The ITO, Ward-1, Bharuch V. Smt. Pallavi Avinash Patel, Bharuch

ITA 91/AHD/2007

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0096 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-01-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 05-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P ORAM
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment
• Section: 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 05/01/2010 DRAFTED ON: 05/ 01/2010 ITA NO.91/AHD/2007 ASSESSMENT YEAR : 1998-99 THE INCOME TAX OFFICER WARD-1 STATION ROAD BHARUCH VS. SMT. PALLAVI AVINASH PATEL 69, PATEL SOCIETY BHARUCH PAN/GIR NO. : - (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI P.ORAM, SR. D.R. RESPONDENT BY: SHRI M.K. PATEL, ADV. O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-VI, BARODA DATED 03/10/2006 PASSED FOR ASSESSMENT YEAR 1998-99, BY RAISING FOLLOWING GROUN DS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.11,10,000/ - WITHOUT APPRECIATING THE FACTS THAT THE VDIS DISCLOSURE FIL ED BY THE ASSESSEE WAS AN INVALID DECLARATION. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT O F THE A.O. BE RESTORED. ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 2 - 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER FOUND THAT ASSESSEE HAS MADE A DISCLOSURE OF RS.11,10,000/- UN DER VDIS, 1997. THE DETAILS OF DISCLOSURE ARE AS UNDER:- (I) INVESTMENT IN ANKUR DEVELOPERS FOR RS.3 LACS. (II) INVESTMENT IN BUILDING UNDER CONSTRUCTION AND STOCK OF RS.8,10,000/-. 3. THE ASSESSEE HAS CLAIMED TO HAVE MADE THE PAY MENT OF INCOME TAX AND INTEREST OF RS.3,52,980 TOWARDS VDIS DISCLOSURE . IT WAS CLAIMED THAT ASSESSEE HAD DEPOSITED AN AMOUNT OF RS.3,52,980/- V IDE CHEQUE NO.1774457 DATED 31.07.1998 AND 1789012 DATED 31.03 .1998. THESE CHEQUES WERE DRAWN ON DENA BANK AND DEPOSITED IN TH E STATE BANK OF INDIA, STATION ROAD BRANCH, BHARUCH. ON ENQUIRY FR OM DENA BANK, THE ASSESSING OFFICER NOTICED THAT TAXES ON VDIS PAID B Y THE ASSESSEE THROUGH TWO CHEQUES WERE ISSUED BY M/S.ANKUR DEVELOPERS AND C.R.SONS FOR RS.2,02,980/- DATED 04.04.1998 AND FOR RS.1,50,000/ - ON 04.04.1998 TOTALLING TO RS.3,52,980/-. BEFORE ISSUING THE CH EQUES CASH OF RS.2,03,000/- AND RS.2,07,000/- WAS DEPOSITED ON 03 /04/1998 (FOR ANKUR DEVELOPERS) AND 03/04/1998 & 04/04/1998 (FOR CR SON S) IN THE BANK ACCOUNT OF THE TWO CONCERNS. ON FURTHER QUESTIONIN G AN AFFIDAVIT WAS FILED, WHEREIN THE ASSESSEE STATED THAT THE CASH O F RS.3,52,980/- WAS PAID BY WAY OF BORROWINGS. THE ASSESSING OFFICER, WAS, HOWEVER, NOT SATISFIED AS TO THE SOURCE OF BORROWINGS. HE INFERRED THAT C ASH DEPOSITED IN THE BANK ACCOUNT IS UNEXPLAINED. THE TAXES WERE REQUIRED TO BE PAID BEFORE ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 3 - 31/03/1998, IN RESPECT OF SUM DECLARED IN THE VDIS. THE LEARNED CIT(APPEALS)-VI, BARODA DID NOT ISSUE CERTIFICATE U/S.68(2) OF THE VDIS, 1997. FURTHER, THE ASSESSING OFFICER NOTICED THAT EVENTHOUGH THE ASSESSEE MADE DISCLOSURE UNDER VDIS, BUT HE DID NOT FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1998-99. HE ACCORDINGLY I SSUED NOTICE U/S.148(1) OF THE I.T. ACT, 1961 TO THE ASSESSEE T O FILE THE RETURN OF INCOME WHICH WERE FINALLY FILED ON 16/01/2006 SHOWING TAXA BLE INCOME AT NIL. 4. SINCE THE ASSESSEE WAS UNABLE TO OBTAIN CERTIFIC ATE U/S.68(2) OF THE VDIS, 1997, THE DISCLOSURE MADE UNDER THAT SCHEME W AS NOT HELD AS A VALID DECLARATION AND, ACCORDINGLY, ASSESSEE WAS HE LD NOT ENTITLED TO IMMUNITY GRANTED UNDER THAT SCHEME. THEREFORE, A SUM OF RS.11,10,000/- WAS TREATED AS UNEXPLAINED INVESTMENT BY THE A.O. AND TAXED IT U/S.69 OF THE I.T. ACT, 1961. THE ASSESSING OFFICER, FURTHE R, TAXED A SUM OF RS.3,52,980/- U/S.69C OF THE I.T. ACT, 1961 AS UNEX PLAINED EXPENDITURE. 5. THE LEARNED CIT(APPEALS) CONFIRMED THE RE-OPENIN G OF THE ASSESSMENT WHICH IS NOT UNDER CHALLENGE BEFORE US. REGARDING INVESTMENT MADE BY THE ASSESSEE, IT WAS FOUND BY TH E LEARNED CIT(APPEALS) THAT THAT THERE IS NO YEAR-WISE BREAK -UP OF THE UNDISCLOSED INCOME. AS ASSESSEE HAS MENTIONED IN THE DECLARAT ION FORM THAT SUM OF RS.11.10 LACS WAS EARNED AND INVESTED IN THE ASSESS MENT YEAR 1988-89 TO 1997-98. THERE WAS NO MATERIAL ON RECORD TO SHOW T HAT INVESTMENT OF RS.11.10 LACS WAS MADE DURING ASSESSMENT YEAR 1998- 99. HE ACCORDINGLY DELETED THE ADDITION. ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 4 - 5.1. REGARDING SOURCE OF PAYMENT OF TAXES, THE LEAR NED CIT(APPEALS) ACCEPTED THE EXPLANATION OF THE ASSESSEE AGAINST W HICH THERE IS NO APPEAL BY THE REVENUE. 6. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTA TIVE, SECTION 69 OF THE I.T. ACT, 1961 WOULD BE APPLICABLE BECAUSE ASSESSEE IS FOUND OWNER OF THE INVESTMENT IN THE FINANCIAL YEAR 1997-98 REL EVANT TO ASSESSMENT YEAR 1998-99. DECLARATION UNDER VDIS, 1997 WAS FI LED IN THE FINANCIAL YEAR 1997-98, THEREFORE, DISCLOSURE OF OWNERSHIP OF THE INVESTMENT WAS ONLY IN THE FINANCIAL YEAR 1997-98. SECTION 69 OF THE I.T. ACT, 1961 PROVIDES TWO CIRCUMSTANCES UNDER WHICH ADDITION CAN BE MADE; ONE IS THAT IN THE RELEVANT FINANCIAL YEAR, THE ASSESSEE HAS MA DE AN INVESTMENT AND SECOND IS ASSESSEE IS FOUND OWNER OF THE INVESTMENT . THEREFORE, IT IS NOT REQUIRED FOR THE ASSESSING OFFICER TO PROVE THAT IN VESTMENT WAS ACTUALLY MADE DURING THIS YEAR. IT IS ENOUGH THAT IT IS DI SCOVERED THAT ASSESSEE IS OWNER OF INVESTMENT. 7. ON THE OTHER HAND, LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SUBMITTED THAT THE QUESTION OF OWNERSHIP W ILL ARISE IN RESPECT OF SECTION(S) 69A AND 69B OF THE I.T. ACT, 1961 ONLY. THE REQUIREMENT OF SECTION 69 OF THE I.T. ACT, 1961 IS THAT ASSESSEE H AS MADE AN INVESTMENT IN ANY FINANCIAL YEAR AND WHICH ARE NOT RECORDED IN TH E BOOKS OF ACCOUNT. SECTION 69 OF THE I.T. ACT, 1961 DOES NOT SPEAK OF OWNERSHIP OF ANY ASSET. 8. AGAINST THIS, LEARNED DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT ADDITION SO MADE MAY BE CONSIDERED U/S.69A OF THE I .T. ACT, 1961. ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 5 - 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE SECTION(S) 69 & 69A OF T HE I.T. ACT, 1961 AS UNDER:- SECTION 69. UNEXPLAINED INVESTMENTS. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDE D IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AN D THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVE STMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE IN COME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. SECTION 69A. UNEXPLAINED MONEY, ETC. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND T O BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SU CH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF AC COUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS N O EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JE WELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE ASSESSING OFFICER, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSES SEE FOR SUCH FINANCIAL YEAR. 10. FROM THE ABOVE, IT IS CLEAR THAT SECTION 69 OF THE I.T. ACT, 1961 CAN BE INVOKED IF IN THE FINANCIAL YEAR (1997-98 IN TH E PRESENT CASE), ASSESSEE HAS MADE INVESTMENT WHICH ARE NOT RECORDED IN THE B OOKS OF ACCOUNT. IN THE PRESENT CASE, AS PER VDIS-1997 CERTIFICATE, AS SESSEE IS SHOWN TO HAVE MADE AN INVESTMENT IN THE ASSESSMENT YEARS 1988-89 TO 1997-98 AND NOT IN THE ASSESSMENT YEAR 1998-99. THERE IS NO MATERI AL ON RECORD TO SUGGEST THAT ASSESSEE HAD MADE INVESTMENT IN THE AS SESSMENT YEAR 1998- 99, THEREFORE, PROVISIONS OF SECTION 69 OF THE I.T. ACT, 1961 WOULD NOT BE APPLICABLE. THERE IS NO NECESSITY TO LOOK FOR OTH ER CONDITIONS MENTIONED ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 6 - IN SECTION 69 OF THE I.T. ACT, 1961 AS PRIMA-FACI E BASIS FOR INVOKING SECTION 69 OF THE I.T. ACT, 1961 IS FOUND ABSENT. 10.1. SECTION 69A OF THE I.T. ACT, 1961 CAN BE IN VOKED IF THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE. IN THE PRESENT CASE, WHAT IS FOUND IS IN VESTMENT IN M/S.ANKUR DEVELOPERS AND IN A BUILDING UNDER CONSTRUCTION AND STOCK. IN OUR CONSIDERED VIEW, INVESTMENT IN M/S.ANKUR DEVELOPER S CANNOT BE EQUATED WITH EITHER MONEY, BULLION, JEWELLERY OR ANY VALUAB LE ARTICLE. THIS SECTION REFERS TO ONLY TANGIBLE ASSET, SUCH AS MONEY, WHICH COMES IN ASSOCIATION WITH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE. THEREFORE, MONEY WOULD REFER TO CASH ONLY AND NOT TO ANY INVESTMENT MADE IN ANY FIRM. THIS CAN BE CONSIDERED EITHER IN SECTION 69 OF THE I.T. A CT, 1961 OR 69B OF THE I.T. ACT, 1961. SECTION 69A OF THE I.T. ACT, 1961 IS E XCLUSIVELY APPLICABLE TO TANGIBLE ASSETS. WE ARE, THEREFORE, OF THE CONSIDE RED VIEW THAT INVESTMENT SO MADE BY THE ASSESSEE CANNOT BE EQUATED EITHER W ITH MONEY, BULLION, JEWELLERY OR ANY VALUABLE ARTICLE. THEREFORE, THIS SECTION WOULD NOT BE APPLICABLE IN THE PRESENT CASE. FURTHER, IT CANNO T BE SAID THAT NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. IT IS EXPLAINED BY HER(ASSESSEE) THAT IT WAS DECLARED IN THE VDIS-199 7 AND PERTAINED TO EARLIER ASSESSMENT YEARS. BEFORE REJECTING THE EXP LANATION, THE ASSESSING OFFICER OUGHT TO HAVE VERIFIED WHETHER SUCH INVESTM ENT WAS MADE IN THE FINANCIAL YEAR 1997-98 OR IN ANY OTHER SPECIFIC YE AR(S). APPLICATION HAS BEEN REJECTION WITHOUT VERIFICATION. THEREFORE, IN OUR CONSIDERED VIEW, NO CASE IS MADE OUT TO TAX THE SUM OF RS.11.10 LACS EI THER U/S.69 OR U/S.69A ITA NO .91/AHD/2007 ITO VS. SMT. PALLAVI AVINASH PATEL ASST.YEAR 1998-99 - 7 - OR EVEN U/S.69B OF THE I.T. ACT, 1961 IN THE ASSESS MENT YEAR 1998-99. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LEARNED C IT(APPEALS). 11. IN RESULT, APPEAL OF THE REVENUE STANDS DISMIS SED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 22/01/ 2010. SD/- SD/- ( BHAVNESH SAINI ) ( D.C.AGR AWAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD; DATED 22/ 01/2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2 . THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-VI, BARODA 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD