Smt. Kailash Rani, Ludhiana V. DCIT, Ludhiana

ITA 325/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5406 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: LALIT TAKYAR
• Keywords: Gift
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH SMC, CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.325/CHD/2011 ASSESSMENT YEAR : 2005-06 SMT.KAILASH RANI, V DCIT, C/O TULISONS PRINTERS, CENTRAL CIRCLE III, MILLER GANJ, LUDHIANA. LUDHIANA. PAN: AHWPR-2170D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LALIT TAKYAR RESPONDENT BY : SMT.SARITA KUMARI, DR O R D E R THE APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A), DATED 24.12.2010 RELATING TO ASS ESSMENT YEAR 2005-06 AGAINST ORDER PASSED U/S 143(3) OF THE I.T.ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L BUT ONLY EFFECTIVE GROUND OF APPEAL IS GROUND NO.2 WHICH REA DS AS UNDER : 2. THAT THE LEARNED CIT (APPEALS) HAS WRONGLY CONFIRMED THE ADDITION OF RS.218750/- MADE ON ACCOUNT OF INVESTMENT IN THE BUSINESS OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FURNISHED THE RETURN OF INCOME DECLARING INCOME FROM OTHER SOURCE S AT RS.32,857/- AND INCOME FROM PURCHASE AND SALE OF READYMADE GARMENTS AT RS.1,05,000/-. THE TOTAL INCOME RETURNED BY THE ASSESSEE WAS RS.1, 37,860/-. THE ASSESSEE HAD FAILED TO FURNISH ANY DETAILS WITH THE STATEMEN T OF INCOME IN RESPECT OF SALE/PURCHASE OF READYMADE GARMENTS. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, IN REPLY TO QUERY RAISED VIDE ORDER-SH EET ENTRY DATED 2 20.12.2007, THE ASSESSEE CHANGED HER STAND IN REGAR D TO THE SOURCE OF THE SAID INCOME. IT WAS STATED BY THE ASSESSEE THAT TH E SAID AMOUNT WAS AGAINST GIFTS RECEIVED AND UTILIZED FOR HOUSEHOLD EXPENSES. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AS IN AN EARLIE R REPLY FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD CONFIRMED NOT TO HAVE RECEIVED ANY GIFT DURING THE YEAR. FURTHER, IN RES PECT OF HOUSEHOLD EXPENSES, IN THE SAID REPLY IT WAS ALSO EXPLAINED B Y THE ASSESSEE THAT THE SAID EXPENSES WERE BEING MET BY MEGHNA RAM TULLI, HUF. THE AO FURTHER NOTED THAT IN THE CASE OF DAUGHTER-IN-LAW OF THE AS SESSEE, ADDITION OF RS.2,13,500/- WAS MADE ON ACCOUNT OF UNDISCLOSED IN VESTMENT IN THE UNDISCLOSED BUSINESS OF RESALE OF SUITS FOR ASSESSM ENT YEAR 2005-06. THE AO WAS OF THE VIEW THAT BECAUSE OF THE SAME, THE AS SESSEE HAS CHANGED HER STAND IN THE CAPTIONED YEAR. FURTHER, IN ANOTHER G ROUP CASES OF MEGHNA RAM TULI, IT WAS ESTABLISHED THAT THE GROUP OF ASSE SSEE COULD GO TO ANY EXTENT TO EVADE TAXES BY WAY OF SUBMITTING FALSE ST ATEMENTS, CHANGE OF STAND ET. THE AO FURTHER NOTED THAT THE ASSESSEE H AS NOT FURNISHED ANY PARTICULARS OF GIFTS GIVEN AND HENCE REJECTING THE CONTENTION OF THE ASSESSEE, THE INCOME DECLARED AT RS.1,05,000/- WAS TAKEN TO BE ON ACCOUNT OF RESALE OF READYMADE GARMENTS, AS ORIGINALLY REPO RTED IN THE RETURN OF INCOME. THE AO FURTHER NOTED FROM THE PERUSAL OF TH E BANK ACCOUNT, BALANCE SHEET AND ACCOUNTS WITH PRIVATE PARTIES THA T THE ASSESSEE HAD NOT MADE ANY WITHDRAWALS FOR THE PURCHASE OF THE READYM ADE SUITS. THE AO WAS OF THE VIEW THAT AS THE ASSESSEE WAS CARRYING O N THE BUSINESS FROM HER RESIDENCE, THE NET PROFIT IS TO BE ESTIMATED @ 8% O F THE TURNOVER. ACCORDINGLY, TURNOVER OF RS.13,12,500/- WAS ESTIMAT ED TO HAVE BEEN EFFECTED BY THE ASSESSEE, ON WHICH THE UNDISCLOSED INVESTMENT WAS TAKEN BY THE AO TO BE 1/6 TH OF THE TOTAL TURNOVER. HENCE, AN ADDITION OFRS.2,1 8,750/- WAS MADE BY THE AO. IN APPEAL, CIT(A) CONFIRMED THE ADDITION MADE BY THE AO REJECTING THE EXPLANATION OF THE ASSESSEE THAT T HE SAID AMOUNT DECLARED 3 IN THE RETURN OF INCOME IS ON ACCOUNT OF GIFTS WHIC H, IN TURN HAVE BEEN UTILIZED FOR HOUSEHOLD EXPENSES. 4. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ADDIT ION. THE LD. AR REFERRED TO THE FACTS OF THE CASE AND POINTED OUT T HAT THE SAID AMOUNT OF RS.1,05,000/- WAS SURRENDERED THOUGH IT WAS CLAIMED TO BE RECEIVED ON ACCOUNT OF GIFTS. THE LD. DR FOR THE REVENUE PLACE D RELIANCE ON THE ORDER OF THE CIT(A). 5. I HAVE HEARD THE RIVAL CONTENTIONS. THE ASSESSE E IN THE RETURN OF INCOME HAD DECLARED AN INCOME OF RS.1,05,000/- AS I NCOME RECEIVED FROM PURCHASE AND SALE OF READYMADE GARMENTS. WHEN CONF RONTED DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS UNABLE TO EXPLAIN THE NATURE OF THE SAID INCOME AND CHANGED HER STAND THAT THE SAID REPRESENT GIFTS RECEIVED BY THE ASSESSEE, WHICH WERE UTILIZED FOR HOUSEHOLD EXPENSES. THE AO NOTED THAT NO WITHDRAWALS WERE MADE FOR CARRYING ON BUSINESS OF THE ASSESSEE AND FURTHER SIMILAR BUSINESS WAS ASSESSED IN THE HANDS OF THE DAUGHTER-IN-LAW OF THE ASSESSEE. IN VIEW OF THE AD DITIONS BEING MADE IN THE GROUP CASES OF THE ASSESSEE, THE STAND OF THE ASSES SEE VIZ-A-VIZ THE GIFTS RECEIVED WAS NOT ACCEPTED BY THE AO AND THE ADDITIO N WAS MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE INVESTMENT MADE FOR CARRYING ON THE SAID BUSINESS. THE ASSESSEE HAS FAILED TO BRIN G ON RECORD ANY EVIDENCE TO ESTABLISH ITS STAND OF HAVING RECEIVED GIFTS. ME RELY MAKING A CLAIM VIZ- A-VIZ THE DECLARATION IN THE RETURN OF INCOME, DOES NOT ABSOLVE THE ASSESSEE OF THE ONUS CAST UPON HER TO EXPLAIN THE NATURE OF ENTRIES IN HER HANDS. IN THE ABSENCE OF THE SAME BEING DISCHARGED, I FIND NO MERIT IN THE CLAIM OF THE ASSESSEE THAT THE SAID AMOUNTS RECEIVED AS GIFT S HAVING BEEN DECLARED AS OTHER INCOME, SHOULD ONLY BE ASSESSED TO TAX. THE AO HAD COMPUTED THE INCOME FROM BUSINESS BY FOLLOWING PERCENTAGE OF PRO FITS EARNED IN THE SIMILAR LINE OF BUSINESS AND THEREAFTER COMPUTED TH E INVESTMENT ALLEGED TO 4 HAVE BEEN MADE BY THE ASSESSEE FOR CARRYING ON THE SAID BUSINESS. I FIND THAT THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE PURELY ON ESTIMATE BASIS. TO MEET THE ENDS OF JUSTICE, I RES TRICT THE SAID ADDITION TO A SUM OF RS.60,000/-. THE AO IS DIRECTED TO DELETE T HE BALANCE ADDITION OF RS.1,58,750/-. THUS, THE GROUND OF APPEAL RAISED B Y THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31ST D AY OF MAY, 2011 SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 31 ST MAY,2011 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSTT.REGISTRAR,ITAT,CHANDIGARH