The ITO, Ward-4, Navsari V. Smt. Sapna Sandip Shah, Navsari

ITA 1674/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89435 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M J PAUL
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Corroborative evidences
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 1563/AHD/2010 / ASSESSMENT YEAR: 2006-07 SMT. SAPNA SANDIP SHAH GAJRA NIWAS, JAIN SOCIETY, SAYAJI ROAD, NAVSARI PAN : BIBPS 7458 K .. APPELLANT VS ITO, WARD-4, NAVSARI .. RESPONDENT ./ ITA NO. 1674/AHD/2010 / ASSESSMENT YEAR: 2006-07 ITO, WARD-4, NAVSARI .. APPELLANT VS SMT. SAPNA SANDIP SHAH NAVSARI, PAN : BIBPS 7458 K .. RESPONDENT ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SHRI M J PAUL, SR. DR / DATE OF HEARING 05/05/2015 ! /DATE OF PRONOUNCEMENT 14/05/2015 #$ #$ #$ #$ / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME-TAX (APPEALS), VALSAD DATED 05.01.2010 FOR ASSESSMENT Y EAR 2006-07. ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 2 - 2. THE ASSESSEE IS AN INDIVIDUAL. SHE DERIVES INCOM E FROM INTEREST INCOME, COMMISSION INCOME FROM LIC AND SHO RT TERM CAPITAL GAIN. ITA NO. 1674/AHD/2010 REVENUES APPEAL 3. FIRST WE TAKE UP THE REVENUES APPEAL. THE REVE NUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN DELETING THE AD DITION MADE U./S 69 B BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT MADE IN LIC. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN DELETING THE ADDITION OF RS.2,88,000/-U/S.56 AS THE CASH GIFT RECEIVED FR OM NON RELATIVES ON VARSI TAP & BIRTHDAY OCCASION WAS EXCE EDING RS.25,000/- AND NOT COVERED U/S.56. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN DELETING THE ADDITION OF RS.6,41,000/- MADE ON ACCOUNT OF UNEXPLAINED CAS H CREDIT U/S. 68 OF THE ACT. WHEREAS THE ASSESSEE FAI LED TO PROVE THE GENUINENESS OF THE TRANSACTION AT THE TIM E OF ASSESSMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE LEARNED C.I.T.(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. AND DISMISSED THE PLEA OF THE ASS ESSEE. 5. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L EARNED C.I.T.(A) BE SET-ASIDE AND THAT THE ORDER OF THE AS SESSING OFFICER BE RESTORED. ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 3 - 3.1 THE FIRST ISSUE IS WITH REGARD TO ADDITION OF R S.6,01,598/- U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTM ENTS. THE ASSESSING OFFICER MADE ADDITION OF RS.6,01,598/- BY INVOKING PROVISIONS OF SECTION 69 OF THE ACT, AS DISCUSSED I N PARAGRAPH 7 OF ASSESSMENT ORDER. 3.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AND THE SAME HAS BEEN OPPOSED BEFORE U S ON BEHALF OF THE REVENUE INTER ALIA SUBMITTING THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.6,01,598/- U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENTS AND ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE ON THIS ISSUE AND THAT OF ASSES SING OFFICER BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 3.3 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD WE FIND THAT THE ASSESSING OFFICER HAD MADE ADDITION IN RESPECT OF INVESTMENTS OF RS.6,01,598/- IN LIC, TRE ATING THE SAME AS UNEXPLAINED INVESTMENTS U/S 69B OF THE ACT. THE INVESTMENT OF RS.6,01,598/- IN LIC WAS DULY RECORDE D IN ASSESSEES BALANCE-SHEET. IT WAS EXPLAINED TO ASSE SSING OFFICER THAT THE ASSESSEE HAD ENOUGH CASH BALANCE OWING TO GIFTS RECEIVED ON ACCOUNT OF VARSHI TAP AND BIRTHDAY OF H ER CHILDREN WHICH WERE SUFFICIENT FOR MAKING THE SAID INVESTMEN TS. HOWEVER, THE ASSESSING OFFICER TREATED SUCH INVESTM ENT AS UNEXPLAINED AND MADE THE ADDITION U/S 69B OF THE AC T. HE ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 4 - FAILED TO APPRECIATE THAT SECTION 69B CAN BE INVOKE D ONLY IN CASE WHERE AN ASSESSEE HAS MADE INVESTMENT IN ANY B ULLION, JEWELLERY OR VALUABLE ARTICLE WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND IN RESPECT OF WHICH THE ASSESSEE CO ULD NOT GIVE EXPLANATION OR EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE SATISFACTORY TO THE ASSESSING OFFICER. IN THE PRESENT CASE, THE INVESTMENT IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE HAS ALSO OFFERED EXPLANATION IN RE SPECT OF THE SAME. THE PROVISIONS OF SECTION 69B ARE APPLICABLE ONLY WHEN INVESTMENTS ARE NOT RECORDED EITHER IN FULL IN PART . IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT MENTION ED THAT THE ASSESSEE HAS LEFT CONCERNED INVESTMENTS UNRECORDED EITHER IN PART OR IN FULL. IN VIEW OF ABOVE, THE CIT(A) WAS J USTIFIED IN DELETING THE ADDITION IN QUESTION. WE UPHOLD THE SAME. 4. NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS. 2,88,000/- U/S 56 ON ACCOUNT OF CASH GIFT RECEIVED FROM NON-RE LATIVES ON VARSI TAP & BIRTHDAY OCCASION. 4.1 THE ASSESSEE RECEIVED GIFT OF RS.5,50,000/- ON THE OCCASION OF VARSI TAP AND BIRTHDAY OF HER THREE CHI LDREN OUT OF WHICH ASSESSING OFFICER MADE THE ADDITION OF RS.2,8 8,000/- IN RESPECT OF GIFTS RECEIVED FROM NON-RELATIVES. DETAI LED BREAK-UP OF THE SAID SUM OF RS.2,88,000/- ALONGWITH REFERENC E OF VARIOUS DOCUMENTARY EVIDENCES IN RESPECT OF CONCERNED DONOR S SUCH AS NAMES, ADDRESSES, PAN, AFFIDAVITS, CONFIRMATION LET TERS, STATEMENT RECORDED BY ASSESSING OFFICER, VOTERS ID , ETC., WERE ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 5 - ANNEXED AT ANNEXURE A PLACED BEFORE US. VARSI-TAP, IN JAIN COMMUNITY, IS CELEBRATED WITH FULL ENTHUSIASM AND G IFT ARE RECEIVED DURING THESE OCCASIONS. AS PER PROVISIONS OF SECTION 56(2)(V) OF THE ACT, THE GIFTS NOT EXCEEDING RS.25, 000/- RECEIVED FROM NON-RELATIVES ON OR BEFORE 31.03.2006 IS EXEMP T. SUCH LIMIT OF RS. 25,000/- IS APPLICABLE IN RESPECT OF E ACH AND EVERY DONOR AND NOT IN RESPECT OF AGGREGATE OF GIFTS RECE IVED. THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY OF THE GIFTS RECEIVED FROM NON-RELATIVES EXCEEDED RS.25,000/-. ACCORDINGLY, S UCH GIFTS ARE EXEMPT IN LIGHT OF SECTION 56(2)(V) OF THE ACT AND NO ADDITION IS CALLED FOR. AS PER SCHEME OF THE ACT, IF A SUM RECEIVED FROM A NON-RELATIVE DOES NOT EXCEED RS.25, 000/-, THE SAME CANNOT BE INCLUDED IN THE TOTAL INCOME. IN ANY CASE, THE PROVISIONS OF SECTION 68 CAST AN INITIAL BURDEN ON THE ASSESSEE TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF DEPOSITORS. ASSESSEE HAS PLACED ON RECORD VARIOUS DOCUMENTARY EVIDENCES IN RESPECT OF CONCERNED DONOR S AS DISCUSSED ABOVE. THUS, THE INITIAL ONUS CAST UPON A SSESSEE HAS BEEN DISCHARGED. HAVING DISCHARGED THE INITIAL ONU S WITH SATISFACTORY EXPLANATION, ONUS SHIFTS ON THE REVENU E. THE PROVISIONS OF SECTION 68 DOES NOT REQUIRE AN ASSESS EE TO ESTABLISH THE SOURCE OF THE SOURCE OF DEPOSITS. HEN CE, NO ADDITION COULD BE MADE EVEN IN PROVISIONS OF SECTIO N 68 OF THE ACT. IN VIEW OF THE ABOVE, IT CANNOT BE SAID THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. THUS, THE F INDING OF CIT(A) IN THIS REGARDS NEEDS NO INTERFERENCE FROM OUR SIDE . WE UPHOLD THE SAME. ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 6 - 5. NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS. 6,41,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 O F THE ACT. 5.1 THE ASSESSING OFFICER MADE ADDITION U/S 68 IN R ESPECT OF UNSECURED LOANS AGGREGATING TO RS.6,41,000/-. DETAI LED BREAK- UP OF THE SAID SUM ALONG WITH DOCUMENTARY EVIDENCES SUCH AS AFFIDAVITS, CONFIRMATION, ETC. WERE PLACED ON RECOR D IN RESPECT OF THE CONCERNED PERSONS AND THE SAME IS ANNEXED BEFOR E US AS ANNEXURE 'B'. THE CONCERNED TRANSACTIONS WERE THROU GH BANKING CHANNEL. THE ASSESSEE HAS ALSO PROVED IDENT ITY OF CREDITORS, CREDITWORTHINESS OF CREDITORS AND GENUIN ENESS OF TRANSACTIONS BY PLACING ON RECORD REQUISITE DOCUMEN TARY EVIDENCES. THE PROVISIONS OF SECTION 68 CAST AN IN ITIAL BURDEN ON THE ASSESSEE TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF DEPOSITORS. ASSESSEE HAS DISCHA RGED SUCH ONUS. HAVING DISCHARGED THE INITIAL ONUS WITH SATIS FACTORY EXPLANATION, ONUS SHIFTS ON THE REVENUE. AS PER THE PROVISIONS OF SECTION 68, AN ASSESSEE IS NOT REQUIRED TO PROVE SOURCE OF THE SOURCE OF DEPOSITS. HENCE, NO ADDITION IS CALLED FO R U/S 68. HAVING FURNISHED THE AFORESAID DETAILS, IT CANNOT B E SAID THAT THE SAME REMAINED UNEXPLAINED IN THE HANDS OF THE A SSESSEE. THEREFORE, IN THE LIGHT OF ABOVE, THE ORDER OF THE CIT(A) IN THIS REGARD WAS JUSTIFIED IN DELETING THE ADDITION IN QU ESTION AND THE SAME IS UPHELD. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . 7. NOW WE TAKE-UP THE ASSESSEES APPEAL VIDE ITA NO.1563/AHD/2010 FOR ASSESSMENT YEAR 2006-07. ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 7 - 8. IN THE ASSESSEES APPEAL, THE ONLY ISSUE IS WITH REGARD TO ADDITION OF RS.1,50,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT. 8.1 THE ASSESSING OFFICER OBSERVED THAT THERE WAS A N OUTSTANDING LIABILITY IN THE BOOKS OF THE ASSESSEE TOWARDS PURCHASE OF SHARE AND MUTUAL FUNDS. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED FOR THE EXPLANATION IN RESPECT OF THE SAME AND DID NOT APPR ECIATE THE EXPLANATION OF THE ASSESSEE FOR WHICH THE ASSESSING OFFICER MADE FOLLOWING OBSERVATION:- '10. FURTHER, THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.1,50,000/- AS OUTSTANDING PAYABLE FOR PURCHASE O F SHARES/MUTUAL FUNDS ON LIABILITY SIDE OF BALANCE SH EET. THE ASSESSEE HAS FURNISHED HER WRITTEN REPLY DATED 22.12.2008 TO SHOW CAUSE NOTICE AT PARA NO.3 SUB PA RA NO.(F),(G), (H) (I), (J) AND (K). HOWEVER, THE CONT ENTION OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE (A) THE ASSESSEE IS NOT AN AGENT OR SHARE BROKER D EALING IN SHARES AND SECURITIES. (B) THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE/PRO OF OF HAVING INVESTED THE AMOUNTS RECEIVED FROM THE ABOVE REFERRED PARTIES IN A PARTICULAR SCRIP OF SHARES/UN ITS OF MUTUAL FUNDS. (C) THE ASSESSEE HAS NOT FURNISHED THE PARTICULARS I.E. NAME OF THE COMPANY, NUMBER OF SHARES, DATE OF PURCHASE AS WELL AS QUANTITY OF SHARES OF EACH COMPANY WHERE SHE HAD INVESTED RS.1,11,540/- AND IN WHOSE NAME THE SAID INVESTMENT STANDS. (D) IT IS SURPRISE TO NOTE THAT THE ASSESSEE HAS OF FERED INCOME IN THE FORM OF SHORT TERM CAPITAL GAIN FROM TRANSACTIONS OF SHARES. THE ASSESSEE HAS OFFERED ENTIRE AMOUNT OF RS.45,010/- AS INCOME, EVEN THOUGH ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 8 - THE SHORT TERM CAPITAL GAIN ATTRACTS ONLY 10% TAXAT ION AS SPECIAL RATE. MOREOVER, THE ASSESSEE HAS NOT FURNISHED THE WORKINGS OF HOW SHE HAS EARNED THE AMOUNT OF SHORT TERM CAPITAL GAIN. THE ASSESSEE APPEARS TO HAVE INTRODUCED HER UNACCOUNTED MONEYS IN THE FORM OF SHORT TERM CAPITAL GAINS WHICH IS MO RE PARTICULARLY SHOWN IN THE ABSENCE OF GAIN WHICH IS MORE PARTICULARLY SHOWN IN THE ABSENCE OF DETAILS O F WORKINGS ON SHORT TERM CAPITAL GAINS. IN VIEW OF TH E ABOVE, I PRESUME, THAT THE ASSESSEE MAY HAVE EARNED RS.45,010/- FROM SPECULATIVE TRANSACTIONS OF SHARES AND HENCE TREAT THE SAME SPECULATIVE INCOME. (E) THE ASSESSEE HAS ALSO NOT FURNISHING CONTRACTS ISSUED BY BROKERS FOR THE TRANSACTIONS OF SALES AND PURCHA SES OF SHARES. SINCE THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE SOURCE AND NATURE OF CREDIT ENTRY IN HIS BOOKS OF A CCOUNT, THE ADDITION OF RS.1,50,000/- IS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68, 8.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) UPHELD THE O RDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE DI D NOT HAVE ANY EVIDENCE LIKE CONTRACT NOTE TO JUSTIFY THE CLAI M OF LIABILITY OUTSTANDING RS.1,50,000/- TOWARDS PURCHASE OF SHARE AND MUTUAL FUNDS. AS THE ASSESSEE WAS SHORT OF THE DET AILS AND SUPPORTING EVIDENCES TO JUSTIFY ITS CLAIM, THE SAME WAS NOT ALLOWABLE EXPENDITURE IN THE HANDS OF THE ASSESSEE. IN THIS REGARD, THE AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE ALSO FAILED TO PRESENT THE DOCUMENTARY EVIDENCE NAMELY B ROKERS NOTE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE APPELLATE AUTHORITIES; HE SIMPLY MENTIONED THAT PRODUCING THE NOTES DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPE LLATE ITA NOS. 1563 AHD 2010 & 1674 AHD 2010 SAPNA SANDIP SHAH-CROSS APPLS AY 2006-07 - 9 - PROCEEDINGS WAS NOT POSSIBLE BECAUSE THE TIME GAP B ETWEEN THE TRANSACTION DONE BY THE ASSESSEE AND THAT REQUIRED TO BE PRODUCED WAS LARGE. IN THIS BACKGROUND, THE CIT(A) RIGHTLY OBSERVED THAT THE ASSESSEE WAS NOT HAVING THE DETAI LS REGARDING THE TRANSACTIONS IN QUESTION. IN VIEW OF THE ABOVE , THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS.1,50, 000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. THIS RE ASONED FINDING OF THE CIT(A) NEEDS NO INTERFERENCE FROM OU R SIDE. WE UPHOLD THE SAME. 9. IN THE RESULT, THE REVENUES APPEAL AS WELL AS A SSESSEES APPEAL, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 14TH DAY OF MAY, 2 015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 14/05/2015 *BT #$ #$ #$ #$ %& %& %& %& '#& '#& '#& '#& / COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. %*() / THE RESPONDENT. 3. + / CONCERNED CIT 4. + ( ) / THE CIT(A), 5. &,- % , , / DR, ITAT, AHMEDABAD 6. -. / / GUARD FILE. #$ #$ #$ #$ / BY ORDER, //TRUE COPY// 0 00 0 / 1 1 1 1 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD