R.Ravikumar, CHENNAI V. ITO, CHENNAI

ITA 58/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2497 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Gift
• Section: 144

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 58/MDS/2013 ASSESSMENT YEAR : 2006-07 R. RAVIKUMAR, M-7A, LATTICE BRIDGE ROAD, THIRUVANMIYUR, CHENNAI 600 041. [PAN : AEKPR7272M] VS. THE INCOME TAX OFFICER, BUSINESS WARD IV(1), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. MEENAKSHISUNDARAM, ITP RESPONDENT BY : SHRI GURU BHASHYAM, JCIT DATE OF HEARING : 18.03.2013 DATE OF PRONOUNCEMENT : 06.05.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS ASSESSEES APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) VIII, CHENNAI DATED 17.09.2012 IN ITA NO. 59/08-09(A) VIII FOR ASSESSME NT YEAR 2006-07, IN PROCEEDINGS UNDER SECTION 144 OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A HARDWARE MERCHANT, FILED RETURN OF INCOME DECLARING ` .1,49,808/-. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 144 BY MAKING I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 2 ADDITION OF ` .41,30,360/-. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, CARRIED THE MATTER BEFORE THE CIT(APPEALS). THE CIT(APPEALS) HAS DELETED CERTAIN ADDITIONS AND CONFIRMED THE FOLLOWING ADDITIONS: 1. 50% OF EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. 2. SUNDRY CREDITORS OF ` .12,57,415/-. 3. GIFT FROM SPOUSE OF ` .3.00 LAKHS. 3. IN SO FAR AS THE DISALLOWANCE IN RESPECT OF EXP ENSES OF ` .3,15,882/- IS CONCERNED, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE WAS UNABLE TO FURNISH PROOF OF EXPENDITURE AND ALSO NOT BEEN ABLE TO PRODUCE BOOKS OF ACCOUNTS AND BILLS/VOUCHER S INSPITE OF TIME BEING GIVEN AT THE TIME OF REMAND PROCEEDINGS. THE CIT(APPEALS), AFTER EXAMINING THE REMAND REPORT, HAS OBSERVED THA T THE TOTAL EXPENDITURE CLAIMED IS ` .6,31,764/- AND SINCE, NO DETAILS WERE FURNISHED, HE HAS DISALLOWED THE ENTIRE AMOUNT. 4. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(APPEALS) HAS CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER. HOWEVER, NO COPY OF THE REMAND REPORT WAS GIVEN TO THE ASSES SEE FOR REBUTTAL. HE FURTHER SUBMITTED THAT WITHOUT ISSUING ANY NOTIC E TO THE ASSESSEE, THE CIT(APPEALS) ENHANCED THE DISALLOWANCE THE DISA LLOWANCE. THEREFORE, THE COUNSEL FOR THE ASSESSEE SUBMITTED T HAT WITHOUT GIVING A I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 3 COPY OF THE REMAND REPORT AND WITHOUT ISSUING A SHO W-CAUSE NOTICE ENHANCING THE DISALLOWANCE IS IN VIOLATION OF NATUR AL JUSTICE AND ALSO CONTRARY TO THE STATUTORY PROVISIONS. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER PASSED BY THE CIT(APPEALS). 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RECO RD AS WELL AS SHORT PAPER BOOK FILED BY THE ASSESSEE. WE FIND FRO M THE ORDER OF THE CIT(APPEALS) THAT HE HAS CALLED FOR THE REMAND REPO RT FROM THE ASSESSING OFFICER WITH REGARD TO THE EXPENDITURE CL AIMED BY THE ASSESSEE. HOWEVER, THERE IS NOTHING ON THE RECORD T HAT THE CIT(APPEALS) HAS GIVEN COPY OF THE REPORT TO THE AS SESSEE. IN SO FAR AS ENHANCEMENT OF THE DISALLOWANCE IS CONCERNED, AS PE R SECTION 251(2), IT IS MANDATORY FOR THE CIT(APPEALS) TO ISSUE A SHO W CAUSE NOTICE BEFORE ENHANCING THE DISALLOWANCE. IN VIEW OF THE A BOVE, WE FIND THAT THE CIT(APPEALS) OUGHT TO HAVE BEEN ISSUED ENHANCEM ENT NOTICE TO THE ASSESSEE AND ALSO SERVED A COPY OF THE REMAND R EPORT TO THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE AND REMIT BACK THE MATTER TO THE CIT(APP EALS) TO REDECIDE THE ISSUE AFRESH AFTER AFFORDING ADEQUATE OPPORTUNI TIES OF HEARING TO THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 4 ASSESSEE. 7. THE SECOND GROUND OF APPEAL RELATING TO ADDITIO N IN RESPECT OF SUNDRY CREDITORS OF ` .11,83,242/-. THE ASSESSEE HAS FAILED TO FILE CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER A S WELL AS CIT(APPEALS). MOREOVER, THE ASSESSEE HAS NOT BEEN A BLE TO RECONCILE THE BALANCE SHOWN IN THE BOOKS OF ACCOUNTS. THEREFO RE, THE CIT(A) HAS CONFIRMED THE ABOVE ADDITION OF ` .11,83,242/-. 8. BEFORE US, THE COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT ALL THE CONFIRMATIONS ARE AVAILABLE WITH THE ASSESSING OFFI CER AND SOME WERE FILED BEFORE THE CIT(APPEALS). WITHOUT ASKING THE E XPLANATION FROM THE ASSESSEE, THE CIT(APPEALS) HAS SIMPLY CONFIRMED IT AND PRAYS FOR DELETING THE ADDITION CONFIRMED BY HIM. 9. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE CIT(A). 10. WE HAVE HEARD BOTH PARTIES AND PERUSED THE REC ORDS. THE TOTAL ADDITION OF ` .12,57,415/- WAS MADE BY THE ASSESSING OFFICER AND WAS CONFIRMED BY THE CIT(APPEALS) TO THE EXTENT OF ` .11,83,242/- ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO RECONCILE AND NOT FILED CONFIRMATION FROM THE SUNDRY CREDITORS. TO MEET THE ENDS OF JUSTICE, WE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 5 ARE OF THE VIEW THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO RECONCILE THE ACCOUNT AND ALSO FILE THE CONFIRMATION LETTER FROM THE SUNDRY CREDITORS. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE CIT(APPEALS) ON THIS ISSUE AND DECIDE AFRESH AF TER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. THE THIRD GROUND OF APPEAL RELATING TO ADDITIO N IN RESPECT OF ` .3,00,000/- TOWARDS GIFT FROM SPOUSE. THE CASE OF T HE ASSESSEE IS THAT HE HAS RECEIVED A GIFT FROM HIS WIFE OF ` .3,00,000/- DURING THE FINANCIAL YEAR 2005-06. THE ASSESSEE HAS SUBMITTED THE DETAIL S OF HIS SPOUSE SUCH AS CONFIRMATION LETTER, PAN NUMBER AND INCOME TAX RETURN. HOWEVER, THE ASSESSING OFFICER ADDED THE AMOUNT OF ` .3,00,000/- FOR WANT OF SUFFICIENT EVIDENCE BY BANK ACCOUNTS, ETC. IN FIRST APPEAL, THE CIT (APPEALS) HAS OBSERVED THAT IN THE ABSENCE OF P ROOF OF HER CAPACITY, CREDITWORTHINESS, SOURCE OF THE DONOR AND GENUINENESS OF THE GIFT BACKED BY EVIDENTIAL VALUE OF THE GIFT SAID TO HAVE BEEN GIVEN TO THE ASSESSEE, THE GIFT OFFERED BY HIS SPOUSE IS HIGHLY DOUBTFUL AND IMPROBABLE AS ASSESSEES WIFE HAS NO REGULAR SOURCE OF INCOME. THEREFORE, THE CIT(APPEALS) HAS CONFIRMED THE ADDIT ION MADE BY THE ASSESSING OFFICER. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 6 12. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE ASSESSEES SPOUSE IS HAVING SOURCE OF INCOME AN D SHE FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION A ND FILED ALL DETAILS INCLUDING PAN NUMBER BEFORE THE ASSESSING OFFICER. THE CIT(APPEALS) SIMPLY DOUBTED THE GENUINENESS ON THE GROUND THAT A SSESSEES WIFE GAVE THE GIFT. THEREFORE, THE COUNSEL FOR THE ASSES SEE PRAYS THAT THE ORDER OF THE CIT(APPEALS) HAS TO BE SET ASIDE ON TH IS ISSUE. 13. ON THE OTHER HAND, THE LD. DR SUPPORTED THE OR DER PASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS FAILED TO SUBMIT SOURCE AND GENUINENESS OF THE GIFT. 14. WE HAVE HEARD BOTH SIDES AND PERUSED THE ORDER S OF AUTHORITIES BELOW. THE CASE OF THE ASSESSEE IS THAT HE HAS RECE IVED THE GIFT OF ` .3,00,000/-FROM HIS WIFE AND THE ASSESSEE HAS FILED PAN NUMBER AND RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT IS NOT CLEAR FROM THE ORDERS OF AUTHORITIES BELOW THAT ON WHAT ACCOUN T THE GIFT WAS GIVEN AND WHAT IS THE SOURCE OF INCOME OF THE WIFE OF THE ASSESSEE. THESE TWO ASPECTS ARE VERY MUCH MATERIAL TO DECIDE THE GE NUINENESS OF THE GIFT. THEREFORE, WE SET ASIDE THE ORDER PASSED BY T HE CIT(APPEALS) TO EXAMINE THE ISSUE AS INDICATED ABOVE AND DECIDE THE ISSUE AFRESH IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.58 5858 58/M/ /M/ /M/ /M/13 1313 13 7 ACCORDANCE WITH AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY, WE SET ASIDE ALL THE ISSUES TO THE FILE OF THE CIT(APPEALS). 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 6 TH OF MAY, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 06.05.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.