Shri Bipinchandra Ishvarlal Desai, Surat V. The Income Tax Officer, Ward-1, Bardoli, Surat

ITA 68/AHD/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3651 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Gift
• Section: 131; 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.68/AHD/2016 / ASSTT. YEAR: 2012-2013 BIPINCHANDRA ISHVARLAL DESAI AT & POST VANKAL TALUKA MANGROL DIST: SURAT. PAN : BDFPD 3545 Q VS ITO, WARD - 1 BARDOLI, SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH REVENUE BY : SHRI B.P.K. PANDA, SR.DR / DATE OF HEARING : 31/05/2016 / DATE OF PRONOUNCEMENT: 01/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-I, SURAT DATED 13.11.2015 PASSED IN THE A SSTT.YEAR 2012-13. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE U NDER SECTION 148 OF THE INCOME TAX. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE ACCO UNTING YEAR RELEVANT TO THE ASSTT.YEAR 2012-13, THE ASSESSEE HA D MADE INVESTMENT IN INSURANCE POLICIES WORTH RS.15 LAKHS. HE HAS NO T FILED ANY RETURN OF INCOME. THE ANNUAL INFORMATION WING TRANSMITTED IN FORMATION WITH ITA NO.68/AHD/2016 2 REGARD TO THE INVESTMENT IN THE INSURANCE POLICIES. ON THE STRENGTH OF THIS INFORMATION, THE LD.AO HAS RECORDED REASON THA T INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT. ACCORDINGLY, HE ISSUED NOTICE UPON THE ASSESSEE UNDER SECTION 148 OF THE INCOME TAX AC T ON 18.3.2014 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE LD.CO UNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AO HAD NOT POSSESSE D ANY MATERIAL WHICH CAN HELP HIM TO FORM AN OPINION THAT INCOME H AS ESCAPED ASSESSMENT. HE WAS HARPING UPON THE INFORMATION RE CEIVED FROM DDIT (INVESTIGATION), SURAT. THE AO SOUGHT TO REOPEN TH E ASSESSMENT WITHOUT POINTING OUT AS TO HOW THE ASSESSEE FAILED TO DISCLOSE PARTICULARS OF INVESTMENT OF RS.15 LAKHS MADE IN INSURANCE POLI CIES. 4. WE HAVE DULY CONSIDERED CONTENTIONS OF THE LD.CO UNSEL FOR THE ASSESSEE. THE ASSESSEE HAS NOT BEEN FILING THE RET URN. IN OTHER WORDS, HE HAD NEVER FILED RETURN. THE AO GOT INFORMATION THAT THE ASSESSEE HAS MADE INVESTMENT IN LIC. THE INVESTMENT WAS OF RS.15 LAKHS. ONCE THE ASSESSEE WAS NOT FILING THE RETURN, THEN, THERE IS NO MECHANISM WITH THE AO TO VERIFY THE SOURCE OF SUCH INVESTMENT. IT CAN ONLY BE VERIFIED BY INQUIRING FROM THE ASSESSEE, AN D THEREFORE, HE HAS TO ISSUE NOTICE UNDER SECTION 148 OF THE INCOME TAX AC T. WE DO NOT SEE ANY ERROR IN THE REOPENING OF THE ASSESSMENT. ACCO RDINGLY, THIS GROUND OF APPEAL IS REJECTED. 5. IN NEXT GROUND OF APPEAL, GRIEVANCE OF THE ASSES SEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S.15 LAKHS ON THE GROUND THAT THE ASSESSEE HAS MADE INVESTMENT FROM U NEXPLAINED SOURCES. THERE IS NO DISPUTE WITH REGARD TO THE FA CT THAT THE ASSESSEE HAD MADE INVESTMENT IN LIC WORTH RS.15 LAKHS. WHEN , DDIT (INVESTIGATION) GOT THIS INFORMATION FROM LIC, HE C ALLED THE ASSESSEE AND RECORDED HIS STATEMENT. COPY OF THE STATEMENT RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT IS AVAILABLE AT P AGE NO.30 OF THE ITA NO.68/AHD/2016 3 PAPER BOOK. FOR BUTTER APPRECIATION OF THE CONTROV ERSY, WE DEEM IT APPROPRIATE TO TAKE NOTE OF RELEVANT QUESTIONS AND THEIR ANSWERS. THEY READ AS UNDER: Q.2 PLEASE GIVE THE DETAILS OF YOUR FAMILY. ANS: I AM LIVING ALONG WITH MY MOTHER, WIFE AND MY AUNTY (FATHERS SISTER) AT BAJAT FALIA, AT & POST. VANKAL, TAL. MANGROL, SURAT. Q.3 PLEASE GIVE THE DETAILS OF HOUSEHOLD WITHDRAWAL S AND WHAT WAS YOUR MONTHLY HOUSEHOLD WITHDRAWALS. ANS: THE HOUSEHOLD EXPENSES ARE BEING MET BY FROM O UR WITHDRAWAL FROM BANK AND FROM SALE OF NURSERY SAPLINGS. THE MONTHLY HOUSEHOLD EXPENSES WILL BE AROUND RS.12,000/- TO RS.15,000/- Q.4 PLEASE GIVE THE SOURCE OF INCOME OF YOUR AND YO UR FAMILY MEMBER ANS: I AM RECEIVING AGRICULTURAL INCOME AND RUNNING A NURSERY IN THE NAME HANUMAN FARM WHICH SELLS SAPLINGS TO THE CUSTOMER SAND THERE IS NO OTHER SOURCE OF INCOME. Q.5 ARE YOUR FILING YOUR RETURN OF INCOME ? ANS NO Q.6 WHY ARE YOU NOT FILING THE RETURN OF INCOME ? ANS. I DO NOT HAVE ANY OTHER INCOME EXCEPT AGRICULT URAL INCOME AND SALE OF SAPLINGS FROM NURSERY HANUMAN FARM WHICH IS ALSO COMES UNDER AGRICULTURE INCOME. Q.7 PLEASE GIVE THE DETAILS OF MOVABLE/IMMOVABLE PROPERTIES HELD BY YOU? ANS. I AM THE OWNER OF MY HOUSE WHERE I AM RESIDING AT 154/195, BAJAT FALIA, AT & POST. VANKAL, TAL. MANGROL,SURAT AND ALSO I AM HAVING 9514 SQ. MTR. AGRICULTURAL LAND AT VANKAL JOINTLYHELD WITH MY MOTHER, MADHUBEN ISHWARLAL DESAI, BROTHER-JITENDRA ISHWARLAL DESAI AND SISTER KALPANABEN DESAI. I HAVE PURCHASE AN AGRICULTURAL LAND ADMEASURING 1203 SQ.MTR., BLOCK NO.500 AND 502 AT VANKAL. THE LAND WAS PURCHASED IN 2012 FOR 3.8 LACS. I AM CULTIVATING THE AGRICULTURAL PRODUCE LIME SUGARCANE , ITA NO.68/AHD/2016 4 JOWER, COTTON, VEGETABLE, MUNG AND GROUND NUT. Q.8 WHETHER ANY EVIDENCE CAN BE PRODUCED IN SUPPORT OF YOUR SOURCE OF AGRICULTURAL INCOME AND SALES RECEIPTS FOR NURSERY SAPLINGS ? ANS. YES, I AM PRODUCING COPIES OF RECEIPTS ON SALE OF SUGARCANE RECEIVED FROM MADHI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD., MADHI AND XEROX COPIES OF BILLS ISSUED BY ME TO ROAD CONTRACTORS OF IRB INFRA LTD., SURENDRA NURSERY, BARODA, BARODA ROSES NURSERY, BARODS SETABAND AGENCY, BARODA. .. NURSERY, ADAS, DIAMOND NAGAR NURSERY, LESKHANA. Q.9 WHETHER YOU HAVE INVESTMENT IN INSURANCE POLICI ES, IF YES, SOURCE OF INVESTMENT IN INSURANCE POLICIES ? ANS. YES. I HAVE TAKEN TWO SINGLE PREMIUM INSURANC E POLICIES FROM SBI LIFE INSURANCE CO. LTD., POLICY NUMBERS 55002975105 AND 53001287208 OF RS.9 LAKHS AND RS.6 LAKHS RESPECTIVELY. THE SOURCE OF INVESTMENT MADE BY MY FATHER (EXPIRED IN 2011) AND AUNTY, SHANTABEN WHO IS HOLDING AGRICULTURAL LAND OF 58506 SQ.METERS AT VANKAL. I HAVE ALSO TAKEN A POLICY FROM INDIAFIRST LIFE INSURANCE CO. AND THE PAYMENT OF RS.1,00,000/- WAS PAID ON 14.09.2011 FROM MY SAVINGS BANK OF BANK OF BARODA. 6. THE STAND OF THE ASSESSEE IS THAT HIS 89 YEARS O LD WIDOW AUNT, NAMELY, (FATHERS SISTER), SMT. SHANTABEN DESAI WAS RESIDING WITH HIM. SHE WAS HOLDING AGRICULTURE LAND OF 58506 SQ.METERS AT VILLAGE VANKAL. HE AND HIS FATHER WERE HOLDING SUBSTANTIAL LAND. I N OTHER WORDS, THEY WERE HOLDING 80,030 SQ.METERS OF LAND, ROUGHLY 16 A CRES OF LAND. THE ASSESSEE WAS RUNNING A NURSERY IN THE NAME OF HANU MAN FARM FROM WHERE HE HAS SOLD SAPLINGS. HE HAS NEVER RETURNED INCOME, BECAUSE, HE HAS NO OTHER SOURCE OF INCOME. HE HAS NOT MADE ANY SALE OF LAND IN THE LAST SIX YEARS. THE LD.CIT(A) HAS REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT IN POSSESSION OF ANY EVIDENCE EXHIBITING THE AGRICULTURE INCOME OF THIS MAGNITUDE WHICH CAN ENABLE HIM TO MAKE INVESTMENT OF RS.15 LAKHS. THE OTHER REASON ITA NO.68/AHD/2016 5 ASSIGNED BY THE LD.REVENUE AUTHORITIES IS THAT AS T O WHY THE INVESTMENT WAS MADE IN CASH, AND NOT THROUGH BANKING CHANNEL. THE LD.CIT(A) FURTHER OBSERVED THAT SOURCE OF INVESTMENT WAS CLAI MED FROM GIFTS RECEIVED FROM FATHER AND AUNT. BUT, THE SOURCE OF INCOME OF HIS FATHER AND AUNT FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED MONEY NOT DISCLOSED. ACCORDINGLY, ADDITION OF RS.15 LAKH S WAS MADE BY THE AO, WHICH WAS CONFIRMED BY THE LD.CIT(A). 7. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS NO OTHER SOURCE OF INCOME. THE DEPARTMENT CANNOT LAY THEIR HAND IN OTHER ACTIVITIES OF THE ASSESSEE. THEREFORE, THE S TAND OF THE ASSESSEE CANNOT BE DISBELIEVED THAT INVESTMENT WAS NOT MADE OUT OF AGRICULTURE INCOME. 8. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.CIT(A). HE CONTENDED THAT THE ASSESSEE HAS SUBM ITTED OLD BILLS EXHIBITING SALE OF SUGAR CANE. THIS RELATED TO F.Y .2006-07 TO 2010-11. THESE BILLS WOULD INDICATE THAT THE AVERAGE INCOME OF THE ASSESSEE WOULD RANGE IN-BETWEEN RS.4 LAKHS TO RS.4.50 LAKHS ONLY. THEREFORE, THE ASSESSEE MUST HAVE SOME OTHER SOURCE OF INCOME FOR MAKING THE ALLEGED UNEXPLAINED INVESTMENT IN LIC. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. IN OUR OPINION, THE LD.REVENUE A UTHORITIES HAVE FAILED TO APPRECIATE THE CONTROVERSY IN RIGHT PERSPECTIVE. THE ASSESSEE IS A FARMER, WHO IS RUNNING A NURSERY ALSO. HE HAS ALLE GED THAT HIS OLD FATHER WHO DIED IN 2011 AT THE AGE OF 82 WAS LIVING WITH HIM. SIMILARLY, HIS FATHERS SISTER I.E. HIS AUNT HAVING AGE OF 89 YEARS, A WIDOW WAS ALSO LIVING WITH HIM. INSTEAD OF TREATING BOTH THESE O LD PERSONS AS INDEPENDENT EARNING MEMBERS, THE LD.REVENUE AUTHORI TIES OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS OPERATING ON THE AGRICULTURE LAND ITA NO.68/AHD/2016 6 OWNED BY THESE TWO OLD PERSONS ALONG WITH HIS AGRIC ULTURE LAND. IT IS TO BE SEEN AS AN INDEPENDENT FAMILY UNIT, WHERE ALL CA RE HAS BEEN TAKEN BY THE ASSESSEE. THE LAND WAS EXHIBITED IN THE NAM E OF FATHER AND AUNT, FOR THE NAMES SAKE IN THE REVENUE RECORD, OT HERWISE ALL THE AGRICULTURE ACTIVITIES ARE BEING CARRIED OUT BY THE ASSESSEE. THE INCOME GENERATED FROM THERE WAS USED BY THE ASSESSEE TO MA KE INVESTMENT. THE SECOND ASPECT IS WHETHER THE AGRICULTURE LAND O F ROUGHLY 16 ACRES COULD GENERATE INCOME, OUT OF WHICH, RS.15 LAKHS CA N BE SPARED FOR INVESTMENT ? THE STAND OF THE ASSESSEE IS THAT APA RT FROM CARRYING OUT REGULAR AGRICULTURE ACTIVITIES, WHERE HE HAS GROWN SUGAR CANE, GROUNDNUT AND OTHER CROPS, HE WAS RUNNING A NURSERY IN THE NAME OF HANUMAN FARM, OUT OF WHICH, PLANTS WERE SOLD BY H IM. THIS EXISTENCE OF NURSERY WAS NOT DENIED BY THE REVENUE. THE AO T OOK GUIDANCE OF INCOME FROM THE BILLS OF SALE OF SUGAR CANE. IT IS TO BE APPRECIATED THAT BILLS CAME TO THE POSSESSION OF THE ASSESSEE, BECAU SE, SUGAR CANE WAS SOLD TO COOPERATIVE SUGAR MILL, WHERE MANDATORY BIL LS WERE RAISED. OTHERWISE, IN RURAL BACKGROUND, HARDLY ANY BILLS WE RE ISSUED FOR SALE OF CROP OR SALE OF PLANTS. POSSIBLY, THERE CANNOT BE ANY EVIDENCE IN THE POSSESSION OF THE ASSESSEE, BECAUSE, HE WAS NOT OPE RATING IN A VERY LARGE SCALE IN AN ORGANIZED MANNER. HE HAS PRODUCE D BANK STATEMENT FOR THE LAST THREE YEARS. IN SUCH SITUATION, ONUS WAS UPON THE REVENUE TO DEMONSTRATE THAT ASSESSEE HAS SOME OTHER SOURCE OF INCOME, OUT OF WHICH, HE HAS GENERATED RS.15 LAKHS. THE STAND OF THE ASSESSEE IS THAT HE HAS NO OTHER SOURCE EXCEPT AGRICULTURE INCOME. HE HAS SAVED THIS INCOME FROM AGRICULTURE OPERATION. NOW, IT IS FOR THE REVENUE, WHO HAS ALLEGED THAT THE ASSESSEE HAS SOME OTHER SOURCE OF INCOME. BUT, THE LD.AO FAILED TO BRING ANY EVIDENCE ON RECORD TO DEM ONSTRATE GENERATION OF SUCH INCOME, APART FROM AGRICULTURE ACTIVITY. I F WE GO BY CIRCUMSTANTIAL EVIDENCE, THEN, 16 ACRES OF AGRICULT URE LAND ALONG WITH RUNNING OF A NURSERY, COULD GENERATE RS.15 LAKHS OV ER A PERIOD OF TIME. ITA NO.68/AHD/2016 7 THE AO OUGHT TO HAVE NOT DOUBTED THE STAND OF THE A SSESSEE. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE IMPUGNED ADDITION. 10. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER