Roshini Rakesh Sheth, CHENNAI V. ITO Non Corporate Ward 15(3), CHENNAI

CO 112/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1567 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T V MUTHU ABIRAMI
• Keywords: Gift; Business income; Cost of acquisition
• Section: 56(2); 80G; 194C; 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH : CHENNAI . , ! ' # ' $ . %& , ( * + [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBE R AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./I.T.A. NO.989/CHNY/2018 & C.O.NO.112/CHNY/201 8. / ASSESSMENT YEAR : 2012-2013. THE INCOME TAX OFFICER, NON CORPORATE WARD 15(3) CHENNAI 600 034 VS. MS. ROSHINI RAKESH SHETH, FLAT C4, AURA ONE APARTMENT, NO.01, 1 ST MAIN ROAD, SHASTRI NAGAR, CHENNAI 600 020. [PAN ACDPC 4238P] ( ,- / APPELLANT) (RESPONDENT/ CROSS OBJECTOR) DEPARTMENT BY : SHRI. AR.V. SREENIVASAN, JCIT. ASSESSEE BY : SMT.T.V.MUTHU ABIRAMI, ADV /DATE OF HEARING : 14-11-2018 /DATE OF PRONOUNCEMENT : 20-11-2018 . / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE APPEAL AND CROSS OBJECTION OF THE REVE NUE AND ASSESSEE RESPECTIVELY DIRECTED AGAINST AN ORDER DA TED 30.11.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNA I. 2. APPEAL OF THE REVENUE IS TAKEN UP FIRST FOR DISPOSA L. ITA NO. 989 /2018 & CO 112/18 :- 2 -: 3. REVENUE HAS TAKEN ALTOGETHER EIGHT GROUNDS OF WHICH GROUND NO.1 & 8 ARE GENERAL NEEDING NO SPECIFIC ADJ UDICATION. GROUND NUMBER 7 IS ALSO, MORE OR LESS GENERAL AND ASSAILS VARIOUS DIRECTIONS GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) TO THE LD. ASSESSING OFFICER, WHICH AS PER REVENUE WAS AKIN TO EXERCISING A POWER TO SET SIDE WHICH WAS NOT THERE WITH TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). SINCE, THIS GROUND OF THE REV ENUE IS RELEVANT TO ALMOST ALL OTHER GROUNDS RAISED, IT WILL BE DEALT B Y US AT THE APPROPRIATE PLACES. 4. VIDE ITS GROUND NO.2, GRIEVANCE OF THE REVENUE IS ON THE DIRECTIONS OF THE LD. ASSESSING OFFICER TO VERIFY T HE SUBMISSION OF THE ASSESSEE WITH REGARD TO DISALLOWANCE OF F17,25,125/ - MADE U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 5. FACTS APROPOS ARE THAT ASSESSEE ENGAGED DOING BUS INESS AS ARCHITECTS, INTERIOR DECORATORS AND DESIGNERS HAD FILED HER RETURN FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF F 96,76,870/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HAD EFFECTED PAYME NTS AGGREGATING F17,25,125/- ON WHICH NO TAX WAS DEDUCTED AT SOURCE U/S.194A, 194H, 194J AND 194I OF THE ACT. BREAK-UP OF SUCH EXPENDI TURE AS GIVEN BY THE LD. ASSESSING OFFICER IS REPRODUCED HEREUNDER:- ITA NO. 989 /2018 & CO 112/18 :- 3 -: NATURE OF PAYMENT APPLICABLE SECTION PAID TO AMOUNT IN F INTEREST PAID 194A M/S. INDIA BULLS FINANCIAL SERVICES 14,043 INTEREST PAID 194A MR. PREMKUMAAR K. SHETH 36,866 INTEREST PAID 194A MRS. BHARTI P.SHETH 36,866 INTEREST PAID 194A MRS. BHARTI P.SHETH 8,611 INTEREST PAID 194A MR. PREMKUMAAR K. SHETH 8,611 COMMISSION PAID 194H MR. PREMKUMAAR K. SHETH (HUF) 1,20,000 COMMISSION PAID 194H J. GOLDEN DAVY 2,25,000 CONSULTANCY CHARGES 194J GHULAM HUSSIN A 40,000 ENGINEERING FEES 194J COLLATE CONSULTANTS P. LTD 5,40,000 CONSULTANCY CHARGES 194J SIVASANKAR S 45,000 REPAIRS AND MAINTENANCE 194C VEHICLE SERVICE 82,500 REPAIRS AND MAINTENANCE 194C ACAC IA DREAMS 3,00,000 TRAVELLING EXPENSES 194C PAID TO AMEX CARD 3,72,625 TOTAL IN . 17,25,125 LD. ASSESSING OFFICER MADE A DISALLOWANCE INVOKING SECTION 40(A)(IA) OF THE ACT. ITA NO. 989 /2018 & CO 112/18 :- 4 -: 6. IN ITS APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT RECIPI ENTS OF THE INTEREST COMMISSION AND CONSULTANCY FEES HAD INCLU DED SUCH AMOUNTS IN THEIR RESPECTIVE INCOME TAX RETURN AND PAID TAX THEREON. RELYING ON THE FIRST PROVISO TO SECTION 201 (1) OF THE ACT AND SECOND PROVISO TO SECTION 40(A) (IA) OF THE ACT, ASSESSEE ARGUED TH AT ONCE THE PAYEE HAD SHOWN THE RECEIPTS AS PART ON THEIR INCOME AND PAID TAXES THEREON, THERE COULD BE NO DISALLOWANCE U/S.40(A)(I A) OF THE ACT. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT PART OF CONSULTANCY CHARGES CLAIMED WAS ACTUALLY INCURRED FOR FABRICAT ION WORK. SIMILARLY ACCORDING TO HER SOME OF THE PAYMENTS MADE UNDER THE HEAD REPAIRS AND MAINTENANCE INCLUDED PURCHASE COST OF GRANITE. ASSESSEE ALSO POINTED OUT THAT TRAVELLING EXPENDITU RE WHICH WAS INCLUDED AS A PART OF CONSULTANCY CHARGES, WAS PAID IN FOREIGN CURRENCY AND DID NOT ATTRACT TAX DEDUCTION PROVISION. L D. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DIRECTED THE LD. ASSESSING OFFICER TO VERIFY FORM NO.26A IN RESPECT OF EACH OF THE PARTIES, AS WELL AS THE SUBMISSIONS M ADE BY THE ASSESSEE AND TO GIVE APPROPRIATE RELIEF TO THE ASSESSEE. 7. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD N O POWERS FOR GIVING DIRECTIONS WHICH WERE AKIN FOR SETTING ASIDE ORDER. ACCORDING TO ITA NO. 989 /2018 & CO 112/18 :- 5 -: HIM, AFTER THE AMENDMENT MADE TO SECTION 251(1) (A) OF THE ACT THROUGH FINANCE ACT, 2001 THE POWER EARLIER AVAIL ABLE WITH THE COMMISSIONER OF INCOME TAX (APPEALS) FOR SETTING AS IDE ORDERS WAS NO MORE THERE. 8. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT DIRECTIONS GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WERE FAIR AND DID NOT WARRANT INTERFERENCE. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORD ERS. CLAIM OF THE ASSESSEE WAS THAT MANY OF THE PARTIES TO WHOM PAYMENTS WERE EFFECTED HAD SHOWN SUCH RECEIPTS IN T HEIR RESPECTIVE RETURNS AND BY VIRTUE OF SECOND PROVISO TO SECTION 40(A) (IA) OF THE ACT READ ALONGWITH FIRST PROVISO TO SECTION 201(1) OF T HE ACT, THE RECIPIENTS HAVING SHOWN THE INCOME AND PAID TAXES, ASSESSEE CO ULD NOT BE SADDLED WITH A DISALLOWANCE U/S.40(A)(IA) OF THE ACT. LD.CIT (APPEALS) CONSIDERING THIS ARGUMENT HAD DIRECTED TH E LD. ASSESSING OFFICER TO VERIFY FORM NO.26A OF THE RECIPIENTS AND GIVE APPROPRIATE RELIEF TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO DIRECTED LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE THAT PAYMENTS TO THREE PARTIES WERE BELOW THRESHOLD LIM IT FOR ATTRACTING TAX PROVISION. WE ARE OF THE OPINION THAT SUCH DIRECTIO NS CANNOT BE CONSIDERED AS A SETTING ASIDE ORDER OR AN ORDER DIRECTING ITA NO. 989 /2018 & CO 112/18 :- 6 -: REEXAMINATION OF WHAT WAS AVAILABLE ON RECORDS. LD . COMMISSIONER OF INCOME TAX (APPEALS) HAD CLEARLY STATED THAT HE WAS PARTLY ALLOWING THE CLAIM OF THE ASSESSEE. DIRECTIONS GIVEN BY HIM TO THE LD. ASSESSING OFFICER WAS ONLY TO GIVE EFFECT TO HIS OR DER AND IN OUR OPINION WAS WELL WITHIN HIS POWERS. WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). GROUND NO.2 OF THE REVENUE STANDS DISMISSED. 10. VIDE ITS GROUND NO. 3, GRIEVANCE OF THE REVENUE THA T LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE L D. ASSESSING OFFICER TO VERIFY A CLAIM OF GIFT OF F1,34,157/- R ECEIVED BY ASSESSEES MINOR CHILD. 11. LD. ASSESSING OFFICER HAD ADDED WITH THE INCOME OF THE ASSESSEE, A GIFT OF F1,34,157/- RECEIVED BY HER MIN OR CHILD MS.KARISHMA R. SETH RELYING ON SECTION 64(1A) OF TH E ACT. ASSESSEE HAD BEFORE LD. ASSESSING OFFICER STATED THAT MS.KAR ISHMA R. SETH HAD RECEIVED SUCH MONEY FROM HER CLOSE RELATIVES LIKE MOTHER, FATHER AND GRANDFATHER. THIS WAS NOT ACCEPTED BY THE LD. ASSES SING OFFICER. WHEN THE MATTER REACHED THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HE DIRECTED THE LD. ASSESSING OFFICER TO VERIFY ALL SU PPORTING DOCUMENTS FILED BY THE ASSESSEE AND ALLOW THE CLAIM TO BE EX TENT THE GIFTS WERE ITA NO. 989 /2018 & CO 112/18 :- 7 -: RECEIVED FROM RELATIVES COMING WITHIN THE MEANING OF EXPLANATION (E) TO SECTION 56(2) (VII) OF THE ACT. 12. NOW BEFORE US, ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT LD. CIT (A) HAD NO SUCH POWERS. ARGUMENTS SIMILAR TO WHAT WERE ADVANCED WITH REFERENCE TO GR OUND 2 WERE RAISED HERE ALSO. 13. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). 14. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE IS THAT DIRECTIONS GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) WERE AKIN TO A SETTING ASIDE OR FOR RE-EXAMINING RECORDS ALREADY AVAILABLE WITH THE LD. ASSESSING OFFICER. IT IS TRUE THAT LD. COMMISSIONE R OF INCOME TAX (APPEALS) HAD DIRECTED THE LD. ASSESSING OFFICER TO VERIFY THE SUPPORTING DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM DURING THE APPELLATE PROCEEDINGS AND GIVE APPROPRIATE RELIEF. NEVERTHELESS, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD SPECIFICAL LY STATED THAT HE WAS PARTLY ALLOWING THE GROUND RAISED BY THE ASSESS EE ON THE GIFTS RECEIVED BY ASSESSEES MINOR DAUGHTER. WE ARE OF T HE OPINION THAT DIRECTIONS OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) DID NOT AMOUNT TO SETTING ASIDE OR RE-EXAMINATION OF THE IS SUE. IT MIGHT BE ITA NO. 989 /2018 & CO 112/18 :- 8 -: TRUE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) COULD HAVE INVOKED RULE 46A OF INCOME TAX RULES, 1961 (IN SHOR T THE RULES) AND SOUGHT A REMAND REPORT FROM LD. ASSESSING OFFICER. HOWEVER, SUCH TECHNICAL NICETIES IN OUR OPINION SHOULD NOT COME I N WAY OF ADMINISTRATION OF JUSTICE, ESPECIALLY WHEN THE IS SUE IS ON SMALL GIFTS RECEIVED BY A MINOR CHILD. WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). GROUND NO.3 OF THE REVENUE STANDS DISMISSED. 15. VIDE ITS GROUND NO.4, GRIEVANCE OF THE REVENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE L D. ASSESSING OFFICER TO VERIFY THE CLAIM OF SUNDRY CREDITORS I N THE BOOKS OF M/S. CLOVER DESIGN AND IN THE NAME OF ONE M/S. KGS MIL ESTONE CONSTRUCTION LTD, FOR GIVING APPROPRIATE RELIEF TO THE ASSESSEE. 16. ASSESSEE HAD SHOWN SUNDRY CREDITORS AGGREGATING TO F60,90,889/- IN THE BOOKS OF HER PROPRIETORSHIP CON CERN NAMED M/S. CLOVER DESIGN, A SUNDRY CREDIT OF F10,00,000/- IN T HE NAME OF M/S. KGS MILESTONE CONSTRUCTION LTD IN THE BOOKS OF THE BUSINESS CONDUCTED IN HER INDIVIDUAL NAME. HOWEVER, IT SEEMS ASSESSE E COULD NOT FILE ANY CONFIRMATION FROM THESE CREDITORS NOR ANY DETAILS. LD. ASSESSING OFFICER MADE ADDITIONS AGGREGATING TO F70,90,889/-, ON ACCOUNT OF ITA NO. 989 /2018 & CO 112/18 :- 9 -: FAILURE OF THE ASSESSEE TO PROVIDE CONFIRMATION AND DETAILS. WHEN THE MATTER REACHED LD. COMMISSIONER OF INCOME TAX (APPE ALS), ASSESSEE FILED CONFIRMATIONS FROM VARIOUS PARTIES. LD.CIT ( APPEALS) AFTER TAKING INTO ACCOUNT THE CONFIRMATIONS SUBMITTED BY THE ASS ESSEE DIRECTED THE LD. ASSESSING OFFICER TO VERIFY THE CLAIM OF SUNDRY CREDITORS AND DELETE THE ADDITIONS, IF PROPER SUPPORTING DOCUMENTS WERE FILED BY THE ASSESSEE. NOW THE CONTENTION OF THE LD. DEPARTMENT AL REPRESENTATIVE BEFORE US IS THAT LD. COMMISSIONER OF INCOME TAX (A PPEALS) HAD NO POWERS FOR GIVING SUCH DIRECTIONS. AS AGAINST THIS , LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 17. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. IT IS TRUE THAT LD. COMMISSIONER OF INCOME TAX (APP EALS) COULD HAVE INVOKED RULE 46A AND SOUGHT A REMAND REPORT INSTEAD OF DIRECTING A VERIFICATION BY THE LD. ASSESSING OFFICER. AS ALRE ADY MENTIONED BY US, SUCH TECHNICAL NICETIES SHOULD NOT COME IN THE WAY OF APPLICATION OF TAX LAWS. WHAT CAN BE COLLECTED AS TAX IS ONLY WHAT IS ALLOWED AS PER THE STATUTE AND NOTHING MORE NOR NOTHING LESS. AS SESSEE HAD BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT MANY OF THE CREDITORS WERE PAID IN SUBSEQUENT YEAR AND THAT TOO THOUGH BANKING CHANNELS. IN THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ITA NO. 989 /2018 & CO 112/18 :- 10 -: DIRECTIONS BY THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) CANNOT BE CONSIDERED AS INAPPROPRIATE. LD. ASSESSING OFFIC ER CAN VERIFY THE SUPPORTING DOCUMENTS FILED BY THE ASSESSEE FOR CORR OBORATING THE BALANCES IN VARIOUS SUNDRY CREDITORS AND GIVE APP ROPRIATE RELIEF TO THE ASSESSEE. WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). GROUND NO .4 OF THE REVENUE STANDS DISMISSED. 18. VIDE ITS GROUND NO.5, GRIEVANCE OF THE REVENUE IS T HAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE L D. ASSESSING OFFICER TO VERIFY THE CLAIM OF BUSINESS PROMOTION A ND SALARY EXPENDITURE AGGREGATING F12,99,384/-. 19. ASSESSEE HAD CLAIMED TOTAL EXPENDITURE OF F25,98,76 7/- AGAINST BUSINESS PROMOTION AND SALARY. LD. ASSESSIN G OFFICER HAD MADE A DISALLOWANCE OF 50% THEREOF DUE TO FAILURE OF TH E ASSESSEE TO PRODUCE BILLS AND VOUCHERS. WHEN THE MATTER REACHED LD. COMMISSIONER OF INCOME TAX (APPEALS), LD. CIT(A) NO TING THAT THE PAYMENTS WERE MOSTLY THROUGH BANKING CHANNELS DIREC TED THE LD. ASSESSING OFFICER TO VERIFY THE BILLS AND VOUCHERS AND ALLOW THE CLAIM TO THE EXTENT IT WAS PROPERLY SUPPORTED. AS MENTIONED BY US, WE DO NOT FIND ANY LACUNA IN THE DIRECTIONS GIVEN BY THE LD. COMMISSIONER OF ITA NO. 989 /2018 & CO 112/18 :- 11 -: INCOME TAX (APPEALS) FOR VERIFYING THE EVIDENCE FIL ED BY THE ASSESSEE. GROUND NO.5 OF THE REVENUE STANDS DISMISSED. 20. VIDE ITS GROUND NO.6, GRIEVANCE OF THE REVENUE IS T HAT DEDUCTION OF F22,500/- CLAIMED U/S.80G OF THE ACT F OR DONATION MADE WAS ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX ( APPEALS). 21. LD. ASSESSING OFFICER HAD DISALLOWED SUCH CLAIM FOR WANT OF EVIDENCE. IT SEEMS, BEFORE THE LD. COMMISSIONER O F INCOME TAX (APPEALS), ASSESSEE HAD PRODUCED EVIDENCE FOR DONE ES APPROVAL UNDER SECTION 80G OF THE ACT. LD. COMMISSIONER OF I NCOME TAX (APPEALS) HAD GIVEN DIRECTIONS TO THE LD. ASSESSING OFFICER TO VERIFY THE CLAIM AND ALLOW TO THE EXTENT, AS PER LAW. WE DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). GROUND NO.6 OF THE REVENUE STANDS DISMIS SED. 22. AS ALREADY MENTIONED BY US, REVENUE HAS RAISED A GE NERAL ISSUE IN ITS GROUND NO.7, ASSAILING DIRECTIONS GIVE N BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR EXAMINING THE EVIDENCE FILED BY THE ASSESSEE AND FOR GIVING APPROPRIATE RE LIEF TO THE ASSESSEE. IT IS TRUE THAT FINANCE ACT, 2001 OMITTED WORDS POWERS TO SET ASIDE OR EXAMINING THE ISSUE AFRESH FROM SECTION 251 (1) ( A) OF THE ACT. HOWEVER, AS ALREADY MENTIONED BY US, DIRECTIONS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WERE NOT AKIN TO A DIRECTION FOR ITA NO. 989 /2018 & CO 112/18 :- 12 -: EXAMINING THE ISSUE AFRESH. THERE WAS NO SETTING AS IDE AS WELL. WHAT WAS DIRECTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS TO EXAMINE THE EVIDENCE FILED BY THE ASSESSEE AND G IVE APPROPRIATE RELIEF. GROUND NO.7 OF THE REVENUE STANDS DISMISSED . 23. NOW, WE TAKE UP CROSS OBJECTIONS FILED BY THE ASSE SSEE. 24. CROSS OBJECTIONS HAVE BEEN FILED WITH A DELAY OF THIRTY TWO DAYS. CONDONATION PETITION HAS BEEN FILED. REASON S SHOWN FOR THE DELAY SEEMS TO BE JUSTIFIED. LD. DEPARTMENTAL REPRE SENTATIVE DID NOT RAISE ANY SERIOUS OBJECTION. DELAY IS CONDONED. C ROSS OBJECTIONS ARE ADMITTED. 25. ASSESSEE HAS RAISED FOUR GROUNDS IN CROSS OBJECTI ON, WHICH ARE REPRODUCED HEREUNDER:- 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ORDER OF TH E ASSESSING OFFICER IS WITHOUT JURISDICTION, IS CONTR ARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTIC E AND FAIR PLAY. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF GIFTS RECEIVED FROM THE RELATIVES, WHICH IS NOT TAX ABLE AS PER THE PROVISIONS OF SECTION 56(2) (VII). 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE LD. ASSESSING OFFICER OUGHT NOT TO HAVE ADDED THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES. 4. THE APPELLANT CRAVES LEAVE TO ADD /ALTER ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING . ITA NO. 989 /2018 & CO 112/18 :- 13 -: APART FROM THIS, ASSESSEE HAD ALSO FILED AN ADDITI ONAL GROUND, WHICH READS AS UNDER:- FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER ERR ED IN DISALLOWING THE EXPENSES INCURRED FOR THE PURPOSE O F BUSINESS AS PERSONAL EXPENSES . 26. LD. ASSESSING OFFICER HAD DENIED THE CLAIM OF EXEMP TION ON GIFTS AGGREGATING F93,200/- MADE BY THE ASSESSEE, R ELYING ON EXPLANATION (E) TO SECTION 56(2) (VII) OF THE ACT. ASSESSEE HAD GIVEN THE BREAKUP OF THE SUM OF F93,200/- AS UNDER:- SL.NO NAME RELATIONSHIP AMOUNT IN F 1 RAKESH P. SHETH HUSBAND 25,000 2 JYOTHICHUNDUR MOTHER 15,000 3 PREMSAICHUNDUR BROTHER 15,000 4 STAFF STAFF 5,000 5 PREMKUMAAR K.SHETH FATHER-IN-LAW 33,200 TOTAL 93,200 LD. ASSESSING OFFICER MADE THE ADDITION, SINCE AS SESSEE COULD NOT PROVE HER RELATIONSHIP WITH THE DONORS NOR FILED ANY CONFIRMATIONS. ITA NO. 989 /2018 & CO 112/18 :- 14 -: EVEN BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS ), ASSESSEE DID NOT PRODUCE ANY CONFIRMATIONS IN THIS REGARD. 27. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE SUBMI TTED THAT THE GIFTS WERE RECEIVED FROM CLOSE RELATIVES AND ASSESSEE WOULD BE ABLE TO PRODUCE CONFIRMATIONS IF GIVEN ONE MORE OPP ORTUNITY. LD. DEPARTMENTAL REPRESENTATIVE DID NOT RAISE ANY STRO NG OBJECTIONS TO THIS. CONSIDERING THE SUBMISSIONS MADE BY THE LD . AUTHORISED REPRESENTATIVE, WE ARE OF THE OPINION THAT ASSESSEE CAN BE GIVEN ONE MORE CHANCE FOR EXPLAINING THE GIFTS OF F93,200/-. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO FIL E EVIDENCE IN SUPPORT OF ITS CLAIM. GROUND NO. 2 OF THE CROSS OB JECTION IS ALLOWED FOR STATISTICAL PURPOSE. 28. VIDE ITS GROUND NO.3, GRIEVANCE OF THE ASSESSEE IS THAT AGRICULTURAL INCOME CLAIMED BY IT WAS NOT ALLOWED BUT ADDED AS INCOME FROM OTHER SOURCES. 29. ASSESSEE HAS CLAIMED AGRICULTURAL INCOME OF F5,00, 000/- BUT DID NOT PRODUCE ANY EVIDENCE BEFORE LD. ASSESSING OFFICER. IN ITS APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEA LS), ASSESSEE HAD PRODUCED CHITTA AND ADANGAL FOR CONFIRMING THE NATURE OF THE ITA NO. 989 /2018 & CO 112/18 :- 15 -: LAND AND ALSO A RECEIPT VOUCHER FOR F5,00,000/-. L D. COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE OPINION THAT EVIDEN CE FILED BY THE ASSESSEE IN THE NATURE OF SELF VOUCHER DID NOT REV EAL ANY AGRICULTURAL ACTIVITIES CARRIED OUT BY THE ASSESSEE. IN OUR OPI NION, MERE PRODUCTION OF CHITTA AND ADANGAL WOULD NOT SHOW THAT ASSESSEE WAS DOING AGRICULTURAL ACTIVITIES OR EARNING ANY AGRICULTURA L INCOME. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD SPECIFICAL LY NOTED THAT VOUCHERS PRODUCED BY THE ASSESSEE DID NOT GIVE ADDR ESS OF THE PARTIES. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPI NION THAT LOWER AUTHORITIES WERE JUSTIFIED IN REJECTING THE CLAIM O F AGRICULTURAL INCOME. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). GROUND NO.3 O F THE CROSS OBJECTION OF THE ASSESSEE STANDS DISMISSED. 30. IN THE ADDITIONAL GROUNDS FILED, GRIEVANCE OF THE ASSESSEE IS THAT EXPENDITURE AGGREGATING F10,63,769/- WAS D ISALLOWED BY THE LOWER AUTHORITIES CONSIDERING, IT TO BE PERSONAL IN NATURE. 31. LD. ASSESSING OFFICER HAD FOUND THAT ASSESSEE HAD DEDUCTED A SUM OF F10,63,769/- FROM THE NET PROFIT OF HER PR OPRIETORSHIP ITA NO. 989 /2018 & CO 112/18 :- 16 -: CONCERN CALLED M/S. CLOVER DESIGN STUDIO. BREAKUP OF THE SUCH EXPENDITURE GIVEN BY THE ASSESSEE WAS AS UNDER:- PERSONAL EXPENSES CLAIMED INTEREST PAID 78,619 AUDIT FEES 1,750 GENERAL EXPENSES 4,06,747 BANK CHARGES & PROCESSING FEES 1,24,820 PRINTING AND STATIONERY 11,221 ELECTRICITY CHARGES 71,076 REPAIRS & MAINTENANCE 74,356 TELEPHONE EXPENSES 18,930 TRAVELLING EXPENSES 92,005 BU SINESS PROMOTION EXPENSES 1,84,245 TOTAL IN F 10,63,769 SINCE ASSESSEE DID NOT OFFER ANY BUSINESS INCOME O THER THAN HER INCOME FROM M/S. CLOVER DESIGN STUDIO, LD. ASSESSIN G OFFICER DISALLOWED THE CLAIM. LD.CIT (APPEALS) HAD CONFIR MED THE DISALLOWANCE OBSERVING THAT ASSESSEE COULD NOT GIVE ANY EVIDENCE TO PROVE THAT EXPENDITURE WAS EXCLUSIVELY INCURRED FO R BUSINESS OF THE ASSESSEE. ITA NO. 989 /2018 & CO 112/18 :- 17 -: 32. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE ARGUE D THAT ASSESSEE, IN ADDITION TO HER PROPRIETORSHIP M/S . CLOVER DESIGN STUDIO, WAS ALSO DOING BUSINESS IN HER INDIVIDUAL NAME. AS PER THE LD. AUTHORISED REPRESENTATIVE, THE EXPENDITURE OF F 10,63,769/- WAS INCURRED IN THE BUSINESS CONDUCTED IN INDIVIDUAL NA ME. AS AGAINST THIS, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASS ESSEE COULD NOT PRODUCE ANY EVIDENCE FOR THIS. 33. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. THE CLAIM WAS DISALLOWED FOR A REASON THAT THE EXPE NSES WERE PERSONAL IN NATURE. HOWEVER A PERUSAL OF THE BREA K-UP OF THE CLAIM REPRODUCED BY US AT PARA 30 ABOVE, CLEARLY SHOWS TH AT, IT INCLUDED AUDIT FEES, BANK CHARGES, TRAVELLING EXPENSES ETC. WE CANNOT BRUSH ASIDE THE CLAIM OF THE ASSESSEE THAT SHE WAS DOING BUSINESS IN HER INDIVIDUAL NAME ALSO IN ADDITION TO BUSINESS IN THE NAME OF M/S. CLOVER DESIGN STUDIO. CONSIDERING THE FACTS AND CI RCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ENDS OF JUSTICE W ILL BE MET IF 50% OF THE CLAIM IS ALLOWED. ACCORDINGLY, WE DIRECT THE LD . ASSESSING OFFICER TO ALLOW 50% OF THE CLAIM OF F10,63,769/-. ADDITIONAL GROUND OF THE ASSESSEE ARE PARTLY ALLOWED. ITA NO. 989 /2018 & CO 112/18 :- 18 -: 34. TO SUMMARIZE THE RESULTS, APPEAL OF THE REVENUE IS DISMISSED WHEREAS THAT OF CROSS OBJECTION OF THE AS SESSEE IS PARTY ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 20TH DAY OF NOV EMBER, 2018, AT CHENNAI. SD/- SD/- ( ' # ' $ . %& ) ( DUVVURU RL REDDY ) ( / JUDICIAL MEMBER ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER / CHENNAI / DATED: 20TH NOVEMBER, 2018. KV ! ' #$ %$ / COPY TO: 1 . &' / APPELLANT 3. ( () / CIT(A) 5. $+, ' - / DR 2. '.&' / RESPONDENT 4. ( / CIT 6. ,/ 0 / GF