Daulat Chand Singhvi , Jodhpur V. ITO, Ward-2(1), Jodhpur

ITA 426/JODH/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3511 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 25-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DAULAT CHAND SINGHVI
• Keywords: Unexplained expenditure; Gift; Income from undisclosed sources; Cost of acquisition; Set aside
• Section: 154; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 Shri Daulat Chand Singhvi Flat No. 2, Parihar Building, Near Minerwa Cinema, MGH Road Jodhpur [PAN: AKUPS 2346 B] (Appellant) Vs. Commissioner of Income Tax (Appeals 1), Jodhpur (Respondent) Appellant by Sh. Daulat Chand Singhvi, CA Respondent by Ms. Nidhi Nair, Sr. DR Date of Hearing 01.02.2024 Date of Pronouncement 07.03.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-1, Jodhpur dated 15/10/2019 [here in after ‘CIT(A)’ ] for assessment year 2012-13 which in turn arise from the order dated 29.12.2017 passed under section 143(3)/147 of the ITO, Ward-2(1), Jodhpur. I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 2 2. In this appeal, the assessee has raised following grounds: - “1. On the facts and circumstances of the case, particularly, in view of the written reply by the appellant to AO, the learned Appellate Authority grossly erred in maintaining the addition of Rs. 200000/- on account of diamond set received as gift by the appellant. That addition made on account of estimated value on account of increase in the market price with the passing of the time deserves to be set aside. 2. That appellant craves your leave to add, amend, and substitute the said ground before at time of hearing of appeal.” 3. Succinctly, the fact as culled out from the records is that in this case, information available to the ld. AO that the assessee has spent approx. Rs. 50 lakhs on marriage of his daughter, Smt. Roshni Singhvi which was happened on 09.05.2011. The fact related to dispute in this appeal is that the assessee regarding the source of marriage contended that his father deposited certain amount with Ambe Associates from where he withdrew the amount and deposited in fixed deposit for future liabilities. From the copy of the pass book, it appears that he encashed the fixed deposit at the time of house warming of in Jaipur in 2007. So, instead of giving the assessee to cash he preferred to buy a diamond set for her granddaughter as per copy of the bill given to the assessee at the time of such presentation of diamond set. As per the copy of bill it appears that he has made the payment of Rs. 3 lac against bill of Rs. 3,16,617/- in view of this explanation, it is requested that the gift of I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 3 diamond set estimated value of Rs. 5 lac may kindly be accepted and included in the expenses of the marriage. The ld. AO did not accept this aspect of the matter and made the addition of Rs. 5 lacs. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “6.2 I have considered the assessment order, appellant’s submissions and documents on record. The AO noted that a diamond set as gift has been presented by the father of the appellant, Late Joharichand Singhvi to the appellant in the year 2007 at the time of House warming of appellant’s house. The assessee submitted that the gift was given for future liabilities for his daughter's marriage but the marriage of the daughter of appellant has been performed in the year 2011. Further, the copy of bill produced by the appellant was not found satisfactory as it was rough estimate and also not bearing bill no., proper date. Therefore; the AO made addition of Rs. 5,00,000/-in the total income of appellant. The appellant has disputed this action of the AO by contending that the appellant was not asked to produce any evidence in support of such a gift by his late father. Since the father of the appellant expired unfortunately on 06/01/2016. The appellant submitted the affidavit from his mother to supplement the appellant's claim. He further submitted that the source of expenditure is important and not that how the Diamond Necklace was bought, from whom the diamond necklace was bought. The possession of the diamond necklace as per the photo appearing on the bill and the possession of the bill are sufficient proof. Moreover, the set was bought for 3.00 lacs appearing by the initials of father of the appellant but the AO made addition of 5.00 lacs which is unwarranted. The appellant has claimed that Shri Johari Chand (late father of the appellant) had presented that gift to the daughter of the appellant. On perusal of affidavit submitted in the name of Smt. Jatan Kanwar Singhvi, Mother of the appellant and copy of the bill of diamond set, I find that the diamond set was purchased in the year 2007 and the same was given as gift to appellant on the occasion of house warming ceremony of the appellant and also It is clearly mentioned at point no. 7 of affidavit made in the name of Smt. Jatan Kanwar Singhvi that "That as per family tradition and in token of his love and affection for my son, he gifted the said diamond set to my son on the eve of his House warming ceremony." I also perused copy of bill which was pasted by the AO in the assessment order wherein it appears that the father of appellant had made payment of Rs. 3,00,000/- against bill of Rs. 3,16,617/- but addition of Rs. I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 4 5,00,000/- was made by the AO which is unjustifiable, in view of affidavit supported by the proof of purchase. In view of the facts and discussion made as above, it is held hereby that the AO was not justified in making addition on account of estimated value of diamond set at Rs.5,00,000/- as the payment was made at Rs. 3,00,000/- only. Thus, the addition made by the AO at Rs. 5,00,000/- is restricted to Rs. 3,00,000/-. The appellant gets relief of Rs. 2,00,000/-. The ground of appeal raised by the appellant regarding this issue is partly allowed.” 5. As the assessee did not find favour fully from the order of the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, has filed the written submissions and the same is reproduced herein below. “THAT MY EXCLUSIVE GROUND IN THIS APPAEL IS ABOUT THE MAINTENANCE OF ADDITION OF RS. 2 LACS TO THE INCOME. That I submitted my appeal against the order of the learned CIT (Appeals) dated 06.12.2019 with respect to partial acceptance of my application made under sec. 154 for rectification mistake which was apparent from the order. The said order is annexed and marked as Annexure I. The said application under section 154 for the rectification of mistake was made on 19.11.2019 against the mistake crept in the appeal order passed by the learned CIT (appeals) on 15.10.2019. The application is annexed and marked as Annexure II. During the course of assessment for assessment year I was asked to explain the total expenditure on the marriage of my daughter which took place in 2012/13 (09/11/2011). In that statement I declared total expenditure on marriage which included the estimated market value of Diamond Set in the year 2012/13 at Rs. 5.00 lacs and the source of such diamond set was out of gift from my father. The learned AO made addition to my income for expenditure out of income from undisclosed sources to the tune of 5.00 lacs. Copy of Assessment order is annexed and marked as Annexure III. 1) Aggrieved by the order of the learned AO I submitted appeal agitating the various additions to my income by the learned AO. One of the grounds of appeal was for addition of 5.00 lacs being the estimated value of DIAMOND SET given to my daughter on her marriage on 09/11/2011. Kindly note that I I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 5 have declared the estimated value in 2011 of a DIAMOND SET, purchased much earlier to 09/05/2011. 2) The said ground of my first appeal before CIT (Appeal) I, Jodhpur is discussed by the learned CIT (Appeals) on page 6 of the appeal order dated 15.10.2019 (Annexure II) At Para 6.2 of the appeal order, the observation of the learned CIT is made about said addition of 5.00 lacs. Last 5 lines of the said Para 6.2 is reproduced for your ready reference: "I also perused copy of bill which was pasted by the AO in the assessment order wherein it appears that the father had made payment of Rs. 300000 against bill of Rs. 316617/- but addition was made by the AO which is unjustifiable, in view of affidavit supported by the proof of purchase." In view of the facts and discussion made as above, it is held hereby that the AO was not justified in making addition on account of estimated value of diamond set at Rs. 500000/- as the payment was made at Rs. 300000/- only. Thus the addition made by the AO at Rs. 500000/- to Rs. 300000/-The appellant gets relief of Rs. 2,00, 000/- The ground of appeal raised by the by the appellant regarding this issue is partly allowed." 3) This order for maintenance of addition of to my income was not in the line with the observation made by the learned CIT (Appeals), Jodhpur in opening part of 5 lines of Para 6.2 / page 6. As such, the present appeal is preferred against the order of maintenance of addition of Rs. 300000/- (reduced to Rs. 200000/- on my application u/s 154 discussed below) The learned CIT (Appeals) endorsed this fact of bill of purchases and affidavit of my mother due to death of my father in January 2016 for purchase of diamond set by my father in 2007 in his appeal order u/s 250 dated 15/10/2019. His observation is in last 5 lines of Para 6.2 of his order which is stated as under: "I also perused copy of bill which was pasted by the AO in the assessment order wherein it appears that the father had made payment of Rs. 300000 against bill of Rs. 316617/- but addition was made by the AO which is unjustifiable, in view of affidavit supported by the proof of purchase." 4) That aggrieved by the order of learned CIT (Appeals) I Jodhpur for sustaining the addition of Rs. 300000/- I moved application under section 154 of the Act. The application is annexed and marked as Annexure II. 5) In my application made under section 154, I have reproduced the observation of the learned CIT (Appeals) Jodhpur I on page 6/ Para 6.2 and requested for deleting the addition of Rs. 300000/-. Mainly on the grounds as under: I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 6 a) When my father has made the payment for diamond set gifted to me in 2007 the question of any addition should have not arisen in my hands in AY 2012/13. b) That once purchase of diamond set by my late father is accepted in the year 2007, there should have no occasion for the addition on account of unexplained expenditure in my hands in the assessment year 20212/13. c) When the fact of gift of diamond set is accepted on the basis of affidavit by my mother, there should be no reason for addition due to expenditure out of unexplained sources. d) Simply with the time gap of 4 years from the date of purchase of the set and using it for giving to my daughter on her marriage the appreciation of value, that too, on estimated basis by me, cannot be the reason for sustaining the addition made by the learned AO. That on my application for rectification of the order the learned CIT (Appeals) Jodhpur in his order dated 06.12.2019 at Para (2) on one hand says it is not a mistake apparent on record and patent mistake but on the other hand he admits a mistake has crept in the order and reduces the addition to Rs. 200000/-. The observations are reproduced for your ready reference: "the contention raised by the appellant that as the proof of purchase by the deceased father of the appellant was proved and accepted by the undersigned. Therefore, the entire addition of Rs. 500000/- made by the AO deserved to be deleted. The issue raised for rectification is not in nature of mistake apparent on record and patent mistake. In fact, these contentions are nothing but requiring the CIT (A) to review his own appellant order passed u/s 250 in appellant's case, which in not permissible in the Income Tax Act, 1961. Once the order was made under section 251(1) of the Act the Commissioner (Appeals) would have no occasion to revert back to provisions of Section 250(1) of the Act. If contentions raised in the application u/s 154 are considered it shall be reviewing/ reverting back to appellate order." 6) The learned CIT (Appeals) has also referred to decision of P & H High Court in the case of Anil Goel vs. CIT (2007) 165 ΤΑΧMAN 46 (Pun & HAR) where it is held non-recording of reasons by Commissioner (Appeals) in support of order passed by him, would not amount to committing any illegality. The issues raised for rectification is hereby rejected. 8) Finally, in Para (3) of the order made under section 154 (Annexure 1) the learned CIT (Appeals) admits that mistake has crept in stating the facts of the case and states that on perusal of the appeal folders, I find that it was only a typographical mistake which is rectifiable. Therefore, the above said portion of Pra 6.2 is substituted by following lines: I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 7 "In view of the facts and discussion made as above, it is held hereby that the AO was not justified in making addition on account of estimated value of diamond set at Rs. 5,00,000 as the payment was made at Rs. 300000/- which was proved by the appellant. Thus, the addition made by the AO is restricted to Rs. 200000/- The appellant gets relief of 300000/- The ground of appeal raised by the appellant regarding this issue is partly allowed. 9) That once the fact of purchase by my father in the year 2007 is accepted in the opening lines of the observation (last five lines Para 6.2 / page 6), there is no scope for sustaining any addition to my income. 10) That the learned CIT (Appeal) has repeatedly accepted the fa. of gift of Diamond Set by my father to me in 2007 on house warming ceremony, there is no reason for the learned CIT (Appeals) to maintain the addition to my income in AY 2012/13. It is reiterated that the learned CIT (Appeals) have admitted that mistake crept in the order, whether typographical or otherwise cannot alter the fact of gift. This facts again accepted by the learned CIT (Appeals) in the order made on application under section 154 (Annexure I) /page 3 last but one Para 11) That the argument advanced by the learned CIT (Appeals) for not rectifying the order is not as per the spirit of the section 154. The learned CIT (Appeals) have himself amended the addition to Rs. 200000/- on finding the mistake in the order. 12) That the learned CIT (Appeals) has cited the case law of Punjab and Haryana High Court in case of Anil Goel vs. CIT (2007) 165 ΤΑΧΜΑN 46 (Pun & HAR). The case law cited by the learned CIT (Appeals) has got no relevance to the facts of the case. In the said case the rectification was sought as reasons for the order were not recorded. In my case all the facts are narrated by the learned CIT (Appeals) himself and he has agreed to the Diamond set being purchased by father in 2007 and gift of such diamond set to me in 2007. 13) It is beyond my imagination how an amount spent by my father for purchase of Diamond set in 2007 and gift of such item to me can be treated as expenditure out of unexplained sources in the assessment year 2012/13 14) That the appreciation in the value of any property after lapse of certain period cannot be made reason for addition to the income. That in my case the diamond set is purchased by father 9n 2007, gifted to me in same year and estimated value (not the cost) as declared by me in my statement before AO without any valid valuation report can give right to any assessing authority to make addition to the income. I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 8 15) In view of the facts stated above, it is prayed that the addition of Rs. 200000/- maintained by the order of learned CIT (Appeals) deserves to be deleted straight way.” 6. To support this contention reliance was placed on the following evidences: 1 Written submission 1-4 2 Form 36: From of appeal to the Appellate Tribunal 5-8 3 Statement of Facts and grounds of appeal 8-8 4 Order of CIT (Appeals) dated 06.12.2019 under sec. 154 (Annexure 1) 9-11 5 Application dated 19.11.2019 under section 154 (Annexure II) 12-13 6 Appeal order under sec 250 dated 15.10.2019 (Annexure III) 14-34 7 Assessment order dated 29.12.2017 (Annexure IV) 35-46 7. The ld DR is heard who has relied on the findings of the lower authorities. 8. We have heard the rival contentions and perused the material placed on record. The only issue in the present appeal is that whether the addition of Rs. 2,00,000/- sustained by the ld. CIT(A) is correct or not. The fact related to the dispute is that the assessee contended she has given the diamond set to his daughter and the value of the that diamond set was estimated in 2011 at Rs. 5 lac. So, instead of giving the assessee to cash his father preferred to buy a diamond set for her granddaughter as per copy of the bill given to the assessee at the time of such presentation of diamond set. As per the copy of bill it appears I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 9 that he has made the payment of Rs. 3 lac against bill of Rs. 3,16,617/- in view of this explanation, it is requested that the gift of diamond set estimated value of Rs. 5 lac may kindly be accepted. The ld. CIT(A) out of 5 lac deleted the addition of Rs. 3 lac based on the evidence supported by the bill and sustained the addition of Rs. 2 lac. The bench noted that when the assessee has produced the bill of Rs. 3 lac of 2007 and submitted that value of that set amount to Rs. 5 lac in 2011. Thus, when the cost of acquisition is proved the market value as on the date of marriage difference of 2 lac can not be added as income of the assessee. The assessee also submitted that such gift given by father who alternatively expired on 06.01.2016 and therefore, the affidavit of the mother of the assessee submitted to supplement the assessee’s claim. Since this affidavit is not controverted by bringing any contrary to the matter. The statement made by the assessee supported by his mother’s affidavit that his father has given the diamond set gift for his daughter in law cannot be valued at market price when the ld. CIT(A) has already considered the relief to the extent of Rs. 3 lac there is no reason to sustain the addition of Rs. 2 lac being the cost of diamond set and market value at the time of marriage. Considering this set of fact supported by version of the assessee and his mother on affidavit we I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 10 direct to delete the addition of Rs.2,00,000/- sustained by the CIT(A). With this observation the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No. 426/Jodh/2019 Assessment Year: 2012-13 11 Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order