SRI.S.BASKAR SAIT,TRICHUR vs. THE DCIT, TRICHUR

Date of hearing : 14.12.2022 Date of Pronouncement : 02.01.2023 O R D E R Per Padmavathy S, Accountant Member: These two appeals are against the separate orders of the CIT(Appeals), Thrissur dated 19.2.2018 for the AYs 2002-02 & 2003- 04. They were heard together and disposed of by this common order.

Nature of disallowance AY 2002-03 AY 2003-04 Interest expenses 2,57,182 2,08,4656 Disallowance of telephone 21,501 11,015 and mobile Unexplained credits in 186,350 5,00,000 capital account Unexplained credits in 7,55,409 capital account of M/s. Aishwarya Loan credits not proved 28,75,000 Investment in fixed deposits 13,75,000 Loss on sale of car 3,52,820 Unexplained credits in 2,48,250 banks Addition towards capital 2,35,378 3,34,504 gain

A. The order of the assessment to the extent objected to herein is illegal, arbitrary and unauthorized.

B. The Appellate Authority went wrong in confirming the addition made on loans received from the friends and relatives for starting a new business on the premise that genuineness of the transactions has not been proved. He also proceeds on the premise that in the remand report also, the officer says that it is the responsibility of the assessee to produce them before the assessing officer for examination. In reply to the remand, it was demonstrated that having identified the persons and having produced confirmation letters from them, initial burden was discharged by the appellant and that Revenue had to take matter forward. The appellant had also relied on the ratio of the Judgment of the Honorable Supreme Court reported in 159 ITR 78, to canvass the said proposition. C. The Learned Commissioner ought to have noted that, length of time after which assesses called upon to explain cash credit is also relevant factor in considering whether the evidence produced is satisfactory. D. The documents substantiating their ownership of the property were produced along with confirmation letters long back when the original appeals were filed and was subject matter of remand. Merely because similar word used in the confirmation letter could not be said that creditors are not creditworthy. For these and other grounds and documents to be submitted at the time of hearing, it is humbly prayed that the Tribunal be pleased to allow the appeal.

“3. The learned Assessing Officer has failed to afford enough time for the appellant to furnish all the details regarding the loan credits of Rs. 28,75,000/- (para 4.5 of the Assessment Order) and credits in the capital account of Rs. 1,86,350 (para 3.7) and credits of Rs. 7,47,000 (para 4.4).

4. The impugned assessment u/s 143(3) r.w.s. 147 was completed within a span of 12 days after the issue of the notice u/s 143(2) just stating that, "Since the loan credit has not been proved satisfactorily, these amounts stand unexplained and added" (para 4.3) "total amount credited in the Capital account of the appellant is unexplained. This is added" (para 4.4). 3. Even though a notice u/s 142(1) has been issued for filing the Return of Income the ld. Assessing Officer has not called for these details specifically by issue of notice u/s 142(1) after filing the Return of Income. 4. The ld. Assessing Officer has not given an opportunity to file such details before the assessment was made.

5. It is prayed before the hon. Tribunal that the Assessing Officer may be directed to examine those details now submitted with regard to confirmatory letters as also details of agricultural holdings, extent, crops cultivated etc. 6. The Id. Assessing Officer has failed to allow development expenses including providing roads within the property and making it fit for motoring, when he himself has admitted that the land of 1.75 acres were sold by the appellant in parts. For doing so the appellant had to provide roads for various plots by incurring development expenses. For these and such other grounds that may be urged at the time of hearing the case may be sent back to the Assessing Officer for considering the pieces of evidence submitted above.” 6. The assessee along with additional grounds filed documents with regard to confirmations from loan creditor and other documents in support of the claims disallowed by the AO. The main contention of the ld. AR before us is that the assessee was not given a proper opportunity to substantiate the claim disallowed by the AO. The ld.

AR also submitted that the AO failed to call for details and examine the true nature of expenses. The ld. AR also submitted that the revisionary proceedings were initiated in the month of March and due to time limit for completion of assessment the AO completed the assessment without calling any details but by simply stating that the assessee did not produce any details. The ld. AR submitted that this could be evidenced from the notice issued u/s. 142(1) which did not call for any details. The CIT(A) while adjudicating had considered only limited issues with regard to unexplained credit in capital accounts and loans wherein he had partly allowed the appeal. The ld. AR submitted that the CIT(A) failed to consider the loan confirmation produced by the assessee and submitted that once the assessee produces the confirmation letters from creditor, the onus is shifted to the revenue and efforts should be made to pursue the creditors. In this regard, the ld. AR relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Orissa Corporation 159 ITR 78. The ld. AR prayed for admission of additional ground for the reason that the CIT(A) did not adjudicate all the issues with regard to the additions made by the AO.

(i) The High Court has no power under S.256(2) of the 1961 Act to call upon the Appellate Tribunal to state a case if there was some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on a re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal. (ii) The conclusion reached by the Tribunal in the instant case, that the assessee had discharged the burden that lay on him could not be said to be unreasonable, or perverse or based on no evidence. If the conclusion is based on some evidence on which it could be arrived at, no question of law as such arises. (iii) The assessee had provided the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that they were income-tax assessees. Their index numbers were in the files of the department. The Revenue apart from issuing notices under 8. 131 of the Act at the instance of the assessees, did not pursue the matter further. It did not examine the source of income of the alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. The assessee, therefore, could not do any further.

Pronounced in the open court on this 2nd day of January, 2023.