Mathurdas Kakubhai Kundalia, JAMNAGAR V. The Deputy Commissioner of Income Tax, Circle-2, JAMNAGAR

ITSSA 3/RJT/2009

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9483 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-06-2013
• Assessment Year: misc
• Appeal Filed On: 17-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV RANADE DR
• Keywords: Gift; Source of fund

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM IT(SS) A NO. 03/RJT/2009 / ASSESSMENT YEAR BLOCK PERIOD 01-04-1990 TO 25-04-2000 SHRI MATHURADAS KAKUBHAI KUNDALIA PANCHAVATI SOCIETY, NEAR RAILWAY CROSSING SIKKA, JAMNAGAR. PAN : AAUPK0208J ( / APPELLANT) THE D Y. COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAMNAGAR. / RESPONDENT ! ' #$ / ASSESSEE BY SHRI CHETAN AGARWAL, CA % ! ' #$ / REVENUE BY SHRI RAJIV RANADE, DR # & ' ! ( / DATE OF HEARING 13-06-2013 ) ! ( / DATE OF PRONOUNCEMENT 30-08-2013 / ORDER .. , / T. K. SHARMA, J. M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 27-03-2009 OF LD. CIT (A),J AMNAGAR FOR THE BLOCK PERIOD 01-04-1999 TO 25-04-2000. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HIS RESIDENCE WAS SEARCHED U/S.132 OF THE I.T. ACT, 1961ON 25-04- 2000. HE FILED THE RETURN OF BLOCK PERIOD 01-04-1999 TO 25-04-2000 DECLARING TOT AL UNDISCLOSED INCOME OF RS.5,59,150/-. AO FRAMED THE ASSESSMENT U/S.158BC O F THE I.T. ACT, 1961 ON 28- 12-2007. AGAINST THIS ORDER, ASSESSEE PREFERRED AN APPEAL AND THE LD. CIT (A)-III, AHMEDABAD REDUCED THE ASSESSED INCOME FROM RS.20,68 ,889/- TO RS.9,23,681/-. AGAINST THIS ORDER, THE DEPARTMENT PREFERRED SECOND APPEAL BEFORE ITAT. THE ASSESSEE ALSO FILED CROSS-OBJECTION. THE ITAT, RAJK OT BENCH VIDE ORDER IN APPEAL IT (SS) A. NO.52/RJT/2003 AND CO NO.637/RJT/ 2005 DATED 15-11-2006 DECIDED THE APPEAL EXCEPT FOLLOWING ISSUES FOR WHIC H THE MATTER WAS RESTORED TO THE FILE OF THE AO TO DECIDE THE ISSUES AFRESH:- 01. ADDITION ON ACCOUNT OF CAPITAL OF SMT. RANJANBE N M. KUNDALIA RS.6,00,306 02. ADDITION ON ACCOUNT OF CAPITAL OF KUM.BHARTIBEN M. KUNDALIA RS.4,90,093 03. ADDITION IN RESPECT OF MARUTI CAR PURCHASED BY SMT. RS.1,60,000 RANJANBEN M. KUNDALIA. IT(SS)A 03-2009 2 3. SUBSEQUENTLY, AO FRAMED THE ASSESSMENT U/S.158BC R.W.S. 254(1) ON 28- 12-2007 WHEREIN HE MADE ALL THE AFORESAID THREE ADD ITIONS AS UNDER:- 01. UNEXPLAINED CAPITAL IN THE NAME OF SMT. RAN JANBEN RS.6,00,306 02. UNEXPLAINED CAPITAL IN THE NAME OF KUM.BHAR TIBEN RS.4,90,093 M. KUNDALIA. 03. COST OF CAR PURCHASED OUT OF UNEXPLAINED IN COME OF THE APPELLANT. RS.1,60,000 4. ON FURTHER APPEAL BY THE ASSESSEE AGAINST THE AS SESSMENT ORDER U/S.158BC, R.W.S. 254(1), THE LD. CIT (A), JAMNAGAR IN IMPUGNED ORDER DATED 27- 03-2009 DELETED THE ADDITION ON ACCOUNT OF UNEXPLAI NED INVESTMENT OF RS.1,60,000/- IN MOTOR CAR BUT CONFIRMED THE ADDITI ON IN RESPECT OF FIRST TWO ISSUES NAMELY ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL I N THE NAME OF SMT. RANJANBEN M. KUNDALIA OF RS.6,00,306/- AND ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL OF KUM. BHARTIBEN M. KUNDALIA OF RS.4,90,09 3/-. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THE HON. COMMISSIONER OF INCOME TAX (APPEALS), J AMNAGAR AS WELL AS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2/ JA M HAS ERRED IN LAW AS WELL AS ON FACTS IN ASSESSING TOTAL INCOME O F THE APPELLANT BY MAKING ADDITION IN TOTAL INCOME BY RS.10,90,399/- W ITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND THE DIRECTION OF THE HON. ITAT, RAJKOT FOR RESTORATION OF THE ISS UES TO DECIDE THEM AFRESH. 2. THE HON. COMMISSIONER OF INCOME TAX (APPEALS), J AMNAGAR AS WELL AS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2/ JA M HAS ERRED IN LAW AS WELL AS ON FACTS IN ASSESSING TOTAL INCOME O F THE APPELLANT BY MAKING ADDITION IN TOTAL INCOME BY RS.6,00,306/- ON ACCOUNT OF ALLEGED UNEXPLAINED CAPITAL IN THE NAME OF SMT. RANJANBEN M . KUNDALIA WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMS TANCES OF THE CASE. . 3. THE HON. COMMISSIONER OF INCOME TAX (APPEALS), J AMNAGAR AS WELL AS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2/ JA M HAS ERRED IN LAW AS WELL AS ON FACTS IN ASSESSING TOTAL INCOME O F THE APPELLANT BY MAKING ADDITION IN TOTAL INCOME BY RS.4,90,093/- ON ACCOUNT OF ALLEGED UNEXPLAINED CAPITAL IN THE NAME OF SMT. RANJANBEN M . KUNDALIA WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMS TANCES OF THE CASE. 5. THE GROUND NO.1 IS GENERAL IN NATURE THEREFORE D OES NOT REQUIRE ANY ADJUDICATION. 6. AT THE TIME OF HEARING BEFORE US ON BEHALF OF AS SESSEE, SHRI CHETAN AGARWAL, CA, APPEARED AND WITH REGARD TO ADDITION O F RS.6,00,306/- CONFIRMED BY IT(SS)A 03-2009 3 LD. CIT (A) IN RESPECT OF SMT. RANJANBEN KUNDALIA, SUBMITTED THAT DURING THE SEARCH, STATEMENT OF ASSESSEE NAMELY MATHURADAS KUN DALIA WAS RECORDED ON OATH U/S. 132(4) ON 25-04-2000. THE ASSESSEE IN HIS STATEMENT STATED THAT HIS WIFE SMT. RANJANBEN KUNDALIA WAS RUNNING TUITION CL ASSES AND TAILORING WORKS FROM ASSESSMENT YEAR 1999-2000 AND ONWARDS, AND IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 1998-99 AND 1999-2000, THE INCO ME DISCLOSED FROM TUITION FEE ONLY. THE STATEMENT OF SMT. RANJANBEN KUNDALIA WAS ALSO RECORDED ON 17- 12-2007 WHEREIN, SHE HAS STATED THAT SHE WAS EARNIN G INCOME FROM TUITION CLASSES AND TAILORING WORKS. HE HAS FURTHER POINTE D OUT THAT DURING THE COURSE OF SEARCH PROCEEDINGS, THE STATEMENT OF SMT. RANJANBEN , WIFE OF THE ASSESSEE WAS RECORDED ON OATH 25-04-2000 WHEREIN, SHE HAS STATED THAT SHE WAS DOING SIVAN KAM-TAILORING WORK. HER STATEMENT WAS ALSO RECORD ED ON 14-12-2004. IN HER STATEMENT, SHE HAS STATED THAT SHE WAS DOING TAILOR ING WORK AND TUITION WORK. ACCORDING TO DEPARTMENT, THIS STATEMENT IS CONTRARY BECAUSE INCOME SHOWN BY SMT. RANJANBEN IS FROM TUITION FEE ONLY IN THE RETU RN OF INCOME AND NO TAILORING INCOME WAS DISCLOSED IN THE RETURN OF INCOME. ON T HESE BASIS, THE LD. CIT (A) IN THE IMPUGNED ORDER HELD THAT CAPITAL AMOUNT OF RS.6 ,00,306/- SHOWN IN THE BOOKS OF ACCOUNT OF SMT. RANJANBEN IS ON 31-03-2000 AS IN COME EARNED BY HER IS NOT CONCLUSIVELY ESTABLISHED. HE THEREFORE, CONFIRMED THIS ADDITION FOR THE DETAILED REASONS GIVEN IN PARA-6.1.2, WHICH READS AS UNDER:- 6.1.2. I HAVE DULY CONSIDERED THE SUBMISSION O F THE APPELLANT AND FROM THE DETAILS FILED BY THE APPELLANT I FIND THAT SMT. RANJANBEN IS WIFE OF THE APPELLANT, AT WHOSE RESIDENTIAL PREMISES, A SEARCH WAS CARRIED ON ON 25- 04-2000. DURING THE COURSE OF SEARCH, BOOKS OF ACCO UNTS ETC. OF SMT.RANJANBEN WERE FOUND FROM THE SAID PREMISES. SI NCE THE SAME WERE FOUND FROM THE RESIDENTIAL PREMISES OF THE APPELLAN T IT HAS TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT PASSED U/S .158BC OF THE ACT. THEREFORE, THE ONUS LIFE ON THE APPELLANT TO ESTABL ISH THAT THE CAPITAL ACCOUNT OF SMT. RANJANBEN IS BONAFIDE BY FILING NEC ESSARY EVIDENCE. IN THIS RESPECT, I FIND THAT THE TOTAL CAPITAL AMOUNT SHOWN IN RS.7,08,405, OUT OF WHICH CAPITAL PRIOR TO F.Y. 1990-91 IS RS.99,845 , WHICH IS OUTSIDE THE PURVIEW OF THE BLOCK PERIOD AND THE INCOME UPTO F.Y . 1997-98, OUT OF TRADING OF AUTO PARTS IN THE NAME OF M/S. JAY AMBE AUTO PARTS, IS RS.3,03,262. IT IS ALSO SEEN THAT SMT. RANJANBEN H AS STATED THAT SHE WAS FILING HER RETURNS OF INCOME UPTO A.Y. 1998-99, WHI CH MEANS THE INCOME SHOWN UPTO 3-03-98 HAS BEEN DECLARED BY HER. THIS INCOME IS RS.3,03,262. SMT. RANJANBEN HAS ALSO DECLARED CAPIT AL AT RS.99,845 PRIOR TO F.Y. 1990-91. THE TOTAL OF BOTH THE AMOUNTS IS R S.4,03,107. SMT. RANJANBEN HAS ALSO SHOWN GIFT RECEIVED DURING THE F .Y. 1990-91 TO 1999- 2000 AT 86,100, AND INCOME FROM BANK INTEREST, DIVI DEND, INCOME-TAX REFUND, FDR INTEREST, LID REFUND, PPF INTEREST AND MEP SALE DURING THE ABOVE PERIOD AT RS.9495, 4,06,272, 11093, 15000, 28 75 AND 2560 IT(SS)A 03-2009 4 RESPECTIVELY. BESIDES, SMT. RANJANBEN HAS SHOWN INC OME OF RS.49,667 UNDER THE VDIS DECLARATION DURING THE PERIOD F.Y. 1 990-91 TO 1999-2000. THE TOTAL OF ALL THE SUMS IS THEREFORE RS.7,08,400, FROM WHICH WITHDRAWAL, TAXES, LIP ETC. DURING THE F.Y. 1990-91 TO 1999-200 0 HAVE BEEN SHOWN AT RS.1,08,099, AND THE CAPITAL AS ON 31-3-2000 HAS BE EN SHOWN AT RS.6,00,306, WHICH AMOUNT HAS BEEN ENTIRELY ADDED B Y THE AO. THE APPELLANT HAS HOWEVER, NOT FURNISHED ANY EVIDENCE D URING THE COURSE OF ASSESSMENT OR APPELLATE PROCEEDINGS IN REGARD TO TH E ABOVE INCOME SHOWN BY SMT. RANJANBEN. THE APPELLANT HAS ALSO NO T SHOWN THE WORKING OF BROUGHT FORWARD CAPITAL AMOUNT OF RS.99,845 FROM THE PERIOD PRIOR TO A.Y. 1990-91 IN THE NAME OF SMT. RANJANBEN. THE APP ELLANT HAS MERELY FILED A COPY OF CHART SHOWING YEAR-WISE INCOME AND CREATION OF CAPITAL, ALONGWITH A COPY OF ACKNOWLEDGEMENTS OF RETURNS OF INCOME AND COPY OF ASSESSMENT ORDERS ETC. FOR THE A.YS 1992-93, 93-9 4, 94-95, 95-96, 96- 97, 97-98, 98-99 AND 99-2000, OF SMT. RANJANBEN. THE RETURN OF INCOME FOR A.Y. 2000-2001 OF SMT. RANJANBEN HAS BEEN FILED ON 7-3-01, I.E. AFTER THE DATE OF SEARCH. THE APPELLANT HAS ON THE BASIS OF ABOVE RETURNS FILED UPTO A.Y. 1999-2000 OF SMT. RANJANBEN CLAIMED CAPIT AL PRIOR TO F.Y. 1990- 91 AT RS.99,845 IN THE NAME OF SMT. RANJANBEN, AND FURNISHED A STATEMENT OF CAPITAL ACCOUNT OF SMT. RANJANBEN FROM THE YEAR 1990-91 TO 1999-2000, I.E. OPENING AMOUNT OF CAPITAL, INCOME F OR THE YEAR, OTHER INCOME, DRAWINGS, CLOSING AMOUNT OF CAPITAL, SOURCE OF INCOME ETC. FROM THE SAID DETAILS, IT IS SEEN THAT SMT. RANJANBEN HA S SHOWN INCOME FROM TRADING OF AUTO PARTS FROM THE F.Y.1990-91TO 1997-9 8, AND IN THE F.Y. 1998-99 AND 99-2000, THE SOURCE OF INCOME SHOWN IS ON ACCOUNT OF TUITION FEES. IT IS ALSO SEEN THAT THE ASSESSMENTS OF SMT. RANJANBEN IN THE A.YS.1992-93, 1993-94, 1994-95 AND 1995-96 HAVE BEE N COMPLETED U/S.143(1)(A) OF THE ACT. THE APPELLANT HAS NOT FIL ED ANY EVIDENCE REGARDING THE ASSESSMENT COMPLETED FOR A.Y. 1996-97 IN THE CASE OF SMT. RANJANBEN, HOWEVER, THE ASSESSMENTS IN THE A.YS. 19 97-98, 1998-99 AND 1999-2000 HAVE ALSO BEEN COMPLETED U/S.143(1)(A) OF THE ACT. THE RETURNS OF INCOME OF WIFE OF THE APPELLANT, VIZ. SM T. RANJANBEN IN ALL THE ABOVE YEARS, PRIOR TO THE SEARCH HAVE THUS BEEN SUM MARILY ACCEPTED UNDER THE PROVISIONS OF SECTION 143(1)(A) OF THE AC T. THEREFORE, NONE OF THE RETURNS WAS SCRUTINIZED U/S.143(1)(A) OF THE ACT. I N THE LIGHT OF THE ABOVE FACTS, IT BECOMES RELEVANT THAT NO DOCUMENTARY EVID ENCE HAS BEEN FOUND DURING THE COURSE OF SEARCH RELATION TO THE INCOME OF SMT. RANJANBEN. THE ONUS SQUARELY LIES UPON THE APPELLANT TO ESTABLISH THE SOURCE OF INCOME DECLARED IN THE RETURNS OF SMT. RANJANBEN IN THE AB OVE ASSESSMENT YEARS. THE APPELLANTS CONTENTION THAT INCOME PERTAINING T O SMT. RANJANBEN CANNOT BE ADDED TO HIS INCOME IS ALSO NOT OF MUCH R ELEVANT, SINCE SMT. RANJANBEN IS WIFE OF THE APPELLANT AND RESIDING IN THE PREMISES, WHICH HAS BEEN SEARCHED U/S.132 OF THE ACT. THUS, WHEN SMT. R ANJANBEN HAS FAILED TO FURNISH AN EVIDENCE REGARDING THE INCOME SHOWN B Y HER IN THE RETURNS OF INCOME, THE ONUS IS ON THE APPELLANT TO ESTABLISH T HAT THE INCOME RETURNED BY SMT. RANJANBEN IS ACTUALLY PERTAINING TO HER AND IS NOT HIS INCOME. THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE TO SHOW TH AT DURING THE BLOCK PERIOD, SMT. RANJANBEN HAD INCOME OUT OF TRADING OF AUTO ARTS IN THE NAME OF JAY AMBE AUTO PARTS. NO BOOKS OF ACCOUNTS WITH N ECESSARY PURCHASE AND SALES BILLS WERE FOUND FROM THE PREMISES OR FUR NISHED BY SMT. RANJANBEN OR THE APPELLANT RELATING TO JAY AMBE AUT O PARTS. SIMILARLY, SMT. RANJANBEN OR THE APPELLANT HAS NOT FURNISHED A NY EVIDENCE TO SHOW THAT THE SOURCE OF INCOME IS FROM TAILORING AND TUI TION. ADDITION MADE ON THIS ACCOUNT HAS ALSO BEEN UPHELD BY THE FIRST APPE LLATE AUTHORITY IN THE APPEAL FILED BY THE APPELLANT AGAINST THE ORIGINAL ASSESSMENT ORDER FOR THE BLOCK PERIOD. THE APPELLANT HAS ALSO NOT FURNISHED ANY EVIDENCE IN RESPECT OF GIFT RECEIVED BY SMT. RANJANBEN OF RS.86 ,100 DURING THE BLOCK PERIOD AND OR RELATING TO BANK INTEREST, DIVIDEND, FDR INTEREST, MEP SALES ETC. SHOWN IN HER INCOME. THE APPELLANT AS ALSO NOT FURNISHED COPY OF THE DECLARATION MADE BY SMT. RANJANBEN OF THE UNDISCLOS ED INCOME UNDER THE VDIS AND OR THE CERTIFICATE ISSUED BY THE COMMISSIO NER FOR ACCEPTANCE OF THE DECLARATION MADE UNDER THE VDIS. AS A RESULT OF LACK OF EVIDENCE TO IT(SS)A 03-2009 5 THE ABOVE EFFECT, THE INCOME DECLARED ON ACCOUNT OF VDIS BY SMT. RANJANBEN HAS REMAINED UNESTABLISHED. IN RESPECT OF INCOME FROM JAY AMBE AUTO PARTS, THE APPELLANT HAS ONLY FURNISHED X EROX OF REGISTRATION OF THE CONCERN WITH THE SALES-TAX AUTHORITIES AND CERT IFICATE ISSUED UNDER THE SALES-TAX ACT REGARDING THE ACTIVITY AND THE AMOUNT OF SALES OF THE ABOVE PROPRIETORY FIRM IN THE NAME OF SMT. RANJANBEN. HO WEVER, THE ABOVE CERTIFICATE OF THE SALES-TAX AUTHORITIES FILED BY T HE APPELLANT ARE ALSO SUMMARY ORDERS GIVING DETAILS OF SALES, AND NO EVID ENCE HAS BEEN FURNISHED THAT THE SALES-TAX AUTHORITIES HAVE PASSE D ANY SCRUTINY ASSESSMENT ORDERS UNDER THE SALES-TAX ACT. IN THE ABSENCE OF THE SAME, THE INCOME RETURNED BY SMT. RANJANBEN FROM TRADING ACTIVITY OF JAY AMBE AUTO PARTS, IS FOUND TO HAVE NOT BEEN ESTABLISHED. IN SO FAR AS THE INCOME DECLARED FROM SEWING AND TUITION CLASSES IN THE NAM E OF SMT. RANJANBEN IS CONCERNED, THE FINDING GIVEN BY THE CIT (A)-III, AHMEDABAD IN HIS APPELLATE ORDER IS STILL APPLICABLE, AS THE APPELLA NT HAS NOT FURNISHED ANY EVIDENCE REGARDING THE SAME. IN THE BACKGROUND OF T HE ABOVE DISCUSSION, I FIND THAT DESPITE THE OPPORTUNITY GIVEN BY THE AO UPON THE DIRECTION ISSUED BY THE ITAT, THE APPELLANT HAS NOT UTILIZED THE SAME AND HAS NOT FURNISHED EVIDENCES OF INCOME OF SMT. RANJANBEN APP EARING IN HER CAPITAL A/C. DURING THE BLOCK PERIOD. THE DOCUMENTS FURNISH ED BY THE APPELLANT RELATING TO THE INCOME FROM JAY AMBE AUTO PARTS AND TUITION INCOME HAVE ALREADY BEEN SEEN ABOVE TO BE NOT CONCLUSIVE EVIDEN CE. I THEREFORE, HOLD THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE T O ESTABLISH THE CAPITAL AMOUNT OF RS.6,00,306 SHOWN IN THE BOOKS OF ACCOUNT OF SMT. RANJANBEN AS ON 31-03-2000 AS INCOME EARNED BY HER, AND SINCE SMT. RANJANBEN IS WIFE OF THE APPELLANT AND RESIDING IN THE SAME PREM ISES, WHERE SEARCH HAS BEEN CARRIED OUT, THE ONUS SQUARELY LIES ON THE APP ELLANT TO CONCLUSIVELY ESTABLISH THE SOURCE OF THE ABOVE CAPITAL AMOUNT IN THE NAME OF SMT. RANJANBEN. I, THEREFORE, UPHOLD THE ADDITION OF RS. 6,00,306, BEING THE AMOUNT IN THE CAPITAL ACCOUNT IN THE NAME OF SMT. R ANJANBEN DURING THE BLOCK PERIOD, IN THE HANDS OF THE APPELLANT. GROUND OF APPEAL NO.2 OF THE APPELLANT IS ACCORDINGLY, DISMISSED. 7. THE FACTS RELEVANT TO THE CONTROVERSY INVOLVED I N GROUND NO.3 ARE IDENTICAL. THE AO MADE ADDITION OF RS.4,90,093/- IN RESPECT OF CAPITAL INTRODUCED IN THE NAME OF ASSESSEES DAUGHTER NAMELY BHARTIBEN KUNDAL IA. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT (A) CONFIRMED THIS ADDI TION ALSO FOR THE DETAILED REASONS GIVEN IN PARA-6.2., WHICH READ AS UNDER:- 6.2 THE OTHER DIRECTION OF THE HONBLE ITAT RAJKOT BENCH RELATED TO THE GROUND OF APPEAL NO. 6 OF THE REVENUE AGAINST THE A DDITION OF RS.4,90,093/- MADE ON ACCOUNT OF CAPITAL INTRODUCED IN THE NAME OF THE DAUGHTER OF THE APPELLANT. THE DIRECTION OF THE HON BLE BENCH REGARDING THIS ADDITION IS THE SAME AS IN THE CASE OF ADDITIO N MADE ON ACCOUNT OF CAPITAL AMOUNT IN THE NAME OF SMT. RANJANBEN KUNDAL IA. THE AO HAS DURING THE COURSE OF PROCEEDINGS U/S 158BC R.W.S. 2 54(1) OF THE ACT PROVIDED SUFFICIENT TIME AND OPPORTUNITY TO THE APP ELLANT TO ESTABLISH THE SOURCES OF INCOME APPROXIMATING TO RS.4,90,093/- IN THE NAME OF BHARTIBEN. THE AO HAS RECORDED THAT THE APPELLANT H AS NOT FURNISHED ANY EVIDENCE / DETAILS ETC. AND BHARTIBEN IN HER STATEM ENT RECORDED ON OATH ON 14-12-07, HAS HERSELF STATED THAT SHE HAS NOT KEPT ANY BILLS, VOUCHERS OF RECEIPTS AND EXPENDITURE OF HER BUSINESS. THE AO TH US CAME TO THE CONCLUSION THAT BOOKS OF ACCOUNTS IN THE NAME OF BH ARTIBEN ARE PURELY FABRICATED AND NOT SUPPORTED BY ANY EVIDENCE AND BH ARTIBEN COULD NOT EXPLAIN THE SOURCES OF AMOUNTS APPEARING IN HER CAP ITAL AMOUNT. HE HAS, THEREFORE, REJECTED THE SUBMISSION OF THE APPELLANT AND HELD THAT AMOUNT OF RS.4,90,093 IS UNDISCLOSED INCOME OF THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANTS SUBMISSION I S THAT BHARTBEN HAD AN IT(SS)A 03-2009 6 INDEPENDENT SOURCE OF INCOME FROM BEAUTY PARLOUR DU RING THE BOCK PERIOD AND WAS FILING HER RETURNS OF INCOME. THE APPELLANT HAS ALSO ENCLOSED XEROX COPIES OF STATEMENT OF INCOME, ACKNOWLEDGMENT S OF RETURNS OF INCOME FILED AND COPY OF LEDGERS FOR THE A.YS. 1992 -93, 1993-94, 1994-95, 1995-96, 1996-97, 1997-98, 1998-99, 1999-2000 AND 2 000-01. THE RETURN OF INCOME FOR THE A.Y. 2000-01 HAS BEEN FILED ON 22 -02-01, I.E. AFTER THE SEARCH WAS CONDUCTED ON THE PREMISES OF THE APPELLA NT. I ALSO FIND THAT THE ASSESSMENT ORDERS UPTO A.Y. 1999-2000 ARE U/S 141(1 )(A) OF THE ACT, I.E. ALL THE RETURNS OF INCOME UPTO THE ASSESSMENT YEAR 1999-2000 HAVE BEEN ACCEPTED UNDER THE SUMMARY PROVISIONS AND NO RETURN OF INCOME HAS BEEN SCRUTINISED U/S 143(3). THE FINDINGS GIVEN IN THE C ASE OF RANJANBEN KUNDALIA ARE, THEREFORE, ALSO APPLICABLE IN THE CAS E OF BHARTIBEN THAT SINCE SHE IS DAUGHTER OF THE APPELLANT AND RESIDING IN TH E SAME PREMISES, WHERE THE SEARCH WAS CARRIED OUT, THE ONUS WAS ON THE APP ELLANT TO PROVE THE INCOME DECLARED BY BHARTIBEN AS INCOME ACTUALLY BEL ONGING TO HER, BY FILING OR PRODUCING NECESSARY EVIDENCES. MS. BHARTI BEN HAS ALSO STATED THAT SHE HAS NOT MAINTAINED ANY VOUCHERS OF EXPENDI TURE REGARDING THE INCOME DECLARED BY HER. THEREFORE, IN THE ABSENCE O F ANY DOCUMENTARY EVIDENCE FURNISHED BY BHARTIBEN OR THE APPELLANT OF THE SOURCES OF INCOME RETURNED BY BHARTIBEN VIDE THE RETURNS OF INCOME DU RING THE BLOCK PERIOD, THE ONUS WAS ON THE APPELLANT TO ESTABLISH THIS INC OME IN THE CASE OF BHARTIBEN AND SINCE THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE REGARDING THE SAME, THE AO HAS RIGHTLY TAKEN THE BA LANCE AMOUNT IN THE CAPITAL ACCOUNT OF BHARTIBEN AS INCOME OF THE APPEL LANT AS ON 1-4-2000. I, THEREFORE, UPHOLD THE ADDITION OF RS.4,90,093 ALSO MADE ON THIS ACCOUNT AND DISMISS GROUND OF APPEAL NO. 3 OF THE APPELLANT . 8. AT THE TIME OF HEARING BEFORE US, SHRI CHETAN AG ARWAL, CA APPEARED AND FILED A PAPER BOOK CONTAINING 207 PAGES AND ALSO TH E SUMMARY OF ARGUMENTS. THE COUNSEL OF THE ASSESSEE TOOK US THROUGH ORIGINA L ASSESSMENT FRAMED U/S.158BC OF THE I.T. ACT ON 28-12-2007 AND POINTED OUT THAT IN THIS ASSESSMENT ORDER, AO COMPUTED UNDISCLOSED INCOME AT RS.20,68,8 89/-. THE LD. CIT (A) REDUCED IT TO RS.9,23,681/- AND AGAINST THIS ORDER, THE DEPARTMENT PREFERRED SECOND APPEAL BEFORE ITAT. THE ASSESSEE ALSO FILED CROSS-OBJECTIONS. THE TRIBUNAL VIDE ITS ORDER DATED 15-11-2006 DECIDED TH E APPEAL BUT RESTORED THREE ISSUED TO THE FILE OF AO FOR DECIDING THE SAME AFRE SH. HE FURTHER EXPLAINED THAT IN IMPUGNED ORDER, THE LD. CIT (A) DELETED ADDITION OF RS.1,60,000/- IN RESPECT OF PURCHASE OF MARUTI CAR BY SMT. RANJANEBEN M. KUNDAL IA BUT CONFIRMED THE REMAINING TWO ADDITIONS VIZ, ADDITION IN RESPECT OF UNEXPLAINED CAPITAL OF SMT. RANJANABEN KUNDALIA OF RS.6,00,306/- AND ADDITION O N ACCOUNT OF UNEXPLAINED CAPITAL OF KUM. BHARTIBEN M. KUNDALIA OF RS.4,90,09 3/-. HE SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) ON DOU BT AND SUSPICION CONFIRMED THE ADDITION OF RS.6,00,306/- BEING CAPITAL OF SMT. RAN JANABEN KUNDALIA WITHOUT APPRECIATION THAT SHE IS REGULARLY FILING THE RETUR N OF INCOME. THE INCOME IS DULY DECLARED IN THE RETURN OF INCOME. SIMILARLY, KUM. B HARTIBEN KUNDALIA IS IT(SS)A 03-2009 7 INDEPENDENTLY ASSESSED TO TAX SINCE 1991. BOTH WERE FILING THE RETURN OF INCOME AND THESE WERE ACCEPTED BY THE DEPARTMENT AND ASSES SMENTS IN THEIR CASE ARE NOT DISTURBED. THE CAPITAL BUILDUP BY THEM IS FROM YEAR TO YEAR. IN THE CASE OF SMT. RANJANABEN KUDALIA, FROM THE ASSESSMENT YEAR 1 991-92 TO 1998-1999, INCOME WAS FROM TRADING OF AUTO PARTS IN THE NAME A ND STYLE OF JAY AMBE AUTO PARTS. THE COUNSEL OF THE ASSESSEE ALSO DREW OUT AT TENTION TO THE COPIES OF SALES TAX REGISTRATION CERTIFICATE AND SALES TAX RETURN W HICH ARE AVAILABLE AT PAGES 39 TO 108 OF PAPER BOOK AND FOR THE ASSESSMENT YEARS 1 999-2000 AND 2000-2001 FROM TUITION FEES, INTEREST FROM BAND AND PPF. HE F URTHER EXPLAINED THAT IN THE CASE OF KUM. BHARTIBEN KUNDALIA, INCOME WAS FROM BE AUTY PARLOR AND INTEREST INCOME IN BOTH THESE YEARS. HE SUBMITTED THAT IN RE SPECT OF BOTH CLOSING CAPITAL WAS INVESTED IN THEIR OWN FIXED ASSETS BELONGING TO THEM, BRUITS OF WHICH THEY WERE ENJOYING INDEPENDENTLY. THERE IS NO EVIDENCE T HAT MONEY WAS ADVANCE TO BOTH OF THEM BY THE ASSESSEE OR THEIR CAPITAL WAS U SED BY THE ASSESSEE. TO SUM UP, THE COUNSEL OF THE ASSESSEE PLEADED THAT ON PRE SUMPTION AND ASSUMPTION, ADDITION CANNOT BE MADE IN THE CASE OF THE ASSESSEE AS THERE IS NO LINKAGE, DIRECT OF INDIRECT EVIDENCE INDICATING THAT SAID CA PITAL WAS EARNED BY THE ASSESSEE. BOTH OF THEM HAVE FILE THEIR INCOME RETUR NS AND DISCLOSED INCOME TO THE DEPARTMENT ON REGULAR BASIS THEREFORE SAME CANN OT BE TAXED AS UNDISCLOSED INCOME U/S.158BC @ 60%. OUR ATTENTION WAS ALSO DRAW N TO INCOME DEFINED U/S.158B(B) OF THE I.T. ACT AND SUBMITTED THAT CAPI TAL AND INCOME ALREADY DISCLOSED TO DEPARTMENT DOES NOT FALL WITHIN THE AM BIT OF DEFINITION OF UNDISCLOSED INCOME. IT WAS VEHEMENTLY ARGUED THAT ASSESSEE IS N OT BENAMIDAR OF SMT. RANJANABEN AND KUM. BHARTIBEN THEREFORE ADDITION BE DELETED. THE RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS:- 1. ASSTT. CIT V. PETER THOSOSE(2008) 109 ITD 0360 (GAU) 2. CIT V. MAHIM UDAMA (108 TAXMANN 0052) KERALA HI GH COURT 3. V. SUSSELAN V. T.P. LEELA KERALA HIGH COURT 139 TAXMANN 0386 4. G. L. CHABDA V. ITO 53 ITD 0053 BANGLORE BENCH. 8.1 ON THE OTHER HAND, LD. DR VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT (A). 9. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE HONBLE GAUHATI HIGH COURT I N THE CASE OF ASSTT. CIT V. PETER THOSOSE (SUPRA) HELD THAT BURDEN OF PROVING T HAT PROPERTY STANDS IN A IT(SS)A 03-2009 8 BENAMI NAME IS ALWAYS ON THE PERSON WHO ALLEGES IT. THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. MAHIM UDAMA (SUPRA) HEL D THAT BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE OWN ER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THIS BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD EITHER DIRECTLY PROVE THE FACTS OF BENAMI OR ESTABLISH CIR CUMSTANCES UNERRINGLY AND REASONABLY RAISING AN INFERENCE OF THAT FACT. THE I SSUE IN THIS CASE BEFORE US IS THAT SMT.RANJANABEN KUNDALIA AND KUM. BHARTIBEN KUN DALIA ARE WIFE AND DAUGHTER OF THE ASSESSEE AND THE DEPARTMENT HAS TRE ATED BOTH OF THEM AS HIS BENAMI AND RESPECTIVE CLOSING BALANCE AS ON 31-03-2 000 WAS ASSESSED AS UNDISCLOSED INCOME FOR THAT BLOCK PERIOD IN THE HAN DS OF THE ASSESSEE. IN THE OPINION OF THE AO, BOTH LADIES ARE NOT DOING BUSINE SS BUT MERELY FURNISHES THE RETURN TO BUILD UP CAPITAL WHICH HE TREATED AS UNDI SCLOSED INCOME OF THE ASSESSEE. IN THE IMPUGNED ORDER, THE LD. CIT (A) UP HELD HIS VIEW. IN OUR CONSIDERED OPINION, THIS VIEW WAS TAKEN BY AO ONLY ON ACCOUNT OF DIFFERENCE IN A STATEMENT RECORDED. A CONTRADICTION IN THE STATEMEN T WAS RECORDED. FROM THE PERUSAL OF ORIGINAL ORDER OF LD. CIT (A), WE FIND T HAT IN THAT ORDER, LD. CIT (A) ACCEPTED THE INCOME FROM AUTO PARTS IN THE NAME OF WIFE OF THE ASSESSEE. HOWEVER, HE REJECTED THE INCOME SHOWN FROM TUITION WORK AS IT WAS WITHOUT EVIDENCE. WE FOUND CONSIDERABLE FORCE IN THIS BIFUR CATION DONE BY THE LD. CIT (A) IN THE ORIGINAL APPELLATE ORDER. IT IS TRUE THAT ST ATEMENTS OF WIFE OF ASSESSEE NAMELY SMT. RANJANABEN KUNDALIA ARE CONTRARY THEREF ORE TUITION INCOME EARNED BY HER CANNOT BE ACCEPTED. IN THIS VIEW OF THE MATT ER, ADDITION OF RS.1,30,211/- ALLEGED TO BE EARNED FORM TUITION IS SUSTAINED AND BALANCE AMOUNT OF ADDITION OF RS.4,70,095/- IS DELETED. THE GROUND NO.2 IS PARTLY ALLOWED. 10. WITH REGARD TO ADDITION ON ACCOUNT OF CAPITAL O F KUM. BHARTIBEN KUNDALIA OF RS.4,90,093/-, WE HAVE HEARD BOTH SIDES. KUMARI BHARTIBEN KUNDALIA HAS SHOWN THIS CAPITAL AS ON 31-03-2000. WITH REGARD T O THIS ADDITION, THE ASSESSING OFFICER AS WELL AS LD. CIT (APPEALS) REJECTED THE E XPLANATION OF THE ASSESSEE ON DOUBT AND SUSPICION. KUMARI. BHARTIBEN KUNDALIA WAS DOING BUSINESS AS A BEAUTY PARLOR SINCE 1991 AND SHE IS ASSESSED TO TAX . DURING THE SEARCH, IT(SS)A 03-2009 9 MACHINERY RELATED TO BEAUTY PARLOR WAS FOUND. BOTH THE DEPARTMENTAL AUTHORITIES BELOW REJECTED THE EXPLANATION OF THE ASSESSEE ON D OUBT AND SUSPICION. WE THEREFORE, DELETED THIS ADDITION OF RS.4,90,093/- M ADE BY AO IN RESPECT OF CAPITAL STANDING IN THE NAME OF KUM. BHARTIBEN KUNDALIA. GR OUND NO.3 IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 12. THIS ORDER IS PRONOUNCED IN OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( *.$. ,% D. K. SRIVASTAVA ) ( .$. -. / T. K. SHARMA) $( #/% / ACCOUNTANT MEMBER #/% /JUDICIAL MEMBER /$- 0/1/ ORDER DATE 30-08-2013. /RAJKOT NVA/- !'# $%'& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI MATHURADAS KAKUBHAI KUNDALIA, PA NCHAVATI SOCIETY, NEAR RAILWAY CROSSING SIKKA, JAMNAGAR 2. /RESPONDENT-THE DY. COMMISSIONER OF INCOME-TAX, CIR .-2, JAMNAGAR. 3. #151 & 6 / CONCERNED CIT, JAMNAGAR.. 4. & 6 - / CIT (A), JAMNAGAR. 5. :;< , , / DR, ITAT, RAJKOT 6. <* >? / GUARD FILE. /$- #$ / BY ORDER TRUE COPY. PRIVATE SECRETARY, ITAT, RAJKOT