Daudayal Murarilal Gupta, V. Income-tax Officer,

ITA 1386/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0488 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S.G. BHUTADA
• Keywords: Unexplained investment; Gift; Salary income; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1386/PN/2016 / ASSESSMENT YEAR : 2009-10 DAUDAYAL MURARILAL GUPTA, 110/1, RAILWAY LINES, SOLAPUR 413 001 PAN : ABHPG2148K . / APPELLANT V/S ITO, WARD-1(1), SOLAPUR . / RESPONDENT / APPELLANT BY : SHRI S.G. BHUTADA / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 15-02-1016 OF THE CIT(A)-7, PUNE RELATING TO ASSES SMENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND DERIVES INCOME FROM SALARY, INCOME FROM HOUSE PROPERTY , INCOME FROM SHARE OF PROFIT AND INTEREST INCOME. HE FILED HIS RETUR N OF INCOME ON 22-01-2010 DECLARING TOTAL INCOME OF RS.2,62,020/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OB SERVED FROM THE VARIOUS DETAILS FILED BY THE ASSESSEE THAT HE HAS PU RCHASED ZIRAYAT AGRICULTURAL LAND VIDE GUT NO.217, AREA OF 2HECTARE AND 4 4AR AT TAMALWADI, TAL. TULJAPUR, DIST. SOLAPUR AT THE COST OF RS.8,0 5,220/- / DATE OF HEARING :09.11.2016 / DATE OF PRONOUNCEMENT:11.11.2016 2 ITA NO.1386/PN/2016 WHICH INCLUDES STAMP DUTY AND OTHER CHARGES FROM ONE SH RI YOGINATH SHIVUOGIPPA HUNGUND, RESIDENT AT 19/1, VIDYA NAGAR, SHELGI, SOLAPUR. 3. ON BEING QUESTIONED BY THE ASSESSING OFFICER IT WAS SUB MITTED THAT THE ABOVE PROPERTY HAS BEEN PURCHASED BY THE A SSESSEE ALONG WITH HIS BROTHER SHRI SITARAM MURARILAL GUPTA . THE ASSESS EE HAS CONTRIBUTED RS.3,14,220/- AND HIS BROTHER SHRI SITARAM MU RARILAL GUPTA HAS CONTRIBUTED RS.4,91,000/-. AS REGARDS THE SOU RCE OF THE ASSESSEE, IT WAS SUBMITTED THAT THE SAME WAS MADE OUT OF CASH GIFT OF RS.3,00,000/- RECEIVED FROM HIS WIFE SMT. KAVITA D. GUPTA AND PERSONAL SAVINGS. IT WAS SUBMITTED THAT SMT. KAVITA D. GUPTA IS REGULARLY ASSESSED TO TAX VIDE PAN NO. AFRPG9522R. SIMILA RLY, THE CONTRIBUTION OF RS.4,91,000/- MADE BY SHRI SITARAM MURARILAL GUPTA IS DEBITED IN THE BOOKS OF ACCOUNT OF GUPTA TRADING COMPA NY. HE IS ALSO ASSESSED TO TAX UNDER ITO, WARD-2(4), SOLAPUR UNDER PAN NO. ABHPG2149J. 4. ON VERIFICATION OF GENUINENESS OF FUNDS RECEIVED IN CASH B Y THE ASSESSEE FROM HIS WIFE SMT. KAVITA D. GUPTA TO THE EXTENT OF RS.3,00,220/- THE ASSESSING OFFICER OBSERVED THAT WHILE EXP LAINING THE SOURCE OF SMT. KAVITA D. GUPTA THE ASSESSEE HAS NOT SU BMITTED THE SHOP ACT LICENSE OF SMT. KAVITA D. GUPTA WHICH IS REQUIRED FOR CARRYING OUT ANY BUSINESS ACTIVITY. SIMILARLY, ASSESSEE HAS NOT GIVEN THE DETAILS OF PURCHASE AND SALE, DETAILS OF CREDITORS AND D EBTORS WITH SUPPORTING CASH BALANCE WITH HIS WIFE, PURCHASES MADE IN TH E NAME OF SON AND WIFE ETC. ON VERIFICATION OF THE GIFT DECLARATION THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS RECEIVED CASH OF RS.3 ,00,000/- FROM HIS WIFE SMT. KAVITA D. GUPTA FOR PURCHASE OF IMMOVABLE PROPERTY IN THE LAST WEEK OF JULY 2008 AND ACTUALLY THE GIFT DEED HAS BEEN EXECUTED ON 13-10-2011, I.E. DURING THE COURSE OF AS SESSMENT 3 ITA NO.1386/PN/2016 PROCEEDINGS. THE ASSESSING OFFICER FURTHER NOTED THAT SINC E THE WIFE OF THE ASSESSEE SMT. KAVITA D. GUPTA IS HAVING SAVINGS BANK ACCOUNT WITH SOLAPUR JANATA SAHAKARI BANK LTD., THEREFORE THERE WA S NO NECESSITY ON HER PART TO KEEP HUGE MONEY WITH HERSELF. HE FURTHER NOTED THAT IF IT IS PRESUMED AS PER THE LETTER OF SMT. KA VITA D. GUPTA DATED 11-08-2011 THAT SHE IS RUNNING A FIRE CRACKER BUS INESS AND RAKHEE BUSINESS SINCE LAST 15 YEARS, THEN WHY SHE HAS N OT DONE THE TRANSACTION THROUGH BANKING CHANNEL, I.E. BANK. THIS ACCORD ING TO THE ASSESSING OFFICER MEANS THAT THE MONEY KEPT BY SMT. KAVIT A D. GUPTA BELONGS TO THE ASSESSEE ONLY AND NOT OF HERSELF. SIMPLY THE FUNDS HAVE BEEN DIVERTED THROUGH SMT. KAVITA D. GUPTA AND SHE HAS NOT PROVED THE GENUINENESS OF RUNNING OF BUSINESS BY PRODUCING THE R ELEVANT DETAILS. HE ACCORDINGLY TREATED THE ABOVE AMOUNT OF RS .3,14,220/- AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT AND ADDED T HE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN APPEAL THE LD.CIT(A) CONFIRMED THE ACTION OF THE ASS ESSING OFFICER. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : ON FACTS AND IN LAW : 1. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF R S.3,14,220/- MADE U/S.69 ON THE GROUND THAT THE ASSESSEE HAS NOT PROVED THE SOURCE OF INVESTMENT SATISFACTORILY. 2. THE LD.CIT(A) ERRED IN CONCLUDING THAT THE ASSESSEE FAI LED TO PROVE WITH COGENT EVIDENCE THAT AMOUNT OF CASH OF RS.3,00,0 00/- HAS BEEN GIFTED BY HER WIFE. 3. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT WIFE OF THE ASSESSEE WHO HAS GIVEN THE GIFT TO THE ASSESSEE WAS FILING THE INCOME -TAX RETURNS REGULARLY SINCE 2000-2001 AND ALSO SHE HAS FILED AN AFF IDAVIT CONFIRMING THAT SHE HAS GIVEN THE GIFT TO THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR D ELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4 ITA NO.1386/PN/2016 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED THE ORDER OF THE CIT(A). HE OBSERVED THAT AN AMOUNT OF RS.3 LAKHS HAS BEEN RECEIVED AS GIFT FROM THE WIFE OF THE ASSESSEE. THE WIFE OF T HE ASSESSEE SMT. KAVITA D. GUPTA IS AN INCOME-TAX ASSESSEE AND REGULA RLY FILING HER RETURN OF INCOME FROM 2000-01 ONWARDS VIDE PAN NO. AFRPG9552R. HE SUBMITTED THAT THE WIFE OF THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FIRE CRACKER AND RAKHEE WHICH IS A SE ASONAL BUSINESS. SINCE THE TURNOVER OF THE ASSESSEE IS LESS THAN THE PRESCRIBED LIMIT FOR GETTING THE ACCOUNTS AUDITED THE ASSE SSEE WAS OPTING FOR PRESUMPTIVE TAX AS PER PROVISIONS OF SECTION 4 4AF. MERELY BECAUSE THE ASSESSEE DOES NOT OWN SHOP LICENSE AND HA S NOT ROUTED HER MONEY THROUGH BANKING CHANNEL THE SAME CANNOT BE A GROUND FOR REJECTING THE CAPACITY OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROTHERS VS. CIT REPORTED IN 37 ITR 271 HE SUBMITTED THAT A MERE SUSPICION ON THE PART OF THE ASSE SSING OFFICER DOES NOT ENTITLE HIM TO MAKE ANY ADDITION. HE SUBMITTED THAT ALTHOUGH THE WIFE OF THE ASSESSEE HAD WRITTEN LETTER TO THE ASSESSING OFFICER, HOWEVER, THE ASSESSING OFFICER HAS NOT SUMMONED HER TO RECORD HER STATEMENT. HE ACCORDINGLY SUBMITTED THAT T HE ORDER OF THE CIT(A) BE SET ASIDE AND THE GROUNDS RAISED BY THE ASSE SSEE SHOULD BE ALLOWED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS NOT CONCLUSIVELY PROVED THE CAPACITY OF THE DONOR TO GIV E A GIFT OF RS.3 LAKHS THAT TOO IN CASH. REFERRING TO THE DECISION OF HONB LE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. KORLAY TRADING COMPANY LTD. REPORTED IN 232 ITR 820 HE SUBMITTED THAT THE HONBLE HIGH COURT IN 5 ITA NO.1386/PN/2016 THE SAID DECISION HAS HELD THAT WHERE THE ASSESSEE FAILS T O FURNISH CONFIRMATION LETTER OF CREDITOR AND ONLY INCOME-TAX FILE NO. O F CREDITOR WAS FILED, MERELY FILING OF INCOME-TAX FILE NUMBER IS NOT ENOUG H TO PROVE THE GENUINENESS OF THE CASH CREDIT. CREDITOR SHO ULD BE IDENTIFIED AND THERE SHOULD BE CREDIT WORTHINESS. SINCE THE ASSESS EE IN THE INSTANT CASE HAS NOT CONCLUSIVELY PROVED THE CREDIT WOR THINESS OF HIS WIFE TO GIVE THE CASH GIFT OF RS.3 LAKHS, THEREFORE, THE CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER. 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND TH E ASSESSEE IN THE INSTANT CASE HAS PURCHASED A PIECE OF LAND ALONG W ITH HIS BROTHER AT A COST OF RS.8,05,220/-. THE CONTRIBUTION OF T HE ASSESSEE FOR SUCH PURCHASE WAS RS.3,14,220/-. ON BEING QUESTIONED BY THE ASSESSING OFFICER TO EXPLAIN THE SOURCE FOR SUCH INVESTMENT IN THE AGRICULTURAL LAND, THE ASSESSEE SUBMITTED TO HAVE RECEIVED CASH GIFT OF RS.3 LAKHS FROM HIS WIFE SMT. KAVITA D. GUPTA. THE ASSESSEE ALSO SUBMITTED INCOME-TAX RETURNS AND PAN NUMBER OF SMT. KA VITA D. GUPTA AND AN AFFIDAVIT REGARDING SUCH GIFT. HOWEVER, THE AS SESSING OFFICER DISBELIEVED THE CREDIT WORTHINESS OF SMT. KAVITA D. GU PTA ON THE GROUND THAT SHE HAS NOT MAINTAINED ANY BOOKS OF AC COUNT, HAS NOT OBTAINED A SHOP LICENSE, MONEY WAS NOT ROUTED THROUGH BANKING CHANNEL ALTHOUGH SHE MAINTAINS A BANK ACCOUNT WITH SOLAP UR JANATA SAHAKARI BANK LTD. HE THEREFORE CAME TO THE CONCLUSION THAT THE MONEY GIFTED BY WIFE OF THE ASSESSEE INFACT BELONGS TO THE ASSESSEE. I FIND THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER U/S.69 OF THE I.T. ACT. 6 ITA NO.1386/PN/2016 9. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSES SEE THAT HIS WIFE BEING ENGAGED IN SEASONAL BUSINESS OF FIRE CRACKER A ND RAKHEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT SINCE HER TURNOV ER IS VERY LESS AND SHE HAS OPTED FOR PRESUMPTIVE TAX AS PER THE PRO VISIONS OF SECTION 44AF. IT IS ALSO HIS SUBMISSION THAT THE WIFE OF THE ASSES SEE HAS WRITTEN A LETTER TO THE ASSESSING OFFICER SUBSTANTIATING TH E SOURCE AS WELL AS CONFIRMING THE GIFT AND THE ASSESSING OFFICER HAS NOT SUMMONED HER TO RECORD HER STATEMENT. 10. I FIND SOME FORCE IN THE ARGUMENT OF THE LD. COUNSEL FO R THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT THE WIFE OF THE A SSESSEE SMT. KAVITA D. GUPTA IS AN INCOME-TAX ASSESSEE FROM 2000-01 O NWARDS. THE COPIES OF THE RETURNS OF INCOME FILED BY HER FOR DIFFEREN T ASSESSMENT YEARS HAVE BEEN FILED IN THE PAPER BOOK. THE CUMULATIVE CAPITAL OF SMT. KAVITA D. GUPTA IS MORE THAN RS.9 LAKHS. THE VARIOUS DOCUMENTS FILED BY THE ASSESSEE SUBSTANTIATING THE CREDIT WORTHINESS OF SMT. KAVITA D. GUPTA CANNOT BE DISBELIEVED UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE. WHEN SMT. KAVITA D. GUPTA HAD FILED THE DETAILS OF HER INCOME-TAX RETURNS ALONG WITH PAN AND CONFIR MATION LETTER, THE ASSESSING OFFICER SHOULD HAVE SUMMONED HER. SIN CE THE ASSESSEE IS A LADY WITH A MENTALLY CHALLENGED CHILD AND IS D OING SEASONAL BUSINESS AND HAS PRODUCED THE PURCHASE AND S ALE BILLS ETC. THE ASSESSING OFFICER UNDER THE FACTS OF THE PRESENT CASE SHOULD NOT HAVE DOUBTED THE BUSINESS OF THE WIFE OF THE ASSESSEE ME RELY ON THE GROUND THAT SHE HAS NOT PRODUCE THE SHOP LICENSE. 11. SO FAR AS THE OBJECTION OF THE ASSESSING OFFICER THAT MONEY HAS NOT ROUTED THROUGH BANKING CHANNEL ALTHOUGH THE WIFE OF T HE ASSESSEE IS MAINTAINING A BANK ACCOUNT IS CONCERNED, THIS IN MY OPINI ON SHOULD NOT BE A GROUND UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE TO 7 ITA NO.1386/PN/2016 DISBELIEVE THE GIFT. SINCE THE ASSESSEE IN THE INSTANT CASE HAS SUBSTANTIATED THE IDENTITY AND CREDIT WORTHINESS OF THE D ONOR AND THE GENUINENESS OF THE TRANSACTION, THEREFORE, THE CIT(A) IN MY OPINION SHOULD NOT HAVE CONFIRMED THE ADDITION MADE BY THE ASSES SING OFFICER U/S.69 OF THE I.T. ACT TO THE EXTENT OF RS.3 LAKHS. 12. SO FAR AS THE DECISION OF HONBLE KOLKATA HIGH COURT IN THE CASE OF KORLAY TRADING COMPANY (SUPRA) RELIED ON BY THE LD. DEP ARTMENTAL REPRESENTATIVE IS CONCERNED THE SAME IN MY OPINION IS NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE THE AS SESSEE FAILED TO FURNISH THE CONFIRMATION LETTER OF THE CREDITOR AND FILED ONLY THE INCOME-TAX FILE NUMBER OF THE CREDITOR FOR WHICH THE HONBLE CALCUTTA HIGH COURT HELD THAT MERE FILING OF INCOME-TAX FILE NUMBER IS N OT ENOUGH TO PROVE THE GENUINENESS OF THE CASH CREDIT. IT WAS HELD THAT THE CREDITOR SHOULD BE IDENTIFIED AND THERE SHOULD BE CREDIT WORTHIN ESS. HOWEVER, IN THE INSTANT CASE, THE WIFE OF THE ASSESSEE HA S FILED ALL THE RELEVANT DETAILS, SUCH AS CONFIRMATION LETTER STATING TO HAV E GIVEN THE GIFT ALONG WITH THE GIFT DEED, COPIES OF HER INCOME-TAX RETUR NS FOR DIFFERENT ASSESSMENT YEARS, HER PAN NUMBER AND DETAILS OF PURCHASE AND SALES. IT WAS ALSO STATED THAT SHE IS NOT MAINTAININ G ANY BOOKS SINCE SHE IS OPTING FOR PRESUMPTIVE TAX U/S.44AF OF THE IN COME TAX ACT. THEREFORE, THE DECISION RELIED ON BY THE LD. DEPARTME NTAL REPRESENTATIVE IN MY OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. CONSIDERING THE TOTALITY OF THE FACTS OF T HE CASE AND THE SMALLNESS OF THE AMOUNT, I AM OF THE CONSIDERED OPINION THA T THE LOWER AUTHORITIES SHOULD NOT HAVE DISBELIEVED THE GIFT OF RS.3 LAKHS RECEIVED BY THE ASSESSEE FROM HIS WIFE FOR PURCHASE OF THE AGRICULT URAL LAND IN QUESTION. I THEREFORE SET ASIDE THE ORDER OF THE CIT(A) A ND DIRECT THE 8 ITA NO.1386/PN/2016 ASSESSING OFFICER TO ACCEPT THE GIFT OF RS.3 LAKHS AS EXPLAIN ED. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-11-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 11 TH NOVEMBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , $ % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 7, PUNE 4. THE CIT-6, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.