SANJAY B, CHAWARE, MUMBAI V. ITO 18(2)(2), MUMBAI

ITA 1357/MUM/2012

• Counselvise Citation: 135719914 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 20-08-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 29-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: UPENDRA SHAH
• Keywords: Gift; Opportunity of being heard; Source of fund; Additional evidence; Surrender of tenancy right
• Section: 143(3); 68; 69; 148

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 1357/MUM/2012 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2002-03 MR. SANJAY B. CHAWARE, FLAT NO. 12, 2 ND FLOOR, BHUPAT BHAVAN, D.S. BABREKAR MARG, (ASH LANE), DADAR (W), MUMBAI 400 028. ( ( ( ( / VS. INCOME TAX OFFICER 18(2)(2), MUMBAI. #. !./ PAN : ADAPC2604D ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) APPELLANT BY SHRI UPENDRA SHAH RESPONDENT BY : SHRI SHISHIR SRIVASTAVA !($ 2 / // / DATE OF HEARING : 20-08-2013 34- 2 / DATE OF PRONOUNCEMENT : 15-10-2013 [ '5 / O R D E R PER P.M. JAGTAP, A.M . : .. , !'# THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) 29, MUMBAI DATED 22-12-2011 AND THE GRIEVA NCE OF THE ASSESSEE IS PROJECTED IN THE FOLLOWING GROUNDS RAISED THEREIN:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) 29 ERRED IN NOT ALLOWING EXEMPTION AGAINST LONG TERM CAPITAL GA INS AMOUNTING TO RS. 60,000/- UNDER SECTION 54/54F. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) 2 9 ERRED IN CONFIRMING ADDITION OF RS. 250000/- 100000 AND 5000 0 GIFTS RECEIVED FROM MOTHER IN LAW, MOTHER AND SISTER U/S 69 OF THE INCOME TAX ACT, 1961. ITA 1357/M/12 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) 29 ERRED IN CONFIRMING ADDITION ON ACCOUNT OF DIFFERENCE IN CAP ITAL BALANCE OF RS. 88634 AS UNEXPLAINED. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS CARRYING ON THE BUSINESS OF SALE OF VEGETABLE AND FLOWERS ON COMMIS SION BASIS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HIM ON 25-06-2002 DECLARING TOTAL INCOME OF RS. 93,563/-. THE SAID RE TURN WAS INITIALLY PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. SUBSEQUENTL Y, THE ASSESSMENT HOWEVER, WAS REOPENED BY THE A.O. AND A NOTICE U/S 148 OF THE ACT WAS ISSUED BY HIM ON 30-3-2007, IN REPLY TO WHICH A LET TER WAS FILED BY THE ASSESSEE STATING THEREIN THAT THE RETURN OF INCOME ORIGINALLY FILED BY HIM ON 25-6-2002 MAY BE TREATED AS THE RETURN FILED IN RES PONSE TO NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF REASSESSMENT PROCEEDI NGS, THE ASSESSEE WAS REQUIRED BY THE A.O. TO EXPLAIN THE SOURCE OF INVES TMENT OF RS. 20 LACS MADE BY HIM DURING THE YEAR UNDER CONSIDERATION IN PURCH ASE OF A NEW FLAT. IN REPLY, THE ASSESSEE FILED A LETTER DATED 10-10-2007 DECLARING THE SOURCE OF HIS INVESTMENT AS UNDER:- SR. NO. DETAILS DATE AMOUNT 1 OLD HOUSE SALE PROCEEDS 08/06/2001 6,00,000/- 2 LOAN FROM FRIEND(MR. RAJU HINGE) 02/06/2001 2,00,00 0/- 3 SALE OF SUMO CAR (USED AS PERSONAL ASSET) 04/06/2001 3,50,000/- 4 LOAN FROM FRIEND (M/S PRAKASH HARDWARE MART) 07/06/2001 2,00,000/- 5 GIFT FROM MOTHER(SMT. SHEELA B. CHAVRE) 01/06/2001 1,00,000/- 6 LOAN FROM FRIEND (MR. RAJU BANGERA) 01/06/2001 30,0 00/- 7 LOAN FROM BROTHER-IN-LAW (SATISH NALAVADE) 02/06/2001 50,000/- 8 LOAN FROM FRIEND (MR. MAHESH AMRUTE) 02/06/2001 50,000/- 9 GIFT FROM MOTHER-IN-LAW (SMT. SITABAI K. JADHAV) 16/09/1999 2,50,000/- 10 BANK BALANCE OLD SAVING 50,000/- 11 LOAN FROM (MRS.NALINI CHAVARE) WIFE 30,000/- 12 GIFT FROM SISTER (MRS. SITAL S. NALAVADE) 02/06/2001 50,000/- 13 CASH IN HAND 02/06/2001 50,000/- ITA 1357/M/12 3 THE A.O. EXAMINED/VERIFIED THE ABOVE SOURCE EXPLAIN ED BY THE ASSESSEE AND FOUND THAT ALTHOUGH THE ASSESSEE HAD PRODUCED A COP Y OF LETTER SIGNED BY ONE SHRI PRAKASH OWALEKAR IN SUPPORT OF HIS CASE OF HAV ING RECEIVED SALE CONSIDERATION OF RS. 6 LACS AGAINST OLD HOUSE, HE C OULD NOT PRODUCE THE SAID PURCHASE DEED FOR HIS EXAMINATION. AS FURTHER NOTED BY THE A.O., THE ASSESSEE ALSO FAILED TO FILE ANY REGISTERED SALE DEED. THE A MOUNT OF SALE CONSIDERATION OF RS. 6 LACS, THEREFORE, WAS TREATED BY THE A.O. AS U NEXPLAINED CASH CREDIT AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSES SEE U/S 68 OF THE ACT. AS REGARDS THE GIFT OF RS. 1 LAC, RS. 2.50 LACS AND RS . 50,000/- CLAIMED TO BE RECEIVED BY THE ASSESSEE FROM HIS MOTHER, MOTHER-IN -LAW AND SISTER IN-LAW RESPECTIVELY, THE A.O. REQUIRED THE ASSESSEE TO PRO DUCE THE SAID DONORS FOR HIS EXAMINATION. ACCORDINGLY, THE ASSESSEE PRODUCED THE SAID DONORS BEFORE THE A.O. WHO RECORDED THEIR STATEMENTS ON OATH. ACCORDI NG TO THE A.O., THE SAID DONORS IN THEIR STATEMENTS COULD NOT EXPLAIN SATISF ACTORILY THE SOURCE OF FUNDS WHICH WERE UTILIZED FOR GIVING GIFTS TO THE ASSESSE E. HE ALSO FOUND THAT THE SAID DONORS WERE NOT ASSESSED TO TAX AND DID NOT HAVE AN Y REGULAR SOURCE OF INCOME. HE, THEREFORE, TREATED THE INVESTMENT MADE BY THE ASSESSEE IN FLAT FROM GIFT AMOUNTS AGGREGATING TO RS. 4 LACS AS UNEX PLAINED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AS REGAR DS THE OLD BANK BALANCE OF RS. 50,000/- AND CASH IN HAND OF RS. 50,000/- EXPLA INED TO BE THE SOURCE FOR MAKING INVESTMENT IN THE NEW FLAT, THE A.O. FOUND T HAT AS PER THE BALANCE SHEET OF THE ASSESSEE AS ON 31-3-2004, THE AMOUNT A PPEARING WAS ONLY 11,366/-. HE, THEREFORE, TREATED THE BALANCE AMOUNT OF RS. 88,634/- AS UNEXPLAINED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S 69 OF THE ACT. 3. THE AFORESAID ADDITION, INTER ALIA, MADE BY THE A.O. IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT WERE DIS PUTED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A). BEFORE THE L D. CIT(A), THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF ELECTRICITY BILL , MTNL BILL ETC. TO ESTABLISH ITA 1357/M/12 4 THAT HE WAS OCCUPYING THE OLD HOUSE ON RENTAL BASIS . IT WAS SUBMITTED THAT THE TENANCY RIGHTS IN THE SAID HOUSE WERE TRANSFERR ED BY THE ASSESSEE TO SHRI PRAKASH OWALEKAR FOR A CONSIDERATION OF RS. 6 LACS AND CONFIRMATION LETTER ISSUED BY SHRI PRAKASH OWALEKAR TO THIS EFFECT WAS FILED BEFORE THE A.O. IT WAS ALSO SUBMITTED THAT IN THE CASE OF TRANSFER OF TENA NCY RIGHTS, THERE WAS NO REQUIREMENT OF ANY SALE DEED AND HENCE THE PRODUCTI ON OF ANY REGISTERED SALE DEED WAS NOT POSSIBLE. THE ADDITIONAL EVIDENCE PROD UCED BY THE ASSESSEE WAS FORWARDED BY THE LD. CIT(A) TO THE A.O. SEEKING HIS REMAND REPORT AND AFTER CONSIDERING THE REMAND REPORT SUBMITTED BY THE A.O. AS WELL AS THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE, THE LD. CIT(A) ACCEPTED THE STAND OF THE ASSESSEE THAT A SUM OF RS. 6 LACS RECEIVED B Y THE HIM WAS RELATABLE TO SURRENDER OF TENANCY RIGHT. HE, HOWEVER, HELD THAT THE INCOME ARISING FROM THE SURRENDER/TRANSFER OF TENANCY RIGHT WAS CHARGEA BLE TO TAX IN THE HANDS OF THE ASSESSEE AS LONG TERM CAPITAL GAIN AND ACCORDIN GLY DIRECTED THE A.O. TO ASSESS SUCH CAPITAL GAIN. AS REGARDS THE GIFTS OF R S. 4 LACS CLAIMED TO BE RECEIVED BY THE ASSESSEE, THE LD. CIT(A) HELD THAT THE BURDEN WAS ON THE ASSESSEE TO ESTABLISH THEIR IDENTITY AND CAPACITY A S WELL AS THE GENUINENESS OF THE TRANSACTIONS. HE HELD THAT THERE WAS, HOWEVER, A FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED DONORS TO GIVE THE GIFTS AS CLEARLY MADE OUT BY THE A.O. AND ACCORDINGLY THE AD DITION MADE ON ACCOUNT OF GIFTS TREATING THE SAME AS UNEXPLAINED WAS CONFIRME D BY THE LD. CIT(A). AS REGARDS THE ADDITION OF RS. 88,634/- MADE BY THE A. O. ON ACCOUNT OF UNEXPLAINED CASH AND BANK BALANCE, THE LD. CIT(A) F OUND THAT NO SATISFACTORY EXPLANATION COULD BE OFFERED BY THE ASSESSEE TO EXP LAIN THE DIFFERENCE OF RS. 88,634/- NOTICED BY THE A.O. ON THE BASIS OF BALANC E SHEET OF THE ASSESSEE AND ACCORDINGLY THE ADDITION MADE BY THE A.O. ON TH IS ISSUE WAS ALSO CONFIRMED BY THE LD. CIT(A). AGGRIEVED BY THE ORDE R OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBU NAL. ITA 1357/M/12 5 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS G ROUND NO. 1, THE LIMITED CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESS EE IS THAT THE LD. CIT(A) HAVING HELD THAT THE PROFIT ARISING FROM TRANSFER/S URRENDER OF TENANCY RIGHT WAS CHARGEABLE TO TAX UNDER THE HEAD LONG TERM CAPI TAL GAIN, FAILED TO CONSIDER THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/ S 54/54F OF THE ACT FOR THE INVESTMENT MADE IN THE NEW HOUSE. IN THIS REGARD, H E HAS INVITED OUR ATTENTION TO THE LETTER DATED 20-12-2011 SUBMITTED TO THE LD. CIT(A) MAKING SUCH CLAIM AND SUBMITTED THAT THE LD. CIT(A) HAS FA ILED TO CONSIDER THE SAME. KEEPING IN VIEW THIS SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE WHICH IS DULY SUPPORTED BY THE LETTER DATED 20-12-2011 FILED BEFORE THE LD. CIT(A), THE LD. D.R. HAS SUBMITTED THAT THE MATTER MAY BE REMIT TED TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE ISSUE RELATING TO THE ASSES SEES ALTERNATIVE CLAIM FOR EXEMPTION U/S 54/54F OF THE ACT AS THE SAME HAS NOT BEEN DECIDED BY HIM VIDE HIS IMPUGNED ORDER. ACCORDINGLY, THIS MATTER I S RESTORED TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO DECIDE THE SAME AFRE SH AFTER AFFORDING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. GROUND NO. 1 OF ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATIST ICAL PURPOSE. 5. AS REGARDS GROUND NO. 2, IT IS OBSERVED THAT ALT HOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS FILED COPIES OF RELEVANT LAND RECO RD EXTRACT TO SHOW THAT THE CONCERNED DONORS WERE HOLDING SOME AGRICULTURAL LAN D, THE SAME, IN OUR OPINION, ARE NOT SUFFICIENT TO ESTABLISH THE CAPACI TY OF THE CONCERNED DONORS TO GIVE THE IMPUGNED GIFT AMOUNTS TO THE ASSESSEE. IN THE ABSENCE OF ANY OTHER DETAILS OR DOCUMENTS FILED BY THE ASSESSEE TO ESTAB LISH ANY REGULAR SOURCE OF INCOME IN THE HANDS OF THE SAID DONORS, WE AGREE WI TH THE AUTHORITIES BELOW THAT THE ASSESSEE HAS FAILED TO ESTABLISH CAPACITY OF THE CONCERNED DONORS. ADMITTEDLY, THE SAID DONORS ARE NOT ASSESSED TO TAX AND THERE IS NO EVIDENCE PRODUCED BY THE ASSESSEE IN THE FORM OF BANK STATEM ENTS, BILLS FOR SALE OF AGRICULTURAL PRODUCE ETC. TO ESTABLISH THE AVAILABI LITY OF FUNDS IN THEIR HANDS ITA 1357/M/12 6 AT THE RELEVANT TIME TO GIVE THE IMPUGNED GIFTS TO THE ASSESSEE. WE, THEREFORE, AGREE WITH THE VIEW TAKEN BY THE AUTHORITIES BELOW THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED DONORS TO GIVE THE IMPUGNED GIFTS. ACCORDINGLY, THE ADDITION OF RS. 4 LACS MADE BY TREATING THE SAID GIFTS AS UNEXPLAINED IS CONFIRMED AND GROUND NO. 2 IS DISMISSED. 6. AS REGARDS GROUND NO. 3, IT IS OBSERVED THAT THE ASSESSEE HAS FAILED BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US T O EXPLAIN THE DIFFERENCE IN THE OLD CASH AND BANK BALANCE OF RS. 1 LAC CLAIMED TO BE AVAILABLE WITH HIM AND THE BALANCE REFLECTED IN THE RELEVANT BALANCE S HEET SUBMITTED BY HIM AS POINTED OUT BY THE A.O. AND IN THE ABSENCE OF SUCH EXPLANATION, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) C ONFIRMING THE ADDITION OF RS. 88,634/- MADE BY THE A.O. ON ACCOUNT OF SUCH DIFFER ENCE. THE SAME IS ACCORDINGLY UPHELD ON THIS ISSUE. GROUND NO. 3 IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER, 2013. . '5 2 34- 6'(7 15-10-2013 4 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 6'( DATED $.)(.!./ RK , SR. PS ITA 1357/M/12 7 '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ; () / THE CIT(A)29, MUMBAI. 4. ; / CIT 18, MUMBAI 5. 9$> 0))( , , / DR, ITAT, MUMBAI E BENCH 6. %, ? / GUARD FILE. '5(! '5(! '5(! '5(! / BY ORDER, !19 0) //TRUE COPY// @ @ @ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI