Sambhu Lal Agrawal, Sambalpur V. DCIT, Circle-1(1), Sambalpur, Sambalpur

ITSSA 5/CTK/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3024 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CTK ASSESSMENT YEAR S
• Keywords: Gift; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND SHRI A BY T. VARKEY, JUDICIAL MEMBER IT (SS) A NO. 05 & 06/CTK/2013 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 SAMBHULAL AGRAWAL, C/O. M/S. SHREE DURGA RICE MILLS, NEW RAMPELA, PO: RENGALI, SAMBALPUR VS. DCIT, CIRCLE 1(1), SAMBALPUR PAN/GIR NO. ACFPA 1780 N (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY /SAMBHULAL AGRAWAL , AR REVENUE BY : SHRI ASIT KUMAR MOHAPATRA, CIT DR DATE OF HEARING : 14 /02 / 2017 DATE OF PRONOUNCEMENT : 17 /02 / 2017 O R D E R PER BENCH THESE ARE APPEAL S FILED BY THE ASSESSEE AGA INST SEPARATE ORDER S OF CIT(A) - BERHAMPUR, CAMP: SAMBALPUR , BOTH DATED 19.12.2012 , FOR THE ASSESSMENT YEAR S 2007 - 08 & 2008 - 09 . 2. IN BOTH THESE APPEALS, THE COMMON GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,50,000/ - IN A.Y. 2007 - 08 AND RS.1,98,000/ - IN A.Y. 2008 - 09 U/S.69C OF THE ACT. 2 3. WE HAVE HEARD THE RIVAL SU BMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE SON OF THE ASSESSEE SHRI PULKIT AGRAWAL WAS STUDYING ENGINEERING IN VELIOR INSTITUTE OF TECHNOLOGY AND HIS DAUGHTER NIDHI AGRAWAL WAS DOING MBA IN MANIPAL UNIVERSITY WHEREAS THE SECOND DAUGHTER, RADHIKA WAS READING IN AN ENGLISH MED IUM SCHOOL AT SAMBALPUR WHICH WAS AT A DISTANCE OF MORE THAN 15 KM FROM THE RESIDENCE OF TH E ASSES SEE. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF EXPENDITURE INCURRED IN THE EDUCATION OF THESE CHILDREN. THE ASSESSEE SUBMITTED THAT HE HAD WITHDRAWALS OF RS. 1,12,124/ - IN ADDITION TO THE WITHDRAWAL OF RS. 1,20,099/ - BY HIS WIFE ANJU AGRAWAL AND RS.89,999/ - SHOWN BY HIS HUF. THUS , THE TOTAL WITHDRAWAL WAS RS.3,22,223/ - , OUT OF WHICH EDUCATIONA L EXPENSES HAVE BEEN MET. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PAID TUITION FEE OF RS.1,32,000/ - FOR DAUGH TER'S MBA AND RS. 56,800/ - AT VELLORE INSTITUTE OF TECHNOLOGY FOR SO N'S ENGINEERING. HE ACCEPTED THE SAME AS OUT OF THE DRAWINGS OF THE ASSESSEE'S FAMILY. HOWEVER, HE ESTIMATED THE OTHER EXPENSES OF THE EDUCATION OF THE TWO CHILDREN STUDYING OUTSIDE TOWARDS HOSTEL FEES, TRA VELLING, BOOKS AND PERIODICALS ETC., @ 66,000/ - PER HEAD PER YEAR. IN ADDITION TO THIS, HE ESTIMATED THE EDUCATIONAL EXPENSES OF THE SECOND DAUGHTER AT ENGLISH MEDIUM SCHOOL INCLUDING TRAVEL EXPENSES AT RS.18,000/ - PER YEAR. FOR THESE AMOUNTS TOTALING RS.1 ,50,000/ - , THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE IS NO AVAILABILITY FROM THE DISCLOSED DRAWINGS AND HELD THAT THIS EXPENDITURE HAVE BEEN MET OUT OF 3 UNDISCLOSED SOURCES AND, THEREFORE, ADDED RS.1,50,000/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4. SIMILARLY, IN ASSESSMENT YEAR 2008 - 09, THE ASSESSEE EXPLAINED THAT IT HAD DRAWINGS OF RS.1,12,124/ - IN ADDITION TO WITHDRAWAL OF RS.1,20,099/ - BY HIS WIFE ANJU AGRAWAL AND RS.89,999/ - SHOWN BY HIS HUF. THUS, THE TOTAL WITHDRAWAL COMES TO RS.3,22,223/ - , OU T OF WHICH THE EDUCATIONAL EXPENSES HAVE BEEN MET. THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR, THE ASSESSEE PAID TUITION FEE OF RS.1,26,500/ - FOR DAUGHTERS MBA AT MANIPAL UNIVERSITY, RS.56,800/ - AT VELLORE INSTITUTE OF TECHNOLOGY FOR SONS ENGINE ERING AND RS.8,300/ - FOR SECOND DAUGHTERS FIRST YEARS COMMERCE COURSE. HE ACCEPTED THE SAME AS OUT OF THE DRAWINGS OF THE ASSESSEES FAMILY. HOWEVER, HE ESTIMATED THE OTHER EXPENSES OF THE EDUCATION OF THE THREE CHILDREN STUDYING OUTSIDE TOWARDS HOSTEL FEES, TRAVELLING, BOOKS AND PERIODICALS, ETC @ RS.66,000/ - PER HEAD PER YEAR, WHICH WORKED OUT TO RS.1,98,000/ - AND HELD THAT THERE WAS NO AVAILABILITY FROM THE DISCLOSED DRAWINGS AND ADDED RS.1,98,000/ - AS EXPENDITURE OUT OF UNDISCLOSED SOURCES. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT THE LD A.R. OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE HIM WAS QUITE CONSCIOUS OF THE LIMITATION OF THE DRAWINGS OF THE ASSESSEE AND HAS STATED THAT T HE BALANCE EXPENDITURE WAS MET OUT OF GIFTS. HE OBSERVED THAT EVEN BASIC DETAILS REGARDING GIFTS HAVE NOT BEEN FURNISHED AND THE ESTIMATION OF THE EXPENDITURE MADE BY THE ASSESSING OFFICER WAS QUITE REASONABLE AND CONSERVATIVE. 4 6. BEFORE US, LD A.R. OF TH E ASSESSEE ASSAILING THE ORDERS OF LOWER AUTHORITIES VEHEMENTLY ARGUED THAT THE ASSESSE WAS STAYING IN A JOINT FAMILY WITH BROTHER AND PARENTS. HE SUBMITTED THAT THE SON OF THE ASSESSEE WAS A MALE CHILD ADOPTED FROM HIS YOUNGER BROTHER WHO WAS ALSO STAYIN G IN THE JOINT FAMILY WITH THEM. HE SUBMITTED THAT IT WAS NATURAL THAT HE CONTRIBUTED TOWARDS EDUCATION OF THE ADOPTED SON OF THE ASSESSEE. HE ARGUED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AND BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SUBMISSION OF THE ASSESSEE THAT THE BALANCE AMOUNT OF EDUCATIONAL EXPENSES OF THE CHILDREN WERE MET OUT OF GIFTS FROM THE FAMILY MEMBERS. IN ABSENCE OF ANY SUCH MATERIAL, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE U/S.69C OF THE ACT. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND SUBMITTED THAT THE EXPENDITURE OF THE ASSESSEE WAS BEYOND THE DISCLOSED SOURCES OF INCOME AND HENCE, ADDITION MADE SHOULD BE CONFIRMED. 8. WE FIND THAT THE ASSESSEE HAS CLAIMED DRAWINGS OF RS.1,12,124 / - AND HAS ALSO CLAIMED THAT HIS WIFE HAD DRAWINGS OF RS.1,20,099/ - AND HUF HAD DRAWINGS OF RS.89,999/ - AGGREGATING TO RS.3,22,223/ - FOR THE ASSESSMENT YEAR 2007 - 08 . SIMILARLY, FOR THE ASSESSMENT YEAR 2008 - 09, THE ASSESSE HAD DRAWINGS OF RS. RS .1,12,124/ - IN ADDITION TO DRAWINGS OF HIS WIFE OF RS.1,20,099/ - AND THE DRAWINGS BY HUF OF RS.89,999/ AGGREGATING TO RS.3,22,223/ - . THE ASSESSING OFFICER ESTIMATED THE OTHER EXPENSES OF THE ASSESSEE APART FROM EXPENSES INCURRED ON TUITION FEE OF THE CHILDREN AND SUCH OTHER ESTIMATED EXPENSES WAS ARRIVED AT RS.3,38,800/ - FOR THE 5 ASSESSMENT YEAR 2007 - 08 AN D RS.3,81,300/ - FOR THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE EXPLAINED BEFORE THE LOWER AUTHORITIES THAT A PART OF THE EDUCATIONAL EXPENSES OF CHILDREN WERE MET BY OTHER CLOSE FAMILY MEMBERS AS GIFT. HE HAS ALSO CLAIMED THAT SON OF THE ASSESSEE WAS ADOP TED SON OF HIS YOUNGER BROTHER, WHO WAS ALSO STAYING IN THE JOINT FAMILY. IT WAS NATURAL THAT HIS YOUNGER BROTHER HAS SPENT MONEY ON THE EDUCATION OF HIS SON. THE DRAWINGS SHOWN BY YOUNGER BROTHER AND HIS WIFE FOR THE ASSESSMENT YEAR 2007 - 08 WAS RS.1,20, 182/ - AND RS.90,000 AND FOR THE ASSESSMENT YEAR 2008 - 09 WAS RS.1,50,088/ - AND RS.96,112/ - . BOTH THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SUBMISSION OF THE LD A.R. OF THE ASSESSEE. IN ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD, THE PLAUSIBLE EXPLANATION OF THE ASSESSEE CANNOT BE ARBITRARILY REJECTED. WE, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE A DDITION OF RS.1,50,000/ - IN ASSESSMENT YEAR 2007 - 08 AND RS.1,98,000/ - IN ASSESSMENT YEAR 2 008 - 09 AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 9. IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 17 /02 /2017 IN THE PRESENCE OF PARTIES. S D/ - SD/ - ( ABY T. VARKEY) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 17 /02 /2017 B.K.PARIDA, SPS 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SAMBHULAL AGRAWAL, C/O. M/S. SHREE DURGA RICE MILLS, NEW RAMPELA, PO: RENGALI, SAMBALPUR 2. THE RESPONDENT. DCIT, CIRCLE 1(1), SAMBALPUR 3. THE CIT(A) SAMBALPUR 4. CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//