Sh. Karnail Singh, Katra. V. The Dy. Commissioner of Income-tax, Katra.

ITA 476/ASR/2012

• Counselvise Citation: 47620914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: P N ARORA
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.476(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :BFAPS5883P SH. KARNAIL SINGH VS. DY. COMMR. OF INCOME TAX, S/O SH. BUDH RAJ, RANGE-2, JAMMU. RAILWAY STATION ROAD, KUNDORIAN, KATRA (J&K). (APPELLANT) (RESPONDENT) I.T.A. NO.71(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :BFAPS5883P DY. COMMR. OF INCOME TAX, VS. SH. KARNAIL SINGH RANGE-2, JAMMU.. S/O SH. BUDH RAJ, KATRA. (APPELLANT) (RESPONDENT) ASSESSEE BY:SH.P.N.ARORA, ADVOCATE DEPARTMENT BY:SH.AMRIK CHAND, DR DATE OF HEARING: 24/02/2014 DATE OF PRONOUNCEMENT:28/02/2014 ORDER PER BENCH ; THESE CROSS APPEALS OF THE ASSESSEE AND THE REVENU E ARISE FROM THE ORDER OF THE CIT(A), JAMMU DATED 19.11.2012 FOR THE ASSESSMENT YEAR 2009- 10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL: ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 2 1. THAT AUTHORITIES BELOW ERRED UNDER LAW AND FAC TS IN MAKING AN ADDITION OF RS.8,00,000/- WHICH WAS DEPOSITED IN AP PELLANT BANK ON 21/03/2009 OUT OF CASH LYING WITH THE APPEL LANT. THE AUTHORITIES BELOW SHOULD HAVE RELIED ON CASH BOOK D ULY MAINTAINED AND PRODUCED BY THEASSESSEE. 2. THAT THERE IS NOTHING IN LAW WHICH PREVENTS ASSE SSEE IN KEEPING WITH HIM CASH FOR A MONTHS AS PER HIS BUSINESS REQ UIREMENTS AND JUDGMENT AND AUTHORITIES BELOW NEVER DISPUTED T HE EXISTENCE OF CASH IN HAND WITH ASSESSEE AND THEIR O BJECTIONS REMAINED THROUGHOUT PROCEEDINGS THAT THE ASSESSEE D EPOSITED THE SAID AMOUNT IN BANK AFTER A GAP OF THREE TO FOU R MONTHS FROM THE DATE OF DRAWLS AND DISBELIEVED TRUE FACT SUPPOR TED BY RECORD THAT AMOUNT DEPOSITED IS UNDOUBTEDLY OUT OF CASH IN HAND AND THUS ADDITION UNDER THESE FAT S IS ABSOLUTELY ILLEG AL, UNCALLED FOR AN UNACCEPTABLE. 3. THAT THE AO ERRONEOUSLY DISBELIEVED VALID GIFT R ECEIVED BY THE ASSESSEE FROM HIS FATHER AMOUNTING TO RS.23.90 LACS AND LD. CIT(A) FURTHER ERRED IN SUSTAINING AN INCORRECT ADD ITION OF THIS SUM OF RS.23.90 LACS WHICH N FACT THE APPELLANT REC EIVED AS GIFT FROM HIS FATHER COMPRISING TWO AMOUNTS OF RS.10,00, 000/- RECEIVED ON 24.03.2009 IN CASH AND RS.13,90,000/- O N 25/03/2009 THROUGH BANK AND THIS GIFT STAND CONFIRM ED BY CONFIRMATION LETTER AND STATEMENT OF AFFAIRS OF DON OR SH. BODH RAJ OF RELEVANT DATE WHERE ENTRIES OF THIS GIFT HA VE DULY BEEN RECORDED. 4. THAT THE AMOUNT OF GIFT FLOWED FROM RAILWAY COMP ENSATION RECEIVED BY THE ASSESSEE FATHER AMOUNTING TO RS.86 LACS WHICH WAS ROTATING AND TRAVELING IN HIS BUSINESS. 5. THAT THE DONOR FATHER OF ASSESSEE SH. BODH RJ IS AN INDEPENDENT OLD INCOME TAX ASSESSEE AND REGULARLY F ILING HIS INCOME TAX RETURNS AND IS MAN OF MEANS WHICH FACT S TAND SUBSTANTIATED THAT DONOR FATHER RECEIVED COMPENSATI ON FROM RAILWAY AMOUNTING TO RS.86 LACS ON ACQUISITION OF H IS AGRICULTURE LAND AND THUS COULD EASILY GIFT A SUM OF RS.23.90 LACS. ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 3 6. THAT THE AO AND HONBLE CIT(A) FAILED TO APPRECI ATE AND TAKE COGNIZANCE OF THE FACT THAT DONOR FATHER SH. BODH R AJ, WHO GIFT THE SUM OF RS.23.90 LACS TO ASSESSEE HAD SUFFICIENT LIQUIDITY AT THE BEGINNING OF THE YEAR AS PER HIS STATEMENT OF A FFAIRS AND THE AMOUNT OF GIFT HAD BEEN DULY REFLECTED IN HIS CLOSI NG STATEMENT OF AFFAIRS AS ON 31.03.2009 AT THE END OF RELEVANT YEAR. BOTH OPENING AND CLOSING STATEMENT OF AFFAIRS AS ON 31.0 3.2009 AT THE END OF RELEVANT YEAR. BOTH OPENING AND CLOSING STAT EMENT OF AFFAIRS WERE DULY FILED AND PRODUCED BEFORE AUTHORI TIES BELOW; 7. THAT ANY OTHER GROUND OR GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.10,00,000/- MA DE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT WH EN THE STATEMENT OF SOURCES OF AMOUNT DEPOSITED IN THE BAN K ACCOUNT FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS CLEARLY REFLECT THAT THERE WAS DEPOSIT OF RS.10,00,000/- O 25.03.2009 ON ACCOUNT OF AMOUNT DEPOSITED FROM CAPITAL OF THE ASS ESSEE. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE SAID E NTRY OF RS.10,00,000/- WAS PART OF THE COMPOSITE ENTRY OF RS.20,00,000/- CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE ON 25.03.2009. 3. THE APPLICANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSE RVED THAT THE ASSESSEE HAD DEPOSITED IN THE BANK ACCOUNT THE FOLLOWING AM OUNTS: ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 4 DATED SOURCES OF FUND A MOUNT REMARKS 21.03.2009 BY AMT. DEPOSITED IN SVI KATRA OUT OF CAPITAL OF KARNAIL SINGH 800000.00 SELF INVESTMENT FROM CAPITAL 25.03.2009 BY AMT. DEPOSITED CAPITAL OF KARNAIL SINGH 1000000.00 SELF INVESTMENT FROM CAPITAL 25.03.2009 BY AMOUNT GIFTED FROM FATHER 1000000.00 GIFTED AMOUNT 26.03.2009 BY AMT. GIFTED FROM FATHER 1390000.00 GIFTED AMOUNT 26.03.2009 BY AMOUNT CASH DEPOSITED 300000.00 SELF INVESTMENT 3.1. THE ASSESSEE SUBMITTED THE FOLLOWING EXPLANATI ON, WHICH IS AVAILABLE AT PAGE 2 & 3 OF AOS ORDER AND IS REPRODUCED FOR T HE SAKE OF CONVENIENCE AS UNDER: THE AMOUNT OF RS.8,00,000/- AND RS.10,00,000/- DEPO SITED IN ASSESSEE BANK A/C ON 21/03/2009 & 25/03/2009 MAINTA INED WITH STATE BANK OF INDIA AND REPRESENTING CAPITAL OF ASSESSEE IS OUT OF AMOUNTS WITHDRAWN FROM THE SAME BANK AS PER DETAIL GIVEN BE LOW: DATE AMOUNT 07/11/2008 RS.15,00,000/- 17/11/2008 RS.2,00,000/- 25 & 27/11/2008 (RS.50,000/- + 50,000/-) THE ASSESSEE WAS CONTEMPLATING TO BID M.C. KATRA MU LE/MAZDOORI CONTRACT TO BE AUCTIONED BEFORE 31.03.2009. IN ORDE R TO KEEP THE CAHS READY THE ASSESSEE WITHDRAW A TOTAL SUM OF RS.18,00 ,000/-(EIGHTEEN LACS) TWO TO THREE MONTHS EARLIER FROM STATE BANK O F INDIA, KATRA MAINTAINED IN THE REGULAR COURSE. ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 5 THE ASSESSEES FATHER SH. BODHRAJ RECEIVED HUGE COM PENSATION FROM RAILWAY AMOUNTING TO RS.86,00,000/- AT VARIOUS TIME S FROM THE YEAR 1999 TO 2004. THE ASSESSEES FATHER INVESTED THE AM OUNT OF COMPENSATION RECEIVED IN ACQUISITION OF LAND FROM R AILWAY IN AGRICULTURE FIELD SUCH AS PURCHASE OF MULES, BUFFAL OES, COWS AND SMALL ADVANCES TO THE FELLOW FARMERS. HIS SON SH. KARNAIL SINGH WAS IN NEED OF MONEY TO INVEST THE AMOUNT FOR CONTRACT OF MULE MAJDOORI TO BE OBTAINED FROM KATRA MUNICIPAL COUNCIL. IT IS SUBMIT TED THAT SH. BODHRAJ IS PERMANENT INCOME TAX ASSESSEE UNDER PAN AKUPR9590E. HE HAS SHOWN AGRICULTURE INCOME FROM MULE/MAZDOORI/ PALKIES IN HIS RETURNS FILED YEAR AFTER YEAR AND HAS PAID AS MUCH INCOME TAX AS RS.20673/- DURING THE ASSESSMENT YEAR 2008-09. THE COPY OF ITR IS ENCLOSED WHICH IS SELF EXPLANATORY. HE SOLD ANIMALS , MULES, BUFFALOES AND RECEIVED SMALL ADVANCES AND DEBTORS AND OUT OF HIS SUM, HE GIFTED A SUM OF RS.23.90- LACS TO HIS SON SH. KARNAIL . BO TH RECORDED THE ENTRY IN THEIR RESPECTIVE BALANCE SHEETS. SH. BODH RAJ CONFIRMED THE GIFT AND SH. KARNAIL SINGH ACKNOWLEDGED THE GIFT. SH. BODHRAJS STATEMENT OF AFFAIRS SHOWS SUBSTANTIAL AMOUNT LYI NG IN BANK I.E. ONE YEAR EARLIER TO M.C. BID. THE GIFT IS PERFECTLY VAL ID AND IS GIFT FROM FATHER TO SON OUT OF NATURAL LOVE AND AFFECTIONS. I) IT IS SUBMITTED THAT AN AMOUNT SHOWN AS CREDIT I N THE NAME OF PAWAN SHARMA IN FACT REPRESENT AND INCLUDED IN SUM OF RS.23.90 LACS SHOWN AS GIFT FROM FATHER OF THE ASSESSEE SH. BODHR AJ WHO SIMPLY WENT TO HANDOVER A SUM OF RS.10,00,000/- IN BANK BUT ACC OUNTANT WROTE THE NAME OF PAWAN SHARMA IN DIARY. IT WAS STATED FROM THE VERY BEGINNING THAT ACCOUNTANT SH. SUNIL KUMAR IS A SMAL L BOY AND VERY IN EXPERIENCED ACCOUNT CLERK WHO DOES NOT UNDERSTAND B OOK KEEPING PROPERLY. THE ASSESSE HAS PREPARED ONLY STATEMENT O F AFFAIRS AND NOT FULL FLEDGED BALANCE SHEET AS NORMALLY PREPARED BY EXPERIENCED ACCOUNTANTS. II) REGARDING GAP OF DEPOSIT AND WITHDRAWS OF AMOUN T BY SH. KARNAIL SINGH, IT IS SUBMITTED THAT GAP OF THREE MO NTHS IS VERY SMALL PERIOD. THE ASSESSEE COULD KEEP THE AMOUNT WITH HIM PARTICULARLY WHEN HE HAD FULL PLANNING TO TAKE CONTRACT OF MULE/ MAJDOORI FROM KATRA M.C. MOREOVER, THE ASSESSEE BELONG TO VILLAGE AND THESE VILLAGE PEOPLE CARRY HABIT OF KEEPING HEAVY CASH WITH THEMS ELVES WHEN THEY WERE CONTEMPLATING TO BUILD START OF NEW CONTRACT. ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 6 4. THE ABOVE SAID EXPLANATION OF THE ASSESSEE WAS N OT FOUND SATISFACTORY BY THE AO AND HE MADE AN ADDITION OF RS. 18 LACS AN D RS.23.90 LACS FOR THE REASONS MENTIONED IN THE ORDER. 5. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE SUB MISSIONS AND HE DELETED RS.10 LACS OUT OF ADDITION OF RS. 18 LACS BY HOLDING THAT THERE WAS NO DEPOSIT OF RS.10 LACS ON 25.03.2009 IN THE BANK ACCOUNT AND IT WAS FACTUALLY A MISTAKE BUT SUSTAINED THE ADDITION OF R S.8 LAC. THE LD. CIT(A) ALSO CONFIRMED THE ACTION OF THE A.O. WITH REGARD T O THE ADDITION OF RS.23.90 LACS. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , ADVOCATE ARGUED THAT THE AMOUNT OF RS.8 LAC WAS DEPOSITED OUT OF OL D CASH AVAILABLE WITH THE ASSESSEE WHICH WAS WITHDRAWN FROM THE SAME BANK WHI CH FACT WAS EXPLAINED BEFORE BOTH THE AUTHORITIES BELOW. IT WAS ARGUED THAT THE ASSESSEE HAS BEEN WITHDRAWING CASH AND DEPOSITING THE SAME AND NO ADVERSE INFERENCE CAN BE MADE OUT OF SUCH AN ACTION, ESPECI ALLY WHEN THE COGENT EXPLANATION WAS SUBMITTED THAT THE ASSESSEE WAS CON TEMPLATING TO BID FOR M.C. KATRA MULE/MAZDOORI CONTRACT TO BE AUCTIONED BEFORE 31/03/2009 AND IN ORDER TO KEEP THE CASH READY, THE ASSESSEE WITH DREW A SUM OF RS.18 LACS. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTA INING THE ADDITION OF RS. 8 LACS. ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 7 6.1. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.AROR A, ADVOCATE FURTHER ARGUED WITH REGARD TO ADDITION OF RS.23.90 LACS THA T THE ASSESSEE SUBMITTED THE EXPLANATION THAT THE ASSESSEE RECEIVED GIFT FRO M SH. BODH RAJ FATHER OF THE ASSESSEE I.E. RS.10 LACS ON 25/03/2009 AND RS.1 3.90 LACS ON 26/03/2009. THE FATHER OF THE ASSESSEE RECEIVED HUGE COMPENSATI ON OF RS.86 LACS FROM INDIAN RAILWAYS ON ACQUISITION OF LAND FOR CONSTRUC TION OF A RAILWAY LINE AND ALSO FOR CONSTRUCTION OF RAILWAY STATION. THE D ETAILS OF COMPENSATION WERE DULY FILED BEFORE BOTH THE AUTHORITIES BELOW. THUS, THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION. 7. THE LD. JCIT( DR) MR. MAHAVIR SINGH, ON THE OTH ER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD MADE WITHDRAWALS FROM THE STATE BANK OF INDIA ON 07/11/2008, 17/11/2008. 25/11/2008 & 27/11/2008 FOR AN AMOUNT OF RS.15 LACS, RS. 2 LACS, RS.50,000/- AND RS.50,000/- RESPECTIVELY. THE ASSESSEE HAS SUBMITTE D THE EXPLANATION THAT IN ORDER TO CONTEMPLATE TO BID FOR CONTRACT, THE ASSE SSEE WAS REQUIRED TO KEEP CASH READY AND ACCORDINGLY CASH WAS WITHDRAWN TO TH E TUNE OF RS.18 LACS TWO-THREE MONTHS BEFORE THE AMOUNT WAS DEPOSITED. THERE IS NOTHING ON RECORD THAT THE SAID CASH HAS BEEN USED ELSEWHERE A ND ONLY ON ASSUMPTION ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 8 AND PRESUMPTION AND WITHOUT BRINGING ANY ADVERSE M ATERIAL ON RECORD, THE EXPLANATION OF THE ASSESSEE CANNOT BE REJECTED. THE REFORE, IN THE FACTS AND CIRCUMSTANCES AND THE CASES RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF R.K. DAVE VS ITO REPORTED IN 94 TTJ 19 (JODHPUR BENCH), IN THE CASE OF ANAND AUTORIDE LTD. VS. JCIT 99 TTJ 12 50 (AHMEDABAD BENCH) AND IN THE CASE OF ITO VS. RAJESH KUMAR KALIA IN I TA NO.357(ASR)/2011 DATED 12.03.2012 (ASR BENCH), THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. ACCORDINGLY, THE AO IS DIRECT ED TO DELETE THE ADDITION SO MADE AND SUSTAINED BY THE LD. CIT(A) OUT OF RS.1 8 LACS. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS R IGHTLY DELETED THE ADDITION OF RS.10 LACS. 9. AS REGARDS THE ADDITION OF RS.23.90 LACS, THERE IS NO DISPUTE TO THE FACT THAT THE AMOUNT HAS BEEN RECEIVED FROM THE FATHER O F THE ASSESSEE. THE AMOUNT HAS BEEN RECEIVED BY THE FATHER OF THE ASSES SEE AS COMPENSATION FROM INDIAN RAILWAYS. THE SAID FATHER IS ASSESSED T O TAX, IS ALSO NOT UNDER DISPUTE. THE RELEVANT EXPLANATION AND THE CONFIRMA TION OF THE SAID GIFT HAD BEEN FILED BEFORE BOTH THE AUTHORITIES BELOW AND IS ON RECORD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE SATISFIES T HE CONDITIONS LAID DOWN UNDER SECTION 68 OF THE ACT I.E. THE ASSESSEE PROVE S THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND THEREFORE, THE LD. ITA NO.S 476(ASR)/2012 ITA NO.71(ASR)/2013 9 CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION SO SUSTAINED BY THE LD. CIT(A). THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED AND TH AT OF THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.476(ASR)/2012 IS ALLOWED AND THAT OF THE REVENUE IN ITA NO.71(ASR)/2 013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. KARNAIL SINGH S/O SH. BODH RAJ, KA TRA. 2. THE DCIT RANGE-2, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR