RATAN MUHURY, Siliguri V. I.T.O.Wd.1(1), Siliguri, Siliguri

ITA 1812/KOL/2009

• Counselvise Citation: 181223514 RSA 2009
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 14-02-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 29-10-2009
• Court: TRIBUNAL
• Department Lawyers: S BHA DRA
• Assessee Lawyers: SUBASH AGARWAL
• Keywords: Gift; Business income; Salary income; Charitable institution
• Section: 131; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 1812/KOL/2009 &' ()/ ASSESSMENT YEAR : 2003-04 (+, / APPELLANT ) RATAN MUHURY (PAN: ADRPM 6840 N) - & - - VERSUS - . (./+,/ RESPONDENT ) THE I.T.O., WARD-1(1), SILIGURI +, 0 1 #/ FOR THE APPELLANT: SHRI SUBASH AGARWAL ./+, 0 1 #/ FOR THE RESPONDENT: SHRI S.BHADRA #2 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 09/07/2009 OF THE CIT(A)-SILIGURI PERTAINING TO A.YR. 2003-04. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL :- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,65,110/- M ADE BY THE AO ON ACCOUNT OF UNSECURED LOAN TREATING THE SAME AS UNEXPLAINED CAS H CREDITS BY WRONGLY INVOKING THE PROVISIONS OF SECTION 68. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCES OF RS .65,720/- ON ACCOUNT OF INTEREST PAID ON UNSECURED LOAN TREATING THE SAME A S BOGUS EXPENDITURE. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO TO THE EXTENT OF RS.3,50,000/- ON ACCOUNT OF ALLEGED GIFT RECEIVED FROM SRI PRADIP MALLICK, SMT. SUMITA MALLICK AND SRI BENOY SAHA. 2 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 1,748/- ON ACCOUNT OF ALLEGED SALES TAX PAYMENT BY WRONGLY INVOKING THE PROVISION S OF SECTION 43B. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 3. AT THE TIME OF HEARING THE LD. COUNSEL APPEARIN G ON BEHALF OF THE ASSESSEE HAS NOT PRESSED GROUND NO.4. THEREFORE, THE SAME IS DIS MISSED AS NOT PRESSED. 4. GROUND NO.5, BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY ADJUDICATION. 5. THE FACTS IN RESPECT OF THE OTHER THREE GROUNDS ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT THE AO HAS OBSERVED THAT THE ASSESSEE HA S TAKEN LOAN OF RS.3,65,110/- CONSISTING OF LOAN OF RS.19,500/- FROM 18 PERSONS A ND RS.14,110/- FROM ONE PERSON ON 1.4.2002 AND ON THE ABOVE SAID LOAN THE ASSESSEE HA S PAID INTEREST OF RS.65,720/- AND CLEARED OFF THE ENTIRE LOAN ON 31.03.2003. 5.1. ON ENQUIRY THE ASSESSEE HAS SUBMITTED CONFIRMA TIONS ALONG WITH AFFIDAVITS. HOWEVER, THE AO MADE ENQUIRIES THROUGH THE INSPECTO R AND BASED ON THE REPORT OF THE INSPECTOR THE AO HAS NOT CONSIDERED THESE SUBMISSIO NS MADE BY THE ASSESSEE FOR THE VARIOUS REASONS MENTIONED IN THE IMPUGNED ORDER AT PAGES 4 AND 5 AND ULTIMATELY ADDED AN AMOUNT OF RS.3,65,110/- U/S 68 OF THE IT A CT AND DISALLOWED INTEREST OF RS.65,720/- TREATING THE ENTIRE TRANSACTIONS AS BOG US. HE FURTHER DISALLOWED THE GIFTS RECEIVED BY THE ASSESSEE FROM THREE INDIVIDUALS BY OBSERVING AS UNDER :- SL.NO. NAME OF THE DONOR, AS CLAIMED DATE AMOUNT 1. PRADIP MALLICK 27/03/2003 1,00,000/- 2. SUMITA MALLICK 27/03/2003 1,00,000/- 3. BENOY SAHA 28/01/03 1,50,000/- NOTICE U/S 131 OF THE L.T. ACT 1961 WAS ISSUED TO T HE ABOVE MENTIONED SO CALLED DONORS. DURING THE COURSE OF DEPOSITION I T WAS STATED BY SRI BENOY SAHA THAT HE IS EMPLOYED WITH SATHI TIMES, PROP. SR I RATAN MUHURY. ACCORDING TO HIM SRI SAHA MADE CASH GIFT OF RS.1,50,000/- ON 28/01/2003 TO HIS EMPLOYER SRI RATAN MUHURY. IT IS ALSO STATED BY SRI BINOY SA HA THAT HIS ANNUAL SALARY INCOME DURING THE YEAR WAS AT 1,00,000/-. BESIDES HIS SALARY INCOME HE HAD ALSO BUSINESS INCOME FROM SUPPLY OF WATCHES TO DIFF ERENT SHOP AND INCOME FROM MONEY LENDING BUSINESS. DEPARTMENTAL INSPECTOR WAS DEPUTED TO ENQUIRE THE CASE. IT APPEARS FROM THE REPORT OF THE INSPECT OR THAT SRI BENOY SAHA IS AN EMPLOYEE OF THE ASSESSEE, SRI RATAN MUHURY, PROP. O F THE FIRM M/S SATHI TIMES. HIS SALARY INCOME WAS RS.2,000/- PER MONTH A ND BUSINESS INCOME RS.3,000/- PER MONTH. SRI BENOY SAHA DOES NOT MAINT AIN ANY BOOKS OF ACCOUNT AND HE ALSO DOES NOT MAINTAIN ANY BANK ACCOUNT. HIS RETURNED INCOME FOR THE 3 A.Y. 03-04 WAS 55,620/- WHICH INCLUDED INCOME FROM SALARY AT RS.24,000/-. IT IS NOT POSSIBLE FOR ONE PERSONS HAVING INCOME OF RS .95,620/- IN THE YEAR TO MAKE GIFT OF RS.150000/- TO HIS EMPLOYER AFTER MEET ING ALL FAMILY EXPENSES CONSISTING OF 4 FAMILY MEMBERS. IT IS NOT ALSO ACCE PTABLE THAT ONE PERSON WITHOUT INVESTING HIS SURPLUS TO HIS BUSINESS WILL MAKE GIFT TO HIS EMPLOYER. THE STATEMENT OF SRI RATAN MUHURY RECORDED U/S 131 ON 11/11/2005 DIFFERS FROM THE STATEMENT OF BINOY SAHA IN RESPECT OF IS N ATURE OF BUSINESS AS WELL AS FAMILY MEMBERS. DURING THE COURSE OF DEPOSITION U/S131 OF THE IT. A CT SRI PRADIP MALLICK STATED THAT HE MADE CASH GIFT OF RS. 1,00,000/- TO HIS FRIEND SRI RATARI MUHURY ON 27/03/2003 ON HIS REQUEST. IT IS STATED BY SRI M ALLICK THAT HE IS THE PRINCIPAL -CUM-PROP. OF ST. PAULS SCHOOL OF SHIV MANDIR. HE MAINTAINS HIS BANK ACCOUNT WITH CB, SHIV ANDIR. HE NEVER MADE ANY GIFT TO BLOOD RELATED PERSONS OR ANY CHARITABLE INSTITUTE OR ANY RELIGIOUS ORGANI SATION. SMT SUMITA MAIILCK, WIFE OF SRI PRADIP MALLLCK, IN HER STATEMENT RECORD ED U/S 131 STATED THAT SHE IS A GRADUATE AND HER SOURCE OF INCOME IS TUTION AND KNI TTING JOB. SHE ALSO MAINTAINS JOINT BANK ACCOUNT WITH HER HUSBAND IN CBI SHIV MAN DIR. ON REQUEST FROM HER HUSBANDS FRIEND SRI RATAN MUHURY SHE MADE CASH GIF T OF RS 1,00,000/- ON 27/03/2003. IT IS ALSO STATED THAT SHE NEVER MADE A NY GIFT TO OTHERS EXCEPTING THE ABOVE. DEPARTMENTAL INSPECTOR WAS DEPUTED TO ENQUIR E THE CASES. THE INSPECTOR IN HIS REPORT STATED THAT PRADIP MALLICK IS THE PRI NCIPAL -CUM-PROP. OF ST PAUL SCHOOL OF SHIV MANDIR, SILIGURI. THE SCHOOL IS RUNN ING WITH CLASSES FROM NURSERY TO CLASS V HAVING 150 STUDENTS (APPROX). AS PER INSPECTORS REPORT SRI MALLICK HAS NO INCOME FROM TUTION JOB. HE MAINTAIN S ONE MARUTY VAN FOR PERSONAL USE. HE HAS TWO DEPENDENT CHILDREN. THEY A RE ENGLISH-MEDIUM- SCHOOL GOING STUDENTS. AFTER CONSIDERING ALL THESE, CREDIT WORTHINESS OF SRI MALLICK TO MAKE GIFT OF RS 1,00,000/- TO HIS FRIEND S ON HIS REQUEST IS NOT ACCEPTABLE. IN RESPECT OF SMT.SUMITA MALLICK ,IT IS STATED BY THE INSPECTOR IN HIS REPORT THAT SMT MAILICK HAS NO TUTION INCOME OR KNI TTIG INCOME. SHE COULD NOT BE ABLE TO PRODUCED ANY KNITTING PRODUCTS OR ANY KN ITTING MACHINERY FOR HER KNITTING JOB. THEREFORE SOURCE OF INCOME O SMT MALL ICK IS NOT VERIFIABLE. THEY DID NEVER MAKE ANY GIFT FOR CHARITABLE PURPOSE, REL IGIOUS ORGANISATION, BLOOD RELATED PERSONS. AND HENCE CREDIT WORTHINESS AS WEL L AS GENUINENESS OF THE TRANSACTIONS IS NOT PROVED. 5.2. ON APPEAL THE LD. CIT(A) HAS CONFIRMED THE SAM E. 5.3. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 6. AT THE TIME OF HEARING BEFORE US THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS FILED THE INCOME TAX ACKNOWLEDGEMENTS, COMPUTATION OF INCOME, FINAL ACCOUNTS AND CONFIRMATIONS IN RESPECT OF 10 LOAN CR EDITORS WHICH WERE PLACED AT PAGES 16 TO 45 OF THE PAPER BOOK AND IN RESPECT OF OTHER 9 CREDITORS HE FILED AFFIDAVITS AND CONFIRMATIONS WHICH WERE PLACED AT PAGES 46 TO 63 O F THE PAPER BOOK. HE CONTENDED THAT THE ACTION OF THE REVENUE IS NOT JUSTIFIABLE I N THE FACTS AND CIRCUMSTANCES OF THE 4 CASE. WHEN ONCE THE ASSESSEE HAS FILED COMPLETE DET AILS IN RESPECT OF THE LOAN CREDITORS INCOME TAX ASSESSMENTS INCLUDING COPY OF THEIR RETU RNS OF INCOME, BALANCE SHEET WHICH CLEARLY EXHIBIT THAT THE LOAN TRANSACTIONS IN RESPECT OF LOAN CREDITORS AND THEY HAVE ALSO DISCLOSED THE INTEREST INCOME IN THEIR RE GULAR RETURNS OF INCOME. THE REVENUE IS NOT JUSTIFIED TO DISBELIEVE THE SAID TRA NSACTIONS U/S 68 OFT EH IT ACT AND DISALLOWANCE OF THE INTEREST PAID ON DISALLOWANCE I S NOT ALSO JUSTIFIABLE. HE REQUESTED TO DELETE THE SAME. 6.1. AS REGARDING THE DISALLOWANCE ON ACCOUNT OF GI FTS SIMILARLY HE FILED INCOME TAX ACKNOWLEDGEMENTS, COMPUTATION OF INCOME AND FINAL A CCOUNTS IN RESPECT OF THREE DONORS NAMELY SHRI PRADIP MALLICK, SMT.SUMITA MALLI CK AND SHRI BINOY SAHA WHICH WERE PLACED AT PAGES 82 TO 87 OF THE PAPER BO OK. SINCE THE DONORS HAVE ALSO CONFIRMED THAT THEY HAVE MADE THE GIFT TO THE ASSES SEE IT IS NOT FAIR ON THE PART OF THE REVENUE TO DISBELIEVE THE SAME AND MADE ADDITIONS I N THE HANDS OF THE ASESSEE AND HE REQUESTED TO DELETE THE SAME. 7. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE BY REFERRING TO THE OBSERVATIONS MADE BY THE AO AS WELL AS CIT(A ) IN THE IMPUGNED ORDER CONTENDED THAT THOUGH THE ASSESSEE HAS FILED THE RE LEVANT DOCUMENTS SINCE IN THIS CASE THE AO HAS MAINLY RELIED ON THE REPORT OF THE INSPE CTOR AND THUS COMING TO THE CONCLUSION THAT THE LOAN TRANSACTIONS ARE BOGUS. SI MILARLY REGARDING THE GIFTS ALSO THE ASSESSEE IS NOT IN A POSITION TO ESTABLISH WHETHER THEY ARE RELATED TO THE ASSESSEE AND ON WHAT OCCASION THE GIFTS ARE MADE TO THE ASSESSEE AN D THE REVENUE HAS PROPERLY BROUGHT ON RECORD THAT THE CREDITWORTHINESS IS NOT SUBSTANT IAL TO MAKE THE DONATIONS OF RS.1,00,000/- BY TWO DONORS NAMELY SHRI PRADIP MALL ICK AND SMT.SUMITA MALLICK AND RS.1,50,000/- BY SHRI BENOY SAHA. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIAL AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT ALL THE LOAN CREDITORS HAVE SHOWN THE TRANSACTIONS IN THEIR BOOKS OF ACCOUNTS AND OFFERED INTEREST INCOME ON THE SAME IN THEIR RESPECTIVE RETURNS OF INCOME WHICH WERE EVIDENT FRO M THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND NO JUSTIFICATION ON THE PART OF T HE REVENUE TO DISBELIEVE THE SAME BASED ON THE INSPECTORS REPORT ONLY. THEREFORE WE D ELETE THE ADDITIONS OF RS.3,65,110/- 5 MADE U/S 68 OF THE IT ACT AND CONSEQUENTIAL DISALLO WANCE OF RS.65,72/- ON ACCOUNT OF INTEREST. THEREFORE GROUND NO.1 AND 2 OF THE ASSESS EE ARE ALLOWED. 8.1. AS REGARDING THE GIFTS, WE ARE OF THE CONSIDER ED VIEW THAT THE REVENUE HAS BROUGHT SUFFICIENT MATERIAL ON RECORD TO THE EFFECT THAT IN THE CIRCUMSTANCES OF THE CASE IT IS QUITE UNUSUAL AND UNNATURAL AND AGAINST HUMAN PROBABILITIES THAT WITHOUT ANY RELATION BETWEEN THE DONOR AND THE DONEE AND WITH P OOR FINANCIAL STATUS OF THE DONORS SIMPLY BY PROVING THE IDENTITY OF THE DONOR IS NOT SUFFICIENT TO ESTABLISH THE GIFTS TO BE A GENUINE ONE. THEREFORE, WE CONFIRM THE ACTION OF THE REVENUE ON ACCOUNT OF THE GIFTS AND DISMISS GROUND NO.3 OF THE ASSESSEE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED IN PART. ORDER PRONOUNCED IN THE COURT ON 05.04.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 05.04.2011. #2 0 .3 4#3(5- COPY OF THE ORDER FORWARDED TO: 1. SHRI RATAN MUHURY, HILL CART ROAD, SILIGURI 2 THE I.T.O., WARD-1(1), SILIGURI 3. THE CIT, 4. THE CIT(A)-SILIGURI 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, #2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)