Jaysinha Laxman Patil, Sangli V. Income-tax Officer, Ward - 2(3), Sangli

ITA 1226/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3672 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 17-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Unexplained investment; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.1226/PUN/2018 / ASSESSMENT YEAR : 2007-08 MR. JAYSINHA LAXMAN PATIL, VARDAN MEDICAL CORNER, MAIN ROAD, ATPADI, SANGLI 415301 PAN : ABPPP5908E VS. ITO, WARD -2(3), SANGLI (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-1, KOLHAPUR ON 02-05-2018 IN RELATION TO THE ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.2,50,000/- TREATED BY THE APPELLANT BY SHRI C.H. NANIWADEKAR RESPONDENT BY SHRI ACHAL SHARMA DATE OF HEARING 19-02-2019 DATE OF PRONOUNCEMENT 20-02-2019 ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 2 ASSESSING OFFICER (AO) AS UNEXPLAINED INVESTMENT U/S.69 O F THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) . 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PROPRIETOR OF M/S. WARDAN MEDICAL CORNER AT ATPADI, SANG LI. A SURVEY WAS CONDUCTED IN WHICH THE FACT OF THE ASSESSEE HAVING CONSTRUCTED A HOUSE TRANSPIRED. THE ASSESSEE SUB MITTED THAT A PLOT WAS PURCHASED FOR RS.3.00 LAKH AND AN EXPEND ITURE OF RS.13,50,000/- WAS INCURRED ON ITS CONSTRUCTION. REG ARDING SOURCE OF INVESTMENT IN PLOT, IT WAS SUBMITTED THAT A LOAN AT 75% OF THE VALUE OF PLOT WAS TAKEN FROM BANK OF MAHARA SHTRA AND REMAINING 25% WAS CONTRIBUTED OUT OF BUSINESS INCOME. THE AO ACCEPTED SUCH AN EXPLANATION. AS REGARDS THE INVESTMENT IN CONSTRUCTION, THE ASSESSEE SUBMITTED THAT A LOAN OF RS.7.00 LAKH WAS OBTAINED FROM M/S. GRIHA FINANCE AND TH E REMAINING RS.6.50 LAKH WAS INVESTED OUT OF BUSINESS INCOME . SINCE THERE WAS NO REFLECTION OF SUCH BUSINESS INCOME IN THE BOOKS OF ACCOUNT, THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.6.50 LAKH. HOWEVER, AT THE TIME OF FILING THE RETURN, THE ASSESSEE MADE OUT A CLAIM THAT A SUM OF RS.2,50,000/- W AS A DECLARED SOURCE FOR WHICH INVESTMENT WAS MADE IN CONSTRUCTION. IT WAS STATED THAT A SUM OF RS.2.00 LAKH WAS ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 3 RECEIVED FROM HIS WIFE OUT OF HER HUFS SHARE AND FURTHER A SUM OF RS.50,000/- WAS WITHDRAWN FROM BUSINESS BY MEAN S OF AN ACCOUNTING ENTRY. THE AO DID NOT ACCEPT THE GENUINENESS OF TRANSACTIONS AND MADE AN ADDITION, INTER ALIA, OF RS.2,50,000/-. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION AND MADE THE ADDITION. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO ABOUT THE ASSESSEES EXPLANATION OF HAVING RECEIVED A SUM OF RS.2.50 LAKH FROM GENUINE AND KNOWN SOURCES. THE AO TENDERED HIS REMAND REPORT DATED 10-11-2011, WHICH HAS BEEN REPRODUCED ON PAGES 7 AND 8 OF THE IMPUGNED ORDER. NOT CONVINCED, THE LD. CIT(A) SUSTAINED THE DISALLOWANCE OF RS.2.50 LAKH. THE ASSESSEE IN THE INSTANT APPEAL IS AGGRIEVED BY THE SUSTENANCE OF ADDITION OF RS.2.50 LAKH. 4. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE R ELEVANT MATERIAL ON RECORD. A SUM OF RS.2.00 LAKH WAS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM HIS WIFE. THE LD. CI T(A) CALLED FOR THE REMAND REPORT FROM THE AO QUA THE EXPLANATION OF RS.2.00 LAKH AND FURTHER ABOUT THE WITHDRAWAL OF RS.50,000/- FROM THE BUSINESS. THE AO GAVE REMAND R EPORT ON BOTH THE SCORES, WHICH IS REPRODUCED AS UNDER : ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 4 AS PER THE DIRECTIONS AND TO VERIFY THE CONTENTS O F THE AFFIDAVIT OF SHRI GULABRAO BABUSAHEB SHINDE, THE PERSON WAS S UMMONED TO THIS OFFICE AND HIS STATEMENT WAS RECORDED. IN THE AFFIDAVIT, SHRI GULABRAO B. SHINDE HAS DEPOSED THAT ALONGWITH HIMSELF, HIS BROTHERS SHRI SHARADRAO BAPUSAHEB SHINDE AND SHRI K LUISARAO B. SHINDE AND MOTHER SMT. MANUTAI B. SHINDE HAVE GIVEN AN AMOUNT OF RS.2,00,000/- TO MRS. KAVITA JAYSINH PATI L, WIFE OF THE ASSESSEE SHRI JAYSINH LAXMAN PATIL. THE STATEMENT OF SHRI GULABRAO BAPUSAHEB SHINDE WAS RECORDED ON 19-09-201 0 (COPY OF THE STATEMENT IS ENCLOSED HEREWITH FOR READY REF ERENCE). FROM THE STATEMENT RECORDED FOLLOWING FACTS ARE EME RGED: 1. OUT OF FOUR FAMILY MEMBERS, THREE BROTHERS OF MR S. KAVITA J. PATIL WIFE OF THE ASSESSEE ALL ARE IN SERVICE, T HE GIST OF THE STATEMENT RECORDED IS GIVEN HEREUNDER. SHRI SHARADRAO BAPUSAHEB SHINDE IS WORKING AS HEADM ASTER WITH P.K. SAWANT VIDYALAYA, ADARE. TAL.CHIPLUN, DIST. RA TNAGIRI. HE IS ASSESSED TO TAX UNDER PAN AFJPS9693A. HE HAS ST ATED THAT AN AMOUNT OF RS.62,000/- HAS BEEN PAID TO HIS SISTE R, WAS OUT OF HOUSING LOAN TAKEN FROM RATNAGIRI DISTRICT SECONDAR Y TEACHER CO-OP. CREDIT SOCIETY, RATNAGIRI. THE PHOTOSTAT CO PY OF THE CERTIFICATE REGARDING LOAN TAKEN WAS VERIFIED AND K EPT ON RECORD. SHRI KHUSHABRAO BAPUSAHEB SHINDE WAS WORKING WITH I .T. C. MOVERS PVT. LTD. MUMBAI & HIS WIFE MRS. ANITA K. SH INDE WAS DOING BUSINESS OF RETAIL TRADING OF CLOTH & TAILORI NG JOB AT MUMBAI. BOTH THE HUSBAND & WIFE WERE ASSESSED TO T AX AND FILING THE RETURNS OF INCOME AT INCOME TAX OFFICE, PANVEL, DIST. RAIGAD. THE PHOTOSTAT COPIES OF THE RETURNS OF INC OME IN FORM NO.2D SARAL HAVE BEEN VERIFIED & PLACED ON RECORD. FROM THE RETURNS OF INCOME, IT IS SEEN THAT FOR A.Y. 2008-09 SHRI KLUISABRAO B. SHINDE HAS DECLARED INCOME FROM SALAR Y @ RS.68,000/- & HIS WIFE HAS DECLARED INCOME FROM BUS INESS @ RS.85,160/-. ACCORDING TO THE AFFIDAVIT HE HAS GIV EN AN AMOUNT OF RS.30,000/- TO THE SISTER. SHRI GULABRAO BAPUSAHEB SHINDE IN THE STATEMENT REC ORDED, HAS STATED THAT HE IS IN SERVICE WITH BHARATI SHIPYARD AT RATNAGIRI AS A CRANE OPERATOR. HE FURTHER STATED THAT HE HAS PAID RS.62,000/- TO HIS SISTER OUT OF WITHDRAWALS FROM THE BANK. THE S AY PUTFORTH WAS VERIFIED FROM THE EVIDENCES PRODUCED. SMT. MANUTAI B. SHINDE ACCORDING TO THE SUBMISSION & AFFIDAVIT OF SHRI GULABRAO B. SHINDE, SHE HAS GIVEN RS.42,000 /- TO HER DAUGHTER MRS. KAVITA J. PATIL. IN THIS CONNECTION SHRI GULABRAO B. SHINDE HAS STATED THAT THE FAMILY IS HOLDING AGR ICULTURAL LAND ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 5 ADMEASURING 15 ACRES OUT OF WHICH 8 ACRES LAND IS I RRIGATED. IT IS VERIFIED FROM THE 7/12 EXTRACT & FORM 8, WHICH A RE PLACED ON RECORD. AS REGARDS WITHDRAWAL OF RS.50,000/- FROM THE BOOKS OF ACCOUNTS I WISH TO SUBMIT AS UNDER : DURING THE COURSE OF SURVEY THE ASSESSEE HAS STATED THAT AN AMOUNT OF INVESTMENT OF RS.6.5 LAKHS IN THE CONSTRU CTION OF HOUSE WAS MADE OUT OF BUSINESS INCOME BUT WAS NOT R EFLECTED IN THE BOOKS OF THE BUSINESS. IN THIS CONNECTION IT I S EVIDENT FROM THE RECORD THAT THE ASSESSEE TILL THE DATE OF SURVE Y HE WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS. HOWEVER ACCORDI NG TO THE STATEMENT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNT, AFTER THE SURVEY PROCEEDINGS. IN THE BOOKS MAINTAINED TH E ASSESSEE HAS SHOWN AN AMOUNT OF RS.50,000/- WAS WITHDRAWN. THIS HAS BEEN VERIFIED, FROM THE RECORDS. AS A RESULT OF EXERCISE CARRIED OUT, IT IS FOUND TH AT THE AFFIDAVIT CAN BE RELIED UPON. AS REGARDS AMOUNT OF RS.50,000 /- WITHDRAWN FROM THE BUSINESS, IT IS VERIFIED FROM THE BOOKS, T HAT THE ASSESSEE HAS TRANSFERRED THE AMOUNT. IN VIEW OF THE ABOVE, THE ASSESSEES APPEAL MAY BE D ECIDED ON THE MERITS OF THE CASE, IF APPROVED. 5. IT CAN BE SEEN FROM THE REMAND REPORT, EXTRACTED ABOV E, THAT THE FAMILY MEMBERS OF THE ASSESSEES WIFE ADMITTED THAT A SUM OF RS.62,000/- WAS GIVEN TO HER BY SHRI SHARADRAO BAPUSAHEB SHINDE, BROTHER OF ASSESSEES WIFE WHO WAS WORKING AS HEADMASTER; A SUM OF RS.30,000/- WAS GIVEN BY SH. KHUSHABRAO BAPUSAHEB SHINDE WHO WAS WORKING IN ITC MOVERS PVT. LTD. MUMBAI; A SUM OF RS.62,000/- WAS GIVEN BY SH. GULABRAO BAPUSAHEB SHINDE, WHO WAS WORKING WITH BHARATI SHIPYARD; AND A SUM OF RS.42,000/- WAS GIVEN BY S MT. MANUTAI BAPUSAHEB SHINDE. ALL THESE RELATIVES DEPOSED THAT ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 6 THEY DID GIVE A SUM OF RS.2.00 LAKH TO THE WIFE OF THE ASSE SSEE. IT IS APPARENT FROM THE REMAND REPORT THAT THE DEPOSITIONS MA DE BEFORE THE AO HAVE NOT BEEN CONTROVERTED WITH ANY COGENT MATERIAL OR EVIDENCE. RATHER, THE AO HAS HIMSELF RECORDE D IN THE REMAND REPORT THAT THE AFFIDAVIT FILED CAN BE RELIED UPON . 6. AS REGARDS THE SOURCE OF CASH WITHDRAWAL OF RS.50,00 0/-, THE AO IN HIS REMAND REPORT HAS CATEGORICALLY RECORDED THAT AS REGARDS THE AMOUNT OF RS.50,000/- WITHDRAWN FROM THE BUSINESS IT IS VERIFIED FROM THE BOOKS, THAT THE ASSESSEE HAS TRANSFERRED THE AMOUNT . 7. IN VIEW OF THE REMAND REPORT SUBMITTED BY THE AO ACCEPTING THE GENUINENESS OF SOURCE OF INVESTMENT OF RS.2 .50 LAKH, I HOLD THAT THE LD. CIT(A) OUGHT NOT TO HAVE SUSTAINED THE ADDITION TO THIS EXTENT. I, THEREFORE, DIRECT TO DELETE THE ADDITION OF RS.2.50 LAKH. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY, 2019 SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 20 TH FEBRUARY, 2019 ITA NO.1226/PUN/2018 MR. JAYSINHA LAXMAN PATIL 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, KOLHAPUR 4. THE PR. CIT-1, KOLHAPUR 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 19-02-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19-02-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *