Mr. Samiulla Khan , Bangalore V. Deputy Commissioner of Income Tax Circle-5(2)(1), Bangalore

ITA 3043/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9770 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-07-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 09-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Keywords: Gift
• Section: 147; 68; 148; 201; 13

Judgement Text

ITA NO.3043(B) 2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B, BANGALORE BEFORE SHRI N.V.VASUDEVAN, VICE PRESIDENT AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.3 0 4 3 ( BANG)/2018 (ASSESSMENT YEAR : 201 5 - 16 ) SHRI MOHAMED S AMIULLA KHAN NO.1/2, NAAZ COMPLEX, N R ROAD, NEAR CITY MARKET, BENGALURU - 560 00 2 PAN NO.A B YPK7388L APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX OFFICER, CIRCLE - 5, BANGALORE RESPONDENT APPELLANT BY : SHRI RAGHAVENDRA CHAKRAVA R THY, CA REVENUE BY : SHRI MANJEET S INGH, ADDL.CIT DATE OF HEARING : 01 - 0 7 - 2020 DATE OF PRONOUNCEMENT : 03 - 07 - 2020 O R D E R PER N.V.VASUDEVAN, VICE PRESIDENT : TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5 , BANGALORE DATED 1 7.09 .2018 FOR THE A.Y.2013 - 14. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN MAKING AN ADDITION OF RS. 3,21, 07,6 66/ - U/S 68 OF THE I NCOME TAX ACT,1961 (ACT). 3 . THE FACTS AND CIRCUMSTANCES UNDER W H ICH THIS APPEAL ARISES FOR CONSIDERATION ARE THAT THE A SSESSEE IS AN INDIVIDUAL. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2015 - 16 THERE WAS AN INCREASE IN THE CAPITAL ACCOUNT OF THE ASSESSEE BY A S UM OF RS.3,21,07,666/ - . THE AO CALLED UPON THE ASSESSEE TO ITA NO.3043(B) 2018 2 EXPLAIN THE INCREASE IN THE SHARE CAPITAL OF THE ASSESSEE . THE ASSESSEE EXPL AINED THAT HIS SON IN LAW SHRI S AFDAR KHATRI HAD GIVEN A LOA N OF RS.3,21,07,666/ - TO THE A SSESSEE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2012 - 13. DURING THE PREVIOU S YEAR RELEVANT TO ASSESSMENT YEAR 2015 - 16 I.E. ON 25 - 03 - 2015 S HRI SAFDAR KHATRI GIFTED UNSECURED LOAN TO HIS FATHER IN LAW I.E. A SSESSEE OU T OF LOVE AND AFFECTION. THE ASSESSEE ALSO SUBMITTED THAT IN THE BALANCE SHEET OF THE A SSESSEES INDIVIDUAL ACCOUNT IN THE PROPRIETOR CONCERN I.E M/S ALFA S TEEL AND M/S SILVERLINE THE A SSESSEE HAD REDUCED A SUM OF RS.3,21,07,666/ - FROM UNSECURED LOANS AND ADDED THE SAME TO HIS CAPITAL ACCOUNT. 4 . ON THE ABO V E PL E A OF THE ASSESSEE , THE ASSESSING OFFICER ( AO ) TOOK THE VIEW THAT THE A SSESSEE FAILED TO PROVE THE SOURCE OF INCOME AND CREDIT WORTHINESS OF HIS SON IN LAW SHRI SAFDAR KHATRI AND THEREFORE, A SUM OF RS.3,21,07,666/ - WAS LIABLE TO BE ADDED U/S 68 OF THE ACT. ACCORDINGLY, THE AFORESAID SUM WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL BY THE ASSESSEE THE CIT(A) UPHELD THE ORDER OF THE AO OBSERVING THAT THE ASSESSEE FAILED TO E STABLISH THE CREDIT WORTHINESS OF HIS SON IN LAW AND MERE FURNISHING OF CONFIRMATION LETTER S AND COPY OF GIFT DEED WAS NOT SUFFICIENT TO DISCHARGE THE ONUS THAT LIES ON THE ASSESSEE U/S 68 OF THE ACT. 6 . AGGRIEVED BY THE ORDER OF LD.CIT(A() THE A SSESSEE PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LD COUNSEL FOR THE ASSESSEE FILED PAPER BOOK BEFORE US. HE BROUGHT TO OUR NOTICE THAT IN THE C A SE OF THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 13 A NOTICE U/S 148 OF THE ACT WAS ISSUED BY THE A O ON 30 - 0 3 - 2015 RE CORDING THE FOLLOWING REASONS FOR ISSUE OF NOTICE U/S 148 OF THE ACT. YOUR CASE WAS RE - OPENED FOR THE FOLLOWING REASON : ON VERIFICATION, IT IS FOUND THAT YOU HAVE RECEIVED RS.3.21,07,666/ - FROM YOUR SON IN LAW ON VARIOUS DATES DURING THE FY: 2011 - 12 RELEVANT TO AY: 2012 - 13 AND SHOWED AS UNSECURED LOANS TILL AY: 2014 - 15 . 2. FURTHER, IT WAS FOUND THAT THE SAME AMOUNT OF UNSECURED LOAN WAS WAIVED ON ACCOUNT OF GIFT DURING THE FY: 014 - 15 RELEVANT TO AY: 2015 - 16. FROM THE DETAILS COLLECTED DURING THE SCRUTINY ITA NO.3043(B) 2018 3 ASSESSMENT PROCEEDINGS FOR AY: 2015 - 16, IT WAS FOUND THAT YOU WERE NOT ABLE TO PROVE THE SOURCE OF INCOME AND CR E DIT WORTHINESS OF YOUR SON - IN - LAW. 3. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT THE INCOME TO THE EX TENT OF RS.3,21,07,666/ - CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THIS CASE FOR THE FINANCIAL YEAR PERTAINING TO AY: 2012 - 13 WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147 OF THE IT ACT, 1961. 7 . THE ASSESSEE FILED ALL THE REQUIRED DETAILS IN THE ASSESSMENT PROCEEDINGS U/S.148 OF THE ACT FOR A.Y.2012 - 13 AND THE AO PASSED AN ORDER OF ASSESSMENT DATED 14 - 12 - 2018 ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE. THE LD. COUNSEL THUS SUBMITTED THAT THE ASSESSEE HAS ESTABLISHED THE GENUINENESS OF THE LOAN (CASH CREDIT) RECEIVED BY THE A SSESSEE FROM HIS SON - IN - LAW . S INCE THE CREDIT WORTHINESS, CAPACITY AND GENUINENESS OF THE TRANSACTION OF LOAN BY THE ASSESSEES SON - IN - LAW TO THE A SSESSEE HAS BEEN ESTABLISHED WITH REGARDS TO AY: 2012 - 13, T HE PR EVIOUS YEAR RELEVANT TO AY: 2012 - 13 IN WHICH THE CASH CREDIT WAS FOUND IN THE BOOKS OF ACCOUNTS OF T H E ASSESSEE , THE GIFT OF THE VERY SAME SUM IN THE PREVIOUS YEAR RELEVANT TO AY: 2015 - 16 SHOULD BE ACCEPTED. IT WAS ALSO BROUGHT TO OUR NOTICE THAT IN THE AFORESAID PROCEEDINGS THAT THE ASSESSEE HAD FILED AN AFFIDAVIT OF HIS SON - IN - LAW EXPLAINING THE MANNER IN WHICH THE MONIES TOTALING RS.3,21,07,66/ - WAS PAID TO THE ASSESSEE. THE COPY OF THE RELEVANT AFFIDAVIT OF THE ASSESSEE AND THE SUPPORTING DOCUMENTS ARE PLACED AT PAGE S 26 & 27 OF THE ASSESSEES PAPER BOOK . COPY OF THE BANK STATEMENTS, EVIDENCING RECEIPT OF MONEY FROM SON - IN - LAW IS ALSO ESTABLISHED BY THE BANK STATEMENTS OF THE ASSESSEES PROPRIETARY ACCOUNT I.E. M/S ALFA STEEL WHICH ARE AT PAGE - 68 TO 70 OF THE ASSESS E ES PAPER BOOK . THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT IN THE LIGHT OF THE AFORESAID DOCUMENTARY EVIDENCE WHICH HAS BEEN ACCEPTED BY THE AO IN SO FAR AS THE ASSESSEES ASSESSMENT FOR AY: 2012 - 13 THE GIFT IN QUESTION DURING THE PREVIOUS YEAR STA N DS EXPLAINED. IN THIS REGARD OUR ATTENTION WAS ALSO DRAWN TO THE COPY OF THE GIFT DEED BY ASSESSEES SON - IN - LAW WHICH IS PLACED AT PAGE - 26 OF THE ASSESSEES PAPER BOOK. IT WAS ALSO HIGHLIGHTED THAT THE ORDER OF ASSESSMENT FOR A.Y. 2012 - 1 3 WAS PASSED AFTER THE IMPUGNED ORDER OF CIT(A). THE LD. D R RELIED ON THE ORDER O F T H E LD.CIT(A). ITA NO.3043(B) 2018 4 8. W E ARE O F THE VIEW THAT THAT IN THE LIGHT OF THE ORDER OF ASSESSMENT DATED 14 - 12 - 2018 FOR AY: 2012 - 13 PASSED IN THE CASE OF THE ASSESSEE ACCEPTING THE GENUINENESS OF THE LOAN GIVEN BY THE A SSESSEE S SON - IN - LAW TO THE ASSESSEE, THE SOURCE, CAPACITY AND GENUINENESS OF THE GIF OF THE VERY SAME SUM IN THE AY: 2015 - 16 STANDS ESTABLISHED. THE O NLY REASON ASSIGNED BY THE REVENUE AUTHORITIES FOR REJECTING THE PLEA OF THE ASSESSEE IN AY: 2015 - 16 IS THAT THE CREDIT WORTHINESS AND SOURCE OF INCOME OF ASSESSEES SON - IN - LAW HAS NOT BEEN ESTABLISHED . THE GIFT BY THE ASSESSEES SON - IN - LAW HAS NEVE R BEEN DISPUTED NOR DISBELIEVED . S INCE THE AO HAS ACCEPTED THE CREDIT WORTHINESS OF THE ASSESSEES SON - IN - LAW IN ASSESSEES ASSESSMENT FOR AY: 201 - 13 , W E ARE OF THE VIEW THAT THE SUM IN QUESTION WHICH WAS ADDED AS UNEXPLAINED U/S 68 OF THE ACT FOR AY: 2015 - 16 H AS TO BE DELETED. WE HOLD AND DIRECT ACCORDINGLY. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 03 - 07 - 2020 SD/ - S D/ - (B.R.BASKARAN) (N.V.VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT PLACE: BANGALORE DATED: 03 - 07 - 2020 *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR 6.GUARD FILE BY ORDER ASST.REGISTRAR