ITO, Pune V. Hemal Anil Tadkod, Pune

ITA 1204/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49729 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Unexplained investment; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI SHAILENDRA KUMAR YA DAV J UDICIAL MEMBER AND SHRI D. KARUNAKARA RAO A CCOUNTANT M EMBER ITA NO. 1204 /PN/ 20 0 9 ( ASSTT. YEAR : 200 5 - 06 ) INCOME TAX OFFICER , APPELLANT WD 4(6), PUNE VS. HEMAL ANIL TADKOD RESPONDENT MANTRI K 314, IIND FLOOR, ASHOK NAGAR, PUNE PAN : NOT AVAILABLE C.O. NO. 38/PN/2011 (ARISING OUT OF ITA NO. 1204/PN/2009) ( ASSTT. YEAR : 2005 - 06 ) HEMAL ANIL TADKOD CROSS OBJECTOR MANTRI K 314, IIND FLOOR, ASHOK NAGAR, PUNE PAN : NOT AVAILABLE VS. INCOME TAX OFFICER, RESPONDENT WD 4(6), PUNE REVENUE BY : SHRI ABHAY DAMLE ASSESSEE BY : SHRI SHARAD SHAH ORDER PER D KARUNAKARA RAO AM TH ESE ARE THE C ROSS APPEALS ARISING OUT OF THE ORDER OF CIT(A) II, PUNE DATED 6.7.2009. WE SHALL ADDRESS TO THE REVENUES APPEAL FIRST. ITA NO. 1204/PN/2009 2. THE GROUNDS RAISED BY REVENUE READ AS UNDER : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) GROSSLY ERRED DELETING THE ADDITION OF RS.10 LAKHS MADE IN THE ASSESSMENT INSTEAD OF CONFIRMING THE SAME. 3. THE LEARNED CIT(A) GROSSLY ERRED IN HOLDING THAT THE SOURCE OF RS. 10 LAKHS IN THE HANDS OF THE APPELLANT IS ADEQUATELY EXPLAINED WITHOUT APPRECIATING THAT THE ASSESSEE HAD NOT GIVEN ANY EVIDENCE IN SUPPORT OF THE SOURCE OF RS.16,10,000/ - BEING FUNDS IN THE NRE A/C. 4 . THE LEARNED CIT(A) GROSSLY ERRED IN TREATING THE BALANCE IN TH E NRE A/C AS EXPLAINED MERELY ON THE BASIS OF THE INCORRECT SUBMISSIONS THAT NO DEPOSITS IN NRE A/C CAN BE MADE FROM ANY INDIAN SOURCES. ITA 1204 /PN/ 200 9 AND C.O. 38/PN/2011 - HEMAL ANIL TADKOD, ( A.Y. 2005 - 06 ) . 2 5 . FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. FROM THE FACTS OF THE CASE AND THE GROUNDS RAISED ABOVE, THE REVENUE IS AGGRIEVED AGAINST THE DECISION OF THE CT(A) IN GIVING RELIEF TO THE ASSESSEE IN RESPECT OF THE ADDITION OF RS 10 LAKHS. AO MADE ADDITION ON THE REASONI NG THAT THE ASSESSEE DID NOT HAVE THE CAPACITY FOR EXPLAINING THE INVESTMENT IN BONDS, DEBENTURES, SHARES ETC AMOUNTING TO RS 10 LAKHS AND THE SOURCES ARE EXPLAINED . ESSENTIALLY, BOTH THE PARTIES RELIED ON THEIR FAVORABLE ORDERS . 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS REGARDS THE ADDITION OF RS. 10 LAKHS, LD CIT(A) HAS VIDE PARA NO. 7 OF THE IMPUGNED ORDER DELETED TH IS ADDITION BY OBSERVING AS UNDER : 7. GROUNDS OF APPEAL NO. 4 & 5 REL ATE TO THE ADDITION OF RS. 10 LAKHS FOR UNEXPLAINED INVESTMENT IN RBI BONDS DURING THE YEAR UNDER CONSIDERATION. IN THE WRITTEN SUBMISSION DATED 10.2.2009, IT WAS STATED THAT THE DETAILS OF THIS ADDITION OF UNEXPLAINED INVESTMENT WAS NOT MENTIONED IN THE ASSESSMENT ORDER. IT IS FURTHER STATED AS UNDER : APART FROM THE ABOVE I STATE THAT I AM WIDOW OF A BRITISH CITIZEN AND I WAS ALSO IN UK FOR YEARS. I CONTINUE TO STAY IN UK FOR MORE NUMBER OF DAYS IN A YEAR THAN INDIA. I HAVE ALSO HOUSE IN INDIA AND I NVESTMENT BECAUSE WE ARE PERSONS OF INDIAN ORIGIN. I HAVE ALSO A FLAT AT MANTRA KISHOR PARK, BUILDING A, 13/14 ASHOKNAGAR, PUNE 411 007. I AM ENCLOSING THE PAPERS WHICH PROVE MY CAPACITY TO INVEST RS. 10 LAKHS IN BONDS, DEBENTURES, SHARES ETC. I FAIL TO UNDERSTAND WHY THE LD. ASSESSING OFFICER HAS NOT BEEN SPECIFIC AS TO WHICH INVESTMENT HE IS TALKING ABOUT IN HIS ASSESSMENT ORDER. MY PAPER SHOWS THAT I HAVE INHERITED MORE THAN RS. 2.5 CRORES IN CASH AND MORE THAN RS. 1.5 CRORE WORTH OF HOUSE BOTH OF THEM IN U.K. THUS, MY CAPACITY TO INVEST RS.10 LAKH MUST BE TREATED AS PROVED BEYOND DOUBT. THE ENTIRE SUBMISSION OF THE APPELLANT DATED 10.02.2009 ALONG WITH DOCUMENTS FILED RELATED TO APPELLANTS FINANCIAL CAPACITY; I.E. RELATED TO THE ESTATE OF HER LATE HUSBAND ANIL TADKOD, WHO WAS A BRITISH CITIZEN; WERE SENT TO THE A.O. ALONG WITH ORDER U/S 250(4) DATED 12.02.2009. THE A.O. WAS ASKED TO EXAMINE THE APPELLANTS CONTENTIONS AND SEND THE REPORT; AS THE ASSESSMENT ORDER WAS PASSED U/S 144. 7.1 IN THE REM AND REPORT , THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF THE RBI BONDS INVESTMENTS ON THE BASIS OF ANNUAL INFORMATION RETURN ACCORDING TO WHICH THESE BONDS WERE PURCHASED ON 21.12.2004 THROUGH UTI BANK LTD. VIDE ORDER SHEET DATED 18.6.2009, WHILE HANDING OVER THE COPY OF THE REMAND REPORT OF THE ASSESSING OFFICER, THE APPELLANT WAS SPECIFICALLY ASKED FOR TO SHOW THE FUND FLOW STATEMENT FOR LINKING THESE INVESTMENTS OF RS. 10 LAKHS WITH THE FUNDS RECEIVED FROM THE ESTATE OF APPELLANTS DECEASED HUSBAND IN UK, ALONG WITH BANK STATEMENT ETC. WHICH WERE REQUIRED TO EXPLAIN THE SOURCE. IN RESPONSE TO THE SAME VIDE LETTER DATED 01.07.2 - 009 THE FOLLOWING WAS SUBMITTED BY THE APPELLANT : APART FROM THE ABOVE, AND IN TERMS OF YOUR SPECIFIC REQUIREMENT IN THE CO URSE OF EARLIER HEARING, WE FURTHER SUBMIT THE FOLLOWING TO PROVE SOURCES OF MONEY AS REGARD THE INVESTMENT IN RBI BOND AMOUNTING TO RS.10 LAKHS. THE PAPERS CLEARLY PROVE THAT THE SOURCES ARE GENUINE, DULY ITA 1204 /PN/ 200 9 AND C.O. 38/PN/2011 - HEMAL ANIL TADKOD, ( A.Y. 2005 - 06 ) . 3 ACCOUNTED AND WERE NOT LIABLE TO INCOME TAX. CONS IDERING THE FACTS OF THE CASE, THE ADDITION MADE BY THE ASSESSING OFFICER, IT IS PRAYED TO YOUR HONOUR, REQUIRED DELETITION. SN DOCUMENT DESCRIPTION REMARK 1 CERTIFICATE FROM SBI FOR TRANSFER OF RS. 16,10,000/ - FROM NRE A/C. NO DEPOSIT IN NRE ACCOUNT C AN BE MADE FROM ANY INDIAN SOURCE AND THE FACT IS PROVED THAT THE MONEY HAS COME FROM OUTSIDE INDIA. 2 BANK STATEMENT FROM SBI FOR A/C NO. 01190049388 IT SHOWS THE TRANSFER OF RS.16,10,000/ - FROM NRE A/C AND ALSO SHOWS THE OUTFLOW FOR INVESTMENT IN RBI BO ND AMOUNTING TO RS 10 LAKHS. 3 COPY OF THE CHEQUE OF RS.10 LAKHS BEARING NO32676DT 18.12.2004 THE COPY CLEARLY PROVES THE INVESTMENT IN RBI BOND AMOUNTING TO RS. 10 LAKHS. 7.2 . THEREFORE, IN VIEW OF THESE DECISIONS OF THE JURISDICTIONAL HIGH COU RT AND THE ITAT, MUMBAI BENCH, THESE DOCUMENTS PRODUCED BY THE APPELLANT ON BEING CALLED FOR, I.E. THE CERTIFICATE FROM THE SBI REGARDING TRANSFER FROM NRE ACCOUNT, BANK STATEMENT OF SBI AND XEROX COPY OF THE CHEQUE ISSUED FOR MAKING THIS INVESTMENTS OF RS. 10 LAKHS ARE DULY CONSIDERED FOR DISPOSING OFF THIS APPEAL. 7.3 THEREFORE, AFTER A CAREFUL PERUSAL OF TH ESE DOCUMENTS, IT IS HELD THAT THE SOURCE OF RS. 10 LAKHS IN THE HANDS OF THE APPELLANT IS ADEQUATELY EXPLAINED . THE ADDITION IS THEREFORE, DELETED AND THE GROUND OF APPEAL NO. 4 IS ALLOWED. GROUND NO. 5 RELATES TO CHARGING OF CONSEQUENTIAL INTEREST. SINCE GROUND NO. 4 IS ALREADY ALLOWED THIS BECOMES INFRUCTUOUS, AND HENCE DISMISSED FOR STATISTICAL PURPOSES. 5 . ON PERUSAL OF THE ABOVE, WE FIND THAT THE AO, DURING THE REGULAR AND EX - PARTE ASSESSMENT PROCEEDINGS, DID NOT HAVE THE BENEFIT OF THE EVIDENCES FILED BY THE ASSESSEE BEFORE THE CIT(A), WHO REMANDED THEM TO THE FILES OF THE AO IN COMPLIANCE OF THE PRINCIPLES OF NATURAL JUSTICE. ON EXA MINING THE SOURCES OF THE FINDS, CASH AND OTHER IMMOVABLE ASSETS INHERITED BY THE WIDOW - ASSESSEE, THE ASSESSEE WAS GRANTED RELIEF. AS THE TRANSACTIONS IN QUESTION ARE BY WAY OF CROSSED CHEQUE INVOLVING THE BANKING CHANNELS. THUS, AFTER UNDERSTANDING THE IN TRICACIES OF THE TRANSACTIONS, IN OUR OPINION, THERE IS NO POINT IN DOUBTING THE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THEREFORE, W E FIND THAT THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS 10 LAKHS MADE BY THE ASSESSEE I N THE EX - PARTE ASSESSM ENT . HENCE, THE ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENC E. RESULTANTLY, THE G ROUNDS OF THE REVENUE ARE DISMISSED . 6 IN THE RESULT, REVENUES APPEAL IS DISMISSED. C.O. NO. 38/PN/2011 ITA 1204 /PN/ 200 9 AND C.O. 38/PN/2011 - HEMAL ANIL TADKOD, ( A.Y. 2005 - 06 ) . 4 7 . AT THE VERY OUTSET, LD. COUNSEL M ENTIONED THAT THE C.O RAISES LEGAL ISSUES RELATING TO PRINCIPLES OF NATURAL JUSTICE AND FAILURE OF THE CIT(A) IN GRANTING REASONABLE OPPORTUNITY OF BEING HEARD. FURTHER, HE MENTIONED THAT THE C.O IS NOT PRESSED IN CASE THE APPEAL OF THE REVENUE IS DISMISS ED. WE HAVE CONSIDERED THE FACTS OF THE CASE AND AS SEEN FROM THE ABOVE, APPEAL OF THE REVENUE IS DISMISSED. CONSEQUENTLY, THE ADJUDICATION OF THE C.O AMOUNTS TO MERELY AN ACADEMIC EXERCISE. THEREFORE, THE SAME IS DISMISSED AS AN ACADEMIC EXERCISE. IN T HE RESULT, C.O IS DISMISSED. 8 . TO SUM UP THE RESULTS, BOTH THE REVENUES APPEAL AND ASSESSEES C.O ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06 TH APRIL , 201 1 SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 06 TH APRIL , 201 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PP ELLANT 2. THE RESPONDENT 3. THE CIT(A) - I I, PUNE 4. THE CIT - II , PUNE 5. THE D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE