Smt. Rekhaben Hasmukhlal Jariwala, Surat V. The ACIT.,Circle-3, Surat

ITA 3489/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2275 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 22-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Assessee Lawyers: D K PARIKH
• Keywords: Income from undisclosed sources; Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3489 & 3493/AHD/2008 ASSESSMENT YEARS :2002-03 & 2006-07 SMT. REKHABEN HASMUKHLAL JARIWALA, 89, NEHRUNAGAR SOCIETY, ICHCHHANATH ROAD, SURAT V/S . ACIT, CIRCLE-3, SURAT. PAN NO. A CRPJ9028N (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI D. K. PARIKH, A.R. /BY RESPONDENT SHRI D.P. GUPTA, CIT. D.R. /DATE OF HEARING 18.09.2012 /DATE OF PRONOUNCEMENT 26.10.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THE APPELLANT FILED APPEAL FOR A.Y. 02-03 BY ITA NO .3489/AHD/2008 AGAINST THE ORDER OF THE CIT(A)-SURAT, ORDER DATED 13.08.2008 AND FOR A.Y. 06- 07 BY ITA NO.3493/AHD/2008 AGAINST THE ORDER OF THE CIT(A)-SURAT, DATED 11.08.2008. THE CO-ORDINATE D BENCH, AHMADABAD, HAD PASSED A CONSOLIDATED ORDER FOR ITA NOS. 3487- 3493 /AHD/ 20 08 & ITA NOS. 3660-3661 / AHD / 2008 FOR A.YS. 2000-01 TO 2006-07 ON 21. 01.2011. THE APPELLANT ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 2 FILED M.A. FOR BOTH THE ASSESSMENT YEARS. M.A. NO.27/AHD/2011 FOR A.Y. 02- 03 & M.A. NO. 28/AHD/2011 FOR 06-07 AND CLAIMED THA T IN A.Y. 02-03, THE CO- ORDINATE BENCH HAS NOT DISPOSED OFF FOLLOWING GROU NDS OF ORIGINAL APPEAL IN ITA NO. 3489/AHD/2008: 4. THAT THE CIT(A) ERRED IN CONFIRMING DISALLOWANC E U/S-14A OF RS.66,218/- 5. THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION U/S-68 OF RS.3,46,149/-. LIKEWISE IN A.Y. 06-07 IN ITA NO.3493/AHD/2008, THE GROUND NO.2 HAS NOT BEEN DEALT WITH BY THE CO-ORDINATE BENCH, WHICH IS AS UNDER: 2. THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS.62,450/- AS INCOME FROM UNDISCLOSED SOURCES. THE CO-ORDINATE D BENCH, AHMADABAD, VIDE ORDER DATED 20.04.2012, HAS ALLOWED THE M.A. IN BOTH THE YEARS AND HELD AS UNDER FOR A.Y. 02-03: 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE OR DER PASSED BY TRIBUNAL AND WE FIND THAT A MISTAKE HAS C ROPPED UP IN NOT ADJUDICATING THE GROUND NO.4 & 5 OF THE ORDER A ND WE RECALL THE ORDER TO THIS EXTENT ONLY. THE SIMILAR OBSERVATION FOR GROUND NO.2 OF A.Y. 06- 07 IS GIVEN IN THE SAME ORDER. SO, WE HAVE HEARD TOGETHER THE CASE ON THES E GROUNDS AS THE ASSESSEE IS SAME AND ISSUES ARE IDENTICAL. THEREF ORE, BOTH APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 3 GROUNDS OF ITA NO.3489/AHD/2008 (FOR A.Y. 02-03) 2. GROUND NO.4 IS AGAINST CONFIRMING THE DISALLOWA NCES U/S.14A OF RS.66,218/-. THE A.O. OBSERVED THAT THE ASSESSEE H AS CLAIMED EXPENSES OF RS.86,407/- (RS.25,368/- CLAIMED FROM FUTURE TRADIN G AND RS.61,039/- FROM OTHER INCOME). THE APPELLANT HAD DIVIDEND INCOME O F RS.8,05,041/- BUT NO EXPENSES ON EARNING ON THIS DIVIDEND HAD BEEN APPOR TIONED BY THE APPELLANT. THEREFORE, A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. AFTER CONSIDERING THE ASSESSEES REPLY, HE DISALLOWED RS. 66,218/- U/S. 14A OF THE IT ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A), WHO HAS ALSO CONFIRMED THE AD DITION BY OBSERVING AS UNDER: 13. I FIND NOTHING UNSCIENTIFIC IN THE METHOD ADOP TED BY THE A.O. A PART OF THE ASSESSEES INCOME WAS EXEMPT FR OM TAXATION. THE ASSESSED WAS NOT IN A POSITION TO BIFURCATE THE EXPENDITURE BETWEEN WHAT HAD BEEN INCURRED FOR EARNING TAXABLE INCOME, AND WHAT HAD BEEN INCURRED FOR EARNING EXEMPT INCOME. THEREFORE, I AM OF THE VIEW THAT THE AO HAD NO OTHER OPTION BUT TO SEGREGATE THE EXPENSES ON PROPORTIONATE BASIS. THE DISALLOWA NCE OF THE SUM OF RS.66,218/- UNDER THE PROVISIONS OF SEC.14A OF THE IT ACT, IS CONFIRMED. 4. NOW THE ASSESSEE CARRIED THE MATTER BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT NO NEXUS HAD BEEN ESTABLISH ED BY THE A.O. BETWEEN EXEMPTED INCOME AND EXPENDITURE BEFORE DISALLOWING THE EXPENSES U/S.14A OF ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 4 THE IT ACT. IT IS CLAIMED THAT THE EXPENDITURE INC LUDED SALARY, BONUS, BANK AND OTHER CHARGES AND TELEPHONE EXPENSES WHICH WE RE NOT RELATABLE TO ANY EXEMPT INCOME SUCH AS FROM DIVIDEND. HE ALSO RELIE D UPON THE CO-ORDINATE BENCH DECISION FOR A.Y. 01-02 IN ITA NO.3488/AHD/20 08 AND CLAIMED THAT HONBLE CO-ORDINATE BENCH HAD ALLOWED THE APPEAL ON IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. THE FINDING IS AS UNDER: 11. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS DISALLOWED A SUM OF RS.16,000/- BY INVOKING THE PRO VISIONS OF SECTION 14A AND STATING THAT THE EXPENDITURE INCURR ED WAS ON ACCOUNT OF ACCOUNTS FEES, POSTAGE & TELEGRAM CHARG ES AND DEMAT CHARGES, WHICH ARE RELATABLE TO EXEMPT INCOME . THE ASSESSEE CONTENDED THAT THESE EXPENSES ARE NOT AT A LL RELATABLE TO THE EXEMPT INCOME AND THESE ARE ARISING OUT OF B USINESS OF ASSESSEE. HENCE, NO DISALLOWANCE SHOULD BE MADE. WE FIND THAT THE PLEA OF THE ASSESSEE IS REASONABLE AND THE RE IS NO NEXUS THAT ASSESSEE HAS EARNED EXEMPT INCOME. WE FURTHER FIND THAT THE PLEA OF ASSESSEE IS QUITE REASONABLE AND WE ALL OW THE CLAIM OF ASSESSEE. THIS ISSUE OF ASSESSEES APPEAL IS AL LOWED. FROM THE SIDE OF THE REVENUE, LD. D.R. RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND CLAIMED THAT IT SHOULD BE CONFIRMED. 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND GONE THROUGH THE CO-ORDINATE BENCH DECISION IN ITA NO. 3488/AHD/ 2008 (SUPRA). IT IS FOUND THAT IN A.Y. 01-02, THE DISALLOWANCE U/S. 14A WAS M ADE ON ACCOUNT OF ACCOUNTS FEES, POSTAGE & TELEGRAPH CHARGES AND D EMAT CHARGES WHEREAS IN THE YEAR UNDER CONSIDERATION THE DISALLOWANCE WAS MADE BY THE A.O. ON ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 5 ACCOUNT OF EXPENDITURE INCURRED ON SALARY & BONUS, BANK & OTHER CHARGES AND TELEPHONE EXPENSES. AS THE ASSESSEE HAS NOT DISALL OWED THE EXPENSES U/S.14A OF THE IT ACT, IT IS TRUE THAT WITHOUT ANY EXPENDITURE NO INCOME CAN BE EARNED. THE ORDER RELIED UPON BY THE APPELLANT IS NOT SQUARELY APPLICABLE AS FACTS ARE DIFFERENT DURING THE YEAR UNDER CONSIDERA TION. THEREFORE, WE HAVE CONSIDERED VIEW THAT CIT (A) WAS RIGHT IN CONFIRMIN G THE ADDITION. THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 6. GROUND NO.5 IS AGAINST CONFIRMING THE ADDITION U /S.68 OF RS.3,46,149/-. THE A.O. OBSERVED THAT THE ASSESSEE HAD SHOWN TWO L OANS, NAMELY, RS.77,863/- FROM M/S. TRIUMH FINSEC PVT. LTD. AND R S.2,68,286/- FROM J.V. CONTROL. THE ASSESSEE WAS GIVEN REASONABLE OPPORTU NITY OF BEING HEARD TO PROVE THE GENUINENESS OF THE TRANSACTION, CREDITWOR THINESS OF THE CASH CREDITORS AND IDENTITY OF THE PERSONS. SHE DID NOT FILE ANY CONFIRMATION, COPY OF RETURN ON INCOME OR ANY OTHER DETAILS OF BOTH THE P ARTIES, EVEN THEN, REPEATED OPPORTUNITY WAS GIVEN TO HER. THEREFORE, HE MADE A DDITION OF RS.3,46,149/- U/S.68 OF THE IT ACT. 7. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A) WHO HAS ALSO CONFIRMED THE ADD ITION BY OBSERVING AS UNDER: 17. THERE IS NO EVIDENCE TO SHOW THAT THE CREDIT S TANDING IN THE NAME OF M/S. JV CONTROL, WAS THE RESULT OF A LAPSE IN THE ACCOUNTING SOFTWARE, NOT HAS ANY EVIDENCE BEEN FURN ISHED TO SHOW THAT THE SAME HAD BEEN RECTIFIED SUBSEQUENTLY. THE ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 6 ADDITION OF THE SUM OF RS.2,68,286/- WILL THEREFORE STAND CONFIRMED. 8. NOW THE MATTER IS BEFORE US. LD. COUNSEL FOR TH E APPELLANT CONTENDED THAT THE LOWER AUTHORITIES HAD TAKEN RS.2,68,286/- IN THE NAME OF M/S. J.V. CONTROL AS LOAN BUT WHICH WAS BALANCE DUE TO COMPUT ER SOFTWARE LAPSE. THIS WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) IN WRITTEN SUBMISSION AT PAGE NO.18 OF THE PAPER BOOK AT PARA F THAT DUE TO ACCOU NTING SOFTWARE LAPSE THE AMOUNT WAS TAKEN UNDER HEAD J.V. CONTROL AND THAT I T WAS SUBSEQUENTLY RECONCILED AND ADJUSTED IN A.Y. 04-05. ALL THE EVI DENCES OF THE APPELLANT WAS WITH THE A.O. FOR SIX ASSESSMENT YEARS, AS THERE WA S SEARCH IN THIS CASE. SIMILARLY, RS.77,863/- RELATED TO THE TRANSACTION O F PURCHASE OF SHARE FROM M/S. TRIUMH FINSEC PVT. LTD. AND NOT CASH CREDIT RS.49,6 47/- WAS RECEIVED THROUGH CHEQUE FROM M/S. M/S. TRIUMH FINSEC PVT. LTD. LD. CIT(A) CONFIRMED THE ADDITION MAINLY BECAUSE ACCOUNTS WERE NOT CROSS VER IFIED BY THE PARTIES. THEREFORE, HE REQUESTED TO DELETE THE ADDITION. FR OM THE SIDE OF THE REVENUE, LD. D.R. RELIED UPON THE ORDERS OF CIT(A) AND A.O. 9. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND GONE THROUGH THE FACTS OF THE CASE. PAGE NO. 58 OF THE PAPER BO OK SHOWS THAT THERE WAS A RUNNING ACCOUNT IN THE BOOKS OF ASSESSEE OF M/S. TR IUMH FINSEC PVT. LTD. WITHOUT ANY SIGNATURE, WHICH SHOWS THE PURCHASE OF THE SHARES WITH OPENING BALANCE OF RS.13,702/- ON 14.04.2001, THERE WAS CRE DIT ENTRY OF RS.49,647.23/- IN THE SAID PAGE. THE FINAL LIABILI TY AS ON 31.03.2002 HAS BEEN SHOWN AT RS.77,863/- IN THIS ACCOUNT. BUT ASSESSEE DID NOT FILE ANY ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 7 CONFIRMATION FROM M/S. TRIUMH FINSEC PVT. LTD. AT A NY STAGE. THE PAGE NO. 18, REFERRED BY THE APPELLANT, IS NARRATION OF FACTS. THE REPLY OF THE ASSESSEE THAT THE AMOUNT OF RS.2,68,286/- IN THE NAME OF J.V. CON TROL WAS DUE TO COMPUTER SOFTWARE LAPSE WHICH REMAINED UNADJUSTED. BESIDES THIS, NO EVIDENCE HAS BEEN GIVEN BY THE APPELLANT. THE ONUS ON THE ASSESS EE TO PROVE THE GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS OF THE CASH CREDITORS AND IDENTITY OF THE PERSONS WHICH HAS NOT BEEN DISCHARG ED BY THE APPELLANT. THEREFORE, WE HAVE CONSIDERED VIEW THAT NO INTERFER ENCE IN THE ORDER OF THE CIT(A) IS WARRANTED. WE CONFIRM THE ADDITION. THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. GROUNDS OF ITA NO.3493/AHD/2008 (FOR A.Y. 06-07) 10. GROUND NO.2 WAS AGAINST CONFIRMING THE ADDITION OF RS.62,450/- AS INCOME FROM UNDISCLOSED SOURCES. THE A.O. OBSERVED THAT DURING THE COURSE OF SEARCH JEWELLERY OF RS.62,450/- WAS FOUND AS PER ANNEXURE JF IN LOCKER ON 18.12.2005. THE ASSESSEE WAS GIVEN REASONABLE OPPO RTUNITY OF BEING HEARD DURING THE COURSE OF ASSESSMENT PROCEEDING U/S. 153 A OF THE IT ACT. BEFORE A.O., THE APPELLANT CLAIMED THAT THIS JEWELLERY BEL ONGED TO HER HUSBAND AND ALSO DRAWN ATTENTION TO THE CIRCULAR NO.1916 DATED 15.05.1994. AFTER CONSIDERING THE APPELLANTS REPLY, THE A.O. MADE TH E ADDITION OF RS.62,450/- AS INCOME FROM UNDISCLOSED SOURCE. 11. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS CONFIRMED THE ADDI TION ON THE GROUND THAT ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 8 THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF ACQUISIT ION OF THE SAID JEWELLERY WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOM E. NO EXPLANATION WAS FURNISHED BEFORE THE A.O. THE APPELLANT CLAIMED TH AT THE JEWELLERY BELONGED TO HER HUSBAND WITHOUT CORROBORATING EVIDENCE. 12. NOW THE MATTER IS BEFORE US. LD. COUNSEL FOR T HE APPELLANT CONTENDED THAT SEARCH WARRANT WAS IN THE NAME OF HER HUSBAND, SHRI KRISHANKANT PATEL. LOCKER NO.607 WITH SHRI BHARAT CO-OPERATIVE BANK LI MITED, WAS IN THE NAME OF HER HUSBAND WHERE JEWELLERY VALUED RS.62,450/- WAS FOUND. THE TOTAL WEIGHT OF JEWELLERY (GOLD) WAS 63.5GR. AND .5KG SILVER ART ICLES WERE ADDED IN THE HANDS OF HER HUSBAND, NAMELY, SHTRI KRISHANKANT PATEL. H E ALSO DRAWN OUR ATTENTION ON PAGE NOS. 49 AND 50 OF THE PAPER BOOK AND CLAIME D THAT SIMILAR ADDITION HAD BEEN MADE IN THE CASE OF HER HUSBAND IN A.Y. 06 -07, ORDER DATED 27.12.2007. THEREFORE, HE REQUESTED TO DELETE THE ADDITION IN THE HANDS OF THE APPELLANT. FROM THE SIDE OF THE REVENUE, LD. D.R. RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 13. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND GONE THROUGH THE PAPER BOOK. AS MENTIONED ABOVE, THE ADDITION F OR SAME JEWELLERY HAD BEEN MADE IN THE HANDS OF HER HUSBAND, AS WELL AS, IN THE HANDS OF APPELLANT, IT IS TANTAMOUNT TO DOUBLE ADDITION OF THE SAME JEW ELLERY. THUS, WE ARE IN AGREEMENT WITH THE APPELLANT AND ACCORDINGLY, THE A DDITION IS DELETED. ITA NOS. 3489 & 3493/AHD/2008 A.Y. 2002-03 & 2006-07 PAGE 9 14. IN THE RESULT, THE ASSESSEES APPEALS, FOR A.Y. 2002-03 IN ITA NO.3489/AHD/2008 IS DISMISSED AND FOR A.Y. 2006-07 IN ITA NO.3493/AHD/2008 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 26.10.2012 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 25.10.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 26.10.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 26.10.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 26.10.2012