Income Tax Appellate Tribunal - Cochin
Sri.C.K. Abdul Azeez, Calicut vs The Dcit, Calicut on 31 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM
I.T.A. Nos. 246 to 248/Coch/2016
Assessment Years : 2007-08, 2009-10 & 2010-11
Shri C.K. Abdul Azeez, Vs. The Deputy Commissioner of
Cheenatham, Kuzhiyil House, Income-tax, Central Circle-1,
Malayamma, Kozhikode.
Kozhikode-673 639.
[PAN: AHBPA 2827M]
(Assessee-Appellant) (Revenue-Respondent)
Assessee by Shri T.N. Seetharaman, Adv.
Revenue by Shri A. Dhanaraj, Sr. DR
Date of hearing 24/05/2018
Date of pronouncement 31/05/2018
ORDER
Per CHANDRA POOJARI, ACCOUNTANT MEMBER:
These appeals filed by the assessee are directed against the common order of the CIT(A)-IV, Kochi dated 24/02/2016 for different assessment years. Since the issues involved in these appeals are common, they were heard together and are being disposed of by this common order.
2. The first ground in ITA No. 246/Coch/2016 is with regard to addition of Rs.15,00,000/- made u/s. 68 of the Act.
I.T.A. Nos. 246-248/C/2016
3. The Ld. AR submitted that the Assessing Officer had added a sum of Rs.15,00,000/- as unexplained credit u/s. 68 of the Act. It was submitted that the Assessing Officer passed the order without considering the submissions made by the assessee genuinely substantiating the receipt of funds as shown in the cash flow statement as investment contribution received from Shri Abdul Latheef. The Ld. AR submitted that at the time of assessment, Shri Abudl Latheef filed detailed affidavit, affirming his contribution of Rs.15,00,000/- made to the assessee for the purpose of investment in Parathode Granites Pvt. Ltd. in which the assessee is the managing director. It was submitted that the affidavit clearly established the essentialities to prove the genuineness of the contributor which included identity of the contributor and genuineness of the transaction. Further, it was submitted that the assessee was an NRI businessman in UAE for the past several years and for the purpose of investment in the said Company, Shri Abdul Latheef had invested the above sum of Rs.15 lakhs out of his savings from earnings in UAE. It was also submitted that at the time of recording sworn statements, the assessee had clearly deposed contribution from friends and third parties towards investments in the Crusher business undertaken by the assessee According to the Ld. AR, the Assessing Officer merely overlooked the submissions and contentions put forward by the assessee. Hence it was pleaded that the addition of Rs. 15 lakhs as contribution of Shri Abdul Latheef in the Crusher business may be deleted.
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I.T.A. Nos. 246-248/C/2016
4. The Ld. DR submitted that there is no whisper in the order of the CIT(A) about the affidavit filed by the assessee. As such it cannot be given any credit.
5. We have heard the rival submissions and perused the record. The main plea of the Ld. AR is that the said amount of Rs.15 lakhs was received from Shri. Abdul Lateef towards his contribution in the Company M/s. Parathode Granites Pvt. Ltd. in which the present assessee is the Managing Director. To this effect, the assessee filed a copy of the affidavit made by Shri Abdul Latheef U. dated 12/03/2013. Admittedly, there is a reference of this affidavit in para 10, page 7 of the CIT(A)'s order. However, the contents of the affidavit was not examined by the lower authorities. Since the deponent therein, not having been examined, it cannot be rejected by the Revenue authorities. In our opinion, it is incumbent upon the lower authorities to examine the deponent therein and thereafter, accept or reject the same. It is not appropriate to overlook the affidavit filed by the assessee without examining the deponent therein. Hence, in the interest of justice and equity, we remit this issue to the file of the Assessing Officer for consideration of the affidavit in accordance with law after giving opportunity of hearing to the assessee. For this proposition, we place reliance on the judgment of the Supreme Court in the case of Mehta and Parikh & Company vs. CIT (30 ITR 181). Hence, this ground of appeal of the assessee is partly allowed for statistical purposes. In the result, the appeal of the assessee in ITA No. 246/Coch/2016 is partly allowed for statistical purposes. 3
I.T.A. Nos. 246-248/C/2016
6. The first ground in ITA Nos. 247 & 248/Coch/2016 is with regard to addition of Rs. 59,45,000/- for the assessment year 2009-10 and Rs. 10,48,000/- for the assessment year 2010-11 made u/s. 68 of the Act.
7. The facts of the case in these assessment years, as in the earlier year are that the assessee was said to have received Rs.59.45 lakhs from the following parties:
AY Name of the person Investment made (Rs.) 2007-08 Mr. Abdul Latheef 15,00,000/- 2009-10 Mr. Abdul Latheef 13,00,000/- 2009-10 Mr. Abdul gafoor 33,84,00/- 2009-10 Mr. Mohammed Sharif 4,13,000/- 2010-11 Mr. V.K. Muneer 10,48,000/-
Since the assessee was not able to discharge the burden cast upon him, the addition was made by the Assessing Officer which was sustained by the CIT(A).
8. Against this, the assessee is in appeal before us. The Ld. AR submitted that the Assessing Officer had passed the assessment order without considering the submission made by the assessee genuinely substantiating the receipt of funds as shown in the cash flow statement as investment contribution received from Shri Abdul Gafoor (R.33,84,000), Shri Abdul Latheef (Rs.13,00,000), Shri Abdul Kareem (Rs.8,48,000) and Shri Mohammed Shabeer (4,13,000). It was submitted that at the time of assessment, four of the above mentioned persons 4 I.T.A. Nos. 246-248/C/2016 filed detailed affidavits affirming their contributions made to the assessee for the purpose of investment in M/s. Parathode Granites Pvt. Ltd. in which the assessee is the managing director. The affidavits filed by the assessee from them clearly establish the essentialities to prove the genuineness of the contributors which included identity of the contributors, credit worthiness of the contributors and genuineness of the transaction. Further, it was submitted that they are NRI businessmen in Gulf countries for the past several years. The amounts contributed by the above four persons are as follows:
Abdul Kareem: As sworn by Kareem in his affidavit, he is an NRI based in KSA doing multifarious businesses. During the above Assessment Year he has contributed Rs.848,000/- in cash for purpose of share investment Parathode Granites Private Ltd. Copy of NRE bank statement of Shri Abdul Kareem maintained with Canara Bank with account No.9869 was placed on record. The transactions deposed from the bank said statements towards the above investments is as below:
Date Amount Nature of Transactions with remarks
27/02/2009 70,00,000 Cash cheque paid to Abdul Azeez vide cheque no.
192855
27/02/2009 3,50,000 Cheque paid to Unnikrishnan who was the person
authorized by Abdul Azeez to receive cash on his behalf 5 I.T.A. Nos. 246-248/C/2016 The balance amount of Rs.4,28,000/- was arranged out of his savings from earning in KSA.
Abdul Gafoor : As sworn by Abdul Gafoor in his affidavit, he is an NRI based in Qatar doing multifarious businesses. During the Assessment Year he has contributed Rs.33,84,000/- in cash for the purpose of share investment Parathode Granites The copy of NRE bank statement of Shri Abdul with Canara Bank with account No. 16236 and Federal bank with account no. 13211 was placed on record. The transactions deposed from the said bank statements towards the above investments is as below:-
CANARA BANK Date Amount Nature of Transactions with remarks 03/112008 50,000 Cash withdrawn vide cheque no. 00416305 and paid to Abdul Azeez 10/11/2008 25,000 Cheque paid to P. Gopalan who was the person authorized by Abdul Azeez to receive cash on his behalf 14/11/2008 10,00,000 Cash withdrawn vide cheque no.00416308 and paid to Abdul Azeez 15/11/2008 10,00,000 Cash vide cheque no.00416309 and paid to Abdul Azeez 15/11/2008 10,00,000 Cheque paid to Abdul Majeed who was the person authorized by Abdul Azeez to receive cash on his behalf 02/12/2008 1,50,000 Cash withdrawn vide cheque no.00416312 and paid to Abdul Azeez 29/01/2009 39,000 Cash withdrawn vide cheque no.00416317 and paid to Abdul Azeez 6 I.T.A. Nos. 246-248/C/2016 FEDERAL BANK 02/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 07/04/2008 10,000 Cash withdrawn from ATM and paid to Abdul Azeez 12/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 15/04/2009 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 15/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 15/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 16/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 21/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 23/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 24/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 25/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez 26/04/2008 15,000 Cash withdrawn from ATM and paid to Abdul Azeez Mohammed Shabeer: As sworn by Mohammed Shabeer in his affidavit, he is an NRI based in Qatar employed as Mechanical engineer. During the above Assessment Year he has contributed Rs.4,13,000/- in cash for the purpose of share investment Parathode Granites Private Limited. The copy of NRE bank statement of Mr. Mohammed Shabeer maintained with SBT with account No.20809 was placed on record. The transactions deposed from the said bank statements towards the above investments is as below:
Date Amount Nature of Transactions with remarks
22/05/2008 7,000 Cash withdrawn vide cheque no. 0044792 and
paid to Abdul Azeez
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I.T.A. Nos. 246-248/C/2016
16/06/2008 10,000 Cash withdrawn vide cheque no.0044794
and paid to Abdul Azeez
18/06/2008 20,000/- Cash withdrawn vide cheque no.0044795 and paid to
Abdul Azeez
29/08/2008 5,000 Cash withdrawn from ATM and paid to Abdul Azeez
17/10/2008 I 3,000 Cash withdrawn from ATM and paid to Abdul Azeez
22/10/2008 1,000 Cash withdrawn from ATM and paid to Abdul Azeez
28/10/2008 7,000 Cash withdrawn from ATM and paid to Abdul Azeez
14/11/2008 1,00,000 Cash withdrawn vide cheque no.0044797 and paid to
Abdul Azeez
16/01/2009 20,000 Cash withdrawn vide cheque no.0044798 and paid to
Abdul Azeez
16/03/2009 4,000 Cash withdrawn vide cheque no.061741 and paid to
Abdul Azeez
The balance amount of Rs.2,56,000/- was arranged of his saving from earnings in Qatar.
Abdul Latheef: As sworn by Abdul Latheef in his affidavit, he is an NRI based in KSA employed as Mason. During the above Assessment Year he had contributed Rs. 13,00,000/- in cash for the purpose of share investment. The copy of NRE bank statement of Shri Abdul Latheef maintained with Canara Bank with account No.60367 was placed on record.
8.1 It was submitted that they have sufficient savings to contribute the money to Shri Abdul Azeez during the relevant financial year. Also, at the time of 8 I.T.A. Nos. 246-248/C/2016 recording of sworn statements, it was submitted that the assessee had clearly deposed contributions from friends and third parties towards investments in the Crusher business undertaken by the assessee. The Ld. AR submitted that the assessing officer merely over looked the submissions and contentions put forward by the assessee. Hence it was pleaded to accept the contribution made by the above mentioned four persons towards share investment in the crusher business as the identity, creditworthiness and genuineness of the transaction is well proved.
9. The Ld. DR submitted that identical affidavits were filed in respect of Abdul Latheef, Abdul Gafoor, Sainulabidheen and Muneer VK. It was submitted that in the case of Abdul Gafoor, Sainulabidheen, the assessee tried to substantiate the credit by showing their NRE bank statement where cash was withdrawn or cash cheque allegedly paid to the assessee. But in any of such cases, according to the Ld. DR, there have been no linkage with various dates on which the cash has been received by the assessee to those of the cash withdrawals made. Further, it was submitted that in the sworn statement, the assessee accepted that no actual written accounts were kept by them. The Ld. DR submitted that the although the credits appeared in the cash flow statement of C.K. Abdul Azeez, the investments were stated to be made with the company M/s. Parathode Granites Pvt. Ltd. in which assessee was the Managing Director. However, in the books of account of the company, the Ld. DR submitted that the name of such 9 I.T.A. Nos. 246-248/C/2016 creditors does not appear which means that the contents of the affidavit was actually incorrect that the investments were made with M/s. Parathode Granites Pvt. Ltd. The company came into existence on 27/10/2009 and the alleged investments as per the affidavit was made during the period prior to the incorporation of the company. The Ld. DR also disagreed with the view that the funds for allocation of shares was lying with the company subject to pendency of the allotment of shares as it was not supported with any of the accounts of the company or in the sworn statement of the assessee. Thus, the Ld. DR submitted that the contents of the affidavit were not correct and it is only a make believe story that the investments were made towards allotment of shares and were kept pending by the company. In the facts and circumstances of the case, the Ld DR submitted that the additions made by the Assessing Officer on account of unexplained cash credit u/s. 68 for a sum of Rs.15 lakhs for the AY 2007-08 , Rs.59,45,000/- for the AY 2009-10 and Rs.10,48,000/- for the AY 2010-11 iare found in order.
10. We have heard the rival contentions and perused the record. Since the facts of this issue are similar to the facts in the assessment year 2009-10, the issue is remitted to the file of the Assessing Officer for the purpose of examining the affidavit filed by the assessee. Accordingly, this issue is remitted to the file of the AO for fresh consideration in accordance with law after giving opportunity of 10 I.T.A. Nos. 246-248/C/2016 hearing to the assessee. Hence, this ground of appeal is partly allowed for statistical purposes for both the assessment years.
11. The next ground in ITA No.248/Coch/2016 is with regard to addition made towards investment of Rs.95 lakhs as advance for purchase of 28.75 acres of land.
12. The Ld. AR submitted that the Assessing Officer had brought to tax an amount of Rs.95 lakhs as unexplained investment by the assessee. The Ld. AR submitted that based on the sworn statement of the assessee on 11/03/2011, the Assessing Officer mentioned that the assessee had paid an amount of Rs.95 lakhs out of Rs.1 crore given as advance for the purchase of 28.75 acres of land for a company named M/s. Parathode Granites Pvt. Ltd. in which the assessee was the Managing Direct. Against the same, it was submitted that the assessee filed a letter dated 04/03/2013, reiterating that the investment in land was made out of funds of the said Company. According to the Ld. AR, the assessee had entered in agreement for the purchase of land and paid advance of Rs. 1 crore out of accumulated reserves and surplus available with the Company. Hence, it was submitted that the funds for the above investment were utilized from the surplus funds of the Company and the assessee had not made any personal investment in the said deal. It was submitted that the said land deal did not materialize as agreement was cancelled by both the parties. Hence, it was 11 I.T.A. Nos. 246-248/C/2016 submitted that the agreement clearly establishes the fact that the assessee signed the agreement on behalf of the Company as Managing Director. From this it can be inferred that the assessee did not execute the agreement in his individual capacity and the same was entered on behalf of the M/s. Parathode Granites Pvt. Ltd. Hence, it was submitted that the addition of Rs.95 lakhs in the hands of the assessee is to be deleted.
13. The Ld. DR submitted that since the agreement was signed by the assessee on behalf of the Company as the Managing Director, for the purchase of land, the assessee was not able to explain it in his individual capacity. According to the Ld. DR in the sworn statement, the assessee had accepted of having spent Rs.95 lakhs in respect of the purchase of 28.75 acres of land for Rs.5,65,00,000, for which the agreement was during the course of search from the premises of Shri Sainulabdheen which is reflected in the sworn statement recorded on 11/03/2011. The Ld. DR submitted that there was no mention whether the purchase of land was meant for the company and the payments were sourced from the books of account of the company or from the company's bank account.
In such a case, it was submitted that the assessee has failed to discharge his obligation to explain the source for such investment. Accordingly, the Ld. DR submitted that the Assessing Officer has rightly made the addition of Rs.95 lakhs as unexplained investment.
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I.T.A. Nos. 246-248/C/2016
14. We have heard the rival submissions and perused the record. The assessee in his sworn statement recorded on 11/03/2011 stated that there was investment of Rs.1 crore for purchase of 28.75 acres of land for M/s. Parathode Granites Pvt. Ltd. Out of this, the assessee invested Rs.95 lakhs and balance of Rs. 5 lakhs was contributed by Shri Abdul Kareem. However, the assessee filed a letter on 04/03/2013 stating that this investment in land was made out of funds of M/s. Parathode Granites Ltd. Subsequently, the deal was cancelled. The entire investment was utilized from the funds of M/s. Parathode Granites Pvt. Ltd. and there was no investment from the assessee's side. However, the records of M/s. Parathode Granites Pvt. Ltd. does not show any of these investments. Hence, the letter dated 04/03/2013 filed by the assessee stating that the assessee has not invested in the company M/s. Parathode Granites Pvt. Ltd. , does not borne out of records and the letter filed by the assessee on 04/03/2011 is a self serving document, not corroborated by any evidence and this letter cannot be acted upon. This addition made by the AO is to be confirmed. The evidence brought on record by the assessee is not enough to deleted the addition. Accordingly, the addition is sustained. This ground of appeal of the assessee is rejected. 13
I.T.A. Nos. 246-248/C/2016
15. In the result all the appeals of the assessee are partly allowed for statistical purposes.
Order pronounced in the open Court on this 31st May, 2018.
sd/- sd/-
(GEORGE GEORGE K.) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Place:
Dated: 31st May, 2018
GJ
Copy to:
1. Shri C.K. Abdul Azeez, Cheenatham, Kuzhiyil House, Malayamma, Kozhikode-673 639.
2. The Deputy Commissioner of Income Tax, Central Circle-1, Kozhikode.
3. The Commissioner of Income-tax(Appeals)-IV, Kochi
4. The Commissioner of Income-tax, Central, Kochi
5. D.R., I.T.A.T., Cochin Bench, Cochin.
6. Guard File.
By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin 14