Prasanta Debnath, Hooghly V. ITO, Ward - 4, Nadia, Nadia

ITA 2171/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48276 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 30-12-2009
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANIK
• Keywords: Unexplained investment; Gift
• Section: 143(3); 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 2171/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2004-05 PRASANTA DEBNATH VS. INCOME-TAX OFFICER, WD-4, NADIA (PAN AEGPD 2930 N) ( *+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI SOMNATH GHOSH FOR THE RESPONDENT: SHRI A. K. PRAMANIK . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXVI IN APPEAL NO.228/CIT(A)XXXVI/KOL/NADIA/06-07 DATED 30.10.2009 . THE ASSESSMENT WAS FRAMED BY ITO, WARD-4, NADIA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 30.11.2006. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ADDITION OF RS.6,50,000/- MADE BY ASSESS ING OFFICER BY INVOKING PROVISIONS OF SECTION 69 OF THE ACT ON ACCOUNT OF GIFT RECEIVE D FROM ASSESSEES FATHER SHRI PHANI BHUSAN DEBNATH AMOUNTING TO RS.3.5 LACS AND ASSESSE ES MOTHER SMT. SEPHALI DEBNATH AMOUNTING TO RS.2.7 LACS. FOR THIS, THE ASSESSEE H AS RAISED THE FOLLOWING TWO GROUNDS: 1.FOR THAT THE LD. CIT(A), KOLKATA ACTED ILLEGALLY AND WITH MATERIAL IRREGULARITY IN NOT JUDICIOUSLY CONSIDERING THE SUBMISSIONS OF THE APPELLANT IN UPHOLDING THE IMPUGNED ADDITION OF RS.6,50,000/- MADE ON ACCOUNT OF ALLEGE D UNDISCLOSED INVESTMENT BY THE LD. INCOME TAX OFFICER, WARD 4, NADIA BY INVOKING THE P ROVISION OF S. 69 OF THE INCOME TAX ACT, 1961 WITHOUT BRINGING ANY MATERIAL ON RECO RD FOR HIS ALLEGED CONCLUSION AGAINST THE FACTUAL MATRIX OF THE CASE AND HIS PURP ORTED FINDINGS ON THAT BEHALF INDULGING IN SPECULATION, SURMISE, SUSPICION AND CO NJECTURE ARE WHOLLY CAPRICIOUS, ERRONEOUS, FLAWED, INVALID, UNWARRANTED AND CONTRAR Y TO THE SETTLED POSITION IN LAW. 2. FOR THAT THE LD. CIT(A), KOLKATA ERRED IN UPHOLD ING THE ADDITION OF RS.6,50,000/- MADE BY THE LD. INCOME TAX OFFICER, WARD-4, NADIA O N ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN JOINT VENTURE BUSINESS WITHOUT FACTUA LLY APPRECIATING THAT THE SOURCES THEREOF ARE DULY SUPPORTED BY IMMACULATE EVIDENCE A S PROVED FROM THE FACTS AND 2 ITA 2171/K/2009 PRASANTA DEBNATH. A.Y.04-05 CIRCUMSTANCES OF THE INSTANT CASE AND HIS PURPORTED FINDINGS ON THAT BEHALF IS WHOLLY ARBITRARY, UNWARRANTED AND PERVERSE. 3.THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) OUGHT TO HAVE CONFIRMED THE DISALLOWANCE MADE U/S. 40(A)(IA) BECA USE TDS HAS NOT BEEN MADE FROM THE PAYMENT OF LABOUR CHARGES. 3. THE BRIEF FACTS LEADING TO ABOVE ISSUE ARE THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT ASSES SEE IS IN THE BUSINESS OF TERMINABLE JOINT VENTURE BUSINESS STYLED AS JOYABRATA GHOSH & PRASANTA DEBNATH. AS PER BALANCE SHEET OF JOINT VENTURE THE ASSESSEE HAS INTRODUCED CAPITAL TO THE TUNE OF RS.6.5 LACS AND ON QUERY FROM ASSESSING OFFICER, THE ASSESSEE REPLI ED THAT THIS AMOUNT OF RS.6.5 LACS INTRODUCED FROM ASSESSEES FATHER SHRI PHONI BHUSAN DEBNATH AMOUNTING TO RS.3.5 LACS AND FROM SMT. SEFALI DEBNATH AMOUNTING TO RS.2.7 LA CS. BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIMED THAT THEY HAVE GIFTED THESE AM OUNTS FROM THEIR PAST BUSINESS SAVINGS. THE ASSESSEE BEFORE ASSESSING OFFICER FIL ED COPIES OF P&L ACCOUNT AND BALANCE SHEET OF SHRI PHONI BHUSAN DEBNATH FOR AND FROM ASSESSMENT YEAR 1990-91 TO 2002-03 OF HIS GROCERY BUSINESS. SIMILARLY, ASSESS EE ALSO FILED BALANCE SHEET OF SMT. SEFALI DEBNATH FOR AYS 1996-97 TO 2002-03 FOR HER S EWING BUSINESS. ASSESSING OFFICER ISSUED SUMMONS U/S. 131 TO BOTH THE PARENTS OF THE ASSESSEE, WHO HAVE GIFTED THE AMOUNTS TO ASSESSEE AND BOTH THE PARENTS UNABLE TO REPLY THE QUESTION CORROBORATING THE ACCOUNT SUBMITTED, ACCORDING TO ASSESSING OFFICER. ACCORDINGLY, ASSESSING OFFICER ASSESSED THE SUM OF RS.6.5 LACS AS UNEXPLAINED INTR ODUCTION OF CAPITAL U/S. 69 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) ALSO ASSESSEE REITERATED SAME SUBMISSIONS BUT CIT(A) ALSO CONFIRM ED THE ADDITION BY GIVING FOLLOWING FINDING: I HAVE CAREFULLY PERUSED THE ABOVE. APPELLANTS FA THER SHRI PHONI BHUSAN DEBNATH IN HIS AFFIDAVIT HAS STATED THAT HE WAS ENGAGED IN GRO CERY BUSINESS FOR MORE THAN THREE DECADES AND THAT HE HAD GIFTED RS.3,50,000/- TO HIS SON DURING THE F.Y. 2003-04. IT WAS ALSO STATED BY HIM THAT HE NEVER HAD ANY BANK ACCOU NT AND THAT, THE ABOVE GIFT WAS GIVEN BY WAY OF CASH. SMT. SEFALI DEBNATH, THE APPELLANT S MOTHER IN HER AFFIDAVIT HAS STATED THAT SHE WAS ENGAGED IN SEWING AND TAILORING BUSINE SS FOR MORE THAN 20 YEARS AND THAT, SHE HAD GIFTED DURING THE F.Y.03-04 A SUM OF RS.2,7 0,000/- TO HER SON. SHE ALSO STATED THAT SHE HAD NO BANK ACCOUNT. IT WAS FURTHER STATED BY BOTH OF THEM THAT THEY DO NOT READ, WRITE OR UNDERSTAND ENGLISH. THE P & L ACCOUNT AND BALANCE SHEET FOR SHRI PHONI BHUSAN DEBNATH FOR THE F.Y. 1989-92 & 2002-03 AND F OR SMT. SEFALI DEBNATH FOR F.Y. 1995-99 TO 2002-03 WERE ALSO FILED. I HAVE ALSO PERUSED THE SWORN STATEMENTS RECORDED B Y THE I.T.O, W-4, NADIA FROM SHRI PHONI BHUSAN DEBNATH & SMT. SEFALI DEBNATH, ON 14TH SEPTEMBER, 2006. ADMITTEDLY BOTH THE PARENTS OF THE APPELLANT ARE NOT ASSESSED TO IN COME TAX. ADMITTEDLY, THEY DID NOT HAVE ANY BANK ACCOUNT. FURTHER NO RECORD WAS MAINTAINED FOR THEIR INCOME AND EXPENDITURE. 3 ITA 2171/K/2009 PRASANTA DEBNATH. A.Y.04-05 THE P & L ACCOUNT AND BALANCE SHEET SUBMITTED, ARE STEREO-TYPED AND LACKS SPECIFICS. FURTHER IT IS NOT CLEAR AS TO HOW THE ABOVE P & L A CCOUNT AND BALANCE SHEET WERE PREPARED WITHOUT THERE BEING ANY BASIC RECORD. IN F ACT, NO ENTRY IN THE P&L A/C AND BALANCE SHEET OF THE APPELLANTS PARENTS IS VERIFIA BLE. EVEN THOUGH BOTH THE PARENTS HAVE CONFIRMED HAVING GIFTED THE ABOVE AMOUNTS TO THE AP PELLANT, THE APPELLANT HAS NOT SUBSTANTIATED THEIR SOURCE FOR THE SAME. CONSIDERIN G ALL, THE ABOVE EVIDENCE TILED BY THE APPELLANT CANNOT BE RELIED ON. IN VIEW OF THE ABOVE , THE ASSESSING OFFICER HAS RIGHTLY TREATED THE APPELLANTS INVESTMENTS IN JOINT VENTUR E AS UNEXPLAINED INVESTMENT. ACCORDINGLY, GROUND NOS. 1 AND 2 ARE DISMISSED. THE ADDITION OF RS.6,50,000/- IS CONFIRMED. 4. BEFORE US, BOTH THE PARTIES ARGUED THEIR CONTENT IONS. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCE S OF THE CASE. WE FIND THAT ASSESSEES FATHER IS ENGAGED IN GROCERY BUSINESS FO R MORE THAN THREE DECADES AND AS PER BALANCE SHEET HE HAS ACCUMULATED THIS CAPITAL OVER THREE DECADES. AS PER LAST BALANCE SHEET, WHICH IS ENCLOSED IN ASSESSEES PAPER BOOK A T PAGE 37 CLEARLY REVEALED THAT CASH IN HAND IS RS.3.5 LACS THAT IS AS ON 31 ST MARCH, 2003. SEEING THE STATUS AND THE AMOUNT INVOLVED IN THE GIFT AND THE RELATIONSHIP I.E. FATH ER AND SON, WE CAN EASILY PRESUME THAT ASSESSEES FATHER MIGHT HAVE EARNED THIS AMOUNT IN HIS GROCERY BUSINESS CARRIED OVER LAST THREE DECADES QUA GROCERY BUSINESS AND ASSESSEE HAS FILED BALANCE SHEETS OF HIS FATHER WHICH CLEARLY REVEALS THAT NO DOUBT THE QUANTUM OF BUSINESS IS NOT THAT MUCH HIGH BUT SLOW AND STEADY HE MIGHT HAVE ACCUMULATED THIS CAPI TAL. THIS FACT IS NOT DENIED THAT THE ASSESSEES FATHER IS NOT IN GROCERY BUSINESS HAVING SHOP AT BISWAS PARA, STATION ROAD, P.O. NABADWIP, NADIA. THIS MAY CREATE DOUBT BUT FA CT IS THAT ASSESSEES FATHER IS IN BUSINESS FOR LAST THREE DECADES, HE MIGHT HAVE ACCU MULATED THIS CAPITAL AND WAS AVAILABLE WITH HIM IN THE SHAPE OF CLOSING STOCK, D EBTORS OR CASH IN HAND. ACCORDINGLY, IN THE PECULIAR FACTS OF THIS CASE, WE ACCEPT THE C ONTENTION OF LD. COUNSEL FOR THE ASSESSEE AND TREAT THIS GIFT OF RS.3.5 LACS GIVEN B Y ASSESSEES FATHER FOR INVESTMENT IN ASSESSEES BUSINESS OF JOINT VENTURE AS GENUINE AND EXPLAINED. ACCORDINGLY, WE DELETE THIS ADDITION. 5. WITH RESPECT TO GIFT OF RS.2.70 LACS GIVEN BY AS SESSEES MOTHER SMT. SEFALI DEBNATH, IT WAS CLAIMED BY ASSESSEE THAT SHE IS IN THE BUSINESS OF SEWING FROM ASSESSMENT YEAR 1995-96 TO 2002-03 FOR THAT HER INC OME AND EXPENDITURE ACCOUNT AND BALANCE SHEET WERE FILED BUT GOING THROUGH ALL THES E, WE FIND THAT IN NONE OF THE YEARS HER GROSS RECEIPT HAS EXCEEDED RS. 1 LAC AND GOING BY THE ENTIRE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS GIFT IS UNEXPLAINED. ACCORDI NGLY, WE HAVE NO HESITATION IN 4 ITA 2171/K/2009 PRASANTA DEBNATH. A.Y.04-05 CONFIRMING THIS GIFT AND THE ASSESSING OFFICER HAS RIGHTLY TREATED THE SAME AS UNEXPLAINED. ACCORDINGLY, THIS APPEAL OF THE ASSESS EE IS PARTLY ALLOWED AS INDICATED ABOVE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 7. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED 18TH DAY OF JULY, 2011 /0 %12 3 JD.(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SHRI PRASANTA DEBNATH, C/O SHRI SOMNATH GHOSH, ADVOCATE, SEVEN BROTHERS LODGE, P.O. BUROSH IBTALA, P.S. CHINSURAH, DIST. HOOGHLY, PIN 712 105 2 ,-*+ / RESPONDENT, ITO, WARD-4, NADIA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .