RAJENDRA GOPIKISAN KALANTRI, Amaravati V. ITO, WARD-II, Amaravati

ITA 232/NAG/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3226 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Unexplained cash credit; Gift
• Section: 271(1)(c); 68; 56

Judgement Text

1 ITA NO. 232/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. ITA NO. 232/NAG/2013 ASSESSMENT YEAR : 2007 - 08. RA JENDRA GOPIKISAN KALANTRI, THE INCOME - TAX OFFICER, AMRAVATI. VS. WARD - II, AMRAVATI. PAN ABFPK2704B APPELLANT. RESPONDENT. APPELLANT BY : SHRI M AHAVIR ATAL RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 02 - 02 - 2016 DATE OF PRONOUNCEMENT : 5 TH FEBRUARY, 2016. O R D E R PER SHRI SHAMIN YAHY A, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 21 - 03 - 2013. THE GROUND OF APPEAL RAISED BEFORE US READ S AS UNDER : 1. THAT KEEPING IN VIEW THE FACTS OF THE CASE A.O. ERRED IN MAKING ADDITION OF RS.951000/ - ON ACCOUNT OF CREDITS U/S 68 OF I.T. ACT, 1961. THESE CREDIT ENTRIES OF RS.9,51,000/ - ARE NOT OF INCOME NATURE BUT ONLY TRANSFER ENTRIES ARE MADE WHICH ARE ALSO INFRUCTUOUS. THE SAID AMOUNT IS NOT INCOME. THE ADDITION BEING IMPROPER, UNJUST DE SERVES TO BE DELETED. THE CIT(APPEALS) - II ERRED IN CONFIRMING THE ADDITION OF RS.951000/ - WITHOUT APPRAISING THE FACT THAT BOTH THESE PERSONS ARE RELATIVES AND COVERED AS A RELATIVE AS PER SEC. 56 OF THE I.T. ACT, 1961. 2. BRIEF FACTS RELATED TO THIS ISSUE ARE THAT THE CAPITAL ACCOUNT OF THE APPELLANT HAD BEEN CREDITED BY AN AMOUNT OF RS.5,00,000/ - AND RS.4,51,000/ - ON 30 - 03 - 2007 AS GIFTS RECEIVED FROM SHRI SHRIVALLABHAJI LADDHA (HUF) AND FROM SAU. 2 ITA NO. 232/NAG/2013 PADMA SARDA RESPECTIVELY. THE AO ASKED THE APPELLANT TO SUB MIT THE COPY OF THE GIFT DEED, COPY OF PASS BOOK OF THE DONORS, THEIR PAN NOS. AND ALSO TO EXPLAIN THE RELATIONSHIP AND AS TO WHY THE PROVISIONS OF SECTION 56 SHOULD NOT BE APPLIED. IT WAS EXPLAINED BY THE APPELLANT THAT THE SAID ENTRIES ARE INFRUCTUOUS I N AS MUCH AS THEY ARE ONLY JOURNAL ENTRIES MADE IN THE BOOKS ONLY IN A HYPOTHETICAL MANNER WITHOUT ACTUAL TRANSFER AND THAT NO MONEY WHATSOEVER HAS EVER BEEN RECEIVED AND THAT FOR THE SAME REASON PROVISIONS OF SECTION 56 OF THE ACT ALSO WOULD NOT COME INTO PLAY AS NO GIFT OR FUNDS WERE RECEIVED. THE ASSESSEE FURTHER SUBMITTED THAT NO MONEY WHATSOEVER IS RECEIVED BY THE ASSESSEE. THAT T HE SO CALLED GIFT AMOUNT IS NOT UTILIZED BY THE ASSESSEE IN ANY WAY, NOR APPROPRIATED BY THE ASSESSEE. THAT I N FACT THERE IS NO GIFT NOR DID RECEIPT OF MONEY NOR ANY FINANCIAL TRANSACTIONS OCCUR WHATSOEVER. THAT T HE SO CALLED ENTRY IS INVALID AND INFRUCTUOUS AND AS SUCH NO WEIGHTAGE WHATSOEVER CAN BE GIVEN TO SUCH ENTRY. THAT T HE SAME IS REQUIRED TO BE IGNORED. HOWEVER, THE AO DID NOT ACCEPT THIS EXPLANATION AND HE HELD AS UNDER : 9. IN THE CASE UNDER CONSIDERATION, THE FACT OF EXISTENCE OF A CREDIT ENTRY IN THE CAPITAL ACCOUNT IS NOT DENIED. THE ASSESSEE STATES THAT THE SAID ENTRY IS INFRUCTUOUS. IF IT IS SO, THE BALANCE S HEET OF THE ASSESSEE WOULD NOT HAVE TALLIED. THE ASSESSEE HAS NOT EXPLAINED AS TO HOW HIS BOOKS OF ACCOUNTS AND FINAL ACCOUNTS CAN BE TREATED AS RELIABLE UNDER SUCH CIRCUMSTANCES. CLEARLY, THE ASSESSEE HAS INTRODUCED A CREDIT HOPING THAT HIS RETURN OF INCO ME AND THE FINAL ACCOUNTS FOR THE YEAR UNDER CONSIDERATION WOULD NOT BE SUBJECTED TO EXAMINATION AND THE INTRODUCTION OF THE CREDIT WOULD GO UNDETECTED . 10. CLEARLY, THE ASSESSEE HAS SUCCEEDED IN HIS DESIGN. ADDITION OF RS.9,51,000/ - IS HEREBY MADE TO THE TOTAL INCOME OF ASSESSEE U/S 68 OF THE I.T. ACT, 1961. PENALTY U/S 271(1)(C) OF THE ACT IS SEPARATELY INITIATED FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 11. MOREOVER ON VERIFICATION OF CAPITAL ACCOUNT OF THE ASSESSEE FOR THE YEAR 31.03.2008 SUBMITTED BY THE ASSESSEE DURING THE COURSE OF 3 ITA NO. 232/NAG/2013 ASSESSMENT PROCEEDINGS IT IS NOTICED THAT THE ASSESSEE HAS ADOPTED THE OPENING BALANCE OF RS.53,12,129/ - WHICH IS THE CLOSING BALANCE FOR THE YEAR 2007, WHICH IS ARRIVED AT AFT ER THE INTRODUCTION OF ABOVE CREDITS. ON FURTHER VERIFICATION OF CAPITAL A/C. FOR THE YEAR 31.03.2008, IT IS NOTICED THAT NO REVERSAL ENTRIES OF SO CALLED INFRUCTUOUS ENTRIES ARE PASSED. MOREOVER, THE DETAILS SOUGHT AS DESCRIBED IN PARA - 6 WERE ALSO NOT SUB MITTED BY THE ASSESSEE. FURTHER THE GIFT FROM HUF AND NON RELATIVE ARE TAXABLE IN THE HANDS OF THE RECEIPANT IN TERMS OF DEFINITION PRESCRIBED U/S 56 OF I.T. ACT, 1961. ON THIS COUNT ALSO THE ADDITION OF RS.9,51,000/ - IS JUSTIFIABLE. 3. UPON ASSESSEES AP PEAL, LEARNED CIT(APPEALS) UPHELD THE AOS ACTION HOLDING AS UNDER : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. I AM OF THE VIEW THAT PROVISIONS OF SECTION 68 ARE CLEARLY ATTRACTED IN THE CASE OF THE APPELLANT . AS PER THE SAID PROVISION WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE APPELLANT MAINTAINED FOR ANY PREVIOUS YEAR AND THE APPELLANT OFFERS NO EXPLANATION A BOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY TH E SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE APPELLANT FOR THAT RELEVANT PREVIOUS YEAR. IN THE CASE OF THE APPELLANT THERE ARE CREDIT ENTRIES TOTALLING TO RS.9,51,000/ - . THE LD. AO GAVE OPPORTUNITIES TO THE APPELLANT TO FURNISH COPY OF THE GIFT DEED, COPY OF PASS BOOK, THEIR PAN NOS. AND TO EXPLAIN THE RELATIONSHIP OF THE SAID PARTIES BUT THE APPELLANT NEVER ADDUCED ANY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE SAID PARTIES OR THE GENUINENESS OF THE TRANSACTIONS. BASIC EVIDEN CES LIKE CONFIRMATION AND COPY OF THE PAN AND COPY OF PASS BOOK WERE ALSO NOT PRODUCED BEFORE THE LD. AO. THE FACT THAT THE APPELLANT DID NOT ACTUALLY RECEIVE THE SAID AMOUNTS AND MONEY DID NOT COME INTO THE BANK ACCOUNT WILL ALSO NOT HELP THE APPELLANT AS SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR THE RELEVANT PREVIOUS YEAR. ALSO, AS NOTED BY THE LD. AO THERE IS NO REVERSAL OF THE SAID ENTRIES IN THE SUBSEQUENT YEARS. CONSIDERING THE ABOVE FACTS THE SAID ADDITION OF RS.9,51,000/ - MADE U/S 68 IS HEREBY UPHELD. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. LEARNED COUNSEL OF THE ASSESSEE REPEATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE HAS CREDITED THE CAPITAL ACCOUNT WITH A SUM OF RS.9,51,000/ - AND DEBITED THE ACCOUNT OF PROSPECTIVE 4 ITA NO. 232/NAG/2013 DONORS. HE SUBMITTED T HAT THIS WAS ONLY A JOURNAL ENTRY DONE TO SHOW BETTER CAPITAL ACCOUNT FOR OBTAINING BANK LOANS. HE SUBMITTED THAT NO AMOUNT WAS ACTUALLY RECEIVED BY THE ASSESSEE EVER IN TH IS REGARD AND HENCE NO ADDITION IS JUSTIFIED. 6. PER CONTRA LEARNED D.R. SUBMITTED THAT SECTION 68 OF THE I.T. ACT MANDATES ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS. THE ASSESSEE HAD MADE A CREDIT ENTRY OF RS.9,51,000/ - AS GIFT RECEIVED AND WHEN EXPLANAT ION WAS SOUGHT BY WAY OF GIFT DEED ETC. THE ASSESSEE HAS COME UP WITH THE STORY OF AN INFRUCTUOUS JOURNAL ENTRY. HENCE HE SUBMITTED THAT THE ORDERS OF THE AUTHORITIES BELOW SHOULD BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN THE CREDIT OF GIFT IN THE CAPITAL ACCOUNT FOR A SUM OF RS.9,51,000/ - HE HAS SUBMITTED THAT THE SAME IS MERE INFRUCT UOUS ENTRY AND NO AMOUNT HAS ACTUALLY BEEN EVER RECEIVED BY THE ASSESSEE. WE FIND THAT WHILE R EJECTING THIS CONTENTION OF THE ASSESSEE THE AO HAS OBSERVED THAT IF THE ENTRY AS CLAIMED BY THE ASSESSEE IS INFRUCTUOUS, THE BALANCE SHEET OF THE ASSESSEE WOULD NOT HAVE TALLIED. W E FIND THAT THERE IS NO REFERENCE IN THE AOS ORDER TO LEARNED COUNSEL OF THE ASSESSEES CLAIM BEFORE US THAT THE ASSESSEE HAS MADE A CONTRA DEBIT ENTRY BY DEBITING THE AMOUNT TO THE ACCOUNT OF PROSPECTIVE DONORS. W E FIND THAT THE SUBMISSION OF THE LEARNE D COUNSEL OF THE ASSESSEE AND THAT BEFORE US ARE MATERIALLY DIFFERENT. BEFORE THE AUTHORITIES BELOW THE ONLY SUBMISSION MADE WAS THAT THE ASSESSEE HAS MADE A SUPERFLUOUS ENTRY OF GIFT IN CAPITAL ACCOUNT WHICH WAS REJECTED BY THE AUTHORITIES BELOW ON THE G ROUND THAT THIS STORY IS NOT CONVINCING AS IN SUCH A CASE THE BALANCE SHEET WOULD NOT HAVE TALLIED. NOW BEFORE US THE ASSESSEES COUNSEL IS TAKING A PLEA THAT THERE WAS A CONTRA DEBIT ENTRY IN THE NAME OF PROSPECTIVE DONORS. WE FIND THAT THERE IS NO COGENT BASIS FOR THIS CHANGE IN FACTUAL SUBMISSION BY THE ASSESSEE. IT IS NOT DISPUTED THAT THERE IS AN UNEXPLAINED CREDIT ENTRY IN THE CAPITAL ACCOUNT OF THE 5 ITA NO. 232/NAG/2013 ASSESSEE. THIS WAS NOT AT ALL EXPLAINED BEFORE THE AUTHORITIES BELOW EXCEPT FOR THE SUBMISSION THAT IT WAS AN INVALID AND INFRUCTUOUS ENTRY MADE WITHOUT ANY REASON OR JUSTIFICATION. THE AO HAS ALSO NOTICED THAT THERE IS NO REVERSAL OF ENTRY OF THE SO CALLED INFRUCTUOUS ENTRY IN THE SUBSEQUENT YEAR. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY WE AFFIRM THE SAME. 8. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF FEBRUARY, 2016. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 5 TH FEBRUARY, 2016. COPY FORWARDED TO : 1. SHRI RAJENDRA GOPIKISAN KALANTRI, SITA SADAN, RAJAPETH, AMRAVATI. 2. I.T.O., WARD - II, AMRAVATI. 3. C.I.T., NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER WAKODE. ASSISTANT REGISTRAR, ITAT, NAGPUR