AMRITAKAUR PAINTAL, MUMBAI V. ITO 20(1)(1), MUMBAI

ITA 6962/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70676 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAS S SAVLA
• Keywords: Unexplained investment
• Section: 234B; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 6962/MUM/2010 (ASSESSMENT YEAR: 2006-07) MS. AMRITAKAUR PAINTAL INCOME TAX OFFICER - 20(1)(1 ) HEMRAJ CHHEDA & CO., 102 RANJIT MUMBAI STUDIO, D.S. PHALKE ROAD VS. DADAR (E), MUMBAI 400014 PAN - AJQPP9850Q APPELLANT RESPONDENT APPELLANT BY: SHRI PARAS S. SAVLA RESPONDENT BY: SHRI GANESH BARE DATE OF HEARING: 12.08.2013 DATE OF PRONOUNCEMENT: 12.08.2013 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-31, MUMBAI AND IT PERTAINS TO A.Y. 2006-07. 2. FOLLOWING GROUNDS WERE URGED BY THE ASSESSEE: - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.4,00,000/- U/S 69 AS UNEXPLAINED INVESTMENTS, BE ING INVESTMENT MADE IN TEMPLETON MUTUAL FUND WITHOUT APPRECIATING THE FACT THAT THE INVESTMENT WAS DONE BY HER FATHER MR. INDERJIT SINGH PAINTAL WHICH WAS DECLARED IN HI S RETURN OF INCOME AND ADDITION MAY BE DELETED. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEES NAME APPEARED AS THIRD HOLDER IN TEMPLETON MUTUAL FUND, AND WAS INSERTED ONLY FOR CONVENIENCE PURPOSE AND HENCE ADD ITION IN THE HANDS OF THE ASSESSEE IS BAD IN LAW. 3. THE APPELLANT DENIES ITS LIABILITY TO THE LEVY O F PENAL INTEREST U/S. 234A, 234B AND 234C, HENCE THE INTEREST LEVIED MAY BE DIRECTED TO BE DELETED. 3. AT THE OUTSET IT MAY BE NOTICED THAT THE MAIN ISSUE IS WITH REGARD TO THE ADDITION MADE BY THE AO UNDER SECTION 69 OF THE ACT WHEREAS GROUND NO. 3 IS CONSEQUENTIAL IN NATURE. AS COULD BE NOTIC ED FROM THE ASSESSMENT ITA NO. 6962/MUM/2010 MS. AMRITAKAUR PAINTAL 2 ORDER, INFORMATION WAS RECEIVED BY THE AO THAT THE ASSESSEE MADE INVESTMENT IN TEMPLETON MUTUAL FUND ON 13.07.2005 T O THE TUNE OF ` 4 LAKHS, WHICH IS NOT REFLECTED IN THE RETURN OF INCO ME. THEREFORE THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES WERE ISSUED TO TH E ASSESSEE IN RESPONSE TO WHICH SHRI M.D. KULKARNI, ACCOUNTANT, OF THE ASSESS EE ATTENDED AND FILED SOME DETAILS ON 09.07.2008 AND 14.07.2008 BUT THERE AFTER NONE ATTENDED AND THE NOTICE SENT TO THE ASSESSEE ON 07.11.2008 W AS REDIRECTED TO ANOTHER ADDRESS AND THE PERSON ON THAT ADDRESS DID NOT ACCE PT THE LETTER. IN SHORT, THE LETTER SENT THROUGH POST WAS RETURNED WITH THE POSTAL REMARKS LEFT. THEREFORE THE AO ASSUMED THAT THE ASSESSEE IS NON-C OOPERATIVE. SINCE THERE IS NO EXPLANATION WITH REGARD TO THE INVESTMENT OF ` 4 LAKHS IN TEMPLETON MUTUAL FUNDS, THE INVESTMENT MADE IN THE SAID MUTUA L FUND WAS TREATED AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE ASSESSEE IS A NON-RESIDENT INDIVIDUAL EARNING INCOME FROM CAPITAL GAINS AND INCOME FROM OTHER SOURCES AND THE RETURN OF INCOME FOR YEAR UND ER CONSIDERATION WAS FILED THROUGH HER FATHER I.E., SHRI INDERJIT SINGH PAINTAL, WHO IS 75 YEARS AND HOLDS POWER OF ATTORNEY. DURING THE YEAR UNDER CONS IDERATION SHRI INDERJIT SINGH PAINTAL SHIFTED TO CHANDIGARH AFTER SELLING T HE RESIDENCE AT ANDHERI, MUMBAI. SINCE THERE WAS A DISPUTE WITH MR. M.D. KUK LARNI, SHRI KULKARNI MIGHT NOT HAVE SUBMITTED THE DETAILS AND MIGHT NOT HAVE ATTENDED THE HEARINGS, WHICH CULMINATED IN THE ADDITION MADE IN THE ORDER WHEREAS THE FACT REMAINS THAT SHRI INDERJIT SINGH PAINTAL HAS N OT RECEIVED ANY NOTICE. WITH REGARD TO ADDITION OF ` 4 LAKHS UNDER SECTION 69 OF THE ACT, IT WAS SUBMITTED THAT THERE WAS NO SUCH UNDISCLOSED INCOME . AT THE TIME OF HEARING IT WAS CONTENDED BEFORE THE CIT(A) THAT INV ESTMENT WAS MADE BY ASSESSEES FATHER IN FRANKLIN TEMPLETON INDIA PRIME MUTUAL FUND AND FOR THE SAKE OF CONVENIENCE HER NAME WAS ALSO INCLUDED, ALONGWITH HER BROTHER, AS A THIRD HOLDER OF THE FUND. THUS THE MUTUAL FUND WAS IN THE NAME OF SHRI INDERJIT SINGH PAINTAL, SHRI INDERMOHAN SINGH PAINT AL AND THE ASSESSEE HEREIN. EVIDENCE IN THE FORM OF INCOME TAX RETURN, CAPITAL ACCOUNT AS WELL AS BANK STATEMENT OF SHRI INDERJIT SINGH PAINTAL WAS F URNISHED TO SHOW THAT ITA NO. 6962/MUM/2010 MS. AMRITAKAUR PAINTAL 3 INVESTMENT OF ` 4 LAKHS WAS MADE IN THE MUTUAL FUND ON 13.07.2005 WHEREAS THE CHEQUE IS DEBITED IN THE BANK ACCOUNT O N 15.07.2005. THE LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE AO BUT NO COMMENTS WERE MADE BY THE AO ON THIS ISSUE. THE LEARNED CIT( A) OBSERVED THAT THOUGH THE ASSESSEE CLAIMS THAT THE INVESTMENT IN MUTUAL F UND WAS MADE ON 13.07.2005 OUT OF THE WITHDRAWALS MADE FROM THE BAN K ACCOUNT OF THE FATHER OF THE ASSESSEE ON 15.07.2005, THE ADDITION, IN FACT, WAS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE ON 13.07.200 5 AND THUS THE EXPLANATION DOES NOT RECONCILE WITH THE FACTS. THER EFORE, HE CONFIRMED THE ADDITION MADE BY THE AO. FURTHER AGGRIEVED, ASSESSE E IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTENTION TO PAGE 3 OF THE PAPER BOOK TO SUBMIT THAT ALL THE DETAILS WERE FURNISHED BEFORE THE CIT(A) TO SHOW THAT THE INVEST MENT WAS MADE BY HER FATHER IN THE MUTUAL FUND AND IN SUPPORT THEREOF IN COME TAX RETURN, CAPITAL ACCOUNT, BALANCE SHEET, ETC. WERE FURNISHED. HE ALS O REFERRED TO PAGE 14 OF THE PAPER BOOK TO SUBMIT THAT THE MAIN HOLDER WAS S HRI INDERJIT SINGH PAINTAL WHEREAS THE SECOND AND THIRD HOLDERS WERE S HRI INDERMOHAN SINGH PAINTAL AND MS. AMRITAKAUR PAINTAL AND THE DATE OF PURCHASE IS SHOWN AS 13.07.2005. HE ALSO REFERRED TO PAGE 9 OF THE PAPER BOOK TO SUBMIT THAT THOUGH THE CHEQUE WAS ISSUED ON 13.07.2005 IT WAS C LEARED ON 15.07.2005 BUT THE FACT REMAINS THAT THE PURCHASE WAS MADE ON 13.07.2005 ITSELF. AT ANY RATE, THE AIR INFORMATION DOES NOT INDICATE THA T THE ASSESSEE HAS MADE ANY INVESTMENT IN HER INDIVIDUAL NAME OTHER THAN TH E IMPUGNED INVESTMENT. WHEN THE ASSESSEE HAS POINTED OUT THESE DETAILS BEF ORE THE CIT(A) IT IS THE DUTY OF THE TAX AUTHORITIES TO VERIFY THE SAME. IN OTHER WORDS, NO ADDITION WOULD HAVE BEEN MADE WITHOUT CROSS VERIFYING THE DE TAILS. 6. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT THE NET ASSET VALUE AS ON 13.07.2005 WAS MENTIONED IN THE MUTUAL FUND AND IF THE CHEQUE IS NOT ENCASHED THEY WOULD NOT HAVE MENTIONED 13.07 .2005 AS THE DATE OF PURCHASE. HE THUS STRONGLY RELIED UPON THE ORDERS P ASSED BY THE TAX AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN BRIEF THE ADDITION WAS MADE BY THE AO ON LY ON THE STRENGTH OF THE ITA NO. 6962/MUM/2010 MS. AMRITAKAUR PAINTAL 4 AIR INFORMATION WHICH DOES NOT INDICATE AS TO WHAT IS THE NUMBER OF MUTUAL FUND WHICH IS SUPPOSED TO HAVE BEEN PURCHASED IN TH E NAME OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE DI D NOT GET PROPER OPPORTUNITY BEFORE THE AO AND EVEN THE CIT(A) HAS N OT CROSS VERIFIED AS TO WHETHER THE MUTUAL FUND, WHICH WAS REFERRED BEFORE THE CIT(A), WAS THE SAME MUTUAL FUND WHICH IS MENTIONED IN THE AIR INFO RMATION. SUCH BEING THE CASE, IN THE INTEREST OF JUSTICE, WE DEEM IT FA IR AND REASONABLE 8. TO SET ASIDE THE MATTER TO THE FILE OF THE AO WHO IS DIRECTED TO RE- EXAMINE THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO OBSERVE THAT IF THERE IS NO INVESTMENT OF ` 4 LAKHS EXCLUSIVELY IN ASSESSEES INDIVIDUAL NAME I N THE YEAR UNDER CONSIDERATION, NO ADDITION CAN BE MADE I N THE HANDS OF THE ASSESSEE. WITH THESE OBSERVATIONS THE ISSUE ARISING OUT OF GROUND NO. 1 AND 2 ARE SET ASIDE TO THE FILE OF THE AO. 9. GROUND NO. 3 IS CONSEQUENTIAL IN NATURE AND HENCE T HE AO IS DIRECTED TO RECONSIDER THE MATTER AFTER PASSING THE ORDER WI TH REGARD TO GROUND NO. 1 AND 2. 10. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURP OSE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 12 TH AUGUST, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 31, MUMBAI 4. THE CIT 20, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P