SMT. PADMA VIPIN SAHGAL, MUMBAI, MUMBAI V. ITO 23(2)(5), MUMBAI, MUMBAI

ITA 6097/MUM/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0090 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Additional evidence; Non compliance
• Section: 147; 68; 69; 27; 148; 69C; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Before Shri Shamim Yahya, Accountant Member I.T.A. No. 6097/Mum/2019 (Assessment Year 2010-11) Smt.Padma Vipin Sahgal C/o V.K.Kanhere & CO. 4, Dwaraka, Shastri Hall J. Dadaji Road Mumbai-400 007 PAN : AYFPS3949H Vs. ITO-23(2)(5) Matru Mandir Building Nana Chowk, Opp. Bhatia Hospital Mumbai-400 007 (Appellant) (Respondent) Assessee by Snehal Shah Department by Anil Gupta Date of Hearing 15.11.2021 Date of Pronouncement 17.01.2022 O R D E R Per Shri Shamim Yahya (AM) :- This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-48 dated 06.06.2019 and pertains to assessment year 2010-11. 2. Grounds of appeal read as under:- 1. Passing the appellate order on the basis of material filed on record as in the first hearing and without giving opportunity of being heard to the appellant, and has further erred in rejecting the appeal in toto, yet at the same time giving directions to the assessing officer to recomputed total income of the appellant, after taking into consideration the total income computation filed in appeal proceedings showing income of Rs. 5,64, 1 40/-, thereby resulting in enforcement of assessment and the income tax payable without giving reasonably opportunity of showing cause against such enhancement and exceeded his jurisdictional power vide section 251 (2) of IT Act 1961. ITA No.6097/M/2019 2 2. Confirming the order of assessment passed by the Assessing Officer, summarily determining appellant income at Rs. 1 8,00,000/- without giving proper opportunity. 3. Confirming the order passed by the Assessing Officer in a hurry without considering the facts & circumstance of the case and the law and completing the assessment in December 2017 itself without proper opportunity being given to the appellant to file the return of income and to make proper submissions in the case when in fact the case was getting barred by limitation only on 31st December, 2018 as per section 153(2) of the Income Tax Act, 1961. 4. Confirming the addition of Rs.18,00,000/- on account of alleged deposit of cash in the Bank account as unexplained monies u/s 69 of the Income Tax Act 1961. When infact the receipt the receipt is not in the nature of income and the source stands fully explained. 5. Upholding the initiating of Penalty proceedings u/s 271(l)(c) for concealment of income, u/s 271(1 )(b) for non compliance as the source is explained, u/s 27 IF for non-filling of Return of income, when there is in fact no concealment, non compliance or non-filling of Return of income and the appellant has not been given proper opportunity to file the return or represent the case as the notice itself was not send on the appellant nor have the reasons been furnished for the reopening of the matter as is required under the law. 3. Brief facts of the case are that in an ex-parte order, the AO made an addition of Rs. 18 lcas in the hands of the assessee under section 68 of the I.T.Act for cash deposit in the assessee bank account. The assessment was framed holding the assessee as resident. 4. Against the AO’s order assessee appealed for the Ld.CIT(A). The statement of facts submitted before tLd.CIT(A) read as under:- 1. The appellant Smt, Padma Vipin Sahgal is a senior citizen advanced in age being more than 76 years old. She is married to Mr. Vipin Sahgal since 1964. She is a citizen of the United States, and visits India during vacations. She is graduated from the University of Bombay in 1962, with a BA (Eng Hons). She has obtained a master's degree in education from the Johns Hopkins University, Baltimore, MD. in 1973. She has been employed by: The Times of India from 1963 -1964 as a reporter. Handicrafts and Handlooms Exports Corp. of India from 1968—1970. 'India Abroad' Newspaper from 1973—1978 as Associate Editor Los Angeles Unified School District from 1985—2005 as English teacher. ITA No.6097/M/2019 3 Santa Monica College 2007—present as English Instructor. Los Angeles Community College District 2007—present as Adjunct Associate Professor of English She being a US citizen is regularly assessed to tax in the US and has filed her tax return in US for the calendar year 2009 and 2010 jointly with her husband declaring income of USD 82,180 (approx INR 41,44,4607-) and USD 1,14,220 (approx INR 54,00,050/-) respectively. She has duly shown income earned in India in these returns and paid tax on the same. She is a non-resident and tax having been already deducted at source from her income in India, was not required to and accordingly has not filed any return of income in India for the said period. 2. Appellant did not receive any notices being out of India nor any intimation regarding the same. 3. Passing the order in a hearing without considering the facts & circumstances of the case and the law and completing the assessment in December 2017 itself without proper opportunity being given when in fact the case was getting barred by imitation only on 31st December, 2018 as per section 153(2) of the Income Tax Act, 1961. Now upon enquires, it is learnt a notice was served on neighbor of the appellant on April 2017. Upon receipt of the notice dated 30/03/2017 which was received by appellant's neighbor and an email from predecessor Income Tax Officer, the process of the appellant on her behalf had in reply requested for the details/reasons for issue of notice u/s 147/148, 1.T. Act 1961, when infact no income was escaping assessment, to which no response was received by appellant. Hence proper opportunity was not given to the appellant either to filed her return or make submission in that regards as even the issues at hand were not known to her. The appellant is a 76 year old and suffered from a severe car accident and is presently incapacitated and not in any condition to travel anywhere or to India and not even in a • condition to appear for any matter/ attendance or to compile and provide any details/ documents. In view of this in the interests of nature justice the case may be set aside and the Assessing Officer may be directed to assess the income after giving proper opportunity to the appellant. 4. Assessing officer passed the order in a hurry as an ex-parte assessment without considering the facts & circumstances of the case and the law and completed the assessment in December 2017 itself without proper opportunity being given when in fact the case was getting barred by limitation only after one year i.e. on 31st December, 2018 as per section 153(2) of the Income Tax Act, 1961. Attention is drawn to Section 153(2) of the Income tax Act, 1961 which stipulates the time limit for completion of assessment made with reference to section 147 upon issue of notice u/s 147/148 of IT Act 1961 which is applicable in this case and is reproduced as under:- "153(2); No order of assessment reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice u/s 148 was served." ITA No.6097/M/2019 4 In this case notice u/s 148 of IT Act 1961 dated 30-03-2017 was served by email after 1st April, 2017. Thus it being served in financial year 2017-18, the time limit is nine months from 31-03-2018 i.e. 31-12-2018. 5. As regard cash deposit of Rs. 18,00,000/- added, it is not income of the appellant the same represents amount directly deposited by her husband in her bank account and not in the nature of income, and thus stand fully explained and is not a cash credit u/s 69C of the Income Tax Act 1961. The above said addition may be deleted in full. In the alternative without prejudice the assessment may be set aside enabling the appellant to file return and assessment may be done in the light of the evidences/submissions made hereinabove. 6. The appellant is a 76 year old and had suffered from a severe car accident and was incapacitated and not in any condition to travel anywhere or to India and not even in a condition to appear for any matter/ attendance or to compile and provide any details/ documents. As the appellant was prevented by sufficient cause beyond her control from responding to notice, filling the return, making submission before Assessing Officer in the case further the amount added as so called unexplained receipt being actually fully explained, Hence initiation of penalty u/s 271(1) (c) may also be quashed. 5. The Ld.CIT(A) rejected the assessee challenge to the lack of proper notice and lack of opportunity by the AO. On merits, he also rejected the affidavit from assessees husband of having given the sum to the assessee. He also ignored the submission that assessee is a non resident and is paying taxes and filing return in USA. The operative para of Ld.CIT(A) order reads as under:- Rejection of Document by Vipin Sahgal:- The so called gift document by Shri Vipin Sahgal is rejected on merits as well as on technically in view of following:- 1. On merits, the document is extremely vague as it does not give any specific details like address and sale deed, agreement etc. of the claimed Panchsheel Park property of Shri Vipin Sahgal. 2. There are no details and evidences of Shri Vipin Sahgal having received certain amount as sale consideration. 3. There are no evidence or proof of gifting certain amount to assessee including cash deposit of Rs. 18 lakhs. /4. There are no details of any bank account showing transaction of funds in this regard. 5. In fact, the language of the document is very vague and Shri Vipin Sahgal has used the expressions like " as / recall and "/ do remember the dates of the deposits but not when actually did my wife return Rs 30 lakhs". ITA No.6097/M/2019 5 6. The fact that assessee and Shri Vipin Sahgal are US citizens and have been filing tax returns in US is of little consequence, while deciding this appeal as the deposits in Indian Bank account would come under the ambit of Income Tax Law of India. 7. Also, the sale of Panchsheel Park property of Shri Vipin Sahgal would also fall within the ambit of capital gain taxation in India as the property is located in India. However, no evidence or details have been filed to substantiate whether any capital gain tax have been paid by Shri Vipin Sahgal in India. Therefore, in view of these anomalies, letter from Shri Vipin Sahgal regarding gift to assessee cannot be held as valid explanation for the issue at hand i.e. credit of cash of Rs. 18 lakhs in assessee's account during F.Y. 2009-10. 8. Even on technical grounds, the letter of Shri Vipin Sahgal is of little help as it is vague and does not have specific details and substantive evidences to support his claim. 9. Notarization of the document in USA will not give any credence to the document as such notarization is not valid and recognized law as per Indian I.T. provisions. 5.2.2 In view of above, the explanation of assessee regarding source of credit of Rs. 18 lakhs remains unexplained. 5.2.3 It would be worthwhile to mention here that these additional evidences have not been forwarded to AO for his comments as they are held as infructuous and worthless, in view of above shortcomings and cannot be considered as a valid and worthwhile document in deciding this appeal. 6. Assessee is in appeal before the ITAT. Heard both the parties and perused the records. From that in the assessees submission before the Ld.CIT(A), it is emanating that the assessee is a non-resident Indian and United States citizen. In such circumstances, framing of assessment as resident de-horse the consideration of double taxation avoidance agreement with the United States of America is subject matter of examination. 7. Furthermore, assessment sustained under section 68 in this case in the case of the non resident and foreign citizen that of the said United States will fall under the head income from other sources if there is no finding of any business connection in India. The assessment for income from other sources shall come under the ambit of double taxation avoidance agreement between India and USA. Furthermore, assessee’s plea of lack of notice and lack of opportunity have been summarily dismissed by the Ld.CIT(A). Moreover, Ld.CIT(A) has not observed that the submission that assessee ITA No.6097/M/2019 6 is a non resident and citizen of USA is in consequential. This is not correct as I have already observed that, this is crucial to the assessment here observed as above. 8. In my considered opinion in the facts and circumstances of the case, the issue needs to be remitted to the file of AO. Both the parties fairly agreed to the proposition. Ld. Counsel of the assessee agreed to cooperate with the AO in the assessment. Hence, the issue raised in the appeal stands remitted to the AO. He shall keep in mind the observation hereinabove. 9. In the result, this appeal by the assessee stands allowed for statistical purpose. Pronounced in the open court on 17 .01.2022 Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : .01.2022 Thirumalesh, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai