ITO, Ward - 30(3), Kolkata V. Sheila Mukherjee, Kolkata

ITA 1450/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2555 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 14-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 20-08-2009
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital Gains
• Section: 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : KOLKATA [ BEFORE SHRI B.R. MITTAL, J.M. & SHRI C.D. RAO, A.M. ] I.T.A.NO. 1450 (KOL) OF 2009 ASSESSMENT YEAR 2006-07 INCOME-TAX OFFICER, WARD-30(3), -VS- SHEILA MU KHERJEE KOLKATA. KOLKATA.( P AN-AFEPM8421J) ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SRI SANJAY BARA, SR. D.R. RESOPONDENT BY : SRI MANOJ KATARUKA. O R D E R PER SRI C.D. RAO, A.M. : THE APPEAL BY THE REVENUE ARISES OUT OF THE ORDER DATED 20/05/2009 OF THE C.I.T.(A)-XIV, KOLKATA FOR ASSES SMENT YEAR 2006-07 AND THE ONLY GROUND RAISED IN THIS APPEAL READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-XIV, KOLKATA HAS ERRED IN DELETING THE UNEXPLAINED SOURCE OF IN VESTMENT IN MUTUAL FUND AMOUNTING TO RS.40,00,000/-. 2. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUN D THAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE INVES TED TOTAL AMOUNT OF RS. 40 LAKHS IN FOUR MUTUAL FUNDS BETWEEN DECEMBER, 2005 AND FEBRUARY, 2006. IT WAS EXPLAINED BY THE ASSESSEE THAT THIS INVESTMENT W AS MADE OUT OF THE ADVANCE RECEIVED FROM M/S. CHING WAH & CO. FOR SALE OF HER TENANCY RIGHT IN PROPERTY LOCATED AT 36, ROWLAND ROAD, KOLKATA. IN SUPPOR T OF THE SAID CONTENTION, THE ASSESSEE PRODUCED HER BANK PASS BOOK AND COPY OF ACCOUNT IN THE BOOKS OF M/S. CHING WAH & CO. THE A.O. ISSUED SUMMON TO THE MANAGING PARTNER OF THE SAID COMPANY ASKING HIM TO APPEAR BEFORE HIM WITH BOOKS OF ACCOUNTS AND EVIDENCES FOR FILING OF INCOME-TAX RETURNS. TH E MANAGING PARTNER DID NOT ATTEND PERSONALLY, BUT STATEMENTS OF ACCOUNT OF THE FIRM WER E SUBMITTED TO THE A.O. THE A.O. ALSO ISSUED SUMMON U/S. 131 TO THE ASSESSEE REQUIRING HER TO APPEAR BEFORE HIM PERSONALLY, BUT THE ASSESSEE EXPRESSED H ER INABILITY AS SHE WAS 85 YEARS OLD AND HAD JUST DISCHARGED FROM HOSP ITAL. IN THE ABOVE CONTEXT THE A.O. TOOK ADVERSE VIEW AGAINST THE ASSESSEE , HOLDING THAT THE FOLLOWING ASPECTS COULD NOT BE VERIFIED BY HIM IN ABSENCE OF ATTENDANCE OF THE ASSESSEE AS WELL AS MANAGING PARTNER OF THE SAID FIRM : 2 A) HOW DID THE ASSESSEE COME IN TOUCH WITH CHING WAH & CO. OR VICE VE RSA? B) WHEN WAS THE PROPERTY ACQUIRED BY THE ASSESSEE ? C) IF THE ALLEGED ADVANCE RECEIVED BY THE ASSESSEE WAS FOR SALE OF PROPERTY, WHEN WAS THE SALE FINALIZED AND WHAT WAS THE AMOUNT OF FINAL PAYMENT ? WHETHER RESULTING CAPITAL GAINS WAS OFFERED BY ASSESSEE FOR TAXATION ? IN VIEW OF THE ABOVE, THE A.O. HELD THAT THE ASSESSEE HAD FAILED TO EXPLA IN THE SOURCE OF INVESTMENT OF RS.40 LAKHS IN MUTUAL FUND AND, THEREFORE, ADDED T HE SAME TO HER INCOME AS UNEXPLAINED INVESTMENT. 3. BEFORE THE LD. C.I.T.(A), THE ASSESSEE FILED A WRITTEN SUBMIS SION, WHICH HAS BEEN INCORPORATED ON PAGES 3 TO 6 OF THE APPELLATE ORDER. AFTER CONSIDERING THE FACTS OF THE CASE, SUBMISSIONS OF THE ASSESSEE AND TH E MATERIAL ON RECORD, THE LD. C.I.T.(A) HELD THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF RS.40 LAKHS INVESTED IN MUTUAL FUND AND THUS HE DELETED THE ADDITION W ITH THE FOLLOWING OBSERVATIONS :- 4. I HAVE CONSIDERED ALL THE FACTS AND CIRCUMSTANC ES OF THIS CASE. IT IS NOTED THAT WHEN THE ASSESSEEE WAS ASKED TO EXPLAIN THE SO URCE OF INVESTMENT OF RS.40,00,000!- IN THE MUTUAL FUNDS SHE EXPLAINED TH AT THIS INVESTMENT WAS MADE OUT OF AN AMOUNT OF RS.85,00,000/- RECEIVED BY HER FROM M/S CHING WAH & CO. AS AN ADVANCE TOWARDS SALE OF TENANCY RIG HT IN A PROPERTY LOCATED AT 36, ROWLAND ROAD, KOLKATA-20. THIS AMOUNT OF RS. 85,00,000/- WAS RECEIVED BY SIX CHEQUES ISSUED DURING THE PERIOD AU GUS5TO- DECEMBER, 2005. THE ASSESSEE PRODUCED THE COPY OF HER BANK PA SSBOOK WHERE THESE CHEQUES HAD BEEN DEPOSITED. THE ASSESSEE ALSO PRODU CED THE CONFIRMATION OF THESE TRANSACTIONS FROM CHING WAH & CO. WHEREIN THE SAID CONCERN HAD CONFIRMED ADVANCEMENT OF THIS MONEY TO THE ASSESSEE . IN THIS CONFIRMATION THE PAN OF THIS CONCERN HAD ALSO BEEN CLEARLY MENTI ONED. WHEN THE ASSESSING OFFICER ISSUED SUMMONS TO MANAGING PARTNE R OF CHING WAH & CO. HE DID NOT ATTEND PERSONALLY BUT THROUGH HIS AUTHOR ISED REPRESENTATIVE FURNISHED LEDGER COPY OF THE ACCOUNT OF THE ASSESSE E FOR PREVIOUS YEAR 2005- 06, ITS PROFIT & LOSS AND BALANCE SHEET FOR FINANCI AL YEAR 2005-06 AND 2006- 07 AND XEROX COPY OF ACKNOWLEDGEMENT OF FILING OF R ETURN FOR ASSESSMENT YEAR 2006-07 AND 2007-08. I AM OF THE OPINION THAT THESE DETAILS WERE SUFFICIENT COMPLIANCE ON THE PART OF THE ASSESSEE T O DISCHARGE THE ONUS REGARDING THE NATURE AND SOURCE OF RS.85,00,000/- R ECEIVED BY HER, OUT OF WHICH RS.40,00,000/- WAS INVESTED IN MUTUAL FUNDS. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING A N ADVERSE VIEW AGAINST THE ASSESSEE JUST ON THE GROUND THAT THE ASSESSEE HERSE LF AND THE MANAGING PARTNER OF CHING WAH & CO. DID NOT APPEAR BEFORE HI M PERSONALLY. THE ASPECTS WHICH ACCORDING TO THE ASSESSING OFFICER HA VE REMAINED UNVERIFIED DO NOT HAVE ANY RELEVANCE TO THE SOURCE OF INVESTME NT MADE BY THE ASSESSEE IN THE MUTUAL FUNDS. DURING THE APPELLATE PROCEEDIN GS THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS EXPLAINED THAT T HE PROPERTY UNDER 3 CONSIDERATION WAS NOT OWNED BY THE ASSESSEE. SHE ON LY HAD TENANCY RIGHTS IN THE PROPERTY. FINALLY THE PROPOSAL TO TRANSFER T HE TENANCY RIGHTS TO CHING WAH & CO. DID NOT MATERIALISE AND ASSESSEE HAD RETU RNED THE WHOLE AMOUNT OF RS.85,00,000/- TO THAT CONCERN. THE DETAILS REGA RDING REPAYMENT OF RS.85,00,000/- TO THIS CONCERN WERE ALSO FILED DURI NG APPELLATE PROCEEDINGS. IN VIEW OF THE ABOVE DISCUSSION I AM SATISFIED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF RS.40,00,000/- INVESTED BY HER IN THE MUTUAL FUNDS DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THERE FORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS DELETED . HENCE THIS APPEAL BY THE REVENUE. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPARTMENTA L REPRESENTATIVE APART FROM RELYING ON THE ORDER OF THE A.O. SUBMITTED TH AT NEITHER THE ASSESSEE NOR M/S. CHING WAH & CO. DID APPEAR BEFORE THE A.O. IN RES PONSE TO THE SUMMONS SERVED ON THEM TO VERIFY THE AUTHENTICITY OF TH E TRANSACTION VIS--VIS INVESTMENT OF RS.40 LAKHS BY THE ASSESSEE IN MUTUAL FUND. FURTHER THE BOOKS OF ACCOUNTS WERE NOT FILED BEFORE THE A.O. TO VERIFY THE S AME BY HIM. THEREFORE, THE A.O. WAS JUSTIFIED IN TREATING THE SAID INVESTMENT OF RS .40 LAKHS BY THE ASSESSEE AS FROM HER UNEXPLAINED SOURCE AND THE LD. C.I. T.(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 5. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESS EE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. C.I.T.(A) AND HE ALSO RELIED O N THE ORDER OF THE LD. C.I.T.(A). HE ALSO FILED A PAPER BOOK CONTAINING, INTER ALIA, COPIES OF BANK ACCOUNT OF THE ASSESSEE, CONFIRMATION OF ACCOUNTS OF M/S. C HING WAH & CO., LETTER DATED 25.8.2008 SUBMITTED BY M/S. CHING WAH & CO. TO THE A.O. WITH A COPY OF LEDGER ACCOUNT OF THE ASSESSEE, LETTER OF ASSESS EE DATED 22.10.2008 IN RESPONSE TO NOTICE U/S. 131 DATED 10.9.2008 AND DOCUME NTS REGARDING TENANCY BETWEEN M/S. CHING WAH & CO. AND THE ASSESSEE. ALL THESE PAPERS/EVIDENCES WERE AS WELL FILED BEFORE THE AUTHORITIES BELOW. THE LEARNED C OUNSEL, THEREFORE, REQUESTED FOR UPHOLDING THE ORDER OF THE LD. C.I.T.(A) DELETING THE ADDITION OF RS.40 LAKHS. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW, DO CUMENTS FILED IN THE PAPER BOOK AND CONSIDERED THE SUBMISSIONS OF T HE LEARNED REPRESENTATIVES OF THE PARTIES. ON PERUSAL OF THE DOCUME NTS REGARDING TENANCY BETWEEN M/S. CHIGH WAH & CO. AND ASSESSEE, PLACED ON PAG ES 34 TO 36 OF THE PAPER BOOK, WE FIND THAT THE ASSESSEE WAS A TENANT IN T HE PROPERTY LOCATED AT 4 36, ROWLAND ROAD, KOLKATA AND HER LANDLORDS WERE PRAFULLA CHARAN LAW & OTHERS, WHO WERE LESSEES UNDER SIR UDAY CHAND MAHATAB OF BURDWAN MAHARAJ FAMILY. THE ASSESSEE AGREED TO ASSIGN HER TENANCY RIGHT IN FAVOUR OF M/S. CHING WAH & CO. ON NEGOTIATION WITH HER LANDLORDS, I.E. LAW F AMILY AND ACCORDINGLY RECEIVED ON SEVERAL DATES TOTAL SUM OF RS.85 LAKHS BY A/C. PAYEE CHEQUES, AS WOULD BE EVIDENT FROM PAGE-10 OF THE BOOK, WH ICH IS BANK STATEMENT MAINTAINED BY THE ASSESSEE WITH U.B.I. IT IS A LSO EVIDENT FROM THE SAID BANK STATEMENT THAT THE ASSESSEE SIMULTANEOUSLY IN VESTED ON SEVERAL DATES TOTAL SUM OF RS.40 LAKHS IN MUTUAL FUNDS. SUBSEQUEN TLY, WHEN THE ASSESSEE FACED SOME DISPUTES OVER ASSIGNING HER TENANCY RIGHT IN FAVOUR OF M/S. CHING WAH & CO., SHE VIDE HER LETTER DATED 07/1/2007 INTIMATED M/S. CHING WAH & CO. ABOUT HER INABILITY TO DO SO AND ULTIMATELY RETURNED THE ENTIRE ADVANCE AMOUNT OF RS.85 LAKHS TO IT, AS WOULD BE EV IDENT FROM LETTER DATED 07/3/2007 WRITTEN BY THE ASSESSEE TO M/S. CHING WAH & CO., PLACED ON PAGE 36 OF THE PAPER BOOK. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO ENDORSE THE VIEW OF THE A.O. THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.40 LAKHS IN MUTUAL FUND AND THEREBY AD DING THE SAME AS UNEXPLAINED INVESTMENT. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. C.I.T.(A), WHO HAS RIGHTLY DELETED THE ADDITION. THE GROUND OF APPE AL OF THE REVENUE IS, THEREFORE, DISMISSED. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE COURT ON 18.06.2010. SD/- SD/- [B.R.MITTAL] [C.D. RAO] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 -06-2010 COPY FORWARDED TO : 1. SHEILA MUKHERJEE, 67-B, BALLYGUNGE CIRCULAR ROAD, KOLKATA-700 019. 2. I.T.O., WARD-30(3), KOLKATA. (3) THE C.I.T.(A)-XIV, KOLKATA. 4. CIT, KOL- (5) THE DEPARTMENTAL REPRESENTATIVE, ITAT, KOLKATA. TRUE COPY, BY ORDER [DKP] DY.REGISTRAR.