S.K. Jain, Gurgaon V. ACIT, Gurgaon

ITA 4763/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6763 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 03-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BA RANWAL
• Keywords: Source of fund; Retraction

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-476 3/DEL/2015 (ASSESSMENT YEAR- 2009-10) S.K.JAIN, 348/21B, GALI NO.5, MADANPURI, GURGAON-122001. PAN-ACFPJ4010L (APPELLANT) VS ACIT, CIRCLE-1(1), GURGAON (RESPONDENT) APPELLANT BY NONE (ADJ. APPLICATION REJECTED) RESPONDENT BY MS. ANIMA BAR A NWAL, SR.DR ORDER BY THE PRESENT APPEAL IN 2009-10 ASSESSMENT AGAINST THE ORDER DATED 11.05.2015 OF CIT(A)-1, GURGAON THE ASSESSEE ASSAILS THE ADDITION OF RS.20 LAKHS BASED ON SURRENDER MADE DURING A SURVEY. AN ADJOURNMENT WAS MOVED ON B EHALF OF THE LD. AR SEEKING TIME, BUT CONSIDERING THE MATERIAL AVAILABLE ON RECORD A ND THE SUBMISSIONS OF THE LD. SR DR, IT WAS REJECTED, 2. THE RECORD SHOWS THAT THE ASSESSEE BY WAY OF FIL ING A RETURN ON 30.03.2010 RETURNED AN INCOME OF RS.2,55,970/-. THE CASE WAS SELECTED FOR SCRUTINY AS THE ASSESSEE HAD BEEN SUBJECTED TO A SURVEY UNDER SECTION 133A(5) ON 27.0 2.2009. IN THE SCRUTINY PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO EXPLAIN WHY THE SURREN DER MADE DURING THE SURVEY CONDUCTED BY ADIT(INV)-II, GURGAON ON 27.02.2009 WAS NOT HONO URED. ON BEHALF OF THE ASSESSEE AS PER THE REPLY OF ASSESSEES COUNSEL DATED 07.12.201 1, THE SURRENDER HAD BEEN RETRACTED AS IT WAS ALLEGEDLY MADE AT THE TIME WHEN THE ASSESSEE WA S NOT MENTALLY FIT. THE ASSESSEE WAS DATE OF HEARING 0 3 .08.2016 DATE OF PRONOUNCEMENT 02 . 1 1 .2016 I.T.A .NO.-4763/DEL/2015 PAGE 2 OF 6 REQUIRED TO FURNISH PROOF OF RETRACTION AS IT WAS F OUND THAT AS PER ADIT (INV.)-II, GURGAON THERE WAS NO RETRACTION WITH THE SAID AUTHORITY. T HE ASSESSEE FURNISHED A COPY OF RETRACTION DATED 02.03.2009 WITH LETTER DATED 14.12 .2011. HOWEVER, THE ORIGINAL RETRACTION LETTER COULD NOT BE FURNISHED BY THE ASSESSEE. AS A RESULT THEREOF, THE ADDITION OF THE SAID AMOUNT WAS MADE BY THE ASSESSING OFFICER. 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE COPY OF THE ORIGINAL LETTER WAS ADMITTED AS FRESH EVIDENCE. IN SUPPORT OF MENTAL IN CAPACITY THE ASSESSEE AS PER PAGE 11 OF THE IMPUGNED ORDER FILED SOME MEDICAL REPORTS, CONS ULTATION PAPERS ETC. IN REGARD TO A HEAD INJURY SUFFERED IN 2005 FOR WHICH TREATMENT CONTINU ED TILL 2008 AS EVIDENCE OF CONTINUING NEUROLOGICAL PROBLEMS. IT WAS ALSO SUBMITTED AS PER REPRODUCTION OF THE SUBMISSIONS AT PAGE 5 OF THE IMPUGNED ORDER THAT NO ONE KNOWS THAT WHEN THE ASSESSEE IS IN PROPER SENCES AND WHEN HE IS NOT IN PROPER/FULL SENSES. I F THE APPELLANT/ASSESSEE IS IN PROPER SENCES AT ANY POINT OF TIME, HIS BRAIN CAN CONVERT HIS SENSES TO MENTAL IMBALANCE EVEN THE NEXT MOMENT. AT TIMES WHEN THE APPELLANT/ASSESSEE IS NOT IN PROPER/FULL SENSES HE MAY NOT RECOGNIZE EVEN HIS FAMILY MEMBERS AND ASKS THEM FROM WHERE THEY HAVE COME OR FOR WHAT PURPOSE THEY HAVE COME. ONCE DURING THE ROUTI NE SURVEY BY THE SALES-TAX OFFICER ABOUT 4-5 YEARS AGO ALL OF A SUDDEN THE APPELLANTS /ASSESSEES BRAIN BECAME IMBALANCED, THE ASSESSEE CALLED THE OFFICER RAMU GET ME A GLASS OF WATER, THE MATTER SHOOT UP AND THE OTHER FAMILY MEMBERS HAD TO BEG SORRY WITH FOLDED H ANDS NUMBER OF TIMES FROM THE SALES- TAX OFFICER EXPLAINING HIM THE MENTAL CONDITION OF THE ASSESSEE, ONLY THEN THE SALES-TAX WAS PACIFIED. HOWEVER, NOT CONVINCED WITH THE EXPLANATION OFFER ED THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE AO HOLDING THAT THE ASSESSEES M ENTAL STATE WAS GOOD. ACCORDINGLY THE RETRACTION WAS NOT PERMITTED. AGGRIEVED THE ASSESSE E IS IN APPEAL BEFORE THE ITAT. 4. THE LD. SR.DR HEAVILY RELIES UPON THE IMPUGNED O RDER. I.T.A .NO.-4763/DEL/2015 PAGE 3 OF 6 5. HAVING HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD, I FIND THAT THE MATTER REQUIRES RECONSIDERATION ON FACTS. ADMITTEDLY A SURVEY WAS CONDUCTED UPON THE ASSESSEE ON 27.02.2009. THE RECORD SHOWS THAT T HE SURVEY WAS CONDUCTED IN ORDER TO ASCERTAIN THE EXPENSES INCURRED ON THE MARRIAGE OF ASSESSEES SON NAMED AMIT WITH RUCHIKA, DAUGHTER OF SH. ANIL JAIN OF LUDHIANA ON 1 5.02.2009 AS PER PARA 4 OF THE IMPUGNED ORDER. THE ASSESSEE AS PER RECORD HAS SURRENDERED AN AMOUNT RS.20 LAKHS DURING THE SURVEY AND CLAIMS THAT WITHIN A FEW DAYS HE HAS RET RACTED THE SAME. THE TAX AUTHORITIES HAVE ACCEPTED THE FACT THAT THERE IS RETRACTION LET TER DATED 02.03.2009. HOWEVER RETRACTION HAS NOT BEEN ALLOWED BY THE TAX AUTHORITIES AS IT I S CONSIDERED TO BE AN AFTERTHOUGHT. THE MEDICAL EVIDENCE IN SUPPORT OF THE RETRACTION, IT I S SEEN, HAS ALSO BEEN DISMISSED ON THE GROUND THAT IT PERTAINS TO TREATMENT HAVING BEEN CA RRIED ON UPTO 2008 AND THE SURVEY ADMITTEDLY WAS CONCLUDED ON 27.02.2009. 6. CONSIDERING THE FACTS AND ARGUMENTS ON RECORD, I FIND THAT THE CLAIM OF THE ASSESSEE HAS BEEN DISMISSED ON THE BASIS OF PERCEPTIONS AND SURMISES WHEREIN NO ATTEMPT HAS BEEN MADE TO ADDRESS THE SPECIFIC FACTS. THE MERE FACT THAT THE ASSESSEE WHO HAS PLEADED MENTAL INCAPACITY TO MAKE THE SURRENDER WAS FOUND AT HIS PLACE OF WORK PER SE DOES NOT PRECLUDE THE ASSESSEE TO CLAIM SUCH MENTAL INCAPACI TY TO MAKE THE SURRENDER. A PERSON SUBJECT TO MEDICAL EVALUATION MAY BE ABLE TO SUCCES SFULLY PLEAD THAT FOR THE ROUTINE DAY TO DAY FUNCTIONING, HE COULD ATTEND TO HIS WORK BEING CARRIED OUT BY HIS STAFF, HELP OR RELATIVES HOWEVER MAY UNDER STRESS NOT BE CAPABLE TO FULLY CO MPREHEND EVALUATE AND DECIDE THE QUESTIONS/PROPOSAL PUT FORTH BY THE SURVEY TEAM. W ITHOUT GETTING A MEDICAL EVALUATION OF THE EVIDENCE RELIED UPON THE CLAIM CANNOT BE OUT RI GHTLY REJECTED. NO DOUBT IF THE EVIDENCE FILED IS FOUND TO BE INSUFFICIENT THE ASSESSEE CAN BE CALLED FORTH TO FURTHER SUPPLEMENT THE EVIDENCES. TO MY UNDERSTANDING THE OPINION OF AN EXPERT MEDICAL PERSON SHOULD HAVE I.T.A .NO.-4763/DEL/2015 PAGE 4 OF 6 BEEN BROUGHT ON RECORD IN ORDER TO FAIRLY DECIDE TH E CLAIM AS PER LAW. THE REASONING THAT SINCE EXACT AMOUNTS ARE FOUND MENTIONED IN THE SURR ENDER CANNOT BE THE BASIS FOR REJECTING THE CLAIM AS THE SAID REASONING PRESUPPOSES THAT TH E ASSESSEE HAD THE MENTAL FACULTIES TO UNDERSTAND WHAT HE WAS AGREEING TO. THUS, THE REAS ONING IS NEITHER HERE NOR THERE AS ONCE MEDICAL INCAPACITY IS PLEADED THEN WHO SUGGEST ED THE EXACT FIGURES ITSELF BECOMES QUESTIONABLE. 7. EVEN OTHERWISE ANY NORMAL PERSON FACED WITH A S URVEY WOULD DEFINITELY BE UNDER STRESS. INFACT HOW A PERSON WOULD REACT TO A SURVEY MAY VARY AS THERE IS NO IDEAL BEHAVIORIAL RESPONSE WHICH CAN BE EXPECTED UNIVERSALLY FROM EVE RY PERSON WHO IS SURVEYED BY THE TAX DEPARTMENT. A LEVEL OF STRESS IS UNDERSTANDABLE. PERSONS WHO DUE TO THEIR FREQUENT INTERACTIONS AND LITIGATIONS WITH THE TAX AUTHORIT IES MAY TAKE THE STRESS OF A SURVEY RELATIVELY IN THEIR STRIDE AS A ROUTINE AFFAIR AS COMPARED TO A HIGHLY SENSITIVE RECLUSIVE PERSON WHO WITH NO EXPOSURE TO LITIGATION WITH TAX AUTHORITIES ETC. MAY BE SO OVER-WHELMED WITH HUMILIATION OR EMBARRASSMENT ESPECIALLY STRAIGHT AFTER A MARRIA GE OF A CHILD THAT HIS STRESS LEVEL AND MENTAL CAPACITY MAY BE ADVERSELY IMPACTED AND HIS C ONSEQUENT RESPONSE MAY BE CLOUDED AND UNCLEAR AND HENCE MAY NOT REFLECT THE ACTUAL P OSITION. THE POSITION FOR A PERSON UNDERGOING TREATMENT FOR A HEAD INJURY WHICH PRESUM ABLY HAS IMPACTED HIS COGNATIVE FACULTIES MAY BECOME MORE AGGRAVATING. 8. THUS, I FIND THAT THE ISSUE REQUIRES RECONSIDER ATION ON FACTS AS THE TAX AUTHORITIES CANNOT OUTRIGHTLY DISMISS THE RETRACTION WITHOUT HA VING AN INDEPENDENT EVALUATION OF THE MENTAL CAPABILITIES OF THE ASSESSEE. I FURTHER FIN D THAT ON READING OF THE ORDERS OF THE TAX AUTHORITIES, NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE MARRIAGE EXPENSES ON ACCOUNT OF THE ASSESSEES SON WERE EXORBITANT AND N OT EXPLAINABLE. INFACT I FIND THAT THERE IS NO DISCUSSION IN THE ORDER WHATSOEVER TO S HOW WHAT WAS THE NATURE OF ASSESSEES I.T.A .NO.-4763/DEL/2015 PAGE 5 OF 6 BUSINESS. IT IS SEEN THAT APART FROM A MENTION THA T THERE WAS A SURVEY ON ACCOUNT OF THE MARRIAGE OF ASSESSEES SON, THERE IS NOTHING ON REC ORD TO SHOW WHY A MARRIAGE IN THE FAMILY WARRANTED A SURVEY WHEREIN THE ASSESSEE MADE A SUR RENDER WHICH WAS RETRACTED PROMPTLY. THE ASSESSMENT ORDER IT IS SEEN IS A TWO PAGED ORDE R WITH NO REFERENCE TO RELEVANT FACTS AND THE 15 PAGED IMPUGNED ORDER THOUGH INCORPORATES TH E WRITTEN SUBMISSIONS OF THE ASSESSEE HOWEVER REJECTS THEM WITHOUT REBUTTING THE MEDICAL EVIDENCE RELIED UPON. IT IS FURTHER SEEN THAT NO DISCUSSION EITHER ON WHAT IS THE BUSINESS O F THE ASSESSEE NOR ON HIS STATUS OR KNOWN SOURCES OF INCOME HAS BEEN MADE. NO DOUBT, THE EVI DENCE WHICH NECESSITATED THE REVENUE TO CARRY OUT A SURVEY WITHIN A FEW DAYS OF THE MARRIAGE OF THE ASSESSEES SON ARE FACTS WHICH MAY BE BEYOND THE SCOPE OF THE PRESENT APPEAL HOWEVER, THE ABSENCE OF RELEVANT MATERIAL VIS--VIS THE LACK OF DISCUSSION ON WHAT WAS THE BUSINESS OF THE ASSESSEE; THE EXTENT OF EXPENDITURE INCURRED ON THE MARRIAGE WHICH WAS FOUND NOT COMMENSURATE WITH ASSESSEES STANDARD OF LIVING ARE AREAS ON WHI CH THERE IS NO DISCUSSION WHATSOEVER. THE ABSENCE OF RELEVANT DISCUSSION LAYS THE EXERCIS E OF POWER VESTED IN THE AUTHORITIES OPEN TO THE CHARGE OF BEING ARBITRARY, BIASED AND PERVER SE. 9. CONSIDERING THE OVERALL PECULIAR FACTUAL MATRIX OF THE PRESENT CASE, IT IS DEEMED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND RES TORE THE ISSUE BACK TO THE AO TO ADDRESS THE PLEA OF MENTAL INCOMPETENCE PUT FORWARD BY THE ASSESSEE AT THE TIME OF SURRENDER BY WAY OF A RETRACTION. EXPERT MEDICAL OP INION MAY BE CALLED FOR IF SO DEEMED APPROPRIATE AS MERELY BECAUSE AS PER THE MEDICAL EV IDENCE TREATMENT WAS UNDER WAY UPTO A SPECIFIC DATE BY ITSELF DOES NOT PROVE THAT THE P ERSON SUFFERING FROM NEUROLOGICAL DISORDER WAS THEREAFTER TOTALLY FIT AND RECOVERED. I FIND T HAT APART FROM THAT THE BARE FACT THAT THERE WAS A MARRIAGE THERE IS NOTHING IN THE ORDER TO SH OW WHAT LED THE REVENUE TO BELIEVE THAT ON ACCOUNT OF A MARRIAGE OF THE ASSESSEES SON, A S URVEY WAS REQUIRED. AT LEAST A I.T.A .NO.-4763/DEL/2015 PAGE 6 OF 6 SEMBLANCE OF REFERENCE IN THE ORDER SHOULD BE THERE AS WITHOUT ANY FACT OR EVIDENCE, IT BECOMES QUESTIONABLE WHY A MERE MARRIAGE OF A SON R EQUIRES, THE TAX AUTHORITIES TO CARRY OUT A SURVEY. THE FACTS WHICH LED TO THIS DECISION AT LEAST SHOULD HAVE BEEN BROUGHT OUT IN THE ORDER BECAUSE IN SUCH AN EVENTUALITY IT WOULD B E POSSIBLE TO GAUGE AND CONSIDER WHETHER THE SURRENDER WAS MADE ON ACCOUNT OF FACTS WHICH WERE SO PATENT AND SELF- SPEAKING THAT THE ASSESSEE HAD NO CHOICE BUT TO MAK E THE SURRENDER IN THE ABSENCE OF ANY RELEVANT DISCUSSION IN THE ORDERS, THE ACTION IS OP EN TO THE CRITICISM BEING ARBITRARY AND WHIMSICAL. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED TO THE FILE OF THE AO TO DECIDE THE SAME DE-NOVO . 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02 ND NOVEMBER, 2016. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI