Smt. Kashmira Gautam Desai, Valsad V. The Income Tax Officer, Ward-2, Valsad

ITA 2706/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5933 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH UPADTHYAR
• Keywords: Unexplained investment; Gift; Reason to believe
• Section: 143(3); 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2706/AHD/2014 / ASSTT. YEAR: 2005-2006 AND ./ ITA NO.3444/AHD/2014 / ASSTT. YEAR: 2005-2006 SMT.KASHMIRA GAUTAM DESAI A-902, SUNFLOWER APARTMENT TITHAL ROAD VALSAD 396 001. VS. ITO, WARD-2 VALSAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RAJESH UPADTHYAR, AR REVENUE BY : SHRI K. MADHUSUDAN, SR.DR ! / DATE OF HEARING : 12/04/2017 '#$ ! / DATE OF PRONOUNCEMENT: 01/05/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST ORDERS OF THE LD.CIT(A), VALSAD DATED 30.9. 2013 AND 1.10.2014 PASSED FOR THE ASSTT.YEAR 2005-06. 2. ITA NO.2706/AHD/2014 EMERGES OUT FROM THE PROCEE DINGS INITIATED UNDER SECTION 143(3) R.W.S 147 WHEREAS IT A ITA NO.2706/AHD/2014 & OTHER 2 NO.3444/AHD/2014 EMERGES OUT FROM THE PENALTY PROCE EDINGS INITIATED AGAINST THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. FIRST WE TAKE UP QUANTUM APPEAL I.E ITA NO.2706/ AHD/2014 . 4. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE U NDER SECTION 143(2) OF THE INCOME TAX ACT, 1961. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D OBTAINED PERMANENT ACCOUNT NUMBER IN THE YEAR 1989, BUT SHE NEVER FILED HER RETURN OF INCOME. STATEMENT OF HER HUSBAND SHRI GA UTAM R. DESAI WAS RECORDED BY THE DDIT (INVT.), VALSAD ON 13.2.2009. IN HIS STATEMENT HE HAS DISCLOSED INVESTMENT OF RS.2 LAKHS IN MUTUAL FUND IN F.Y.2004-05 IN THE NAME OF SMT.KASHMIRA G. DESAI. SIMILARLY, H E DISCLOSED AN INVESTMENT OF RS.1 LAKHS AGAINST PURCHASE OF OFFICE SPACE AT 401, AMAR CHAMBERS, VALSAD. ARMED WITH THIS INFORMATION, THE AO HAD ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 2 0.3.2012. THE AO HAS REOPENED THE ASSESSMENT, AND AFTER HEARING THE ASSESSEE PASSED AN ASSESSMENT ORDER ON 11.2.2013. BEFORE THE LD.CI T(A) THE ASSESSEE DID NOT CHALLENGE REOPENING OF THE ASSESSMENT. THE ASSESSEE HAS RAISED THIS GROUND OF APPEAL FOR THE FIRST TIME BEF ORE THE TRIBUNAL. THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASS ESSMENT HAS BEEN PLACED ON PAGE NO.4 OF THE PAPER BOOK, WHICH READS AS UNDER: 10 REASONS FOR THE BELIEF THAT INCOME : HAS ESCAPED ASSESSMENT. DURING THE COURSE OF RECORDING THE STATEMENT IN THE CASE OF ASSESSEE'S HUSBAND SHRI GAUTAM RATILAL DESAI BY THE DDIT (INV. ), VALSAD ON 13.02.2009, SHRI GAUTAM R. DESAI HAS ADMITTED TO HA VE MADE AN INVESTMENT OF RS. 2 LAC IN MUTUAL FUND IN F.Y. 2004 -05 IN THE NAME OF HIS WIFE SMT. KASHMIRA G. DESAI. FURTHER, SHRI GAUTAM R . DESAI HAS ADMITTED IN HIS STATEMENT THAT SMT. KASHMIRA G. DESAI HAS IN VESTED RS. 1 LAC IN PURCHASING OFFICE AT 401, AMAR CHAMBERS VALSAD ON 2 9.10.2004. SMT. ITA NO.2706/AHD/2014 & OTHER 3 KASHMIRA G. DESAI HAS NOT FILED RETURN OF INCOME FO R A.Y. 2005-06. SINCE THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR A.Y . 2005-06, THE INVESTMENTS MADE IN MUTUAL FUND AND IN IMMOVABLE PR OPERTY REMAIN UNEXPLAINED. HENCE, I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 3,00,000/- DURING THE A.Y. 2005- 06. PLACE: SURAT. (ARUNKUMAR K.G.) DATE: 20.03.2012 INCOME TAX OFFICER, WARD-2, VALSAD. 6. THE LD.COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH THE REASON CONTENDED THAT HUSBAND OF THE ASSESSEE HAS D ISCLOSED HIS INVESTMENT THOUGH IN THE NAME OF THE ASSESSEE. THE REFORE, ASSESSMENT FOR THE ASSTT.YEAR 2005-06 OUGHT TO BE REOPENED IN THE NAME OF GAUTAM R. DESAI AND NOT THE ASSESSEE. IN OTHER WOR DS, THE STAND OF THE ASSESSEE WAS THAT NO MATERIAL EXHIBITING ESCAPE MENT OF INCOME IN THE HANDS OF THE ASSESSEE WAS OBTAINED BY THE AO TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IN HER HAND. IN HIS SECOND FOLD OF SUBMISSIONS, HE CONTENDED THAT IN THE ASSESSMENT OR DER, THE AO HAS NOT MADE ADDITION ON ACCOUNT OF INVESTMENT IN MUTUA L FUND AS WELL AS INVESTMENT IN PURCHASES OF OFFICE SPACE. THE AO HA S MADE ADDITION OF UNEXPLAINED OPENING CAPITAL BALANCE. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE EXPRESSION AND EMPLOYED IN SECTION14 7 PROHIBITS THE AO TO MAKE ANY ADDITION OF THE INCOME UNEARTHED DURING THE RE- ASSESSMENT PROCEEDINGS UNLESS AN ADDITION IS BEING MADE OF THE AMOUNTS FOR WHICH ASSESSMENT WAS REOPENED. IN OTHE R WORDS, IF THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTUAL FUNDS AND UNEXPLAINED INVESTMENT IN PURCHASE OF OFFICE SPACE, THE AO CANNOT ADD ANY OTHER AMOUNT WHOSE ASSESSMENT FOUND TO BE ESCAPED DURING THE ASSESSMENT PROCEEDINGS. FOR BUT TRESSING HIS CONTENTION, HE RELIED UPON THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD., 331 ITR 236. HE ALSO ITA NO.2706/AHD/2014 & OTHER 4 RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COUR T IN THE CASE OF RANBAXY LABORATORIES LTD. V. CIT, 336 ITR 136. HE ALSO PUT RELIANCE UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT REPORTED IN 353 ITR 172. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDER OF THE AO. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE ASSESSMENT RECO RD WOULD REVEAL THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 13.1 0.2012 IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 148 DATED 20.3 .2012. IN ORDER TO EXPLAIN THE INVESTMENT IN MUTUAL FUND AND PURCHASE OF OFFICE PROPERTY, THE ASSESSEE HAS SHOWN OPENING CAPITAL BALANCE, I.E . SHE HAS CALCULATED THE CLOSING CAPITAL BALANCE AS ON 31.3.2004. SHE W AS AWARE THAT SIX YEARS HAVE BEEN EXPIRED FROM ASSESSMENT YEAR 2004-0 5. THE AO WILL NOT BE IN A POSITION TO REOPEN THAT ASSESSMENT. CL OSING BALANCE SHOWN IN THE EARLIER YEAR WOULD BE OPENING BALANCE IN THI S YEAR AND THIS OPENING BALANCE WILL EXPLAIN THE INVESTMENT IN THE ASSETS. THE AO CONFRONTED THE ASSESSEE TO PROVE SOURCE OF CAPITAL BALANCE AVAILABLE TO HER IN THE OPENING ACCOUNT. SHE FAILED TO GIVE EXP LANATION AND DUE TO THIS REASON, HE MADE ADDITION OF UNEXPLAINED OPENIN G BALANCE. THIS UNEXPLAINED OPENING BALANCE CAN EASILY TAKE CARE OF THE INVESTMENT MADE BY THE ASSESSEE DURING THIS YEAR AND FOR THIS REASON, THERE WAS NO NEED TO MAKE DOUBLE ADDITION. SIMILARLY, AS FAR AR GUMENTS OF THE LD.COUNSEL FOR THE ASSESSEE THAT HER HUSBAND HAS DI SCLOSED INVESTMENT AND ASSESSMENT OUGHT TO BE REOPENED IN HIS CASE IS CONCERNED, HE DISCLOSED THE FACT ABOUT PURCHASES OF MUTUAL FUND I N THE NAME OF THE ASSESSEE AS WELL AS PURCHASE OF OFFICE SPACE. THIS IS AN INFORMATION WHICH CAN EASILY EMPOWER THE AO TO FORM AN OPINION THAT INCOME HAS ESCAPED IN THE HANDS OF THE ASSESSEE. THE ASSET WA S IN THE NAME OF THE ASSESSEE. HAD THE CASE OF THE ASSESSEES HUSBA ND BEEN REOPENED, HE COULD HAVE AN EXPLANATION THAT ASSET DOES NOT ST AND IN HIS NAME AND HIS WIFE HAS SOURCE OF SUCH INVESTMENT. THEREFORE, IT WAS NECESSARY FOR THE AO TO VERIFY THE DETAILS OF THE ASSESSEE. IN V IEW OF THE ABOVE ITA NO.2706/AHD/2014 & OTHER 5 SITUATION, NEITHER OF THE JUDGMENT OF THE HONBLE B OMBAY HIGH COURT, DELHI HIGH COURT NOR GUJARAT HIGH COURT RELIED UPON BY THE ASSESSEE ARE APPLICABLE ON THE GIVE FACTS. THERE IS NO MERIT IN THE CONTENTION THAT THERE WAS NO INFORMATION WITH THE AO TO HARBOR A BE LIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. IN VIEW OF THE ABOVE, WE D O NOT FIND ANY MERIT IN THE FIRST GROUND OF APPEAL. 8. AS FAR AS ADDITION OF RS.3,47,391/- IS CONCERNED , THE ASSESSEE HAS SHOWN IT AS OPENING CASH BALANCE. SHE HAS SUBMITTE D THAT SHE WAS A GRADUATE TAKING TUITION AND SHE HAS SAVINGS FROM MA NY YEARS. THE ASSESSEE COULD BUTTRESS HER CONTENTIONS WITH HELP O F ANY DETAILS EXHIBITING DETAILS OF STUDENTS TO WHOM SHE GAVE TUI TION. SHE HAS NOT RECEIVED A SINGLE PAYMENT FROM STUDENTS THROUGH ACC OUNT PAYEE CHEQUE. THE ACTIVITY IN ITSELF IS DOUBTFUL. HOWEV ER, THERE MAY BE SOME SAVING IN THE HANDS OF THE ASSESSEE, BECAUSE BEING A WOMAN, SHE MIGHT HAVE RECEIVED GIFTS ON DIFFERENT OCCASIONS, EITHER FROM HER PARENTS OR FROM HER IN-LAWS. THEREFORE, THE AO OUGHT TO HAVE NOT DOUBTED TOTAL CAPITAL BALANCE. HE SHOULD HAVE GIVEN A CREDIT OF HER PAST SAVINGS. CONSIDERING THESE ASPECTS, WE ARE OF THE VIEW THAT AT THE MOST A SUM OF RS.1,47,391/- COULD BE TREATED AS UNEXPLAINED OPENI NG CAPITAL BALANCE AND A BENEFIT OF RS.2,00,000/- REPRESENTING SMALL S AVINGS IN THE PAST OUT OF NON-TAXABLE INCOME COULD BE ESTIMATED. THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE NEXT APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1,02,103/- WH ICH HAS BEEN IMPOSED ON THE ALLEGED CONCEALED INCOME OF RS.3,47, 391/-. 10. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE CAREFULLY. IT EMERGES OUT FROM THE REC ORD THAT THE ASSESSEE HAS DISCLOSED A CAPITAL BALANCE OF RS.3,47,391/-. ACCORDING TO THE ASSESSEE SHE WAS NOT HAVING INCOME EXHIBITING TAXAB LE LIMIT IN THE PAST, ITA NO.2706/AHD/2014 & OTHER 6 BUT SHE HAS MADE SMALL SAVINGS. WHEN SHE FILED THE RETURN FOR THIS YEAR, SHE COMPUTED IT AS AN OPENING CAPITAL BALANCE . IN THE QUANTUM APPEAL, WE HAVE ALREADY CONSIDERED THIS ASPECT AND GIVEN HER CREDIT OF HER SAVING AT RS.2,00,000/-. FOR THE REMAINING ADD ITION ALSO IT CANNOT BE ALLEGED THAT THE ASSESSEE HAS DELIBERATELY CONCE ALED PARTICULARS OF INCOME. IN HER UNDERSTANDING SHE HAS SAVINGS WHICH WAS NOT ACCEPTED BY THE AO. SHE FAILED TO SUBSTANTIATE HER POINT OF VIEW I.E. SHE FAILED TO BRING DEMONSTRATIVE EVIDENCE ON RECORD IN SUPPORT O F HER SAVING. TO OUR MIND HER EXPLANATION WAS NOT FALSE. THEREFORE, WE ALLOW THIS APPEAL AND DELETE PENALTY. 11. IN THE RESULT, ITA NO.2706/AHD/2014 IS PARTLY A LLOWED, WHEREAS, ITA NO.3444/AHD/2014 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST MAY, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER