2013 (11) TMI 177 - AT - Income Tax

Tribunal overturns CIT(A) decision, directs further examination of facts and identities

The Tribunal set aside the Ld CIT(A)'s decision to delete the Rs. 46.55 lakhs assessed in the assessee's hands, directing further examination and ... Assessment of Undisclosed income u/s 69A of the Income Tax Act - Assessee had received a sum of Rs.46.55 lakhs from a Trust called Kuriakose Elias Trust, Trivandrum during the financial year 2004-05 in settlement of his dues, which are due from a person named Shri M.R. Somarajan, Amba Rubber Industries, Thampalakkadu, Kanjirappally, Kottayam District – Held that:- Ld CIT(A) has placed much reliance on the opinion given by the Government examiner of questioned documents. It is a well settled proposition of law that the strict rule of evidence is not applicable to the income tax proceedings and the issues can be decided on the basis of preponderance of probabilities - Signatures recorded in the receipts, final agreement and cheque needs to be verified - Opinion given by the Government Examiner with regard to the difference in the signature and handwriting would gain importance only if proper explanation is offered to the contradictions Identity of the assessee, who is in receipt of money, has been put in question – Held that:- It is a well settled proposition of law that the retraction can be accepted only on the basis of evidences and explanations - Tax authorities have not taken any step to verify the address in order to ascertain the correct identity of Mr. Alex George(assessee), particularly in the circumstances of the claim that the Alex George is a different person and not the assessee. The father's name has been mentioned as 'K.C.George'. In most of the situations; the father's name may not be alike, though the personal name may be alike - Restored the matter to Commissioner(A)’s file with the direction to cause enquiries on the above said lines and also such other enquiries that may be required and then take appropriate decision in accordance with the law. Issues Involved:1. Justification of deletion of Rs. 46.55 lakhs assessed in the hands of the assessee.2. Validity of the evidence and statements regarding the receipt of Rs. 46.55 lakhs.3. Contradictions in the statements and evidence provided by the involved parties.4. Requirement for further examination and verification of facts and identities.Issue-Wise Detailed Analysis:1. Justification of Deletion of Rs. 46.55 Lakhs Assessed in the Hands of the Assessee:The primary issue in the appeal was whether the Ld CIT(A) was justified in deleting the amount of Rs. 46.55 lakhs assessed in the hands of the assessee. The department contended that the amount was received by the assessee from Kuriakose Elias Trust in settlement of dues from Shri M.R. Somarajan. The assessee denied receiving this amount. The Ld CIT(A) had deleted the addition based on the opinion of the Government examiner of questioned documents, which indicated that the signatures on the receipts were not those of the assessee.2. Validity of the Evidence and Statements Regarding the Receipt of Rs. 46.55 Lakhs:The AO had assessed the amount based on statements and documents indicating that the payment was made to the assessee. However, the assessee denied the receipt of the amount and the signatures on the documents. The Ld CIT(A) called for a remand report and directed the AO to obtain an expert opinion on the signatures. The Government examiner concluded that the signatures were not matching, leading the Ld CIT(A) to delete the addition.3. Contradictions in the Statements and Evidence Provided by the Involved Parties:Several contradictions were noted in the statements and evidence:- The address of 'Mr. Alex George' mentioned in the letter of authorization was not verified.- Shri M.R. Somarajan initially confirmed the identity of the assessee but later retracted, claiming dealings with another person named Alex George.- Both the assessee and Shri M.R. Somarajan claimed not to know each other, despite being in the same trade and the assessee providing assessment details of Shri M.R. Somarajan.- Fr. Mathew Thayyil, Treasurer of the Trust, confirmed the identity of the assessee and did not retract during cross-examination.4. Requirement for Further Examination and Verification of Facts and Identities:Given the contradictions and the importance of the statements, the Tribunal found it imperative to obtain proper explanations and further verification:- Explanations from Shri M.R. Somarajan regarding his retraction.- Compelling Shri M.R. Somarajan to produce the 'another Alex George'.- Verification of the address and identity of 'Mr. Alex George, S/o K.C. George'.- Examination of the President of the Trust.- Proper explanations from the assessee regarding the confirmation of identity by Fr. Mathew Thayyil.Conclusion:The Tribunal concluded that the issue required further examination and verification of the facts and identities involved. The order of the Ld CIT(A) was set aside, and the matter was restored to his file with directions to conduct further enquiries and take an appropriate decision in accordance with the law. The appeal filed by the revenue was treated as allowed for statistical purposes.