Income Tax Officer-II, Faizabad V. Shri Shashi Prakash Verma, Faizabad

ITA 266/LKW/2012

• Counselvise Citation: 26623714 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M P MISHRA
• Keywords: Gift

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.266/LKW/2012 ASSESSMENT YEAR:2006 - 07 SHRI SHASHI PRAKASH VERMA, R/O H.NO.5/17/82A, SHAKTI NAGAR COLONY, DEOKALI ROAD, FAIZABAD. PAN:ADOPV0604Q VS INCOME TAX OFFICER - II, FAIZABAD. (RESPONDENT) (APPELLANT) SHRI PUNEET KUMAR, D. R. APPELLANT BY SHRI M. P. MISHRA, ADVOCATE RESPONDENT BY 06/02/2015 DATE OF HEARING 26 /02/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 15/03/2012 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.39,81,078/ - BY ACCEPTING THE EARNING CAPACITY OF SMT. KAMINI VERMA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FAILED TO PROVE INCOME EARNING CAPACI TY OF HIS WIFE SMT. KAMINI VERMA. 2. THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT ASSESSEE HAD COMPLETELY FAILED TO SUBSTANTIATE THE RECEIPT OF GIFTS OF RS.2,00,000/ - EACH FROM MOHD. KASIM AND MOHD. AZAM. 3. THAT ON THE MERIT OF THE CASE TH E ORDER OF CIT(A) IS LIABLE TO BE CANCELLED AND ORDER OF ASSESSING OFFICER SHOULD BE UPHELD. 2 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED TH AT THE TRIBUNAL ORDER IN THE CASE OF KAMINI VERMA, WIFE OF THE ASSESSEE, FOR THE SAME ASSESSMENT YEAR, IS AVAILABLE ON PAGES 22 TO 28 OF THE PAPER BOOK AND IN HER CASE , THIS WAS THE FINDING OF THE CIT(A) THAT THE ACTUAL BALANCE SHOWN BY HER IN CAPITAL ACCO UNT IS HER STRIDHAN AND THEREFORE, NO ADDITION IS CALLED FOR. THIS ORDER OF CIT(A) WAS CONFIRMED BY THE TRIBUNAL. HE SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER IN THE PRESENT CASE IS NOTHING BUT THE ADDITION OF THE SAME AMOUNT FOR WHICH AD DITION WAS MADE IN THE HANDS OF HIS WIFE ON PROTECTIVE BASIS AND IN ASSESSEES CASE ON SUBSTANTIVE BASIS. HE SUBMITTED THAT WHEN THE ADDITION IS DELETED IN THE CASE OF ASSESSEES WIFE BY HOLDING THAT THE BALANCE IN THE CAPITAL ACCOUNT IS HER STRIDHAN, NO ADDITION CAN BE MADE IN THE HANDS OF THE PRESENT ASSESSEE BEING HUSBAND OF SMT. KAMINI VERMA. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING THE ISSUE RAISED BY THE REVENUE AS PER GROUND NO. 1, WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT( A) AS PER PARA 2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 2. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER ADDED AN AMOUNT OF RS.39,81,078/ - ON SUBSTANTIVE BASIS WHICH WAS EARLIER ASSESSED ON PROTECTIVE BASIS I N THE CASE OF SMT. KAMINI VERMA. THUS THE ENTIRE INCOME ASSESSED ON PROTECTIVE BASIS IN THE CASE OF THE SMT. KAMINI VERMA HAS BEEN TREATED AS INCOME OF THE APPELLANT ON SUBSTANTIVE BASIS. IN THE CASE OF SMT. KAMINI VERMA ALL THE ADDITIONS HAVE BEEN DELETED BY THIS APPELLATE AUTHORITY WHILE THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAINS HAS BEEN PARTLY ALLOWED. I FIND THAT THE AO HAS NOT ESTABLISHED AS TO HOW THE INCOME PROTECTIVELY ASSESSED IN THE CASE OF SMT. KAMINI VERMA REPRESENTED THE INCOME OF THE APPELLANT. NON ACCEPTANCE OF THE INCOME AS DETERMINED IN THE CASE OF THE APPELLANT'S WIFE AS NOT REALLY EARNED AND ITS ASSESSMENT IN HER HANDS ON PROTECTIVE BASIS DOES NOT 3 AUTOMATICALLY RENDER THE PROTECTIVELY ASSESSED INCOME OF THE WIFE AS SUBSTANTIVE IN COME OF THE APPELLANT. BESIDES, IT IS ALSO SEEN THAT THE APPELLANT'S WIFE HAS BEEN ASSESSED TO TAX FOR A NUMBER OF ASSESSMENT YEARS AND IN THESE ASSESSMENTS THE INCOME DECLARED BY HER HAS BEEN ASSESSED ON SUBSTANTIVE BASIS IN HER HANDS. THE AO WAS, THEREF ORE, NOT JUSTIFIED IN ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE TOTAL INCOME OF RS.39,81,078/ - ASSESSED ON PROTECTIVE BASIS IN THE CASE OF HIS WIFE SHOULD NOT BE TREATED AS HIS UNEXPLAINED INCOME. THE PROPOSED ACTION OF THE AO WAS WITHOUT ANY BASIS AND WITHOUT LOGICALLY ESTABLISHING THAT THE INCOME PROTECTIVELY ASSESSED IN THE CASE OF THE APPELLANT'S WIFE WAS IN REALITY ASSESSABLE ON SUBSTANTIVE BASIS IN THE CASE OF THE APPELLANT. THE AO HAS ALSO NOT ESTABLISHED THE LIKELY SOURCES FROM WHICH THE APPELLA NT COULD HAVE EARNED SUCH INCOME ESPECIALLY IN VIEW OF THE FACT THAT THE APPELLANT IS A SALARIED EMPLOYEE AND WORKING AS JUNIOR ENGINEER IN U.P. JAL NIGAM. THE RELATIONSHIP OF HUSBAND AND WIFE BETWEEN THE APPELLANT AND HIS WIFE IS SEEN TO BE THE SOLE BASIS ON WHICH THE AO HAS ATTRIBUTED THE ENTIRE INCOME TO THE APPELLANT AND HAS ASSESSED SUCH INCOME IN HIS HANDS ON SUBSTANTIVE BASIS. THE ACTION OF THE AO IS NOT FOUND TO HAVE ANY MERITS AND, THEREFORE, THE INCLUSION OF INCOME ASSESSED ON PROTECTIVE BASIS IN THE CASE OF THE APPELLANT'S WIFE IN THE INCOME OF THE APPELLANT ON SUBSTANTIVE BASIS IS DIRECTED 4O BE DELETED. 4.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT THE ENTIRE INCOME ASSESSED ON PROTECTIVE BASIS IN THE CASE OF SMT. KAMINI VERMA HAS BEEN TREATED AS INCOME OF THE ASSESSEE ON SUBSTANTIVE BASIS. HE HAS ALSO NOTED THAT IN THE CAS E OF SMT. KAMINI VERMA , ALL THE ADDITIONS HAVE BEEN DELETED BY HIM EXCEPT THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN AND HE HAS ALSO GIVEN A FINDING THAT THE ASSESSING OFFICER H AS NOT ESTABLISHED AS TO HOW THE INCOME PROTECTIVELY ASSESSED IN THE CA SE OF SMT. KAMINI VERMA REPRESENTED THE INCOME OF THE ASSESSEE. THIS GOES TO SHOW THAT THE INCOME IS THE SAME FOR WHICH THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS AND IN THE HANDS OF HIS WIFE ON PROTECTIVE BASIS. IN THE HANDS OF THE ASSESSEES WIFE, THIS WAS THE FINDING OF CIT(A) THAT THE CAPITAL BALANCE DISCLOSED BY H ER IS ON ACCOUNT OF STRIDHAN. THIS FINDING OF CIT(A) IN THE 4 CASE OF SMT. KAMINI VERMA HAS BEEN UPHELD BY THE TRIBUNAL. HENCE, IT CANNOT BE SAID THAT THE STRIDH AN ACCEPTED IN THE CASE OF WIFE OF THE ASSESSEE IS INCOME OF THE ASSESSEE. HENCE, ON THIS ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND THEREFORE, DECLINE TO INTERFERE IN HIS ORDER. GROUND NO. 1 IS REJECTED. 5. REGARDING GROUND NO. 2 OF THE REVENUE APPEAL, WE FIND THAT THE ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 3 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 3. WHILE COMPLETING THE ASSESSMENT THE AO ALSO ADDED AN AMOUNT OF RS.4,00,000/ - ON ACCOUNT OF THE ALLEGED GIFTS OF RS.2,00,000/ - EACH FROM SHRI MOHD. KASIM AND SHRI MOHD. AZAM. THE AO TREATED THESE ALLEGED GIFTS AS UNEXPLAINED AND ADDED THE CUMULATIVE AMOUNT OF RS.4,00,000/ - AS INCOME OF THE APPELLANT. THIS ADDITION IS DISPUTED BY THE APPELLA NT WHO CONTENDS THAT THE AO WAS NOT JUSTIFIED IN TREATING THE GIFTS AS UNEXPLAINED MERELY BECAUSE THE DONORS COULD NOT BE PRODUCED IN PERSON. BESIDES, THE APPELLANT ALSO CONTENDS THAT THE ALLEGED GIFTS WERE IN FACT RECEIVED IN THE PREVIOUS YEAR 2003 - 04 RE LEVANT TO THE A.Y. 2004 - 05. THIS CONTENTION IS FURTHER SOUGHT TO BE PROVED BY THE STATEMENT OF APPELLANT'S BANK ACCOUNT IN WHICH CHEQUES IN RESPECT OF THE CLAIMED GIFTS ARE FOUND CREDITED ON 25/04/2003 AND 06/01/2004 AND BOTH THE DATES FALL WITHIN THE FI NANCIAL YEAR 2003 - 04 RELEVANT TO THE A.Y. 2004 - 05. EVEN THE AO IN HIS ORDER ( PARA 4 PAGE 4) MENTIONS THAT 'FROM PERUSAL OF CASH FLOW CHARTS FOR EARLIER YEARS SUBMITTED BY THE ASSESSEE IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED GIFTS FROM SHRI MOHD. KASI M AND SHRI MOHD. AZAM.' THE FACTUAL POSITION BEING SO THE GIFTS IN QUESTION EVEN IF NOT ACCEPTED AS EXPLAINED COULD NOT BE TREATED AS INCOME OF THE APPELLANT FOR THE F.Y. 2005 - 06 AND THEREBY RELEVANT TO THE A.Y. 2006 - 07 WHICH IS UNDER CONSIDERATION. THE AD DITION OF RS.4,00,000/ - MADE BY THE AO IS, THEREFORE, DIRECTED TO BE DELETED. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT THIS IS NOTED BY CIT(A) THAT IT IS THE CLAIM OF THE ASSESSEE THAT THE GIFT IN DISPUTE 5 WERE IN FACT RECEIVED IN THE PREVIOUS YEAR 2003 - 04 RELEVANT TO THE A.Y. 2004 - 05 AND T HIS CONTENTION IS PROVED BY THE STATEMENT OF ASSESSEES BANK ACCOUNT IN WHICH CHEQUES IN RESPECT OF THE CLAIMED GIFTS ARE FOUND CREDITED ON 25/04/2003 AND 06/01/2004 AND BOTH THE DATES FALL WITHIN THE FINANCIAL YEAR 2003 - 04 RELEVANT TO THE A.Y. 2004 - 05. IN VIEW OF THIS FINDING OF CIT(A), WHICH COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE, NO ADDITION IS JUSTIFIED ON THIS ACCOUNT IN THE PRESENT YEAR . WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF CIT(A). GROUND NO. 2 IS ALSO REJECTED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 /02/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR