Sh. R.K. Singla, Patiala V. ITO, Patiala

ITA 457/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63942 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Diversion of income
• Section: 244A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 457/CHD/2012 ASSESSMENT YEAR : 2008-09 R.K. SINGLA V I.T.O. WARD 6 H NO. 111, PATIALA NEW OFFICERS COLONY PATIALA ABOPS 2752 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH CAJLA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 05.09.2012 DATE OF PRONOUNCEMENT : 12.09.2012 O R D E R PER T.R.SOOD, A.M IN THIS APPEAL THE ASSESSEE HAS RAISED VARIOUS GROU NDS OUT OF WHICH GROUND NO. 3 WAS NOT PRESSED HENCE THE SAME IS DISMISSED AS NOT PRESSED. OTHER GROUNDS READ AS UND ER: 2 THAT THE LD. CIT(A) PATIALA IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ITO, WARD 6, PATIALA IN WHICH DEDUCTION OF RS. 4,33,636/- CLAIMED BY THE ASSESSEE U/S 10(10C) OF THE INCOME-TAX ACT, 1961 WAS DISALLOWED. 3. NOT PRESSED 4 THAT THE LD. CIT(A), PATIALA IS ERRED IN UPHOLDIN G THE ADDITION OF RS. 76,581/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. THAT THE LD. CIT(A), PATIALA IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF ITO ON ACCOUNT OF CHARGING THE INTEREST U/S 234B, 234D AND WITHDRAWING THE INTERES T ALLOWED U/S 244A OF THE ACT. 2. GROUND NO. 2 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAD OPTED RETIREMENT FROM SERVICE OF THE S TATE BANK OF INDIA UNDER EXIT OPTION SCHEME AND RECEIVED VARI OUS 2 EMOLUMENTS INCLUDING EX-GRATIA PAYMENT AMOUNTING TO RS. 4,33,636/-. ON THIS AMOUNT EXEMPTION U/S 10(10C) W AS CLAIMED WHICH HAS BEEN DENIED BY THE ASSESSING OFFICER. AC TION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A). 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN V IEW OF THE DECISION OF CHANDIGARH BENCHES OF THE TRIBUNAL IN C ASE OF SMT. TRIPTA PURI AND SMT. SARITA ZAKHMI, ITAS NO. 1103 A ND 1043/CHD/2011. 4. THE LD. DR FOR THE REVENUE RELIED ON THE ORDER O F THE LD. CIT(A). 5. AFTER HEARING BOTH THE PARTIES WE FIND WE FIND T HAT CHANDIGARH BENCHES OF THE TRIBUNAL IN ITAS NO. 110 3 AND 1043/CHD/2011 HAS ALREADY TAKEN A VIEW THAT EX-GRAT IA PAYMENT WOULD QUALIFY FOR EXEMPTION U/S 10(10C) OF THE ACT IN VIEW OF THE DECISION OF PANDYA VINOD CHANDRA BHOGILAC V ITO (2010) 045 DTR 105 WHICH IN TURN HAD FOLLOWED VARIOUS DECI SIONS OF HON'BLE BOMBAY HIGH COURT AND HON'BLE MADRAS HIGH C OURT. THEREFORE, FOLLOWING THE DECISION WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION OF EXEMPTION U/S 10(10C) IN R ESPECT OF EX-GRATIA PAYMENT. 6. GROUND NO. 4 THIS ADDITION CONSISTS OF FOLLOWING ITEMS:- (I) INTEREST ON NSCS AMOUNTING TO RS. 37,260/- (II) INTEREST ON FDR AMOUNTING TO RS. 38,747/- (III) INTEREST ON SB ACCOUNT AMOUNTING TO RS. 574/ - THE THIRD ITEM CONSISTING OF RS. 574/- WAS NOT PRES SED BEFORE US, THEREFORE, THE SAME IS DISMISSED. THE DISPUTE REGARDING INTEREST ON NSCS AROSE BECAUSE THERE WAS A CREDIT O F RS. 87,260/- IN THE CURRENT ACCOUNT OF THE ASSESSEE ON ACCOUNT OF MATURITY OF NSCS WORTH RS. 50,000/-. IN EARLIER YE ARS NO 3 INTEREST WAS OFFERED AS INCOME ON ACCOUNT OF ACCRU AL OF INTEREST. ON QUERY IT WAS SUBMITTED THAT NSCS WER E PURCHASED JOINTLY WITH HIS SON ON 16.2.2002 AND INTEREST ON T HESE NSCS WAS BEING SHOWN SEPARATELY BY THE SON OF THE ASSESS EE IN HIS RETURN OF INCOME. THE ASSESSING OFFICER DID NOT FIN D MERIT IN THE SUBMISSIONS AS NSCS WERE PURCHASED BY THE ASSES SEE AND EVEN CHEQUE FOR MATURITY AMOUNT WAS IN HIS NAME. I T WAS ALSO FOUND THAT SHRI SOURAV SINGLA SON OF THE ASSESSEE H AD NO INDEPENDENT SOURCE OF INCOME AND HAD DECLARED MEAGE R INCOME FROM INTEREST. ACCORDINGLY A SUM OF RS. 37,260/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 7. ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 8 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT NSCS WERE GIFTED TO MAJOR SON LONG BACK THAT IS WHY INTEREST INCOME WAS DECLARED BY HIM IN HIS OWN RETURN AND TH EREFORE, INCOME COULD NOT ADDED TO THE ASSESSEES INCOME. H OWEVER, ON QUERY HE COULD NOT PRODUCE ANY EVIDENCE REGARDIN G THE GIFT OR EVEN ANY EVIDENCE REGARDING DISCLOSURE OF INCOME BY HIS SON RATHER HE CONTENDED THAT VERIFICATION OF THESE ASPE CTS MAY BE REMITTED TO THE FILE OF THE AO. 9 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF LD. CIT(A). 10 AFTER HEARING BOTH THE PARTIES WE FIND THAT THOU GH IT WAS CLAIMED BEFORE US THAT THE GIFT WAS GIVEN TO HIS SO N WHEN HE WAS MAJOR AT THAT POINT OF TIME AND ALSO THAT THE I NCOME FROM SUCH NSCS HAS BEEN DECLARED BY THE SON BUT THE SAME COULD NOT BE VERIFIED IN THE ABSENCE OF EVIDENCE FOR THE SAME. THEREFORE, IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A 4 DIRECTION TO RE-EXAMINE THE SAME AND TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER VERIFICATION OF EVIDENCE WHICH MAY BE FURNISHED BY THE ASSESSEE. 11 THE SECOND ASPECT OF THE ADDITION WAS THAT DURIN G ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THERE WA S A DEBIT ENTRY OF RS. 5.00 LAKHS ON ACCOUNT OF STDR IN THE ACCOUNT OF THE ASSESSEE. IT WAS STATED THAT HE HAS PURCHASED FDR JOINTLY WITH HIS WIFE SMT. ASHIMA SINGLA. IT WAS STATED TH AT INTEREST INCOME WAS BEING SHOWN BY HER, COPY OF HER RETURN A LONG WITH COPY OF STDR WAS FILED. IT WAS NOTICED BY THE AO TH AT COMPUTATION OF THE RELEVANT YEAR OF THE INCOME OF T HE WIFE WAS BELOW TAXABLE LIMIT. THE AO ALSO OBSERVED THAT STD R WAS MADE BY THE ASSESSEE FROM HIS CURRENT ACCOUNT, THER EFORE, HE INVOKED PROVISIONS OF SECTION 64(1)(IV) AND ADDED I NTEREST OF RS. 38,747/- IN ASSESSEES INCOME. 12 ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 13 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE CONTE NDED THAT THIS AMOUNT WAS GIVEN AS LOAN TO THE WIFE OF THE AS SESSEE AND THEREFORE, PROVISIONS OF SECTION 64(1)(IV) WERE NOT APPLICABLE. IN THIS REGARD HE RELIED ON THE DECISION OF CIT V. M VINODA RAO AND OTHERS, 200 ITR 50 WHEREIN IT WAS HELD THAT THE CLUBBING WILL NOT BE APPLICABLE IN CASE OF LOAN. HOWEVER, N O EVIDENCE WAS FILED BEFORE US TO PROVE THAT THE MONEY WAS GIV EN AS LOAN. 14 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RE LIED ON THE ORDER OF THE LD. CIT(A). 15 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE AO HAS GIVEN A CATEGORICAL FINDING THAT STDR OF RS. 5.00 L AKHS WAS MADE IN THE JOINT NAME OF ASSESSEE AND HIS WIFE AND THE SAME WAS DEBITED TO ASSESSEES CURRENT ACCOUNT. THEREFO RE, IT IS A 5 SIMPLE CASE OF JOINT FDR AND INCOME FROM WHICH HAS BEEN DIVERTED TO THE ACCOUNT OF THE ASSESSEES WIFE. BEF ORE THE AO OR EVEN BEFORE THE LD. CIT(A) THE ASSESSEE NEVER CO NTENDED THAT THE AMOUNT WAS GIVEN AS LOAN AND THEREFORE, I T IS A SIMPLE CASE OF AFTER-THOUGHT AND ACCORDINGLY BEFORE US TH OUGH IT WAS CONTENDED THAT THE AMOUNT WAS GIVEN AS A LOAN BUT N O EVIDENCE WAS FILED FOR THE SAME. WE ARE OF THE OPINION THAT THIS IS A SIMPLE CASE OF DIVERSION OF INCOME BY TRANSFERRING THE ASSET WITHOUT ADEQUATE CONSIDERATION AND THEREFORE, PROV ISIONS OF SECTION 64(1)(IV) HAS BEEN RIGHTLY INVOKED BY THE A O. ACCORDINGLY WE CONFIRMED THIS ADDITION. 16. GROUND NO. 5 IS REGARDING LEVY OF INTEREST U/S 234B, 234D AND WITHDRAWING THE INTEREST ALLOWED U/S 244A OF THE ACT. THESE ISSUES ARE OF CONSEQUENTIAL NATURE AND THE AO IS DIRECTED TO LEVY INTEREST IN ACCORDANCE WITH LAW. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 12.09.2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 12.09. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 6