ACIT, CHENNAI V. Shri Masanam Veerakumar, CHENNAI

ITA 1275/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1176 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1275/MDS/2011 (ASSESSMENT YEAR : 2006-07) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-IV(3), AAYAKAR BHAVAN IV FLOOR, 121, M.G.ROAD, CHENNAI-600 034. VS. MR. MASANAM VEERAKUMAR, 23/10, AARAVAMUDHAN GARDEN ST EGMORE, CHENNAI-600 008. PAN: ADIPV4989L (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SHAJI P.JACOB, ADDL. CIT RESPONDENT BY : MR . G.BASKAR, ADVOCATE DATE OF HEARING : 21 ST FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 14 TH MARCH, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNING THE ORDER OF THE CIT(A)-V, CHENNAI DATED 11.04.2011 . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-0 7 ON 4.3.2008 DECLARING TOTAL INCOME OF ` 2,58,961/-. THE ASSESSEE IS ALLEGED TO BE A DIRECTOR OF M/S. MODELS BRIGHT F UTURE PERSONALITY DEVELOPMENT P. LTD. THE CASE OF THE AS SESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) ITA NO.1275/MDS/2011 2 WAS ISSUED TO THE ASSESSEE ON 11.9.2008. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER MADE ADDITIONS IN THE INCOME RETURNED BY THE ASSESSEE ON ACCOUNT OF GIFTS AMOUNTING TO ` 4,80,920/- RECEIVED FROM MOTHERS SISTERS SON, LOAN FROM MR. ILIAZ AMOUNTING TO ` 8,80,072/- AND FROM MR. SAKTHVEL TO THE TUNE OF ` 5,04,000/- AND CASH DEPOSITS AMOUNTING TO ` 13,00,000/-. 3. THE ASSESSING OFFICER HELD THAT MOTHERS SISTER S SON DOES NOT FALL WITHIN THE DEFINITION OF RELATIVE AS PROVIDED UNDER EXPLANATION TO SECTION 56(2)(V), THEREFORE, T HE GIFT RECEIVED FROM HIM IS DISALLOWED. AS REGARDS LOANS , IDENTITY OF THE PERSONS WHO HAVE GIVEN LOANS HAVE NOT BEEN PROV ED. THE ASSESSING OFFICER REJECTED CONFIRMATIONS RECEIVED B Y THE ASSESSEE THROUGH E-MAIL AND MADE ADDITIONS OF THE SAID ALLEGED LOANS IN THE INCOME RETURNED BY THE ASSESSE E. AS REGARDS CASH DEPOSITS, THE ASSESSING OFFICER HELD T HAT THE ASSESSEE HAS FAILED TO GIVE CLEAR SOURCE OF DEPOSI TS IN THE BANK. THE ASSESSING OFFICER VIDE HIS ASSESSMENT ORD ER DATED 30.12.2008 REJECTED THE EXPLANATION FURNISHED BY T HE ITA NO.1275/MDS/2011 3 ASSESSEE AND PROCEEDED ON TO MAKE ADDITION OF THE S AID AMOUNT. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30.12.2008, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND ALLOWED THE APPEAL IN FULL. NOW, THE REVENUE HAS COME IN SECOND APPEAL BEFORE T HE TRIBUNAL ASSAILING THE ORDER OF THE CIT(A). 4. SHRI SHAJI P.JACOB APPEARING ON BEHALF OF THE RE VENUE SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 4,80,920/-, WHICH THE ASSESSEE HAS ALLEGED TO HAVE RECEIVED AS GIFT FROM HIS MOTHERS SISTERS SON. AS PER THE DEFINITION OF RELATIVE GIVEN IN EXPLANATION TO SECTION 56(2)(V), MOTHERS SISTERS SON DO NOT FALL WITHIN THE MEANING OF THE TERM RELATIVE USED IN THE SECTION. THE DR SUBMITTED THAT WITH RE GARD TO THE ALLEGED LOANS RECEIVED FROM MR. ILIAZ AND MR. SAKTH IVEL, THE CIT(A) WITHOUT AFFORDING ANY OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER HAS ACCEPTED THE APPEAL OF THE AS SESSEE. IN RESPECT OF CASH DEPOSITS AMOUNTING TO ` 13,00,000/-, THE DR CONTENDED THAT THE ASSESSEE HAS FAILED TO PRODUCE A NY ITA NO.1275/MDS/2011 4 DOCUMENTARY EVIDENCE TO SUBSTANTIATE HIS CLAIM THAT THE AMOUNT HAS BEEN RECEIVED AS A LOAN. THE IDENTITY O F THE LENDERS WAS NEITHER ESTABLISHED BEFORE THE ASSESSIN G OFFICER OR BEFORE THE CIT(A). THE DR SUBMITTED THAT EXCEPT FOR THE BALD STATEMENT OF THE ASSESSEE, THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM WITH REGARD TO CASH DEPOSITS . THE CIT(A) HAS DRAWN ADVERSE INFERENCE FROM THE ORDER O F THE ASSESSING OFFICER WHEREIN THE ASSESSING OFFICER HAS MADE REFERENCE TO WHAT THE ASSESSEE HAS STATED BEFORE HI M. 5. ON THE OTHER HAND, THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) IS A WELL-RE ASONED AND DETAILED ORDER. THE AMOUNT OF ` 4,80,920/- HAS BEEN RECEIVED BY THE ASSESSEE FROM HIS COUSIN. THE CIT(A) HAS ALL OWED THE SAME AFTER CONSIDERING THE FACT THAT THE GIFT HAS BEEN RECEIVED FROM LINEAL ASCENDANT OR LINEAL DESCENDANT WHICH MEANS RELATIVE. WITH REGARD TO THE LOAN AMOUNTS RECEIVED FROM MR. ILIAZ AND MR. SAKTHIVEL, THE COUNSEL SUBMI TTED THAT CONFIRMATIONS RECEIVED THROUGH E-MAIL FROM THE AFOR ESAID PERSONS WERE SUBMITTED BEFORE THE ASSESSING OFFICE R. THE ASSESSING OFFICER IN AN ARBITRARY AND UNJUSTIFIED M ANNER ITA NO.1275/MDS/2011 5 REFUSED TO CONSIDER THE SAME AND WENT ON TO MAKE A DDITION OF THE SAID AMOUNT. THE COUNSEL FURTHER CONTENDED T HAT AN AMOUNT OF ` 13,00,000/- WAS NOT A SINGLE TRANSACTION. THE SAID AMOUNT WAS DEPOSITED OVER A PERIOD OF ONE YEAR. HE CONTENDED THAT ALL THE STATEMENTS WERE PRODUCED BEF ORE THE ASSESSING OFFICER AS WELL AS CIT(A). THE ASSESSING OFFICER WITHOUT CONSIDERING THE DOCUMENTARY EVIDENCE PRODUC ED BY THE ASSESSEE MADE ADDITION OF ` 13,00,000/- IN THE INCOME RETURNED BY THE ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE CIT(A) HAS ALLOWED GIFT OF ` 4,80,920/- RECEIVED FROM MOTHERS SISTERS SON ON THE GROUND THAT THE AMOUNT HAS BEEN RECEIVE D FROM THE LINEAL ASCENDANT OR LINEAL DESCENDANT WHICH MEA NS RELATIVE. THE TERM RELATIVE HAS BEEN DEFINED IN EX PLANATION TO SECTION 56(2)(V) WHICH IS REPRODUCED HEREIN BELOW:- 56(2)(V):- EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'RELA TIVE' MEANS (I) SPOUSE OF THE INDIVIDUAL; (II) BROTHER OR SISTER OF THE INDIVIDUAL; ITA NO.1275/MDS/2011 6 (III) BROTHER OR SISTER OF THE SPOUSE OF THE INDIVI DUAL; (IV) BROTHER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUAL; (V) ANY LINEAL ASCENDANT OR DESCENDANT OF THE INDIV IDUAL; (VI) ANY LINEAL ASCENDANT OR DESCENDANT OF THE SPOU SE OF THE INDIVIDUAL; (VII) SPOUSE OF THE PERSON REFERRED TO IN CLAUSES ( II) TO (VI); THE TERM USED IN PROVISO TO SECTION 56(2)(V) IS RELATIVE WHICH HAS BEEN FURTHER ELABORATED IN THE EXPLANATIO N TO CLAUSE (V) OF SECTION 56(2). THE CIT(A) HAS ERRED IN EQUATING THE TERM LINEAL ASCENDANT OR LINEAL DESCEND ANT TO RELATIVE TO INCLUDE MOTHERS SISTERS SON. WHEN THE MEANING OF THE TERM RELATIVE IS DEFINED IN THE ACT ITSELF, TO DERIVE MEANING OF THE WORD RELATIVE FROM TERM LINEAL ASCENDANT O R LINEAL DESCENDANT AND BRING THE RELATIONSHIP WITH THE PU RVIEW OF THE SECTION TO GRANT BENEFIT IS UNJUSTIFIED AND BAD IN LAW. WHEN THE DEFINITION HAS BEEN PROVIDED IN THE ACT ITSELF, IT IS NOT APPROPRIATE TO IMPORT DICTIONARY MEANING OF THE TER M. A PERUSAL OF THE TERM RELATIVE USED IN THE SECTION CLEARLY SHOWS THAT MOTHERS SISTERS SON DOES NOT FALL WITHIN THE DEFINITION OF RELATIVE. THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE FROM MOTHERS SISTERS SON DOES NOT QUALIFY FOR THE BENEFIT. ITA NO.1275/MDS/2011 7 THEREFORE, WE REVERSE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOW THE GROUND OF APPEAL OF THE REVENUE. 7. IN RESPECT OF OTHER TWO ADDITIONS, THE DR HAS CO NTENDED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CL AIM WITH DOCUMENTARY EVIDENCE EITHER DURING THE ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS WITH RESPECT TO IDENTITY AND GENUINENESS OF THE LENDERS OF THE LOAN. THE DR HAS CONTENDED THAT BEFORE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER THE CIT(A) HAS NOT AFFORDED ANY O PPORTUNITY TO THE ASSESSING OFFICER TO DEFEND THE ASSESSMENT O RDER. THE DOCUMENTS WHICH WERE PRODUCED BEFORE THE CIT(A) WER E NEVER SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSIN G OFFICER, WHICH IS IN VIOLATION OF RULE 46A OF THE I NCOME TAX ACT. 8. IN RESPECT OF THESE TWO ADDITIONS DELETED BY CI T(A), WE DEEM IT APPROPRIATE TO REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO DECIDE THE ISSUES AFRESH AFTER TAKING IN TO CONSIDERATION THE EVIDENCE SUBMITTED BY THE ASSESSE E WITH REGARD TO GENUINENESS OF THE LENDERS OF THE LOAN AN D THE ITA NO.1275/MDS/2011 8 EVIDENCE FURNISHED BY THE ASSESSEE EXPLAINING CASH DEPOSITS OF ` 13,00,000/-. THUS, THESE TWO GROUNDS OF APPEAL ASS AILING THE ORDER OF THE CIT(A) ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED IN THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 14 TH DAY OF MARCH, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 14 TH MARCH, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.