SMT MANIMEGALAL ARUMUGAM, Nagpur V. I.T.O. WARD -3(2), Nagpur

ITA 252/NAG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1326 (ITAT-NAGPUR)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 142(1); 69

Judgement Text

1 ITA NO. 252/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 252/NAG/2016 ASSESSMENT YEAR : 2011 - 12. SMT. MANIMEGALAI ARUMUGAM, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 3(2), NAGPUR. PAN AANPA4458N. APPELLANT. RESPONDENT. APPELLANT BY : SHRI KAPIL HIRANI. RESPONDENT BY : SMT. AGNES P. THOMAS. DATE OF HEARING : 29 - 09 - 2016 DATE OF PRONOUNCEMENT : 10 TH OCT., 2016 O R D E R. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I , NAGPUR DATED 11 - 01 - 2016 AND PERTAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) GROSSLY ERRED IN NOT ADJUDICATING THE GROUND OF LEGALITY OF THE ADDITION OF RS. 27,31,000/ - SO MADE BY THE LD. A O TREATING THE SAME AS 'INCOME FROM OTHER SOURCES' DESPITE THE SAME BEING SPECIFICALLY CONTESTED BY THE APPELLANT AND SPECIFIC SUBMISSIONS MADE WHICH MAKES THE ORDER PASSED BY THE HON'BLE CIT(A) BAD IN LAW AND LIABLE TO BE SET RIGHT IN ACCORDANCE WITH LA W. 2) THE LD. CIT(A) FURTHER GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS . 27,31,000/ - SO MADE BY THE A O AS ADDITION MADE U/S 69A DESPITE THE ORDER OF THE A O MAKING THE ADDITION AS INCOME FROM OTHER SOURCES AND NOT UNEXPLAINED INVESTMENT AS CONTEMPLATED U/S 69A OF THE I T ACT, 1961 . THE REVISION OF THE ORDER OF THE A O AS DONE BY THE CIT(A) IS ILLEGAL, INVALID AND BAD IN LAW. 2 ITA NO. 252/NAG/2016. 3) WITHOUT PREJUDICE, THE ADDITION OF RS. 27,31,000/ - MADE BY THE A O AS 'INCOME FROM OTHER SOURCES' IS ILLEGAL AND LIABLE TO BE DEL ETED AS PER LAW. 4) WITHOUT PREJUDICE, THE LD. CIT(A) GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 27,31,000/ - IGNORING THE FACT AND EXPLANATION OF THE APPELLANT THAT THE AMOUNT OF RS. 27,31,000/ - REPRESENTING THE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE APPELLANT WERE OUT OF AMOUNTS GIFTED TO THE APPELLANT BY HER MOTHER - IN - LAW OUT OF SALE OF GOLD ORNAMENTS DESPITE THE APPELLANT PROVING THE EXISTENCE OF THE SAID JEWELLERY AND THE CREDITWORTHINESS OF THE DONOR AS REQUIRED UNDER LAW. THE ADDITION THUS MADE BY THE A O AND CONFIRMED BY THE CLT(A) IS ILLEGAL AND DESERVE TO BE DELETED IN THE INTEREST OF NATURAL JUSTICE. ` 5 ) THE LD. CIT(A} GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 8,93,200/ - AS UNEXPLAINED INVESTMENT U/S 69 OF THE I T ACT, 1961 IGNORING THE FACT THAT THE SAID AMOUNT WAS RECEIVED BY THE APPELLANT AS GIFT FROM HER HUSBAND WHO HIMSELF APPEARED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS AND ACCEPTED THE GIVING OF THE SAID GIFT. THE SAID INVESTMENT OF RS. 8,93,200/ - WAS MADE DIRECTLY BY APPELLANTS HUSBAND IN THE NAME OF THE APPELLANT FROM HIS BANK ACCOUNTS AND THE SAME WAS TREATED AS GIFT TO THE APPELLANT . THE ADDITION SO SUSTAINED IS ILLEGAL, INVALID AND DESERVES TO BE DELETED IN THE INTEREST OF NATURAL JUSTICE. 6 ) THE LD. CIT(A} FURTHER ERRED IN NOT ACCEPTING THE CORROBORATORY EVIDENCES IN THE FORM OF AFFIDAVITS OF THE APPELLANT AND HER HUSBAND AND ALSO CONFIRMATION OF GIFT IN SUPPORT OF APPELLANT'S CONTENTIONS ON THE GROUND THAT THE ORDER WAS PASSED ON THAT VERY DATE I . E 11 . 1 . 2016 . THE LD. CIT(A} OUGHT TO HAVE ACCEPTED THE CORROBORATORY EVIDENCE AND DELETED THE ILLEGAL ADDITIONS IN THE INTEREST OF NATURAL JUSTICE. 7 ) THE LD. CIT(A ) FURTHER GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 50,121/ - REPRESENTING INTEREST FROM SAVINGS BANK ACCOUNT OF THE APPELLANT IGNORING THE FACT THAT THE SAID INTEREST ON THE AMOUNTS RECEIVED AS GIFT BY THE APPELLANT FROM HER MOTHER - IN - LAW AND AS SUCH ARE NOT ASSESSABLE IN THE HANDS OF THE APPELLANT VIDE PROVISIONS OF SECTION 64(L)(VI ) OF THE I T ACT, 1961. THE ADDITION THUS SUSTAINED DESERVES TO BE DELETED AS PER LAW . 8 ) WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A} PASSED THE ORDER DISMISSING THE APPEAL OF THE APPELLANT WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE APPELLANT WHICH MAKES THE ORDER VIOLATIVE OF THE PRINCIPLES OF NATURAL 3 ITA NO. 252/NAG/2016. JUSTICE AND LIABLE TO BE SET ASIDE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : RETURN OF INCOME DECLARING TOTAL IN COME OF RS.11,50,000/ - WAS FILED ON 30 - 07 - 2011. THE APPELLANT IS AN EMPLOYEE OF T HE RESERVE BANK OF INDIA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO THAT THE APPELLANT HAD DEPOSITED CASH AMOUNTING TO RS.12,39,000/ - IN AXIS BANK, N AGPUR BRANCH AND HAD ALSO DEPOSITED CASH AMOUNTING TO RS.14,92,000/ - IN IDBI, NAGPUR BRANCH. 3. ON ENQUIRY FROM THE AO IN THIS REGARD THE ASSESSEE RESPONDED AS UNDER : 'MY FAMILY ORIGINALLY BELONGS TO VILLAGE SAMBAMEDU, TALUKA AND DISTRICT - NAMMAKKAL OF TAMIL NADU STATE. AFTER THE DEATH OF MY FATHER - M - LAW IN THE YEAR 1991 MY HUSBAND AND I USED TO TAKE CARE OF MY MOTHER - IN - LAW . IN THE YEAR 2010 MY MOTHER - IN - LAW WAS NOT KEEPING WELL DUE TO HER OLD AGE . SINCE I HAD TAKEN CARE OF HER ALL THESE YEARS, SH E HAD GIFTED HER GOLD ORNAMENTS TO ME FOR THE MARRIAGE OF MY DAUGHTER. MY DAUGHTER IS THE ONLY GIRL CHILD IN THE FAMILY. SINCE THE GOLD ORNAMENTS WERE V E RY OLD AND OUT - FASHIONED, MY MOTHER - IN - LAW SOLD THESE ORNAMENTS AT REGULAR INTERVALS AND HANDED OVER THE SALE PROCEEDS BY WAY OF CASH TO ME AND IN TU RN I DEPOSITED THIS MONEY IN MY SAVINGS BANK ACCOUNTS . THE LIST OF GOLD ORN A M ENTS GIFTED TO ME IS SHO WN . IN ANNEXURE - I . ALL THOSE GOLD ORNAMENTS WERE POLISHED AND SOME WERE REPAIRED AT NAGPUR. PROOF OF THIS IS ENCLOSED IN ANNEXURE - D . SHE ALSO GIFTED SOME MONEY ON VARIOUS DATES FROM HER SAVINGS. MY MOTHER - IN - LAW DIED ON 30/1/2012 AT MY NATIVE PLACE. BEFORE HER DEATH SHE D ID NOT HAD OVER TO ME ANY RECEIPTS FOR THE SALE OF GOLD. AFTER THE RECEIPT OF NOTICE UNDER 142(1) OF THE I . T . ACT, I HAVE TRIED TO COLLECT PROOF REGARDING SALE OF GOLD BY MY MOTHER - IN - LAW AT MY NATIVE PLACE . I COULD NOT COLLECT THE NECESSARY PROOF BEC AUSE THE SHOPS WHERE MY MOTHER - IN - LAW SOLD THE GOLD ORNAMENTS ARE NOT CO - OPERATING . I , THEREFORE, REQUEST YOU TO KINDLY TREAT THE MONEY I HAD DEPOSITED IN MY SAV I NGS BANK ACCOUNT AS GIFT FROM MY MOTHER - IN - LAW AND DROP THE PROCEEDINGS UNDER SECTION 142(1) OF THE INCOME TAX ACT . REGARD I NG THE REST OF THE INVESTMENTS, THEY WERE MADE FROM MY REGULAR SA V IN G S FROM SALAR Y AS SHOWN IN ANNEXUR E II I. ' 4. THE AO WAS NOT CONVINCED. HE HELD THAT THE SUM OF RS.27,31,000/ - DEPOSITED IN THE BANK ACCOUNT HAS TO BE TAXED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO FURTHER NOTED THAT THE OTHER INVESTMENTS OF THE ASSESSEE CLAIMED TO HAVE BEEN RECEIVED FROM 4 ITA NO. 252/NAG/2016. HUSBAND ARE ALSO NOT SATISFACTORILY EXPLAINED. HENCE THE SAME WERE ALSO LIABLE TO BE ADDED AS UNDISCLOSED INCOME BEING INCOME FROM OTHER SOURCES AS UNDER : TATA STEEL LIMITED RS.1,95,200 PUNJAB AND SIND BANK. RS.1,98,000 STATE BANK OF INDIA RS. 5 ,00,000 RS.8,93,200 5. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BEFORE THE LEARNED CIT(APPEALS). 6. APROPOS THE ISSUE OF CASH DEPOSITS THE ASSESSEE INTER ALIA SU BMITTED THAT THE AMOUNT WAS NOT LIABLE TO BE ADDE D AS INCOME FROM UNDISCLOSED SO URCES. THE ASSESSEE ALSO SOUGHT TO SUBMIT SOME ADDITIONAL EVIDENCES REGARDING THE CLAIM OF GIFS RECEIVED FROM MOTHER - IN - LAW. HOWEVER, LEARNED CIT(APPEALS) DID NOT ACCEPT THE AD DITIONAL EVIDENCES AND HELD THAT SECTION 69A WOULD BE AN APPROPRIATE SECTION IN WHICH THE SAID ADDITION OUGHT TO HAVE BEEN MADE. HENCE HE HELD T HAT IN VIEW OF THE ABOVE FACTS, THE ADDITION AMOUNTING TO RS.27,31,000/ - U/S 69A WAS CONFIRMED. 7. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8. LEARNED COUNSEL OF THE ASSESSEE VEHEMENTLY CONTENDED THAT THE AO HAS MADE THE ADDITION AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE HAS VEHEMENTLY CONTENDED THE SAME BEFORE THE LEARNED CIT(APPEA LS). THE LEARNED CIT(APPEALS) HAS ACCEPTED THIS CONTENTION OF THE ASSESSEE. HOWEVER, HE HAS CONFIRMED THE ADDITION U/S 69A OF THE I.T. ACT WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THIS FINDING. HENCE LEARNED COUNSEL SUBMITTED THAT THERE IS V IOLATION OF PRINCIPLE OF NATURAL JUSTICE. HE CLAIMED THAT AT BEST U/S 69A IT IS THE BALANCE LYING IN BANK ACCOUNT ONLY THAT CAN BE ADDED. FURTHER MORE HE SUBMITTED THAT THE ASSESSEE HAS SOUGHT TO SUBMIT THE AFFIDAVIT FROM THE LEGAL 5 ITA NO. 252/NAG/2016. HEIRS OF THE DECEASED MOTHER - IN - LAW. HOWEVER, LEARNED CIT(APPEALS) HAS NOT ENTERTAINED THE SAME. LEARNED COUNSEL SUBMITTED THAT FOR THESE REASONS AND IN THE IN INTEREST OF JUSTICE, THE MATTER MAY BE REMITTED TO THE FILE OF LEARNED CIT(APPEALS) TO ENABLE THE ASSESSEE TO SUBMIT T H OSE EVIDENCES AND CANVAS THE APPEAL IN PROPER PERSPECTIVE. 9. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. UPON CAREFUL CONSIDERATION I FIND THAT WHILE THE AO HAS MADE THE ADDITION ON ACCOUNT OF UNDISCLOSED SOURCES, UPON A SSESSEES APPEAL AGAINST THE SAME THE LEARNED CIT(APPEALS) HAS HELD THAT THE ADDITION IS CONFIRMED U/S 69A. IN THIS REGARD THE ASSESSEE SEEKS OPPORTUNITY BEFORE THE LEARNED CIT(APPEALS) TO SUBMIT ITS PLEA AGAINST THE ADDITION UNDER THIS SECTION. FURTHER MO RE THERE ARE CERTAIN ADDITIONAL EVIDENCES WHICH THE ASSESSEE WANTS TO PLACE BEFORE THE LEARNED CIT(APPEALS) TO PROPERLY CANVAS THE CASE. UPON CAREFUL CONSIDERATION I FIND THAT THE INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE QUA THE ASPECTS MENTIONED AB OVE IS REMITTED TO THE FILE OF THE LEARNED CIT(APPEALS). ACCORDINGLY I REMIT THE ISSUE TO THE FILE OF LEARNED CIT(APPEALS). LEARNED CIT(APPEALS) IS DIRECTED TO CONSIDER THE ISSUE AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE IN TERMS OF DISCUSSION AS ABOVE. 11. APROPOS THE ISSUE OF ADDITION OF RS.8,93,200/ - , THE LEARNED CIT(APPEALS) DID NOT ACCEPT THE ASSESSEES CONTENTION AND HELD AS UNDER : IT IS IMPORTANT TOP NOTE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT DID NOT EVEN FILE THE CONFIRMATION BEFORE THE LD. AO TO ESTABLISH THE FACT THAT THE SAID AMOUNT HAD INDEED BEEN RECEIVED BY THE APPELLANT FROM HER HUSAND. SINCE THE APPELLANT HAD MADE CERTAIN INVESTMENTS, THE ONUS WAS ON THE APPELLANT TO ESTABLISH BY WAY OF CREDIBLE EVIDENCE, T HAT THE SAID AMOUNT HAD INDEED BEEN RECEIVED BY HER FROM HER HUSBAND AS A GIFT. NO SUCH EVIDENCE HAD BEEN FURNISHED DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. 12. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6 ITA NO. 252/NAG/2016. 13. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE IN THIS REGARD SUBMITTED THAT IT WAS THE ASSESSEES PLEA BEFORE THE AO THAT THE SAID INVESTMENTS WERE MADE OUT OF GIFTS FROM HUSBAND. THAT THE ASSESSEES REPRESENTATIVE WAS THE HUSBAND HIMSELF WHO APPEAR ED BEFORE THE AUTHORITIES BELOW. HENCE LEARNED COUNSEL CLAIMED THAT DRAWING ADVERSE INFERENCE THAT CONFIRMATION WAS NOT RECEIVED FROM THE HUS B AND CANNOT BE SUSTAINED WHEN THE HUSBAND HAS HIMSELF APPEARED BEFORE THE AUTHORI TIES BELOW AND CLAIMED THAT HE HAS HIMSELF GIVEN THE SAID LOANS TO THE ASSESSEE . THUS ADVERSE INFERENCE CANNOT BE DRAWN THAT THERE IS NO CONFIRMATION FILED IN THIS REGARD. 14. HEARD THE LEARNED D.R. 1 5 . UPON CAREFUL CONSIDERATION I FIND THAT THERE IS CONSIDERABLE CO G ENCY IN THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. WHEN THE ASSESSEES HUSBAND HAS HIMSELF APPEARED BEFORE THE AUTHORITIES BELOW AS A REPRESENTATIVE AND CLAIMED THAT HE HAS GIVEN THE GIFT S FOR THOSE INVESTMENTS BY THE ASSESSEE, ADVERSE INFERENCE FOR LACK OF CONFIRMATION FROM THE HUSBAND IS QUITE CONTRADICTORY. HENCE IN THE INTEREST OF JUSTICE I REMIT THIS ISSUE TO THE FILE OF THE AO. THE AO SHALL CONSIDER THIS ISSUE AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 15. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF OCT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 10 TH OCT. , 2016. 7 ITA NO. 252/NAG/2016. COPY FORWARDED TO : 1. SMT. MANIMEGALAI ARUMUGAM, SARANG APARTMENTS, 2 ND FLOOR, 22 FARM ROAD, CIVIL LINES, NAGPUR. 2. I.T.O., WARD - 3(2), NAGPUR. 3. C.I.T. - , NAGPUR. 4. CIT(APPEALS), - I I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR.