ITO, New Delhi V. Smt. Indu Attri, New Delhi

ITA 3329/DEL/2011

• Counselvise Citation: 332920114 RSA 2011
• Duration Of Justice: 3 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH SENIOR
• Assessee Lawyers: M K AGARWAL
• Keywords: Gift; Business income; Salary income; Onus to prove
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3329/DEL./2011 (ASSESSMENT YEAR : 2008-09) ITO, WARD 48 (1), VS. SMT. INDU ATTRI, NEW DELHI. E 23, 2 ND FLOOR, LAJPAT NAGAR III, NEW DELHI 110 024. (PAN : AEOPA4962R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.K. AGARWAL, CA REVENUE BY : SHRI SATPAL SINGH, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXX, NEW DELHI DATED 19.04.2011. 2. THE ASSESSEE IS AN INDIVIDUAL AND SOURCE OF INCO ME DECLARED IN THE RETURN OF INCOME WAS INCOME FROM SALARY ONLY. RETU RN WAS FILED ON 31.10.2008 DECLARING TOTAL INCOME AT RS.1,20,000/-. WHILE MAKING THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER MADE AN A DDITION OF RS.63,74,636/- IN THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT, 1961 WHICH SHE HAS RECEIVED AS DEPOSITS IN HER BANK ACCOUNT DURING ITA NO.3329/DEL/2011 2 THE PERIOD 01.04.2007 TO 31.03.2008. THE CIT(A) HA D DELETED THIS ADDITION BY HOLDING AS UNDER :- DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE ME, IT HAS BEEN SUBMITTED BY THE AUTHORISED REPRESENTATIVE ON BEHALF OF THE ASSESSEE IN REGARD TO FIRST GROUND OF APPEAL A S UNDER:- THE INCOME TAX OFFICER HAS MADE AN ADDITION OF RS.6 4,74,636 IN RESPECT OF CREDIT ON ACCOUNT OF FOREIGN CURRENCY AND A SUM OF RS.3,13,689 ON ACCOUNT OF INTEREST FROM THE BANK . THE ITO WAS HAVING A COPY OF THE BANK ACCOUNT OF MRS. INDU ATTRI WHEN HE HIMSELF HAS ADMITTED THAT THESE PAYMENTS AR E IN FOREIGN CURRENCY AND WERE REMITTED FROM ABROAD. SHE IS A SALARIED EMPLOYEE AND A DIRECTOR FOR THE COMPANY, E XCEPT THAT SHE IS NOT WORKING ANYWHERE NOR SHE HAS ANY OTHER S OURCE OF INCOME EXCEPT INVESTMENT IN MUTUAL FUNDS MADE OUT O F THE MONEY RECEIVED FROM REMITTANCE FROM ABROAD WHICH WA S REMITTED BY HER HUSBAND MR. NIKOLAI VALCHEV, WHO IS A NON RESIDENT AND HOLDING PASSPORT OF BULGARIA AND IS RE SIDING ABROAD AND EARNING INCOME INDEPENDENTLY AND HE HAS REMITTED THIS AMOUNT TO HIS WIFE DURING THE YEAR FROM ABROAD FOR HER MAINTENANCE AND LOOKING AFTER HER CHILDREN WHICH IS IN THE NATURE OF GIFTS MADE BY HIM. OUT OF THE REMITTANCE SHE INCURRED MONEY FOR HER UPKEEP AND FOR CHILDREN AND THE BALAN CE AMOUNT LYING UNSPENT IS INVESTED IN MUTUAL FUNDS WHICH ARE FULLY EXPLAINABLE AND THE DETAILS OF INVESTMENTS WERE FIL ED BEFORE THE INCOME TAX OFFICER WHO HAS ALREADY INCLUDED THE INC OME FOR SHORT TERM CAPITAL GAIN OF RS.58,161 WHICH WOULD NO T HAVE BEEN POSSIBLE WITHOUT FILING DETAILS OF INVESTMENTS . BEFORE ME THE ASSESSEE HAS FILED THE STATEMENT OF R EMITTANCES RECEIVED FROM ABROAD AND BACK MADE TO OUTSIDE INDIA AND A NET CREDIT OF RS.57,43,680.57/- HAS BEEN CREDITED T O HER ACCOUNT DURING THE YEAR AND NOT RS.63,74,636/- AS T AKEN BY THE A.O. THE ASSESSEE HAS FURTHER SUBMITTED THE REASON OF ADDITION OF THE AFORESAID AMOUNT IS ON ACCOUNT OF T HE FACT THAT THE ASSESSEE HAS NOT SUBMITTED THE SOURCE, EVIDENCE AND BANK CERTIFICATE FOR THE FOREIGN CURRENCY RECEIVED IN HE R BANK ACCOUNT. THE LD AO HAS IGNORED THE FACT THAT THESE REMITTANCES ARE OF FOREIGN EXCHANGE AND ARE RECEIVED FROM ABROA D THROUGH NORMAL BANKING CHANNELS AND THE SAME DOES NOT PARTA KE THE CHARACTER OF CASH CREDIT IN THE ACCOUNT OF THE ASSE SSEE IN ITA NO.3329/DEL/2011 3 NORMAL COURSE IN RESPECT OF INDIAN OPERATIONS. SHE HERSELF DOES NOT EARN ANY INCOME FROM ANY SOURCE EXCEPT THE SALA RY. THE FACT THAT THE HDFC BANK WAS REQUESTED TO ISSUE THE CERTIFICATE AND THE SAME WAS NOT ISSUED TILL THE TIME OF ASSESS MENT. AND HENCE, THE LD OFFICER SHOULD HAVE GOT THE INFORMATI ON FROM THE BANK ITSELF IF HE WANTED TO INQUIRE ANY FURTHER IN THIS RESPECT. HOWEVER, THE FACT IS EVIDENT ON THE FACE OF IT AND AS SUCH THE ASSESSEE HAS DISCHARGED ITS ONUS BY CLAIMING THAT T HE AMOUNT RECEIVED REPRESENTS THE REMITTANCES RECEIVED FROM A BROAD IN FOREIGN CURRENCY. THE ASSESSEE HAS ALSO FILED BEFORE ME A CONFIRMATIO N FROM HDFC BANK LTD. REGARDING THE SAID REMITTANCES. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT CONFIRMING THE RECEIPT OF MONEY FROM ABROAD FROM HER HUSBAND, WHO IS A FOR EIGN CITIZEN. THE AMOUNT HAS BEEN ORIGINATED FROM OUTSID E INDIA. IT HAS BEEN VEHEMENTLY ARGUED BEFORE ME THAT SECTION 6 8 CAN BE INVOKED ONLY IF BOOKS OF ACCOUNTS HAVE BEEN MAINTAI NED WHICH IS NOT THE CASE WITH THE ASSESSEE AS THESE ARE NOT CASH CREDITS. MY ATTENTION WAS ALSO DRAWN TO THE REPORTED JUDGMEN T IN THE CASE OF SMT SHANTA DEVI VS. CIT (171 ITR 532). AN AFFIDAVIT OF THE HUSBAND MR NIKOLAI VALCHEV SENT BY HIM FROM NETHERLANDS DULY VERIFIED BY AN AUTHORIZED ATT ESTATION AUTHORITY IS FILED BEFORE ME WHICH CONFIRMS THAT TH E SAID PERSON IS A CITIZEN OF BULGARIA AND HAVING PASSPORT ISSUED BY BULGARIAN EMBASSY WHICH WAS ALSO FILED BEFORE ME. THE ONLY QUESTION OF THE ASSESSING OFFICER TO MAKE AN ADDITION WAS ON ACCOUNT OF THAT THE ASSESSEE HAS FAILED TO S UBMIT SOURCE AND THE EVIDENCE FROM THE BANK. THUS, THE CONFIRMAT ION OF THE ASSESSEE AND THE EXPLANATION REGARDING SOURCE EVIDE NCED BY. DECLARATION OF MR NIKOLAI VALCHEV DULY NOTARIZED IN NETHERLANDS, AND THE CONFIRMATION OF THE BANK AND T HE PURPOSE FOR WHICH THE MONEY HAS BEEN SENT HAS BEEN EXPLAINE D. MY ATTENTION WAS ALSO DRAWN TO THE CBDT CIRCULAR DT . 20.02.1969 WHERE THE MONEY BROUGHT INTO INDIA BY A NON RESIDENT FOR INVESTMENT OR OTHER PURPOSES IS NOT LI ABLE TO INDIAN INCOME TAX ACT. MY ATTENTION WAS ALSO INVITE D TO SECTION 5 OF THE INCOME TAX ACT, WHERE THE TAX IS C HARGEABLE ON THE INCOME WHICH IS RECEIVED OR DEEMED TO BE REC EIVED IN ITA NO.3329/DEL/2011 4 INDIA AND AS SUCH THE REMITTANCES SO RECEIVED FROM HUSBAND TO WIFE ARE NOT IN THE NATURE OF THE INCOME AND AS SUC H ARE NOT TAXABLE AND ARE OUTSIDE THE PREVIEW OF THE ACT AS T HEY ARE IN THE NATURE OF THE GIFTS GIVEN BY NON RESIDENT FOREIGN C ITIZEN. THE COUNSEL OF THE ASSESSEE HAS FILED THE FOLLOWING JUDGMENTS AS PART OF PAPER BOOK : CIT V. ASHOK BHAI CHINMAN B HAI REPORTED IN 056 ITR 0042 AND CIT V/S A.B. V. GOWDA REPORTED IN 157 ITR 0697 (J 986). IT HAS ALSO BEEN ARGUED BE FORE ME THAT THE INITIAL BURDEN TO PROVE THAT THE AMOUNT IS NOT TAXABLE HAS BEEN DISCHARGED. IT HAS ALSO BEEN ARGUED BEFORE ME THAT THE REVENUE HAS TO DISCHARGE ITS BURDEN TO PROVE THAT THE MONEY HAS AC TUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSE E WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. NOT ONLY THIS, T HE PRINCIPAL HAS BEEN LAID DOWN BY VARIOUS COURTS THAT IF THE E XISTENCE OF THE REMITTER IS PROVED THEN NORMALLY NO FURTHER ENQ UIRY IS NECESSARY WHICH HAS BEEN HELD IN CASE OF CIT V. VAL UE CAPITAL SERVICES REPORTED IN 307 ITR 334. I HAVE CAREFULLY GONE IN TO THE ABOVE SUBMISSIONS A ND HOLD THAT THE ASSESSING OFFICER WAS NOT RIGHT TO MAKE ADDITIO NS TO THE RETURNED INCOME WITHOUT FURTHER INVESTIGATION WHEN THE A.O WAS HAVING INFORMATION THAT THE AMOUNT HAS BEEN REC EIVED FROM ABROAD AND SIMPLY BECAUSE CONFIRMATION FROM TH E HDFC BANK WAS NOT FILED COULD NOT BE THE SOLE BASIS FOR MAKING ADDITIONS. ALSO IN VIEW OF THE JUDICIAL PRONOUNCEME NTS, I AM OF THE VIEW THAT THE REMITTANCES RECEIVED FROM ABRO AD IS NOT TAXABLE IN INDIA AS THE SAME HAS BEEN PROVED BEYOND OUT THAT THE AMOUNT HAS BEEN RECEIVED FROM HER HUSBAND WHO I S A NON RESIDENT FOREIGN CITIZEN. THE FIRST GROUND OF APPEAL THEREFORE IS ADMITTED AN D THE ADDITION MADE TO THE RETURNED INCOME OF RS.63,74,63 6/- IS THEREFORE DELETED. 3. NOW, THE REVENUE IS IN APPEAL BY TAKING THE FOLL OWING GROUND OF APPEAL ON THIS ISSUE :- ITA NO.3329/DEL/2011 5 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN: (I) DELETING THE ADDITION OF RS 63,74,636/- HOLD ING THAT THE REMITTANCES RECEIVED FROM ABROAD IS NOT TAXABLE IN INDIA AS THE SAME HAS BEEN RECEIVED FROM ASSESSEE'S HUSBA ND WHO IS A NON-RESIDENT FOREIGN CITIZEN RELYING UPON THE ADD ITIONAL EVIDENCES PRODUCED BY THE ASSESSEE THAT HER HUSBAND IS A FOREIGN CITIZEN WHEREAS AS PER THE RECORDS AVAILABL E WITH THE ASSESSING OFFICER, THE ASSESSEE'S HUSBAND IS FILING HIS RETURN REGULARLY IN THE WARD 48(1), NEW DELHI DECLARING HI MSELF AS A RESIDENT; (II) THAT EVEN IF THE REMITTANCES RECEIVED BY THE ASSESSEE ARE IN THE NATURE OF GIFTS, THE GIFT DEEDS ARE TO B E SUBMITTED AND THE DUTIES ON THE SAME ARE TO BE PAID; MERELY R ECEIVING THE REMITTANCES THROUGH THE BANKING CHANNEL AS HAS BEEN TAKEN A SOLE GROUND BY THE ASSESSEE, DOES NOT PROVE THE NATURE & SOURCE OF CREDIT. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE IS A SALARIED EMPLOYEE AND DIRECTOR IN THE COMPANY. SHE HAS RECEIVED REMITTANCES FROM ABROAD FROM HER HUSBAND, SHRI NIKO LAI VALCHEV WHO IS A NON-RESIDENT AND HOLDING THE PASSPORT OF BULGARIA A ND RESIDING ABROAD AND EARNING INDEPENDENT INCOME. THE REVENUE HAS NOT BR OUGHT ANYTHING CONTRARY TO THIS FINDING OF THE CIT(A). THE REVENU E HAS ALSO NOT CONTROVERTED THE AFFIDAVIT FILED BY HER HUSBAND, SH RI NIKOLAI VALCHEV WITH REGARD TO THE REMITTANCES WHICH WERE DULY VERIFIED. IN THIS AFFIDAVIT, IT IS ALSO CONFIRMED THAT SHRI NIKOLAI VALCHEV IS A CITIZ EN OF BULGARIA AND ISSUED PASSPORT FROM BULGARIA EMBASSY. SHRI NIKOLA I VALCHEV, HUSBAND OF ASSESSEE IS ALSO ASSESSED TO INCOME-TAX IN INDIA IN THE STATUS OF NON- ITA NO.3329/DEL/2011 6 RESIDENT. COPY OF ITRS WERE FILED FOR ASSESSMENT YEARS 2011-12, 2012- 13, 2013-14 AND 2014-15. CONSIDERING ALL THESE FAC TS, WE FIND NO FAULT IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND THIS GROU ND OF REVENUES APPEAL IS DISMISSED. 5. THE OTHER ADDITION MADE BY THE ASSESSING OFFICER OF RS.3,13,689/-. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASS ESSEE THAT INTEREST INCOME WAS ADJUSTED AGAINST THE INTEREST OF RS.5 LA CS TOWARDS THE PORTFOLIO MANAGEMENT FEE AND SUSTAINED PART OF THE ADDITION A ND ALLOWED THE RELIEF ONLY OF RS.71,876/- WHICH WAS NOT RECEIVED DURING T HE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR. THIS ISSUE HAS BEEN R AISED BY THE REVENUE IN GROUND NO.3 WHICH READS AS UNDER :- (III) ALLOWING THE ASSESSEE A RELIEF OF RS.71,876 /- WITH RESPECT TO THE ADDITION ON ACCOUNT OF INTEREST INCO ME, SOLELY RELYING UPON THE ASSESSEE'S VERSION THAT THE AMOUNT RELATES TO THE PREVIOUS YEAR AND HENCE MAY NOT BE ADDED IN THE YEAR UNDER CONSIDERATION WITHOUT HAVING ANY DOCUMENTARY PROOF IN THIS REGARD. 6. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE REVENUE HAS FAILED TO BROUGHT OUT ON RECORD WHICH COULD PROVE THAT THI S AMOUNT OF RS.71,876/- HELD BY THE CIT (A) TO BE PERTAINING TO THE EARLIER YEARS AND NOT PERTAINING TO THE PREVIOUS YEAR RELEVANT TO ASS ESSMENT YEAR UNDER CONSIDERATION. THEREFORE, WE DO NOT FIND ANY MERIT IN THE REVENUES APPEAL ON THIS GROUND. THIS GROUND OF APPEAL STAND S DISMISSED. ITA NO.3329/DEL/2011 7 7. THE OTHER GROUND IS WITH REGARD TO THE DELETION OF ADDITION OF RS.58,161/- MADE ON ACCOUNT OF SHORT TERM CAPITAL G AINS TREATING THE SAME AS BUSINESS INCOME. THE CIT (A) HAS ACCEPTED THE A SSESSEES CONTENTION WITH REGARD TO THE EXPENSES OF RS.5 LACS PAID AS P ORTFOLIO MANAGEMENT SERVICES OF THE HDFC BANK. THE CIT (A) HAS DEALT T HIS ISSUE IN PARA 7 OF HIS ORDER WHICH READ AS UNDER :- 7. THE THIRD GROUND OF APPEAL IS WITH REGARD TO AD DITION ON ACCOUNT OF CAPITAL GAINS OF RS 58,161/-. BEFORE ME IT IS ARGUED THAT THE ADDITION HAS BEEN MADE TO THE RETURNED INCOME WITHO UT CONSIDERING THE EXPENDITURE INCURRED FOR EARNING THE SAID INCOM E. A SUM OF RS.500000/- HAS BEEN PAID TO HDFC BANK AS FEES TOWA RDS PMS CHARGES. THE ITO CHOSE TO TAKE THE INCOME ARISING F ROM MUTUAL FUND AS INCOME OF SHORT TERM CAPITAL GAIN WHILE TAXING I T AS BUSINESS INCOME AND THE ABOVE EXPENDITURE WAS NOT CONSIDERED WHILE MAKING THE ADDITIONS AND HENCE THERE IS NO INCOME ARISING TO THE ASSESSEE. I FIND FROM THE CALCULATIONS MADE BY THE A.O THAT T HE CALCULATION OF TAX HAS BEEN MADE ON NORMAL BASIS ON THIS INCOME AN D HAS BEEN TREATED FOR TAX PURPOSES AS BUSINESS INCOME. I THEREFORE GIVE BENEFIT OF DOUBT TO THE ASSESSEE A ND TREATING THE INCOME OF SHORT TERM CAPITAL GAINS AS BUSINESS INCO ME AND ALLOWING THE EXPENDITURE INCURRED THERE AGAINST AS PER BANK STATEMENT AND THUS THE ADDITIONS STANDS DELETED OF RS.58161/-. THE REVENUE HAS NOT BROUGHT ANY CONTRARY TO THE FIN DING OF THE CIT (A). THEREFORE, WE SUSTAIN THE ORDER OF CIT (A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 24 TH DAY OF SEPTEMBER, 2014/TS ITA NO.3329/DEL/2011 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT