Smt. Meena Garg, Yamunanagar V. DCIT, Chandigarh

ITA 1165/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73474 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 18-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 1165 TO 1170/CHD/2013 ASSESSMENT YEARS: 2002-03 TO 2007-08 SMT. MEENA GARG, VS THE DCIT, CENTRAL CIRCLE-II, YAMUNANAGAR CHANDIGARH PAN NO. ABOPG2721J (APPELLANT) (RESPONDENT) DATE OF HEARING : 24.02.3014 DATE OF PRONOUNCEMENT : 26.02.2014 APPELLANT BY : SHRI ROHIT GOEL RESPONDENT BY : SHRI AKHILESH GUPTA ORDER PER T.R.SOOD, A.M. THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGA INST THE COMMON ORDER DATED 24.10.2013 OF LD. CIT(A)(CENTRAL), GURGAON. 2. IN ALL THESE APPEALS, IDENTICAL GROUND HAS BEEN RAI SED WHICH READS AS UNDER:- 1. THE CIT(A) HAVE ERRED IN LAW AND FACTS IN CLUBB ING THE INCOME OF MEENA GARG PROP M/S PUNJAB TRADING CO. YA MUNA NAGAR AS INCOME OF M/S PUNJAB PLYWOOD INDUSTRIES. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT A SE ARCH WAS CONDUCTED IN THIS GROUP. DURING SEARCH, THE STATEMENT OF THE ASSESSE E I.E. SMT. MEENA GARG WAS RECORDED AND THE RELEVANT EXTRACTS WHICH HAS BEEN R EPRODUCED IN THE ASSESSMENT ORDER WHICH READS AS UNDER:- Q. PLEASE STATE WHETHER YOU ARE ASSESSED TO INCOM E TAX OR NOT. 2 ANS. I AM NOT AWARE OF ANY FACT IN THIS REGARD. IT IS MY HUSBAND ONLY WHO KNOWS, WHETHER I PAY INCOME TAX OR NOT. I AM A HOUSEWIFE ONLY AND I DEPEND UPON MY HUSBAND TO TAP THE SOURCE FOR RUNNING HOUSEHOLD ACTIVITIES. Q. PERUSAL OF YOUR RETURN OF INCOME REVEALS THAT Y OU ARE THE PROPRIETOR OF M/S. PUNJAB TIMBER TRADING CO. PLEASE STATE THE DETAILS OF THE TRADING BEING CARRIED OUT BY THI S PROPRIETORSHIP CONCERN. ALSO PLEASE PRODUCE THE REC ORDS / BOOKS OF THIS CONCERN , IF THIS IS ACTUALLY BEING R UN BY YOU. ANS. NO, I AM NOT RUNNING ANY SUCH CONCERN. I DO NO T KNOW ANYTHING ABOUT M/S. PUNJAB TIMBER TRADING CO. SO I DONT HAVE NAY BOOK OF ACCOUNTS NOR ANYTHING WITH REGARD OF THIS FIRM. AS I STATED EARLIER ALSO, I AM A HOUSEWIFE ON LY AND I DONT CONTRIBUTE TO THE BUSINESS ACTIVITIES OF MY H USBAND OR HIS BROTHER IN ANY MANNER WHATSOEVER I JUST SIGN TH E INCOME TAX RETURN AS INSTRUCTED BY MY HUSBAND. Q. DO YOU HAVE ANYTHING TO SAY ANYTHING IN RESPECT OF THE ABOVE? ANS. I HAVE NOTHING TO SAY AS I AM HOUSEWIFE ONLY A ND I AM ABSOLUTELY NOT INVOLVED IN THE BUSINESS ACTIVITIES. MY NAME MAY BE THERE IN THE PAPERS ONLY. 4. LATER ON, A STATEMENT WAS ALSO RECORDED DURING T HE ASSESSMENT PROCEEDINGS WHICH HAS BEEN REPRODUCED AT PARA 1.4 OF THE ASSESS MENT ORDER WHICH READS AS UNDER:- Q1. PLEASE STATE IF YOU ARE EMPLOYED OR HAVE YOUR OWN INDEPENDENT SOURCES OF INCOME. ANS. I AM NOT EMPLOYED BUT HAVE MY OWN INDEPENDENT BUSINESS OF TRADING OF TIMBER. Q4. DO YOU MANAGE YOUR CONCERN DIRECTLY ? ANS. NO, I HAVE ENGAGED THE HELP OF 1 WORKER RIGHT NOW- HIS NAME IS RAVINDER Q10. WHO & WHEN DID YOU START THIS BUSINESS. ANS. I STARTED THIS BUSINESS IN 1997 AFTER MY HUSBA ND TOLD ME A BOUT IT. Q11. HAVE YOU EVEN DONE ANY BUSINESS BEFORE ? ANS. NO, BEFORE GETTING MARRIED I WAS TEACHING. 3 Q18. DO YOU SIGN ANY CHEQUES ETC. ANS. YES, THE CHEQUES THAT ARE PRESENTED BY MY HUSB AND. Q23. ON THE DATE OF SEARCH AT YOUR RESIDENCE IN MAR CH 2007 DURING THE COURSE OF SEARCH WAS YOUR STATEMENT RECORDED. ANS. YES. 5. FROM THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD DENIED DOING ANY BUSINESS DURING THE SEARCH. EVEN IN THE STATEMENT RECORDED DURING THE ASSESSMENT PROCEEDINGS SHE FURTHER SUBMI TTED THAT SHE HAD NO KNOWLEDGE WHERE THE BOOKS OF ACCOUNT WERE KEPT. ON THESE FACTS, THE ASSESSING OFFICER CONCLUDED THAT THE PROPRIETARY CONCERN THE PUNJAB TIMBER TRADING CO WAS IN FACT BEING RUN AND OWNED BY PUNJAB PLYWOOD I NDUSTRIES IN WHICH MALE MEMBERS OF THE FAMILY WERE PARTNERS. ACCORDING TO HER, SMT. MEENA GARG I.E. THE ASSESSEE HAS ONLY LENT HER NAME TO THIS BUSINES S AND, THEREFORE, INCOME WAS HELD TO BE BELONGING TO M/S PUNJAB PLYWOOD INDUSTRI ES. 6. ON APPEAL, IT WAS MAINLY SUBMITTED THAT PUNJAB T IMBER TRADING CO WAS A PROPRIETARY CONCERN OF THE ASSESSEE AND THE ASSESS EE HAD INDEPENDENT PAN NUMBER. THIS PROPRIETARY CONCERN WAS STARTED IN 19 97. IT WAS CONTENDED THAT INCOME CAN BE CLUBBED UNDER THE CHAPTER CONTAINING SECTIONS 60 TO 65 AND IF THOSE PROVISIONS ARE INVOKED THEN THE INCOME OF THE WIFE COULD HAVE BEEN AT BEST CLUBBED IN THE HANDS OF HER HUSBAND. THERE IS NO P ROVISION TO CLUB THE INCOME OF AN INDIVIDUAL TO THE INCOME OF SOME OTHER FIRM W HERE HUSBAND IS A PARTNER. FURTHER, A REFERENCE WAS MADE TO THE BENAMI TRANS ACTIONS PROHIBITION ACT 1986 AND IT WAS POINTED OUT THAT TO HOLD THE PROPRI ETARY CONCERN PUNJAB TIMBER TRADING COMPANY AS BENAMI THE INVESTMENT SHOULD H AVE COME FROM M/S PUNJAB PLYWOOD INDUSTRIES WHICH HAS NOT HAPPENED. FURTHER, RELIANCE WAS PLACED ON VARIOUS CASE LAWS SHOWING THAT INCOME COU LD NOT BE CLUBBED. THE LD. CIT(A) EXAMINED THE SUBMISSIONS AND OBSERVED THAT I T WAS WRONG TO STATE THAT ASSESSEE WAS CONFUSED WHEN HER STATEMENT WERE BEING RECORDED U/S 132(4) OF THE 4 ACT WHEN SHE HAS CLEARLY DENIED DOING ANY BUSINESS . THE LD. CIT(A) FURTHER RELIED ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF E.A.E.T. SUNDARARAJ 95 ITR 454 (MAD.) AND CONFIRMED THE ACTI ON OF THE ASSESSING OFFICER. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND PARTICULARLY POINTED OUT THAT THERE IS NO PROVISION UNDER THE ACT BY WHICH INCOME OF AN INDIV IDUAL CAN BE CLUBBED IN THE INCOME OF A FIRM WHERE ASSESSEES HUSBAND IS A PART NER. HE FURTHER SUBMITTED THAT DECISION OF THE HON'BLE MADRAS HIGH COURT IN T HE CASE OF E.A.E.T. SUNDARARAJ 95 ITR 454 (MAD.) (SUPRA) IS DISTINGUIS HABLE ON FACTS BECAUSE IT WAS CLEARLY HELD THAT IT WOULD DEPEND UPON THE FACTS WH ETHER THE PARTICULAR FIRM IS BENAMI OR NOT. IN THAT CASE, ACCORDING TO HIM BU SINESS WAS CARRIED ON IN THE SAME PREMISES AND SOME CAPITAL HAD ALSO GONE FROM T HE EXISTING FIRM TO THE NEW FIRM. 8. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IN THE CASE OF E.A.E.T. SUNDARARAJ 95 ITR 454 (MAD.) ((SUP RA) IT WAS DECIDED UNDER THE OLD ACT. IN ANY CASE IN THAT CASE THE FIRM WAS HELD TO BE BENAMI BECAUSE OF THE FOLLOWING FACTS:- (I) THE TWO PARTNERS OF THE FIRM WERE THE WIFE OF THE KARTA OF THE HINDU UNDIVIDED FAMILY AND THE WIFE OF AN U NDIVIDED MEMBER OF THE HINDU UNDIVIDED FAMILY ; (II) THE CAPITAL PROVIDED BY THE PARTNERS WAS LYING IN DEPOSIT WITH OTHERS AND WAS BRINGING IN SOME INTEREST TO T HE LADIES. 5 (III) THE BUSINESS OF THE FIRM WAS ALSO IN THE SAME LINE AS THAT OF THE ASSESSEE ; AND THERE WAS NO SPECIFIC REASON FOR THE WIVES OF THE MEMBERS OF THE FAMILY STARTING A RIVA L BUSINESS. (IV) THE BUSINESS PREMISES OF THE FIRM WERE THE SAM E AS THE BUSINESS PREMISES OF THE ASSESSEE-FAMILY, AND THE F IRM WAS UTILISING THE ASSESSEE'S OWN TELEGRAPHIC ADDRESS. (V) NEITHER OF THE PARTNERS HAD ANY EXPERIENCE OF T HE BUSINESS AND BOTH THE PARTNERS PROFESSED COMPLETE IGNORANCE OF THE RUNNING OF THE BUSINESS ; AND (VI) THE KARTA OF THE HINDU UNDIVIDED FAMILY, SRI S UNDARARAJ, ACTUALLY CARRIED ON THE FIRM'S BUSINESS. 10. IN THE CASE BEFORE US, NO SUCH FACTS HAVE BEEN BROUGHT ON RECORD. IT HAS NOT BEEN SHOWN THAT ANY MATERIAL WAS BEING PURCHASE D FORM M/S PUNJAB PLYWOOD INDUSTRIES OR ANY AMOUNT HAS COME FROM THAT FIRM. IT IS ALSO NOT BROUGHT ON RECORD THAT BUSINESS WAS CONDUCTED FROM THE SAME PR EMISES. IT IS ONLY ON THE STATEMENT RECORDED DURING THE SEARCH WHERE SMT. MEE NA GARG I.E THE ASSESSEE HAS SAID THAT SHE WAS NOT RUNNING ANY BUSINESS CONC ERN IN THE NAME OF M/S PUNJAB TIMBER TRADING CO BUT LATER ON IN RESPECT OF QUESTION NO. 24, DURING THE ASSESSMENT PROCEEDINGS SHE CLEARLY STATED THAT SHE WAS CONFUSED AND NERVOUS. QUESTION NO. 24 AND ITS ANSWER READS AS UNDER;- Q24. IN THE STATEMENT RECORDED ON THE DATE OF SEA RCH YOU HAVE SPECIFIED THAT YOU ARE NOT FILING ANY RETURN OF INC OME OR HAVE ANY BUSINESS CONCERN. PLEASE CLARIFY AS TO WHY YOU HAD STATED SO WHEN TODAY YOU ARE DOING TIMBER BUSINESS. ANS. I DENIED DOING ANY BUSINESS AS I WAS NERVOUS A ND THOUGHT THE QUESTIONS BEING ASKED RELATED TO MY HUSBANDS BUSIN ESS. 11. EVERY PERSON DURING THE SEARCH SOMETIMES NERVOU S. FURTHER, WE FIND THAT REVENUE HAS NOT SHOWN WHETHER ANY CAPITAL HAS MOVED FROM PUNJAB PLYWOOD 6 INDUSTRIES TO M/S PUNJAB TIMBER TRADING COMPANY. I N THE ABSENCE OF SUCH NEXUS, THERE IS NO PROVISION TO HOLD THAT THE FIRM I.E. M/S PUNJAB TIMBER TRADING CO RUN BY THE ASSESSEE WAS BENAMI OF M/S PUNJAB P LYWOOD INDUSTRIES. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND HOLD THAT M/S PUNJAB TIMBER TRADING COMPANY IS NOT A BOGUS PROPRIETARY C ONCERN. 12. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26,02,2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 26 TH FEBRUARY, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH