Dr. M.B. Satish Kumar, Kadur V. ITO, Chickmagalur

ITA 702/BANG/2015

• Counselvise Citation: 70221114 RSA 2015
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 11-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Gift; Difference of opinion; Change of opinion
• Section: 234B

Judgement Text

ITA.702/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.702/BANG/2015 (ASSESSMENT YEAR : 2004-05) DR. M. B. SATISH KUMAR, PROP : SRI SATYA SAI HOSPITAL, NO.NH 206, KADUR, CHIKMAGALUR DISTRICT 577548 .. APPELLANT PAN : BATPS8308D V. INCOME-TAX OFFICER, WARD 1, CHIKMAGALUR .. RESPONDENT ASSESSEE BY : SHRI. R. CHANDRASHEKAR, ADVOCATE REVENUE BY : DR. P. K. SREEHARI, ADDL.CIT HEARD ON : 17.12.2015 PRONOUNCED ON :28 .12.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE IT HAS ALTOGETHER TAKEN NINE GROUNDS OF WHICH GROUNDS 8 AND 9 ARE ON LEVY OF INTEREST U/ SS.234A AND 234B OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT), WHICH AR E CONSEQUENTIAL IN NATURE. ITA.702/BANG/2015 PAGE - 2 02. VIDE ITS GROUNDS 1 TO 3 ASSESSEE ASSAILS REOPEN ING OF THE ASSESSMENT DONE FOR THE IMPUGNED ASSESSMENT YEAR. 03. VIDE GROUNDS 4 TO 6 ASSESSEE ASSAILS AN ADDITIO N OF RS.9 LAKHS MADE BY THE AO U/S.68 OF THE ACT WHICH WAS CONFIRMED BY THE CIT (A). 04. ASSESSEE HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR ON 02.05.2011 IN RESPONSE TO A NOTICE ISSUED U/S.148 O F THE ACT. THE GERMANE REASON FOR ISSUE OF NOTICE U/S.148 OF THE ACT, FOR THE IMPUGNED ASSESSMENT YEAR ARISES FROM THE OBSERVATIONS OF CIT (A) IN HIS APPELLATE ORDER FOR A. Y. 2005-06. IN THE ASSESSMENT DONE FOR A. Y. 2005-06, IT WAS NOTED THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF A NURSIN G HOME CALLED SRI SATYA SAI HOSPITAL IN CHIKMAGALUR DISTRICT. A SUM OF RS.9 LAKHS OUT OF THE INVESTMENT WAS EXPLAINED BY THE ASSESSEE AS A GIFT RECEIVED FROM ONE SHRI. P. VENKATESHWARALU OF KADUR ON 12.08.2003. AO HAD OBSERVED THAT SHRI. P. VENKATESHWARALU WAS NOT RELATED TO THE ASSESSEE IN ANY MANNER AND ON DAYS IMMEDIATELY PRECEDING DATE OF THE GIFT. SHRI. VENKATESHWARALU HAD SUBSTANTIAL CASH DEPOSITS IN HIS BANK ACCOUNT. 05. CIT (A) ON ASSESSEES APPEAL FOR A. Y. 2005-06 HELD THAT THE GIFT WAS CLAIMED AS RECEIVED ON 12.08.2003 AND THE DONOR HAD MENTIONED THE CHEQUE ITA.702/BANG/2015 PAGE - 3 DATE AS 12.08.2003 IN HIS AFFIDAVIT. THUS ACCORDIN G TO CIT (A) AMOUNT WAS RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2003-04 RELEVANT TO A. Y. 2004-05. SINCE GIFT WAS RECEIVED IN THE EARLIER YE AR CIT (A) DELETED THE ADDITION DISBELIEVING THE GIFT FOR A. Y. 2005-06 IN TER ALIA MAKING THE FOLLOWING OBSERVATIONS : THE ADDITION IS DELETED BECAUSE THE TRANSACTION OF CASH CREDIT / UNEXPLAINED GIFT DOES NOT PERTAIN TO THIS YEAR. TH E AO IS FREE TO TAKE ANY ACTION AS PER LAW IN THE RELEVANT ASST YEAR. T HE AO WOULD ALSO HEAR THE ASSESSEE AND CONSIDER ALL HIS OBJECTIONS I N CASE HE CONTEMPLATES THIS ADDITION IN THE RELEVANT ASST YEA R. THEREFORE NO COMMENTS ARE MADE AT THIS STATE ON THE MERITS OF TH E ADDITION. 06. IN THE PROCEEDINGS FOR IMPUGNED ASSESSMENT YEAR ALSO, ASSESSEE RELIED ON THE VERY SAME AFFIDAVIT THAT HE HAD PRODU CED IN RESPECT OF SHRI. VENKATESHWARALU FOR JUSTIFYING THE GIFT. AO EXAMIN ED THE BANK ACCOUNTS OF THE DONOR WITH ING VYSYA BANK. AS PER THE AO IM MEDIATELY PRIOR TO THE CLEARING OF THE CHEQUE DATED 12.08.2003, ON 14. 08.2003, THERE WERE FOLLOWING TRANSACTIONS IN HIS BANK ACCOUNT : ITA.702/BANG/2015 PAGE - 4 07. AO MADE FURTHER VERIFICATION AND ISSUED SUMMONS TO SHRI. VENKATESHWARALU. HE APPEARED BEFORE THE AO AND CON FIRMED HAVING MADE GIFT TO THE ASSESSEE. ACCORDING TO SHRI. VENK ATESHWARALU CREDITS IN HIS BANK ACCOUNTS WERE ON ACCOUNT OF SAL E OF AGRICULTURAL PRODUCE. SHRI. VENKATESHWARALU WAS THE PROPRIETOR OF ONE M/S. TIRUMALA ESTATES. SOURCE OF THE AMOUNT FROM WHICH HE HAD GIVEN THE GIFT TO THE ASSESSEE WAS EXPLAINED BY HIM AS UNDER : ITA.702/BANG/2015 PAGE - 5 08. AO ISSUED SUMMONS TO EACH OF THE ABOVE PARTIES. IT SEEMS SHRI. C. N. SHIVAPPA, SHRI. K. N. PRAKASH AND SHRI P. RANGAS WAMY APPEARED BEFORE THE AO AND STATED THAT THEY HAD NOT PURCHASED ANY A RECANUTS OR COCONUTS TO SHRI. VENKATESHWARALU. THEY ALSO DENIED ANY PAYMEN TS TO SHRI. VENKATESHWARALU. OTHER PERSONS DID NOT APPEAR. AO DISBELIEVED THE CLAIM OF GIFT MADE BY THE ASSESSEE AND MADE AN ADDITION O F RS.9 LAKHS. 09. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). ONE OF THE ARGUMENTS TAKEN BY THE ASSESSEE BEFORE THE CIT (A) WAS THAT REOPENING WAS ITA.702/BANG/2015 PAGE - 6 BASED ON THE SATISFACTION OF THE CIT (A) AND NOT TH E SATISFACTION OF THE AO. ACCORDING TO THE ASSESSEE IT WAS MERELY ON A CHANGE OF OPINION. IN SO FAR AS MERITS OF THE ADDITION WAS CONCERNED, ARGUMENT OF THE ASSESSEE WAS THAT SOURCE OF THE SOURCE COULD NOT BE QUESTIONED. CIT (A) HOWEVER WAS OF THE OPINION REOPENING WAS NOT BASED ON ANY CHANGE OF OP INION, SINCE AO HELD THE VERY SAME OPINION WHEN HE COMPLETED THE ASSESSM ENT FOR A. Y. 2005- 06. FURTHER ACCORDING TO HIM, ASSESSEE COULD ONLY ESTABLISH THE IDENTITY OF THE DONOR BUT THE GENUINENESS OF THE GIFT WAS NOT P ROVED. WITH THESE OBSERVATIONS HE DISMISSED THE APPEAL OF THE ASSESSE E. 10. NOW BEFORE US THE LD. AR SUBMITTED THAT THE REA SONS EMANATED NOT FROM ANY SATISFACTION DERIVED BY THE AO BUT WERE SO LELY DEPENDENT ON THE OBSERVATIONS OF THE CIT (A) IN HIS ORDER FOR A. Y. 2005-06. ACCORDING TO HIM, THE REASONS RECORDED BY THE AO DID NOT SHOW AN Y RATIONAL CONNECTION WITH ANY ESCAPEMENT OF INCOME CHARGEABLE TO TAX. A S PER THE LD. AR, DIRECTIONS OF CIT (A) WERE ERRONEOUSLY CONSIDERED T O BE GOOD ENOUGH FOR REOPENING THE ASSESSMENT. ACCORDING TO HIM, REOPEN ING BASED ON CHANGE OF OPINION WAS BAD IN LAW. RELIANCE WAS PLACED ON JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT V. KELVINATOR OF INDI A LTD [ (2010) 320 ITR 561]. ITA.702/BANG/2015 PAGE - 7 11. ON MERITS, LD. AR SUBMITTED THAT ASSESSEE HAD P ROVED THE IDENTITY OF THE DONOR AND THE DONOR HAD APPEARED BE FORE THE CIT (A) AND CONFIRMED THE GIFT. DONOR HAD MENTIONED IN THE AFFIDAVIT THE REASON AS TO WHY HE WAS GIVING THE GIFT TO THE ASSE SSEE. ASSESSEE COULD NOT BE ASKED TO PROVE THE SOURCE OF THE DONOR . AS PER THE LD. AR ASSESSEE HAD DISCHARGED HIS ONUS. IF DONOR WAS NOT ABLE TO SATISFACTORILY EXPLAIN HIS SOURCE, REVENUE SHOULD H AVE PROCEEDED AGAINST THE DONOR AND NOT AGAINST THE ASSESSEE. 12. PER CONTRA, LD. DR SUBMITTED THAT THIS WAS NOT A REOPENING STRICTO- SENSU. ASSESSEE HAD NOT FILED ANY RETUR N FOR THE IMPUGNED ASSESSMENT YEAR. FURTHER ACCORDING TO HIM ELEMENTS OF A GIFT WERE NOT SATISFIED. DONOR WAS NOT RELATED TO THE ASSESS EE. BANK PASS-BOOK OF THE DONOR SHOWED CASH CREDITS IN HIS BANK ACCOUN T IMMEDIATELY BEFORE THE GIFT. REVENUE WAS NOT VERIFYING THE SOU RCE OF THE SOURCE. EXAMINATION OF THE PERSONS WERE DONE ONLY TO VERIFY THE GENUINENESS OF THE TRANSACTIONS. AS PER THE LD. DR ASSESSEE FA ILED TO PROVE THE GENUINENESS. THUS ACCORDING TO HIM, LOWER AUTHORIT IES WERE JUSTIFIED IN MAKING THE ADDITION. ITA.702/BANG/2015 PAGE - 8 13. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IN SO FAR AS THE ISSUE OF REOPENING IS CONCERNED, WE F IND THAT ASSESSEE HAD NEVER FILED A RETURN PRIOR TO ISSUE OF NOTICE U /S.148 OF THE ACT. THUS THERE WAS NO QUESTION OF ANY CHANGE OF OPINION . CIT (A) IN HIS ORDER FOR A. Y. 2005-06 HAD GIVEN A CLEAR FINDING T HAT THE DATE ON WHICH THE ALLEGED GIFT WAS CLAIMED FELL WITHIN THE PREVIOUS YEAR RELEVANT TO A. Y. 2004-05. IN OUR OPINION CONSIDER ING THIS, THE REOPENING DONE WAS VALID. REASON CITED BY THE AO W AS RELEVANT. ONLY RELEVANCY OF REASON CAN BE LOOKED INTO AND NOT ITS SUFFICIENCY. EVEN OTHERWISE, HONBLE APEX COURT IN THE CASE OF D CIT V. ZUARI ESTATE DEVELOPMENT & INVESTMENT CO. LTD (C. A.6758 OF 2004, DT.17.04.2014) HAS HELD THAT A REOPENING DONE, EVEN IN A CASE WHERE AN ASSESSEE HAD FILED A RETURN WHICH WAS SUBJECT T O A PROCESSING U/S.143(1) OF THE ACT, WOULD NOT COME WITHIN THE AM BIT OF CHANGE OF OPINION. ASSESSEES GROUNDS 1 TO 3 ON REOPENING AR E DISMISSED. 14. COMING TO THE MERITS OF THE CLAIM, WHAT I FIND IS THAT AFFIDAVIT OF SHRI. VENKATESHWARALU, IPRODUCED BY THE ASSESSEE BE FORE THE LOWER AUTHORITIES READ AS UNDER : ITA.702/BANG/2015 PAGE - 9 15. IT HAS BEEN CLEARLY STATED THAT FATHER OF THE A SSESSEE WAS A CLOSE FRIEND OF SHRI. VENKATESHWARALU AND LATTER WAS GIVING THE MONEY FOR HELPING THE ASSESSEE FOR CONSTRUCTING A HOSPITAL CUM NURSING HO ME. SHRI. VENKATESHWARALU HAD APPEARED BEFORE THE AO AND CONF IRMED THE GIFT. NO DOUBT, AO HAD FOUND THAT THE PERSONS CLAIMED BY SHR I. VENKATESHWARALU TO ITA.702/BANG/2015 PAGE - 10 HAVE FUNDED HIM FOR MAKING THE GIFT HAD DENIED THE TRANSACTIONS WITH SHRI. VENKATESHWARALU. AO FOUND THAT ALL THESE PERSONS W ERE ONLY THE EMPLOYEES OF SHRI. VENKATESHWARALU OR PEOPLE HAVING LITTLE MEANS. IN MY OPINION THIS WOULD AT THE BEST SHOW THAT SHRI. VENK ATESHWARALU HAD INCOME OTHER THAN INCOME FROM DECLARED AND EXPLAINED SOURC ES. HOWEVER THE FACT THAT HE HAD GIVEN A GIFT THROUGH A BANK CHEQUE OUT OF HIS BANK ACCOUNT, IN MY OPINION, STANDS SUBSTANTIATED BY THE ASSESSEE. ASSESSEE HAD DISCHARGED THE ONUS VESTED ON HIM TO PROVE THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE CR EDITOR. IN MY OPINION, LOWER AUTHORITIES OUGHT NOT HAVE DISBELIEVED THE GI FT RECEIVED BY THE ASSESSEE FROM SHRI. VENKATESHWARALU. I, THEREFORE, DELETE THE ADDITION OF RS.9 LAKHS MADE BY THE AO. GROUNDS 4 TO 7 OF THE A SSESSEE ARE TREATED AS ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DAY OF D ECEMBER, 2015. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN ITA.702/BANG/2015 PAGE - 11 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR