Dindayal Kayan, Kolkata V. I.T.O Wd - 34(3),kolkata, Kolkata

ITA 561/KOL/2013

• Counselvise Citation: 56123514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2013
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Keywords: Gift; Business income; Income from undisclosed sources; Source of fund
• Section: 43B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE HON BLE SHRI B.P.JAIN, AM] I.T.A NO.561 /KOL/2013 ASSESSMENT YEAR: 2006 - 07 DINDAYAL KAYAN VS I.T.O., WARD - 34(3 ) KOLKATA KOLKATA (APPELLANT) ( RESPONDENT) (PAN : AFWPK 8861 J) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI SANJAY, SR.DR, ADDL. C.I.T. DATE OF HEARING : 02 .06 .2015. DATE OF PRONOUNCEMENT: 02 .06 .2015. ORDER PER SHRI B.P.JAIN, AM : THIS APPEAL OF THE ASSESSEE ARI SES FROM THE ORDER OF LD.CIT(A) - XX, KOLKATA DATED 08.11.2012 FOR ASSESSMENT YEAR 2006 - 07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT THE LD. CIT(A) ERRED IN SUSTAINING ADDITION OF GIFT RS.9,69,677/ - RECEIVED AT THE OCCASION OF HIS MARRIAGE HURRIEDLY WITHOUT VERIFICATION AND WITHOUT ALLOWING PROPER OPPORTUNITY TO SUBSTANTIATE THE GENUINENESS OF THE GIFT ALTHOUGH FULL PARTICULARS OF THE DONORS WERE DULY FURNISHED AT THE TIME OF ASSESSMENT STAGE AND THEREAFTER. 2. THAT THE LD.CI T(A) ERRED IN SUSTAINING DISALLOWANCE OF INTEREST RS.399,222/ - PAYABLE TO THE LAXMI COMMERCIAL BANK ON LOAN FROM THEM, INVOKING SECTION 43B ALTHOUGH THE LOAN AND INTEREST WAS SUB - JUDICE BEFORE DELHI RECOVERY TRIBUNAL AND ALLAHABAD HIGH COURT AND ANY PAYMEN T OF INTEREST WAS INFEASIBLE DURING PENDENCY OF SUITE BEFORE AUTHORITIES BELOW. 3. THAT THE ASSESSMENT ORDER AND THE APPELLATE ORDER ARE BAD IN LAW AND ARE LIABLE TO BE SET ASIDE AND ELIGIBLE TO BE RESTORED TO THE A.O. 4. THAT THE APPELLANT CRAVE LEAVE TO ADD TO ALTER OR ANY OF THE GROUND OF APPEAL. 3. AS REGARDS GROUND NO.1 THE BRIEF FACTS OF THE CASE ARE THAT THE AO FOUND THAT THERE WAS A DIFFERENCE IN CLOSING CAPITAL AS SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME AND BOOKS OF ACCOUNT PRODUCED. TO RE CONCILE THE SAID DIFFERENCE BETWEEN THE CLOSING CAPITAL AS PER RETURN OF INCOME AND AS PER BOOKS OF ACCOUNT , THE ASSESSEE ITA NO. 561/KOL/2013 DINDAYAL KAYAM A.YR. 2006 - 0 7 2 SUBMITTED THAT HE HAD RECEIVED GIFT OF RS.9,69,677/ - ON MARRIAGE CEREMONY, AND IN SUPPORT OF THIS GIFT THE ASSESSEE FILED A LIST OF 4 3 PERSONS WITH THEIR ADDRESSES AND AMOUNTS OF GIFTS RECEIVED. THE ASSESSEE NEVER PRODUCED THE GIFT DONORS BEFORE THE AO FOR VERIFICATION OF GENUINENESS OF TRANSACTION AND CREDITWORTHINESS/IDENTITY OF THE PERSONS CONCERNED. THE ASSESSEE SUBMITTED DETAILS OF ONLY FIVE DONORS OUT OF 43 GIFT DONORS. THE AO OBSERVED FROM THE DETAILS OF THE SAID FIVE DONORS THAT NONE OF THE SAID FIVE DONORS HAD SHOWN ANY GIFT GIVEN TO THE ASSESSEE IN THEIR P&L A/C AND BALANCE SHEET. THEIR CAPITAL AND DRAWINGS WERE TOO SMALL TO OF FER ANY GIFT OF AMOUNTS AS MENTIONED AGAINST THEIR NAMES. HENCE, HE OPINED THAT NONE OF THOSE FIVE GIFT DONORS WERE CAPABLE ENOUGH TO GIFT THE AMOUNTS TO THE ASSESSEE BECAUSE THEY HAD VERY LITTLE CAPITAL AND VERY SMALL INCOMES; SOMEHOW THEY WERE MAINTAINI NG THEIR DAY TO DAY EXPENSES. THEREFORE, HE CONCLUDED THAT THE GIFTS RECEIVED SHOWN BY THE ASSESSEE WERE OUT OF HIS OWN FUNDS WHICH WAS EARNED OUT OF HIS UNDISCLOSED SOURCES OF INCOME AND ACCORDINGLY HE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. T HE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, I PROCEED TO DECIDE THE ISSUE AFTER HEARING THE LD. DR AND AFTER PERUSING THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT CASE IT IS UNDISPUTED THAT THE A SSESSEE HAS SUBMITTED A LIST OF 43 PERSONS WITH THEIR ADDRESSES AND THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED THE GIFT TOTALING TO RS.9,69,677/ - FROM THE SAID 43 PERSONS. THE ASSESSEE DID NOT PRODUCE ANY GIFT LIST BEFORE THE AO. THE ASSESSEE SUBMITTED THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF FIVE DONORS WHERE THE CL IENTS WERE OBSERVED TO BE TOO SMALL TO OFFER ANY GIFT TO THE ASSESSEE. ACCORDINGLY THE AO ON THE BASIS OF THESE FIVE PERSONS TREATED THE GIFT CLAIMED TO HAVE BEEN GIVEN BY 43 PERSONS WHO ARE OUT OF OWN FUNDS OF THE ASSESSEE AND ADDED TO THE INCOME OF THE ASSESSEE. IN FACT THIS THEORY OF DECISION ABOUT FIVE PERSONS CANNOT BE APPLIED TO THE REST OF 38 PERSONS WHICH IS AGAINST ANY PROVISION OF LAW. HOWEVER, ,THE POWER TO SUMMON THE DONORS U/S 131 OF THE ACT VESTS WITH THE AO AND NOT WITH THE ASSESSEE. HAVING RECEIVED THE NAMES AND ADDRESSES OF ALL THE DONORS, THE AO COULD HAVE SUMMONED ALL THE SAID 43 PERSONS AND VERIFIED THE GENUINENESS OF THE TRANSACTIONS, CREDITWORTHINESS AND IDENTITY OF TH E SAID PERSONS WHICH HAS NOT BEEN ITA NO. 561/KOL/2013 DINDAYAL KAYAM A.YR. 2006 - 0 7 3 DONE BY THE AO. ACCORDINGLY THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE SAID PERSONS REMAINED TO BE EXAMINED BY BOTH THE AUTHORITIES BELOW. IN THE CIRCUMSTANCES AND FACTS OF THE PRESENT CASE AND IN THE INTEREST O F JUSTICE I SET ASIDE THE MATTER TO THE FILE OF AO, WHO WILL EXAMINE ALL THE SAID 43 PERSONS AND FIND OUT THE GENUINENESS OF THE TRANSACTIONS, CREDITWORTHINESS AND IDENTITY OF THE SAID PERSONS AND DECIDE THE ISSUE DENOVO. AO IS DIRECTED ACCORDINGLY. ACCORD IN GLY GROUND NO.1 OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. AS REGARDS GROUND NO.2 THE BRIEF FACTS OF THE CASE ARE THAT THE AO FOUND THAT THE ASSESSEE HAD DEBITED A SUM OF RS.3,99,222/ - IN THE P&L A/C AS INTEREST ON LOANS FROM LAXMI COMMERCIAL BANK. THE LOAN AND INTEREST OF RS.96,70,048/ - WAS SHOWN AS LIABILITY IN THE NAME OF LAXMI COMMERCIAL BANK, IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2006. AS THE ASSESSEE HAD NOT PAID THE INTEREST ON LOANS TAKEN FROM THE BANK BUT CLAIMED THE AMOUNT OF SUCH INTEREST AS DEDUCTION FROM THE BUSINESS INCOME; THE AO ISSUED SHOW CAUSE LETTER TO THE ASSESSEE AS TO WHY THE INTEREST OF RS.3,99,222/ - SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME AS PER THE PROVISIONS OF SECTION 43B. BUT, NEITHER ANY EX PLANATION WAS OFFERED NOR ANY WRITTEN SUBMISSION WAS FILED IN RESPONSE TO THAT SHOW CAUSE LETTER. THEREFORE, THE AO DISALLOWED THE SAID SUM OF RS.3,99,222/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 6. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE AND I, AFTER HEARING THE LD. DR AND PERUSING THE MATERIALS AVAILABLE ON RECORD, PROCEED TO DECIDE THE ISSUE. I CONCUR WITH THE FINDINGS OF LD.CIT(A) WHO AFTER CONSIDERING THE EXPLANATION OF ASSESSEE HELD THAT PROVIS IONS OF SECTION 43B OF THE ACT ARE CLEARLY APPLICABLE AND THE SUM PAID DURING THE IMPUGNED YEAR IS ONLY ALLOWABLE U/S 43B OF THE ACT AND NO OTHER SUM CAN BE ALLOWED AS AN EXPENDITURE U/S 43B(E) OF THE ACT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE I FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF AO. THUS GROUND NO.2 OF THE ASSESSEE IS DISMISSED. 7. GROUND NOS. 3 AND 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. ITA NO. 561/KOL/2013 DINDAYAL KAYAM A.YR. 2006 - 0 7 4 8. IN THE RESULT THE APPEAL OF THE ASSES SEE IS PARTLY ALLOWED. ORDE R PRONOUNCED IN THE OPEN COURT ON 02 .06 .2015. SD/ - [ B.P.JAIN ] ACCOUNTANT MEMBER DATE: 02 .06 .2015. R.G.(.P.S.) C OPY OF THE ORDER FORWARDED TO: 1 . DINDAYAL KAYAN, 7, LYONS RANGE, ROOM NO.17B, 1 ST FLOOR, K OLKATA - 700001. 2 I.T.O., WARD - 34(3), KOLKATA 3 . CIT(A) - XX, KOLKATA 4. CIT - KOLKATA. 5. CIT - DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /AS ST. REGISTRAR , ITAT, KOLKATA BENCHES