Sh.Rajesh Khosla, Ludhiana V. Asstt.Commissioner of Income Tax, Ludhiana

ITA 1409/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8342 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard
• Section: 143(3); 68; 6; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1409/CHD/2016 ASSESSMENT YEAR: 2009-10 SHRI RAJESH KHOSLA, VS THE ACIT, 451-L, MODEL TOWN, CIRCLE-VI, LUDHIANA. LUDHIANA. PAN: ABMPK1912C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 08.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-4 LUDHIANA DATED 27.09.2016 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLO WING GROUNDS : 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN DISMISSING THE APPEAL FILED BY THE APPELLA NT. 2. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER IN TREATING THE AMOUNT OF UNSECUR ED LOAN TAKEN BY THE ASSESSEE FROM COUSIN SISTER AS 'INCOME FROM OTHER S OURCES' U/S 56 (2)(VI) OF THE ACT BY ASSUMING THE SAME AS GIFT REC EIVED BY THE ASSESSEE FROM HIS COUSIN SISTER. 2 3. THAT THE WORTHY CIT (A) WHILE ADDING BACK INTERE ST FREE LOAN OF RS. 10 LACS HAS ERRED IN NOT CONSIDERING THE AFFIDA VIT, BANK STATEMENT OF THE ASSESSEE AND HIS COUSIN SISTER SIKHA J BEDI, WH ERE SHE HAS CONFIRMED THE REPAYMENT OF ABOVE SAID INTEREST FREE LOAN. 4. THAT THE ADDITION HAS BEEN MADE AGAINST THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WHO IS A DOCTOR BY PROFESSION HAS FILED HIS RETURN OF I NCOME FOR THE YEAR UNDER CONSIDERATION ON 17.09,2009 DECL ARING THEREIN AN INCOME OF RS.15,76,180/- WHICH WAS STATE D TO BE PROCESSED UNDER SECTION 143(1) OF THE ACT AT THE RETURNED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO EXPLAIN THE SOURCE OF CREDIT ENTRY OF RS. 10,00,000 /- IN HIS CAPITAL ACCOUNT. IN RESPONSE THERETO, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESS EE HAS TAKEN INTEREST FREE LOAN OF RS. 10,00,000/- FROM HI S COUSIN SISTER SMT. SHIKHA BEDI WHO IS A RESIDENT OF CANADA. THE ASSESSEE FURTHER FILED AFFIDAVIT FROM H IS COUSIN SISTER WHEREIN IT HAS BEEN STATED BY HER THA T SHE HAS GIVEN A GIFT OF RS. 10,00,000/- THROUGH CHEQUE TO HER COUSIN BROTHER OUT OF NATURAL LOVE AND AFFECTION. W HEN ASKED TO EXPLAIN THAT AS TO WHY THE AMOUNT OF GIFT SHOULD NOT BE TAXED IN HIS HANDS BY INVOKING PROVISIONS OF SECTION 56(2)(VI) OF THE ACT, THE ASSESSEE FILED AN OTHER AFFIDAVIT FROM HER COUSIN SISTER WHEREIN IT HAS BEE N 3 SUBMITTED THAT SHE HAS GIVEN INTEREST FREE LOAN TO HER COUSIN BROTHER AND IT WAS WRONGLY MENTIONED AS GIFT IN THE EARLIER AFFIDAVIT. HOWEVER, THE ASSESSING OFFIC ER DID NOT ACCEPT THIS PLEA OF THE ASSESSEE AND TREATED TH E AMOUNT OF RS. 10,00,000/- AS GIFT AND MADE AN ADDIT ION OF RS. 10,00,000/- TO THE RETURNED INCOME OF THE AS SESSEE BY INVOKING PROVISIONS OF SECTION 56(2)(VI) OF THE ACT. THE ASSESSING OFFICER HAS ALSO TREATED THIS AMOUNT AS UNEXPLAINED CREDIT ENTRY IN THE BOOKS OF ASSESSEE A ND MADE AN ADDITION OF THE SAME AMOUNT UNDER SECTION 6 8 OF THE ACT ALSO AS THE CREDITWORTHINESS OF THE LENDER HAS NOT BEEN PROVED BY THE ASSESSEE. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER V IDE ORDER UNDER SECTION 143(3) OF THE ACT DATED 28.12.2 011 AT AN ASSESSED INCOME OF RS.25,76,180/-. 3. THE ASSESSEE CHALLENGED THE ADDITION OF RS. 10 L ACS BY INVOKING PROVISIONS OF SECTION 56(2)(VI) OF INCO ME TAX ACT BEFORE LD. CIT(APPEALS). THE WRITTEN SUBMISSIO N OF THE ASSESSEE IS QUOTED IN THE IMPUGNED ORDER IN WHICH ASSESSEE EXPLAINED THAT THE AMOUNT IN QUESTION WAS RECEIVED AS INTEREST FREE LOAN FROM SMT. SHIKHA BED I, COUSIN OF THE ASSESSEE. HER AFFIDAVIT WAS ALSO FILE D IN WHICH SHE HAS WRONGLY MENTIONED IT TO BE GIFT THE REFORE, HER ANOTHER AFFIDAVIT WAS ALSO FILED EXPLAINING IT WAS INTEREST FREE LOAN AND NOT GIFT. THE ASSESSEE PROD UCED SUFFICIENT EVIDENCE ON RECORD TO PROVE IDENTITY OF THE CREDITOR, CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND 4 GENUINENESS OF THE TRANSACTION. THEREFORE, THE ASS ESSING OFFICER SHOULD NOT HAVE TREATED IT AS UNEXPLAINED G IFT UNDER SECTION 56(2)(VI) OF THE ACT. THE ASSESSEE A LSO MADE A REQUEST TO THE ASSESSING OFFICER AT ASSESSMENT ST AGE THAT SMT. SHIKHA BEDI IS PRESENTLY IN INDIA AND SHA LL BE REACHING LUDHIANA ON 25.12.2011 AND COULD FILE HER FRESH CERTIFICATE/AFFIDAVIT CONFIRMING THE FACT. THE ASS ESSEE, THEREFORE, PLEADED THAT SINCE LOAN WAS REPAID THERE FORE, NO ADDITION SHOULD BE MADE. THE LD. CIT(APPEALS), HOW EVER, CONFIRMED THE ADDITION ON ACCOUNT OF GIFT TAXABLE U NDER SECTION 56(2)(VI) OF THE ACT BECAUSE GIFT WAS RECEI VED FROM HIS COUSIN SISTER. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF TH E ASSESSING OFFICER. PB-12 IS COPY OF THE CAPITAL AC COUNT OF THE ASSESSEE IN WHICH RS. 10 LACS WERE SHOWN AS LOA N FROM SMT. SHIKHA BEDI. THE ASSESSING OFFICER AT TH E ASSESSMENT STAGE ALSO ASKED THE ASSESSEE TO EXPLAIN THE LOAN TAKEN. PB-28 IS AFFIDAVIT BY SMT. SHIKHA BEDI IN WHICH SHE HAS EXPLAINED THAT AMOUNT IN QUESTION WAS GIVEN AS GIFT TO THE ASSESSEE BUT LATER ON REALIZIN G THE MISTAKE, HER ANOTHER AFFIDAVIT WAS FILED BEFORE ASS ESSING OFFICER IN WHICH IT WAS EXPLAINED THAT THE AMOUNT O F RS. 10 LACS WERE GIVEN TO THE ASSESSEE AS LOAN IN ASSES SMENT YEAR UNDER APPEAL. IT WAS ALSO EXPLAINED THAT SHE HAS RECEIVED BACK THE ABOVE AMOUNT THROUGH RTGS ON 21.12.2011. THE CERTIFICATE OF BANK OF INDIA IN SU PPORT OF 5 THE RETURN OF THE LOAN AMOUNT IS ALSO FILED AT PAGE 30. PB-4 IS IDENTITY PROOF OF SMT. SHIKHA BEDI. PB-5 I S RETURN OF INCOME OF SMT. SHIKHA BEDI FILED IN THE STATE OF CANADA. PB-16 IS AFFIDAVIT OF THE ASSESSEE CONFIRM ING THE FACT OF RECEIPT OF LOAN AND RETURN OF AMOUNT TO SMT . SHIKHA BEDI THROUGH RTGS. COPY OF PASSPORT OF SMT. SHIKHA BEDI ALONGWITH HER BANK ACCOUNT IS ALSO PLAC ED ON RECORD. THE REPLY OF THE ASSESSEE IS FILED AT PAGE 14 WHICH WAS FILED BEFORE ASSESSING OFFICER IN WHICH IT WAS ALSO EXPLAINED THAT SMT. SHIKHA BEDI IS PRESENT IN LUDHI ANA AND HER FRESH AFFIDAVIT WAS FILED ALONGWITH COPY OF THE BANK STATEMENT. IT WAS ALSO EXPLAINED THAT SHE IS PREPARED TO APPEAR BEFORE ASSESSING OFFICER FOR REC ORDING OF HER STATEMENT. IT WAS, THEREFORE, SUBMITTED THA T IT IS AN UNSECURED LOAN THEREFORE, SECTION 56(2)(VI) IS N OT ATTRACTED IN THIS CASE. ON THE FACE OF THESE EVIDE NCES AND MATERIAL ON RECORD, IT IS CLEAR THAT AUTHORITIES BE LOW WERE WHOLLY UNJUSTIFIED IN CONSIDERING IT TO BE A GIFT A ND MAKING ADDITION UNDER SECTION 56(2)(VI) OF THE ACT AS ASSESSEE EXPLAINED THAT THERE WAS A MISTAKE IN FIRS T AFFIDAVIT OF SMT. SHIKHA BEDI EXPLAINING THE TRANSA CTION OF GIFT WHICH WAS SUBSEQUENTLY RECTIFIED BY FILING HER ANOTHER AFFIDAVIT THAT IT WAS LOAN AMOUNT WHICH WAS ALSO RE PAID TO HER THROUGH BANKING CHANNEL. THEREFORE, SUFFICIENT EVIDENCES ARE AVAILABLE ON RECORD TO EXPLAIN THAT I T WAS AN UNSECURED LOAN TO THE ASSESSEE AND NOT A GIFT. THE ASSESSEE PLACED ON RECORD SUFFICIENT EVIDENCE TO PR OVE THE 6 INGREDIENTS OF SECTION 68 OF THE ACT THEREFORE, THE RE ARE NO REASONS FOR THE AUTHORITIES BELOW TO HOLD THAT IT W AS A PROHIBITED GIFT UNDER SECTION 56(2)(VI) OF THE ACT. I AM, THEREFORE, OF THE VIEW THAT ASSESSEE HAS BEEN ABLE TO EXPLAIN IT IS THE UNSECURED LOAN IN THE MATTER. FU RTHER, WHEN ASSESSEE MADE A REQUEST TO THE ASSESSING OFFIC ER THAT SMT. SHIKHA BEDI IS IN INDIA AND IS WILLING TO APPEAR BEFORE ASSESSING OFFICER FOR RECORDING HER STATEMEN T, IT WAS DUTY OF THE ASSESSING OFFICER TO VERIFY THE FAC TS FROM SMT. SHIKHA BEDI BY RECORDING HER STATEMENT BUT ASSESSING OFFICER DID NOT DO ANYTHING, THEREFORE, N O ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESS EE. 5. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE, IT IS CLEAR THAT THE ASSESSEE RECEIVED UNSECURED LO AN FROM SMT. SHIKHA BEDI, HOWEVER, IT WAS CONSIDERED AND TR EATED AS GIFT UNDER SECTION 56(2)(VI) OF THE ACT. THE MA TTER, THEREFORE, REQUIRES RE-CONSIDERATION AT THE LEVEL O F THE ASSESSING OFFICER BECAUSE THE ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE AS UNSECURED LOAN RECEIVED BY T HE ASSESSEE. I, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECI DE THE ISSUE OF UNSECURED LOAN OF RS. 10 LACS IN ACCORDANC E WITH LAW IN THE LIGHT OF THE EVIDENCE AND MATERIAL PRODU CED BY 7 THE ASSESSEE BEFORE HIM BY GIVING REASONABLE SUFFIC IENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED 10 TH FEBRUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH