DCIT, Pondicherry V. Shri A.Murugesan, Pondicherry

ITA 1864/CHNY/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73602 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 19-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 17-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Opportunity of being heard; Source of fund; Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1864/MDS/2011 (ASSESSMENT YEAR: 2003-04) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, PUDUCHERRY-605 003. VS. MR. A.MURUGESAN PROP. M/S. SANTHOSH AGENCIES, MAILAM ROAD, SEDARAPET, PUDUCHERRY-605 111. PAN: AANPM8455E (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.DAS GUPTA, JCI T RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE DATE OF HEARING : 19 TH DECEMBER, 2013 DATE OF PRONOUNCEMENT : 13 TH JANUARY, 2014 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, CHENN AI DATED 19.08.2011 FOR THE ASSESSMENT YEAR 2003-04. THE ONLY GRIEVANCE IN THE REVENUES APPEAL IS THAT COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN DELETING ADDITIONS OF ` 2,00,000/- AND ` 10,50,000/-, MADE TOWARDS UNPROVED LOANS. ITA NO.1864 /MDS/2011 2 2. THE APPEAL OF THE REVENUE IS FILED WITH THE DELA Y OF THREE DAYS. A PETITION FOR CONDONATION OF DELAY HA S BEEN FILED ALONG WITH THE APPEAL CITING REASONS FOR DELAY IN F ILING OF APPEAL. WE HAVE PERUSED THE REASONS AND ARE SATISFI ED THAT THERE IS A REASONABLE CAUSE FOR THE DELAY IN FILI NG OF THE APPEAL. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF THREE DAYS IN FILING OF THE APPEAL. THE PETITION F OR CONDONATION OF DELAY IS THUS, ALLOWED AND THE APPEAL IS ADMITT ED. 3. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT MADE ADDITION OF ` 2,00,000/- BEING LOAN RECEIVED BY THE ASSESSEE FROM HIS WIFE AND ` 10,50,000/- BEING LOAN RECEIVED FROM HUF OF THE ASSESSEE ON THE GROUND THAT ASSESSE ES WIFE HAS NO CAPACITY TO LEND MONIES TO THE ASSESSEE BEY OND ` 2,00,000/- OUT OF ` 4,00,000/- RECEIVED AND HUF OF THE ASSESSEE DOES NOT HAVE ANY SOURCE FOR LENDING MONIE S TO THE ASSESSEE. THEREFORE HE HAS TREATED BOTH THESE LOANS AS UNPROVED AND ADDED TO THE INCOME RETURNED. ON APPEA L, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITIONS AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. ITA NO.1864 /MDS/2011 3 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTING THE O RDER OF THE ASSESSING OFFICER SUBMITS THAT THE COMMISSIO NER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING A DDITIONS AS THESE ADDITIONS WERE MADE BY THE ASSESSING OFFICER AS THE ASSESSEE DID NOT PROVE LOANS AND THE CREDITORS HAVE NO SUFFICIENT MEANS TO LEND MONIES TO THE ASSESSEE. HE PRAYS FOR SUSTAINING THE ADDITIONS MADE BY THE ASSESSING OFFI CER. 5. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES. IN RESPECT OF LOAN RECEIVED BY THE ASS ESSEE FROM HIS WIFE, THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE REMAND REPORT SUBMITTED BY THE ASSE SSING OFFICER IN THE COURSE OF THE PROCEEDINGS BEFORE HIM DELETED THE ADDITION OBSERVING AS UNDER:- B) UNPROVED LOAN FROM WIFE-RS.2,00,000/-: THE ASSESSING OFFICER IN THE ASSESSM E NT ORDER OBSERVED THAT THE ASSESSEE RECEIVED A GIFT OF RS . 4,00,000/- FROM HIS WIFE . TH E ASSESSING OFFICER EXAMINED THE CONFIRMATION LETTER FILED BY HER ITA NO.1864 /MDS/2011 4 AND CONCLUD E D TH A T SHE DOES NOT HAVE SUFFICIENT INCOME TO ADVANCE A GIFT OF RS . 4 ,00,000/- TO THE ASSESS EE A ND ACCORDINGLY DISALLOWED RS.2,00 , 000/- AS NON- GENUINE GIFT AND BROUGHT TO TAX. BEFORE THE UNDERSIGNED, THE ASSESSEE EXPLAINED THAT HIS W IF E SMT . BHUVANESWARI, HAS BEEN WORKING WITH INDIAN BANK SINCE 1993 AND HER ANNU A L INCOME IS RS . 2.79 LAKHS, IN ADDITION TO THE AGRICULTURAL, AS COULD BE SEEN FROM THE R E TURN OF INCOME FILED FOR A . Y . 2003-04. THE ASSESSEE ALSO PRODUCED THE 'CHITTA A ND ADANGAL ' IN SUPPORT OF AGRICULTURAL INME BEFORE THE ASSESSING OFFICER , WHIL E PREPARING THE REMAND REPORT . THE CONTENTS OF T HE REMAND REPORT ARE - ' THE APPELLANT HAS FURNISHED A L E TTER FROM THE BRANCH MANAGER OF INDIAN BANK, METTUPALAYAM BRANCH WHICH SAYS THAT MRS.P.BHUVANESWARI HAS BEEN IN THE EMPLOYMENT OF INDIAN BANK SINCE 5.2.1 993 AND WORKING IN METTUPALAYAM BRANCH FROM 21.10.1996 . THE APPELLANT HAS PRODUCED ' CHITTA AND AGANGAL' IN SUPPORT OF TH E AGRICULTURA L INCOME OF MRS . BHUVANESWARI . THE REVENUE RECORDS FOR FASALI YEARS 1410 (2001-02). 14 1 1 (2002-03) AND 1412 (2003-04) THA T CROPS LIKE GROUNDNUT , CASURINAS WERE GROWN IN THE AGRICULTURAL LAND. ALTHOUGH THE ENTIRE SALARY HAS BEEN SAV E D BY HER , IT IS PERTINENT. TO NOTE THAT SHE HAS NOT DISCLOSED THE AGRICULTURAL I NCOME IN HER RETURN. THE THEN ASSESSING OFFICER HAS VERIFIED THE SAVINGS ACCOUNT PASS BOOK OF MRS. BHUVANESWARI AND THEN CONCLUDED THAT SHE IS NOT IN A POSITION TO GIVE MORE THAN RS . 2.00 LAKHS DURING THE F . Y . 2003-04 AND THE BALANCE OF ` 2,00,000/- HAS BEEN BROUGHT TO TAX'. ITA NO.1864 /MDS/2011 5 THUS, FROM THE ABOVE, IT CAN S A FELY P RESUMED THAT THE ENTIRE SALAR Y OF RS .2 . 7 9 L A KHS AND AGRICULTURAL INCOME A.Y.2003-04 IS THE SOURCES OF GIFT TO THE ASSE S SE E . SIMILARLY, THERE WERE ALSO SUFFICIENT INCOMES FROM THE EARLIER YEARS. CONSIDERIN G TH E SOURCES IN T HE HANDS OF THE ASSESSEE'S WIFE AND HER CONFIRMATION LETTER , THE ASSESSIN G OFFICER IS NOT JUSTIFIED IN REJECTING THE ASSESSEE'S CLAIM OF GIFTS FROM T HE WIFE . ACCORDINGLY, THE ASSESSEE SUCCEEDS IN THE APPE A L ON THIS GROUND, AND THE ADDITI O N O F RS. 2, 00,000/- IS DELETED . 7. ON READING OF THE REMAND REPORT AND THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE DO NOT FIN D ANY GOOD REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING T HAT ASSESSEES WIFE HAS SUFFICIENT SAVINGS FOR LENDING MONIES TO THE ASSESSEE. THEREFORE, WE SUSTAIN THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUND RAISED BY THE REVENUE ON THIS ISSUE. 8. IN RESPECT OF THE ADDITION OF ` 10,50,000/-, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION CONSIDERING THE REMAND REPORT AND THE EVIDENCES FIL ED BY THE ASSESSEE OBSERVING AS UNDER:- D) ADDITION OF RS . 10,50,000/- ON ACCOUNT ITA NO.1864 /MDS/2011 6 OF LOAN FROM HUF: THE ASSESSING OFFI CER I N H IS ORDER U/S 143(3) OBSERVED T HAT THE ASS E SSEE RE C EIVED A LOAN OF RS. 10 , 50 , 0 0 0 / - F ROM HIS HU F AND THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN SUPP ORT O F T H E S A ME . HENCE , THE ASSESSING O F FICER DIS A LLOWED THE SA I D LOAN OF RS . 10 , 50 , 0 0 0 / - A ND BROUGHT T HE SAME TO TA X . DURING THE COU R SE OF REM A ND REPORT PROCEEDINGS, THE ASSESSEE FURNI S H E D T H E C O P I ES OF RETURNS OF INCOM E FILED B Y THE HUF FOR A . V'S 2000-01, 2001-02 & 2 00 3 -04 , A ND A LSO THE PARTITION DEED DAT E D 14.01 . 1999 BETWEEN THE ASSESSEE AND HIS F AT H ER . T HE CON T ENTS OF THE REMAND REPORT ARE AS UNDER : ' THE ASSESSEE IN HIS SUBMI S SION HAS FURNISHED COPIE S O F ACKNOWLEDGEMENT O F RETURN OF IN C OME OF HUF FOR THE A . Y S 2000- 01 AND 2 001 - 02 AND ALSO COPIES OF C HALLAN FOR TAX PAYMENT MADE FOR A . Y . 2003 -0 4 . FURTHER, H E HAS SUBM I TTED COPIES O F AFFIDAVIT IN SUPPORT OF PARTIT I ON BETWEEN THE ASSESSEE AND HIS FATH E R ON 14 . 01.1999. IN ADDITION TO THE ABOVE , THE A S SESSEE HAS SUBMITTED COPI ES OF R E GISTERED PARTITION D EE D , MEMOR A NDUM O F PARTITION D E ED AND T H E AFFIDAVIT OF THE KARTA ' . FROM THE ABOVE, IT IS SEEN THA T THER E WAS A PARTITION OF FATHER'S HUF AND T H E AS S E SSEE ON 14.01.1999 , WHEREIN SUNDRY DEBT O RS WORTH RS . 9. 00 L A KHS W E RE G I VE N TO THE A SSESSEE . THESE DEBTORS WERE RE ALISED SUBSEQUENTLY (BY THE ASSESSEE IN HIS H U F CA P AC IT Y) AND ADVANCED TO THE ASSESSEE (INDI V IDUAL) DURING THE F . Y. 2 002-03 , A S L O AN . ITA NO.1864 /MDS/2011 7 IN ADDITION , THE ASSESSEE ' S HUF HAS ITS OWN SOURCES OF INCOME. THE ABOVE ALSO FINDS SUFFICIENT STRENGTH FROM THE SUBSEQUENT AND FINAL PARTITION OF FATHERS HUF ON 27.08.2006, WHEREIN THE ASSESSEE GOT ONLY 1.71 ACRES OF AGRICULTURAL LANDS AS AGAINST 5 TO 6 ACRES OF AGRICULTURAL LANDS RECEIVED BY EACH OF THE OTHER BROTHERS. IN VIEW OF THE ABOVE, THE SOURCES FOR ADVANCING A LOAN OF ` 10,50,000/- BY THE HUF TO THE ASSESSEE STANDS ESTABLISHED AND JUSTIFIED. HENCE, THE ADDITION OF ` 10,50,000/- MADE BY THE ASSESSING OFFICER IS DELETED. 9. THE COMMISSIONER OF INCOME TAX (APPEALS) MAINLY DELETED THE ADDITION ON THE GROUND THAT ASSESSEES HUF IN ITS RETURNS FILED FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 HAS SHOWN THAT THERE WERE DEBTORS OUTSTANDING TO TH E EXTENT OF ` 9,00,000/- AND THEY WERE GIVEN TO THE ASSESSEES HU F ON PARTITION AND THEREFORE THE SOURCE FOR LENDING MONI ES TO THE ASSESSEE BY HUF WAS EXPLAINED, THEREFORE THE ADDITI ON OF ` 10,50,000/- WAS DELETED. ON READING OF THE REMAND REPORT AND THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ). HOWEVER, IN THE ABSENCE OF ANY RECORD BEFORE US TO SHOW THAT ASSESSEES HUF IS IN POSSESSION OF DEBTORS TO THE EXTENT OF ITA NO.1864 /MDS/2011 8 ` 9,00,000/-, WE FEEL THAT THIS FACT SHOULD BE VERIFI ED BY THE ASSESSING OFFICER AND IN CASE, RECORDS / EVIDENCES SHOW THAT THE ASSESSEES HUF IS IN POSSESSION OF DEBTORS TO THE EXTENT OF ` 9,00,000/-, THE ADDITION SHALL NOT BE MADE AS UNPR OVED LOAN. FOR THE LIMITED PURPOSE, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY SUCH FACT A ND DECIDE THE ISSUE ACCORDINGLY. THE ASSESSEE MAY BE GIVEN ADEQUA TE OPPORTUNITY OF BEING HEARD. THE GROUND RAISED BY T HE REVENUE ON THIS ISSUE IS ALLOWED FOR STATISTICAL PU RPOSES. 10. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 13 TH DAY OF JANUARY, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 13 TH JANUARY, 2014. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.