ITO, Agra V. Shri Satyender Sharma, Agra

ITA 584/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6788 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 22-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MISHRA
• Assessee Lawyers: D K SHARMA
• Keywords: Gift; Set aside
• Section: 68

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.584/AGR/2008 ASST. YEAR: 2000-01 INCOME-TAX OFFICER 2(4), VS. SHRI SATYENDRA SH ARMA, AGRA. PROP. M/S. CREATIVE HANDS, 3/300, RUI KI MANDI, SHAHGANJ, AGRA. (PAN : AFLPS 7736 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MISHRA, SR. D.R. RESPONDENT BY : SHRI D.K. SHARMA, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 13.06.2008. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O THE DELETION OF THE ADDITION OF RS.20,05,000/- UNDER SECTION 68 OF THE INCOME-TAX A CT, 1961 (THE ACT HEREINAFTER). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. MA DE AN ADDITION OF RS.20,05,000/- UNDER SECTION 68 OF THE ACT AS THE ASSESSEE COULD NOT PRO DUCE THE DONEE BUT HE MERELY FURNISHED THE AFFIDAVITS OF SMT. VIMLESH SHARMA AND SMT. NIRMALA SHARMA. WHEN THE MATER WENT BEFORE THE CIT(A), THE CIT(A) ACCEPTED THE CONTENTION OF THE A SSESSEE THAT THE ASSESSEE HAS WITHDRAWN A 2 SUM OF RS.25,00,000/- FROM HIS CAPITAL ACCOUNT WHIC H WAS RS.69,60,694/- AS ON 01.04.1998 AND THE SAME WERE INVESTED BY THE ASSESSEE DURING 04.05 .1999 TO 07.06.1999 FOR THE PURCHASE OF THE SHARES FROM M/S COSMOS FINANCIAL SERVICES (P). LTD. OF M/S. DIAMOND STEELS (P) LTD. WHICH WERE SUBSEQUENTLY SOLD FOR RS.21,00,000/- ON NO PRO FIT AND NO LOSS BASIS AND THE CHEQUES WERE DEPOSITED IN THE SAME BANK ACCOUNT OF STATE BANK OF PATIALA OUT OF WHICH THE GIFT OF RS.20,00,000/- WERE GIVEN THROUGH DEMAND DRAFT. TH E CIT(A) AFTER CALLING THE REMAND REPORT FROM THE A.O., DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE RIVAL CONTENTIONS AND MY OBS ERVATIONS ARE AS UNDER :- - THE GIFTS OF RS.5,00,000/- EACH APPEAR TO HAVE BE EN GIVEN OUT OF S.B. ACCOUNT NO.4154 OF THE APPELLANT IN STATE BANK OF PATIALA, SANJAY PLAC E, AGRA BY DEMAND DRAFTS AS UNDER :- 16.06.1999 5,00,000 16.06.1999 5,00,000 17.06.1999 5,00,000 18.06.1999 5,00,000 PRIOR TO THE SAID DEMAND DRAFTS, THERE ARE DEPOSITS AS UNDER :- 16.06.1999 5,00,000 16.06.1999 5,00,000 17.06.1999 5,00,000 18.06.1999 5,00,000 THE DEPOSITS ARE STATED TO BE BY CHEQUES RECEIVED F ROM M/S. COSMOS FINANCIAL SERVICES P. LTD., AGRA AS UNDER :- DATE CHEQUE NO. AMOUNT 16.06.1999 572300 5,00,000 16.06.1999 572299 5,00,000 17.06.1999 783226 5,00,000 18.06.1999 783227 5,00,000 THE A.O. HAS NOT DISPUTED THE RECEIPT OF AMOUNTS BY CHEQUE BY TRANSFER FROM THE ACCOUNT OF M/S. COSMOS FINANCIAL SERVICES P. LTD. 3 - THE APPELLANT HAS BEEN UNABLE TO FURNISH DETAILS OF SHAREHOLDING IN THE COMPANY DIAMOND STEELS PVT. LTD., ACQUIRED THROUGH COSMOS F INANCIAL SERVICES PVT. LTD. HOWEVER, THE APPELLANT HAS FURNISHED BILLS & CONTRA CT NOTES FOR PURCHASE AND SALE OF SHARES. - IN COMPLIANCE OF DIRECTIONS OF THIS OFFICE VIDE O RDER SHEET ENTRY DATED 12.05.2008, THE AO HAS CALLED FOR EXTRACTS OF THE FOLLOWING ACCOUNTS O F THE APPELLANT FOR THE PERIOD 01.04.1998 TO 31.03.1999 FROM STATE BANK OF INDIA, SIB BRANCH, 38/4, SANJAY PLACE, AGRA. SAVING ACCOUNT 01190031102 CA 01000016558 (I) ON PERUSAL OF THE STATEMENT OF ACCOUNT NO.01190 031102, IT IS SEEN THAT THE FOLLOWING AMOUNTS HAVE BEEN TRANSFERRED FROM THE AP PELLANTS CA 01000016558 : 24.02.99 3,50,000 15.03.99 50,000 22.03.99 1,00,000 5,00,000 THIS AMOUNT IS CLAIMED AS WITHDRAWN AND GIVEN TO CO SMOS AS UNDER : DATE CHEQUE NO. AMOUNT 24.02.1999 800502 50,000 27.02.1999 800503 1,00,000 03.03.1999 800504 1,00,000 06.03.1999 800505 50,000 11.03.1999 800506 50,000 15.03.1999 800507 50,000 22.03.1999 800508 1,00,000 TOTAL 5,00,000 THUS THE CLAIM OF THE APPELLANT THAT CASH OF RS.5,0 0,000/- WAS WITHDRAWN FROM THE SAVING BANK ACCOUNT PRIOR TO THE IMPUGNED PURCHASE OF SHARES IS CORRECT. (II) ON PERUSAL OF THE STATEMENT OF CA 01000016558, IT IS SEEN THAT CASH WITHDRAWALS CLAIMED TO HAVE BEEN MADE BY THE APPELLANT ARE REFL ECTED THEREIN AS UNDER :- DATE CHEQUE NO. AMOUNT 17.10.1998 397342 1,50,000 30.11.1998 397375 2,00,000 08.12.1998 397381 2,00,000 15.12.1998 397386 2,00,000 4 23.12.1998 397394 2,00,000 29.12.1998 397398 1,50,000 29.01.1999 507516 2,00,000 04.02.1999 507528 2,00,000 24.03.1999 CASH 6,00,000* *COMPRISING RS.5,00,000/- DEPOSITED IN AND SUBSEQUE NTLY WITHDRAWN FROM ACCOUNT NO.01190031102 AS DETAILED IN (I) ABOVE. T HE BALANCE OF RS.1,00,000/- IS STATED TO BE OUT OF HOUSEHOLD WITHDRAWALS OF RS.2,4 0,000/-. THUS THE WITHDRAWALS TO THE EXTENT OF RS.20,00,000/ - ARE REFLECTED IN THE ABOVE BANK ACCOUNTS. THOUGH THE BROKER HAS NOT RESPONDED TO T HE SUMMONS ISSUED BY THE AO, THE CLAIM OF THE APPELLANT APPEARS PLAUSIBLE SINCE THE RECEIPT OF AN EQUAL AMOUNT OF RS.20,00,000/- FROM M/S. COSMOS FINANCIAL SERVICES IS NOT IN DOUBT. THERE IS ALSO NO EVIDENCE TO SHOW THAT THE ABOVE AMOUNT OF RS.20,00, 000/- WITHDRAWN BY THE APPELLANT WAS UTILIZED/DEPLOYED IRRETRIEVABLY BY HIM ELSEWHER E AND THAT THE AMOUNT RECEIVED BY THE APPELLANT FROM M/S COSMOS FINANCIAL SERVICES P. LTD . IS A SEPARATE, DISTINCT AND ADDITIONAL AMOUNT OF RS.20,00,000/- HANDED OVER BY THE APPELLANT TO M/S. COSMOS SERVICES PVT. LTD. AND RETURNED TO HIM BY FOUR CHEQ UES OF RS.5,00,000/- AGGREGATING TO RS.20,00,000/-. THEREFORE, THE ADDITION OF RS.20,0 0,000/- U/S. 68 OF THE ACT IS NOT SUSTAINABLE AND CONSEQUENTLY DELETED. AS REGARDS THE BALANCE AMOUNT OF RS.1,00,000/- PAID FOR PURCHASE OF SHARES TO M/S. COSMOS FINANCIAL SERVICES P. LTD., I AM IN AGREEME NT WITH THE A.O. THAT THE SOURCE OF THE SAID PAYMENT COULD NOT BE PROVED TO SATISFACTIO N BY THE APPELLANT. HOWEVER, SINCE THE PAYMENT PERTAINS TO AY 1999-2000, ADVERSE IMPLICATI ON THEREOF ARISES IN THAT YEAR. EVEN OTHERWISE, SINCE THE IMPUGNED ADDITION U/S.68 OF TH E ACT IS ONLY OF RS.20,05,000/-, THIS DISCUSSION IS ONLY ACADEMIC. - IT IS SEEN THAT AN AMOUNT OF RS.5,000/- HAS BEEN DEPOSITED BY THE APPELLANT IN HIS BANK ACCOUNT NO.4154 WHICH HAS BEEN TREATED AS UNEXPLAIN ED CASH CREDIT AS ENVISAGED IN SECTION 68 OF THE ACT. LOOKING TO THE MEAGER QUANT UM VIS--VIS THE OVERALL WITHDRAWALS OF THE APPELLANT, THE ADDITION OF SUCH AMOUNT U/S. 68 OF THE ACT IS NOT TENABLE AND HENCE DELETED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDER OF THE AUTHORITIES BELOW. THIS IS AN UNDISPU TED FACT THAT THE ASSESSEE HAS GIVEN GIFT DURING THE YEAR UNDER CONSIDERATION AMOUNTING TO RS.20,00, 000/- BY DEPOSITING THE CHEQUES FROM M/S. COSMOS FINANCIAL SERVICES P. LTD. JUST SAME DAY WH EN THE GIFT WERE GIVEN BY HIM. THE ASSESSEE CLAIMS THAT THE SAID AMOUNT HAS BEEN RECEIVED BY HI M FROM THE SAID CONCERN OUT OF THE SALE 5 PROCEEDS OF THE SHARE OF THE PRIVATE LIMITED COMPAN Y WHICH WERE ACQUIRED BY HIM OUT OF THE WITHDRAWAL MADE IN THE PRECEDING YEAR FROM HIS SAVI NG ACCOUNT AND THAT OF THE CURRENT ACCOUNT. M/S. COSMOS FINANCIAL SERVICES P. LTD. DID NOT APPE AR BEFORE THE ASSESSING OFFICER EVEN NO CONFIRMATION IS BROUGHT ON RECORD IN COMPLIANCE WIT H THE SUMMON ISSUED BY THE ASSESSING OFFICER. THE CIT(A) AFTER VERIFYING THE FACTS ON R ECORD AS WELL AS REMAND REPORT RECEIVED FROM THE A.O. GAVE THE FINDING OF FACTS THAT THE SOURCE OF THE AMOUNT DONATED WAS DULY VERIFIABLE OUT OF THE WITHDRAWAL FROM THE BANK ACCOUNT OF THE ASSE SSEE BUT FAILED TO APPRECIATE IN OUR OPINION THAT THERE IS NO WITHDRAWAL DURING THE YEAR. THERE HAS BEEN WITHDRAWAL IN THE EARLIER YEAR NOT DURING THE YEAR. THE ASSESSEE HAS GIFTED HUGE AMOU NT TO THE VARIOUS PERSONS. NEITHER IT HAS BEEN MENTIONED WHAT RELATION THE ASSESSEE HAD WITH THE D ONEES. DONEES ALSO DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS GIFTED THE AMO UNT, THE ONUS IS ON THE ASSESSEE TO PROVE THE SOURCE OF THE AMOUNT TO THE SATISFACTION OF THE ASS ESSING OFFICER. WE NOTED THAT IN THIS CASE THE CURRENT ACCOUNT FROM WHICH THE WITHDRAWAL WAS MADE FROM 17.10.1998 TO 24.03.1999 BELONGED TO THE BUSINESS CONCERN OF THE ASSESSEE. IT HAS BE EN CLAIMED THAT THIS CONCERN HAS WITHDRAWN DURING THIS PERIOD A SUM OF RS.21,00,000/-. MERELY THE WITHDRAWALS ARE MADE IN THE BUSINESS CONCERN DOES NOT MEAN THAT THE AMOUNT HAS BEEN WITH DRAWN BY THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO SHOW THAT THE AMOUNT HAS BEEN SHOWN BY THE ASSESSEE AS ITS DRAWINGS. THE AMOUNT WITHDRAWN FROM BUSINESS CONCERN ON THE VARIOUS DATE S MIGHT HAVE BEEN USED FOR THE BUSINESS PURPOSE OF THE SAID CONCERN. HAD THE ASSESSEE BEEN HAVING CASH IN HAND TO THE EXTENT OF RS.20,00,000/-, HE WOULD HAVE FILED THE WEALTH TAX RETURN. THE CASH IN HAND IN EXCESS OF RS.50,000/- IS AN ASSET. NO SUCH RETURN WAS EVER C LAIMED BY THE ASSESSEE TO HAVE BEEN FILED. EVEN THERE IS NO EVIDENCE ON RECORD BEING BROUGHT OUT FROM EITHER OF THE SIDE THAT THE ASSESSEE WAS A WEALTH TAX ASSESSEE AND THE SUM OF RS.20,00,0 00/- AS CLAIMED BY THE ASSESSEE UTILISED IN 6 THE PURCHASE OF THE SHARES IN SUBSEQUENT YEAR DURIN G MAY TO JUNE 1999 WAS LYING WITH THE ASSESSEE AS ON 31.03.1999. THE ASSESSEE HAS NOT SU BMITTED ANY BALANCE SHEET OR THE STATEMENT OF AFFAIRS. THE SHARES PURCHASED BETWEEN MAY TO JUNE 1999 BY PAYING THE CASH HAS BEEN SOLD THROUGH THE SAME CONCERN. THE SHARES BELONG, ACCOR DING TO THE ASSESSEE, TO A PRIVATE LIMITED COMPANY NAMELY M/S. DIAMOND STEELS (P) LTD. AND THE CONSIDERATION WAS RECEIVED BY CHEQUE FROM M/S. COSMOS FINANCIAL SERVICES PVT. LTD. IT I S CLAIMED THAT THE SHARES WERE PURCHASED AND SOLD AT THE SAME PRICE. IN OUR OPINION, THE ONUS I S ON THE ASSESSEE TO PROVE THE SOURCE OF THE GIFT MADE BY HIM OUT OF HIS BANK ACCOUNT AND ALSO SOURCE OF THE INVESTMENT MADE IN THE PURCHASE OF SHARES DURING MAY TO JUNE 1999. HAD THE ASSESSEE B EEN HAVING CASH IN HAND IN HIS INDIVIDUAL HAND, HE WOULD HAVE SUBMITTED THE WEALTH TAX RETURN WHICH THE ASSESSEE HAS NOT DONE. THE A.O. ASKED THE ASSESSEE TO PRODUCE THE CASH BOOK AN D THE LEDGER FOR THE F.Y. 1998-99 BUT THE SAME WERE NOT PRODUCED. THE BALANCE SHEET OR THE S TATEMENT OF AFFAIRS AS ON 31.03.1999 WERE ALSO NOT PRODUCED SO AS TO PROVE WHETHER THE ASSESS EE WAS HAVING THE CASH IN HAND AS ON 31.03.1999. THE ASSESSEE SUBMITTED COPY OF THE BIL LS IN RESPECT OF THE SHARES PURCHASED AND SOLD BUT NO EVIDENCE OR DOCUMENTS WERE FILED WHETHER THE SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE OR NOT. WHETHER THE PRIVATE LIMITED COMPA NY M/S. DIAMOND STEELS (P) LTD. WAS INTIMATED ABOUT THE TRANSFER OF THE SHARES IN FAVOU R OF THE ASSESSEE. THE ASSESSEE EVEN DID NOT POINT OUT HOW MUCH INCOME HAS BEEN SHOWN BY THE ASS ESSEE IN THE F.Y. ENDING 31.03.1999. WHETHER THERE WERE PROFIT IN THE PROPRIETARY CONCER N SO AS TO GENERATE A SUM OF RS.20,00,000/- CASH IN HAND IN THE HANDS OF THE ASSESSEE. THE CIT (A), IN OUR OPINION, HAS INCORRECTLY TREATED THE CURRENT ACCOUNT OF THE PROPRIETORSHIP CONCERN OF TH E ASSESSEE TO BE HIS INDIVIDUAL ACCOUNT. THERE IS EVERY POSSIBILITY THAT THE MONEY WOULD HAVE BEEN USED BY THE ASSESSEE SOMEWHERE ELSE. THE ONUS IS ON THE ASSESSEE TO EXPLAIN ABOUT THE AMOUNT WITHDRAWN AND WAS KEPT BY THE ASSESSEE TO 7 THE SATISFACTION OF THE A.O. THE EXPLANATION GIVEN BY THE ASSESSEE MUST BE PLAUSIBLE ONE. FROM THE ORDER OF THE CIT(A) WE NOTED THAT EXCEPT THE FA CT THAT THE MONEY HAS BEEN WITHDRAWN BY THE ASSESSEE FROM 17.10.1998 TILL 29.03.1999 ON THE DIF FERENT DATES FROM THE BANK ACCOUNT, NO OTHER EXPLANATION IS AVAILABLE ON RECORD. EVEN THE EVIDE NCES ABOUT THE DISTINCTIVE SHARE NUMBERS ARE NOT AVAILABLE. EVIDENCE ON WHETHER THE SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE OR NOT IS ALSO NOT AVAILABLE. EVEN PHOTOCOPIES OF THE SHA RE CERTIFICATES ARE NOT AVAILABLE. THE BANK ACCOUNT BEING S.B. ACCOUNT NO.4154 WAS OPENED WITH THE STATE BANK OF PATIALA, SANJAY PLACE ON 25.04.1999 IN WHICH THE CHEQUE RECEIVED FROM M/S. C OSMOS FINANCIAL SERVICES (P). LTD. WERE DEPOSITED ON THE SAME VERY DATE WHEN THE GIFTS WERE GIVEN BY THE ASSESSEE. NO ENQUIRY HAS BEEN MADE FROM M/S. DIAMOND STEELS (P) LTD. WHETHER THE ASSESSEE HAS GENUINELY PURCHASED AND SOLD THE SHARES. IN OUR OPINION, MERELY ON THE BASIS OF THE BANK ACCOUNT THAT ALSO BELONGING TO BUSINESS CONCERN ONE CANNOT CONCLUDE THAT THE ASSES SEE HAS DULY EXPLAINED THE SOURCE OF THE DEPOSIT SPECIALLY WHEN THE ASSESSEE HAS NOT FILED W EALTH TAX RETURN SHOWING CASH IN HAND AMOUNTING TO RS.20,00,000/- AS ON 31.03.1999 WHICH WAS CHARGEABLE TO WEALTH TAX. THUS, IN OUR OPINION, THE ASSESSEE HAS NOT DISCHARGED HIS ON US AND THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT PLAUSIBLE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE A.O. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* 8 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