DCIT, V. D. Parameshwara Reddy,

ITA 989/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90048 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: FARHAT HUSSAIN QURESHI
• Assessee Lawyers: B S BALACHANDRAN
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard
• Section: 143(3); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI VIJAYPAL RAO , JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 989 /BANG/201 3 (ASSESSMENT YEAR : 200 7 - 08 ) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), B ANGALORE. VS. SHRI D. PARAMESHWARA REDDY, NO.6/4, ENNOBLE HOUSE, RAGHAVACHARI HOUSE, BELLARY - 583 101 PAN AFWPR 7141G APPELLANT RESPONDENT. APPELLANT BY : SHRI FARHAT HUSSAIN QURESHI, CIT (D.R) RESPONDENT BY : SHRI B.S. BALACHANDRAN, ADVOCATE. DATE OF H EARING : 18.6.2015. DATE OF P RONOUNCEMENT : 17.7. 201 5 . O R D E R PER SHRI JASON P. BOAZ, A.M. : THIS APPEAL BY TH E ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), MYSORE DT.31.1.2013 FOR ASSESSMENT YEAR 2007 - 08. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2.1 THE ASSESSEE'S PREMISES WAS SEARCHED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON 26.10.2007. CONSEQUENT THERETO, PROCEEDINGS WERE INITIATED UNDER SECTION 153A OF THE ACT BY ISSUE OF NOTICE THERE UNDER AND IN RESPONSE THERETO, THE ASSESSEE FILED A RETURN OF INCOME FOR ASSESSMENT YEAR 20 07 - 08 ON 6.10.2009 DECLARING INCOME OF RS.28,66,790 AND AGRICULTURAL INCOME OF RS.16,16,263. THE ASSESSMENT WAS 2 ITA NO. 989 /B ANG/2013 CONCLUDED UNDER SECTION 153A RWS 143(3) OF THE ACT VIDE ORDER DT.31.12.2009 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.61,83,055 IN VIEW OF THE FOLLOWING ADDITIONS/DISALLOWANCES : - (I) LEASE RENT RS.2,00 , 000. (II) AGRICULTURAL INCOME OF F.Y. 2005 - 06 : RS.7,17,263. (III) EXCESS CLAIM OF AGRICULTURE FOR CURRENT YEAR : RS.3,99,000. (IV) UNPROVED CASH GIFT : RS.20,00,0 00. AGRICULTURAL INCOME WAS ESTIMATED AT RS.5,00,000. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08 DT.31.12.2009, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS), MYSORE. THE LEARNED CIT (APPEALS) DISP OSED THE APPEAL VIDE ORDER DT.31.1.2013 ALLOWING THE ASSESSEE PARTIAL RELIEF. 3. AGGRIEVED BY THE ORDER OF THE CIT (APPEALS), MYSORE DT.31.1.2013 FOR ASSESSMENT YEAR 2008 - 09, REVENUE HAS PREF E RRED THIS APPEAL RAISING THE FOLLOWING GROUNDS : - GRO UND NO.1 : THE LEARNED CIT (APPEALS) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.20 LAKHS MADE ON ACCOUNT OF UNEXPLAINED GIFT UNDER SECTION 68 OF THE INCOME TAX ACT. GROUND NO.2 : THE LEARNED CIT (APPEALS) ERRED IN LAW AND IN FACT IN DE LETING THE ADDITION OF RS.7,17,263 MADE ON ACCOUNT OF UNEXPLAINED AGRICULTURAL INCOME IN THE CAPITAL ACCOUNT. 4. GROUND NO.1 : GIFT RS.20 LAKHS . 4.1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT IN THE CAPITAL ACC OUNT FILED, THE ASSESSEE CLAIMED TO HAVE RECEIVED A CASH GIFT OF RS. 20 LAKHS 3 ITA NO. 989 /B ANG/2013 FROM HIS UNCLE RAMI REDDY, S/O ESHWAR REDDY, AN AGRICULTURIST FROM NANDYAL TALUK, KURNOOL DISTRICT, ANDHRA PRADESH. IN THIS REGARD, THE ASSESSEE FILED A GIFT LETTER ON A STAMP PAPER OFRS.50 AS PER WHICH CASH GIFT OF RS.20 LAKHS IS CLAIMED TO HAVE BEEN MADE BY SRI RAMI REDDY TO THE ASSESSEE ON 4.4.2006. ON EXAMINATION THEREOF, THE ASSESSING OFFICER DID NOT ACCEPT THE GIFT AS VALID AND GENUINE, SINCE ONLY THE DONOR HAD SIGNED TH E GIFT LETTER WITHOUT EITHER THE DONEE I.E. THE ASSESSEE ACCEPTING THE ALLEGED GIFT OR THERE BEING ANY WITNESSES IN THE PRESENCE OF WHOM THE GIFT DOCUMENT WAS DRAWN UP. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN THESE CIRCUMSTANCES THE GENUINENESS O F THE GIFT DEED WAS NOT ESTABLISHED AS EVEN THOUGH THE ASSESSEE HAD IDENTIFIED THE DONOR, THE GENUINENESS OF THE GIFT TRANSACTION WAS NOT ESTABLISHED . ACCORDING TO THE ASSESSING OFFICER NEITHER THE CREDIT WORTHINESS OF THE DONOR N OR THE GENUINENESS OF T HE TRANSACTION COULD BE ESTABLISHED SINCE THE DONOR IS AN AGRICULTURIST AND HAS NOT MAINTAINED ANY ACCOUNTS TO ESTABLISH THE EA R NING OF AGRICULTURAL INCOME AS CLAIMED FOR ADVANCING THE ALLEGED GIFT OF RS.20 LAKHS. IN THAT VIEW OF THE MATTER, THE ASSESSING O FFICER HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE ALLEGED CASH GIFT OF RS.20 LAKHS, WHICH APPEARED AS A CREDIT IN HIS CAPITAL ACCOUNT, AND BROUGHT THE SAME TO TAX IN THE ASSESSEE'S HANDS. 4.1 ON APPEAL, THE LEARNED CIT (APPEALS) D ELETED THE ADDITION OF RS.20LAKHS OBSERVING THAT SINCE THE ASSESSEE HAS FILED THE CONFIRMATION IN THE FORM OF GIFT DEED, THE ONUS CAST UPON THE ASSESSEE STANDS DISCHARGED AND THAT THE ASSESSING OFFICER HAS HELD THE GIFT AS NON - GENUINE WITHOUT ANY FINDING TO THAT EFFECT. 4 ITA NO. 989 /B ANG/2013 4.2.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE ASSAILING THE NON - SPEAKING FINDING OF THE LEARNED CIT (APPEALS) AND THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IN SUPPOR T OF THE FINDING OF THE LEARNED CIT (APPEALS) IN HOLDING THE GIFT OF RS.20 LAKHS TO BE GENUINE. THE BASIC FACTS, NOT DISPUTED ARE THAT THE ASSESSEE S CAPITAL ACCOUNT FOR THE PERIOD UNDER CONSIDERATION REFLECTED A CREDIT OF RS.20 LAKHS, WHICH HE CLAIMED WA S A CASH GIFT RECEIVED BY HIM FROM HIS UNCLE SRI RAMI REDDY, AN AGRICULTURIST OF KURNOOL DISTRICT, ANDHRA PRADESH. IN SUPPORT OF THIS, THE ASSESSEE FILED A COPY OF GIFT DOCUMENT ON STAMP PAPER OF RS.50, AS PER WHICH A CASH GIFT OF RS.20 LAKHS HAS BEEN CL AIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON 4.4.2006, WHICH IS SIGNED ON L Y BY THE DONOR AND NEITHER BY THE DONEE; I.E. THE ASSESSEE NOR WAS THERE ANY WITNESS THERETO. ON EXAMINATION OF THESE DETAILS BEFORE HIM, WE FIND THAT THE ASSESSING OFFICER HAS R ENDERED A CLEAR FINDING THAT WHILE THE IDENTITY OF THE DONOR IS ESTABLISHED , THE ASSESSEE HAS FAILED TO EST A BLISH BOTH THE CREDIT WORTHINESS OF THE DONOR, SINCE THE DONOR HAS NOT MAINTAINED ANY ACCOUNTS IN RESPECT OF ALLEGED AGRICULTURAL INCOME AND THE GI FT WAS MADE IN CASH AND ALSO THE GENUINENESS OF THE TRANSACTION OF THE ALLEGED GIFT DONATION. THIS IS CONTRARY TO THE OBSERVATION OF THE LEARNED CIT (APPEALS) THAT THE ASSESSING OFFICER HAD HELD THE GIFT AS NON - GENUINE WITHOUT RENDERING A FINDING TO THAT EFFECT AND WHICH WE FIND IS NOT IN ACCORDANCE WITH THE FACTS ON RECORD. 4.2.2 WE FIND FROM A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) THAT AT PARA 3.7 THEREOF HE HAS MERELY RECORDED THE ASSESSEE'S SUBMISSIONS AND AT PARA 3.8 5 ITA NO. 989 /B ANG/2013 DELETED T HE ADDITION ON ACCOUNT OF THE UNPROVED CASH GIFT OF RS.20 LAKHS CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE, SUMMARILY, WITHOUT HIMSELF RENDERING ANY CLEAR FINDING AS TO HOW THE CREDIT WORTHINESS OF THE DONOR WAS ESTABLISHED AND HOW THE ALLEGED CASH G IFT TRANSACTION WAS GENUINE, BY THE MERE FILING OF AN INCOMPLETE GIFT DEED. IN OUR CONSIDERED VIEW, THE GENUINEN E SS OF THE CREDIT OF RS.20 LAKHS IN THE CAPITAL ACCOUNT OF THE ASSESSEE IS TO BE EXPLAINED BY THE ASSESSEE BY ESTABLISHING THE IDENTITY OF THE DONOR, HIS CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTION. IN THE CASE ON HAND, WE FIND THAT APART FROM ESTABLISHING THE IDENTITY OF THE DONOR, THE ASSESSEE HAS FAILED TO ESTABLISH BOTH THE CREDIT WORTHINESS OF THE DONOR AND THE GENUINENESS OF THIS TRANSACTION BEFORE THE AUTHORITIES BELOW. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPIN I ON THAT THE LEARNED CIT (APPEALS) S ORDER IN DIRECTI N G THE DELETION OF THE ADDITION OF RS.20 LAKHS ON ACCOUNT OF THE UNEXPLAINED CASH GIFT WAS NOT CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE ISSUE OF THE CREDIT OF CASH OF RS.20 LAKHS IN THE ASSESSEE'S CAPITAL ACCOUNT IN THE YEAR UNDER CONSIDERATION DOES NOT APPEAR TO HAVE BEEN EXAMINED THOROUGHLY IN ALL RESPEC TS BY THE AUTHORIT IES BELOW, W E, IN THE INTEREST OF JUSTICE AND EQUITY, DEEM IT APPROPRIATE TO REMAND THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - EXAMINATION AND ADJUDICATION THEREON AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND FI LE DETAILS/SUBMISSION REQUIRED IN THIS REGARD. IT IS ORDERED ACCORDINGLY. CONSEQUENTLY, GROUND NO.1 OF REVENUE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6 ITA NO. 989 /B ANG/2013 5. GROUND NO.2 : AGRICULTURAL INCOME RS.7,17,263. 5.1 IN THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER ON EXAMINATION OF THE ASSESSEE'S CAPITAL ACCOUNT AS ON 31.3.2007 OBSERVED THAT THERE WAS CREDIT OF TOTAL AGRICULTURAL INCOME OF RS.16,16,263, WHICH INCLUDED, RS7,17,263 SAID TO PERTAIN TO THE IMMEDIATELY PRECEDING YEAR I.E. P ERIOD RELEVANT TO ASSESSMENT YEAR 2006 - 07. THE ASSESSING OFFICER, ON EXAMINATION OF THE ASSESSEE'S RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2006 - 07, OBSERVED THAT THE ASSESSEE D E CLARED NIL AGRICULTURAL INCOME THEREIN. ON BEING QUERIED IN THIS REGARD, T HE ASSESSEE SUBMITTED THAT THE AGRICULTURAL PRODUCE OF ASSESSMENT YEAR 2006 - 07 WAS SOLD IN THE CURRENT YEAR AND ACCORDINGLY THE INCOME THEREOF WAS CRE DITED TO HIS CAPITAL ACCOUNT FO R THE YEAR ENDING 31.3.2007, AND IT IS FOR THIS REASON THAT THE AGRICULTURA L INCOME WAS DECLARED AT NIL IN THE YEAR ENDING 31.3.2006. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT SINCE THE ASSESSEE HAD DECLARED NIL AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2006 - 07, THE CREDIT OF RS.7,17,263 IN THE ASSESSEE'S CAPITAL ACCOUN T FOR THE YEAR ENDING 31.3.2007 AS AGRICULTURAL INCOME WAS NOT TENABLE SINCE THE ASSESSEE HAD NO DOCUMENTARY EVIDENCE TO PROVE HIS CLAIM. IN THAT VIEW OF THE MATTER, HIS CLAIM THE ASSESSING OFFICER HELD THE SAID CREDIT OF RS.7,17,263 IN THE ASSESSEE'S CAP ITAL ACCOUNT TO BE AN UNEXPLAINED CREDIT AND BROUGHT THE SAME TO TAX IN THE ASSESSEE'S HANDS. 5.2 ON APPEAL, THE ASSESSEE REITERATED THE SUBMISSIONS PUT FORTH BEFORE THE ASSESSING OFFICER THAT THE AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2006 - 07 WAS DECLARED AT NIL SINCE THE AGRICULTURAL PRODUCE OF THAT YEAR WAS SOLD IN THE CURRENT YEAR AND THEREFORE THE 7 ITA NO. 989 /B ANG/2013 INCOME THEREOF AMOUNTING TO RS.7,17,263 WAS CREDITED TO THE CAPITAL ACCOUNT. THE LEARNED CIT (APPEALS) WAS OF THE VIEW THAT SINCE THE ASSESSEE HA D AGRICULTURAL INCOME FROM ASSESSMENT YEAR 2003 - 04 ONWARDS, IT WAS PLAUSIBLE THAT THE ASSESSEE DECLARED NIL INCOME FOR ASSESSMENT YEAR 2006 - 07, SINCE IF THE AGRICULTURAL PRODUCE OF THAT YEAR HAD NOT BEEN SOLD IN THAT YEAR IT COULD HAVE BEEN SOLD IN THE CURR ENT YEAR. THE LEARNED CIT (APPEALS), OBSERVING THAT THE ASSESSEE HIMSELF HAD ESTIMATED HIS AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2003 - 04 @ RS.16,500 PER ACRE, WH I CH HE HAD FOUND REASONABLE AND ACCEPTED WHILE DISPOSING THE APPEAL FOR THAT YEAR, HE WAS OF THE VIEW THAT THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE IN THE YEAR 2006 - 07 AND DECLARED IN THIS YEAR OUGHT TO ALSO ESTIMATED AT RS.16,500 PER ACRE AND DIRECTED THE ASSESSING OFFICER ACCORDINGLY. 5.3.1 WE HAVE HEARD THE RIVAL SUBMISSION S OF BOTH THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE IN SUPPORT OF THE GROUNDS RAISED FOR RESTORING THE ASSESSING OFFICER S FINDING IN THE MATTER OF THE UNEXPLAINED CREDIT OF RS.7,17,263 IN THE ASSESSEE'S CAPITAL ACCOUNT FOR 31.3.2007 AND THE LEAR NED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IN SUPPORT OF THE IMPUGNED ORDER OF THE CIT (APPEALS) IN ESTIMATING THE AGRICULTURAL INCOME @ RS.16,500 PER ACRE FOR THE PRODUCE OF ASSESSMENT YEAR 2006 - 07 AS SOLD AND CREDITED IN THE CAPITAL ACCOUNT OF THE AS SESSEE FOR YEAR ENDING 31.3.2007. IT IS NOT DISPUTED THAT THE ASSESSEE'S CAPITAL ACCOUNT FOR THE YEAR ENDING 31.3.2007 HAD A CREDIT OF RS.7,17,263 CLAIMED TO BE IN RESPECT OF THE SALE OF AGRICULTURAL PRODUCE PERTAINING TO THE ASSESSMENT YEAR 2006 - 07, IN THE CURRENT YEAR. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSING OFFICER REJECTED THIS CLAIM OF THE ASSESSEE ON THE GROUNDS THAT IN THE 8 ITA NO. 989 /B ANG/2013 ASSESSEE'S RETURN OF INCOME FOR ASSESSMENT YEAR 2006 - 07 , AGRICULTURAL INCOME WAS DECLARED AT NIL AND ALSO FOR THE REA SON THAT THE ASSESSEE DID NOT HAVE DOCUMENTARY PROOF OF HAVING EARNED SUCH AGRICULTURAL INCOME AS CLAIMED. ACCORDINGLY, THE SAME WAS TREATED AS UNEXPLAINED CASH CREDIT IN THE ASSESSEE'S CAPITAL ACCOUNT . 5.3.2 IN THE IMPUGNED ORDER, THE LEARNED CIT (APPEALS) HAS STATED THAT THE ASSESSEE WAS HAVING AGRICULTURAL INCOME AS EARLY AS ASSESSMENT YEAR 2003 - 04, AND IN THE APPEAL FOR THAT YEAR, WHICH IS REPORTEDLY DECIDED BY THE LEARNED CIT (APPEALS), THE ASSESSEE HAD HIMSELF ESTIMATED HIS AGRICULTURAL INCOM E AT RS.16,500 PER ACRE WHICH THE LEARNED CIT (APPEALS) FOUND TO BE REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS VIEW OF THE MATTER, THE LEARNED CIT (APPEALS) PROCEEDED TO ESTIMATE THE AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2006 - 07 ALS O AT RS.16,500 PER ACRE. ON AN APPRECIATION OF THE FACTS AS EMANATE FROM THE RECORD WE FIND THAT THE ASSESSEE WAS EARNING AND DE CLARING AGRICULTURAL INCOME ATLEAST FROM ASSESSMENT YEAR 2003 - 04 ONWARDS AND HAS ALSO DECLARED AGRICULTURAL INCOME OF RS.16,16 ,263 FOR THE YEAR UNDER CONSIDERATION, VIZ. ASSESSMENT YEAR 2007 - 08. THIS ESTABLISHES THAT T HE ASSESSEE HAS BEEN E A RNING AGRICULTURAL INCOME F OR THE LAST MANY YEARS . THEREFORE, WE ARE OF THE OPINION THAT, THE ASSESSEE'S CONSTANT CLAIM BEFORE THE AUTHORI TIES BELOW THAT THE AGRICULTURAL INCOME DECLARED FOR ASSESSMENT YEAR 2006 - 07 WAS NIL SINCE THE PRODUCE WAS SOLD IN THE CURR E NT YEAR AND THE PROCEEDS / INCOME THEREOF WAS CREDITED TO THE ASSESSEE'S CAPITAL ACCOUNT FOR ASSESSMENT YEAR 2007 - 08, IS PLAUSIBLE I N THE FACTS AND CIRCUMSTANCES OF THE CASE. WE ALSO FIND THAT THE ESTIMATION OF AGRICULTURAL INCOME BY THE LEARNED CIT (APPEALS) AT RS.16,500 PER ACRE, AS 9 ITA NO. 989 /B ANG/2013 HAD BEEN ESTIMATED BY THE ASSESSEE FOR ASSESSMENT YEAR 2003 04 TO BE REASONABLE IN THE FACTUAL MATRI X OF THE CASE. WE, THEREFORE, FIND NO CAUSE TO INTERFERE WITH THE DECISION OF THE LEARNED CIT (APPEALS) IN HOLDING THAT THE INCOME ARISING OUT OF THE SALE OF AGRICULTURAL PRODU C E OF ASSESSMENT YEAR 2006 - 07 AS CREDITED IN THE ASSESSEE'S CAPITAL ACCOUNT FO R THE YEAR ENDING 31.3.2007 BE ESTIMATED AT RS.16,500 PER ACRE. CONSEQUENTLY, THE GROUND AT S.NO.2 RAISED BY REVENUE IS DISMISSED. 6. IN THE RESULT, REVENUE S APPEAL FOR ASSESSMENT YEAR 2007 - 08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORD ER PRONOUNCED IN THE OPEN COURT ON 17 TH JULY, 2 01 5 . SD/ - ( VIJAYPAL RAO ) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER *REDDY G P COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, BANGALORE