Shri Pooran Chand Agarwal, Prop., Aligarh V. ITO, Aligarh

ITA 54/AGR/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6698 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 18-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Reopening of assessment; Gift; Cost of acquisition
• Section: 143(3); 234B; 147; 68; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.54/AGR/2009 ASST. YEAR: 2003-04 SHRI POORAN CHAND AGARWAL, (PROP.), VS. INCOME-TAX OFFICER, WARD-2, M/S RAM CHAND POORAN CHAND AGENCIES, ALIGARH. GANDHI MARG, RAILWAY ROAD, ALIGARH. (PAN : AAPPA 0572 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI R.C. SHARMA, JR. D.R. ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FIELD BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 29.12.2008 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL:- (1.1) BECAUSE IN ANY VIEW THE PROCEEDINGS INITIATE D U/S 147 AND CONFIRMED BY THE LD. C.I.T. (A) IS WRONG, ILLEGAL AND AGAINST TH E FACTS AND LAW OF THE CASE. (1.2) BECAUSE THE NOTICE ISSUED U/S 148, THE ASSESS MENT MADE U/S 143(3) READ WITH SECTION 147 IS WRONG, ILLEGAL AND BAD IN LAW. 2. BECAUSE IN ANY VIEW THE ADDITION CONFIRMED BY TH E LD. C.I.T. (A) OF RS.5,00,000/- OF GIFT RECEIVED OF RS.1,00,000/- EAC H FROM FIVE PERSONS U/S 68 OF THE I.T. ACT 1961 IS WRONG, ILLEGAL AND AGAINST THE FAC TS AND LAW OF THE CASE. 3. BECAUSE IN ANY VIEW THE ADDITION CONFIRMED BY TH E LD. C.I.T.(A) OF THE LONG TERM CAPITAL GAIN ON SALE OF PLOT AT BANNA DEV I, ALIGARH ASSESSED AT RS.12,73,202/- AGAINST RS.11,80,110/- SHOWN (BY TAK ING THE COST OF ACQUISITION AT 2 RS.3,47,500/- INSTEAD OF RS.3,81,030/-) IS WRONG, I LLEGAL AND AGAINST THE FACTS AND LAW OF THE CASE. 4. BECAUSE IN ANY VIEW THE INTEREST CHARGED U/S 234 B AND 234C AS PER NOTICE OF DEMAND DT. 27.11.2006 IS WRONG, ILLEGAL AND EXCE SSIVE. 2. IN RESPECT OF GROUND NO.1, IT WAS CONTENDED BY T HE LD. A.R. THAT THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) SHOULD HAVE BEEN DROPPED BY THE A.O. IN VIEW OF THE PROVISIONS OF SECTION 15 2(2) AS HE HAD BEEN ASSESSED ON AN AMOUNT LOWER THAN WHAT HE SHOULD HAVE BEEN RIGHTLY LIABLE FOR EVEN IF THE INCOME ESCAPED ASSESSMENT HAD BEEN TAKEN INTO ACCOUNT. 3. LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND CONTENDED THAT IN THE ORIGINAL RETURN THE ASSESSEE HAS DECLAR ED AN INCOME OF RS.1,59,013/- BESIDES THE LONG TERM CAPITAL GAIN (LTCG) OF RS.11,80,110/- WHILE IN THE ASSESSMENT REOPENED UNDER SECTION 147 READ WITH SECTION 143(3) THE ASSESSEE HAD BEEN ASSESSED AT AN INCOME OF RS.19,82,220/- WHICH INCLUDES THE LTCG OF RS.12,73,202/- AGAINST R S.11,80,110/- SHOWN BY THE ASSESSEE. THUS, IT WAS CONTENDED THAT THE PLEA OF THE ASSESSE E IS NOT CORRECT AS HE HAD BEEN ASSESSED AT AN HIGHER INCOME AFTER THE REOPENING OF THE ASSESSMENT . 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS FILED THE ORIGINAL RETURN SHOWING AN INCOME OF RS.1,59,013/- BESIDES T HE INCOME FROM LTCG AT RS.11,80,110/- WHILE IN THE REOPENING OF ASSESSMENT THE ASSESSEE H AD BEEN ASSESSED AT AN INCOME OF RS.19,82,220/- INCLUDING THE LTCG OF RS.12,73,202/- . THUS, THIS IS NOT A CASE WHERE THE ASSESSEE HAD BEEN ASSESSED AT AN INCOME LOWER THAN WHAT HE WOULD HAVE BEEN RIGHTLY LIABLE. 3 EVEN THE INCOME ALLEGED TO HAVE ESCAPED BEEN TAKEN INTO ACCOUNT. IN OUR OPINION, THE ASSESSEE WILL NOT BE ENTITLED TO GET THE PROCEEDINGS DROPPED UNDER SECTION 152(2). THE ASSESSEE DID NOT PRESS THE GROUND RELATING TO ISSUANCE OF NOTICE. T HUS, GROUND NO.1 STANDS DISMISSED. 5. GROUND NO.2 RELATES TO THE ADDITION OF RS.5,00,0 00/- BEING GIFT RECEIVED BY THE ASSESSEE AT THE RATE OF RS.1,00,000/- EACH FROM FIVE PERSONS. 6. THE FACTS RELATING TO THE GIFTS ARE THAT THE ASS ESSEE SUBMITTED FOLLOWING DOCUMENTS TO PROVE THE GENUINENESS OF THE GIFT BEFORE THE A.O. : - I) GIFT DEED IN CONFIRMATION AND ACCEPTANCE OF THE GIFT THROUGH DEMAND DRAFT II) AFFIDAVIT AFFIRMING THE GIFT FROM DONOR III) ACKNOWLEDGEMENT OF THE INCOME-TAX RETURN OF TH E DONOR FOR THE A.Y. 2003-04. IV) COPY OF PAN TO PROVE THE IDENTITY OF THE DONOR V) COPY OF THE BANK PASS BOOK TO PROVE THE SOURCE O F THE DONOR. VI) COPY OF BALANCE SHEET AND CAPITAL ACCOUNT TO PR OVE THE CREDITWORTHINESS. 7. THE A.O., ON ACCOUNT OF ASSESSEE BEING FAILED TO PRODUCE THE DONOR, TREATED THE GIFT TO BE NON-GENUINE AND MADE THE ADDITION UNDER SECTION 68 OF THE ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) ALSO CONFIRMED THE ADDITION AS THE A.O. BROUGHT ON RECORD THAT THE AMOUNT HAS BEEN DEPOSITED BY THE DONOR IN THEIR BAN K ACCOUNT EITHER ON THE SAME DAY OF GIFT I.E. 30.05.2002 OR IMMEDIATELY PRECEDING THE DATE 29.05. 2002 BY WAY OF TRANSFER OR IN CASH. 4 8. BEFORE US, THE LD. A.R. VEHEMENTLY CONTENDED THA T THE ASSESSEE HAS SUBMITTED COPY OF THE GIFT DEED, AFFIDAVIT OF THE DONOR, HIS PAN, COPY OF INCOME-TAX RETURN, COPY OF PASS BOOK AS WELL AS BALANCE SHEET AND CAPITAL ACCOUNT. THE ASSESSEE HAS THUS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE C ANNOT PROVE THE SOURCE OF THE SOURCES. THE A.O., NO DOUBT, ASKED THE ASSESSEE TO PRODUCE EACH OF THE DONOR BUT THE ASSESSEE REQUESTED THE A.O. TO EXERCISE THE POWER VESTED UNDER INCOME-TAX ACT SO THAT THE DONOR COULD BE PRODUCED. THE A.O. DID NOT DO ANYTHING FURTHER BUT MADE THE A DDITION IN THE HANDS OF THE ASSESSEE. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE A.O. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THE A.O. HAS NOT ACCEPTED THE TRANSAC TION OF GIFT TO BE NON-GENUINE IN VIEW OF THE FACT THAT THE BANK ACCOUNT OF THE DONOR REVEALS THA T THE ASSESSEE HAS DEPOSITED THE AMOUNT IN THE BANK EITHER ON THE SAME DAY OF GIFT OR ON THE IMMED IATELY PRECEDING DATE. THE SOURCE OF THIS TRANSFER ENTRIES OR CASH DEPOSIT IS NOT VERIFIABLE. THE ASSESSEE EVEN THOUGH SUBMITTED NECESSARY EVIDENCE TO PROVE THE IDENTITY, CREDITWORTHINESS AN D GENUINE OF THE TRANSACTION AND ALSO REQUESTED THE A.O. TO EXERCISE HIS POWER VESTED UNDER INCOME- TAX ACT SO THAT THE PRESENCE OF EACH OF THE DONOR MAY BE COMPELLED. THE A.O., WITHOUT ISSUING SUMMONS TO EACH OF THE DONOR OR VERIFYING THE FACTS FROM THE CONCERNED A.O., REJECTED THE GEN UINENESS OF THE GIFT. ALL THE DONORS ARE INCOME-TAX ASSESSEES. THIS FACT IS ON RECORD. IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ORISSA SYNTHETIC CORPORATION, 168 IT R 70, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN LAW IN NOT ISSUING SUMMONS TO THE DONORS IN CASE THE A.O. DOUBTS THE GENUINENESS OF THE GIFT TO EACH OF THE DONOR, TO VERIFY THE CORREC TNESS OF THE GIFT. THIS IS SETTLED LAW THAT THE ASSESSEE IS NOT EXPECTED TO PROVE THE SOURCE OF SOU RCES IN VIEW OF THE DECISION OF THE HONBLE 5 GUJARAT HIGH COURT IN THE CASE OF ROHINI BUILDERS, 256 ITR 360. WE ACCORDINGLY DELETE THE ADDITION OF RS.5,00,000/-. THUS, GROUND NO.2 STAND S ALLOWED. 10. THE NEXT GROUND RELATES TO LTCG. THE A.O. COMP UTED LTCG AT RS.12,73,202/- AS AGAINST RS.11,80,110/- RETURNED BY THE ASSESSEE. 11. THE BRIEF FACTS ARE THAT THE ASSESSEE HAS SOLD A PLOT OF LAND FOR A CONSIDERATION OF RS.22,85,000/-. WHILE COMPUTING THE LTCG, THE ASSE SSEE HAS TAKEN THE COST OF ACQUISITION OF THE SAID PLOT AT RS.3,81,030/-. THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS SHOWN THE VALUE OF THIS PLOT AT RS.3,47,500/- IN HIS BOOKS OF ACCOUNTS. WH EN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE A.O. 12. THE LD. A.R. CONTENDED THAT THE ASSESSEE, AFTER PURCHASE OF THE PLOT AT RS.3,47,500/-, HAS CONSTRUCTED THE BOUNDARY WALL ON WHICH IT HAS INCUR RED AN EXPENDITURE OF APPROXIMATELY RS.30,000/- AND, THEREFORE, THE ASSESSEE HAS CLAIME D A DEDUCTION F RS.3,81,030/-. 13. THE LD. D.R., ON THE OTHER HAND, POINTED OUT TH AT IN THE BOOKS THE ASSESSEE HAS SHOWN THE COST OF ACQUISITION OF LAND AT RS.3,47,500/-. ALTH OUGH THE ASSESSEE HAS CLAIMED THAT HE HAS INCURRED A SUM OF RS.30,000/- FOR THE CONSTRUCTION OF BOUNDARY WALL BUT NO EVIDENCE IN THIS REGARD WAS EVER FILED BY THE ASSESSEE NEITHER BEFOR E THE A.O. NOR BEFORE THE CIT(A). EVEN NO SUCH EVIDENCES ARE AVAILABLE IN PAPER BOOK FILED BY THE ASSESSEE. 6 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN OUR OP INION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). THE ONUS IS ON THE ASSESSEE TO PROV E THAT THE ASSESSEE HAS INCURRED A SUM OF RS.30,000/- FOR THE CONSTRUCTION OF THE BUILDING OU T OF THE BOUNDARY WALL BUT NO SUCH EVIDENCE HAS EVER BEEN FILED BY THE ASSESSEE NEITHER BEFORE THE AUTHORITIES BELOW NOR BEFORE US. UNDER THESE FACTS, WE CONFIRM THE ORDER OF THE CIT(A). T HUS THE GROUND NO.3 STANDS DISMISSED 15. GROUND NO.4 RELATING TO THE CHARGING OF INTERES T UNDER SECTION 234B & 234C OF THE ACT IS CONSEQUENTIAL IN NATURE. ACCORDINGLY, THE A.O. IS DIRECTED TO RECOMPUTE THE INTEREST AFTER GIVING EFFECT TO THIS ORDER. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY