ITO, Mangalore V. Dr. Prathibha Kini, Mangalore

ITA 1042/BANG/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9417 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 28-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Rejection of books of accounts; Gift; Business income
• Section: 133A; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1042/BANG/08 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER, WARD 2(2), MANGALORE. : APPELLANT VS. DR. (MRS.) PRATHIBHA KINI, KARKALA NURSING HOME, KARKALA. : RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI RESPONDENT BY : SHRI V. SRINIVASAN O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THE REVENUE HAS COME UP WITH THE PRESENT APPEAL, AGGRIEVED BY THE FINDING OF THE LD.CIT(A),MANGALORE , IN THE CASE OF DR. PRATHIBHA KINI FOR THE ASSESSMENT YEAR [AY] 2005-06 . 2. THE REVENUE HAS RAISED TWELVE EXHAUSTIVE GROUNDS OF APPEAL. ON A PERUSAL, GROUND NOS: 1, 11 AND 12 ARE GENERAL AND N OT SPECIFIC WHICH, IN OUR CONSIDERED VIEW, DO NOT SURVIVE FOR ADJUDICATIO N. THE REMAINING ITA NO.1042/B/08 PAGE 2 OF 13 GROUNDS, FOR THE SAKE OF CLARITY AND PROPER UNDERST ANDING, ARE REFORMULATED IN A CONCISE MANNER AS UNDER: (1) THE CIT(A) ERRED IN ALLOWING THE GIFTS OF RS.5.48 L AKHS AS GENUINE DESPITE THE EVIDENCE ON RECORD THE GIFTS AGGREGATIN G TO RS.39.4 LAKHS FROM THE ASSESSEES BROTHERS AND BROTHER-IN-L AW FOR WHICH CREDITWORTHINESS WAS NOT ESTABLISHED; - THE FACTS PROVIDED IN CONFIRMATION LETTERS AS THER E IS ANOTHER $2360 BALANCE WITH ME WHICH INDICATES THAT THE ASS ESSEES CLAIM OF GIFT WAS BOGUS; - THE FACT THAT THE ASSESSEE HAD MANAGED TO BRING THE ALLEGED GIFTS OF RS.5.48 LAKHS ON RECORD IN PLACE OF SUPPRE SSED PROFESSIONAL RECEIPTS AS DETERMINED BY THE AO BASED ON THE ACTUAL PROFESSIONAL RECEIPTS ADMITTED BY THE ASSESS EE AFTER THE SURVEY; (2) THE CIT(A) ERRED IN DELETING ADDITION OF RS.70000/- BEING CLOSING STOCK ON THE BASIS THAT THE SAME WAS ESTIMATED BY T HE AO; - ACCEPTING THE ASSESSEES SUBMISSION THAT THE STOCK TALLY WAS TAKEN ON THE CLOSING STOCK AND ON CONSERVATION BASI S ESTIMATED TO A ROUND FIGURE OF RS.25000/- IGNORING THE FACT T HAT IN FORM NO.3CB AUDIT REPORT AT SL.NO.28(A) WHERE THE QUANT ITATIVE DETAILS OF GOODS WERE REQUIRED TO BE FILLED; - IN NOT CONSIDERING THE FACT THAT THE INVENTORY OF S TOCK WAS TAKEN DURING SURVEY ON 21/3/05 AND VALUED THE STOCK AT RS.68000/- WHICH THE ASSESSEE HAD AGREED TO. THIS WAS CLOSE TO THE ESTIMATED STOCK VALUED AT RS.70000/- BY THE AO; (3) THE CIT(A) ERRED IN DELETING THE ADDITION OF ADVANC E OF RS.13.08 LAKHS BASED ON THE SUBMISSION THAT THE SAME WAS GIV EN TO DR.B.MANJUNATH KINI [HUF]; - ADDITION WAS MADE AFTER VERIFICATION OF THE BALAN CE SHEET AND STATEMENT OF ACCOUNTS OF DR.KINI WHEREIN THE SAID ADVANCE WAS NOT FOUND. THIS ASPECT WAS OVERLOOKED BY THE CIT(A). 3. THE ASSESSEE [DR. PRATHIBHA KINI] IS A PROPRIETR IX OF KARKALA NURSING HOME AND A PRACTICING DOCTOR. THE NURSING HOME OF THE ASSESSEE WAS SUBJECTED TO A SURVEY U/S 133A OF THE ACT ON 21/3/2 005. THE AO, WHILE CONCLUDING THE ASSESSMENT PROCEEDINGS, MADE THREE M AJORS ADDITIONS ITA NO.1042/B/08 PAGE 3 OF 13 WHICH WERE SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT(A). THE LD.CIT(A), AFTER DUE CONSIDERATION OF THE RIVAL SUBMISSIONS, P ERUSING THE RELEVANT RECORDS AND MATERIALS PLACED BEFORE HIM, HAD GIVEN A FINDING THAT THE FOLLOWING ADDITIONS MADE BY THE AO CANNOT BE SUSTAI NED FOR THE ELABORATE REASONS SET-OUT IN HIS IMPUGNED ORDER: 3.1. THE ADDITIONS DELETED BY THE LD.CIT(A) UNDER T HE EACH HEAD, ARE AS UNDER: (I)TREATING THE AMOUNT RECEIVED FROM SRI PRAKASH N. NAYAK THE ASSESSEES BROTHER WHO RESIDES AT USA, AS SUPPRESSED PROFESSIONAL RECEIPTS OF THE ASSESSEE RS. 5,48,470 (II)ADDITION TOWARDS CLOSING STOCK RS. 70,0 00 (III)ADVANCE TO DR.B.M.KINI RS.13,08, 208 4. AGGRIEVED, THE REVENUE HAS COME UP WITH THE PRES ENT APPEAL. WITH REGARD TO THE DELETION OF RS.548470/- , THE MAIN GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT (A) HAD TERMED THE ALLEGED GIFT S AS GENUINE IN SPITE OF THE EVIDENCES ON RECORD TO SHOW THAT THE ASSESSEE H AD RECEIVED GIFTS AGGREGATING TO RS.39.40 LAKHS FROM HER BROTHERS AND BROTHERS-IN-LAW FOR WHICH THE ASSESSEE COULD NOT ESTABLISH THE CREDITWO RTHINESS OF THE DONORS. FURTHER, THE CIT(A) HAD GROSSLY FAILED TO CONSIDER THE VERY FACT PROVIDED IN THE CONFIRMATION LETTER, QUOTE THERE IS ANOTHER $2360 BALANCE WITH ME - WHICH CLEARLY INDICATES THAT THE ASSESSEES CLAIM OF GIFT AS BOGUS . IT WAS, FURTHER, ARGUED THAT THE ASSESSEE HAD MANAGED TO BR ING THE SO CALLED GIFTS TO THE TUNE OF RS.5.48 LAKHS INTO RECORD IN A SYSTE MATIC MANNER IN PLACE OF SUPPRESSED PROFESSIONAL RECEIPTS AS DETERMINED BY T HE AO, BASED ON ITA NO.1042/B/08 PAGE 4 OF 13 ACTUAL PROFESSIONAL RECEIPTS ADMITTED BY THE ASSESS EE AFTER THE SURVEY. THIS VITAL PIECE OF EVIDENCE HAS BEEN GIVEN A GO-BY , BY THE CIT(A). 4.1. TO BUTTRESS ITS ARGUMENT, THE REVENUE HAD FURN ISHED A PAPER-BOOK CONTAINING 1 8 PAGES WHICH, INTER ALIA, CONSISTS OF COPIES OF LETTERS OF THE DONORS, COPY OF INVENTORY STOCK ETC., 5. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE RELEVANT RECORDS AND THE CASE LAWS ON W HICH RELIANCE WAS PLACED BY EITHER PARTY. 5.1. THE ASSESSEE HAD, IN FACT, FURNISHED THE DETAI LS OF GIFTS RECEIVED DECLARATION OF GIFT, LETTER FROM HER BROTHERS, AFFI DAVIT OF HER BROTHER AT THE TIME OF HIS VISIT TO INDIA, CHEQUE COUNTER-FOILS, C ERTIFICATE FROM THE BANKER - WHICH HAVE BEEN DULY VOUCHED BY THE AO. 5.2. THE PURPORTED LETTER OF SRI PRAKASH NAYAK DATE D 28/1/05, ON THE BASIS OF WHICH THE AO MADE ADDITION; THE RELEVANT P ORTION IS REPRODUCED AS UNDER: I HAVE ENCLOSED A CHEQUE FOR $ 7000 IN YOUR NAME , SO THERE IS ANOTHER $ 2360 BALANCE WITH ME AS O N TODAY. 5.3. THE INFERENCE OF THE AO WAS THAT FROM THE ABOVE, IT CAN BE SEEN THAT NOWHERE THE ABOVE PERSONS MENTIONED IT AS A GI FT. IN ONE LETTER (ANNEXURE B) HE HAS WRITTEN SPECIALLY THERE IS A NOTHER $2360 BALANCE WITH ME, THE MEANING OF THE SAME ONLY THE ASSESSEE CAN EXPLAIN. 5.3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD FILED A LETTER ON 26/12/2006, THE CONTENTS OF WHICH IS REPRODUCED AS UNDER: ITA NO.1042/B/08 PAGE 5 OF 13 1. I HAVE RECEIVED GIFT OF RS.3088665/- DURING 200 0-01 TO 2005-06 FROM MY YOUNGER BROTHER BY NAME MR.N.PRAKASH NAYAK. HE IS A NRI WORKING IN DEPARTMENT OF INTENSIVE CARDIOLOGY, USA. I AM ENCL OSING THE INTERNET E- MAIL COPY OF AFFIDAVIT [DECLARATION OF GIFT] ATTEST ED BY NOTARY. THE ORIGINAL AFFIDAVIT DOCUMENTS WILL BE PRODUCED WITHIN A WEEK. 2. THE GIFT OF $8370 DURING THE FINANCIAL YEAR 2001 -2002 FROM MY ANOTHER YOUNGER BROTHER NRI WORKING IN INTENSIVE ANAESTHESI A CARE USA. NOW HE HAS COME TO INDIA. AFFIDAVIT DECLARATION OF GIFT A TTACHED. 3. I HAVE RECEIVED GIFT OF RS.2,29,750/- FROM MR. SRINIVASA SHENOY AND RS.229500/- FROM MR. SHANKAR SHENOY DURING THE FINA NCIAL YEAR 2003-04. BOTH OF THEM ARE MY BROTHERS-IN-LAW WORKING IN USA SINCE MANY YEARS. THE CERTIFICATES FROM CANARA BANK, KARKALA HAS BEEN PRO DUCED. AS THEY ARE IN USA, IT WILL TAKE SOME TIME FOR ME TO GET THE CONFI RMATIONS. I SHALL SUBMIT THE AFFIDAVIT CERTIFICATES BY NOTARY AND THE CONFIR MATION CERTIFICATES OF MR.SHANKAR SHENOY AND MR.SRINIVAS SHENOY FROM USA W ITHIN A MONTH. 4. THE AMOUNTS WERE EITHER REMITTED FROM OUTSIDE INDIA OR GIFTED OUT OF THEIR NRE BANK ACCOUNTS. AS PER THE FEMA/FERA, CRE DITS TO NRE BANK ACCOUNTS CONSIST ONLY OF REMITTANCES MADE FROM ABRO AD AND REMITTED INTO THEIR NRE ACCOUNTS IN INDIA. THEY HAVE MADE THE GI FTS OUT OF THEIR NATURAL LOVE AND AFFECTION TOWARDS ME. IN SUPPORT OF MY SU BMISSION, I AM ENCLOSING THE AFFIDAVIT BY DONORS CONFIRMING THE GIFTS. INCO ME CERTIFICATE, SALARY CERTIFICATE WITH INCOME-TAX PAYMENT AT USA BY MR.PR AKASH NAYAK HAS BEEN ENCLOSED. I HAVE ALREADY ENCLOSED THE CERTIFICATES ISSUED BY THE BANK REGARDING THE GIFTS. 5.3.2. THE AO HAD, IN THE ASSESSMENT ORDER, OBSERV ED THAT IT IS REALLY SURPRISING WHETHER SUCH HUGE GIFTS CAN BE GI VEN BY THESE MARRIED PEOPLE WHO HAVE THEIR FAMILIES. MOREOVER, THE SALA RY DRAWN AT USA IS JUST SUFFICIENT TO MAINTAIN THE FAMILY AND STANDARD OF L IVING AT ABROAD. EVEN IF THE GIFTS WERE GIVEN OUT OF LOVE AND AFFECTION, IT WILL BE GIVEN OCCASIONALLY AND ON CERTAIN EVENTS. THE OBSERVATION FOUND HERE I N THIS CASE IS THAT GIFTS ARE GIVEN EVERY YEAR AND THAT TOO BY EVERYBODY ABRO AD WITHOUT ANY SPECIFIC OBLIGATION. FURTHER, IN THE LETTERS ORIGINALLY ISSU ED BY STATED TO BE DONORS NOWHERE IT IS STATED THAT IT IS GIFT, BUT INFERS L IKE A LOAN REPAYMENT ITA NO.1042/B/08 PAGE 6 OF 13 5.4. AFTER DUE CONSIDERATION OF THE ASSESSEES SUBM ISSIONS AND ALSO EXTENSIVELY QUOTING THE REASONING OF THE AO, THE CI T(A) HAD CONCLUDED THUS, 4.7. IDENTICAL ISSUE HAD COME BEFORE MY PREDECESSO R WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2004-05. IN THAT YEAR AL SO, THE ISSUE OF GIFT RECEIVED BY THE APPELLANT FROM BROTHER WAS INVOLVED . THE CIT(APPEALS), MANGALORE VIDE ORDER DATED:29/3/2007 HAD DELETED TH E ADDITION, WHICH THE ASSESSING OFFICER HAD MADE TREATING THE GIFTS AS SU PPRESSED PROFESSIONAL RECEIPTS OF THE APPELLANT RECEIVED BY WAY OF SYSTEM ATIC TRANSFER. THE CIT(APPEALS), MANGALORE, WHO DECIDED THE APPEAL FOR AY 2004-05 HAD FOUND THAT THE APPELLANT HAS PROVED THE IDENTITY. THE APPELLANT HAD ALSO PROVED THAT MONEY WAS RECEIVED THROUGH BANKING CHAN NELS. THE APPELLANT HAD ALSO PROVED THAT THE DONOR HAD SUFFICIENT RESOU RCES TO MAKE A GIFT TO THE APPELLANT. THE APPELLANT HAD PRODUCED CONFIRMATION FROM THE DONOR ALSO. THEREFORE, IN VIEW OF THESE FACTS AND ALSO IN VIEW OF THE FACT THAT ASSESSING OFFICER HAS NO EVIDENCE WHATSOEVER TO ADDUCE IN SUP PORT OF HIS CONTENTIONS EVEN AFTER A SURVEY U/S 133A OF INCOME-TAX ACT AT T HE PREMISE OF THE APPELLANT, THE CIT(APPEALS) MANGALORE HAD DELETED T HE ADDITION MADE ON THIS ACCOUNT. THE FACTS BEING SAME IN AY 2005-06, THE DECISION TAKEN BY THE CIT(A) IN AY 04-05 IS RELIED UPON BY ME WHILE DELET ING THE ADDITION OF RS.548470/- IN ASSESSMENT YEAR 2005-06. 5.5. DURING THE COURSE OF HEARING, THE LD. D R HAD PLACED STRONG RELIANCE ON THE FOLLOWING CASE LAWS: (I) IN THE CASE OF TIRATH RAM GUPTA V. CIT REPORTED IN (2008) 304 ITR 145, THE HONBLE HIGH COURT OF PUNJAB AND HARYA NA HAS OBSERVED THUS , TO SEE THE GENUINENESS OF A GIFT, THE TEST OF HUMAN PROBABILITY IS THE MOST APPROPRIATE. A GIFT C ANNOT BE ACCEPTED AS SUCH TO BE GENUINE, MERELY BECAUSE THE AMOUNT HAS COME BY WAY OF A CHEQUE OR DRAFT THROUGH BANKING CH ANNEL, UNLESS THE IDENTITY OF THE DONOR, HIS CREDITWORTHINESS, RE LATIONSHIP WITH THE DONEE AND THE OCCASION IS PROVED. WITH DUE RESPECTS, WE FIND THAT IN THE PRESENT CASE , THE IDENTITY OF THE DONOR(S), HIS/THEIR CREDITWORTHINESS AND THEIR REL ATIONSHIPS TO THE ASSESSEE (DONEE) HAVE BEEN PROVED, WHICH, IN OUR VIEW, HAVE NOT BEEN CONTRADICTED BY THE ASSESSING OFFICER. HENCE, THE ABOVE CASE IS DISTINGUISHABLE; ITA NO.1042/B/08 PAGE 7 OF 13 (II) IN THE CASE OF SANDEEP KUMAR (HUF) V. CIT REPO RTED IN (2007) 293 ITR 294, THE HONBLE HIGH COURT OF DELHI HAD AN OCCASION TO DEAL WITH A SIMILAR CASE. THE HONBLE COURT WAS PL EASED TO HOLD THAT MERE IDENTIFICATION OF DONOR AND SHOWING THE MOVEM ENT OF GIFT AMOUNT THROUGH BANKING CHANNELS IS NOT SUFFICI ENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF THE GI FT IS MADE BY THE ASSESSEE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLIS H THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. WITH RESPECTS, WE WOULD LIKE TO POINT OUT THAT THE CASE LAW ON WHICH THE REVENUE PLACED RELIANCE IS IN FACT IN FAVOUR OF THE PRESENT ASSESSEE. AS PER THE NORMS SET BY THE HONBLE COURT REFERRED SUP RA, THE PRESENT ASSESSEE HAD, INDEED, ESTABLISHED THE IDENTITY OF T HE PERSON(S) WHO MADE THE GIFT(S) AND THEIR CAPACITIES TO MAKE SUCH GIFT( S) AND, THUS, DISCHARGED THE ONUS CAST UPON HER. 5.6. FURTHER, THE HONBLE ITAT, BANGALORE A BENCH IN ITA NO:833(BANG)/2007 AND IN ITA NO:741(BANG)/2007 [BY THE REVENUE] DATED: 30 TH JUNE, 2008 IN THE ASSESSEES OWN CASE FOR THE AY 2 004-05 HAD AN OCCASION TO CONSIDER AN IDENTICAL ISSUE. AFTER DELIBERATING IN AN EXHAUSTIVE MANNER, HAS OBSERVED THUS 8.2. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE ARE NOT DECLINED TO INTERFERE WITH THE F INDINGS OF THE CIT(A). THE ASSESSEE DISCHARGED THE ONUS CAST UPON HIM (SIC) HER. THE AMOUNTS UNDER CONSIDERATION RECEIVED STANDS EST ABLISHED. ALL THE THREE PERSONS ARE DONORS AND IMMEDIATE RELATIVE S OF THE ASSESSEE. THE MONEY HAS COME THROUGH PROPER BANKIN G CHANNEL. THE ASSESSEE HAS ALSO ESTABLISHED THAT ALL THE THRE E PERSONS HAVE ADEQUATE SOURCE OF INCOME TO THE EXTENT OF DONATION OFFERED TO THE ASSESSEE. THE CONFIRMATION LETTERS HAVE ALSO BEEN FILED IN THIS REGARD. THE AO HAS BROUGHT NOTHING ON RECORD TO DO UBT THE GENUINENESS AND CREDIT WORTHINESS OF THE DONORS. E VEN AFTER SURVEY, NOTHING WAS FOUND ON RECORD TO FALSIFY THE GIFTS IN QUESTION. ITA NO.1042/B/08 PAGE 8 OF 13 THE AO HAS NOT CO-RELATED THE GIFTS WITH UNACCOUNTE D MONEY OF ASSESSEE IN ANY MANNER. WE ALSO FIND THAT SIMILAR GIFTS HAVE BEEN RECEIVED BY THE ASSESSEE IN THE PAST. THE REVENUE HAS NOT DISPUTED THE SAME. UNDER THE FACTS AND CIRCUMSTANCES, THE C IT(A) WAS JUSTIFIED IN DELETING THE ADDITION IN QUESTION. TH E SAME IS UPHELD. 5.7. IN FACT, THE ASSESSEE HAD DISCHARGED THE ONUS CAST UPON HER THE IDENTITY OF THE DONOR(S), THEIR CREDITWORTHINESS, R ELATIONSHIPS WITH THE DONEE HAVE SINCE BEEN PROVED WHEREAS THE ASSESSING OFFI CER HAS NOT BROUGHT ON RECORD ANY COMPREHENSIVE EVIDENCE TO THE CONTRAR Y. 5.8. IN OVER ALL CONSIDERATION OF THE FACTS AND RES PECTFULLY FOLLOWING THE HONBLE TRIBUNALS FINDING REFERRED SUPRA, WE HAVE NO HESITATION IN UPHOLDING THE FINDING OF THE CIT (A) ON THIS COUNT. 6. THE SECOND EFFECTIVE GROUND OF THE REVENUE IS THE DELETION OF THE ADDITION MADE TOWARDS CLOSING STOCK OF RS.70000/-. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD SHOWN TOTAL COST AND PUR CHASE OF MEDICINE AT RS.323390/- WHEREAS TOTAL SALES OF MEDICINES AND CL OSING STOCK WAS SHOWN AT RS.399577/- INCLUDING ROUND FIGURE OF CLOSING ST OCK OF RS.25000/- WHICH IS UNUSUAL IN A MEDICAL SHOP TO ARRIVE AT A ROUND F IGURE OF CLOSING STOCK. AS THE ASSESSEE HAD FAILED TO PROVE AS TO HOW SHE HAD ARRIVED AT A ROUND FIGURE OF CLOSING STOCK WITHOUT SHOWING THE BASIS O F VALUATION AND PARTICULARS OF QUANTITY, HE HAD ADOPTED A CLOSING S TOCK OF RS.70000/- AS UNDISCLOSED STOCK ON AN ESTIMATED BASIS. 6.1. THIS WAS OBJECTED TO BY THE ASSESSEE BEFORE THE CIT (A). THE CIT (A) WAS OF THE VIEW THAT THE SURVEY WHICH TOOK PLAC E ON 12/3/2005 AND NOTHING WAS FOUND AT THE PREMISES OF THE ASSESSEE. MOREOVER, THE AO HAD ITA NO.1042/B/08 PAGE 9 OF 13 NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SINCE THE BASIS ON WHICH THE AO HAD ESTIMATED THE CLOSING STOCK AT RS. 70000/- WAS NOT EXPLAINED IN THE ASSESSMENT ORDER, THE CIT (A) CHOS E TO DELETE THE ADDITION. 6.2. IT WAS CONTENDED BY THE REVENUE THAT THE INVEN TORY OF STOCK WAS TAKEN DURING SURVEY ON 21/3/2005 AND VALUATION OF STOCK W AS RS.68600/- AS ON THE DATE OF SURVEY WHICH THE ASSESSEE HAD AGREED TO . ON THE BASIS OF INVENTORY OF STOCK TAKEN DURING SURVEY, THE AO HAD ADOPTED THE FIGURE OF RS.70000/- AS UNDISCLOSED STOCK AS IN LAST YEAR AND THUS PLEADED THAT THE SAME MAY BE UPHELD. 6.3. ON A PERUSAL OF THE INVENTORY OF SOCK TAKEN DU RING SURVEY ON 21/3/2005, WE FIND THAT THE CLOSING STOCK, TO BE PR ECISE, OF RS.68606.64 WAS ARRIVED AT WHICH WAS AUTHENTICATED BY THE ASSES SEE HERSELF. THIS VERY FACT HAS BEEN OVERLOOKED BY THE CIT (A), PERHAPS BY OVER-SIGHT, WHILE DECIDING THIS ISSUE. 6.4. THE HONBLE TRIBUNAL HAD AN OCCASION TO DEA L WITH A SIMILAR ISSUE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IN THE AS SESSEES OWN CASE. THE AO MADE AN ADDITION OF CLOSING STOCK AT RS.63,0 00/- ON ESTIMATED BASIS, IN ADDITION TO THE DECLARED CLOSING STOCK OF RS.20,000/-. ON APPEAL, THE CIT (A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.30000/-. AFTER CONSIDERING THE PROS AND CONS OF THE ISSUE, THE HON BLE TRIBUNAL WAS OF THE VIEW THAT 6.2. AFTER GOING THROUGH THE MATERIAL ON RECORD, W E FIND THAT THE CLOSING STOCK SHOWN BY THE ASSESSEE IS ON ESTIMATE BASIS. THE AO ITA NO.1042/B/08 PAGE 10 OF 13 MADE ADDITION BY ENHANCING ESTIMATION WITHOUT SUBST ANTIATING THE SAME. BY TAKING OVER ALL VIEW, THE CIT(A) WAS JUSTI FIED IN DIRECTING THE AO TO ADOPT THE CLOSING STOCK AT RS.50000/- AND ACCORDINGLY HE WAS JUSTIFIED IN SUSTAINING THE ADDITION OF RS.30,0 00/-. 6.5. ADOPTING THE SAME ANALOGY, AS THE ISSUE IS SIMILAR IN NATURE, THE AO IS DIRECTED TO ADOPT THE CLOSING STOCK AT RS.350 00/- + RS.25000/- [AS ESTIMATED BY ASSESSEE HERSELF] INSTEAD OF RS.70000/ - + 25000/- ADOPTED BY THE AO IN THE IMPUGNED ORDER . IN A NUT-SHELL, THE ASSESSEE GETS A RELIEF OF RS.35000/- ON THIS COUNT. THIS VIEW HAS BEEN TAKEN, KEEPING IN VIEW OF THE FACT THAT THE CLOSING STOCK OF RS.70000/- [IN A DDITION TO ESTIMATION OF RS.25000/- BY THE ASSESSEE HERSELF] ON ESTIMATION B Y THE AO WITHOUT SUBSTANTIATING THE SAME, IN OUR CONSIDERED VIEW, WA S ON THE HIGHER SIDE. 7. THE LAST EFFECTIVE GROUND OF THE REVENUE IS THE DELETION OF THE ADDITION OF ADVANCE OF RS.13.08 LAKHS BASED ON THE SUBMISSION THAT THE SAME WAS GIVEN TO DR.B.MANJUNATH KINI [HUF]. 7.1. ON VERIFYING THE STATEMENT OF ACCOUNTS AND BAL ANCE SHEET OF THE ASSESSEE, THE AO FOUND THAT THE ASSESSEE HAD ADVANC ED RS.13.08 LAKHS TO SRI B.M.KINI. WHEN COMPARED WITH THE BALANCE SHEET AND STATEMENT OF ACCOUNTS OF B.M.KINI [ASSESSEES HUSBAND], THE SAME HAS NOT BEEN REFLECTED AND, THUS, CONCLUDED THAT THE ASSESSEE HA D SUPPRESSED HER PROFESSIONAL INCOME AND HAD SHOWN THE SAID AMOUNT A S ADVANCE TO SHRI KINI. ACCORDINGLY, THE SAID AMOUNT WAS ADDED TO HER TOTAL INCOME. 7.2 AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH THE CIT(A). THE ASSESSEE IN HER LETTER DATED 26/5/2008 SUBMITTED TH AT THE SAID AMOUNT HAD, ITA NO.1042/B/08 PAGE 11 OF 13 IN FACT, GIVEN TO DR.B.M.KINI [HUF] AND BY MISTAKE ENTERED IN THE BALANCE SHEET OF THE ASSESSEE AS DR.B.M.KINI [INDL]. 7.3. TAKING CUE FROM THE ASSESSEES ASSERT ION, THE CIT(A) WENT ON TO ADD THAT 9.3. WHAT IS RELEVANT IN THIS APPEAL IS THE FACT TH AT ASSESSING OFFICER HAS MADE ADDITION FOR RS.1308208/- WHICH THE APPELL ANT HAS GIVEN AND NOT TAKEN. IF THE AMOUNT GIVEN IS REFLECTED IN THE BAL ANCE SHEET, NO ADDITION CAN BE MADE UNLESS THE ASSESSING OFFICER DISPUTES THE S OURCE OF THIS AMOUNT IN THE CASE OF THE APPELLANT. THE ASSESSING OFFICER H AS NOT DISPUTED THE SOURCE OF THIS MONEY WHICH SHE HAS ADVANCED. UNDER THESE CIRCUMSTANCES, THE FACT THAT MONEY HAS GONE TO DR.B.M.KINI [HUF] AND NOT TO DR.B.M.KINI IS OF NO RELEVANCE FOR MAKING ADDITION IN THE TOTAL INCOME O F THE APPELLANT. THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER F OR RS.13,08,208/- IS HEREBY DELETED. 7.4. IT WAS CONTENDED THAT THE AO HAD MADE THE ADDITION AFTER DUE VERIFICATION OF BALANCE SHEET AND STATEMENT OF ACCO UNTS OF B.M.KINI. IT WAS, FURTHER, CONTENDED THAT THE SAID AMOUNT WAS ALSO NO T FOUND IN THE BALANCE SHEET OF B.M.KINI [HUF]. 7.5. ON A PERUSAL OF THE IMPUGNED ORDER O F THE AO, WE FIND THAT THE AO HAD NOT CATEGORICALLY ASSERTED THAT THE ALLEGED ADV ANCED AMOUNT WAS NOT FOUND A PLACE IN THE BALANCE SHEET OF EITHER B.M.KI NI [HUF] OR B.M.KINI [INDL]. THIS ISSUE HAS ALSO NOT DEALT WITH IN A P ROPER MANNER EVEN BY THE CIT(A). WE ARE ALSO NOT IN AGREEMENT WITH THE CIT (A)S ASSERTION THAT THE AO HAS NOT DISPUTED THE SOURCE OF MONEY WHICH THE A SSESSEE HAD ITA NO.1042/B/08 PAGE 12 OF 13 ADVANCED. THE AO DID DISPUTE IT, THUS THEREFORE, IT IS VERY WELL CONCLUDED THAT THE ASSESSEE TO THAT EXTENT HAS EITH ER SUPPRESSED HER PROFESSIONAL INCOME OR SHOWN THE AMOUNT AS ADVANCED TO HER HUSBAND. 7.6. THE REVENUE HAD CONTENDED BEFORE U S THAT THIS AMOUNT ADVANCE OF RS.13.08 LAKHS IS NOT FOUND IN THE BALANCE SHEET OF B.M.KINI [HUF]. HOWEVER, BOTH THE ASSESSEE AND THE REVENUE HAS NOT FURNISHED BEFORE US, THE COPIES OF THE STATEMENTS OF ACCOUNTS AND BALANC E SHEETS OF B.M.KINI [HUF] AND B.M.KINI [INDL] FOR PERUSAL OF THIS BENCH , TO CLEAR THE AIR. NEITHER THE LD. CIT (A) NOR THE LD. AO HAS DISCUSSED THE IS SUE BASED ON THE STATEMENT OF ACCOUNTS SUCH AS BALANCE SHEET, PROFIT AND LOSS A/C, CASH FLOW STATEMENTS ETC. IN THIS CIRCUMSTANCE WE ARE NO T IN A POSITION TO DECIDE THE ISSUE EVEN ON MERITS IN THE ABSENCE OF PROPER F EED BACK. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSU E SHOULD BE REMITTED BACK ON THE FILE OF THE AO TO VERIFY THE FACTS AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY . 8. IN THE RESULT, THE REVENUES APPEAL IS PARTL Y ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUGUST, 2009. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 7 TH AUGUST, 2009. DS/- ITA NO.1042/B/08 PAGE 13 OF 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.