Joseph Thannikottu Korah v. The Principal Commissioner of Income Tax

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE S.V.BHATTI`** ``` & ``` ``` THE HONOURABLE MR.JUSTICE BASANT BALAJI FRIDAY, THE 25[TH] DAY OF MARCH 2022 / 4TH CHAITHRA, 1944 ``` ## **`ITA NO. 310 OF 2019`** ``` ITA 33/2017 OF I.T.A.TRIBUNAL,COCHIN BENCH ``` ## **`APPELLANT/S:`** ``` SHRI JOSEPH THANNIKOTTU KORAH AGED 60 YEARS THANNIKOTTU HOUSE,TITANIUM NAGAR, KAVANADU.P.O., KOLLAM-691003. ``` ``` BY ADVS. V.P.NARAYANAN NISHA JOHN SMT.DIVYA RAVINDRAN SRI.R.BHASKARA KRISHNAN SRI.T.M.SREEDHARAN (SR.) ``` ## **`RESPONDENT/S:`** ``` THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM- 695003. ``` ``` BY ADV SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT ``` ``` THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 25.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` ITA NO. 310 OF 2019 ``` -2- ## **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## **Income Tax Appeal No. 310 OF 2019** - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## JUDGMENT (Dated this the 25[th] day of March 2022) Basant Balaji J., The appellant/assessee is an individual, who is employed in KMML Ltd., Chavara, Kollam. The assessee filed return of income for the assessment year 2011-12 disclosing an income of Rs.5,77,610/-. The assessment was taken up for scrutiny under the CASS scheme and notice under Section 143(2) of the Income Tax Act was issued. The assessee was asked to explain the source of cash deposit of Rs.30,00,000/- made in the assessee’s bank account with ICICI bank, Kollam on 20.1.2011. The assessee submitted that the sum represented the sale receipts of land belonging to his wife, Smt. Saly Joseph, who had transferred 76.73 ares of land to one Sri Sajiv ``` ITA NO. 310 OF 2019 ``` -3- Mathai for a total consideration of Rs.3,35,700/-. The assessee produced the sale deed dated 20.1.2011. The case of the assessee is that though the document value is only Rs.3,35,700/-, the actual consideration was for Rs.31,00,000/- including an advance of Rs.1,00,000/-. The sale consideration of Rs.30,00,000/- received on 20.1.2011 was deposited in the bank account in the assessee’s name. 2. A sworn statement was also recorded from the assessee on 16.1.2014. The assessee was directed to produce evidence regarding the source of income to prove the cash credit of Rs.30,00,000/- deposited in the bank. Though ample opportunity was given to the assessee to prove the correlation between the sale price of the land belonging to his wife and the sum of Rs.30,00,000/deposited, the assessee failed to do so. Since the assessee failed to substantiate the source of income, an assessment order was passed on 12.3.2014 whereby he was directed to pay a balance tax of Rs.12,29,570/-. 3. The assessee filed appeal before the Commissioner of Income Tax (Appeals) against the assessment order. The ``` ITA NO. 310 OF 2019 ``` -4- appellate authority also concurred with the finding of the Income Tax Officer. The assessee thereafter challenged the order of the first appellate authority before the Income Tax Appellate Tribunal, Cochin Bench by filing I.T.A.No.33/Coch/2017. The Tribunal, by the impugned order, after elaborately considering the submissions made by the counsel and also verifying the documents, partly allowed the appeal giving credit of Rs.3,35,700/- disclosed in the sale deed against the cash deposit of Rs.30,00,000/Aggrieved by the same, this appeal is filed on the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, did not the Appellate Tribunal err in law in sustaining the addition of income of Rs.26,64,300/- from other source for the Assessment year 2011-12? (ii) Did not the statutory Authorities and the Appellate Tribunal err in law in failing to cross verify with the purchaser of the immovable property the facts stated in the sworn statement and in the affidavit of the appellant before the first Appellate Authority and the Appellate ``` ITA NO. 310 OF 2019 ``` -5- Tribunal as regards the withdrawal of amount from the NRE Bank account by the purchaser and payment thereof, to the appellant prior to registration of sale deed with respect to the immovable property considered in the assessment proceedings for a sum of Rs.30 lakhs? (iii) Are not the conclusions arrived at by the Appellate Tribunal erroneous and perverse in law, as also arbitrary and unsupported by any evidence or material and on that ground liable to be set aside? (iv) Is not the order and the findings of the Appellate Tribunal in the impugned order in ITA No.33/Coch/2017 dated 22.6.2017 for AY-2011-12 erroneous in law and perverse and hence unsustainable? 4. Heard the learned counsel Adv.Nish John for the appellant and the learned standing counsel Shri. Christopher Abraham for the respondent. 5. The learned counsel for the appellant submitted that though the sale deed has shown only Rs.3,35,700/- as sales consideration, the sale in fact was for Rs.31 lakhs and one lakh received at the time of agreement and Rs.30,00,000/- at the time of sale deed on 20.1.2011. The ``` ITA NO. 310 OF 2019 ``` said amount was deposited in the bank account of the appellant, since the assessee’s wife did not have any bank account. The counsel also submitted that to the notice under Section 143(2) of the I.T. Act, the appellant has submitted a proper reply pointing out that the amount deposited is sale consideration obtained by his wife Smt. Saly Joseph from Shri Sajeev Mathai and since she has discharged her initial burden, the onus has now shifted to the respondent and the income Tax Officer ought to have verified the details from the purchaser of the property Sri Sajeev Mathai to verify that the amount deposited by the assessee’s wife is in fact an amount given by shri.Sajeev Mathai. 6. The counsel relied on the decision of the High Court of Gauhati reported in **Nemi Chand Kothari v. Commissioner of Income Tax [(2003) 185 CTR 0635],** to substantiate that “once the assessee discloses the source from which he has received the loan, the burden under Section 106 of the Evidence Act stands discharged and the onus then shifts to the Assessing officer to show if he **`ITA NO. 310 OF 2019`** -7- wants to treat the loan as the income of the assessee from undisclosed source, the transaction between the assessee and the creditor is/are not genuine or that the creditor has no creditworthiness and/or that the money, which has been received by the assessee in the form of loans, actually belonged to the assessee himself.” 7. Per contra, the learned counsel for the respondents submitted that the assessee has failed to substantiate the amount of Rs.30,00,000/- was actually the sales consideration received by his wife by sale of 76.73 ares of property to Shri Sajeev Mathai. Going by the recitals in the sale deed, it can be seen that the value in the document is only Rs.3,35,700/- and hence the amount of Rs.30,00,000/cannot be attributed to the sale consideration of the property. He also submitted that even after giving repeated opportunities to substantiate the contention the assessee failed to prove the said fact to the Assessing Officer with cogent evidence. 8. Though the appellant has filed an affidavit before the Tribunal specifically pointing out that it was the amount **`ITA NO. 310 OF 2019`** -8- received by his wife, which was deposited in the bank, the Tribunal did not accept the same as it was against the recitals in the sale deed. 9. The only contention of the appellant is that the amount of Rs.30,00,000/- deposited in the appellant’s account is the sale value of 76.73 ares of land belonging to the appellant’s wife which was sold in favour of Shri.Sajeev Mathai. The value shown in the sale deed was as per the Government rates of the property at the relevant point of time. Relevant market value of the property at that time was Rs.31,00,000/- though the rate fixed by the Government was very less than the market value and that is the reason why the document shows the total consideration of Rs.3,35,700/-. It is relevant to note that the appellant has not examined his wife who was the vendor of the property and who received the sale consideration of Rs.31,00,000/before the Assessing Officer to prove the source of income. Merely by producing the sale deed which shows the sale consideration of Rs.3,35,700/- and trying to connect it with the deposit of Rs.30,00,000/- in the account ``` ITA NO. 310 OF 2019 ``` -9- on the very same day of the same transaction will not discharge the onus from the shoulder of the assessee. Only if the assessee discloses the source of income (the entire amount) then only the burden under Section 106 of the Evidence Act stands discharged and the onus then shifts to the Assessing Officer. In the case on hand, the amount deposited is Rs.30,00,000/- whereas the document shows only the value of Rs.3,35,700/- Thus, the appellant though disclosed the source of the cash deposit in the bank, he has not discharged the burden of proof on him. Hence the decision reported by the counsel for the appellant has no application. The Tribunal looked into all the aspects and found that the Assessing Officer as well as the first appellate authority failed to give credit to the amount of Rs.3,35,700/- which was shown in the sale deed and thereby it was partly allowed reducing the total income as Rs.26,64,300/-. 10. On consideration of the entire facts and circumstances of the case, we are of the opinion that the substantial questions of law are answered against the ``` ITA NO. 310 OF 2019 ``` -10- appellant. Accordingly, this Income Tax Appeal fails and it is dismissed. sd **S.V.BHATTI, JUDGE sd** **BASANT BALAJI, JUDGE** _dl/_ ``` ITA NO. 310 OF 2019 ``` -11- ## **`APPENDIX OF ITA 310/2019`** |`PETITIONER ANNEXURES`|`PETITIONER ANNEXURES`| |---|---| |`ANNEXURE A`|`TRUE COPY OF ASSESSMENT ORDER DATED`| ||`12.3.2014 PASSED BY THE INCOME TAX`| ||`OFFICER, WARD-2, KOLLAM RANGE, KOLLAM,`| ||`ALONG WITH COMPUTATION OF INCOME.`| |`ANNEXURE B`|`TRUE COPY OF THE ORDER OF THE CIT`| ||`(APPEALS), KOTTAYAM IN ITA`| ||`NO.1/KLM/CIT(A)/TVM/2014-15 DATED`| ||`1.11.2016, PASSED BY THE COMMISSIONER OF`| ||`INCOME TAX (APPEALS),`| ||`THIRUVANANTHAPURAM.`| |`ANNEXURE C`|`TRUE COPY OF THE ORDER OF THE ITAT,`| ||`COCHIN BENCH IN ITA NO.33/COCH/2017`| ||`DATED 22.6.2017 PASSED BY THE ITAT,`| ||`COCHIN BENCH, COCHIN.`| |`ANNEXURE D`|`TRUE COPY OF THE SWORN STATEMENT OF THE`| ||`ASSESSEE RECORDED ON 16.1.2014 BY THE`| ||`ASSESSING OFFICER.`| |`ANNEXURE E`|`TRUE COPY OF THE AFFIDAVIT FILED BY SHRI`| ||`JOSEPH THANNIKKOTTU KORAH BEFORE THE`| ||`CIT(A), THIRUVANANTHAPURM, ON`| ||`15.10.2016.`| |`ANNEXURE E1`|`TRUE COPY OF THE AFFIDAVIT FILED BY SHRI`| ||`THOMASKUTTY N.I.(REAL ESTATE BROKER)`| ||`DATED 15.8.2016 BEFORE THE CIT(A).`| |`ANNEXURE E2`|`TRUE COPY OF THE SUMMARY OF ICICI BANK`| ||`ACCOUNT OF SHRI JOSEPH.T.K. AS ON`| ||`30.1.2011.`| |`ANNEXURE E3`|`NOTARIZED TRUE COPY OF SALE DEED NO.201`| ||`OF 2011 EXECUTED BY SALLY JOSEPH IN`| ||`FAVOUR OF SAJEEV MATHAI.`| |`ANNEXURE E4`|`NOTARIZED TRUE COPY OF THE SALE DEED`| ||`NO.357 OF 2008 EXECUTED BY`| ||`THULASEEDHARAN AND 2 OTHERS IN FAVOUR OF`| ||`SALLY JOSEPH.`| |`ANNEXURE E5`|`NOTARIZED TRUE COPY OF SALE DOCUMENT`| ||`NO.1178 OF 2008 EXECUTED BY VASUDEVAN`| ||`PILLAI AND 6 OTHERS IN FAVOUR OF SALLY`| ||`JOSEPH.`|