K.V. MATHEW Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This appeal is filed by the assessee against the order in I.T.A.No.48/Coch/2010 of the Income Tax Appellate Tribunal, Cochin Bench. The issue relates to the assessment year 2005-06.

(2.) The appellant is a dealer of Art and Craft paper and he filed his return of income declaring the total income at Rs.2,19,730/-. A scrutiny notice under Section 143(2) of the Income Tax Act was issued on 18.10.2006. After hearing the asessee, it was found that in computing the total income the assessee has not considered the personal elements involved in expenditure under the head of vehicle maintenance, hire purchase interest on car and depreciation on car. Further it was found that on verification of the account, the total sundry creditors of Rs.74,34,966/- and Rs.64,57,129/- is styled as payable (Account - K.V.Mathew). Further it was seen that an amount exceeding Rs.10 lakhs was deposited in the Savings Bank Account. The assessing officer found that there are numerous transactions of credits and debits in the account. Though the assessee took up a contention that the amount deposited in the Savings Bank Account is the money received from his sister, the assessing officer formed an opinion that the assessee was not able to prove that the amount came through fund transfer from Italy and it was credited to the Post Office Savings Bank Account of his brother. The assessing officer found that the assessee failed to prove the onus of the transaction and having relied upon the judgment of the Supreme Court in Commissioner of Income Tax v. P.Mohnakala, 2007 291 ITR 278 held that the explanation offered by the assessee about the nature and source of sums found in the credit is not satisfactory and prima facie evidence was available against the assessee. Accordingly, an amount of Rs.22,51,000/- as cash credit in S.B. account was treated as unexplained money under Section 69A of the Income Tax Act. That apart 1/4th disallowance out of vehicle maintenance and hire purchase interest as attributable to personal user was also added as business income.

(3.) The assessee filed an appeal before the Commissioner of Income-tax, who after going through the entire matter in detail, dismissed the appeal. On a further appeal filed by the assessee before the Tribunal, the Tribunal also agreed with the view expressed by the assessing officer as well as the first appellate authority. In the appeal, learned counsel for the appellant, inter alia, contended that if the unexplained money is the amount received from a close relative and it would reflect in the account of that person, the proper course would be to call upon that person to explain regarding the unexplained money. It was further contended that the assessee had produced necessary declaration and the person from whom he received the amount also sworn an affidavit regarding the source of income which was not appreciated by the authorities below. The appellant raised the following substantial question of law in the memorandum of appeal: