ITO, Nagercoil V. Dr.M.George, Nagercoil

ITA 1463/CHNY/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51740 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K ME GHANATH CHOWHAN
• Assessee Lawyers: R VENKATESH
• Keywords: Gift; Salary income; Opportunity of being heard
• Section: 133A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 1463/MDS/2009 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, WARD I(1), NAGERCOIL. (APPELLANT) V. DR. M. GEORGE, M/S GEORGE MISSION HOSPITAL, EATHAMOZHI ROAD, KOTTAR, NAGERCOIL. PAN : AJJPM0638E (RESPONDENT) APPELLANT BY : SHRI K. MEGHANATH CHOWHAN, JCIT RESPONDENT BY : SHRI R. VENKATESH O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY REVENUE FOR THE ASSESSMENT YEAR 2006- 2007 AGAINST AN ORDER DATED 20.07.2009 OF COMMISSIO NER OF INCOME TAX (APPEALS)-I, MADURAI. I.T.A. NO. 1463/MDS/09 2 2. IN GROUNDS NOS. 1 TO 4 OF THE APPEAL OF THE REVE NUE, THE GRIEVANCE PROJECTED BY THE DEPARTMENT IS THAT THE L D. CIT(A) FAILED TO NOTE THAT THE OPENING AND CLOSING BALANCE OF CAP ITAL FUND WAS ARRIVED AT IN THE ASSESSMENT ORDER AFTER TAKING INT O ACCOUNT ASSESSEES GROSS SALARY RECEIVED FROM THE PRIVATE E MPLOYER FROM THE ASSESSMENT YEAR 1996-97 TO 2006-07 RS. 19,75,600/- WHICH WAS INCLUSIVE OF SALARY FOR THE ASSESSMENT YEAR 2006-07 ALSO AND THEREFORE, THE CLOSING BALANCE OF RS. 27,15,255/- F OR THE ASSESSMENT YEAR IS TAKEN AS THE BALANCE OF CAPITAL FUND. THE ASSESSEE HAD NOT FURNISHED PARTICULARS OF EMPLOYMENT WITH GOVERNMENT AND THEREFORE, NO CREDIT FOR SALARY SAVINGS OF RS. 5 LA KHS OUT OF GOVERNMENT SERVICES FOR EARLIER EIGHT YEARS WAS ALL OWED BY THE ASSESSING OFFICER, WHICH THE LD. CIT(A) HAD FAILED TO TAKE NOTE OF. STILL FURTHER, THE LD. CIT(A) ERRED IN ACCEPTING TH E SAVINGS FROM STRIDHAN AT RS. 3 LAKHS AT THE TIME OF MARRIAGE OV ERLOOKING THE FACT THAT THIS CLAIM WAS MADE ONLY AT A LATER STAGE AND WAS AN AFTER THOUGHT AND HENCE ADDITION ON THIS COUNT SHOULD HAV E BEEN SUSTAINED. I.T.A. NO. 1463/MDS/09 3 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT] WAS CO NDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 7.3.2008 AND S OME DISCREPANCIES WERE NOTICED IN THE ACCOUNTS. A DETA ILED SWORN STATEMENT WAS RECORDED FROM THE ASSESSEE. THE ASSE SSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 31. 3.2008 ADMITTING INCOME OF RS. 2,44,321/- AND AGRICULTURA L INCOME OF RS. 6,92,709/-. AFTER PERUSAL OF THE PARTICULARS PRODU CED, THE ASSESSING OFFICER FOUND THAT THE CAPITAL ACCOUNT FOR ASSESSME NT YEAR 2006-07 WAS AS UNDER: AS PER LAST YEAR BALANCE SHEET : RS. 2 4,70,934/- ADDITION : NET SALARY : RS. 2,44,321/- TOTAL RS. 27,15,255/- 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS P ER SWORN STATEMENT OF THE ASSESSEE, BEFORE THE ASSESSING OFF ICER IT WAS STATED THAT BEFORE STARTING PROFESSION OF GEORGE MI SSION HOSPITAL, HE WAS HAVING ONLY SALARY INCOME FOR THE EARLIER YEAR. THE PARTICULARS I.T.A. NO. 1463/MDS/09 4 OF ASSESSEES SALARY WERE OBTAINED FROM HOLY CROSS HOSPITAL, NAGERCOIL AND FROM IT WAS FOUND THAT THE EARNINGS F ROM SALARY WOULD AMOUNT TO RS. 14,33,729/- AS UNDER: GROSS SALARY FOR THE LAST TEN YEARS RS. 19,75,600 LESS: DEDUCTION TAX PAID LIC ETC. RS. 5,41,871 RS. 14,33,729 THE PROBABLE AMOUNT OF PERSONAL EXPENSES IS ESTIMATED @ 25% OF NET SALARY AND THIS IS DEDUCTED FROM THE NET EARNINGS. RS. 3,58,432 BALANCE CAPITAL FUND AVAILABLE RS. 10,75,297 5. THE ASSESSEE WAS REQUESTED TO EXPLAIN THE SOURCE OF BALANCE OF RS. 16,39,958/- [RS. 27,15,255/- MINUS RS. 10, 75,297/-]. THE ASSESSEE SUBMITTED THAT THE EXCESS AMOUNT WAS OUT O F RS. 5 LAKHS RECEIVED FROM HIS DECEASED FATHER FIFTEEN YEARS BAC K AND RECEIPT OF STRIDHAN AND MARRIAGE GIFTS RS. 5 LAKHS AND HIS PA ST SAVINGS RS. 2 LAKHS FROM HIS OWN PROFESSIONAL EARNINGS FROM HIS O UT-PATIENT CLINIC TILL HE JOINED REGULAR EMPLOYMENT AND VARIOUS RECEI PTS OF GIFTS FROM RELATIVES DURING THE PAST YEARS. THE ASSESSING OFF ICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AS, ACCORDIN G TO HIM, IT WAS AN AFTER THOUGHT WHICH WERE MENTIONED WHILE HE WAS DEPOSING HIS I.T.A. NO. 1463/MDS/09 5 SWORN STATEMENT U/S 131 OF THE ACT BEFORE THE ASSES SING OFFICER ON 10.3.2008. THEREFORE, HE MADE ADDITION OF RS. 16, 39,958/- U/S 68 OF THE ACT. 6. IN APPEAL THE LD. CIT(A) OBSERVED THAT DURING TH E COURSE OF ASSESSEES MARRIAGE IT WAS NORMAL CUSTOM FOR VARIOU S GIFTS TO BE RECEIVED AT THE TIME OF MARRIAGE. HE CONSIDERING T HE SOCIAL STATUS OF THE ASSESSEE ESTIMATED RS. 3 LAKHS AS SAVINGS F ROM STRIDHAN. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEES WIF E DR. PUNITHA GEORGE ALSO COMPLETED HER MEDICAL COURSE IN 1988 AN D HAS BEEN WORKING EVER SINCE. HE FURTHER OBSERVED THAT IT WO ULD BE REASONABLE TO EXPECT THAT SOME OF THE HOUSE HOLD EX PENSES WOULD BE MET BY ASSESSEES WIFE. HE, THEREFORE, ESTIMATE D RS. 2 LAKHS AS HOUSE HOLD EXPENSES MET BY ASSESSEES WIFE. ACCORD INGLY, HE COMPUTED THE OPENING BALANCE AS UNDER: I.T.A. NO. 1463/MDS/09 6 (I) SAVINGS OUT OF SALARY AS COMPUTED BY THE ASSESSING OFFICER RS. 10,75,297 (II) SAVINGS OUT OF SALARY FOR THE EARLIER 8 YEARS RS. 5,00,000 (III) SAVINGS OUT OF SHREEDHAN RS. 3,00,000 (IV) PORTION OF HOUSEHOLD EXPENSES MET BY ASSESSEES WIFE RS. 2,00,000 RS. 20,75,297 OPENING BALANCE FOR THE PERIOD UNDER CONSIDERATION RS. 24,70,934 UNEXPLAINED DIFFERENCE RS. 3,95,637 ACCORDINGLY, THE LD. CIT(A) RESTRICTED THE ADDITION TO RS. 3,95,637/- AND GRANTED RELIEF OF RS. 12,44,321/-. 7. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAD C ONSIDERED THE STRIDHAN AT RS. 3 LAKHS AND RS. 2 LAKHS OUT OF AS SESSEES WIFES INCOME FOR MEETING THE HOUSE HOLD EXPENSES AND HE F URTHER ACCEPTED RS. 5 LAKHS WAS SAVINGS OUT OF SALARY FOR EARLIER EIGHT YEARS. HE ARGUED THAT THESE AMOUNTS WERE ACCEPTED AS AVAILABLE WITH THE ASSESSEE WITHOUT ANY EVIDENCE AND WITHOUT ANY VERIFICATION. THEREFORE, THE LD. CIT(A) WAS NOT JU STIFIED IN GRANTING RELIEF OF RS. 12,44,321/- TO THE ASSESSEE. I.T.A. NO. 1463/MDS/09 7 8. GROUND NOS. 5 AND 6 OF THE APPEAL ARE DIRECTED A GAINST THE ORDER OF THE LD. CIT(A) IN GIVING CREDIT FOR AGRICU LTURAL INCOME OF RS. 1,10,000/- EVEN WHEN THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE FOR AGRICULTURAL LAND HOLDING OF 5.5 ACRES. THE LD. A.R. SUBMITTED THAT IN THE SUBSEQUENT ASSES SMENT YEAR 2007-08, THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1237/MDS/2010 VIDE ORDER DATED 1.6.2011 HAS RESTORE D THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. HE FURTHER SUBMITTED THAT FOLLOWING THE SAID ORDER THI S ISSUE SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR F RESH ADJUDICATION. REGARDING GROUND NO. 1 OF THE APPEAL, HE SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICE R FOR READJUDICATION OF THE ISSUE AFRESH AFTER PROPER VER IFICATION. 9. THE LD. D.R. AGREED WITH THE SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE FOR RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. I.T.A. NO. 1463/MDS/09 8 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT IN THE INSTANT CASE, THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS. 16,39,958/- ON ACCOUNT OF UNEXPLAINED OPENI NG CAPITAL U/S 68 OF THE ACT WHICH WAS REDUCED TO RS. 3.95,637/- BY LD. CIT(A) AND THE ASSESSEE WAS ALLOWED RELIEF OF RS. 12,44,321/- . THE CONTENTION OF THE LD. D.R. IS THAT THE LD. CIT(A) HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE REGARDING RECEIPT OF RS. 5 LAKHS FROM HIS FATHER, RS. 5 LAKHS AS SAVINGS OF LAST EIGHT YEARS BEFORE EMPLOYM ENT AND RS. 2 LAKHS OUT OF DRAWINGS OF THE ASSESSEES WIFE FOR ME ETING HOUSE HOLD EXPENSES WITHOUT ANY EVIDENCE OR MATERIAL. 11. THE LD. A.R. HAS SUBMITTED THAT THIS ISSUE MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION AFTER VERIFICATION TO WHICH THE LD. D.R. HAS NO OBJECTION . THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R EMAND THE MATER BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N OF THE ISSUE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND BY PASSING A I.T.A. NO. 1463/MDS/09 9 SPEAKING ORDER AFTER ALLOWING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 12. REGARDING GROUNDS NOS. 4 AND 5 OF THE APPEAL, W E FIND THAT THE ISSUE OF AGRICULTURAL INCOME DERIVED FROM 5.5 A CRES OF LAND WAS DECIDED BY THE TRIBUNAL IN ASSESSMENT YEAR 2007-08 WHEREIN THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER FOR FRESH ADJUDICATION OF THE ISSUE. BOTH THE PARTIES SUBMITTED THAT THIS ISSUE SHOULD BE RESTORED BACK T O THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER DIR ECTIONS OF THE TRIBUNAL CONTAINED IN ORDER FOR ASSESSMENT YEAR 200 7-08. THE LD. D.R. AGREED TO THE SAME. WE, THEREFORE, SET ASIDE T HE ORDERS OF THE LOWER AUTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH AF TER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AS PER DIRECTIONS CONTAINED IN ASSESSMENT YEAR 2007-08. I.T.A. NO. 1463/MDS/09 10 13. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON THE NINTH DAY OF AUGUST, 2011. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH AUGUST, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I, MADURAI (4) CIT-I, MADURAI (5) D.R. (6) GUARD FILE