ITO, New Delhi V. Prof. Najma Nasim Siddiqui, New Delhi

ITA 516/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3798 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 31-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Unexplained investment; Source of fund; Additional evidence; Non compliance
• Section: 142(1); 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T. A. NO.516/DEL/2011 ASSESSMENT YEAR : 2007-08 INCOME-TAX OFFICER, PROF. NAJMA NASIM SIDDIQUI, WARD 46(2), NEW DELHI. VS. F-9/11, MODEL TOWN, NEW DELHI. PAN: AAOPG8304M (APPELLANT) (RESPONDENT ) APPELLANT BY: SHRI A.K. MONGA, SR. DR. RESPONDENT BY: NONE O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 12 .11.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SEC. 144/143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT), FOR THE ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WITH R EGARD TO THE ADDITION OF RS.30,00,000/- MADE BY THE ASSESSING OFFICER UNDER SEC. 69 OF THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENTS IN MUTUA L FUNDS. 3. IN THIS CASE, THE ASSESSEE FILED HER RETURN OF I NCOME ON 19.03.2008, DECLARING TOTAL INCOME AT RS.4,20,068/-. THEREAFTE R, THE CASE WAS SELECTED 2 FOR SCRUTINY THROUGH CASS, AND NOTICE U/S 143(2) DA TED 30.07.2008 WAS ISSUED AND SERVED UPON THE ASSESSEE FIXING THE DATE FOR HEARING ON 24.07.2008. IT HAS BEEN STATED BY THE AO IN THE AS SESSMENT ORDER THAT HE ISSUED VARIOUS NOTICES UNDER SEC. 143(2) AND 142(1) TO THE ASSESSEE BUT THE ASSESSEE HAD NOT RESPONDED TO ANY OF THE AFORESAID NOTICES. THE AO, THEREFORE, COMPLETED THE ASSESSMENT EX PARTE U/S 14 4 OF THE ACT TO THE BEST OF HIS JUDGMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD VIDE ORDER DATED 29.12.2009 AS THE MATTER WAS BEING BARRED BY LIMITA TION BY 31.12.2009. 4. IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT THE ASSESSEE HAS SHOWN INCOME FROM PENSION, INCOME UNDER THE HEAD CAPITAL GAINS AND INCOME FROM OTHER SOURCES. AS PER AIR INFORMATION, IT WAS FOUND BY THE AO THAT THE ASSESSEE HAD INVESTED RS.3,00,000/- TOWARDS PU RCHASE OF UNITS OF ICICI PRUDENTIAL MUTUAL FUND ON 31.03.2007, RS.13,00,000/ - ON 17.01.2006, RS.4,00,000/- ON 9.10.2006 AND RS.10,00,000/- ON 1. 06.2006 FOR PURCHASE OF SBI MUTUAL FUND. SINCE NONE FOR THE ASSESSEE APPEA RED BEFORE THE AO, THE AO TREATED THE INVESTMENT AMOUNTING TO RS.30,00,000 /- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND ADDED THE SAME TO TH E TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM UNDISCLOSED SO URCES. 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 3 6. BEFORE THE LEARNED CIT(A), THE ASSESSEES COUNSE L HAD FILED WRITTEN SUBMISSIONS EXPLAINING SOURCES OF INVESTMENTS ALONG WITH THE COPY OF THE BANK STATEMENT, COPY OF INTIMATION OF INVESTMENT AN D REDEMPTION OF UNITS OF MUTUAL FUNDS. THE ASSESSEE ALSO FILED AN APPLICATI ON UNDER RULE 46A OF THE INCOME-TAX RULES FOR ADMISSION OF EVIDENCES. THE A DDITIONAL EVIDENCES ALONG WITH THE APPLICATION WERE SENT BY THE LEARNED CIT(A) TO THE AO FOR SUBMITTING HIS REPORT. THE AO SUBMITTED HIS REMAND REPORT ON 23.10.2010. A COPY OF REMAND REPORT WAS GIVEN TO THE ASSESSEE. THE ASSESSEE THEN SUBMITTED COUNTER COMMENTS TO THE REMAND REPORT SUB MITTED BY THE AO. IN THE COUNTER COMMENTS, THE ASSESSEE SUBMITTED AS UND ER:- 5. THE ITO IN HIS REMAND REPORT HAS NOT GIVEN ANY COGENT OR VALID REASONS FOR NOT ACCEPTING THE SUBMISSIONS AND DOCUMENTS FILED BEFORE YOU AT THE APPELLATE STAGE. HE HAS ALSO NOT HELD ANY OF THE DOCUMENTS FILED BEFORE YOU AS N OT GENUINE. HE HAS ALSO NOT HELD THAT THE REASONS GIVEN BY THE APPELLANT FOR NON COMPLIANCE BEFORE ITO ARE FALSE, NOT CORRECT AN D CANNOT BE RELIED UPON WHICH IS AS UNDER:- THE ASSESSEE WAS PREVENTED FROM FILING THE ABOVE DETAILS AND EVIDENCE BEFORE THE ASSESSING OFFICER I N COMPLIANCE TO THE NOTICES ISSUED BY HIM AS THE CONSULTANT WHO WAS ENGAGED BY THE ASSESSEE FOR ATTENDING TO THE CASE AND TO WHOM THE NOTICES WERE SENT FOR COMPLIANCE CLOSED HIS OFFICE AND WENT ABROAD WITHOUT ANY INTIMATION TO THE ASSESSEE. IN THE FACTS AND CIRCUMSTANCES IT IS THEREFORE REQU ESTED THAT YOUR LEARNED SELF AS APPELLATE AUTHORITY IN FAIRNES S AND JUSTICE PLEASE ACCEPT THE SUBMISSIONS AND DOCUMENTS FILED B EFORE YOU AND DISPOSE THE CASE BY PASSING ORDERS ACCEPTING TH E CONTENTION 4 OF THE APPELLANT THAT SHE WAS PREVENTED BY REASONAB LE CAUSE FROM FILING THE DOCUMENTS 6. WE HAVE FILED BEFORE YOU THE COPY OF BANK STATEM ENT, STATEMENT SHOWING INVESTMENTS AND REDEMPTION OF UNI TS OF MUTUAL FUNDS WITH EXPLANATION OF SOURCE OF FUNDS FOR INVESTMENT. WE ONCE AGAIN SUBMIT OUR EXPLANATION W HICH IS AS UNDER: S.NO. DATE MUTUAL FUND AMOUNT SOURCE REMARKS 1. 1-06--06 SBI 1000000 REDEMPTION OF UNITS OF MUTUAL FUND ON 29.5.2006 FOR RS.10,18,758/- INVESTMENT MADE ON 29/09/2005 STT PAID. SHORT TERM CAPITAL GAIN RS.18758/-. COPY OF STATEMENT OF ACCOUNT ENCLOSED. RECEIVED 10,18,758/- ON 29-05-06 IN BANK ON SALE OF MUTUAL FUND. 2. 9-10-06 SBI MAGNUM 400,000 MATURITY PROCEEDS OF FDR ON 16/09/06 AND BALANCE IN BANK. COPY OF BANK ACCOUNT ENCLOSED. 3. 17-01- 07 SBI 13,00,000 REDEMPTION OF UNITS OF SBI MUTUAL FUND PURCHASED ON 1/06/06 AS ABOVE AT 1, SHORT TERM CAPITAL GAIN RS.250189/- , SIT PAID. COPY OF STATEMENT OF ACCOUNT ENCLOSED. RECEIVED 12,50,189 ON 8- 12-06 IN BANK. 4. 31-03- 07 ICICI PRUD. 300,000 REDEMPTION OF UNITS OF SBI BLUE CHIP FUND PURCHASED ON 14/02/06. SIT PAID LONG TERM CAPITAL GAIN RS.7379/- EXEMPT, RECEIVED ON 8- 03-07 IN BANK. FROM THE ABOVE DETAILS IT WILL BE SEEN THAT OUT OF TOTAL INVESTMENT OF RS.30 LAKHS MADE DURING THE YEAR, INV ESTMENTS AT S.NO.1,3, AND 4 AMOUNTING TO RS.26 LAKHS ARE OUT OF REDEMPTION PROCEEDS OF EARLIER INVESTMENTS AND SHORT TERM CAPITAL GAINS ARISING OUT OF THE SAME HAVE BEEN DECLARED IN THE R ETURN, 5 WHEREAS LONG TERM CAPITAL GAINS ARE EXEMPT AS STT HAS BEEN PAID. THE INVESTMENT OF RS.4 LAKHS ON 9/10/2006 IS OUT OF BALANCE IN BANK AND MATURITY PROCEEDS OF FDR. 7. AS SOURCE OF ALL THE INVESTMENTS HAVE BEEN FULLY EXPLAINED ALONG WITH SUPPORTING DOCUMENTS, THIS IS TO REQUEST YOUR LEARNED SELF TO KINDLY ALLOW RELIEF BY DELETING THE ADDITIONS MADE BY ITO IN FAIRNESS AND JUSTICE. 7. IN THE LIGHT OF THE EXPLANATION SUBMITTED BY THE ASSESSEE ALONG WITH EVIDENCES, THE LEARNED CIT(A) DELETED THE ADDITION AS HE WAS OF THE VIEW THAT SOURCE OF ALL THE INVESTMENTS HAVE BEEN FULLY EXPLA INED ALONG WITH SUPPORTING DOCUMENTS. THE OPERATING PORTION OF THE CIT(A)S ORDER RUNS AS UNDER:- 9.1 I HAVE PERUSED THE ASSESSMENT ORDER, GROUNDS O F APPEAL, WRITTEN SUBMISSIONS AND OTHER EVIDENCES FILED AND D ISCUSSED THE MATTER WITH THE AR. 9.2 AFTER HAVING TAKEN INTO CONSIDERATION THE SUBMI SSIONS OF THE LD COUNSEL OF THE APPELLANT, THE REMAND REPORT BY THE ITO AND THE COMMENTS OF THE LD. COUNSEL OF THE APPELLAN T TO THE REMAND REPORT AND THE EVIDENCE FILED BEFORE ME I AM SATISFIED THAT IN COURSE OF JUSTICE, THE EVIDENCE IS ACCEPTED AND AS THE APPELLANT HAS FULLY EXPLAINED THE SOURCES OF FUNDS NO ADDITION IS CALLED FOR. THE ITO IS HEREBY DIRECTED TO DELETE T HE ADDITION MADE AND APPELLANT GETS RELIEF OF RS.30,00,000/-. THE AO SHOULD HAVE CONSIDERATION TO ASSESSEES PROBLEM OF NOT BEING ABLE TO EXPLAIN BEFORE HIM TIME. HE SHOULD ALLOW A PPELLANT SUFFICIENT OPPORTUNITY TO EXPLAIN HER CASE REQUIRE THE DETAILS BEFORE MAKING ANY ADDITIONS. IF EXPLANATIONS ARE P ROPER AT APPELLATE STAGE, WHY AO COULD NOT BE STRAIGHT FORWA RD TO ACCEPT EVIDENCES IN REMAND PROCEEDINGS STAGE. IT IS PAINF UL TO ACCEPT INFRUCTUOUS WORK AT THIS STAGE OF LIFE. LET US LEA RN TO VERIFY EVIDENCES PUT UP BY AR AND VERIFY HIS/HER BOOKS OF ACCOUNTS, 6 STATEMENTS AND MAKE RIGHT ADDITION WHICH WILL STAND THE TEST OF APPEAL. IN THE RESULT, THE ADDITION OF RS.30,00,00 0/- IS DELETED . 8. HENCE, THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE LEARNED DR. NONE FOR THE ASSE SSEE WAS PRESENT. 10. THE LEARNED DR MERELY SUPPORTED THE AOS ORDER AND THEN SUBMITTED THAT SINCE SUFFICIENT OPPORTUNITY TO FURNISH EVIDEN CES TO EXPLAIN THE INVESTMENT MADE BY THE ASSESSEE WERE PROVIDED TO TH E ASSESSEE BY THE AO, THE LEARNED CIT(A) SHOULD NOT HAVE ADMITTED THE ADD ITIONAL EVIDENCES FOR CONSIDERATION INASMUCH AS NEITHER OF THE CLAUSES (A ) TO (D) OF RULE 46A(1) WAS SATISFIED IN THE PRESENT CASE. 11. FROM THE ASSESSMENT ORDER, WE FIND THAT THE ASS ESSEE IS A RETIRED EMPLOYEE DERIVING INCOME FROM PENSION. WE FURTHER FIND THAT THE AO HAS COMPLETED THE EX PARTE ASSESSMENT UNDER SEC. 144 OF THE ACT AND MADE THE ADDITION OF RS.30,00,000/- ON ACCOUNT OF INVESTMENT MADE IN THE MUTUAL FUNDS BY THE ASSESSEE. THE AO HAS NOT MADE ANY ENQ UIRY FROM THE MUTUAL FUND AUTHORITY OR FROM THE RESPECTIVE BANK THROUGH WHICH THE PAYMENT TOWARDS PURCHASE OF MUTUAL FUND WAS MADE BY THE ASS ESSEE. THE AO HAS MADE THE ADDITION MERELY FOR THE REASON THAT THE AS SESSEE DID NOT COMPLY WITH THE VARIOUS NOTICES ISSUED BY HIM WITHOUT MAKI NG ANY FURTHER ENQUIRY FROM THE MUTUAL FUND AUTHORITY AS WELL AS FROM THE BANK. THE ASSESSEE HAS SUBMITTED VARIOUS EVIDENCES IN THE FORM OF BANK STA TEMENT, DETAILS OF 7 INVESTMENT AND THE REDEMPTION OF VARIOUS UNITS OF M UTUAL FUND MADE FROM TIME TO TIME. THESE DETAILS WERE SUBMITTED BEFORE THE LEARNED CIT(A), AND THE LEARNED CIT(A) FORWARDED THE SAME TO THE AO FOR HIS REMAND REPORT. THE ASSESSEE HAS GIVEN A REASON FOR NOT FILING THE DETAILS AND EVIDENCES BEFORE THE AO, AND THE REASON SO GIVEN BY THE ASSES SEE WAS NOT FOUND TO BE THE BASELESS OR UNREASONABLE. THE ASSESSEE HAS SUB MITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE WAS PREVENTED FROM FILING THE VARIOUS DETAILS AND EVIDENCES BEFORE THE AO AS THE TAX CONSULTANT ENGAG ED BY THE ASSESSEE WENT ABROAD WITHOUT ANY INTIMATION TO THE ASSESSEE. THI S REASON GIVEN BY THE ASSESSEE IS NOT FOUND TO BE FALSE BY THE AO. THERE FORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS BEEN ABLE TO SATISFY THE NECESSARY CONDITION FOR ADMISSION OF ADDITIONAL EVIDENCES BEF ORE THE LEARNED CIT(A) INASMUCH AS THE ASSESSEE WAS PREVENTED FROM FILING THE DETAILS AND EVIDENCES BEFORE THE AO DUE TO UNAVOIDABLE REASON AND COMPELL ED CIRCUMSTANCES. WE, THEREFORE, HOLD THAT THE CIT(A) WAS JUSTIFIED IN AD MITTING THE ADDITIONAL EVIDENCES FILED BEFORE HIM IN SUPPORT OF THE SOURCE OF INVESTMENT MADE BY THE ASSESSEE IN MUTUAL FUNDS. IN SO FAR AS THE SOU RCE OF INVESTMENT EXPLAINED BY THE ASSESSEE, WE DO NOT FIND ANY MATERIAL TO REJ ECT THE SAME. THE ASSESSEE HAS GIVEN A CATEGORICAL EXPLANATION ABOUT THE SOURC E OF FUND FOR MAKING INVESTMENT IN MUTUAL FUNDS FROM TIME TO TIME. THE DETAILS OF THE EXPLANATION 8 HAVE ALREADY BEEN REPRODUCED HEREINABOVE AND HAVE B EEN RIGHTLY CONSIDERED BY THE LEARNED CIT(A) TO BE SATISFACTORY. WE, THER EFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED C IT(A) IN DELETING THE ADDITION OF RS.30,00,000/- ON ACCOUNT OF ALLEGED UN EXPLAINED INVESTMENT IN MUTUAL FUNDS MADE BY THE ASSESSEE. WE, THEREFORE, UPHOLD THE ORDER OF THE LEARNED CIT(A). 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 13. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 17 TH JUNE, 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH JUNE, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.