Jitendra Bandu Bhosale, Kolhapur V. Income-tax Officer,

ITA 1203/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1514 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Unexplained investment; Cost of acquisition
• Section: 143(3); 69

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 12 03 /PN/201 6 / ASSESSM ENT YEAR : 20 09 - 1 0 SHRI JITENDRA BANDU BHOSALE, 1460, C - WARD, GALA NO.7, LAXMIPURI, KOLHAPUR 416002 . / APPELLANT PAN: A JEPB7494A VS. THE INCOME TAX OFFICER , WARD 1(1), KOLHAPUR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 25 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE A SSESSEE IS AGAINST THE ORDER OF CIT (A) - 1, KOLHAPUR , DATED 23 . 0 3 .20 1 6 RELATING TO ASSESSMENT YEAR 20 09 - 1 0 AGAINST ORDER PASSED UNDER SECTION 14 3(3) R.W.S. 263 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. THE PRESENT APPEAL IS DECIDED AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE BECAUSE OF SMALLNESS OF THE ISSUE. ITA NO. 12 03 /PN/20 1 6 SHRI JITENDRA BANDU BHOSALE 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: - 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) - 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) - KOLHAPUR WAS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE CONFIRMING THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 263 OF THE ACT WHE N THE WIFE OF THE ASSESSEE HAD INDEPENDENT SOURCE OF INVESTMENT AND HAD CONFIRMED HER INVESTMENT ACCORDINGLY. THE LD. CIT(A) ERRED IN NOT CONSIDERING GROUND REALITIES VIS - A - VIS - A - VIS THE HUMAN PSYCHOLOGY OF LADIES IS CONCERNED. THE ADDITION MADE IN THE HAN DS OF THE HUSBAND IS NOT JUSTIFIED. IT BE DELETED. 2 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT - KOLHAPUR - I , IN ORDER UNDER S. 263 SET ASIDE THE ORIGINAL ORDER OF THE A.O. AS NO PROPER ENQUIRIES WERE MADE. AFTER RESTORING THE MATTER T O HIS FILE THE A.O. BEFORE PASSING THE SAID FRESH ASSESSMENT ORDER OUGHT TO HAVE CONSIDERED ALL THE GROUND REALITIES VIS - A - VIS LADIES PSYCHOLOGY AS FAR AS THEIR SAVINGS ARE CONCERNED. THE WIFE OF THE ASSESSEE HAD ADMITTED THAT THE SAID SAVINGS ARE CONCERNED. THE WIFE OF THE ASSESSEE HAD ADMITTED THAT THE SAID WAS HER INVESTMENT. IN SUCH CIRCUMSTANCES S. 69 WAS NOT APPLICABLE. THE LD. CIT(A) - KOLHAPUR ERRED IGNORING THIS A SPECT OF THE LADIES PSYCHOLOGY REGARDING THEIR INVESTMENT AND THEREFORE, WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE A.O. THE ADDITION BE DELETED. 4 . THE ISSUE RAISED IN THE PRESENT APPEAL IS ON ACCOUNT OF ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE ACT AT RS. 7,77,600/ - . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL RUNNING 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL RUNNING PATHOLOGY LAB. THE ASSESSING OFFIC ER GOT INFORMATION THAT THE ASSESSEE HAD PURCHASED IMMOVABLE PROPERTY SITUATED AT B - 10, SHRI SAI KIAP CO - OP. HOUSING SOCIETY, NEURAL, NEW MUMBAI JOINTLY WITH HIS SPOUSE FOR RS.7,50,000/ - VIDE PURCHASE DEED DATED 25.11.2008. THE ASSESSEE HAD INCURRED EXPEN DITURE OF RS.20,100/ - AND RS.7,500/ - FOR STAMP DUTY AND REGISTRATION CHARGES, RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT REFLECTED THE SAID PROPERTY IN HIS BALANCE SHEET. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. IN REPLY, THE ASSESSEE POINTED OUT THAT THE PROPERTY WAS PURCHASED BY HIS SPOUSE AND THE SAID PROPERTY WAS SOLD ON 09.11.2009 FOR RS.9 LAKHS AND SHORT TERM CAPITAL GAINS WAS SHOWN BY HIS WIFE. THE SAID CONTENTION OF THE ASS ESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS THE SPOUSE OF ASSESSEE HAD NOT SHOWN THE SAID PROPERTY IN HER BALANCE SHEET AND ALSO SHORT TERM CAPITAL GAINS WAS NOT ITA NO. 12 03 /PN/20 1 6 SHRI JITENDRA BANDU BHOSALE 3 REFLECTED IN THE RETURN OF INCOME FILED BY HIS SPOUSE. SINCE THE ASSESSEE HAD NOT ESTA BLISHED THAT THE PROPERTY WAS PURCHASED BY HIS WIFE, THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAINS WAS TO BE MADE IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THAT THE INVESTMENT IN THE SAID PROPERTY WAS OUT OF UNEXPLAINED SOURCES O F THE ASSESSEE AND THUS, AN ADDITION OF RS.7,77,600/ - ON ACCOUNT OF COST PRICE PLUS OTHER EXPENSES WAS PROPOSED TO BE TAXED IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2009 - 10. ALL THESE PROCEEDINGS WERE NOTED WHILE COMPLETING THE ASSESSMENT FOR ASSESSMEN T YEAR 2010 - 11 . CONSEQUENT THERETO, THE ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 WAS SET - ASIDE BY THE COMMISSIONER - I, KOLHAPUR VIDE ORDER PASSED UNDER SECTION 263 OF THE ACT ON 25.03.2014. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED HIS REPLY WHICH IS REPRODUCED BY THE ASSESSING OFFICER UNDER PARA 4 AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER. THE ASSESSEE STRESSED THAT THE SAID ASSET WAS PURCHASED BY HIS WIFE AND IN THE RETURN FILED FOR ASSESSMENT YEAR 2010 - 11, THE ASSESSEE HAD DECLAR ED THE PROFIT ON SALE OF PROPERTY IN THE PROFIT & LOSS ACCOUNT ITSELF. THE SAID MISTAKE WAS COMMITTED BY LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE . HOWEVER, THE SAID GAIN WAS INCLUDED. IN THIS REGARD, HE FURTHER STRESSED THAT SINCE THE PROPERTY BELONG TO HIS SPOUSE, NO COST OF ACQUISITION WAS TO BE ADDED IN HIS HANDS THOUGH THE PROPERTY IN QUESTION WAS REGISTERED IN THE NAME OF HIS WIFE AND HIMSELF. THE ASSESSING OFFICER THEREAFTER, ASKED THE ASSESSEE TO PRODUCE THE DOCUMENTARY EVIDENCE REGARDI NG INVESTMENT AND SUBSEQUENT WITHDRAWALS MADE BY THE SPOUSE OF ASSESSEE AT THE TIME OF PURCHASE OF PROPERTY. THE ASSESSEE IN THIS REGARD FURNISHED WRITTEN SUBMISSIONS ON 20.01.2015 , IN WHICH IT WAS EXPLAINED THAT SHE HAD WITHDRAWN THE AMOUNT FROM BANKS DU RING THE FINANCIAL YEAR 2008 - 09 AND HAD FURTHER RECEIVED CERTAIN AMOUNT IN CASH FROM HER FATHER. IT WAS FURTHER POINTED OUT BY THE ASSESSEE THAT WHILE GOING THROUGH SCRUTINY ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2010 - 11, THEN INCOME ITA NO. 12 03 /PN/20 1 6 SHRI JITENDRA BANDU BHOSALE 4 TAX OFFICER HAD T AKEN HER STATEMENT ON OATH AND IN THAT DECLARATION ALSO, SHE HAD CLEARLY MENTIONED THAT THE AMOUNT WAS RECEIVED FROM HER FATHER FOR MAKING THE INVESTMENT IN HOUSE PROPERTY. HOWEVER, IN THE ABSENCE OF ANY DOCUMENTARY PROOF BEING AVAILABLE FOR RECEIVING THE SAID AMOUNT FROM HER FATHER, THE ASSESSEE CONTENDED THAT NO ADVERSE VIEW COULD BE TAKEN IN HIS CASE . THE ASSESSING OFFICER IN THIS REGARD NOTED THAT THE FLAT WAS PURCHASED IN CASH FOR RS.7,50,000/ - AND HE QUESTIONED THE AVAILABILITY OF CASH IN THE HANDS OF ASSESSEE. IN THE ABSENCE OF ANY SUCH DETAILS BEING FILED BY THE ASSESSEE, THE ADDITION WAS MADE BY THE ASSESSING OFFICER. 6. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN MAKING ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. 7 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS WHETHER IN SUCH CIRCUMSTANCES, WHERE THE ASSESSEE HAS EXPLAINED THAT THE SOURCE OF INVESTMENT IN THE SAID PROPERTY IS MADE BY HIS WIFE, WHO IN TURN , HAS SOLD THE PROPERTY IN THE SUCCEEDING YEAR AND HAD ALSO DECLARED THE PROFIT ON SALE OF SAID PROPERTY IN HER HANDS, MAY BE UNDER THE OTHER HEAD INCOME FROM CAPITAL GAINS AS PROFIT ON SALE OF PROPERTY, CAN ANY ADDITION BE MADE IN THE HANDS OF ASSESSEE, ON ACCOUNT OF HIS INVESTMENT IN THE SAID PROPERTY, ON THE PREMISE THAT THE ASSESSEE WAS JOINT HOLDER OF THE PROPERTY. ADMITTEDLY, THE ASSESSEE OWNS THE SAID PROPERTY ALONG WITH HI S WIFE IN JOINT NAMES. IN CASE, THE CASE OF ASSESSING OFFICER IS ACCEPTED THAT THE SO CALLED INVESTMENT HAS BEEN MADE BY THE ASSESSEE, THEN AT BEST HE CAN BE HELD LIABLE FOR 50% OF THE INVESTMENT, AS THE PROPERTY IS JOINTLY HELD BY HIM AND HIS WIFE. NO SUCH CASE HAS BEEN BUILT UP BY THE ASSESSING OFFICER. ON THE OTHER HAND, TH E EXPLANATION FILED ALONG WITH ITA NO. 12 03 /PN/20 1 6 SHRI JITENDRA BANDU BHOSALE 5 RELEVANT EVIDENCES HAVE BEEN BRUSHED ASIDE AND THE COST OF INVESTMENT IN THE PROPERTY IN ENTIRETY HAS BEEN TREATED AS INCOME OF THE ASSESSEE UNDER SECTION 69 OF THE ACT. THE ASSESSEE HAD ELABORATED BEFORE THE ASSESSING OFFIC ER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE SAID INVESTMENT WAS THE PERSONAL INVESTMENT OF HIS WIFE AND THE SAME WAS NOT DECLARED IN HER BALANCE SHEET AND / OR IN THE BALANCE SHEET FILED BY THE ASSESSEE, WHEREIN ONLY BUSINESS ASSETS WERE SHOWN. FURTHER, THE INVESTMENT IN THE IMMOVABLE PROPERTY WAS MADE BY HIS WIFE OUT OF HER OWN CASH AND CASH RECEIVED FROM HER FATHER. THE WIFE OF ASSESSEE WAS ALSO A PATHOLOGIST AND HAD SHOWN THE INCOME FROM BUSINESS, THOUGH ON LOWER SCALE. THE SAID PROPERTY W AS SOLD IN ASSESSMENT YEAR 2010 - 11 AND THE PROFIT ON SALE OF PROPERTY WAS BY AN ERROR, SHOWN AS INCOME FROM BUSINESS . HOWEVER, MERELY BECAUSE THE INCOME FROM SHORT TERM CAPITAL GAINS WAS DECLARED AS INCOME FROM BUSINESS BY THE WIFE OF ASSESSEE IN ASSESSME NT YEAR 2010 - 11 DOES NOT TAKE AWAY THE FACT THAT THE SAID INVESTMENT AND ITS SALE THEREOF HAS BEEN DECLARED IN THE HANDS OF WIFE OF ASSESSEE. ONCE THE GAIN ARISING FROM SALE OF SUCH PROPERTY, WHICH IS HELD BY THE ASSESSEE AND HIS WIFE IN JOINT NAMES, IS D ECLARED IN THE HANDS OF WIFE OF ASSESSEE, THERE IS NO MERIT IN MAKING THE ADDITION UNDER SECTION 69 OF THE ACT IN THE HANDS OF ASSESSEE ON ACCOUNT OF PURCHASE PRICE . THE SOURCE OF INVESTMENT IS AT BEST TO BE EXPLAINED IN THE HANDS OF WIFE OF ASSESSEE. HE RE ONLY, IT MAY BE TAKEN NOTE THAT BY WAY OF WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THE SOURCE OF INVESTMENT BY HIS WIFE OUT OF CASH LOAN RECEIVED FROM HER FATHER. THE TOTAL INVESTMENT IN THE HANDS OF WIFE OF ASSESS EE IS ONLY RS.7,50,000/ - . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WHERE WIFE OF ASSESSEE HAS DECLARED THE INCOME / PROFIT ON SALE OF SAID PROPERTY IN HER HANDS IN ASSESSMENT YEAR 2010 - 11, THERE IS NO MERIT IN TREATING THE IN VESTMENT IN THE SAID PROPERTY AS UNEXPLAINED IN THE HANDS OF ASSESSEE, WHO IS THE CO - OWNER OF PROPERTY. THE CASE OF THE ASSESSEE ITA NO. 12 03 /PN/20 1 6 SHRI JITENDRA BANDU BHOSALE 6 REPEATEDLY BEFORE THE AUTHORITIES BELOW WAS THAT THE SAID PROPERTY THOUGH IN JOINT NAMES WAS SOURCED OUT OF FUNDS AVAILABLE WI TH HIS WIFE AND IN THE ABSENCE OF ANY CONTRARY EVIDENCE AND IN VIEW OF THE GAIN BEING DECLARED IN THE HANDS OF WIFE OF ASSESSEE, NO ADDITION IS WARRANTED UNDER SECTION 69 OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION MA DE OF RS.7,77,600/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 29 TH J U LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPOND ENT; 3. ( ) / THE CIT(A) - 1 , KOLHAPUR ; 4. / THE CIT - 1, KOLHAPUR ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE C OPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE