Shri Dushyant Ji Lohani, BHILWARA V. ITO, BHILWARA

ITA 155/JODH/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1950 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Section: 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH , JODHPUR BEFORE: SHRI BHAGCHAND, AM & SHRI PARTHA SARTHI CHA UDHARY, JM ITA NO. 155/JODH/2017 ASSESSMENT YEAR : 2008-09 DUSHYANT JI LOHANI, 21/207, BHOPAL GANJ, OPPOSITE BHADADA BAGH, BHILWARA. VS. I.T.O., WARD-5, BHILWARA. PAN /TAN NO.: ADCPL 6259 M APPELLANT RESPONDENT ASSESSEE BY : SHRI P.C. PARWAL (CA) REVENUE BY: SHRI S.K. MEENA (JCIT D.R.) DATE OF HEARING : 04/05/2017 DATE OF PRONOUNCEMENT : 05/05/2017 ORDER PER: PARTHA SARTHI CHAUDHARY, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER DATED 25/01/2017 PASSED BY THE LD. CIT(A), AJMER FOR THE ASSESSMENT YEAR 2008- 09, WHEREIN THE ASSESSEE HAS TAKEN ONLY ONE EFFECTI VE GROUND OF APPEAL, WHICH IS AS UNDER: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ADDITION OF RS. 3,21,000/- ON ACCOUNT OF UNDISCLOSED INCOME U/S 69 OF THE IT ACT, 1961. 2. THE ASSESSEE CRAVES RIGHT TO ADD, ALTER OR AMEND ED ANY OF THE GROUND OF THE APPEAL. 2. THE BRIEF FACTS ARISING HEREIN ARE THAT THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION WAS A STUDENT OF ICFAI UNIVERSI TY, DEHRADHUN PERUSING ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 2 MASTERS IN BUSINESS ADMINISTRATION . THE AO ON THE BASIS OF INFORMATION THAT THE ASSESSEE HAS INVESTED RS. 5 LAKHS FOR PURCHASE OF UNITS OF UTI MUTUAL FUND, INITIATED PROCEEDINGS U/S 147 OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) AS ASSESSEE HAS NOT FILED THE RETURN. THE ASSESSEE EXPLAINED THAT DURING THE RELEVANT YEAR HE WAS A ST UDENT AND HAS NO SOURCE OF INCOME. HE HAD A JOINT ACCOUNT WITH PNB ALONG WI TH HIS FATHER, SHRI SANTOSH LOHANI FROM WHICH INVESTMENT OF RS. 5 LAKHS WAS MADE ON 28.02.2008 IN THE UNITS OF UTI MUTUAL FUND. THE SOU RCE OF SUCH INVESTMENT WAS EXPLAINED TO BE THE AMOUNT DEPOSITED IN THIS BA NK ACCOUNT BY HIS MOTHER, SMT. DEVI LOHANI OUT OF THE SALE PROCEEDS O F THE AGRICULTURAL LAND SOLD ON 12.02.2008. THE AO FROM PERUSAL OF THE BANK ACCOUNT OF ASSESSEE JOINTLY MAINTAINED WITH HIS FATHER OBSERVED THAT TH ERE IS A DEPOSIT OF RS. 3,21,000/- IN CASH BETWEEN 14.02.2008 TO 06.03.2008 . FURTHER, IN THE JOINT ACCOUNT OF SHRI SANTOSH KUMAR LOHANI AND SMT. DEVI LOHANI, PARENTS OF THE ASSESSEE, THERE IS CASH DEPOSIT OF RS. 2,28,000/- B ETWEEN 14.02.2008 TO 19.02.2008 AND THIS AMOUNT IS TRANSFERRED TO THE BA NK ACCOUNT OF THE ASSESSEE MAINTAINED JOINTLY WITH HIS FATHER ON 20.0 2.2008 OUT OF WHICH INVESTMENT IS MADE IN THE UNITS OF UTI MUTUAL FUND. HOWEVER, THE AO NOTED THAT THE MOTHER OF THE ASSESSEE HAD RECEIVED RS. 3 LAKHS IN CASH ON SALE OF AGRICULTURAL LAND WHICH IS UTILISED FOR CASH DEPOSI T OF RS. 2,28,000/- IN HER ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 3 ACCOUNT AND THEREFORE, HE TREATED THE CASH DEPOSIT OF RS. 3,21,000/- IN THE ACCOUNT OF THE ASSESSEE AS UNEXPLAINED AND MADE ADD ITION U/S 69 OF THE ACT. 3. THE ASSESSEE MADE FOLLOWING SUBMISSIONS BEFORE T HE LD. CIT(A): 1. THE ASSESSEE HAS A JOINT ACCOUNT WITH HIS FATHER SHRI SANTOSH LOHANI IN PUNJAB NATIONAL BANK A/C NO. 005200010913 4490. 2. HE IS A STUDENT AND DO NOT HAVE ANY SOURCE OF IN COME. COPY OF DEGREE ISSUED BY THE ICFA1 UNIVERSITY OF DEHRADUN O F MASTER IN BUSINESS ADMINISTRATION ARE ENCLOSED HEREWITH. 3. MR. SANTOSH LOHANI HAS SOLD AGRICULTURE LAND HOL D IN THE NAME OF HIS WIFE SMT. DEVI LOHANI VIDE AGREEMENTS DTD. 12.0 2.2008. IN THESE AGREEMENT SALE VALUE OF RS. 13,00,000/- (RS. 6,50,000/- + RS. 6,50,000/-) WHICH WAS TAKEN BY CHEQUE OF RS. 10 ,00,000/- (RS. 5,00,000/- + RS. 5,00,000/-) AND RS. 3,00,000/- (RS. 1,50,000/- + RS. 1,50,000) WAS RECEIVED IN CASH. COPIES OF SALE AGREEMENTS ARE ENCLOSED HEREWITH. ON THESE SALES AMOUNT OF CONSIDERATION WAS ALSO RE CEIVED IN CASH OTHER THAN REGISTERED VALUE, AMOUNT WAS DEPOSI TED IN JOINT ACCOUNT ON VARIES DATES AS FOLLOWS: SL. NO. DATE OF CASH DEPOSIT AMOUNT OF CASH DEPOSITED IN JOINT ACCOUNT NO. 0052000109134490 1. 14/02/2008 45,000/- 2. 15/02/2008 45,000/- 3. 16/02/2008 45,000/- 4. 18/02/2008 45,000/- 5. 19/02/2008 48,000/- ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 4 6. 20/02/2008 45,000/- 7. 06/03/2008 48,000/- TOTAL 3,21,000/- 4. THIS AMOUNT WAS RELATED TO SHRI SANTOSH LOHANI A ND THE AMOUNT DEPOSITED HAS BEEN UTILISED FOR MUTUAL FUND OF RS. 5,00,000/-ON 28.02.2008 WHICH WAS LIQUIDATE ON 25.05.2010 AND TH E PROCEED OF MUTUAL FUND HAS ALSO BEEN UTILIZED TO PURCHASE A GRICULTURE LAND BY MR. SANTOSH LOHANI IN THE NAME OF HIS WIFE SMT. DEVI LOHANI. COPY OF AGREEMENT FOR PURCHASE OF LAND, ACCOUNT ST ATEMENT OF MUTUAL FUND AND BANK PASSBOOK ARE ALSO ENCLOSED HER EWITH. FROM THE ABOVE IT IS ALSO PROVES THAT DUSHYANT LOH ANI WAS NOT HAVING ANY SOURCE OF INCOME AND THE AMOUNT SO DEPOS ITED WAS OF HIS FATHER BEING JOINT ACCOUNT HOLDER. THE INVOCATION OF SECTION 148 IN CASE OF ASSESS IS ALSO BAD IN LAW. SINCE BANK ACCOUNT WAS IN JOINT NAME AND AMOUNT ALS O RELATED TO JOINT ACCOUNT HOLDER I.E. HIS FATHER SHRI SANTOS H LOHANI. THEREFORE THE ADDITION MADE TO ASSESSEE IS DESERVE D TO BE DELETED. ON CONSIDERING THE ASSESSMENT ORDER, STATEMENT OF F ACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS, THE LD CIT(A) HAS HELD THA T THE ASSESSEE FAILED TO PROVE SATISFACTORILY, THE SOURCE OF CASH DEPOSITS OF RS. 3,21,000/- MADE BY HIM IN THE BANK ACCOUNT. THE APPELLANT HAS NOT FURN ISHED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE EXPLANATION GIVEN IN T HE WRITTEN SUBMISSIONS ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 5 FILED BY HIM. THEREFORE, THE ADDITION OF RS. 3,21,0 00/- MADE BY THE ASSESSING OFFICER WAS CONFIRMED. 4. BEING FURTHER AGGRIEVED, THE ASSESSEE HAS PREFER RED APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THAT T HE BANK ACCOUNT IN WHICH CASH DEPOSIT OF RS. 3,21,000/- IS MADE IS NOT IN TH E NAME OF THE ASSESSEE ONLY BUT IN THE JOINT NAME OF THE ASSESSEE AND HIS FATHER, SHRI SANTOSH LOHANI. THE MODE OF OPERATION OF ACCOUNT WAS EITHER / OR SURVIVOR. THE ASSESSEE HAS NO SOURCE OF INCOME DURING THE RELEVAN T YEAR AS HE WAS STUDYING AT DEHRADUN IN THE ICFAI UNIVERSITY. THUS, WHEN ASSESSEE HAS NO SOURCE OF INCOME AND THE CASH WAS DEPOSITED IN THE BANK ACCOUNT WHICH IS IN THE JOINT NAME WITH HIS FATHER, THE ADDITION MADE I N THE HANDS OF THE ASSESSEE IS NOT JUSTIFIED. HE FURTHER SUBMITTED THA T IT MAY BE NOTED THAT THE SOURCE OF THE DEPOSIT MADE IN THE JOINT BANK ACCOUN T IS OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LAND SOLD BY THE MOTHE R OF THE ASSESSEE, SMT. DEVI LOHANI. SHE SOLD THE LAND ON 12.02.2008 VIDE 2 SALE DEEDS FOR RS. 13,00,000/- OF WHICH RS. 10,00,000/- WAS RECEIVED B Y CHEQUE AND RS. 3,00,000/- IN CASH. THE STAMP AUTHORITIES HAVE TAKE N THE SALE VALUE OF THIS PROPERTY AT RS. 14,48,000/- (7,28,000/- + 7,20,000/ -). THESE FACTS SHOW THAT APART FROM RS. 3 LAKHS RECEIVED IN CASH AS PER THE SALE DEED ON THE SALE OF LAND BY THE MOTHER OF THE ASSESSEE, SHE ALSO RECEIV ED SOME EXTRA AMOUNT. ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 6 THIS AMOUNT WAS DEPOSITED BY HER PARTLY IN THE BANK ACCOUNT OF THE ASSESSEE AND PARTLY IN HER BANK ACCOUNT AGGREGATING TO RS. 5,49,000/-. IN FACT, THE CASH DEPOSIT OF RS. 2,28,000/- IN THE BAN K ACCOUNT OF THE MOTHER OF THE ASSESSEE WAS ALSO TRANSFERRED TO THE BANK ACCOU NT OF THE ASSESSEE AND OUT OF SUCH AMOUNT RS. 5 LAKHS WAS INVESTED IN UTI ON 28.02.2008. THE REDEMPTION PROCEEDS OF THESE UNITS WAS THEREAFTER C REDITED TO THIS ACCOUNT ON 31.05.2010 FOR RS. 4,93,975/-. OUT OF IT, RS. 4,93,000/- WAS WITHDRAWN ON 01.06.2010. THIS AMOUNT WAS UTILISED BY SMT. DEVI L OHANI, MOTHER OF THE ASSESSEE FOR PURCHASE OF AGRICULTURAL LAND FOR RS. 5 LAKHS ON 08.06.2010 . ALL THESE FACTS SHOW THAT THE SOURCE OF DEPOSIT OF RS. 3,21,000/- IN THE JOINT BANK ACCOUNT OF THE ASSESSEE IS OUT OF THE SALE PRO CEEDS OF THE AGRICULTURAL LAND SOLD BY HIS MOTHER WHICH ULTIMATELY IS WITHDRA WN FROM HIS BANK ACCOUNT AND USED BY HIS MOTHER TO PURCHASE ANOTHER AGRICULT URAL LAND. THUS, NEITHER THE ASSESSEE HAS DEPOSITED THIS AMOUNT IN HIS BANK ACCOUNT NOR HE IS BENEFICIARY OF THIS AMOUNT. HENCE, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS UNJUSTIFIED. THE LD AR FURTHER REFERRED TO THE CASE OF CIT VS. SMT. P.K. NOORJAHAN 237 ITR 570 (SC) AND VEHEME NTLY ARGUED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DEC ISION OF THE HON'BLE APEX COURT. 5. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 7 6. WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE F ACTS AND CIRCUMSTANCES OF THE CASE AND HEARD THE RIVAL CONTE NTIONS. THE HON'BLE APEX COURT IN THE CASE OF CIT VS. SMT. P.K. NOORJAHAN (S UPRA) WHEREIN THE ASSESSEE WAS A MUSLIM LADY AGED 20 YEARS. SHE MADE CERTAIN INVESTM ENTS IN LAND. THE EXPLANATION OF ASSESSEE REGARDING THE SOU RCE OF THE PURCHASE MONEY FOR THESE INVESTMENTS WAS THAT THE SAME WERE FINANCED FROM OUT OF THE SAVINGS FROM THE INCOME OF THE PROPERTIES WHICH WERE LEFT BY HER MOTHERS FIRST HUSBAND. THE SAID EXPLANATION OFFERE D BY THE ASSESSEE WAS REJECTED AND ADDITION WAS MADE U/S 69. THE TRIBUNAL , HOWEVER, HELD THAT EVEN THOUGH THE EXPLANATION ABOUT THE NATURE AND SO URCES OF THE PURCHASE MONEY WAS NOT SATISFACTORY BUT IN THE FACTS AND CIR CUMSTANCES OF THE CASE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO EARN THE AMOUN T INVESTED IN THE PROPERTIES AND THAT BY NO STRETCH OF IMAGINATION CO ULD THE ASSESSEE BE CREDITED WITH HAVING EARNED THIS INCOME IN THE COUR SE OF THE ASSESSMENT YEAR OR WAS EVEN IN A POSITION TO EARN IT FOR A DEC ADE OR MORE. THE TRIBUNAL TOOK THE VIEW THAT ALTHOUGH THE EXPLANATION OF THE ASSESSEE WAS LIABLE TO BE REJECTED, SECTION 69 OF THE ACT CONFERRED ONLY A DI SCRETION ON THE ITO TO DEAL WITH THE INVESTMENT AS INCOME OF THE ASSESSEE AND T HAT IT DID NOT MAKE IT MANDATORY ON HIS PART TO DEAL WITH THE INVESTMENT A S INCOME OF THE ASSESSEE AS SOON AS THE LATTERS EXPLANATION HAPPENED TO BE REJECTED. ACCORDING TO THE HIGH COURT, THE TRIBUNAL HAD NOT COMMITTED ANY ERRO R IN TAKING INTO ACCOUNT ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 8 THE COMPLETE ABSENCE OF RESOURCES OF THE ASSESSEE A ND ALSO THE FACT THAT HAVING REGARD TO HER AGE AND THE CIRCUMSTANCES IN W HICH SHE WAS PLACED SHE COULD NOT BE CREDITED WITH HAVING MADE ANY INCOME O F HER OWN AND IN THESE CIRCUMSTANCES THE TRIBUNAL WAS RIGHT IN REFUSING TO MAKE AN ADDITION OF THE VALUE OF THE INVESTMENTS TO THE INCOME OF THE ASSES SEE. LD. COUNSEL APPEARING FOR THE REVENUE, HAS URGED THAT THE TRIBU NAL AS WELL AS THE HIGH COURT WERE IN ERROR IN THEIR INTERPRETATION OF SECT ION 69 OF THE ACT. IT WAS HELD BY HONBLE SUPREME COURT AS UNDER:- WE ARE UNABLE TO AGREE. AS POINTED OUT BY THE TRIB UNAL, IN THE CORRESPONDING CLAUSE IN THE BILL WHICH WAS INTRODUCED IN PARLIAMENT, THE WO RD 'SHALL' HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE, THE SAID WORD WAS SUBSTITUTED BY THE WOR D 'MAY'. THIS CLEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING S. 69 WAS T O CONFER A DISCRETION ON THE ITO IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH H AS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE INCOME OF THE ASSESSEE AND T HE ITO IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SO URCE OF THE INVESTMENT SHOULD BE TREATED AS INCOME OR NOT UNDER S. 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS, A DISCRETION HAS BEEN CONFERRED ON THE ITO UNDER S. 69 OF THE ACT TO TREAT THE SOURCE OF INVES TMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUN D SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND C IRCUMSTANCES OF THE PARTICULAR CASE. IN THE INSTANT CASE, THE TRIBUNAL HAS HELD THAT THE DI SCRETION HAD NOT BEEN PROPERLY EXERCISED BY THE ITO AND THE A AC IN TAKING INTO AC COUNT THE CIRCUMSTANCES IN WHICH THE ASSESSEE WAS PLACED AND THE TRIBUNAL HAS FOUND THAT THE SOURCES OF INVESTMENTS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. THE HIGH COURT HAS AGREED WITH THE SAID VIEW OF THE TRIBUNAL. WE ALSO DO NOT FIND ANY ERROR IN T HE SAID FINDING RECORDED BY THE TRIBUNAL. THERE IS THUS NO MERIT IN THESE APPEALS AND THE SAM E ARE ACCORDINGLY DISMISSED. IN THE PRESENT CASE, IN THE PAPER BOOK FILED BY THE ASSESSEE, IT WAS CLEAR FROM THE DOCUMENTARY EVIDENCE THAT AT THE RELEVANT TIME, THE ASSESSEE WAS A ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 9 STUDENT OF ICFAI UNIVERSITY, DEHRADUN AND HAD NO SO URCE OF INCOME. THE BANK ACCOUNT DETAILS FILED CLEARLY SHOWS THAT BOTH THE ACCOUNTS, ONE WAS THE JOINT ACCOUNT WITH HIS FATHER AND ANOTHER WAS WITH THE MOTHER OF THE ASSESSEE. FROM TAKING GUIDANCE OF THE HON'BLE SUPRE ME COURTS DECISION (SUPRA) THE QUESTION WHETHER SOURCE OF INVESTMENT S HOULD BE TREATED AS INCOME U/S 69 OF THE ACT HAS TO BE CONSIDERED IN TH E LIGHT OF THE FACTS OF EACH CASE. A DISCRETION HAS BEEN CONFERRED ON THE I TO U/S 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS INCOME OF THE ASS ESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY. HOWEVER, THE SAID DISCRETION SHOULD BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE. WHEN IT IS CLAIMED THAT THE ASSE SSEE COULD NOT POSSIBLY HAVE ANY SOURCE OF INCOME, THE ADDITION ON HIS HAND IS NOT JUSTIFIED WITHIN THE PARAMETERS OF THE INCOME TAX ACT. IF AT ALL, TH E ADDITIONS COULD HAVE BEEN MADE, IT COULD HAVE BEEN DONE EITHER IN THE HA NDS OF THE FATHER OR THE MOTHER OF THE ASSESSEE, THEREFORE, WE ARRIVE AT OUR CONSIDERED VIEW THAT THE FINDINGS OF THE LD. CIT(A) ARE HEREBY REVERSED AND WE DIRECT THE DELETION OF ENTIRE ADDITION OF RS. 3,21,000/- U/S 69 OF THE ACT FROM THE HANDS OF THE ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS ALLOW ED. 7. THE 2 ND GROUND OF THE APPEAL IS GENERAL IN NATURE, HENCE, NO ADJUDICATION IS REQUIRED. ITA 155/JODH/2017_ DUSHYANT JI LOHANI VS. ITO 10 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/05/2017. SD/- SD/- (BHAGCHAND) (PARTHA SARTHI CHAUDHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR DATED:- 05 TH MAY, 2017. *RANJAN COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI DUSHYANT JI LOHANI, BHILWARA. 2. THE RESPONDENT- THE ITO, WARD-5, BHILWARA. 3. CIT 4. THE CIT(A) 5. DR, ITAT, JODHPUR 6. GUARD FILE (ITA NO. 155/JODH/2017) BY ORDER, ASST. REGISTRAR