Dr. Vaninder Singh Riar, Gurdaspur V. The Income Tax Officer, Gurdaspur

ITA 557/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8794 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 27-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: SUBHASH MAHAJAN
• Keywords: Gift; Assessment record
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.557(ASR)/2015 ASSESSMENT YEAR:2008-09 PAN:AGXOR6463K SH. VANINDER SINGH RIAR VS. INCOME TAX OFFICER, S/O SH. AMARJIT SINGH RIAR, WARD-1, GURDASPUR. DADWAN ROAD, DHARIWAL, DISTT. GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SUBHASH MAHAJAN, ADVOCATE RESPONDENT BY: SH. S.S. KANWAL, DR DATE OF HEARING: 11/01/2016 DATE OF PRONOUNCEMENT: 17/03/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2008-09 AGAINST THE LD. CIT(A)S ACTION OF REJECTING THE C ASH FLOW STATEMENT FILED BY THE ASSESSEE AND CONFIRMING THE ADDITION OF RS.4 ,70,000/- OUT OF THE TOTAL ADDITION OF RS.8,19,250/-. 2. THE FACTS ARE THAT THE ASSESSEE DERIVES INCOME F ROM BANK DEPOSITS, POST OFFICE DEPOSITS AND OTHER DEPOSITS. THE AO FOU ND THE FOLLOWING CASH DEPOSITS MADE IN THE BANKS: ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 2 S.NO. DATE OF PAYMENT BANK ACCOUNT NO. AMOUNT (RS.) 1. 14.09.2007 ACCOUNT NO.441002010005737 WITH UNION BANK OF INDIA, KOT SANTOKH RAI, DHARIWAL, GURDASPUR. 70,000/- 2. 26.11.2007 -DO- 65,000/- 3. 27.11.2007 -DO- 85,000/- 4. 8.3.2008 -DO- 2,50,000/- 5. 26.11.2007 FIXED DEPOSIT RECEIPT 49,250/- TOTAL: 5,19,250/- 3. THUS, THERE WERE DEPOSITS OF RS.4,70,000/- AND FDR OF RS.49,000/-, TOTALING TO RS.5,19,250/-. BESIDES, T HE ASSESSEE WAS ALSO FOUND TO HAVE MADE A CASH GIFT OF RS.3,00,000/- TO HIS BROTHER, SHRI MANTEJ SINGH RIAR. 4. VIDE REPLY DATED 18.06.2010, THE ASSESSEE STATE D THAT THE DEPOSITS WERE DULY REFLECTED IN HIS CASH FLOW STATEMENT, WHI CH HAD ALREADY BEEN ACCEPTED BY THE DEPARTMENT. 5. DISAGREEING WITH THE ASSESSEE, THE AO OBSERVED T HAT THE CASH FLOW STATEMENT HAS NO VALUE IN LAW; THAT THERE HAD BEEN NO OCCASION FOR THE DEPARTMENT TO EXAMINE THE CASE AND SO, THE ASSESSE ES CONTENTION THAT HIS DEPOSITS, AS REFLECTED IN HIS CASH FLOW STATEME NT, HAD BEEN EXAMINED BY THE DEPARTMENT WAS FALSE; THAT IT WAS FOR THE F IRST TIME THAT THE CASE WAS BEING SCRUTINIZED; THAT THE CASH FLOW STATEMENT WAS A MADE UP AFFAIR ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 3 AND WAS NOT ACCEPTABLE; AND THAT THE ASSESSEE HAD B EEN ASKED TO FURNISH EVIDENCE AS TO THE SOURCES OF THE BANK DEPOSITS, BU T THE ASSESSEE HAD FAILED TO DO SO. THE AO OBSERVED THAT THE ASSESSEE HAD BEEN ASKED TO FURNISH EVIDENCE REGARDING THE CASH DEPOSITS IN BAN K ACCOUNT AND FDR DURING THE YEAR AND THAT THE ASSESSEE IN HIS REPLY, HAD STATED THAT REGARDING THE QUERY PERTAINING TO OTHER INCOME, THE ASSESSEE HAD ADVANCED LOANS TO VARIOUS PERSONS IN THE EARLIER YE ARS AND DURING THE YEAR UNDER CONSIDERATION; THAT HE HAD RECEIVED INTE REST INCOME; THAT MONTH-WISE DETAILS STOOD ALREADY FILED; AND THAT HE HAD NOT MAINTAINED RECORD REGARDING NAMES AND ADDRESSES OF THE PERSONS . THE AO OBSERVED THAT THE SAID EXPLANATION OF THE ASSESSEE WENT AGAI NST HIM; THAT THE ASSESSEE WAS WITHHOLDING THE REQUIRED INFORMATION I N ORDER TO AVOID PROPER INVESTIGATION; THAT IT WAS NOT POSSIBLE FOR A PERSON TO GIVE LOAN TO OTHERS WITHOUT NOTING DOWN THEIR NAMES AND ADDRESSE S, AMOUNTS AND DATE OF LOAN ADVANCED, INTEREST EARNED/RECEIVED; TH AT THEREFORE, THE ASSESSEES EXPLANATION WAS PATENTLY FALSE; THAT TH E PROCEEDINGS HAD BEEN ATTENDED BY THE COUNSEL FROM TIME TO TIME AND THE A SSESSEE HAD NOT ATTENDED EVEN ONCE; THAT THE COUNSEL HAD PARTICULAR LY BEEN ASKED TO PRODUCE THE ASSESSEE, BUT HE HAD FAILED TO ATTEND; THAT THIS AMPLY SHOWED THAT THE EXPLANATIONS BEING FURNISHED WERE NOT TRUE; THAT THE INTERESTINGLY, THE ASSESSEE HAD NEVER SHOWN ANY LOA NS GIVEN IN ANY OF THE THREE YEARS, AS NO SUNDRY DEBTORS HAD BEEN SHOW N IN THE STATEMENT OF AFFAIRS AS FILED FOR THE THREE YEARS; THAT THIS CLEARLY SHOWED THAT THE ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 4 ASSESSEE HAD INTENTIONALLY AVOIDED APPEARING AND FA CING INVESTIGATION AND GIVING EVIDENCE IN RESPECT OF CASH DEPOSITS MAD E DURING THE YEARS, GIFTS MADE AND LOANS ADVANCED, ETC., THAT IT WAS F URTHER NOTICED THAT SOME DEPOSITS HAD BEEN MADE WITHOUT ANY GAP OF TIME ; THAT A SUM OF RS.65,000/- WAS DEPOSITED ON 26.11.2007 AND AN FDR OF RS.49,250/- WAS ALSO PURCHASED ON THE SAME DATE; THAT AGAIN, A SUM OF RS.85,000/- WAS DEPOSITED ON THE VERY NEXT DATE, I.E., ON 27.11 .2007; THAT A GIFT OF RS.3,00,000/- WAS ALSO GIVEN BY THE ASSESSEE TO HI S BROTHER, SH. MANTEJ SINGH RIAR, IN CASH; THAT IF CASH OF RS.13,12,021/ - WAS AVAILABLE WITH THE ASSESSEE, WHY DEPOSITS WERE MADE ON DIFFERENT D ATES; THAT IN THE CASH FLOW STATEMENT, BALANCE CARRIED FORWARD HAD BEEN SH OWN AT RS.5,35,858/-; THAT THE QUESTION WAS AS TO WHERE SU CH CASH BALANCE WAS AND AS TO WHEN THE ASSESSEE HAD A BANK ACCOUNT, WHY THE SAME HAD NOT BEEN DEPOSITED THEREIN; THAT APPARENTLY, THE CAPITA L ACCOUNT AS FURNISHED WAS A MADE UP STORY AND IT WAS PATENTLY FALSE; AND THAT, THEREFORE, THE ASSESSEES EXPLANATION COULD NOT BE ACCEPTED. 6. IT WAS IN THIS MANNER THAT THE AO MADE ADDITION OF RS.8,19,250/- TO THE ASSESSEES INCOME, AS INCOME FROM UNDISCLOS ED SOURCES. 7. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 5,19,250/-, DELETING THE ADDITION O F RS.3,00,000/- REPRESENTING CASH GIFTED BY THE ASSESSEE TO HIS BRO THER, SH. MANTEJ SINGH RIAR. THE LD. CIT(A) ALSO DELETED THE ADDITION OF R S.49,250/- REPRESENTING FIXED DEPOSIT RECEIPT. ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 5 8. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THERE WAS NO REASON FOR THE LD. CIT(A) TO REJECT THE CASH FLOW S TATEMENT PREPARED OUT OF THE STATEMENT OF INCOME & CAPITAL ACCOUNT SUBMITTED BY THE ASSESSEE FOR THE F.YS. 2003-04 TO 2007-08 WHICH WERE FURNISHED B Y THE ASSESSEE ALONGWITH THE RETURN IN RESPECTIVE YEARS. HE FURTH ER CONTENDED THAT IN THE REMAND REPORT SUBMITTED BY THE AO, THESE STATEM ENTS WERE VERIFIED AND FOUND CORRECT IN THE ASSESSMENT RECORD. THE LD. COUNSEL STATED THAT THE LD. CIT(A) HAS ERRONEOUSLY NOT APPRECIATED THE FACT THAT REASON GIVEN BY THE AO FOR ADDITIONS IN ASSESSMENT ORDER ARE CON TRARY TO SETTLED LAW BY THE HONBLE PUNJAB & HARYANA HIGH COURT THAT, T HERE IS NO DIFFERENCE IN ASSESSMENT U/S 143(3) AND 143(1)(A) IF ATTAINED FINALITY. IT WAS SUBMITTED THAT THE LD. CIT(A) HAS ERRED BY IGNORING THE FACT THAT THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE IN CASE OF ASSESSEE AS HE HAD MAINTAINED NO REGULAR BOOKS OF ACCOUNTS AND CREDIT IN SAVING ACCOUNT/FDR WITH BANK HAD BEEN REFLECTED IN THE CAP ITAL ACCOUNT SUBMITTED WITH THE AO; AND THAT THE LD. CIT(A) HAS GONE WRONG IN OBSERVING THAT THAT THE CASH DEPOSITS WERE NOT DEB ITED IN THE BANK ACCOUNT. 9. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT DUE REL IEF HAS BEEN GRANTED BY THE LD. CIT(A) TO THE ASSESSEE; THAT THE ASSESSE E HAS NOT PROVED THE SOURCE OF THE CASH DEPOSITS AND THAT SO, THE ONUS U /S 68 OF THE ACT HAS NOT BEEN DISCHARGED. ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 6 10. I HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. BEFORE THE LD. CIT(A) WRITTEN ARGUMENTS (APB 3-6) HAD BEEN FILED, ADDITIONAL WRITTEN ARGUMENTS (APB 7 -8) WERE ALSO FURNISHED. CASH FLOW STATEMENT (APB 9-10) WAS ALSO FILED. FOR CONVENIENCE, THIS CASH FLOW STATEMENT IS BEING REPR ODUCED AS UNDER: CASH FLOW STATEMENT OF SH.VANINDER SINGH RIAR S/O DR. AMARJAIT SINGH RIAR, DADWAN ROAD, DHARIWAL, TEHSIL GURDASPUR. 01.04.2005 TO 31.03.2006 OPENING CAPITAL BALANCE 16,490.00 A/C NO.5735 BANK BALANCE 1505.00 A/C NO.6528 01.04.2005 500.00 CASH AS ON 01.04.2005 14485.00 16490.00 16,490.00 OPENING CASH BALANCE 14,485.00 CASH WITHDRAWN FROM A/C DATE A/C NO.0005737 07.03.2006 9,00,000.00 A/C NO.0006508 07.032.006 3,35,000.00 12,59,485.00 LESS WITHDRAWLS TATA AIG INSU. 20,000.00 PPF 5,000.00 WITHDRAWALS 12,000.00 37,000.00 37,000.00 12,12,485.00 01.04.2006 TO 31.03.2007 OPENING CAPITAL BALANCE 12,12,485.00 CASH WITHDRAWN FROM BANK AC/ NO.005737 DT.15.04.20 06 3,75,000.00 15,87,485.00 LESS: CASH DEPOSITED IN BANK A/C NO.0005737 DATE 16.01.2007 99000.00 17.01.2007 1000.00 22.03.2007 99500.00 23.03.2007 500.00 ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 7 INSURANCE TATA AIG 20000.00 PPF 5000.00 WITHDRAWALS 12000.00 WITHDRAWALS FOR FDR 53000.00 (FDR RS.100000 LESS WITHDRAWALS FOR FDR FROM BANK 47000 _____________________ 2,90,000.00 2,90,000.00 CASH IN HAND 12,97,485.00 01.04.2007 TO 31.03.2008 OPENING CAPITAL BALANCE 12,97,485.00 ADD OTHER INCOME 82,250.00 13,79,735.00 LESS TO INSURANCE 15,629.00 TO INSURANCE 20,000.00 TO PPF 5,000.00 TO WITHDRAWALS 12,000.00 TO CASH DEPOSITED IN DATED 12.09.2007 70,000.00 CASH FDR DATE 26.11.2007 49,250.00 26.11.2007 65,000.00 27.11.2007 85,000.00 08.03.2008 2,50,000.00 TO GIFT TO BROTHER 3,00,000.00 8,71,942.00 8,71,942.00 5,07,793.00 11. IT DOES NOT STAND DISPUTED THAT IN THE YEAR UND ER CONSIDERATION, CASH FLOW STATEMENT WAS PREPARED OUT OF THE CAPITAL ACCOUNT FILED BY THE ASSESSEE. THIS CAPITAL ACCOUNT AS WELL AS CASH FLOW STATEMENT HAVE BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(A) FOR THE PURPOSES OF DELETING THE ADDITION OF RS.3,00,000/- REPRESENTING CASH GIFT MA DE BY THE ASSESSEE TO HIS BROTHER, SH. MANTEJ SINGH RIAR AS WELL AS FDR OF RS.49,250/-. AT THE ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 8 SAME TIME, FOR SUSTAINING THE ADDITION IN QUESTION, I.E., THE ADDITION OF RS.4,70,000/- REPRESENTING CASH DEPOSITED IN THE BANK, THIS CASH FLOW STATEMENT HAS NOT BEEN TAKEN INTO CONSIDERATION. HO WEVER, A PERUSAL OF THE CASH FLOW STATEMENT SHOWS THAT THE ASSESSEE HAD OPENING CAPITAL ACCOUNT OF RS.13,12,021/-. THE OTHER INCOME WAS ADD ED IN THE CAPITAL ACCOUNT/ CASH AFFAIRS STATEMENT. THIS HAD DIRECT NE XUS WITH THE CAPITAL ACCOUNT OF ALL EARLIER YEARS. AS SUCH, THERE WAS NO REASON AVAILABLE WITH THE LD. CIT(A) TO DISBELIEVE THESE MATERIAL EVIDENC ES, WHICH STAND ALREADY ACCEPTED BY THE DEPARTMENT. APROPOS THIS ACCEPTANCE , THE ASSESSEES STAND HAS REMAINED THAT THOUGH THE EARLIER ASSESSME NTS WERE UNDER SECTION 143(3) OF THE ACT, HOWEVER, NO NOTICE U/S 1 43(2) WITHIN THE PRESCRIBED TIME OF TWELVE MONTHS WAS ISSUED AND SO, THE ASSESSMENT PROCEEDINGS ATTAINED FINALITY. THIS HAS NOT BEEN DI SPUTED. OUT OF THE OPENING CAPITAL OF RS.13,12,021/-, WHICH WAS LYING IN THE SHAPE OF INVESTMENT FOR INTEREST AND CASH IN HAND, EVEN AS N OTED BY THE AO IN THE ASSESSMENT ORDER, NARRATING THE SOURCE OF INCOME, S TATING THAT THE ASSESSEE HAS INTEREST INCOME FROM OTHER INVESTMENTS . DURING THE YEAR UNDER CONSIDERATION, THESE INVESTMENTS WERE RECEIVE D BACK BY THE ASSESSEE ALONG WITH INTEREST AND THE AMOUNT WAS DEP OSITED IN THE BANK. THE RETURNS OF THE EARLIER YEARS WERE FILED BY THE ASSESSEE ALONGWITH THE CAPITAL ACCOUNT. 12. ON RECEIPT OF INVESTMENTS WITH INTEREST, THE A SSESSEE DEPOSITED THE SAME IN THE BANK AND PURCHASED FDRS. ALL PARTIC ULARS OF THE INTEREST ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 9 RECEIVED WERE SUBMITTED BY THE ASSESSEE. THE INCOME OF THE ASSESSEE DOES NOT STAND DISPUTED BY THE AO. ALL RECEIPTS AND DEPOSITS IN ALL THE YEARS WERE DULY SHOWN BY THE ASSESSEE. THE ASSESSEE HAS STATED ALL THE ABOVE FACTS IN THE WRITTEN SUBMISSION FILED BY HIM BEFORE THE LD. CIT(A) TOO. BESIDES, IT WAS ALSO SUBMITTED THAT THE ASSESS EE HAD APPLIED FOR CERTIFIED COPIES OF THE STATEMENTS FILED WITH THE I NCOME TAX RETURNS FOR THE EARLIER YEARS, BUT THE AO DID NOT ISSUE THESE CERTI FIED COPIES TO THE ASSESSEE. HOWEVER, THE LD. CIT(A) HAS NOT TAKEN AN Y COGNIZANCE OF SUCH SUBMISSIONS MADE BY THE ASSESSEE. 13. IT HAS, THUS, BEEN WRONGLY IGNORED THAT AS AVAI LABLE FROM THE CASH FLOW STATEMENT MADE OUT OF CAPITAL ACCOUNT FURNISHE D BY THE ASSESSEE, THE DEPOSITS WERE MADE OUT OF THE CAPITAL ALREADY A VAILABLE WITH THE ASSESSEE, WHICH WAS BROUGHT FORWARD FROM THE EARLIE R YEARS. MOREOVER, IT HAS NOT BEEN DISPUTED, AGAIN, THAT THE CASH FLOW ST ATEMENT IS AN ACCEPTED DOCUMENT UNDER ACCOUNTANCY AND IS PREPARED TO ASSESS THE CAPACITY OR INSOLVENCY OF A PERSON. THE CASH FLOW S TATEMENTS FOR ALL THE EARLIER YEARS WERE DULY SUBMITTED BY THE ASSESSEE A LONGWITH THE RETURNS, OF INCOME FILED AND THEY WERE ACCEPTED BY THE DEPAR TMENT. ALL THESE CASH FLOW STATEMENTS WERE PREPARED OUT OF THE MATERIAL S UBMITTED WITH THE DEPARTMENT IN EARLIER YEARS, AND SO, THEY COULD NOT BE IGNORED. THERE WAS NO MATERIAL WHATSOEVER WITH THE LD. CIT(A) TO O BSERVE THAT THE CASH FLOW STATEMENT FOR THE YEAR UNDER CONSIDERATION WAS JUST A MADE UP DOCUMENT, PREPARED TO SUIT THE CONVENIENCE OF THE A SSESSEE. ITA NO.557(ASR)/2015 ASSESSMENT YEAR: 2008-09 10 14. IN VIEW OF THE ABOVE, FINDING FORCE IN THE GRIE VANCE SOUGHT TO BE RAISED BY THE ASSESSEE, THE SAME IS ACCEPTED. ACCOR DINGLY, THE ADDITION SUSTAINED BY THE LD. CIT(A) AMOUNTING TO RS.4,70,00 0/- DOES NOT HAVE ANY MERIT. THE SAME, AS SUCH, IS DELETED. 15. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/03/ 2 016. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 17/03/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: DR. VANINDER SINGH RIAR. DHARIWAL, DI STT. GURDASPUR. 2. THE ITO WARD-1, GURDASPUR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.