I.T.O Wd - 1(4),Asansol, Asansol V. MOON Moon Som., Burdwan

ITA 1998/KOL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0888 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-10-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI; P C NAYAK CIT RETD
• Keywords: Gift; Salary income; Maximum Marginal Rate; Source of fund
• Section: 40A(3)

Judgement Text

1 ITA NOS.2001 & 1998/KOL/2015 MOON MOON SOM, AYS, 2009-10 & 2003-04 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 1998/KOL/2013 ASSESSMENT YEAR: 2003-04 & I.T.A. NO. 2001/KOL/2013 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WD-1(4), ASANSOL VS. MOON MOON SOM (PAN:AKWPS3989C) APPELLANT RESPONDENT DATE OF HEARING 01.11.2017 DATE OF PRONOUNCEMENT 06.12.2017 FOR THE APPELLANT SHRI SALLONG YADEN, ADDL. CIT, SR . DR FOR THE RESPONDENT SHRI P.C. NAYAK, ADDL. CIT (RETD .) & SHRI K. K. KHEMKA, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THESE APPEALS BY THE REVENUE ARE AGAINST THE SEPARA TE ORDERS OF LD. CIT(A)-DURGAPUR DATED 25.03.2013 AND 26.03.2013 FOR AYS 2003-04 AND 2009-10 RESPECTIVELY. SINCE THE ISSUE PERTAINS TO SAME ASSESSEE, WE DISPOSE OF ALL THESE APPEALS BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE TAKE UP ITA NO.1998/KOL/2013 FOR AY 2003-04. THE SOLE GROUND OF REVENUE APPEAL IS AGAINST THE ACTION OF THE LD. CIT (A) IN DELETING THE ADDITION OF RS.55 LACS. BRIEFLY STATED FACTS ARE THAT THE AO NOTED THAT THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR HAS SHOWN IN HER BALANCE SHEET BROUGHT FORWARD CAPI TAL AT RS.65,96,914/-. THE AO FURTHER NOTED THAT THE ASSESSEE WAS ONLY 31 YEAR OLD (HER D ATE OF BIRTH WAS 31.12.1971) AND BEING VERY YOUNG AND HAVING NET INCOME OF ONLY RS.1,94,20 2/- IN THE YEAR UNDER CONSIDERATION WHICH INCLUDED INCOME FROM BEAUTICIAN PROFESSION OF RS.1,02,407/-, SALARY INCOME OF RS.60,000/-, AGRICULTURAL INCOME OF RS.1,02,000/-, THUS HAVING ONLY NET CAPITAL GENERATED IN THE YEAR UNDER CONSIDERATION IS ONLY RS.1,94,202/- , THEREFORE THE AO WONDERED AS TO HOW IT WAS POSSIBLE FOR THE ASSESSEE TO ACCUMULATE SUCH A HUGE CAPITAL OF RS.65,96,914/- BEFORE 2 ITA NOS.2001 & 1998/KOL/2015 MOON MOON SOM, AYS, 2009-10 & 2003-04 AY 2003-04. SINCE, ACCORDING TO AO, NO OTHER SOURC E OF INCOME HAS BEEN DISCLOSED BY HER TILL THAT DATE AND IN THE ABSENCE OF ANY ANSWER/EXP LANATION FROM THE ASSESSEE, THE AO CONCLUDED THAT RS. 55 LACS OUT OF OPENING CAPITAL OF RS.65,96,914/- AS UNDISC LOSED INCOME PERTAINING TO AY 2003-04 AND HE DISALLOWED IT. AGG RIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE TH E SAME. AGGRIEVED, THE REVENUE IS BEFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. DURING ASSESSMENT PROCEEDINGS, THE AO NOTED AFTER PERUSAL OF BALANCE SHEET FILED BY THE ASSESSEE THAT SHE HAD SHOWN BROUGHT FORWARD CAP ITAL OF RS.65,96,914/-, WHICH ACCORDING TO AO, WAS NOT BELIEVABLE BECAUSE ASSESSEE IS A YOU NG LADY OF 31 YEAR OLD AND HER BEAUTICIAN INCOME WAS ONLY RS.1,02,407/-, SALARY IN COME WAS RS.60,000/- AND AGRICULTURAL INCOME WAS ONLY RS.1,02,000/- AND THUS HAVING NET C APITAL GENERATED THIS YEAR OF ONLY RS.1,94,202/-. AND SINCE THE ASSESSEE DID NOT PART ICIPATE IN THE ASSESSMENT PROCEEDINGS AND THERE WAS NO OTHER KNOWN SOURCES OF INCOME FOR THE ASSESSEE, THE AO ESTIMATED THAT RS. 55 LAKHS OUT OF OPENING CAPITAL OF RS.65,96,914/- AS U NDISCLOSED INCOME PERTAINING TO AY 2003-04 AND DISALLOWED IT. ON APPEAL, THE LD. CIT( A) DELETED THE ADDITION. WE NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAS BEEN FILING HER RETURN OF INCOME FROM AY 1998-99 ONWARDS. THE LD. CIT(A) TOO K NOTE OF THE EVIDENCE OF FILING OF RETURN BY THE ASSESSEE FROM 1998-99 ONWARDS. IT WAS BROUGHT TO THE KNOWLEDGE OF THE LD. CIT(A) THAT THE ASSESSEE WAS NOT KEEPING WELL AND, THEREFORE, COULD NOT PARTICIPATE IN THE ASSESSMENT PROCEEDINGS BEFORE THE AO. THE LD. CIT( A) WAS OF THE OPINION THAT THE AO SHOULD HAVE CONSIDERED THE PAST RECORDS OF THE ASSE SSEE BEFORE MAKING THE ADDITION AND HE TOOK NOTE OF THE FACT THAT THE OPENING CAPITAL DISC LOSED BY THE ASSESSEE IS THE ACCUMULATED PAST INCOME OF HER. THE LD. CIT(A) ALSO DID NOT FI ND ANY LOGICAL REASON FOR THE AO TO SADDLE AN ADDITION OF RS. 55 LACS, WHEN THE OPENING CAPITAL DISCLOSED BY THE ASSESSEE WAS TO THE TUNE OF RS.65,96,914/- AND SINCE THE OPENING CA PITAL WAS THE CLOSING CAPITAL AS ON 31.03.2002, THE SAID AMOUNT DOES NOT PERTAIN TO ANY INCOME OF THE RELEVANT YEAR UNDER CONSIDERATION I.E. AY 2003-04. SINCE IT IS THE BRO UGHT FORWARD OPENING CAPITAL WHICH IS CARRIED FORWARD FROM EARLIER YEAR ACCORDING TO LD C IT(A) IT CANNOT BE ADDED IN THIS YEAR. WE NOTE FROM A PERUSAL OF BALANCE SHEET OF AY 2001-02 I.E. AS ON 31.03.2001(PAGE 10 OF PB), CAPITAL BROUGHT FORWARD IS ONLY RS.3,65,773/-. HOW EVER, THERE WAS A GIFT TO ASSESSEE FROM RITA KESH OF RS. 60 LAKHS AND, THEREFORE, THE CAPIT AL BROUGHT FORWARD INCREASED TO 3 ITA NOS.2001 & 1998/KOL/2015 MOON MOON SOM, AYS, 2009-10 & 2003-04 RS.64,64,542/- AS ON 31.03.2002 FOR AY 2002-03(PAG E 8 OF PB). THIS BEING THE HISTORY BEHIND THE CARRY FORWARD IN RESPECT OF CAPITAL, AND ASSESSEE BEING A REGULAR ASSESSEE, IN CASE THE AO HAD ANY DOUBTS REGARDING THE GIFT OF RS 60 L AKHS WHICH WAS INSTRUMENTAL IN SUDDEN SURGE OF CAPITAL, THEN AO HAD TO TAKE LEGAL COURSE FOR IT IN RESPECT OF AY 2002-03 AND NOT MAKE ADDITION IN THIS RELEVANT ASSESSMENT YEAR (AY 2003-04), WHICH IS NOTHING BUT THE CLOSING CAPITAL AS ON 31.03.2002, WHICH IS THE OPEN ING CAPITAL ON 01.04.2003 IN THE HANDS OF THE ASSESSEE FOR THIS ASSESSMENT YEAR. THE LD. CIT (A) HAS TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAD FILED HER INITIAL RETURN ON 11.06.1999 AND HAS BEEN A REGULAR ASSESSEE UNDER THE INCOME-TAX ACT SINCE AY 1998-99 AND THE LD. CIT(A) HAD GONE THROUGH THE RETURN FROM AY 1998-99 ONWARDS TILL THE AY UNDER CONSIDERATION. AS WE NOTED EARLIER THAT THE ASSESSEE HAS RECEIVED A GIFT OF RS.60 LACS AS ON 31.03.2001 WHICH IS NOT RELEVANT FOR THE YEAR 2003-04 AND, THEREFORE, THE ADDITION OF RS. 55 LACS BY THE AO ON ACCOUNT OF OPENING CAPITAL ON THE BASIS OF SURMISES AND CONJECTURES WAS UNWARRANTED A ND, THEREFORE, RIGHTLY DELETED BY THE LD. CIT(A) WHICH DOES NOT REQUIRE ANY INTERFERENCE. TH IS APPEAL OF REVENUE IS, THEREFORE, DISMISSED. 4. NOW, COMING TO ITA NO. 2001/KOL/2013 FOR AY 2009 -10. REVENUE HAS CHALLENGED THE ACTION OF LD CIT(A) IN RESPECT TO THE DISALLOWA NCE MADE BY AO OF RS 35,50,000/- AND RS 1.0,53,480/- . BRIEF FACTS IS THAT DURING THE ASSE SSMENT PROCEEDINGS, THE AO RECEIVED AN INFORMATION FROM ITO, WD-2, ASANSOL REGARDING BUSIN ESS TRANSACTION OF THE ASSESSEE WITH M/S. GUPTA PLYWOOD AND M/S. GLASS MART, CHANDA FOR THE PERIOD 01.04.2008 TO 31.03.2009. TAKING NOTE OF THIS FACT, THE AO RAISED CERTAIN QUE RIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO THE ASSESSEE ABOUT THE NATURE OF BUS INESS TRANSACTION WITH M/S. GUPTA PLYWOOD AND M/S. GLASS MART, CHANDA. THE ASSESSEE R EPLIED TO THE SAID LETTER THAT M/S. GUPTA PLYWOOD AND M/S. GLASS MART, CHANDA HAD CONDU CTED THE ENTIRE CULTIVATION JOB AT THE ASSESSEES FARM. HOWEVER, THE AO NOTED THAT SINCE N O EVIDENTIARY PROOF HAS BEEN FURNISHED ALONG WITH THE LETTER, HE DID NOT GIVE ANY WEIGHTAG E TO THE SAID CONTENTION. THE AO ALSO NOTICED THAT ASSESSEE HAS PAID IN CASH AMOUNTING TO RS.35,50,000/- AND RS 10,53,480/- ON DIFFERENT DATES. ACCORDING TO THE AO, THE ASSESSEE HAD NOT SHOWN ANY SUPPORTING DOCUMENTS REGARDING THE CASH PAYMENTS AND TAKING NO TE OF SEC. 40A(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), W HICH RESTRICTS CASH TRANSACTION IN A DAY BEYOND RS.20,000/-, ACCORDING TO AO NO DEDUCTION ON THE SAID AMOUNT CAN BE GIVEN AS AN EXPENDITURE AND, THEREFORE, HE DISALLOWED RS.35,50, 000/- AND RS 10,53,480/- AND ADDED THE 4 ITA NOS.2001 & 1998/KOL/2015 MOON MOON SOM, AYS, 2009-10 & 2003-04 SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE APPEAL OF THE ASSESSEE. HOWEVER, THOUGH THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE , THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO RECEIVED INFORMATION FRO M ITO, WARD-2, ASANSOL STATING THAT ASSESSEE HAD SOME BUSINESS TRANSACTION WITH M/S. GU PTA PLYWOOD AND M/S. GLASS MART, CHANDA. ON GOING THROUGH THE LEDGER COPY OF M/S. G UPTA PLYWOOD, THE AO NOTED THAT THE ASSESSEE HAD PAID IN CASH AN AMOUNT OF RS. 35,50,00 0/- AND RS 10,53,480/- ON DIFFERENT DATES. THE ASSESSEE WAS ASKED ABOUT THE NATURE OF BUSINESS TRANSACTION WITH THE SAID CONCERNS. THE ASSESSEE REPLIED THAT THE SAID CONCE RNS EXECUTED ENTIRE CULTIVATION JOB WITH THE HELP OF LABOURERS IN THEIR AGRICULTURAL FARM. SINCE ACCORDING TO THE AO, NO EVIDENCE WAS PLACED BEFORE HIM HE DISBELIEVED THE SAME AND SINCE RS.35,50,000/- AND RS 10,53,480/- HAS BEEN PAID IN CASH TO THE SAID CONCERN, WHICH ACCORD ING TO AO, WAS IN CONTRAVENTION OF SEC. 40A(3) OF THE ACT HE DISALLOWED THE SAID AMOUNT. ON APPEAL, THE LD. CIT(A) WONDERED AS TO WHY THE ASSESSEE HAS COME IN APPEAL BEFORE HIM O N THIS DISALLOWANCE OF EXPENDITURE ON AGRICULTURAL INCOME BECAUSE BY WAY OF DISALLOWANCE OF AGRICULTURAL EXPENDITURE, ASSESSEES AGRICULTURAL INCOME GOT ENHANCED BY THAT MUCH AMOUN T. WE WOULD LIKE TO ADD HERE THAT WHEN THE AGRICULTURAL EXPENDITURE HAS NOT BEEN DEBI TED BY THE ASSESSEE IN THE P&L ACCOUNT, THEN INVOKING OF SECTION 40A(3) OF THE ACT DOES NOT FIRST OF ALL ARISE BECAUSE DISALLOWANCE INVOKING SEC. 40A(3) OF THE ACT IS ONLY FOR EXPENDI TURE WHICH IS INCURRED UNDER THE HEAD BUSINESS OR PROFESSION . WE NOTE THAT THE DISALLOWANCE MADE BY THE AO DO ES NOT PERTAIN TO THE EARNING OF NON-AGRICULTURAL INCOME BY ASSESS EE TO THE TUNE OF RS.2,11,500/- WHICH WAS DISCLOSED BY THE ASSESSEE. THE AO HAS ACCEPTED THE NON-AGRICULTURAL INCOME OF RS.2,11,500/-. THE AGRICULTURAL INCOME IS EXEMPT F ROM TAX AND IS TO BE AGGREGATED ONLY FOR THE RATE PURPOSE. THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAS ALREADY BEEN TAXED AT THE MAXIMUM MARGINAL RATE AND THE ENH ANCEMENT OF INCOME BY VIRTUE OF THE DISALLOWANCE MADE BY HIM IN RESPECT TO THE AGRICULT URAL EXPENDITURE DOES NOT IN ANY MANNER IMPACT THE ASSESSEES TAXABLE INCOME. IN THE LIGHT OF THE AFORESAID CIRCUMSTANCES, THE LD. CIT(A) DID NOT FIND ANY REASON FOR THE ASSESSEE TO BE AGGRIEVED BY THE DECISION OF THE AO, THEREFORE, HE WAS PLEASED TO DISMISS THE SAME. LIKE WISE, WE ALSO WONDER AS TO WHY THE REVENUE IS IN APPEAL BEFORE US SINCE THE LD. CIT(A) HAS DISMISSED THE GROUND OF APPEAL OF 5 ITA NOS.2001 & 1998/KOL/2015 MOON MOON SOM, AYS, 2009-10 & 2003-04 THE ASSESSEE, AND WE DO NOT UNDERSTAND THE GRIEVANC E OF THE REVENUE ON THIS ISSUE. WE NOTE THAT THE ASSESSEE HAD CLEARLY STATED BEFORE THE AO THAT THE PAYMENT OF RS.35,50,000/- AND RS 10,53,480/- HAS BEEN PAID TO M/S. GUPTA PLYWOOD AND M/S. GLASS MART FOR EXPENSES INCURRED FOR CULTIVATION OF HER FARM LAND FROM WHIC H AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE AND HAS BEEN ACCEPTED BY THE AO. WHEN THE AGRICULTURAL INCOME IS EXEMPT FROM TAX AND IS TO BE AGGREGATED ONLY FOR RATE PURPOSES AND SINCE THE AO HAS ACCEPTED THE ASSESSEES EARNING FROM THE NON-AGRICULTURAL INCOME OF RS.2,11,500/- AS DISCLOSED BY THE ASSESSEE, THE DISALLOWANCE MADE IN RESPECT OF AGRIC ULTURAL EXPENDITURE WOULD AMOUNT TO ENHANCEMENT OF THE AGRICULTURAL INCOME. THE LD. CI T(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE AND, THEREFORE, THE RESULT IS THAT AOS OR DER IS NOT DISTURBED ON THIS ISSUE AND THE EFFECT OF DISALLOWANCE OF AGRICULTURAL EXPENDITURE BY THE AO WILL ENHANCE THE AGRICULTURAL INCOME OF THE ASSESSEE, HOWEVER, THE AO ERRED IN AP PLYING SEC. 40A(3) OF THE ACT TO DISALLOW THE AGRICULTURAL INCOME BECAUSE SEC. 40A(3 ) IS APPLICABLE ONLY FOR EXPENDITURE INCURRED UNDER THE HEAD BUSINESS OR PROFESSION AN D CANNOT BE INVOKED FOR EXPENDITURE INCURRED ON AGRICULTURE AND, THEREFORE, AO ERRED I N INVOKING SEC. 40A(3) OF THE ACT AND THUS AS STATED EARLIER, THE LD. CIT(A) DISMISSED TH E APPEAL OF THE ASSESSEE, THERE COULD NOT HAVE BEEN ANY GRIEVANCE ON THE PART OF THE REVENUE TO HAVE FILED AN APPEAL BEFORE US. FOR THE REASONS STATED ABOVE THE APPEAL OF REVENUE IS DISMI SSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 6TH DE CEMBER, 2017 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH DECEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WAD-1(4), ASANSOL 2 RESPONDENT SMT. MOON MOON SOM, 130, B. L. HATI ROAD, DHAL DIGHI, BURDWAN, DIST. BURDWAN-713101. 3. THE CIT(A), ASANSOL 4. 5. CIT , ASANSOL DR, KO LKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY