Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 3828 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 5 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-08-2019
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2005-2006
Appeal Filed On
03-03-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 130/ASR/2015 AS SESSMENT YEAR: 2005-06 SRIJAL GUPTA, 5-A, NEAR DURGA MATA MANDIR, PATEL NAGAR, PATHANKOT [PAN: AOLPG 6303F] VS. THE INCOME TAX OFFICER, WARD 6(3), PATHANKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PARVEEN JAIN, ADV. RESPONDENT BY: SH. CHARAN DASS, SR. DR DATE OF HEARING: 21.05.2019 DATE OF PRONOUNCEMENT: 16.08.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR (' CIT(A)' FOR SHORT) DATED 04.12.2014, DISMISSING THE ASSESSEES APPEAL CONTES TING HIS ASSESSMENT U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' H EREINAFTER) DATED 26.03.2013 FOR THE ASSESSMENT YEAR (AY) 2005-06. 2. THE ONLY ISSUE IN THIS APPEAL, QUA WHICH THE APPEAL RAISES FOUR GROUNDS, IS THE SUSTAINABILITY IN LAW, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, OF AN ADDITION, MADE IN THE SUM OF RS.20,60,542, SINCE CONFIRMED IN FIRST APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-INDIVIDUAL WAS OBSERVED TO HAVE PURCHASED TWO PROPERTIES DURING THE CURRENT YE AR, INVESTING RS.18,47,513/-. ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 2 NO RETURN OF INCOME FOR THE RELEVANT YEAR HAD BEEN FILED BY THE ASSESSEE AS PER RECORD OF THE DEPARTMENT. ACCORDINGLY, REASSESSMENT PROCEEDINGS WERE INITIATED BY THE ISSUE OF NOTICE U/S. 148(1) ON 23.3.2012 FOLLOW ING THE DUE PROCEDURE IN ITS RESPECT, I.E., RECORDING OF REASONS U/S. 148(2) ON 16.3.2012, APPROVED U/S. 151 ON 22.3.2012, SERVED ON 26/3/2012. THE ASSESSEE, IN TH E ASSESSMENT PROCEEDINGS, EXPLAINED THE SOURCE OF THE SAID INVESTMENTS, WHICH IS EVEN OTHERWISE APPARENT, THE LD. COUNSEL FOR THE ASSESSEE, SH. JAIN, WOULD ARGUE , FROM THE FACT THAT NO ADDITION TOWARD THE SAME WAS MADE BY THE ASSESSING OFFICER ( AO). HE, HOWEVER, OBSERVED THE ASSESSEE TO BE A PARTNER WITH 30% SHARE IN A FI RM BY THE NAME REAL ESTATE (PARTNERSHIP DEED AT PB PGS. 2-5), WHICH HAD DEPOSI TS IN ITS BANK ACCOUNT DURING THE RELEVANT YEAR AT AN AGGREGATE RS.68,68,475. THE SAME WAS EXPLAINED TO BE THE MONIES INTRODUCED BY WAY OF CAPITAL IN THE PARTNERS HIP . AS THE FIRM DID NOT MAINTAIN ANY BOOKS OF ACCOUNT OR, IN ANY CASE, THE SAME WERE NOT PRODUCED, THE AO ESTIMATED THE ASSESSEES CAPITAL IN THE SAID FIR M TO BE IN THE PROFIT SHARING RATIO, I.E., AT RS.20,60,542 /-. THE FIRM, IN HIS OPINION, WAS IN FACT ONLY A RU SE, HAVING QUOTED A FICTITIOUS PAN (IN THE BANK ACCOUNT OPENIN G FORM). A FIRM, LEGALLY SPEAKING, IS NOT A SEPARATE LEGAL ENTITY, AND IT IS ONLY THE PARTNERS WHO ARE THE OWNERS OF ITS ASSETS, CITING N. KHADERVALI SAHEB & ANR. V. N. GUDU SAHIB (DECD) & ORS [2003] 261 ITR 1 (SC) FOR THE PURPOSE. THE PARTNER WAS, IN ANY CASE, BOUND TO EXPLAIN THE SOURCE OF HIS CAPITAL IN THE FIRM, F OR WHICH REFERENCE WAS MADE BY HIM TO THE FOLLOWING DECISIONS: CIT V. K. CHINNATHAMBAN [2007] 292 ITR 682 (SC); HIMMATRAM LAXMINARAIN V. CIT [1986] 161 ITR 7 (P&H); SURENDRA MOHAN SETH V. CIT [1996] 221 ITR 239 (ALL); AND MANOJ AGGARWAL V. DY. CIT [2008] 113 ITD 377 (DEL)(SB). NOT SATISFIED WITH THE ASSESSEE S EXPLANATION, ADDITION FOR RS. 20,60,542 WAS, ACCORDINGLY, MADE BY HIM, AND CONFIR MED IN APPEAL FOR ESSENTIALLY THE SAME REASONS. AGGRIEVED, THE ASSESSEE IS IN SEC OND APPEAL. ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 3 4. BEFORE ME, IT WAS EXPLAINED THAT THE ENTIRE INVE STMENT IS FROM EXPLAINED SOURCES, BEING PRIMARILY BY WAY OF BANK TRANSFERS B Y THE ASSESSEES FATHER, SH. SAHIB DAYAL, FROM HIS BANK ACCOUNT, OR OF THE FIRM IN WHICH HE IS A PARTNER. THAT APART, CASH GIFTS WERE MADE BY THE ASSESSEES GRAND FATHER, SH. OM PARKASH, UPON WITHDRAWING CASH FROM A PARTNERSHIP FIRM. THE RELEV ANT BANK ACCOUNTS, TO EXHIBIT THE BANK TRANSFERS, AS WELL AS THE CAPITAL ACCOUNT OF THE PARTNERS, FORMING PART OF THE PAPER-BOOK, WERE ADVERTED TO DURING HEARING (PB PGS . 23-25, 49-50). 5. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. 5.1 THE FIRST THING THAT NEEDS TO BE CLARIFIED, HAV ING BEEN CONTESTED BY SH. JAIN DURING HEARING, IS THAT IT IS LEGALLY PERMISSIBLE F OR THE AO TO, IN THE REASSESSMENT PROCEEDINGS, ASSESS OTHER INCOMES, I.E., WHICH DO N OT FIND MENTION IN THE REASONS RECORDED. THE ONLY CAVEAT IS THAT THE SAME OUGHT NO T TO BE THE SUBJECT MATTER OF ASSESSMENT ALREADY MADE, AS THAT WOULD AMOUNT TO A REVIEW, WHICH IS NOT PERMISSIBLE. THIS ASPECT IS CLARIFIED BY EXPLANATION 3 TO SECTION 147, EVEN AS THE SAME STANDS ABUNDANTLY CLARIFIED BY THE HONBLE COU RTS TIME AND AGAIN, INCLUDING BY THE HONBLE JURISDICTIONAL HIGH COURT, AS IN MANJINDER S. KANG V. CIT [2012] 344 ITR 358 (P&H); CIT V. MEHAK FINVEST PVT. LTD. [2014] 367 ITR 769 (P&H). THERE HAS BEEN IN FACT NO PRIOR ASSESSMENT IN THIS CASE. THE ASSESSEES OBJECTION IS IN FACT NOT TENABLE ON FACTS AS WELL. THIS IS AS, P ER THE ASSESSEE HIMSELF, THE TWO PROPERTIES QUA WHICH THE REASONS TO BELIEVE ESCAPEMENT OF INCOME HAVE BEEN RECORDED, STAND INVESTED IN THROUGH THE FIRM, REAL ESTATE. THAT IS, AN ENQUIRY OF THE ASSESSEES PERSONAL INVESTMENT AND THAT BY THE SAID FIRM OVERLAP, I.E., RELATE TO THE SAME INVESTMENTS. HOW COULD THEN IT BE SAID THAT THE AO HAS TRAVELLED TO A NEW AREA ? NO OTHER ARGUMENT QUA THE LEGAL ASPECT, I.E., TOWARD CONTESTING THE VALI DITY OF THE ASSESSMENT PROCEEDINGS, WAS ASSUMED OR RAISE D DURING HEARING. ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 4 5.2 ON MERITS, THE TWO PROPERTIES PURCHASED, ALONG WITH THE MODE OF THE INVESTMENT THEREIN, HAVE BEEN TABULATED BY THE ASSE SSEE, AND WHICH ARE SUMMARIZED AS UNDER: (AMT . IN RS. LACS) PARTICULARS OF INVESTMENT AMT. MODE (I) PROPERTY 1 (AT MOHALLA KHAJANCHI, GURDASPUR) (PURCHASED ON 26.5.2004) 5.30 CASH (II) PROPERTY 2 (AT MOHALLA KHAJANCHI, GURDASPUR) CASH 3.17 (PURCHASED ON 09.02.2005) 13.47 BANK TRANSFER 10.00 18.47 THE ASSESSEES CASE IS THAT THE TWO PROPERTIES PURC HASED BY HIM DURING THE YEAR ARE ONLY THROUGH THE PARTNERSHIP FIRM, REAL ESTATE (RE FOR SHORT), WHICH WAS FORMED TO DEAL IN REAL ESTATE, EVEN AS THE SALE DEEDS ARE IN THE NAME OF THE INDIVIDUALS, BEING THE FOUR PARTNERS IN THE SAID PARTNERSHIP. WH ILE ONE PROPERTY (PROPERTY 1, SALE DEED AT PB PGS. 6-9, WITH ENGLISH TRANSLATION AT PB PGS. 10-11), PURCHASED ON 26.5.2004 FOR RS.21.20 LACS, IS IN EQUAL SHARES OF ALL THE CO-OWNERS, I.E., RS.5.30 LACS EACH, THE OTHER (PROPERTY 2, SALE DEED AT PB P GS. 12-19, WITH ENGLISH TRANSLATION AT PB PGS. 20-21), PURCHASED ON 09.2.20 05 FOR RS.42.40 LACS, IS WITH DEFINED SHARES OF THE CO-OWNERS, I.E., IN THE RATIO OF THEIR RESPECTIVE INVESTMENTS, WITH THAT BY THE ASSESSEE AMOUNTING TO RS.13,17,513 (BEING TOWARD SHARE IN 17.37 M, OUT OF THE TOTAL AREA OF 27.95 M). 5.3 THE FIRST QUESTION THAT NEEDS TO BE ADDRESSED I N THE MATTER IS THE AMOUNT OF INVESTMENT THAT THE ASSESSEE NEEDS TO EXPLAIN, I.E. , RS. 18.475 LACS (AS CLAIMED TO HAVE BEEN MADE), OR RS. 20.61 LACS, FOR WHICH, REGA RDING IT AS UNEXPLAINED, THE IMPUGNED ADDITION HAS BEEN MADE IN ASSESSMENT AND C ONFIRMED. THE ASSESSEES CLAIM THAT THE AO HAS ACCEPTED THE EXPLANATION FOR RS.18.475 LACS ADMITTEDLY INVESTED IN THE TWO PROPERTIES, IS MISPLACED, AND O NLY NEEDS TO BE STATED TO BE ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 5 REJECTED. THE AO HAS CATEGORICALLY REJECTED (AND WH ICH FINDING OUGHT TO HAVE BEEN CONTESTED, THOUGH HAS NOT BEEN), THE ASSESSEES EXP LANATION TOWARD THESE INVESTMENTS, HOLDING THAT THE STATED SOURCE/S, LIST ED AT RS. 18 LACS AT PAGE 3 OF THE ASSESSMENT ORDER, DO NOT RELATE TO THE PURCHASE OF ANY PROPERTY AND, BESIDES, ARE FOR F.Y. 2003-04, WHILE THE INVESTMENT UNDER REFERENCE IS THAT MADE DURING F.Y. 2004- 05, THE PREVIOUS YEAR RELEVANT TO AY 2005-06 (REFER PARA 2, PAGES 3-4 OF HIS ORDER). THE SAME DID NOT, FOR THE SAME REASONS, FIND FAVOR WITH LD CIT(A) AS WELL, WITH THE CASH COMPONENT THEREOF (RS. 8 LACS) BEING ALSO NOT SUPPORTED BY ANY RELIABLE EVIDENCE (PARA 6, PAGE 9 OF THE IMPUGNED ORDER IO ). THE SAME, BEING BY WAY OF IKRARNAMAS, WAS, AS SHALL BE NOTED (REFER PARA 4), NOT PRESSED BEFORE THE TRIBUNAL. THE AO DID NOT ALSO ACCEPT THE ASSESSEES CLAIM OF CASH GIFTS FROM HIS GRANDFATHER (SHRI OM PRAKASH), MADE BEFORE HIM ON THE LAST DAY OF HEARING, I.E., 26.3.2013. THE SAME WAS AGAIN NOT SUPPORTED BY ANY CONTEMPORAN EOUS EVIDENCE; THE ASSESSEE, HE FURTHER OBSERVED, TO BE COMING UP WITH SOME STORY FROM TIME TO TIME. THIS OBSERVATION, WHICH IS PERTINENT, HAS AGAIN NOT BEEN CONTESTED BY THE ASSESSEE AT ANY STAGE INASMUCH AS IT IS THE AOS SATISFACTIO N THAT THE LAW MANDATES, AND NOT OF THE APPELLATE AUTHORITY, SO THAT THE LATTERS PU RVIEW IS THE MAINTAINABILITY OF THE ASSESSEES EXPLANATION, I.E., WHETHER THE SAME OUGH T TO HAVE BEEN, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, INCLUDING THE EVIDENCES LED IN SUPPORT, REGARDED AS SATISFACTORY OR NOT BY THE ASSESSING AUTHORITY. THE RE IS, IT IS FURTHER OBSERVED, NO EXPLANATION AT ANY STAGE, INCLUDING BEFORE THE TRIB UNAL, FOR THE COMPLETE CHANGE IN THE SOURCE OF CASH (RS.8 LACS), CLEARLY REGARDED AS AN AFTERTHOUGHT BY THE AO. THE SAME ALSO DID NOT INSPIRE CONFIDENCE OF THE LD CIT( A). THE COPY OF THE CAPITAL ACCOUNT IN THE FIRM, OM PRAKASH BKO, FILED IN SUPPO RT, WAS DATED 31/03/1999, I.E., FIVE YEARS BACK. MONEY WITHDRAWN FIVE YEARS EARLIER COULD NOT BE REGARDED AS AVAILABLE, AND WOULD ONLY HAVE BEEN USED SOMEWHERE ELSE IN THE INTERVENING PERIOD. THE SAME, HE OPINED, COULD ONLY BE CONSIDER ED WHERE SUPPORTED BY BANK ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 6 TRANSFER/S, OR WHERE THE WITHDRAWAL/S WAS IMMEDIATE LY BEFORE THE GIFT/S, STATED BEFORE HIM AT RS. 8 LACS, AS UNDER: RS.2.50 LACS ON 10/01/2004 (PB PGS. 51, 53) RS. 3 LACS ON 10/03/2004 (PB PG. 52) RS.2.50 LACS ON 16/01/2005 (NIL) (REFER PG. 9 OF THE IO) I STATE SO AS THE ASSESSMENT ORDER (PARA 7, PAGE 11 ) ONLY REFERS TO A GIFT AMOUNT OF RS. 2.50 LACS, WHICH WOULD POSSIBLY BE EITHER FOR 1 0/01/2004 OR 16/01/2005 INASMUCH AS THERE IS NO REFERENCE BY THE AO TO THE DATE OF THE GIFT. AS SHALL BE APPARENT FROM THE FOREGOING, THERE IS NO REFERENCE TO THE GIFT DATED 16/01/2005 BEFORE THE TRIBUNAL NOR ANY DOCUMENT IN ITS SUBSTA NTIATION BEFORE IT; PB PG. 53 BEING THE SAME DOCUMENT AS PB PAGE 51, ATTESTED ON 15/02/2004. THE AO, TAKING NOTE OF THE FACT THAT THE INVESTMENT IN THE REAL ESTATE HAS BEEN ROUTED THROUGH THE FIRM, RE, ACCORDINGLY SHIFT ED THE BASIS FOR THE ADDITION TO THE BANK DEPOSITS DURING THE YEAR IN THE SAID FIRMS ONLY BANK ACCOUNT (NO. CD 100226, WITH THE CENTRAL BANK OF INDIA, PATEL NAGAR , GURDASPUR BRANCH) DURING THE RELEVANT YEAR, I.E., RS.68,68,475 (PB PGS. 22, 22A) , WHICH WAS CLARIFIED BY THE ASSESSEE BEFORE HIM (VIDE LETTER DATED 21/03/2015) TO BE NOT ENTIRELY IN CASH, BUT BY WAY OF BANK TRANSFERS AS WELL, BEING AT RS. 18,25,7 75 (I.E., RS.68,68,475 RS. 50,42,700). THAT BEING THE CASE, THE QUESTION IS WH ETHER THIS CHANGE OF BASE IS VALID. IT SURELY IS, AS DISCUSSED HEREINBEFORE (PAR A 5.1 OF THIS ORDER). THE INVESTMENT IN PROPERTY HAVING BEEN ROUTED THOUGH THE FIRM (RE) , AS FOUND BY THE AO DURING THE ASSESSMENT PROCEEDINGS, THE SAME IN FACT REPRES ENTS THE CORRECT MANNER FOR APPLICATION OF SS. 69/69A, BEING BOTH MORE COMPREHE NSIVE AND PRECISE. REAL ESTATE IS ONE OF THE AVENUES TO WHICH THE MONIES, INTRODUC ED AS CAPITAL IN THE FIRM (RE) BY ITS PARTNERS HAS BEEN APPLIED TO. IN FACT, OF RS. 68.685 LACS DEPOSITED IN THE SAID FIRMS BANK ACCOUNT, ONLY A SUM OF RS. 5,561 IS HEL D IN THE BANK ACCOUNT ON ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 7 31/03/2005, THE YEAR-END, SO THAT THE BALANCE RS. 6 8.63 LACS STANDS UTILIZED BY THE FIRM DURING THE YEAR ITSELF. THE INVESTMENT TO BE T HEREFORE EXPLAINED BY THE ASSESSEE IS THAT INVESTED AS HIS SHARE IN THE CAPIT AL INTRODUCED IN THE FIRM DURING THE RELEVANT YEAR. THE INVESTMENT IN PROPERTY IS ONLY F OR RS. 63.60 LACS. NO OTHER INVESTMENT IN PROPERTY HAS BEEN STATED, MUCH LESS E VIDENCED. OF THE SAME, RS. 11 LACS IS NOT INVESTED FROM THE FIRMS BANK ACCOUNT, BEING: A). RS. 1 LAC IN PROPERTY 1 (BY WAY OF DEMAND DRAFT DATED 21/05/2004 DRAWN ON CANARA BANK, PATHANKOT); THE BALANCE PURCHASE PRICE OF RS.19 LACS BEING FROM THE FIRMS BANK ACCOUNT. B). RS. 10 LACS IN PROPERTY 2 (BY WAY OF THREE CHEQ UES DATED 26.12.2003 BY ASSESSEES FATHER, SH. SAHIB DAYAL, FROM HIS BANK A CCOUNT AND THAT FROM THE PARTNERSHIP FIRM, M/S. GUPTA BROTHERS); THE BALANCE PURCHASE PRICE OF RS. 30 LACS BEING FROM THE FIRMS BANK ACCOUNT. 5.4 BEFORE PROCEEDING FURTHER, IT MAY BE RELEVANT T O CLARIFY THAT THERE IS LITTLE MERIT IN THE AOS STAND OF RE, A PARTNERSHIP FIRM, BEING A BOGUS FIRM INASMUCH AS IT DID NOT FILE ITS RETURN OF INCOME AND, FURTHER, FURNISHED A WRONG PAN FOR OPENING A BANK ACCOUNT. THIS ASPECT, EVEN AS ALSO O BSERVED DURING HEARING, HAS BEEN EXAMINED IN DETAIL BY THE TRIBUNAL IN THE CASE OF ANOTHER PARTNER, RAKESH GUPTA (IN ITA NO. 222/ASR/2016, DATED 31/01/2019), TO FI ND THE FIRM RE TO BE A GENUINE FIRM. THE FIRM HAD IN FACT RAISED A LOAN FR OM HINDUSTAN COOPERATIVE BANK LTD., PATHANKOT, DURING F.Y. 2005-06. THAT THE FIRM IS NOT A LEGAL ENTITY, WITH ITS PARTNERS THE REAL OWNER OF ITS ASSETS, IS NOT RELE VANT AS THE FIRM IS A SEPARATE PERSON U/S. 2(31) OF THE ACT. IN FACT, THE RELEVANCE OF TH E AOS FINDING IN THIS REGARD IS ONLY QUA THE INVESTMENT IN REAL ESTATE BY THE ASSESSEE, BEI NG THROUGH THE FIRM (RE), AND NOT WHERE THE CAPITAL IN THE SAID FIRM ITSELF I S THE BASIS FOR RECKONING THE INVESTMENT TO BE EXPLAINED. ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 8 5.5 COMING TO THE ADDITION ON MERITS, THE BANK DEPO SITS IN THE FIRM DURING THE YEAR, AS STATED (VIDE ASSESSEES LETTER DATED 21/3/ 2013), ARE: SR. NO. AMOUNT (RS.) MODE 1 50,42,700 CASH 2 18,25,775 CHEQUE TOTAL 68,68,475 NO PART OF THE DEPOSIT/S BY CHEQUE/S IS ATTRIBUTABL E TO THE ASSESSEE, A PARTNER WITH 30% SHARE IN THE FIRM. THIS, HOWEVER, BECOMES AN IR RELEVANT CONSIDERATION AS, WHETHER IN CASH OR BY CHEQUE, OR IN FACT IN ANY OTH ER MANNER, THE AO HAS TAKEN THE TOTAL CAPITAL INTRODUCED IN THE FIRM RE AS THE RELE VANT BASE, FOR WHICH, IN THE ABSENCE OF THE BOOKS OF ACCOUNT OF THE FIRM, THE DE POSIT IN ITS BANK ACCOUNT HAS BEEN TAKEN A SURROGATE MEASURE. THE ASSESSEE, TO BE FAIR, IN FACT DOES NOT DISPUTE THIS, THOUGH CLAIMS, AND ONLY CORRECTLY SO, THAT IT IS ONLY THE ACTUAL INVESTMENT BY EACH PARTNER IN THE FIRM, RATHER THAN HIS SHARE IN THE PROFIT OF THE FIRM, THAT SHOULD BE ADOPTED AND, THUS, REQUIRED TO BE EXPLAINED BY H IM. THE CONTENTION IS UNEXCEPTIONAL, BUT THE AO DOES SO ONLY IN THE ABSEN CE ON THE FIRMS ACCOUNTS, QUA WHICH, TO A REPLY IN THE NEGATIVE, REFERENCE WAS AL SO MADE DURING HEARING. THOUGH THE GIFT DEED/S, ADDUCED ON 26.3.2013, ARE STATED B Y THE AO TO BE ACCOMPANIED BY THE ASSESSEES CAPITAL ACCOUNT IN THE BOOKS OF RE, THERE IS NO REFERENCE THERETO BY THE ASSESSEE ANYWHERE ELSE, WITH THE ADMITTED POSIT ION BEING OF UNAVAILABILITY THEREOF, BOTH IN THE INSTANT CASE AS WELL AS IN RAKESH GUPTA (SUPRA). IT IS IN FACT THIS THAT LED THE AO TO ADOPT THE PROFIT-SHARING RATIO T O ARRIVE AT THE QUANTUM OF INVESTMENT IN THE FIRM RE BY EACH OF ITS PARTNERS. THE REFERENCE TO THE CAPITAL ACCOUNT IN RE IN THE ASSESSMENT ORDER MUST THEREFOR E BE NECESSARILY CONSTRUED AS IMPLYING REFERENCE TO THE CAPITAL ACCOUNT OF THE DO NOR, SH. OM PRAKASH, IN THE FIRM, OM PRAKASH BKO, FROM WHICH CASH FOR THE STATE D GIFT/S TO THE ASSESSEE IS ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 9 ADMITTEDLY SOURCED BY HIM. THE TOTAL CAPITAL INVEST ED IN RE (AS ON 31/03/2005), IN ANY MANNER, ON THE BASIS OF THE MATERIAL ON RECORD, IS AT RS.79.69 LACS, AS UNDER: - BY CHEQUE : RS.18,25,775/- - BY CASH : RS.50,42,700/- - OTHER : RS.11,00,000/- (*) [(*) THOUGH RS.10 LACS (OUT OF RS.11 LACS) STANDS I NVESTED BY THE ASSESSEE ON 26/12/2003 (I.E., RELEVANT TO A.Y. 2004-05), THE SA ME HAS BEEN INCLUDED AS THE SAME IS TO BE TAKEN INTO ACCOUNT IN ARRIVING AT THE ASSESSEES SHARE IN THE PROPERTY AND, CONSEQUENTLY, IN THE CAPITAL OF THE FIRM, RE, I.E., TO THE EXTENT APPLIED IN REAL ESTATE (REFER PARA 5.2 OF THIS ORDER)] FURTHER, INASMUCH AS THE SHARE IN THE PROPERTY ACQU IRED BY THE PARTNERS IS NOT IN THEIR RESPECTIVE PROFIT-SHARING RATIO, THE CAPIT AL, TO THE EXTENT INVESTED BY THE FIRM IN PROPERTY, IS TO BE IN THE RATIO OF THEIR (PARTNE RS) SHARE IN THE SAID PROPERTY. THE INVESTMENT IN THE FIRM, I.E., BY THE ASSESSEE, AND WHICH IS THEREFORE REQUIRED TO BE EXPLAINED BY HIM, IS AT RS.23,30,145/-, I.E., BY TA KING THE CAPITAL OTHER THAN THAT INVESTED IN PROPERTY IN THE PROFIT-SHARING RATIO, A S UNDER: (AMT. IN RS. ) PARTICULARS PROPERTY OTHER TOTAL REMARKS FIRMS CAPITAL 63,60,000 16,08,775 79,68 ,775 ASSESSEES SHARE 18,47,513 4,82,632 23,30,145 @ 30% THE POSITION THAT THEREFORE EMERGES IS, AS: PARTICULARS/MODE CHEQUE CASH OTHER (#) TOTAL INVESTMENT BY ASSESSEE -- 13,30,145 10,00,0 00 23,30,145 (#) (I.E., INCLUDES INDIRECT TRANSFERS) NOW, THERE IS NOTHING ON RECORD TO SHOW THAT ANY PA RT OF THIS CAPITAL, I.E., OTHER THAN THE INDIRECT TRANSFER OF RS.10 LACS, WAS MADE BY TH E ASSESSEE PRIOR TO 01/04/2004, THE BEGINNING OF THE RELEVANT PREVIOUS YEAR. ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 10 5.6 THERE IS NO ADVERSE FINDING, OR EVEN AN OBSERVA TION BY THE REVENUE, WITH REGARD TO INDIRECT TRANSFER/S OF RS.10 LACS, WHICH FINDS DUE MENTION IN THE RELEVANT SALE DEED. THE SAME, IN FACT, ARE DIRECT PAYMENTS T O THE SELLER, SURINDERJEET SINGH S/O SH. ACHHAR SINGH, RESIDENT OF GURDASPUR. THE SA ME IS ACCORDINGLY ACCEPTED. THE ONLY EXPLANATION FOR THE CASH INTRODUCED BY THE ASSESSEE, I.E., REGARDED AS SO ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, INCLUDING THE MATERIAL ON RECORD, IS THE CASH GIFTS FOR RS.5.50 LACS, I.E., O N 10/01/2004 (RS.2.50 LACS) AND 10/03/2004 (RS.3 LACS)(REFER PARA 5.3). THE BALANCE CAPITAL, AT RS.7,80,145 THE TOTAL BEING AT RS. 13,30,145, IS THUS UNEXPLAINED. AS REGARDS THE CASH GIFTS OF RS.5.50 LACS, THE STATED SOURCE IS THE WITHDRAWAL B Y SHRI OM PRAKASH, THE ASSESSEES GRAND-FATHER, FROM HIS CAPITAL ACCOUNT I N THE FIRM, M/S. OM PRAKASH BKO DURING F.YS. 2001-02 & 2002-03, AT RS.4 LAC EAC H (PB PGS. 49, 50). THE ASSESSEE HAS, IN SUPPORT OF THE SAME, ALSO FILED, A LBEIT FOR THE FIRST TIME, THE DISSOLUTION (RETIREMENT) DEED OF THE SAID FIRM DATE D 31/3/2003 AND THE COMMUNICATION TO THE SALES-TAX DEPARTMENT IN ITS RE SPECT (PB PGS. 40-42). IF THE SAID DEED, AS WELL AS THE FIRMS BALANCE-SHEETS AS AT 31/3/2002 & 31/3/2003, HAVE BEEN CONTEMPORANEOUSLY FILED WITH THE REVENUE, THE WITHDRAWAL OF CASH BY THE ASSESSEES GRAND-FATHER DURING THE RELEVANT YEARS C ANNOT BE DISPUTED. THE QUESTION OF RETAINING CASH FOR 2 YEARS AND 1 YEAR RESPECTIVE LY, IMPINGING ADVERSELY ON THE GENUINENESS OF THE GIFTS, THOUGH OBTAINS. WHY WOULD, IT MAY BE ASKED, ONE HOLD THE AMOUNT IN CASH, AND IN NO INSUBSTANTIAL SUMS, FOR Y EAR/S ? THIS QUESTION, ALSO RAISED BY THE LD. CIT(A), REMAINS UNANSWERED. AGAIN, THERE IS THE QUESTION OF THE CASH REQUIRED FOR HOUSEHOLD PURPOSES (WHICH IS TO BE REC KONED UP TO 31/03/2005, AS THE SAME IS TO BE CONSIDERED UP TO THAT DATE). THAT IS, THE CASH WITHDRAWAL FROM THE FIRM OM PRAKASH BKO, ASSUMING SO (INASMUCH AS THERE IS NO POSITIVE FINDING IN ITS RESPECT BY EITHER AUTHORITY), YET DOES NOT AUTOMATI CALLY TRANSLATE INTO CASH AVAILABILITY WITH THE DONOR. THERE IS FURTHER NO OT HER WITHDRAWAL FROM THE SAID FIRM ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 11 IN THE HANDS OF SHRI SAHIB DAYAL, THE ASSESSEES FA THER, ALSO A PARTNER IN THE SAID FIRM. THERE IS NOTHING ON RECORD TO EXHIBIT THE AVA ILABILITY OF SURPLUS CASH WITH THE FAMILY, WHICH IS CLEARLY INTO INVESTING EXTENSIVELY , UTILIZING ITS RESOURCES TO THE HILT, IN REAL ESTATE. THE EXPLANATION OF CASH GIFT/ S, AS OBSERVED EARLIER, WAS IN FACT INTRODUCED ALMOST SURREPTITIOUSLY AT THE TIME OF TH E LAST HEARING BEFORE THE AO, NOR HAS THE CHANGE IN EXPLANATION OR THE VOLTE-FACE THUS, EXPLAINED AT ANY STAGE. SO, HOWEVER, TAKING A BROAD VIEW IN THE MATTER, CAS H IS REGARDED AS AVAILABLE WITH THE FAMILY TO SOME EXTENT, WHICH WAS UTILIZED FOR INVESTMENT IN THE NAME OF THE ASSESSEE (ROUTED THROUGH THE FIRM, RE). CASH GI FT, AS A SOURCE OF CASH INTRODUCTION IN THE FIRM RE IS, ACCORDINGLY, ACCEPT ED AT RS. 2.50 LACS, I.E., AS PER THE GIFT DEED DATED 10/1/2004, THE EARLIEST IN TIME, AL SO FURNISHED BEFORE THE AO. THERE IS NO QUESTION OF THE CASH AVAILABILITY WITH THE AS SESSEE BEING REGARDED AT A HIGHER AMOUNT. STRICTLY SPEAKING, EVEN THIS SHOULD, IN FAC T, BE PRECEDED BY A VERIFICATION (BY THE AO) OF THE CASH WITHDRAWALS BY, AS WELL AS ITS AVAILABILITY WITH, SH. OM PRAKASH, FOR BEING GIFTED, AS THE SAME, APART FROM BEING LIABLE TO BE CONSUMED FOR HOUSEHOLD PURPOSES BY THE FAMILY (FROM F.Y. 2001-02 TO 2004-05), COULD HAVE BEEN ALSO UTILIZED IN INVESTMENT/S IN HIS NAME OR IN THE NAME OF ANY OTHER FAMILY MEMBER/S. THE SAME IS HOWEVER DISPENSED WITH, CONSI DERING THE MATTER BEING OLD, AS WELL AS THE TEDIUM INVOLVED, SO AS TO GIVE A QUI ETUS TO THE MATTER. THE IMPUGNED ADDITION, ACCORDINGLY, GETS CONFIRMED AT RS.10,80,1 45/- (I.E. RS.13,30,145 RS.2.50 LACS). I DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON AUGUST 16, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER ITA NO. 130/ASR/2015 (AY 2005-06) SRIJAL GUPTA V. ITO 12 DATE: 16.08.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SRIJAL GUPTA, 5-A, NEAR DURG A MATA MANDIR, PATEL NAGAR, PATHANKOT (2) THE RESPONDENT: THE INCOME TAX OFFICER, WAR D 6(3), PATHANKOT (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER
