The ITO, Ward-8(2), Ahmedabad V. Shri Shaum Janak Hatheesing, Ahmedabad

ITA 511/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89457 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Unexplained cash credit; Capital asset; Salary income; Corroborative evidences; Valuation report
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO.511 /AHD/2011 (ASSESSM ENT YEAR: 2006-07) INCOME-TAX OFFICER WARD- 8(2), AHMEDABAD V/S SHRI SHAUM JANAK HATHEESING 3 RD FLOOR, RATAN APARTMENT OPP. POLICE STADIUM SHAHIBAUG, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAGPH9665N APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : SHRI TUSHAR P. HEMANI, A.R. ( )/ ORDER DATE OF HEARING : 29-04-2015 DATE OF PRONOUNCEMENT : 15-05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-XIV, AHMEDABAD DATED 25.11.2010 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL AND DIRECTOR OF S.J.H. MA ZDA RESORT AND ENTERTAINMENT LTD. AND HAVING SALARY INCOME. ASSESS EE FILED HIS RETURN OF INCOME FOR A.Y. 2006-07 ON 20.02.2007 DECLARING TOT AL INCOME OF RS. 5,40,000/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT ITA NO 511/A HD/2011 . A.Y. 2006-0 7 2 WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 10 .12.2008 AND THE TOTAL INCOME WAS DETERMINED AT RS. 64,63,175/-. AGGRIEVE D BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO V IDE ORDER DATED 25.11.2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGG RIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFO RE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND;- 1. THE LD. CIT(A)-XLV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.53,00,000/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF RELINQUISHMENT OF RIGHT TO RESIDE IN THE BUNGALOW W HICH COME WITHIN THE DEFINITION OF TRANSFER U/S.2(47)(II) OF THE IT. ACT. 2. THE LD. CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,22,195/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE IT. ACT. 3. THE LD. CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,00,980/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT. 4. 1 ST GROUND IS WITH RESPECT TO ADDITION OF RS. 53,00,00 0/- ON ACCOUNT OF RELINQUISHMENT OF RIGHTS. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS RECEIVED RS. 53,00,000/- FROM SMT. JIGNA PATEL, MAN AGING TRUSTEE OF FIRDOS MEMORIAL CHARITY AND EDUCATION TRUST AND IT WAS NOT OFFERED TO TAX BY THE ASSESSEE. ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY T HE AMOUNT SHOULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE TO WHICH A.O N OTED THAT NO DETAILS WERE FILED BY THE ASSESSEE. A.O ON PERUSAL OF THE A GREEMENT CARRIED OUT BY THE ASSESSEE WITH JIGNA PATEL NOTED THAT THE AMOUNT WAS GIVEN TO ASSESSEE TOWARDS RELINQUISHMENT OF RIGHTS AND TO HAND OVER T HE POSSESSION OF THE PREMISES AT SHAHIBAUG, AHMEDABAD. HE WAS OF THE VIE W THAT RELINQUISHMENT OF RIGHTS TO RESIDE WAS INCOME WHICH ACCRUED TO TH E ASSESSEE U/S. 2(47)(II) OF THE ACT. HE THEREFORE CONSIDERED THE SAME TO BE INCOME. AGGRIEVED BY THE ITA NO 511/A HD/2011 . A.Y. 2006-0 7 3 ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE RE MAND REPORT AND THE VALUATION REPORT SUBMITTED BY THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 2.1 THE A.O.'S CONTENTION FOR THE ADDITION WAS THAT IT WAS A RELINQUISHMENT OF RIGHTS IN CAPITAL ASSETS; HENCE CHARGEABLE TO TAX U/S. 2(47)( II)OF THE I.T. ACT. REMAND REPORT WAS CALLED FOR AS THE A.R. HAD SUBMIT TED FRESH EVIDENCE OF VALUATION REPORT OF THE PROPERTY WHICH WAS GIVEN UP BY THE AS SESSEE. THE A.O. HAS GIVEN IN HIS REMAND REPORT THAT AS PER THE VALUATION REPORT, THE VALUER HIMSELF HAS ADMITTED THAT HE CANNOT VALUE ONE ANTIQUE OF RS.7,00,000/- OUT OF TO TAL ASSETS OF RS.68,65,000/-. 2.2 THE A.R. HAS SUBMITTED THAT ALREADY A COPY OF T HE BREAKUP OF THE FURNITURE FIXTURES HANDED OVER AT THE TIME OF GIVING AWAY THE POSSESSI ON OF THE PREMISES WAS SUBMITTED TO THE A.O. WHICH TOTALED TO RS.45.53 LAKHS. THE A.R. HAS FURTHER NARRATED THE FOLLOWING PARA AS PER THE AGREEMENT DATED 30-6-2005. ' 1. THAT THE PARTIES OF SECOND PART, MORE PARTICUL ARLY SMT.NINA T. SEPAI AND HER SON SHRI SHAUM J. HUTHEESING, HAD A RIGHT TO RESIDE IN THE B UNGALOW SITUATED IN CANTONMENT, SHAHIBAUG, AHMEDABAD AND HAVE THEIR BELONGINGS FURN ITURES, FIXTURES, ETC. SAID SMT. NINA T.SEPAI AND SHRI SHAUM J. HATHEESING HAVE AGRE ED TO RELINQUISH THEIR RIGHTS AND HAVE ALSO AGREED TO HAND OVER POSSESSION OF THE PRE MISES AND TO PERMANENTLY RELINQUISH THE RIGHT TO RESIDE, USE AND BE ENTITLED TO CONTINU E TO USE SAID PROPERTY AND HAVE ALSO AGREED TO HAND OVER POSSESSION OF THE SAID PREMISES AS WELL AS POSSESSION OF THE FURNITURE, FIXTURES, ETC. 2.--OF ANY NATURE WITH RESPECT TO ANY OF THE PR OPERTIES OF THE TRUST OF THE RIGHT TO RESIDE OR RIGHT TO USE FURNITURE, FIXTURE ETC. AND! WHEREAS THE PARTY OF THE SECOND PART HAVE SURRENDERED, RELINQUISHED AND GIVEN UP THEIR R IGHT TO LITIGATE IN AN ___________. THE A.R. HAS SUBMITTED A NOTARISED COPY OF THE VALU ATION REPORT OF THE PROPERTY DATED 1998 ALONGWITH CALCULATION OF CAPITAL GAINS. IF EIT HER OF THE TWO VALUES ARE ADOPTED I.E. RS.45.53 LAKHS OR RS.61.65 LAKHS (RS.68.65 LAKHS LE SS RS.7 LAKHS OF ANTIQUE), BOTH CALCULATION ALONGWITH INDEXATION RESULTS IN A LOSS TO THE ASSESSEE. THE PLAIN READING OF THE TWO AGREEMENTS DATE 30-6-2 005, CLEARLY SHOWS THAT ASSESSEE HAD GIVEN UP THE PROPERTY ALONGWITH THE FURNITURE, FIXT URES AND THE ENTIRE DEAL ALONGWITH THE ASSESSEE'S MOTHER SHRI NINA SEPAI WAS FOR:- A) GIVING AWAY: THE POSSESSION OF THE PROPERTY. B) GIVING UP THE RIGHT TO LITIGATE C) TO WITHDRAW ALL SUITS FILED AGAINST EACH OTHER PEND ING IN ANY COURTS. D) HANDOVER THE MANAGEMENT OF THE TRUST AND THE SCHOOL . IT IS CLEAR FROM THE ABOVE THAT THE ASSESSEE HAD HA NDED OVER THE PREMISES ALONGWITH ALL THE FURNITURE AND FIXTURES FOR WHICH HE HAD PAID. H ENCE, THE SAME NEEDS TO BE GIVEN COGNIZANCE WHILE CALCULATING THE TAXABLE INCOME. AS PER THE CALCULATION SUBMITTED BY THE A.R. IT RESULTS IN A LOSS. 2.3 THE CONTENTION OF THE A.R. HAS BEEN CONSIDERE D, I HAVE GONE THROUGH THE AGREEMENTS, VALUATION REPORT AND I FIND THAT THE A. O. HAS WRONGLY MADE THIS ADDITION ITA NO 511/A HD/2011 . A.Y. 2006-0 7 4 WITHOUT GOING INTO THE DETAILS FURNISHED BY THE ASS ESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. HENCE THE ADDITION IS DELETED. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. LD. A.R. ON OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE CIT(A) AND F URTHER SUBMITTED THAT THE AMOUNT WAS RECEIVED ON ACCOUNT OF RELINQUISHMEN T OF RIGHT TO RESIDE IN THE BUNGALOW AND FOR THE FURNITURES AND FIXTURES AN D OF WHICH THE ASSESSEES SHARE WAS RS. 53,00,000/-. HE SUBMITTED THAT AS PER THE VALUATION REPORT, THE VALUE OF THE BUNGALOW WAS 68,65,000/-AND THE COST O F ANTIQUES WAS RS. 7,00,000/-. AS PER THE CALCULATION SUBMITTED BY THE ASSESSEE WHICH IS PLACED IN THE PAPER BOOK, THE ASSESSEE HAS INCURRED LONG TERM CAPITAL LOSS AND THEREFORE NO AMOUNT COULD HAVE BEEN TAXED AS CAPITA L GAINS IN THE HANDS OF THE ASSESSEE. HE THUS SUPPORTED THE ORDER OF LD. CI T(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE VALUA TION REPORT AND THE CALCULATION SUBMITTED BY THE ASSESSEE HAS GIVEN A F INDING THAT THE CALCULATION OF THE INCOME EARNED ON SALE OF PROPERT Y SHOWS A LOSS AS AGAINST THE TAXABLE INCOME CONSIDERED BY THE A.O. HE THEREF ORE DELETED THE ADDITION MADE BY THE A.O. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. ITA NO 511/A HD/2011 . A.Y. 2006-0 7 5 9. 2 ND GROUND IS WITH RESPECT TO ADDITION OF RS. 2,22,195 /- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O N OTICED THAT ASSESSEE HAD RECEIVED RS. 2,22,195/- BY CHEQUE. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE TO WHICH IT WAS SUBMITTED BY THE ASSESSE E THAT IT WAS RECEIVED ON ACCOUNT OF SALE OF OLD FURNITURE. A.O NOTED THAT IN THE ABSENCE OF SUPPORTING EVIDENCE THE SUBMISSION OF THE ASSESSEE COULD NOT B E ACCEPTED AND THAT ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF TRA NSACTION. HE ACCORDINGLY CONSIDERED THE AMOUNT AS UNEXPLAINED CASH CREDIT U/ S. 68 AND ADDED TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 3. THE SECOND POINT OF APPEAL IS REGARDING ADDITION OF RS.2,20,195/ UNDER SECTION 68 AS UNEXPLAINED CASH CREDIT. 3.1 THE AO HAS STATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF TRANSACTION. THE ASSESSEE MERELY STA TED THAT THE AMOUNT PERTAINS TO SALE OF FURNITURE AND WITHOUT ANY BASIS. THEREFORE, THE AMO UNT OF RS.2,22,195/- IS TREATED AS UNEXPLAINED CASH CREDIT U/S.68 AND ADDED TO THE TOT AL INCOME. 3.2 THE AR OF THE APPELLANT HAS SUBMITTED THAT THE AMOUNTS RECEIVED BY THE ASSESSEE, WERE BY CHEQUES ONLY AND THE BREAK UP WAS AS UNDER. BREAK UP OF THE AMOUNT IS AS FOLLOWS: RS. 37,195/- DATED 20.05.2005 RS. 1,50,000/- DATED 30.05.2005 RS. 35,000/- DATED 20.10.2005 THE ASSESSEE HAD FURTHER VACATED HIS HOUSE IN THIS YEAR AND HAD PRODUCED CORRESPONDENCE WITH PARTIES WHOM HE HAS SOLD FURNIT URE. ALSO, ALL AMOUNTS WERE RECEIVED BY CHEQUES ONLY; AND THE A.R. HAS CITED THE FOLLOWI NG JUDGMENT IN SUPPORT OF THE CLAIM. ADDL. C1T V. BAHRI BROS. [P.) LTD. [1985] 154 ITR 244 (PAT.) ITA NO 511/A HD/2011 . A.Y. 2006-0 7 6 3.3 I HAVE GONE THROUGH THE DETAILS OF THE SUBMISSI ONS MADE AND THE ASSESSMENT ORDER AND I FIND THE A.R.S CONTENTION IS FOUND TO BE COR RECT AND THEREFORE THE ADDITION OFRS.2,20,195/-IS DELETED. 11. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), RE VENUE IS NOW IN APPEAL BEFORE US. 12. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. LD. A.R. ON OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE CIT(A) AND F URTHER SUBMITTED THAT THE AMOUNT WAS RECEIVED BY CHEQUE ON ACCOUNT OF SAL E OF OLD FURNITURE. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HA S NOTED THAT ASSESSEE HAD PRODUCED CORRESPONDENCE WITH THE PARTIES TO WHOM TH E FURNITURE WAS SOLD BY THE ASSESSEE AND FURTHER ALL THE AMOUNTS WERE RECEI VED IN CHEQUES. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A), WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 14. GROUND NO. 3 IS WITH RESPECT TO ADDITION OF RS. 4,0 0,980/- DEPOSITED IN THE BANK. 15. A.O ON PERUSING THE CASH BOOK NOTICED THAT EVERY MO NTH CASH ON RS. 33,415/- WAS CREDITED ON ACCOUNT OF SALARY AND THAT THERE WAS NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE RECEIPTS. HE WAS OF THE VIEW THAT ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS O F TRANSACTION. HE ITA NO 511/A HD/2011 . A.Y. 2006-0 7 7 THEREFORE CONSIDERED THE AGGREGATE SALARY OF RS. 4, 00,980/- RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT AND ADDED TO TH E INCOME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFO RE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 4.2 THE A.R OF THE APPELLANT HAS SUBMITTED THAT THE ASSESSEE HAD DEPOSITED THE CASH FROM CASH ON HAND WHICH HE WAS HAVING AT THAT TIME. 4.3 I HAVE GONE THROUGH THE REPRESENTATION AND THE SUBMISSION BY THE A.R. WHEREIN THE CLOSING CASH BALANCE OF THE CASH BOOK IS RS. 7, 27,015/- WHICH IS MORE THAN THE RECEIPT OF SALARY. HENCE HE DID NOT NEED CASH ON HAND TO TA LLY THE BOOKS. IN VIEW OF THE EXPLANATION GIVEN AND THE CASH ACCO UNT VERIFIED, THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IS NOT REQUIRED . HENCE, THE DISALLOWANCE OF RS. 4,00,980/- MADE BY THE A.O IS DELETED AND THE APPEA L IS ALLOWED. 16. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 17. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. LD. A.R. ON OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE A.O. AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE HAS NOTED THAT THE CLOSING CASH BALANCE OF THE CASH BOO K WAS IN EXCESS OF THE RECEIPTS OF SALARY AND THEREFORE ASSESSEE DID NOT N EED ANY CASH ON HAND TO TALLY THE BOOKS. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A), WE THEREF ORE FIND NO REASON TO ITA NO 511/A HD/2011 . A.Y. 2006-0 7 8 INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THI S GROUND OF REVENUE IS DISMISSED. 19. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 15 - 05 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMED ABAD