DCIT, CIR-7, KOLKATA, Kolkata V. Shri Vivek Gupta, Kolkata

ITA 1201/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1603 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ZAFRAUL HAQUE TANVEE R JCIT LD
• Assessee Lawyers: SOUMITRA CHOUDHURY LD A
• Keywords: Unexplained cash credit; Unexplained investment; Salary income; Corroborative evidences; Bogus loan
• Section: 143(3); 142(1); 68; 69

Judgement Text

1 ITA NO. 1201/KOL/14 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUD ICIAL MEMBER I.T.A NO. 1201/KOL /2014 A.Y: 2010-1 1 D.C.I.T, CIR-7, KOLKATA VS. SHRI VIVEK GUPTA PAN:ADTPG 6742P [APPELLANT] [RESPONDENT] FOR THE APPELLANT : SHRI ZAFRAUL HAQUE TANVEE R, JCIT, LD.SR.DR FOR THE RESPONDENT : SHRI SOUMITRA CHOUDHURY, A DVOCATE, LD.AR DATE OF HEARING : 13-06-2017 DATE OF PRONOUNCEMENT : 23-08-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DT. 27-03-2014 FOR THE A.Y 2010-11. 2. THE ONLY ISSUE TO BE DECIDED AS TO WHETHER THE C IT-A IS JUSTIFIED IN TREATING THE LIABILITIES OF ASSESSEE AS GENUINE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL. HE DERIVES HIS INCOME FROM SALARY, HOUS E PROPERTY AND CAPITAL GAIN AND INCOME FROM OTHER SOURCES. THE A SSESSEE FILED HIS RETURN DECLARING TOTAL INCOME OF RS.38,06,360/-. NO TICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. DURING THE SCRUT INY PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS SHOWN LOAN OF RS .75,00,000/- IN THE NAMES OF SMT. PRAMILA SHAH, PRITI RUNGATA AND S MT. PUSHPA SANGANERIA OF RS. 25,00,000/- EACH. IN EXPLANATION, THE ASSESSEE SUBMITTED AS UNDER BEFORE THE AO:- 2 ITA NO. 1201/KOL/14 3. THE ASSESSEE HAS ENCLOSED THE BALANCE SHEET AND INCOME & EXPENDITURE STATEMENT WITH THE LETTER DATED 24.7.2012. ONGOING THROUGH THE BALANCE SHEET THE ASSESSEE IT IS NOTICED THAT THE ASSESSEE HAS SHOWN OF LOAN OF RS.75,00,000 IN THE NAME OF SMT PRAMILA SHAH, SMT. PRITI RUNGATA, AND SMT. PUSH PA SANGANERIA OF RS. 25,00,000 EACH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESSEE WAS ASKED VIDE ORDER SHEET DATED 21.12.12 TO EXPLAIN THE LIABILITY OF RS . 75,00,000 APPEARING IN THE BALANCE SHEET. IN RESPONSE THE ASSESSEE VIDE LETTER DATED 5 .2.2013 EXPLAINED THAT DETAILS OF PAYMENT OF RS.75,00,000 TO THE DAUGHTER'S OF LATE R AM AVATAR GUPTA. IN THE DETAILS HE MENTIONED THE NAME AND ADDRESS OF AND DATE OF PAYME NT OF RS.25,00,000 EACH IN FAVOUR OF AFORESAID THREE DAUGHTER OF LATE RAMAWATAR GUPTA. T HE RELEVANT PORTION OF EXPLANATION DATED 5.2.2013 IS REPRODUCED BELOW; DETAILS OF PAYMENT OF RS. 75 LAES TO THE DAUGHTERS OF LATE RAMAWATAR GUPTA IS:- (A) RS.25 LACS TO MRS. PRAMILA SHA.H ON 12/11/2011 THROUGH SBI, SALT LAKE, PURBACHAL, KOLKATA-97 (B) RS.25 LACS TO MRS. PRITI RUNGATA ON 13/11/2011 THROUGH STANDARD CHARTERED BANK, CHAIBASA, JHARKHAND, (C) RS.25 LACS TO MRS. PUSHPA SANGANERIA ON 22/11'/ 2011 THROUGH SBI, ALIPORE ROAD, KOLKATA-27 4. IT WAS FURTHER EXPLAINED THAT LATE RAMAWATAR GUP TA HAS CREATED A WILL 27.3.2008 AUTHORISING SHRI VIVEK GUPTA, I.E. THE ASSESSEE, TO GIVE A SUM OF RS.25,00,000 EACH TO HIS AFORESAID THREE DAUGHTER AFTER HIS DEATH. IN CONTIN UATION A PROBATE WAS CREATED ON 13.4.2009 SHOWING THE DEATH OF RAMAWATAR GUPTA ON 2 3.9.2008 AND ADMINISTRATION OF HIS ASSETS BY THE ASSESSEE. IT IS.NECESSARY TO POINT OU T THAT NEITHER IN THE WILL NOR IN THE PROBATE LIST AND ASSETS AND LIABILITY OF LATE RAMAW ATAR GUPTA WAS MENTIONED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE V IDE LETTER DATED 28.12.12 FURNISHED THE LIST OF ASSETS TOTALING TO RS.2,25,59,590 FOR W HICH NECESSARY SUPPORTING EVIDENCE COULD NOT BE FURNISHED. THE ASSESSEE FURTHER FILED THE DE TAILS OF ASSETS OF LATE RAMAWATAR GUPTA VIDE LETTER DATED 16.1.2013 WHICH IS AGAIN NOT SUPP ORTED BY THE EVIDENCES. IN THIS SITUATION THE ASSETS INHERITED BY THE ASSESSEE FROM HIS GRANDFATHER LATE RAMAWATAR GUPTA IS NOT SUPPORTED BY THE EVIDENCES. 5. IN THE LIGHT OF THESE DOCUMENTARY EVIDENCES THE QUESTION OF ALLOWABILITY OF LOAN AMOUNTING TO RS.75,00,000 SHOWN IN THE NAME AFORESA ID THREE DAUGHTER OF RS.25,00,000 ARISES. DURING THE COURSE OF ASSESSMENT PROCEEDING VIDE ORDER SHEET DATED 5.2.13 THE ID A/R POINTED OUT THAT THE ASSESSEE DOES NOT MAINTAIN ANY REGULAR BOOKS OF ACCOUNT. HENCE THE QUESTION OF APPLICATION OF PROVISION OF SECTION 68 IS INVOLVED AGAINST THE LOAN OF RS.75,00,000 SHOWN IN THE BALANCE SHEET IS ALSO TO BE CONSIDERED. SINCE THE PROBATE WAS CREATED ON 13.4.2009, THE ALLOWABILITY OF LOAN OF R S.75,00,000 HAS TO BE CONSIDERED IN THE A.Y.2010-11, I.E. PERIOD UNDER CONSIDERATION. IT IS ADMITTED THAT THE ASSESSEE DID NOT RECEIVE THE LOAN OF RS.75,00,000 FROM THE AFORESAID THREE PERSONS BUT THE LIABILITY RS.75,00,000 WAS CREATED IN COMPLIANCE TO THE WILL OF LATE RAMAWATAR GUPTA. IT MEANS THE LOAN OF RS.75,00,00G IS FICTIOUS/ BOGUS. ON THE CON TRARY THE ASSETS SHOWN IN THE BALANCE SHEET ARE IN EXISTENCE. THE BALANCE SHEET TALLY WIT H RS.4,80,75,058. IF THE FICTIOUS /BOGUS LOAN OF RS.75,00,000 IS TAKEN OUT FROM THE LIABILIT Y SIDE OF THE BALANCE SHEET THE LIABILITY WILL BE ONLY TO THE EXTENT OF RS.4,05,75,058 WHILE THE ASSETS WILL REMAIN AT RS. 4,80,75,058. IN OTHER WORD THE ASSETS WILL EXCEED O VER THE LIABILITY BY RS.75,00,000 WHICH IS AGAINST THE PRINCIPLE OF ACCOUNTANCY. HENCE, ADD ITION OF RS.75,00,000 IS LIABLE TO BE MADE U/S. 69 READ WITH SECTION 69A OF THE I.T.ACT 1 961. 4. THE AO WAS OF THE OPINION THAT THE ASSETS AND LI ABILITIES OF LATE RAMAWTAR GUPTA WAS NOT MENTIONED IN THE WILL AND TH E ASSESSEE COULD NOT FILE ANY SUPPORTING EVIDENCE REGARDING TH E ASSETS OF LATE RAMAWATER GUPTA AND AS SUCH TREATED THE SAID LIABIL ITY OF RS.75,00,000/- AS BOGUS FOUND FROM THE BALANCE SHEE T AND MADE ADDITION OF RS. 75,00,000/- U/S. 69 R.W.S 69A OF TH E ACT BY AN ORDER PASSED U/S. 143(3) OF THE ACT DT. 21-3-2013. 3 ITA NO. 1201/KOL/14 5. THE ASSESSEE CHALLENGED THE SAME BEFORE THE CIT- A. BEFORE HIM THE ASSESSEE CONTENDED THAT THE AMOUNT OF RS.75 LAK HS IS PAYABLE TO HIS SISTERS AS PER WILL EXECUTED BY HIS LATE FATHE R, RAMAWTAR GUPTA, WHO EXPIRED ON 23-09-08. THE SAID WILL COULD NOT BE EXECUTED BEFORE FILING OF RETURN FOR THE A.YS 2009-10 AND 2010-11 A ND AS SUCH PAYMENT OF RS. 75 LAKHS SHOWN AS LIABILITIES IN HIS BALANCE SHEET. THE CIT-A ON CONSIDERATION OF THE SUBMISSIONS OF ASSESS EE AND THE REMAND REPORT OF AO DELETED THE IMPUGNED ADDITION B Y STATING AS UNDER:- 4. DECISION. 4.1. I HAVE GONE THROUGH THE WILL SUBMITTED TO THE A.O. AS WELL AS TO ME ALONG WITH SUBMISSION. IN PARA 3.1 OF THE WILL, LATE R.A.GUPTA HAS APPOINT ED THE APPELLANT MR. VIVEK GUPTA AS SOLE EXECUTOR OF THE WILL ESTATE. THEN IN SUBSEQUENT PAR AS HE HAS MENTIONED IN DETAIL THE NAME OF BENEFICIARIES AND SPECIFIC ASSETS WHICH HE HAS BEQU EATHED TO THEM. MOST OF THE ASSETS HE HAS BEQUEATHED TO HIS GRANDSON SHRI VIVEK GUPTA THE APP ELLANT. IN PARA 7.2 OF THE WILL HE BEQUEATHED A SUM OF RS. 25,00,000/- TO EACH OF HIS THREE DAUGHTERS, SMT. PUSHPA SANGANERIA, SMT. PRAMILA SHAH AND SMT PRITI RUNGTA, TOTALING RS . 75,00,000/- IN THE SAME PARA HE AUTHORIZES THE EXECUTOR TO SELL' OR ENCASH SOME OF HIS INVESTMENTS IN MOVEABLE PROPERTY OTHER THAN SHARES OF SANMARG PRIVATE LIMITED TO THE EXTEN T NECESSARY. 4.2, FROM COPY OF THE WILL WHICH WAS DULY PROBATED BY HON'BLE HIGH COURT, KOLKATA ON 30.04.2009 IT IS CLEAR THAT THE APPELLANT WAS GIVEN MOST OF THE ASSETS OF HIS LATE GRAND FATHER AND HE WAS ALSO - DIRECTED TO PAY A SUM TOTALING RS . 75,00,000/- TO THREE THE DAUGHTERS OF LATE R.A.GUPTA. 4.3. THE LIST OF THE ASSETS OF LATE. RAMAWTAR GUPTA WAS SUBMITTED TO THE AO DURING ASSESSMENT PROCEEDINGS. THE AO HAS NOT DISPUTED THAT THE ASSET S WERE BEQUEATHED TO THE APPELLANT AND HAS NOT DOUBTED THE EXISTENCE OF SAME. IN FACT IN P ARA 5 OF HIS ORDER WHILE ACCEPTING THE INCLUSION OF ASSETS ACQUIRED BY THE APPELLANT IN TE RMS OF WILL IN HIS CAPITAL, HE HAS TRIED TO EXPLAIN IN DETAIL, HOW THE LIABILITY OF RS. 75,00,0 00/- IS BOGUS. I HAVE 'ALSO GONE THROUGH THE REMAND REPORT SUBMITTED BY THE AO IN WHICH HE HAS N OT DOUBTED THE TRANSACTIONS IN THE CAPITAL ACCOUNT OF APPELLANT ARISING OUT OF .HE WILL OF LAT E RAMAWTAR GUPTA. HIS ONLY OBJECTION IS TO INCLUSION OF THE ASSETS AND LIABILITIES SPECIFIED I N THE WILL IN HIS CAPITAL ACCOUNT, INSTEAD OF MAINTAINING A SEPARATE ACCOUNT FOR THE ESTATE AS AN EXECUTOR OF LATE RAMAWTAR GUPTA. 4.4. I FIND THE STAND TAKEN BY THE' AO THAT LIABILI TY OF RS. 75,00,000/- IS BOGUS, IS UNACCEPTABLE, BECAUSE HE HIMSELF HAS AGREED TO THE INCLUSION OF A SSETS ACQUIRED UNDER WILL IN ASSETS SIDE OF THE BALANCE SHEET OF THE COMPANY, HE CAN NOT TERM A CCRUAL OF LIABILITY ON ACCOUNT OF SAME WILL AS BOGUS. ALSO HIS STAND THAT ASSETS SIDE OF THE BA LANCE SHEET SHALL EXCEED LIABILITY SIDE BY RS. 75,00,000/- DOES NOT HOLD GROUND AS LIABILITY OF RS . 75,00,000/- HAS BEEN RIGHTLY RECOGNIZED IN TERMS OF PARA 7.2 OF THE WILL AND 'CANNOT BE' TERME D AS BOGUS. ALSO I FIND NO MERIT IN THE OBSERVATION OF THE AO THAT APPELLANT SHOULD HAVE MA INTAINED SEPARATE ACCOUNT IN THE CAPACITY OF EXECUTOR IN RESPECT OF ASSETS AND LIABILITIES OF LATE RAMWTAR GUPTA AS SPECIFIC ASSETS WERE BEQUEATHED TO SPECIFIC PERSONS AND HE HAS INCLUDED ONLY THOSE ASSETS AND LIABILITIES WHICH WERE BEQUEATHED TO HIM. REST OF THE ASSETS WERE TRANSFER RED TO SPECIFIED BENEFICIARIES, AS SUCH NO ASSETS AND LIABILITIES OF ESTATE LEFT TO BE REALIZE D OR PAID. 4.5. THE AO HAS NOT DISPUTED THE FACT THAT LATE RAM AWTAR GUPTA HAS LEFT A WILL DATED 27/03/2008 DURING HIS LIFE TIME WHICH WAS DULY REGI STERED WITH ADDL REGISTRAR OF ASSURANCE ON 28/03/2008. HE ALSO HAD NOT DISPUTED THAT THE WILL WAS PROBATED BY HON'BLE HIGH COURT, KOLKATA ON 30.04.2009. HE ALSO HAS NOT DISPUTED THE INCLUSI ON OF ASSETS BEQUEATHED TO THE APPELLANT IN TERMS OF THE WILL IN THE BALANCE SHEET OF THE APPEL LANT, THEREFORE HE CANNOT DISPUTE THE LIABILITY OF RS. 75,00,0001- ACCRUING TO THE APPELLANT ON THE BASIS OF SAME PROBATED WILL. IN SUBSEQUENT YEAR THE LIABILITY OF RS. 75,00,000/- HAS BEEN PAID THROUGH BANKING CHANNEL. THIS STRENGTHENS THE CONTENTION OF THE APPELLANT THAT THE LIABILITY WAS GENUINE. 4.6. AS SUCH I CONCLUDE THAT THE SUM OF RS. 75,00,0 00/- IS NEITHER UNEXPLAINED CASH CREDIT NOT UNEXPLAINED INVESTMENT AS HELD OUT TO BE BY THE AO. THE LIABILITIES WERE RECOGNIZED IN 4 ITA NO. 1201/KOL/14 ACCORDANCE WITH THE WILL OF LATE RAMAWTAR GUPTA WHI CH WAS PROBATED BY HON'BLE HIGH COURT, CALCUTTA. INCLUSION OF BOTH LIABILITIES AND ASSETS AS PER WILL IN THE BALANCE SHEET OF VIVEK GUPTA IS IN ACCORDANCE WITH PROBATED WILL. THUS SOURCE OF TH E LIABILITIES REMAINS EXPLAINED, AND THE AO HAS ERRED IN TERMING THEM AS BOGUS AND FICTITIOUS. ALSO THE' CONTENTION OF THE AO THAT THE BALANCE SHEET DOES NOT TALLY ALSO DOES NOT HOLD AS ONLY NET OF ASSETS ACQUIRED UNDER WILL AND LIABILITY OF RS. 75,00,000/- WAS ADDED TO HIS CAPIT AL. THE AO HAS NOT PLACED ON RECORD ANY EVIDENCE THAT THESE. CREDITS ARE UNEXPLAINED NOR HA S HE FOUND ANY UNEXPLAINED INVESTMENT. AS .HELD BY HON'BLE SUPREME COURT IN THE CASE OF DHAKE SHWARI COTTON MILLS 26 ITR 775 (SC) NO ADDITION IS PERMISSIBLE ON MERE SURMISE AND CONJECT URE. I DIRECT THE AO TO DELETE THE ADDITION OF RS. 75,00,000/-.HENCE, GROUND NO. 2, 3 & 4 ARE ALLO WED. 6. THE LD. DR RELIED ON THE ORDER OF THE AO AND PRA YED TO ALLOW THE GROUNDS RAISED BY THE REVENUE. ON THE OTHER HAND, T HE LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE CIT-A AN D PRAYED TO DISMISS THE GROUND(S) OF APPEAL RAISED BY THE APPEL LANT REVENUE. 7. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LIABILITIES AS SHOWN BY THE ASSESS EE IN THE BALANCE SHEET WERE DISCHARGED BY THE ASSESSEE IN ACCORDANCE WITH WILL EXECUTED BY HIS LATE FATHER, LATE RAMAWATER GUPTA T HROUGH BANKING CHANNEL ON 12-11-2011 THROUGH SBI, SALT LAKE, KOLK ATA ON 12-11- 2011, THROUGH STANDARD CHARTERED BANK, CHAIBASA, JH ARKHAND ON 13- 11-2011 AND ON 22-11-2011 THROUGH SBI, ALIPORE ROAD , KOLKATA. IT CLEARLY SHOWS THAT THE LIABILITY AS FOUND BY THE AO WAS DISCHARGED BY THE ASSESSEE IN SUBSEQUENT YEAR. IT IS OBSERVED THA T THE AO IN THE REMAND REPORT HAS NOT DOUBTED THE SAID TRANSACTIONS . THUS, THE CIT-A WAS JUSTIFIED IN DIRECTING THE AO TO DELETE THE IMP UGNED ADDITION OF RS.75,00,000/-. WE UPHOLD THE ORDER OF THE CIT-A ON THIS ISSUE. THE GROUND(S) RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-08-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23-08-2017 5 ITA NO. 1201/KOL/14 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/REVENUE: THE DCIT, CIR-7, AAYKAR BHAWAN, 5 TH FLOOR, ROOM NO. 15,P-7 CHOWRINGHEE SQUARE, KOLKATA-69. 2 RESPONDENT/ASSESSEE: SHRI VIVEK GUPTA, SANMARG PVT. LTD. 160/C, C.R AVENUE, KOLKATA-7. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKATA