Neelam Verma, Parwanoo V. ITO, Ward, Parwanoo

ITA 1215/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4122 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Gift; Income from undisclosed sources; Opportunity of being heard; Corroborative evidences; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO.1215/CHD/2018 ASSESSMENT YEAR: 2007-08 NEELAM VERMA VS. THE ITO W/O SH. V.P. VERMA WARD PARWANOO C/O HOTEL MONAAL PALACE PARWANOO SECTOR-2, PARWANOO-173220 SOLAN, H.P. PAN NO. ABOPV8910H (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SURINDER BABBAR, CA REVENUE BY : SMT. CHANDRAKANTA, SR. DR DATE OF HEARING : 24/01/2019 DATE OF PRONOUNCEMENT : 13.03.2019 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DT. 13/07/2018 OF LD. CIT(A), SHIMLA PERTAINI NG TO 2007-08 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LD. INCOME-TAX OFFICER, PARWANOO (HEREINAFTER C ALLED THE LD. A.O.) AND THE LD. CIT(A) IN CONCURRENCE WITH THAT OF THE LD. A.O. IS WRONG, AGAINST FACTS AND LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) IN CONCURRENCE WITH THE LD. A.O. IS WHOLLY UNJUSTIFIED IN UPHOLDING THE ADDITION OF RS. 9,00,000/- BY TREATING THE CASH AMO UNT ACCEPTED BY THE ASSESSEE FROM MS. GEETA LAI AS ASSESSEE'S INCOME FR OM UNDISCLOSED SOURCES. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) IN CONCURRENCE WITH THE LD. A.O. IS WHOLLY UNJUSTIFIED IN UPHOLDING THE ADDITION OF RS. 5,00,000/- BY TREATING THE CASH GIF T ACCEPTED BY THE ASSESSEE FROM HIS FATHER SH. ISHWAR SINGH CHAUDHARY AS ASSES SEE'S INCOME FROM UNDISCLOSED SOURCES. 4. THE APPELLANT CRAVES LEAVE TO ADD/DELETE ANY OTHER GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. THE LD. AR INVITING ATTENTION TO THE RESPECTIVE ORDERS OF THE AO AND LD. CIT(A)SUBMITTED THAT IN THE FACTS OF THE PRESENT CA SE THE NEED FOR FUNDS OF THE ASSESSEE WAS NOT IN DISPUTE AS THE SPECIFIC PROPERTY FOR WHI CH THE FUNDS WERE ARRANGED, THE PAYMENT ADMITTEDLY TO HIMACHAL FINANCE CORP. LTD. ( HFCL) HAD TO BE MADE IN TERMS OF THE PURCHASE AGREEMENT DT. 04/04/2003 ENTERED INTO WITH HIMACHAL PRADESH FINANCIAL CORPORATION, SHIMLA. ON ACCOUNT OF THE ASSESSEE'S F AILURE TO MAKE THE NECESSARY PAYMENTS THE LITIGATION ETC. ENSUED. THE HFCL HAD A DMITTEDLY ISSUED A RECALL-CUM- TAKE OVER NOTICE AND ON THE FAILURE OF PAYMENT, WOU LD HAVE ACTED THEREUNDER. THE ITA NO. 1215/CHD/2018 A.Y. 2007-08 PAGE 2 OF 4 ASSESSEE ACCORDINGLY HAD TO APPROACH LD.CIVIL JUDGE (SR. DIVISION), KASAULI IN SUIT NO. 10/1 OF 2006 FOR SETTING ASIDE THE RECALL-CUM-TAK E OVER NOTICE DT. 09/05/2005. SINCE THE ISSUE WAS DECIDED AGAINST THE ASSESSEE TH E ASSESSEE HAD TO APPROACH THE HONBLE DISTRICT JUDGE, SOLAN ON 21/06/2006 VIDE C. M.A NO. 7-S/14 OF 2006. THE JUDGEMENT IN THE SAID CASE WAS PRONOUNCED ON 31/10/ 2006 REQUIRING THE ASSESSEE TO URGENTLY RAISE FUNDS FROM VARIOUS SOURCES. IN THE S AID BACKGROUND IT WAS HIS SUBMISSION THAT MRS. GEETA LAL MADE AVAILABLE AN AMOUNT OF RS. 9 LACS. THE ASSESSEE HAS PLACED HER BANK STATEMENT ON RECORD AND THUS THE ONUS PLAC ED ON THE ASSESSEE STANDS DISCHARGED. THE SAID ISSUE IS ADDRESSED VIDE GROUND NO. 2 IN THE PRESENT PROCEEDINGS. THE ASSESSEE ALSO OBTAINED AN AMOUNT OF RS. 5 LACS FROM HER FATHER SHRI ISHWAR SINGH CHAUDHARY. THE AFFIDAVIT OF THE FATHER AFFIRMING TH ESE FACTS WAS RELIED UPON. IT WAS HIS SUBMISSIONS THAT THE ONLY ACTIVITY DONE BY THE FATH ER WAS AGRICULTURAL ACTIVITY JOINTLY WITH HIS BROTHER AND THUS SIMPLY BECAUSE HE WAS NOT AN INCOME TAX ASSESSEE CANNOT BE A REASON TO DISCARD THE EXPLANATION OFFERED. PAPER BO OK RUNNING INTO 36 PAGES FILED IN THE COURT SUPPORTING THE ABOVE CLAIM ALSO RELIED UPON B EFORE THE TAX AUTHORITIES WAS RELIED UPON. 3. THE LD. SR.DR RELIED UPON THE ORDERS OF THE AUTH ORITIES BELOW. IT WAS ALSO HER SUBMISSION THAT BANK STATEMENT OF MRS. GEETA LAL CA NNOT BE SAID TO BE A SUFFICIENT PROOF. IN THE ABSENCE OF MRS. GEETA LALS IDENTITY ITSELF NOT BEING ESTABLISHED, THE OCCASION FOR THE AO OR THE CIT(A) TO CONSIDER HER C REDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS DOES NOT ARISE. RELYING ON THE ORD ERS, IT WAS HER SUBMISSION THAT THESE HAVE ALSO BEEN QUESTIONED BY THE DEPARTMENT. ADDRES SING THE AVAILABILITY OF THE FUNDS WITH THE ASSESSEES FATHER IT WAS HIS SUBMISSION TH AT IT IS A GENERAL ARGUMENT WITHOUT ANY SUPPORTING EVIDENCE. 4. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. I FIND THAT IN AS MUCH AS THE ISSUE OF THE AMOUNTS HAVING BEEN ADVANCE BY MRS. GEETA IS CONCERNED IT IS SEEN THAT APART FROM RELYING ON A C OPY OF THE BANK STATEMENT THERE IS NO EVIDENCE OF ANY IDENTITY ETC. ON RECORD. ON A PERU SDAL OF PAPER BOOK PAGE NO. 33 WHICH IS THE COPY OF THE BANK STATEMENT OF MRS. GEETA LAL , ACCOUNT NO. 10286069700 IT IS SEEN THAT NO RESIDENTIAL ADDRESS OR DOCUMENT IDENTI FYING HER AS D/O, W/O ETC. HAS BEEN PLACED ON RECORD. IT IS FURTHER SEEN THAT THE ASSE SSEE HAS EXPLAINED THE RELATIONSHIP WITH MS. GEETA LAL AS FRIEND OF FRIEND THE RELEVANT EXTR ACT FROM PARA 8 OF THE IMPUGNED ORDER WHICH IS CONSISTING OF THE WRITTEN SUBMISSIONS BEFO RE THE LD. CIT(A), IS EXTRACTED HEREUNDER FOR READY REFERENCE: UNDER THESE CIRCUMSTANCES THE ASSESSEE ARRANGED CAS H FROM HER CLOSE FAMILY FRIEND SH. S.S. THAKUR, MRS. GEETA LAL (FRIEND OF A FRIEND ) . ITA NO. 1215/CHD/2018 A.Y. 2007-08 PAGE 3 OF 4 4.1. ACCORDINGLY I FIND THAT IN THE FACTS OF THE PR ESENT CASE AS FAR AS THE EVIDENCE AVAILABLE ON RECORD QUA MRS. GEETA IS CONCERNED IT IS NEITHER SUFFICIENT NOR COMPLETE. ACCEPTING THE ORAL PRAYER OF THE LD. AR THAT THE AS SESSEE BE PROVIDED AN OPPORTUNITY TO ESTABLISH HER IDENTITY AS UNDER A MISTAKEN BELIEF T HAT BANK ACCOUNT NUMBER ALONGWITH NAME IS NOT SUFFICIENT, THE ISSUE IS RESTORED BACK. THE OPPORTUNITY SO PROVIDED IN THE INTERESTS OF SUBSTANTIAL JUSTICE, IT IS HOPED IS UT ILIZED FULLY AND FAIRLY IN GOOD FAITH. IT IS MADE CLEAR THAT IN THE EVENTUALITY OF ABUSE OF THE SAME, THE AO SHALL BE FREE TO PASS AN ORDER IN ACCORDANCE WITH LAW ON THE BASIS OF MATERI AL AVAILABLE. 5. QUA THE FUNDS MADE AVAILABLE BY THE ASSESSEE FUR THER, IT IS SEEN THAT THE ASSESSEE HAS PLACED ON RECORD AFFIDAVIT OF HER FATHER ALONGW ITH JAMABANDI OF AGRICULTURAL LAND AT PAPER 34 TO 36 OF THE PAPER BOOK FILED. IT IS SEEN THAT THE AO HAS MADE AN ADDITION OF RS. 5 LACS ON FOLLOWING FACTS: THE SUBMISSIONS MADE BY THE ASSESSEE HAVE BEEN CONS IDERED BUT ARE NOT ACCEPTABLE AS THEY ARE NOT SUPPORTED WITH DOCUMENTA RY EVIDENCE. NO PROOF OF EARNING OF INCOME FROM DAIRY FARM BY HER FATHER WAS FURNISHED BY THE ASSESSEE. FURTHER, NO PROOF OF HAVING 5 LAKHS IN CA SH WITH HIM ON THE SAID DATE WAS FURNISHED. HER FATHER WAS HOLDING AGRICULT URAL LAND JOINTLY WITH HIS BROTHERS; ANY INCOME THERE FROM WOULD BELONG TO THE OTHER CO OWNERS OF THE PROPERTY AS WELL. AS SUCH, IT CANNOT BE SAID THAT A LL THE INCOME EARNED WAS HIS. FURTHER, MERE PRESENTING OF A FEW RECEIPTS FOR THE YEAR 2009, DO NOT PROVE AVAILABILITY OF CASH WITH HIM IN THE YEAR 200 6. THE RECEIPTS FROM SALE OF AGRICULTURAL PRODUCE CANNOT BE TREATED AS INCOME AS MUCH EXPENDITURE IS INCURRED ON RAISING THE PRODUCE. MANY A TIMES THERE IS LOSS TO THE AGRICULTURIST. THE ASSESSEE FAILED TO PROVE THAT HE R FATHER WAS HAVING PROFIT FROM AGRICULTURE. NO PROOF WAS FURNISHED IN SUPPORT OF HIS HAVING INCOME IN LACS FROM THE ABOVE TWO SOURCES IN THE YEAR 2006 OR EARLIER YEARS. THE ASSESSEE DID NOT FURNISH ANY BANK ACCOUNT OF HER FA THER. IF HE WAS HAVING INCOME IN LAKHS, THEN HE WOULD HAVE DEFINITELY KEPT SOME PART OF IT IN THE BANK, LEST IT WAS PLOUGHED BACK IN AGRICULTURE OR I N THE RUNNING OF THE ABOVE VENTURE. NO PERSON WOULD KEEP LAKHS AT HOME, WHEN T HE MONEY IS SAFER IN BANK AND ALSO INVOLVES ACCRUAL OF INTEREST INCOME. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT HER FATHER WAS HAVING RS. 5 LA KHS IN CASH WITH HIM, WHICH HE GIFTED TO HER, DOES NOT CARRY MUCH FORCE. THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF THE SAID GIFT; THEREFORE, RS. 5 LAC IS TREATED AS HER INCOME FROM UNDISCLOSED SOURCES AND IS ADDED TO HER TAXABLE INCOME. PENALTY PROCEEDINGS U/S 271(1)( C) FOR CONCEALMENT OF / INCOME ARE INITIATED SEPARATELY. 5.1 IT IS SEEN THAT BEFORE THE LD. CIT(A) ALSO THE ASSESSEE PLEADED THAT HER FATHER HAD SUFFICIENT AGRICULTURAL INCOME ON ACCOUNT OF CASH C ROP PRODUCED AND DAIRY ACTIVITY ETC. IT IS SEEN THAT AFFIDAVIT HAD BEEN FILED BEFORE THE LD . CIT(A) ALSO. ON READING OF THE FINDINGS ARRIVED AT IN THE IMPUGNED ORDER IN PARA 5 .5.2 IT IS SEEN THAT THE ISSUE HAS BEEN DISCUSSED AND ARGUMENTS REJECTED ON ACCOUNT OF THE FACT THAT SHRI ISHWAR SINGH CHAUDHARY WAS NOT AN INCOME TAX ASSESSEE AND THE AM OUNTS WERE NOT FOUND ROUTED THROUGH HIS BANK ACCOUNT. I FIND THAT THE AFORESAID DECISION MAKING PROCESS IS INCORRECT , WHAT WAS NECESSARY FOR DECIDING THE ISSUE WAS WHETH ER SHRI ISHWAR SINGH CHAUDHARY HAD THE POSSIBILITY OF EARNING ANY AGRICULTURE INCO ME FROM THE LAND HOLDINGS AT THE ITA NO. 1215/CHD/2018 A.Y. 2007-08 PAGE 4 OF 4 RELEVANT POINT OF TIME. IN THE EVENT AGRICULTURAL LAND HOLDING IS ESTABLISHED IT WOULD THEN BE NECESSARY TO CONSIDER THE AGRICULTURAL ACTIVITY ON THE SAME LAND HOLDINGS AS NOTED BY THE LAND REVENUE AUTHORITIES. THE FACT THAT THE AS SESSEES FATHER WAS NOT AN INCOME TAX ASSESSEE IN THE PECULIAR FACTS WOULD NOT BE A RELEV ANT CRITERIA. SIMILARLY THE AVAILABLE FUNDS NOT HAVING BEEN DEPOSITED IN BANK AT BEST MAY AROUSE A SUSPICION BUT BY ITSELF CANNOT BE A DECIDING CRITERIA. ACCORDINGLY, IN THE ABSENCE OF ANY RELEVANT DISCUSSION ON THE ISSUES, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO PASS A SP EAKING ORDER IN ACCORDANCE WITH LAW. THE AO SHALL NECESSARILY ADDRESS THE AVERMENTS MADE IN THE AFFIDAVIT RELIED UPON BY THE ASSESSEE AND CALL FOR SUPPORTING LAND REVENUE RECOR DS ETC. FOR DECIDING THE ISSUE. ACCORDINGLY, THE ISSUES ARE SET ASIDE WITH THE ABOV E DIRECTIONS. NEEDLESS TO SAY THAT THE AO SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH L AW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.03.2019. SD/- (DIVA SINGH) JUDICIAL MEMBER AG/POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT(A), THE D R ASSTT.REGISTRAR ITAT CHANDIGARH.