Smt. Nilafer, V. ITO,

ITA 702/BANG/2013

• Counselvise Citation: 70221114 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU J
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained cash credit; Gift; Source of fund
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 702 / BANG/20 1 3 (ASSESSMENT YEAR: 20 09 - 10 ) SMT. NILOFER, 3/5, 8 TH CROSS, LAKSHMI ROA D, SHANTHINAGAR, BANGALORE - 560027. PAN:AFSPN5113Q APPELLANT VS. INCOME - TAX OFFICER, WARD 2(1), BANGALORE. RESPONDENT APPELLANT BY: SHRI V.SRINIVASAN, CA. RESPONDENT BY: SHRI M.K.BIJU, JCIT(DR) DATE OF HEARING : 06 - 08 - 2014 . DATE OF PRONOUNCEMENT: 22 - 08 - 2014. O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A) - I, BANGALORE, DATED 28 - 3 - 2013 FOR THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED B Y THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.16,60,312/ - OUT OF A SUM OF RS.32,47,262/ - DISALLOWED BY THE ASSESSING OFFICER (AO) AS UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE. ITA NO . 702/BANG/2013 SMT.NILOFER PAGE 2 OF 6 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, WHO IS IN THE BUSINESS OF SALE OF FRUITS AND TEACHING OF AEROBICS, HAS FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 10 - 8 - 2009 DECLARING A TOTAL INCOME OF RS.2,80,396/ - . SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE AO IN RE SPONSE TO ANY OF THE NOTICES, THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT']. DURING THE PROCEEDINGS U/S 144, THE AO OBSERVED THAT THE ASSESSEE IS GETTING INCOME FROM OTHER SOURCES AND ALSO THAT T HE ASSESSEE HAS PURCHASED A RESIDENTIAL PROPERTY FOR RS.36 LAKHS ON 15 - 10 - 2008. THE ASSESSEE WAS ASKED TO FURNISH THE INFORMATION RELATING TO THE SOURCE OF INVESTMENT IN PURCHASE OF PROPERTY, THE COPY OF SALE DEED AND COPY OF THE BANK PASSBOOK FOR VERIFIC ATION. THE ASSESSEE FILED A LETTER DATED 16 - 6 - 1991 THROUGH TAPPAL STATING THAT THE SOURCE FOR INVESTMENT IN PURCHASE OF PROPERTY IS OUT OF SHARES RECEIVED FROM FAMILY PARTITION AND GIFT S RECEIVED FROM HER FOUR BROTHERS. THE AO VERIFIED THE ROYAL BANK OF SCOTLAND BANK PASSBOOK FILED BEFORE HIM AND NOTICED THAT A SUM OF RS.4 LAKHS HAS BEEN DEPOSITED BY CASH ON VARIOUS DATES OF RS.25,000/ - EACH AND A SUM OF RS.28,47,262/ - WAS DEPOSITED IN THE BANK THROUGH DEMAND DRAFT. THE ASSESSEE WAS THEREFORE REQUESTED T O FILE DETAILS ALONG WITH CONFIRMATION FROM THE RELEVANT PARTIES, GIFT DEED S , STATEMENT OF AFFAIRS ETC. VIDE OFFICE LETTER DATED 8 - 7 - 2011. IN RESPONSE TO THE SAME, THE ASSESSEE REPLIED BY LETTER DATED 25 - 7 - 2011 THAT THE ASSESSEE S FOUR ITA NO . 702/BANG/2013 SMT.NILOFER PAGE 3 OF 6 BROTHERS HAVE GIFTE D RS.1 LAKH EACH AS GIFT DURING THE YEAR WHICH HAS BEEN DEPOSITED INTO THE BANK AND ALSO THAT SHE HAS GOT A SHARE OF ANCESTRAL PROPERTY FROM WHICH SHE HAS RECEIVED A SUM OF RS.28,47,262/ - IN THE FORM OF DEMAND DRAFTS ON VARIOUS DATES. THE AO, AFTER CONSIDERIN G THE EVIDENCE FILED BY THE ASSESSEE, OBSERVED THAT THE ANCESTRAL PROPERTY WAS SOLD ONLY FOR A SUM OF RS.13,43,500/ - WHICH WAS TO BE SHARED WITH OTHERS AND FURTHER AS REGARDS THE GIFT OF MONEY FROM HER BROTHERS, HE OBSERVED THAT THOUGH DONORS HAVE FURNISHE D THEIR PAN NOS. THEY HAVE NOT FURNISHED THE STATEMENT OF AFFAIRS AND COPIES OF THEIR RETURNS. THEREFORE, H E TREATED THE ENTIRE SUM OF RS.32,47,262/ - AS UNEXPLAINED DEPOSIT INTO THE BANK ACCOUNT OF THE ASSESSEE AND ACCORDINGLY BROUGHT IT TO TAX. 3. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) ALONG WITH NECESSARY EVIDENCE. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AND AFTER CONSIDERING THE SAME , ACCEPTED THE GIFT OF RS.8 LAKHS FROM THE FOUR BROTHERS OF THE ASSESSEE AS WELL AS THE RECEIPTS OF THE ASSESSEE S SHARE OF ONE OF ANCESTRAL PROPERT IES I.E. RS.1,34,350/ - (BEING 10% OF RS.13,43,500/ - AND RS.4,52,600/ - TOWARDS THE BALANCE ANCESTRAL PROPERTY. THE CIT(A) ALSO ACCEPTED RS.2,00,000/ - AS GIFT GIVEN BY THE ASSESSEE S FATHER . HOWE VER, AS REGARDS THE BALANCE OF RS.16,60,312/ - , THE CIT(A) CONFIRMED THE ADDITION. THE ITA NO . 702/BANG/2013 SMT.NILOFER PAGE 4 OF 6 ASSESSE E IS IN SECOND APPEAL BEFORE US AGAINST THE CONFIRMED ADDITION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI V.SRINIVASAN, WHILE REITERATING THE SUBMISSIONS MAD E BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, HAS SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY OF THE DONOR AND THE CREDIT WORTHINESS OF THE DONOR. THE ASSESSEE HAS DISCHARGED THE ONUS AND IT WAS FOR THE REVENUE TO PROVE THAT SOURCES FOR INVESTMENT WERE FROM ANY OTHER SOURCES AND NOT FROM THE SOURCE EXPLAINED BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS BEING ASKED TO PROVE THE SOURCE OF SOURCE WHICH IS NOT PERMISSIBLE AS LAID DOWN BY THE HON BLE GAUHATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. CIT REPORTED IN 264 ITR 254. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SHRI M.K.BIJU, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSE E HAS FAILED TO DISCHARGE THE ONUS OF PROVING CREDIT WORTHINESS OF THE DONOR AND THEREFORE, THE DISALLOWANCE CONFIRMED BY THE CIT(A) IS JUSTIFIED AND NEEDS NO INTERFERENCE. 5. HAVING CONSIDERED THE RIVAL CONTENTIONS AND ALSO THE MATERIAL ON RECORD, WE FIN D THAT THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF HER INVESTMENT IN THE PURCHASE OF A HOUSE ITA NO . 702/BANG/2013 SMT.NILOFER PAGE 5 OF 6 FOR A SUM OF RS.36,00,000/ - . THE ASSESSEE HAS EXPLAINED THE SOURCE TO BE GIFTS FROM HER FATHER AS WELL AS BROTHERS TOWARDS HER SHARE ON SALE OF ANCESTRAL P ROPERTY. THE RELATIONSHIP BETWEEN THE PARTIES, GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE DONOR IS ESTABLISHED BY THE ASSESSEE AND EVEN FOR THE SUM OF RS.16,60,312/ - WE FIND THAT THE SAME HAS BEEN RECEIVED BY THE ASSESSEE IN THE FORM OF DEMAND DRAFTS. THE AO , IN THE REMAND REPORT , HAS ACCEPTED THE GIFTS FROM THE BROTHERS AS WELL AS PART OF THE GIFTS FROM THE FATHER. THE ONLY DISPUTE IS WITH REGARD TO THE CREDIT WORTHINESS OF THE FATHER OF THE ASSESSEE FOR A SUM OF RS.16,60,312/ - . ACCORDING T O THE LEARNED COUNSEL FOR THE ASSESSEE, FATHER OF THE ASSESSEE WAS A MAN OF MEANS WHICH IS NOT DOUBTED BY THE AUTHORITIES BELOW AND THE FATHER HAS ALSO GIVEN A CONFIRMATION ABOUT THE GIFT OF MONEY TO HIS DAUGHTER, I.E. THE ASSESSEE HEREIN. HE SUBMITTED TH AT THE AUTHORITIES BELOW ARE SEEKING THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE I.E. THE SOURCE OF THE FATHER. ACCORDING TO HIM, THE ASSESSEE CANNOT BE ASKED TO EXPLAIN THE SOURCE OF THE SOURCE AS HELD BY THE HON BLE GAUHATI HIGH COURT IN THE CASE O F NEMICHAND KOTHARI (CITED SUPRA). THE CLAIM OF THE ASSESSEE HAS BEEN THAT THE SUM RECEIVED BY HER WAS TOWARDS HER SHARE OF ANCESTRAL PROPERTY AND ASSESSEE S FATHER HAS CONFIRMED IT TO BE A GIFT FROM HIM TO HIS DAUGHTER. SINCE THE ASSESSEE HAS RECEIVED FU NDS IN THE FORM OF DEMAND DRAFTS , WE ARE OF THE VIEW THAT IT WOULD BE NECESSARY AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO WITH ITA NO . 702/BANG/2013 SMT.NILOFER PAGE 6 OF 6 A DIRECTION TO THE ASSESSEE TO PRODUCE NECESSARY EVIDENCE BEFORE THE AO TO SHOW THAT THE ASSESSEE S FATHER MR.AZMATHULL A IS A MAN OF MEANS AND THAT MR.AZMATHULLA HAD FUNDS AVAILABLE WITH HIM AT THE TIME OF ALLEGED GIFTS, THEN THE SAME HAS TO BE TREATED AS EXPLAINED BY THE ASSESSEE. THE AO CANNOT ASK THE SOURCE OF FUNDS WITH MR.AZMATHULLA. THE AO IS DIRECTED ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRON OUNCED IN THE OPEN COURT ON 22 ND OF AUGUST, 201 4. S D / - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL M EMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE