Shri Hitesh L.Vaghela, Baroda V. The ACIT., Circle-1(2), Baroda

ITA 3446/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0401 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 09-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Unexplained cash credit; Gift; Set aside
• Section: 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BEN CHES DAHMEDABAD BEFORE: SHRI MAHAVIR SINGH, ACCOUNTANT MEMBER , AND SHRI A.N. PAHUJA, JUDICIAL MEMBER. ITA NO.3446/AHD/2007 (ASSESSMENT YEAR 2002-2003) SHRI. HITESH L. VAGHELA C/O HONEST ENTERPRISE LTD., 118, MEGHDOOT APARTMENT, NEAR APASARA CINEMA, PRATAPNAGAR ROAD, BARODA. ACIT, CIR.-1(2), BARODA. (APPELLANT) VERSUS (RESPONDENT) ITA NO.43/AH D/2009 (ASSESSMENT YEAR 2002-2003) SHRI. HITESH L. VAGHELA C/O HONEST ENTERPRISE LTD., 118, MEGHDOOT APARTMENT, NEAR APASARA CINEMA, PRATAPNAGAR ROAD, BARODA. ACIT, CIR.-1(2), BARODA. (APPELLANT) (RESPONDENT) PAN: AALPV 8408 L FOR THE ASSESSEE : SHRI TUSHAR P. HEMANI, AR FOR THE REVENUE : SHRI C.K. MISHRA, SR. DR ORDER PER SHRI MAHAVIR SINGH: THESE TWO APPEALS ARISING OUT OF THE ORDER OF COMMI SSIONER OF INCOME- TAX (APPEALS)-I, BARODA IN APPEAL NO.S CAB/I-354/05 -06 AND CAB/I/440/2007- 08 BY DIFFERENT DATE -11-06-2007, 6-11-2008. THE ASSESSMENT WAS FRAMED BY THE ACIT, CIRCLE-1(2), BARODA U/S. 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 30-12-2005 FOR THE ASSESSMENT YEAR 2002-03. THE PENALTY U/S.271(1 ) OF THE ACT, UNDER DISPUTE WAS LEVIED BY THE ACIT, CIRCLE-1(2), BARODA VIDE HIS ORDER DATED 30- 01-2008. 2 ITA NO. 3446/AHD/2007 & ITA NO. 43/AHD/2009 (ASSESSMENT YEAR 2002-2003) FIRST WE WILL DEAL WITH ASSESSEES APPEAL IN ITA NO .3446/AHD/2007. 2 THE FIRST ISSUE AS REGARDS TO THE RE-OPENING HAS BEEN RAISED BY G ROUND NO.1 AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESS MENT PROCEEDINGS U/S. 147 OF THE I.T. ACT UNDER THE FACTS AND CIRCUM STANCES OF THE CASE THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIBLE EITHER IN LAW OR ON FACT. THE PRESENT PROCEEDINGS, THEREF ORE, ARE REQUIRED TO BE QUASHED. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS ISSUE AND ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSE D. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ADDING 50% OF TH E TELEPHONE EXPENDITURE AMOUNTING TO RS. 17,239/- BORNE BY THE COMPANY IN WHICH APPELLANT IS A DIRECTOR, AS PERQUISITE IN THE HANDS OF THE APPELLANT. 4. THE SECOND ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF UNEXPLAINED CA SH CREDITS AMOUNTING TO RS.5.50 LAKHS I.E. GIFT RECEIPT FROM SHILA GROVER A MOUNTING TO RS.3.50 LAKHS AND 2 LAKHS RESPECTIVELY. FOR THIS, THE ASSESSEE H AS RAISED THE FOLLOWING GROUND:- 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN ADDING RS. 5,50,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT A SURVEY U/S.133A OF THE ACT CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 11-09-2002, FROM WHERE A BANK PASS-BOOK IN THE NAME OF ASSESSEE AND OTHER FAMILY MEMBERS WITH BARODA PEOPLES CO-OPERATIVE BANK LTD. WAS FOUND SHOWING CASH DEPOSITS ON VARIOUS DATES IN THE NAME OF FAMIL Y MEMBERS OF THE ASSESSEE. IT WAS FOUND THAT THE ASSESSEE HAS RECEI VED GIFTS OF RS.5.50 LAKHS 3 ITA NO. 3446/AHD/2007 & ITA NO. 43/AHD/2009 (ASSESSMENT YEAR 2002-2003) IN THE CAPITAL ACCOUNT AND THE ASSESSEE EXPLAINED T HAT IT HAD RECEIVED GIFT OF RS.3,50 LAKHS FROM SHILA GROVER. HE WAS REQUIRED T O FURNISH ADDRESS, PAN, COPY OF INCOME-TAX RETURNS, CONFIRMATION LETTER AND COPY OF THE BANK STATEMENT OF SHILA GROVER ALONG WITH THE NATURE OF RELATIONSH IP OF THE DONOR AND THE NATURE OF CIRCUMSTANCES / OCCASION UNDER WHICH THE GIFT WAS MADE. THE ASSESSEE EXPLAINED THAT SHILA GROVER WAS A FRIEND A ND THE GIFT WAS MADE BY DD NO. 1597 DATED 12-01-2002 BUT HE FAILED TO FURNI SH THE CONFIRMATION LETTER, PAN, COPY OF RETURN OF INCOME, COPY OF THE BANK STA TEMENT AND THE CIRCUMSTANCES / OCCASION FOR THE GIFT. ON BEING IS SUED A SHOW CAUSE FOR ADDING BACK THIS AMOUNT, THE ASSESSEE EXPLAINED THA T THE DONOR WAS HIS FRIENDS WIFE AND THAT IT WAS NOT NECESSARY THAT TH ERE MUST BE AN OCCASION FOR THE GIFT. THE ASSESSING OFFICER ADDED BACK THIS AMO UNT U/S.68 OF THE ACT FOR THE REASON THAT THE ASSESSEE HAD NOT FURNISHED THE NAME AND ADDRESS OF THE BANK ON WHICH THE CLAIMED DD WAS DAWN AND THAT CONF IRMATION HAD NOT BEEN FURNISHED FROM THE DONOR NOR HER PAN WAS GIVEN OR C OPY OF HER INCOME TAX RETURN FILED. AS REGARDS THE OTHER GIFT OF RS.2 LA KHS, THE ASSESSEE WAS REQUIRED TO FURNISH IDENTICAL DETAILS. HOWEVER, TH E ASSESSEE EXPLAINED THAT THIS AMOUNT WAS WRONGLY CREDITED TO THE ASSESSEES ACCOUNT INSTEAD OF M/S. STEEL AUTHORITY OF INDIA LTD. BUT HE FAILED TO SUBM IT FURTHER MATERIAL TO SUBSTANTIATE THIS EXPLANATION. ACCORDINGLY THE ASS ESSING OFFICER MADE THIS ADDITION OF CASH CREDIT OF RS.5.50 LAKHS AS UNEXPLA INED GIFTS. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 6. THE CIT(A) CONFIRMED THE ADDITION BY GIVING FOLL OWING FINDING IN PARA-5 OF HIS APPELLATE ORDER:- I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS OB SERVED THAT IN THE CASE OF SHILA GROVER, THE APPELLANT HAS FAILED TO FURNISH T HE PAN AND THE COPY OF THE I.T. RETURN. IT HAS NOT BEEN STATED THAT SHE H AS NOT ASSESSED TO TAX. HER CREDITWORTHINESS HAS NOT BEEN ESTABLISHED. IT IS NOT THE APPELLANTS CASE THAT A CONFIRMATION LETTER HAS BEEN FURNISHED BY HER. UNDER THE CIRCUMSTANCE, IT IS MISLEADING AND ILL-FOUNDED TO C LAIM THAT THE APPELLANT HAD DISCHARGED HIS ONUS WITH REGARD TO THE ALLEGED GIFT OF RS. 3,50,000/-. AS REGARDS THE BALANCE AMOUNT OF RS. 2,00,000/- FOU ND CREDITED IN HIS BANK ACCOUNT PURPORTEDLY BY MISTAKE BY THE BANK, IT IS PERTINENT TO OBSERVE 4 ITA NO. 3446/AHD/2007 & ITA NO. 43/AHD/2009 (ASSESSMENT YEAR 2002-2003) THAT NEITHER BEFORE THE ASSESSING OFFICER NOR BEFOR E ME IT HAS BEEN EXPLAINED AND SHOWN IF THE SAID ENTRY, ALLEGEDLY PA SSED BY THE BANK BY MISTAKE, HAD SUBSEQUENTLY BEEN REVERSED BY THE BANK . IT IS ALSO A FACT THAT THE APPELLANT HAS FAILED TO FURNISH ANY OTHER EVIDENCE IN ITS SUPPORT. THAT BEING SO, THE APPELLANTS ARGUMENT AMOUNTS TO A SELF-SERVING STATEMENT ONLY AND IS, THEREFORE, REJECTED. UNDER THE CIRCUMSTANCES, NO FAULT CAN BE FOUND WITH THE ASSESSING OFFICERS ACT ION WITH REGARD TO BOTH THESE ENTRIES TOTALING TO RS.5,50,000/- AND THE ADD ITION SO MADE U/S. 68 OF THE ACT OF THIS AMOUNT IS UPHELD. 7. NOW BEFORE US THE LD. COUNSEL FOR THE ASSESSEE H AS FILED THE DETAILS IN THE SHAPE OF CONFIRMATION, CERTIFICATE FROM HONEST ENTERPRISES LTD. AND THE OTHER DETAILS REGARDING RECEIPT OF GIFTS FROM SHILA GROVER AS UNDER:- (A) GIFTS RECEIVED BY ME DURING THE F.Y. 2001-02 I S AS UNDER:- (I) RS.3,50,000/- FROM SHILA GROVER BY DD NO. 1597 DT. 12.01.2002 SHE IS MY FRIENDS WIFE. SHE HAS GIVEN THE AMOUNT A S GIFT. THERE WAS NO OCCASION ON THAT DAY. AS I KNOW FOR A GIFT I T IS NOT NECESSARY THAT IT SHOULD BE ON SOME OCCASION. I THE REFORE HAVE TO REQUEST YOU NOT TO ADD GIFT AMOUNT TO MY INCOME FOR THE YEAR. (II) RS.2,00,000/-, THE AMOUNT IS GIVEN CREDIT BY T HE BANK I AM UNABLE TO TRACE THE SOURCE OF THE SAME AS DOCU MENT HAS BEEN MISPLACED. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE CA SH CREDIT HAS NOT BEEN PROPERLY EXAMINED BY THE ASSESSING OFFICER OR BY TH E CIT(A). HE STATED THAT THE ASSESSEE IS READY TO FILE EVERY DETAIL BEFORE T HE LOWER AUTHORITIES, IN CASE, THE MATTER IS SET ASIDE TO THE FILE OF THE ASSESSIN G OFFICER FOR ONE MORE OPPORTUNITY. THE LD. DR HAS NOT OBJECTED TO THE SA ME. IN VIEW OF THE ABOVE FACTS, WE FEEL THAT THE ASSESSING OFFICER SHOULD BE EXAMINED DETAILS IN VIEW OF THE PROVISIONS OF THE ACT IN RESPECT OF THE CASH CR EDIT, WHETHER THE SAME IS EXPLAINED OR NOT. IN TERMS OF THIS, THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER AND ALLO WED FOR STATISTICAL PURPOSES. NOW WE COME TO ASSESSEES APPEAL IN ITA NO.43/AHD/2 009. 5 ITA NO. 3446/AHD/2007 & ITA NO. 43/AHD/2009 (ASSESSMENT YEAR 2002-2003) 8. AS THE ABOVE QUANTUM APPEAL HAS BEEN SET ASIDE T O THE FILE OF ASSESSING OFFICER, WE SET ASIDE THE PENALTY PROCEED ING. IN CASE, THE ASSESSING OFFICER, DURING THE COURSE OF SET ASIDE A SSESSMENT PROCEEDINGS NOTICED THAT THERE IS A CASE FOR CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, HE MAY INITIATE T HE SAME. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOV E. 9. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO.3446/AH D/2007 IS ALLOWED FOR STATISTICAL PURPOSES AND IN ITA NO.43/A HD/2009 IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 30 TH NOVEMBER, 2009. SD/- SD/- /- (A.N. PAHUJA) (MAHAV IR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED: 30/11/2009 DKP* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, /TRUE COPY/ ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.