Bibhuti Bhusan Rath, Bhubaneswar V. ITO, Bhubaneswar

ITA 469/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65151 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P S PANDAK K AGARWAL ARS
• Keywords: Unexplained investment; Gift; Search and seizure
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 469/CTK/2012 / ASSESSMENT YEAR 2009 - 10 BIBHUTI BHUSAN RATH, B - 20, BJB NAGAR, BHUBANESWAR 751 014 PAN: AMXPR 9927 L - - - VERSUS - INCOME - TAX OFFICER, WARD 1(3), ARY AKAR BHAWAN, BHUBANESWAR 751 007 ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.S.PANDA/K.K.AGARWAL, ARS / FOR THE RESPONDENT: / SMT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 06.11.2012 / DATE OF PRONOUNCEMENT: 09.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY GROUND THAT THE AUTHORITIES BELOW MISDIRECTED THEMSELVES TO BRING TO TAX A SUM OF 50 LAKHS RECEIVED FROM THE PARENTS OF THE ASSESSEE WAS BOGUS AND HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IS AN INDIVIDUAL AGED ABOUT 21 YEARS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 DECLARING INCOME OF 1,52,640. DURING THE COURSE OF SCRUTINY PROCEEDINGS, IT WAS POINTED OUT TO THE ASSESSEE THAT CASH DEPOSITS EXCEEDING A CERTAIN LIMIT WERE NOTIFIED BY THE BANK T O THE I.T.DEPARTMENT WHEN THE ASSESSEES CASE WAS TO BE SCRUTINIZED REQUIRING HIM TO EXPLAIN THE SOURCE OF THE CASH DEPOSITS IN THE BANK TO WHICH THE ASSESSEE REPLIED THAT THESE AMOUNTS WERE AVAILABLE TO HIS PARENTS WHO HAD ALLOWED HIM TO BE DEPOSITED IN H IS BANK ON VARIOUS DATES WHICH BEING RELATIVES AS DEFINED IN I.T.A.NO. 469/CTK/2012 2 THE I.T.ACT WAS NOT TO BE TAXED AS GIFTS FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER DISALLOWED THE SAME BY HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE CASH DEPOSITS INSOFAR AS IT HAS BEEN SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE THAT THE ASSESSMENT ORDER WAS PASSED ON 24.10.2011 WHEN A LETTER WAS FILED BEFORE THE ASSESSING OFFICER ON 28.10.2011 ON THE LAST DATE FIXED OR ADJOURNED FOR HEARING WAS 21.10.2011 WHEN THE ASSE SSING OFFICER NOTED THAT NONE HAD APPEARED BUT WAS ACTUALLY THE DATE ON WHICH THE LETTER WAS SENT FOR FILING WITH THE ASSESSING OFFICER. THE LETTER CLEARLY INDICATED THAT THE ASSESSEES PARENTS SHRI BHABANI CHARAN RATH & SMT. SARMISTHA RATH WERE BOTH INCOM E - TAX ASSESSEES AND WERE HOLDING CASH AS PER THEIR I.T.RETURNS FILED WITH THE RESPECTIVE AOS WITH THEIR PAN. THEREFORE, THE IDENTITY, GENUINENESS AND CREDITWORTHINESS WAS EXPLAINED TO THE ASSESSING OFFICER VIDE THIS LETTER WHICH WAS NOT DEALT WITH BY THE A SSESSING OFFICER IN HIS ORDER. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHEN THE LEARNED CIT(A) CONSIDERED THE ASSESSEES SUBMISSIONS BUT CONTINUED TO HOLD A VIEW THAT UNEXPLAINED CASH IN THE HANDS OF THE PARENT COULD NOT BE TAKEN AS SANCTITY OF GIFT ON DEPOSITING IN THE BANK IN THE HANDS OF THE CHILD OF THE PARENTS. 4. THE LEARNED COUNSEL OF THE ASSESSEE INITIATING HIS ARGUMENT SUBMITTED THAT T HE APPELLANT HAD FILED HIS RETURN FOR THE FIRST TIME DURING THE YEAR. DURING THE Y EAR, THE PARENTS OF THE ASSESSEE HAD DEPOSITED A SUM OF 50 LA KHS IN THE BANK ACCOUNT OF THE ASSESSEE. WITHOUT VERIFYING THE SOURCE OF THE DEPOSIT, THE A.O. MADE THE ADDITION WHICH IS ILLEGAL AND BAD IN LAW. HE FURNISHED THE STATEMENT OF AFFAIRS OF SRI B.C. RATH AND SMT. SARMISTHA RATH, THE PARENTS OF THE ASSE SSEE IN THE PAPER BOOK AT PAGE NO. 15 & 17, WHICH CLEARLY INDICATE HOLDING SUFFICIENT CASH IN HAND OF THE PARENTS AS ON I.T.A.NO. 469/CTK/2012 3 31.03.2008 TO DEPOSIT THE ABOVE AMOUNT IN THE BANK. THE DETAILS OF CASH IN HAND ARE 27,81,867 IN CASE OF THE FATHER SHRI BHABANI CHARAN RATH AND 42,57,003 IN CASE OF THE MOTHER SMT. SARMISTHA RATH . THE LEARNED COUNSEL SUBMITTED THAT THE RETURN FILED FOR THE A.Y. 2008 - 09 OF BOTH THE PARENTS WERE SELECTED FOR SCRUTINY AND ORDER HAS BEEN PASSED U/S 143(3) OF THE INCOME TAX ACT , 1961 ON 28. 12.2010 WHEREIN THE ABOVE CASH IN HAND WERE ACCEPTED BY THE DEPARTMENT. THE IMPUGNED AMOUNT S WERE DEPOSITED BY THE PARENTS BY WAY OF GIFTS TO THE ASSESSEE AMOUNTING TO 60 LAKHS . IN SUPPORT OF THE ABOVE GIFTS, THE LEARNED COUNSEL OF THE ASSESSEE FURNISHED THE COPY OF THE AFFIDAVITS IN THE PAPER BOOK AT PAGE NO. 13 & 14. THIS FACT OF GIFT HAS BEEN DULY MENTIONED BEFORE THE A.O. ON 28.10.2011 BY WAY OF SUBMISSION, A COPY OF WHICH HE PLACE D IN THE PAPER BOOK AT PAGE NO. 12. THE ASSESSING OFFICER RECEIVED THE ABOVE SUBMISSION AND INFORMED THE A.R. THAT THE ORDER HAS ALREADY BEEN PASSED ON 24.10.2011. HOWEVER, THE SAME WAS NOT SERVED ON THE SAME DAY. SUBSEQUENTLY, THE ORDER WAS SERVED ON THE APPELLANT ON 04.11.2011 WITHOUT CONSIDERING THE ABOVE SUBMISSION WHICH IS ILLEGAL AND BAD IN LAW. IN VIEW OF THE ABOVE, HE DISPUTED SOME OBSERVATIONS MADE BY THE LEARNED CIT(A) IN HIS ORDER. AS TO THE OBSERVATION OF THE LEARNED CIT(A) ONLY DURING THE APPEAL PROCEEDING S THE RECEIPT IS SHOWN AS GIFTS., THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE RECEIPT OF GIFT WAS SHOWN BEFORE THE LD. A.O. ON 28.10.2011 PRIOR TO THE ORDER WAS SERVED. THE MATTER WAS ALSO IN THE RECORDS OF SRI BHABANI CHARAN RATH FILED DURING HIS ASSESSMENT PROCEEDINGS, ORDER FOR WHICH WAS PASSED ON 03.11.2011. HENCE THE CONTENTION OF THE LD. CIT(A) IS NOT CORRECT. FURTHER AS TO THE OBSERVATION OF THE LEARNED CIT(A) THE ASSESSEE WAS PERHAPS WAITING FOR COMPLETION OF WRITING AND CLOSURE OF ACCOUNTS IN CASE OF THE PARENTS, SINCE THE PARENTS WERE SUBJEC TED TO SEARCH AND SEIZURE ACTION. , THE LEARNED COUNSEL OF THE I.T.A.NO. 469/CTK/2012 4 ASSESSEE SUBMITTED THAT THE SAID CONTENTION WAS ALSO NOT CORRECT. THE SEARCH ORDER WAS PASSED LONG BEFORE EVEN THE START OF THE A.Y. I.E. ON 31.12.2007. AS TO THE OBSERVATION THERE IS NO REASO N WHY THE GIFTS COULD NOT HAVE BEEN GIVEN BY CHEQUE OR TRANSFER ENTRIES, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAID CONTENTION HAS NO RELEVANCE SINCE THE GIFT TO SON CAN BE GIVEN BY ANY MODE. ONLY THING REQUIRED TO MAKE A GIFT IS SOURCE. HE SUBMITTED THAT THE DETAILS FILED BY WAY OF STATEMENT OF AFFAIRS CLEARLY ESTABLISH THAT THERE WAS SUFFICIENT SOURCE IN THE HANDS OF BOTH THE PARENTS TO MAKE THIS GIFT. THE LEARNED CIT(A) HAS OBSERVED IN HIS ORDER THAT THE TRANSACTION WOULD HAVE BEEN IN C HEQUE RATHER THAN UNDERGOING THE PAIN OF CASH WITHDRAWALS, COUNTING OF THE SAME AND RECOUNTING THE SAME WHILE DEPOSITING ETC. TO THIS, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAID CONTENTION WILL NOT NEGATE A GENUINE GIFT BY PARENTS TO SON. THE LEARNED CIT(A) HAS FURTHER OBSERVATION THAT THE FACTS SHOW THAT THE UNEXPLAINED CASH DEPOSITS HAVE BEEN GIVEN THE COLOUR OF GIFTS SINCE IT WAS DETECTED THROUGH AIR INFORMATION AND THE AFFIDAVITS FILED IS ONLY A SELF SERVING DOCUMENT WITHOUT HAVING ANY EVIDENTIARY VALUE. AGAINST THIS OBSERVATION OF THE LEARNED CIT(A), THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ONLY A PRESUMPTION. THE PARENTS HAVE DULY DISCLOSED THE ABOVE GIFTS AS DRAWINGS AND THERE WAS ALSO SUFFICIENT CASH IN HAND FOR THE AB OVE CONTENTION OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE LEARNED COUNSEL OF THE ASSESSEE PRAYED FOR DELETION OF THE IMPUGNED ADDITION. 5. THE LEARNED DR SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW INSO F AR AS THE ASSESSEE HAS NOT BEEN ABLE TO EX PLAIN THE CASH AVAILABLE IN THE HANDS OF THE PARENTS TO THE EXTENT THAT WHETHER THE CASH WAS TO BE IDENTIFIED FOR THE PURPOSE OF DEPOSITS IN THE ASSESSEES BANK HAS NOT BEEN I.T.A.NO. 469/CTK/2012 5 SPELT OUT BY THE LEARNED COUNSEL OF THE ASSESSEE AS WAS CONSIDERED BY THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE CASH AVAILABLE IN PHYSICAL FORM HAS NOT TO BE EXPLAINED INSOFAR AS IT IS FORMING PART OF THE INCOME WHETH ER DECLARED OR RENDERED TO TAX BY WAY OF REGULAR RETURNS. IT IS UNDISPUTED THAT THE AMOUNTS WERE TAXED IN THE HANDS OF THE PARENT WHEN THE STATEMENT OF AFFAIRS TOOK NOTE THAT THE INCOME WAS AVAILABLE TO THE ASSESSEE IN THE FORM OF AVAILABLE CASH IN THE BAN K BALANCE. IT WAS THE ONUS OF THE ASSESSEE TO EXPLAIN THE DEPOSITS IN HIS BANK ACCOUNT WHICH UNDISPUTEDLY WAS IN CASH. THE CASH AVAILABLE WITH THE PARENT THEREFORE WAS AFTER HAVING PAID TAX EITHER ON THE DECLARED INCOME OR THE INCOME GENERATED ITSELF OBVIO USLY THE CASH WAS NOT GENERATED BY THE ASSESSEE HIMSELF TO BE DEPOSITED IN HIS OWN BANK ACCOUNT. WE OBSERVE THAT THE ASSESSING OFFICER AND THE LEARNED CIT(A) HAVE NOTED THESE FACTS WHICH OTHERWISE HAVE NOT BEEN DISPUTED BUT ONLY ON HOLDING A DOUBT HAS BEEN DISMISSED. THE PHYSICAL AVAILABILITY OF CASH AFTER HAVING PAID TAX WAS TAXED IN THE BANK WHICH ALONE SHOULD HAVE BEEN CONSIDERED BY THE BANK INSOFAR AS THE INFORMATION GIVEN BY THE BANK TO THE I.T.DEPARTMENT OF CERTAIN AMOUNT OF CASH EXCEEDING PARTICULAR LIMIT HAD BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, SOUGHT TO HOLD THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN WHEN THE LETTER INDICATING THE SAME WAS SUBMITTED IS PRIOR TO WHICH HE HAD PASSED THE ORDER HOLDIN G EXPLANATION IS NOT FORTHCOMING. THIS ISSUE WAS THEREFORE DEALT WITH BY THE LEARNED CIT(A) BUT ON OUR PERUSAL OF THE ORDER APPEARS TO HAVE FOUND NO INFIRMITY IN THE CONTENTION OF THE ASSESSEE THAT THE PARENTS COULD HAVE HAD IT. THEREFORE , WITHOUT ASSIGNING ANY CONCRETE REASON HE CONTINUED HOLDING VIEW THAT GIFTS CAN ONLY BE GIVEN I.T.A.NO. 469/CTK/2012 6 IN CHEQUE OR TRANSFER ENTRIES. HOLDING OF CASH SPECIALLY AFTER INCOME HAVING BEEN SUBJECTED TO TAX CONTINUES TO HOLD THE SAME FORM NEED NOT NECESSARILY BE IDENTI FIED IN THE FORM OF A CHEQUE OR A TRANSFER ENTRY IS THE WHOLE OPINION OF THE LEARNED CIT(A) WHICH CANNOT BE HELD AGAINST THE ASSESSEE. WE DO FIND THAT THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE AS SUBMITTED ABOVE IS JUSTIFIED AND THEREFORE, THE SUM OF 50 LAKHS DISALLOWED CLAIMED AS GIFTS IN THE HANDS OF THE ASSESSEE CANNOT BE DISALLOWED FOR WANT OF GENUINENESS AND CREDITWORTHINESS OF TH E DONORS. IN VIEW OF THE ABOVE, THE SAME IS DIRECTED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSE E IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 09.11.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : BIBHUTI BHUSAN RATH, B - 20, BJB NAGAR, BHUBANESWAR 751 014 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(3), ARYAKAR B HAWAN, BHUBANESWAR 751 007 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECR ETARY. I.T.A.NO. 469/CTK/2012 7 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 06.11.2012 . 2. DAT E ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..