Kambala Nookalamma, Gajuwaka V. The ITO, Visakhapatnam

ITA 117/VIZ/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3868 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Gift; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 117 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 20 1 3 - 1 4 ) KAMBALA NOOKALAMMA D.NO.17 - 57 - 21, R.H.COLONY GANGAVARAM PEDAGANTYADA GAJUWAKA VISAKHAPATNAM [PAN : CDLPK9550R ] VS. INCOME TAX OFFICER WARD - 5(3) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : SHRI DJP ANAND , DR / DATE OF HEARING : 02 . 04. 201 8 / DATE OF PRONOUNCEMENT : . 0 4 .201 8 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX [ CIT (APPEALS) ] - 2 , VISAKHAPATNAM VIDE 2 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM ITA NO.433/2015 - 16/CIT(A) - 2/W - 5(3)/VSP/2016 - 17 DATED 01 . 12 .201 6 FOR THE ASSESSMENT YEAR 201 3 - 1 4 . 2. GROUND NOS. 1 ,2 AND 7 ARE GENERAL IN NATURE WHICH DOES NO T REQUIRE SPECIFIC ADJUDICATION AND THE LD.AR DID NOT MAKE ANY ARGUMENTS ON THESE GROUNDS. HENCE THESE GROUNDS ARE DISMISSED. 3. GROUND NO.3(A) IS RELATING TO THE GIFT RECEIVED FROM THE HUSBAND OF THE ASSESSEE DURING THE FINANCIAL YEAR 2011 - 12. THE ASSESSEE STATED THAT SHE HAS RECEIVED GIFT OF RS.10,00,000/ - DURING THE FINANCIAL YEAR 2011 - 12 FROM HER HUSBAND SRI KAMBALA NOOKARAJU. THE ASSESSING OFFICER(AO) DID NOT BELIEVE THE RECEIPT OF GIFT AS THE SAME IS NOT SUPPORTED BY ANY EVIDENCE. THE AO OBSERVED THAT SRI NOOKA R AJU IS WORKING AS EMPLOYEE IN RINL AND THE BANK ACCOUNT OF SRI NOOKARAJU DID NOT SUPPORT THE CASH GIFT FROM THE WITHDRAWALS. THE ASSESSEE ALSO DID NOT FURNISH ANY EVIDENCE WITH REGARD TO THE SOURCES. SRI NOOKARAJU HAS NOT MADE ANY HUGE WITHDRAWAL S AND THE AO ALSO OBSERVED THAT SRI NOOKARAJU HAS TAKEN A LOAN FROM THRIFT AND CREDIT SOCIETY OF M/S RINL FOR PERFORMING THE MARRIAGE OF HIS DAUGHTER, HENCE, REJECTED THE CLAIM OF THE ASSESSEE WITH REGARD TO THE CASH GIFT FROM HER HUSBAND AND ADDED BACK TO THE INC OME. 3 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM 4 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE LD. CIT(A) PERUSED THE STATEMEN T OF STATE BANK OF HYDERABAD RELATING TO THE HUSBAND OF THE ASSESSEE , FROM WHERE THE ASSESSEE HAS DRAWN HIS SALARIES AND OBSERVED TH AT HER HUSBAND HAS NO SOURCE TO GIVE SUCH GIFT TO HIS WIFE AND THE SAME IS NOT SUPPORTED BY THE ENTRIES IN THE ABOVE REFERRED BANK STATEMENTS. ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APP EAL BEFORE THIS TRIBUNAL. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. BOTH THE LD.CIT(A) AND THE AO HELD THAT HUSBAND OF THE ASSESSEE, SRI NOOKARAJU HAS NO FINANCIAL CAPACITY TO GIVE GIFT OF RS.10 LAKHS DURING THE FINANC IAL YEAR 2011 - 12. WE HAVE GONE THROUGH THE CIT(A) ORDER, WHEREIN THE DEPOSITS AND WITHDRAWALS ARE TABULATED IN THE CIT(A) ORDER. AS PER THE DETAILED ANALYSIS MADE BY THE CIT(A) , THERE A RE NO HUGE WITHDRAWALS TO SUPPORT THE GIFT OF RS.10 LAKHS GIVEN TO TH E ASSESSEE. AS PER THE ORDER OF THE LD.AO, THE ASSESSEE HAD TAKEN A LOAN FROM THE COOPERATIVE CREDIT SOCIETY TO PERFORM THE MARRIAGE. DURING THE APPEAL HEARING, THE LD.AR DID NOT BRING ANY EVIDENCE TO CONTROVERT THE FINDINGS GIVEN BY THE LD.CIT(A). T HE L D.AR MADE AN ARGUMENT THAT THE GIFT WAS RECEIVED FROM HER HUSBAND IN THE F.Y. 4 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM 2011 - 12 AND THE SAME REQUIRED TO BE TAXED IN THE YEAR IN WHICH IT WAS RECEIVED, WE CAREFULLY EXAMINED THE INFORMATION PLACED BEFORE US AND DO NOT FIND ANY EVIDENCE TO ESTABLISH T HAT HER HUSBAND HAD SOURCE FOR GIVING THE GIFT AND ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEES CLAIM OF GIFT IS UNFOUNDED. THE ASSESSEE HAS MADE INVESTMENTS IN THE YEAR UNDER CONSIDERATION AND TRIED TO EXPLAIN THE SOURCE AS GIFT FROM HER HUSBAND. TH US THE AO HAS RIGHTLY MADE THE ADDITION IN THE YEAR UNDER CONSIDERATION. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) AND THE SAME IS UPHELD. THE ASSESSES APPEAL ON THIS GROUND IS DISMISSED. 7. GROUND NO.3(B) IS RELATED TO THE ASSESSEES CLAIM OF ACCUMULATED SAVINGS OF RS.30,00,000/ - FROM MONEY LENDING BUS INESS WHICH INCLUDES CASH GIFT OF RS.10 LAKHS FROM THE HUSBAND OF THE ASSESSEE. IN GROUND NO.3(A), WE HAVE HELD THAT THE ASSESSEES HUSBAND HAS NO SOURCE TO GIVE THE GIFT OF RS.10 LAKHS AND CONFI RM ED THE ADDITION, HENCE THE BALANCE REMAINED IS RS.20 LAKHS. THE ASSESSEE CLAIMED T O HAVE ACCUMULATED THE SAVINGS OF RS.2 0 LAKHS WHICH WAS USED IN MONEY LENDING BUSINESS TO VARIOUS FISHERMEN IN THE LOCAL ITY FOR INTEREST . DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FURNISHED THE NAMES OF THE PERSONS TO WHOM THE MONIES 5 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM WERE ADVANCED AND RECOVERED FROM THEM. THE AO DID NOT BELIEVE THE ACCUMULATION OF CAPITAL SAVINGS FROM MONEY LENDING BUSINESS AND MA DE THE ADDITION OF RS.30 LAKHS INCLUSIVE OF RS.10 LAKHS RELATING TO THE GIFT RECEIVED FROM HER HUSBAND . THE LD.CIT(A) CONFIRMED THE ADDITION. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. DURING THE APPEAL HEARING, THE LD.AR REFERRED TO PAGE NO.42 OF THE PAPER BOOK AND SUBMITTED THAT BY THE END OF MARCH 2012, THE ASSESSEE H A D ACCUMULATED SAVINGS OF RS.2 0,00,000/ - WHICH WAS UTILIZED FOR GIVING LOANS TO FISHERMEN FOR INTEREST RANGING FROM 12 TO 15% THROUGH MONEY LENDING BU SINESS . SHE HAS ALSO GIVEN NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE AMOUNTS WERE ADVANCED AND THEIR AADHAR NUMBERS ALONG WITH AADHAR CARD PHOTO COPIES. THE LD.AR ARGUED THAT THE AO WITHOUT MAKING ANY ENQUIRY MADE THE ADDITION, HENCE REQUESTED TO RE MIT THE MATTER BACK TO THE FILE OF THE AO. 9. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEES CASE IS THAT SHE HAD ACCUMULATED SAVINGS OF RS.2 0 LAKHS 6 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM (30,00,000 - 10,00,000/ - ) WHICH WAS USED FOR MONEY LENDING BUSINESS AND THE SAME WAS BROUGHT INTO WINE BUSINESS. THE INVESTMENT OF RS.43,68,173/ - IN WINE BUSINESS WAS SAID TO BE OUT OF ACCUMULATED SAVINGS OF MONEY LENDING BUSINESS. IN THE PRECEDING PARAGRA PHS, WE HAVE ALREADY HELD THAT SRI NOOKARAJU HAS NO CAPACITY TO GIVE THE GIFT, HENCE, THE ADDITION WAS CONFIRMED. WITH REGARD TO THE REMAINING AMOUNT, THE ASSESSEE H A S FURNISHED THE DETAILS OF NAMES AND PERSONS TO WHOM THE ADVANCES WERE GIVEN A ND THE CONT ENTION OF THE LD.AR I S OF THE VIEW THAT THE AO HAS NOT VERIFIED THE GENUINENESS OF THE TRANSACTION. WE AGREE WITH THE LD.AR THAT THE AO SHOULD NOT HAVE BRUSHED ASIDE THE INFORMATION FILED BY THE ASSESSEE WITHOUT VERIFICATION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO FOR VERIFICATION OF THE MONEY LENDING BUSINESS AND ACCUMULATION OF SAVINGS WHICH WAS BROUGHT INTO THE BUSINESS. THE AO IS DIRECTED TO VERIFY THE DETAILS OF AMOUNTS ADVANCED BY THE ASSESSEE TO T HE BORROWERS WITH DATE AND AMOUNT ADVANCED, INTEREST CHARGED, DATE OF REPAYMENT OF EACH INDIVIDUAL AND WHETHER THE BORROWER A IS ASSESSED TO TAX OR NOT ETC AND DECIDE THE ISSUE AFRESH AFTER VERIFYING THE COMPLETE DETAILS AND DECIDE THE ISSUE ON MERITS. THE ASSESSEE IS DIRECTED TO FURNISH THE NECESSARY DETAILS TO THE AO WITH REGARD TO THE DATE AND AMOUNT ADVANCED TO VARIOUS PARTIES, DATE OF 7 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM REALIZATION, INTEREST COLLECTED FROM EACH PARTY, WHETHER THE OTHER PARTY IS ASSESSE D TO TAX OR NOT AND ANY OTHER DETAILS CALLED FOR BY THE AO. THE AO IS FREE TO MAKE ALL THE NECESSARY ENQUIRIES AND DECIDE THE ISSUE AS PER LAW. THE ASSESSEES APPEAL ON THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.4 IS RELATED TO THE AD DITION OF RS.5,00,000/ - BY THE AO. THE AO MADE THE ADDITION OF RS.39,97,065/ - IN THE ASSESSMENT AND THE CONTENTION OF THE LD. AR IS THAT OUT OF THE ABOVE ADDITION, A SUM OF RS.5,00,000/ - WAS ADDED BY THE AO TWICE, ONCE IN PAYMENTS AND SECOND TIME IN DEPOS ITS MADE IN THE BANK ACCOUNT. THE LD.AR BROUGHT TO OUR ATTENTION TO THE LICENCE FEE ACCOUNT, WHEREIN THE ASSESSEE HAD MADE PAYMENT OF RS.5,00,000/ - AS LICENCE FEE ON 25.06.2012 FOR WHICH THE AO MADE THE ADDITION FOR LACK OF SOURCE. THE ASSESSEE FURNISHED THE DETAILS OF LICENCE FEE ACCOUNT IN PAGE NO.28 OF THE PAPER BOOK. THE ASSESSEE ALSO ENCLOSED BANK ACCOUNT COPY OF INDIAN BANK, GAJUWAKA BRANCH, WHEREIN, IT IS SHOWN THAT A SUM OF RS.5,00,000/ - WAS TRANSFERRED TO LICENCE FEE ACCOUNT ON 25.06.2012. THERE FORE, THE LD.AR CONTENDED THAT THE AO MADE THE ADDITION OF RS.5,00,000/ - TWICE, ONCE IN PAYMENTS MADE FOR LICENCE FEE TO STATE EXCISE DEPARTMENT AND SECOND TIME IN THE CASH DEPOSITS MADE IN THE 8 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM BANK ACCOUNT. HENCE, REQUESTED TO DELETE THE ADDITION OF RS.5 ,00,000/ - OUT OF THE TOTAL ADDITION MADE BY THE AO AMOUNTING TO RS.39,97,065/ - . 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS REQUIRED TO EXPLAIN THE TOTAL SOURCE FOR THE INVESTMENTS MADE IN WINE BUSINESS . PRIMA FACIE, IT APPEARS THAT, THERE WAS MERIT IN THE ARGUMENT OF THE ASSESSEE. AS PER PAGE NO.28 OF THE PAPER BOOK IN THE LICENCE FEE ACCOUNT, THE ASSESSEE MADE THE PAYMENT OF RS.5,00,000/ - WHICH WAS INCLUDED IN THE LICENCE FEE TO EXCISE DEPARTMENT TO TH E TUNE OF RS. 21,33,334/ - . SIMILARLY, THE ASSESSEE HAS MADE THE CASH DEPOSIT OF RS. 5,26,500/ - WHICH WAS USED FOR PAYMENT OF LICENCE FEE. THEREFORE, IT APPEARS THAT THE AO HAS CONSIDERED THE SUM OF RS.5,00,000/ - TWICE. HENCE THIS ISSUE REQUIRES VERIF ICATI ON AT THE END OF THE AO . THEREFORE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO AND DIRECT THE AO TO VERIFY THE TRANSACTION WITH T HE BOOKS OF ACCOUNTS AND THE A MOUNTS DEPOSITED IN BANK ACCOUNT AND DECIDE THE ISSUE AFRESH ON MERITS. 12. THE LD.AR DID NOT MAKE ANY ARGUMENT ON GROUND NO.5, HENCE GROUND NO.5 IS DISMISSED AS NOT PRESSED. 9 ITA NO . 117 /VIZ/201 7 KAMBALA NOOKALAMMA , VISAKHAPATNAM 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH APR , 20 1 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 06 .0 4 .2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - KAMBALA NOOKALAMMA, D.NO.17 - 57 - 21, R.H.COLONY, GANGAVARAM, PEDAGANTYADA, GAJUWAKA, VISAKHAPATNAM 2 . / THE RESPONDENT INCOME TAX OFFICER , WARD - 5(3) , VISAKHAPATNAM 3 . THE COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM