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2024 Supreme(Ker) 1349
IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.K.Jayasankaran Nambiar, K.V.Jayakumar, JJ.
The Pr. Commissioner Of Income Tax (Central) – Petitioner
Versus
Sri M.K. Rajendran Pillai – Respondent
I.T.A.NO.27 OF 2024, I.T.A.NO.17 OF 2024, I.T.A.NO.26 OF 2024, I.T.A.NO.28 OF 2024, I.T.A.NO.39 OF 2024, I.T.A.NO.44 OF 2024
Decided On : 03-12-2024
Advocate Appeared:
For the Petitioner: Smt. Susie B Varghese, Sc, Income Tax Department By Adv. Sri. Navaneeth. N. Nath, Sc, Income Tax Department, Sri. P. K. Ravindranatha Menon (Sr. )
For the Respondent: Smt. Ananya Rath, Smt. Sandra Mariya, Smt. Vinitha S. T., Sri. Muhammed Aljuq A., Sri. R. V. Easwar (Sr. ), Sri. Sidharth A. Menon
IMPORTANT POINT
The court upheld the Tribunal's decision, emphasizing the Revenue's burden to prove the genuineness of disputed transactions under the Income Tax Act.
Headnote:
(A) Income Tax Act - Sections 68 and 132 - I.T. Appeals - The Revenue challenged the Tribunal's order that partly allowed the assessee's appeal against substantial additions to taxable income for assessment years 2012-13 to 2017-18 - The Tribunal found that the Revenue failed to establish the assessee's ownership of disputed bank accounts and upheld the deletion of additions related to unexplained cash deposits and credit entries - The court noted that the Tribunal's findings were based on substantial evidence and upheld the decision. (Paras 5, 8, 12, 14)
(B) Burden of Proof - The court reiterated that the burden lies on the Revenue to disprove the genuineness of transactions once the assessee provides satisfactory evidence of identity, creditworthiness, and genuineness of transactions. (Paras 12, 13)
Facts of the case:
The assessee, part of a business group, faced substantial additions to income following a search under Section 132 of the I.T. Act, which were contested in appeals. The Tribunal found that many additions were unjustified as they were not directly attributable to the assessee.
Findings of Court:
The Tribunal's findings were upheld, limiting the additions to Rs.5,44,90,000/- and dismissing the Revenue's appeals.
Issues: The main issues included the validity of additions made to the assessee's income and the burden of proof regarding cash credits.
Ratio Decidendi: The court affirmed that the Revenue must provide evidence to counter the assessee's claims of loan transactions and that the Tribunal's findings were supported by substantial evidence.
Result: Appeals dismissed.
JUDGMENT :
A.K.Jayasankaran Nambiar, J.
These I.T. Appeals preferred by the Revenue impugn a common order dated 20.01.2023 of the Income Tax Appellate Tribunal, Cochin Bench that partly allowed appeals preferred by the respondent/assessee against orders confirming additions made to the taxable income declared by him under the Income Tax Act [hereinafter referred to as the “I.T. Act”] for the assessment years 2012-13 to 2017-18 [six assessment years].
2. The brief facts necessary for the disposal of these appeals are as follows:
The assessee and his family members run various business concerns that are grouped together under the umbrella of M/s.Sreevalsam Group of concerns. There was a search conducted under Section 132 of the I.T. Act at the residential and office premises of the proprietors and the business concerns on 08.06.2017, pursuant to which, a notice was issued to the assessee under Section 153A of the I.T. Act on 03.08.2018. The respondent/assessee, is a partner to the extent of 39% in one of the partnership concerns namely, M/s.Money Muttam Finance, and has a limited shareholding of approximately 11% and 15% respectively in M/s.Mooneymuttathu Nidhi Limited and M/s.Allebasi Builders and Developers (P) Limited. His wife and children are proprietors and partners respectively in other business concerns that come under the umbrella of M/s.Sreevalsam group. The respondent/assessee and his family members, as well as all the entities of the group, are separately assessed to income tax and it is not disputed that the respondent/assessee does not hold any position in the management and control of the majority of the firms/corporate entities of M/s.Sreevalsam group.
3. On receipt of the notice under Section 153A of the I.T. Act, the respondent/assessee filed a return of income on 01.12.2018 declaring an income of Rs.6.17 lakhs. Notices under Section 143(2) and Section 142(1) were issued on various occasions to the assessee requiring it to file requisite documents including cash flow statements and statements of assets and liabilities. Although the assessee raised objections with regard to the issuance of notice to him by contending inter alia that the proceedings initiated against him were without jurisdiction, and alternatively, sought time from the Assessing Authority for filing applications for settlement before the Income Tax Settlement Commission, the Assessing Authority did not accede to the said requests and the assessments were completed against the assessee on 17.03.2020. In the assessment order, the Assessing Officer found that substantial additions had to be made to the declared income of the assessee towards (i) credit receipts from 38 bank accounts of Nagaland based entities/concerns (ii) cash deposits found in the bank accounts of the assessee and his family members (iii) cash deposits in Vrindavan Builders Private Limited (iv) cash component in land transactions and (v) other credits in bank accounts of the assessee and his family members. The total additions made by the Assessing Officer was in an amount of Rs.305.59 crores. It is understood that protective assessments for the aforementioned assessment years were also made in relation to the other business concerns and family members of the assessee.
4. Aggrieved by the assessment orders passed against him, the respondent/assessee preferred appeals before the First Appellate Authority which granted limited relief to the assessee but largely confirmed the demand in the assessment orders. It was therefore that the assessee preferred further appeal before the Appellate Tribunal which partly allowed the appeal by the order impugned in these appeals preferred by the Revenue.
5. In the appeals filed before us by the Revenue, many questions of law were initially raised. At the time of admission of the appeals, however, the respondent/assessee was asked to respond only to the following substantial questions of law which arise from the impugned order of the Tribunal, namely;
1.
