Mahavir Singh Malik, Rohtak V. ITO, Rohtak

ITA 1198/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61779 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 09-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: GURJEET SINGH; PANKAJ JAIN
• Keywords: Gift; Income from undisclosed sources; Opportunity of being heard
• Section: 69; 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A.NO.1198/DEL/2011 ASSESSMENT YEAR : 2007-08 MAHAVIR SINGH MALIK, INCOME-TAX OFFICER, H.NO.730, WARD NO.20, VS. WARD-1, ROHTAK. PREM NAGAR, ROHTAK. PAN: AARPM5255E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GURJEET SIN GH CA & SHRI PANKAJ JAIN, ADVOCATE RESPONDENT BY : SHRI R. S. NEGI, S R. DR O R D E R PER K.D. RANJAN, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 7-08 ARISES OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS), ROHTAK. THE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER:- 1. BECAUSE THE ACTION FOR UPHOLDING THE ADDITION F OR RS.12,84,027/- FOR THE REASON BEING INCOME FROM UND ISCLOSED SOURCES IS BEING CHALLENGED ON FACTS AND LAW. 2. EVEN THE QUANTUM OF ADDITIONS ARE BEING DISPUTED SINCE EVEN WITHOUT RETURNING ANY FINDINGS OF WHATSOEVER KIND O F THE `RESOURCES AND THE `BASIS OF CHARGE WHICH ARE THE INITIAL STEP BEFORE BRINGING THE TRANSACTION WITHIN THE SCO PE OF `INCOME. 2 3. BECAUSE THE ACTION FOR UPHOLDING THE ADDITION FO R RS.29,964/- U/S 80C TOWARDS AMOUNT SPENT FOR HOUSE RENOVATION I S BEING CHALLENGED ON FACTS AND LAW. 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO CON FIRMING THE ADDITION OF RS.12,84,027/- AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE IS A RETIRED SDO FROM IRRIGATION DEPARTMENT AND HAD DECL ARED INCOME OF RS.1,10,422/- AS PENSION. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSING OFFICER OBTAINED BANK STATEMENT OF TWO AC COUNTS MAINTAINED WITH ORIENTAL BANK OF COMMERCE (OBC), ROHTAK WHEREIN CER TAIN CREDIT ENTRIES OF RS.28,01,661/- WERE AVAILABLE. THE ASSESSING OFFIC ER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE DEPOSITS IN THE BANK ACCO UNT. AS NO COMPLIANCE WAS RECEIVED FOR THE OPPORTUNITIES GIVEN TO THE ASS ESSEE, THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY THE CREDIT ENTRIES OF RS.28, 01,661/- IN THE BANK ACCOUNT WITH OBC SHOULD NOT BE TREATED AS HIS INCOM E. IN RESPONSE TO THIS THE ASSESSEE STATED THAT HE HAD RECEIVED RS.17,12,4 29/- AS RETIREMENT BENEFITS ON HIS RETIREMENT ON 31 ST OCTOBER, 2003 AND KEPT ON ROTATING THE MONEY BY WITHDRAWING AND DEPOSITING THE MONEY TILL MARCH, 20 06 WITH SOME SMALL GIVE AND TAKE AMONG THE RELATIVES AND FRIENDS. IT WAS ALSO STATED THAT THE ASSESSEE WAS DIABETIC AND HE HAD TO KEEP THE AMOUNT OR RS.3-4 LAKH TO TAKE CARE OF THE AILMENT. HE ALSO GOT SOME LOANS AND GI FTS FROM HIS FRIENDS AND WELL WISHERS FOR HEART SURGERY. THE AO DID NOT ACC EPT THE CONTENTION OF 3 ASSESSEE FOR AVAILABILITY OF RETIREMENT BENEFITS FO R THE DEPOSITS IN THE BANK ACCOUNT ON THE GROUND THAT AS PER CASH FLOW STATEME NT FILED BY HIM ONLY CASH OF RS.2.75 LAKH WAS AVAILABLE AS ON 1.04.2006 WHICH WAS KEPT BY HIM FOR MEDICAL EXPENSES. FURTHER NO OTHER ASSETS WERE SHO WN AS ON 31.3.2006. THE AO ALSO DID NOT ACCEPT THE ARGUMENT OF ROTATION OF MONEY IN THE ABSENCE OF FURNISHING OF DETAILS AND DOCUMENTARY EVIDENCE. TH OUGH THE AO WAS AGREED WITH THE MEDICAL EXIGENCIES OF THE ASSESSEE, SINCE NO CHEQUE HAD BEEN ISSUED FROM HIS BANK ACCOUNT FOR THE TREATMENT, THE PLEA O F THE ASSESSEE REGARDING LOANS/GIFTS/CONTRIBUTION BY FRIENDS AND RELATIVES F OR MEDICAL TREATMENT AS SOURCE OF CASH INTRODUCED WAS NOT FOUND PLAUSIBLE. FURTHER AS THE ASSESSEE WAS HAVING RS.2.75 LAKH IN CASH AS ON 1.04.2006 AND HE KEPT RS.3-4 LAKH CASH FOR MEDICAL EXIGENCIES, THERE WAS NO NEED TO R AISE ANY LOAN ETC. WHEN THE ASSESSEE WAS NOT DOING ANY BUSINESS ACTIVITY TH EN THERE WAS NO NEED FOR A NUMBER OF TRANSACTIONS IN THE BANK ACCOUNT. THE CA SH FLOW STATEMENT FILED BY THE ASSESSEE WAS NOTHING BUT AN INVERTED BANK ST ATEMENT. THE ASSESSEE FILED AFFIDAVIT FROM SIX PERSONS OF HAVING GIVEN LO AN LESS THAN RS.20,000/- EACH IN CASH AGGREGATING TO RS.1,13,500/-. THIS CO NTENTION OF THE ASSESSEE WAS ALSO NOT ACCEPTED AS GENUINENESS OF ALLEGED LOA NS AND AFFIDAVITS WERE NOT PROVED. THE AO HOWEVER, ACCEPTED CREDIT ENTRIE S AMOUNTING TO RS.14,04,134/- ON ACCOUNT OF GIFTS, PENSION RECEIPT , RECEIPTS THROUGH BANKING 4 CHANNELS ETC. AND TREATED THE AMOUNT OF RS.13,97,5 27/- AS INVESTMENT FROM UNDISCLOSED SOURCES. 3. BEFORE THE CIT(A) IT WAS SUBMITTED BY THE ASSES SEE THAT THE YOUNGER SON OF THE ASSESSEE WHO COMPLETED M. TECH WAS INTER ESTED IN FURTHER STUDIES ABROAD AND FOR THAT PURPOSE THE ASSESSEE MADE FREQU ENT DEPOSITS/WITHDRAWALS IN THE BANK TO SHOW A ROSY PICTURE FOR OBTAINING VI SA. THE SON GOT GOVERNMENT JOB IN FEBRUARY, 2007 AND THEREAFTER NO FREQUENT TRANSACTIONS WERE MADE BY THE ASSESSEE IN THE BANK. IT WAS ALSO STATED THAT THE ASSESSEE HAD 5 ACRES OF AGRICULTURAL LAND IN HUF CAPACITY WH ICH IS ENOUGH TO MEET THE COST OF HOUSE-HOLD EXPENSES. IT WAS ALSO SUBMITTED THAT SALARY OF HIS DAUGHTER-IN-LAW AND OWN PENSION WAS MORE THAN RS.3. 5 LAKHS PER YEAR. IT WAS THEREFORE, SUBMITTED THAT THE AMOUNT DEPOSITED IN THE BANK WAS EXPLAINABLE. THE LEARNED CIT(A) CONSIDERED THE EXP LANATION OF THE ASSESSEE. HE DELETED THE ADDITION OF RS.1,13,500/- BY OBSERVI NG AS UNDER:- 4. I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. FROM THE ASSESSMENT ORDER, IT IS EVIDENT T HAT CREDIT ENTRIES AMOUNTING TO RS.14,04,134/- ON ACCOUNT OF G IFTS, PENSION RECEIPT, RECEIPTS THROUGH BANKING CHANNELS ETC. HAV E BEEN ACCEPTED BY THE AO. THE ACTION OF THE AO IN NOT AC CEPTING THE CASH LOANS WITHOUT EXAMINING THE CREDITORS AND HAVI NG ADVERSE MATERIAL ON RECORD IS NOT IN ORDER. THE CONTENTION OF THE APPELLANT ON THE AVAILABILITY OF MORE THAN 3.5 LACS PER YEAR WITH THE FAMILY IN CASH IS NOT ACCEPTABLE IN THE ABSENCE OF ANY EVIDENCE. THE REASONS GIVEN BY THE AO FOR NOT ACCE PTING THE AVAILABILITY OF CASH AND DEPOSITS FROM THE EARLIER WITHDRAWALS ETC. IN VIEW OF THE ALLEGED CASH FLOW STATEMENT WIT HOUT THE 5 SUPPORT OF ANY DOCUMENTARY EVIDENCE APPEARS TO BE R EASONABLE. THE ARGUMENT OF FREQUENT ROTATION OF CASH FOR OBTAI NING VISA WAS NOT TAKEN BEFORE THE AO. IT IS NOT KNOWN AS TO WHY THIS FACT, IF CORRECT, WAS NO TAKEN BEFORE THE AO. THE EXPLANATION OFFERED IS NOT PLAUSIBLE AS THE FREQUENT ROTATIONS OF MONEY FOR THE PURPOSE OF VISA SHOULD HAVE BEEN MADE THROUGH C HEQUES AND NOT IN CASH. THE CASE LAWS RELIED UPON BY THE AR ARE DISTINGUISHABLE ON FACTS. THE ACTION OF THE AO IS THEREFORE UPHELD AND AS MENTIONED EARLIER, THE ADDITION ON AC COUNT OF LOANS OF RS.113500/- IS DELETED. THE GROUND OF APP EAL IS THEREFORE PARTLY ALLOWED. 4. BEFORE US THE LEARNED AR OF THE ASSESSEE REITERA TED SIMILAR ARGUMENTS THAT THE ASSESSEE WAS ROTATING MONEY IN ORDER TO SH OW THE ROSY PICTURE. THE ASSESSEE HAD RECEIVED GIFTS AND LOANS FROM VARIOUS PERSONS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD 5 ACRES OF AGRICULT URAL LAND WHICH WAS SUFFICIENT TO MAINTAIN THE HOUSE-HOLD EXPENSES. TH E LEARNED AR OF THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS TIME GAP IN WITHDRAWAL AND DEPOSITS. MERELY THERE WAS TIME GAP, PROVISIONS OF SEC. 69 COULD NOT BE INVOKED. HE FURTHER SUBMITTED THAT THE ASSESSEE IS PREPARED TO GIVE DETAILS ALONG WITH EVIDENCE IF THE ASSESSEE IS GIVEN OPPORT UNITY TO EXPLAIN BEFORE THE AO. 5. ON THE OTHER HAND, THE LEARNED SR. DR SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS CONTENDED TH AT THE ASSESSEE IN ORDER TO 6 SHOW ROSY PICTURE FOR THE PURPOSE OF OBTAINING VISA WAS WITHDRAWING CASH AND DEPOSITING THE SAME IN THE BANK ACCOUNT. WE HA VE GONE THROUGH THE CASH FLOW STATEMENT FOR THE PERIOD FROM 1.04.2006 T O 31 ST MARCH, 2007. AS ON 1.04.2006 THERE IS OPENING CASH BALANCE OF RS.2, 75,000/- WHICH HAS BEEN STATED TO BE FROM WITHDRAWAL FROM BANK. THE AO HAS ALSO NOTED THAT WITHDRAWALS HAVE BEEN MADE BY CERTAIN PERSONS LIKE SHRI JAGBIR SINGH KUNDU, SHRI SATBIR SINGH, SHRI BALWANT SINGH KUNDU, SHRI JAI SINGH, SMT. SATYA MALIK, SHRI RAM NIWAS HOODA, SHRI SHYAM SINGH ETC. THE AO HAS NOT EXAMINED THESE PERSONS AS TO WHY THE AMOUNT WAS WITHDRAWN BY THEM. SINCE THE ISSUE HAS NOT BEEN EXAMINED PROPERLY, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WIT H THE DIRECTIONS TO EXAMINE THE CONTENTION OF THE ASSESSEE WHETHER THE CASH WIT HDRAWN WAS DEPOSITED IN THE BANK ACCOUNT IN ORDER TO SHOW THE ROSY PICTURE FOR THE PURPOSE OF OBTAINING VISA. THE AO WILL EXAMINE THE PERSONS TO ASCERTAIN THE PURPOSE FOR WHICH THE CHEQUES WERE GIVEN TO THEM AND WHETHE R THE AMOUNT WITHDRAWN WAS AVAILABLE WITH THE ASSESSEE FOR DEPOS ITING IN THE BANK. THE AO WILL PROVIDE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 7. NEXT ISSUE FOR CONSIDERATION RELATES TO CONFIRMI NG THE ADDITION OF RS.29,964/- U/S 80C OF THE ACT. THE ASSESSEE HAD C LAIMED DEDUCTION U/S 80C IN RESPECT OF THE AMOUNT SPENT FOR RENOVATION. THE AMOUNT SPENT ON 7 RENOVATION HAS NOT BEEN FOUND TO BE DEDUCTIBLE U/S 80C OF THE ACT. THE AO AS WELL AS THE CIT(A) HAS CONFIRMED THE DISALLOWANC E. 8. DURING THE COURSE OF HEARING THE LEARNED AR OF T HE ASSESSEE COULD NOT SPECIFY THE PROVISIONS UNDER WHICH THE AMOUNT SPENT ON RENOVATION COULD BE CLAIMED AS DEDUCTION U/S 80C OF THE ACT. SEC.80C(2 )(XVIII), THE AMOUNT PAID OR DEPOSITED FOR THE PURPOSES OF PURCHASE OR CONSTR UCTION OF A RESIDENTIAL HOUSE PROPERTY IS ELIGIBLE FOR DEDUCTION. THERE IS NO CLAUSE U/S 80C(2) UNDER WHICH THE AMOUNT SPENT ON RENOVATION COULD BE ALLOW ED AS A DEDUCTION. SINCE THE PROVISIONS OF SEC.80C ARE NOT APPLICABLE IN RESPECT OF AMOUNT SPENT ON RENOVATION, IN OUR CONSIDERED OPINION, THE LEARN ED CIT(A) HAS RIGHTLY UPHELD THE DISALLOWANCE UNDER SEC. 80C OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 13 TH JULY, 2012. SD/- SD/- (R.P. TOLANI) (K.D. RANJAN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED: 13 TH JULY, 2012. 8 ITA NO.1198/DEL/2011 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.