ACIT, Hyderabad V. Sri Mahander Singh Bagga, Hyderabad

ITSSA 67/HYD/2005

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8539 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-01-2011
• Assessment Year: misc
• Appeal Filed On: 04-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER IT(SS)A NO.66/HYD/05 (BLOCK PERIOD OF ASSESSMENT YEARS FROM 1996-97 TO 2002-03 (UPTO 31.1.2002)) SHRI MAHENDER SINGH BAGGA, HYDERABAD. ( PAN ALCPS 2684 M ) V/S. ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I, HYDERABAD (APPELLANT) (RESPONDENT) AND IT(SS)A NO.67/HYD/05 : (BLOCK PERIOD OF ASSESSMENT YEARS FROM 1996-97 TO 2002-03 (UPTO 31.1.2002)) ASSTT. COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE I, HYDERABAD V/S. SHRI MAHENDER SINGH BAGGA, HYDERABAD. ( PAN ALCPS 2684 M ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.PRASAD,CA DEPARTMENT BY : SHRI V.SRINIVAS CIT O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE CROSS APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE FOR THE BLOCK PERIOD FROM 1996-97 TO 2002-03 (UPTO 3 1.1.2002), IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME -TAX(APPEALS). IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 2 THESE APPEALS ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEES APPEAL : IT(SS)A NO.66/HYD/05 2. GROUND OF APPEAL NO.1 OF THE ASSESSEE IS AS UNDER- '1. THE LEARNED APPELLATE AUTHORITY IS NOT CORRECT IN DISALLOWING RS.17800/- BELONGING TO THE APPELLANTS WIFE. THIS AMOUNT MEANT FOR HOUSE HOLD EXPENSES KEPT WITH THE APPELLANTS WIFE WHICH INCLUDES HER P IN MONEY. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDIT ION OF RS.17,800 WAS MADE ON ACCOUNT OF CASH FOUND AT THE TIME O F SEARCH, BELONGING TO THE WIFE OF THE ASSESSEE. HE SUBMITTED THAT THIS AMOUNT OF RS.17,800 IS PAN MONEY OF THE WIFE OF SHRI MAHENDER S INGH AND THE SMALLNESS OF THE AMOUNT ITSELF JUSTIFIES THE SOURCE THERE OF. THE LEARNED DEPARTMENTAL REPRESENTATIVE, OPPOSING THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE ASSESSEE, HAS RELIED ON THE ORDERS OF THE A SSESSING OFFICER AND THE CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. CONSIDERI NG THE FINANCIAL STATUS OF THE ASSESSEES FAMILY AND THE SMALLNESS OF THE AMOUNT INVOLVED, WHICH IS STATED TO BE MEANT FOR HOUSEHOLD EXP ENSES WHICH INCLUDES SAVINGS OF THE ASSESSEES WIFE, WE HOLD THAT NO ADD ITION ON THIS COUNT IS CALLED FOR. ACCORDINGLY, THIS ADDITION OF RS.17 ,800 IS DELETED GROUND OF APPEAL NO.1 OF THE ASSESSEE IS ALLOWED. 5. GROUND OF APPEAL NO.2 OF THE ASSESSEE READS AS UNDER- 2. THE LEARNED APPELLATE AUTHORITY IS NOT CORRECT IN DISALLOWING INVESTMENT IN KISAN VIKAS PATRA OF IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 3 RS.20000/-. SMALL GIFTS RECEIVED BY APPELLANT AND THEIR CHILDREN ARE ACCUMULATED AND INVESTED IN THIS . THIS IS A SMALL AMOUNT THAT TOO ACCUMULATED OVER A PERIOD OF TIME AND DISBELIEVING THE APPELLANTS CONTENTION IS NOT JUSTIFIED. 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT KISAN VIKAS PATRAS WORTH RS.20,000 WERE PURCHASED IN THE NAMES OF M INOR CHILDREN OF THE ASSESSEE. THE SOURCE FOR THESE INVESTMENTS WAS EXPLAIN ED TO BE SMALL GIFTS RECEIVED ON VARIOUS OCCASIONS AND FESTIVALS BY TH E CHILDREN OF THE ASSESSEE, WHICH WERE ACCUMULATED AND INVESTED IN KISAN V IKAS PATRAS IN QUESTION. THE LEARNED DEPARTMENTAL REPRESENTATIVE , ON THE OTHER HAND, RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND T HE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT IN THE FACTS OF THE CASE AND CONSIDERING THAT THE CHILDREN OF THE ASSESSEE HAVE RECEIVED SMALL GIFTS ON VARIOUS FESTIVALS AND OTHER OCCASIO NS FROM THEIR PARENTS AND RELATIVES, WHICH WERE INVESTED IN THE KISAN VIKAS PATRAS TOTALING ONLY TO RS.20,000, WE HOLD THAT NO CASE FOR A DDITION IS MADE OUT BY THE REVENUE AUTHORITIES. ACCORDINGLY, THIS ADDITION OF RS.20,000 IS DELETED AND GROUND OF APPEAL NO.2 IS ALLOWED. 8. GROUND OF APPEAL NO.3 OF THE ASSESSEE IS AS UNDER- 3. THE LEARNED APPELLATE AUTHORITY IS NOT CORRECT IN MAKING AN ADDITION OF RS.240000/-. THE APPELLANT, F OR INCOME FROM INTEREST, HAS BEEN FOLLOWING CASH SYSTE M AND THUS ACCRUED INTEREST IS NOT SHOWN AS INCOME SINCE IT IS NEVER RECEIVED. THE LEARNED APPELLATE AUTHORITY IS NOT CORRECT IN DISBELIEVING THE SAME. 9. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A SSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND THE LOAN AMOUN T ADVANCED TO SHRI MD. SALEEM WAS NEVER RECEIVED BACK TILL DATE AND THEREFORE, THERE IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 4 WAS NO OCCASION TO MAKE THE IMPUGNED ADDITION OF RS.2,40 ,000 TO THE INCOME OF THE ASSESSEE. HE SUBMITTED THAT AN UNDERTAKING SIGNED BY THE ASSESSEE AS WELL AS THE BORROWER, SHRI MD. SALEEM DATED 8.5.2000 WAS SEIZED BY THE DEPARTMENT AT THE TIME OF SEARCH AND COPY OF THE SAME HAS BEEN FILED AT PAGE 48 OF THE COMPILATION BEFORE THE TRIBUNAL WHICH CLEARLY SHOWS THAT NO PART OF EITHER THE PRINCIPAL OR INTEREST AMOUNT WAS EVER PAID TO THE ASSESSEE BY THE BORROWER, SHRI MD. SALEEM. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REL IED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). HE SUBMITTE D THAT THE TRANSACTION OF TAXING THE AMOUNT LENT BY THE ASSESSEE TO SHRI MD. SALEEM WAS MADE OUTSIDE THE BOOKS OF ACCOUNT AND THE SAME WAS DET ECTED ONLY DUE TO SEARCH OPERATION, WHEREIN THE UNDERTAKING WAS SEIZED BY THE DEPARTMENT. HE SUBMITTED THAT THE INTEREST OF RS.2,40, 000 ACCRUED TO THE ASSESSEE AND AS PER THIS UNDERTAKING THAT WAS PAYABLE BY THE BORROWER, SHRI MD. SALEEM, TO THE ASSESSEE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE F IND THAT FROM THE UNDERTAKING DATED 8.5.2000 SIGNED BY BOTH THE ASSESSEE A S WELL AS THE BORROWER SHRI MD.SALEEM, IT IS CLEAR THAT NO PORTION OF THE SO CALLED LOAN AMOUNT OR THE INTEREST WAS EVER PAID TO THE ASSESSEE BY T HE BORROWER. THERE WAS NO INCRIMINATING MATERIAL BROUGHT ON RECORD BY THE REVENUE TO SUGGEST THAT THE ASSESSEE HAS IN FACT RECEIVED SOME PART OF T HE LOAN AMOUNT OR INTEREST FROM THE BORROWER, SHRI MD. SALEE M. WE FIND THAT THE ASSESSING OFFICER HAS NOT MADE ANY FURTHER ENQUIRY AND HA S NOT SUMMONED SHRI MD. SALEEM TO EXAMINE HIM TO FIND OUT THE TRUTH. THE ASSESSEE HAS CLAIMED THAT IT HAS NOT RECEIVED ANY PART OF THE PRINCIPAL OR IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 5 INTEREST AMOUNT FROM SHRI MD. SALEEM TILL DATE. THIS SUBMISSION OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE. IN TH ESE FACTS OF THE CASE, WE HOLD THAT IT COULD NOT BE SAID THAT INTEREST AM OUNT OF RS.2,40,000 HAS ACCRUED TO THE ASSESSEE AND ACCORDINGLY, THE ADDITION MADE ON THIS COUNT IS DELETED AND THE GROUND OF APPEAL NO.3 OF THE ASSESSEE IS ALLOWED. 12. GROUND OF APPEAL NO.4 OF THE ASSESSEE IS AS UNDER:- 4. THE LEARNED APPELLATE AUTHORITY IN MAKING ADDIT ION OF RS.2,00,000-00 STATING THAT CASH ON HAND AS DECLARE D IN CASH FLOW STATEMENT AS ON 1-04-1995 IS NOT IN PROPO RTION TO THE INCOME DECLARED. 13. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ASSESSEE HAS BEEN FILING ITS RETURN OF INCOME SINCE ASSESSMENT YEAR 1988- 89 AND CASH IN HAND OF RS.4 LAKHS IS COVERED BY THE CASH F LOW STATEMENT FILED BY THE ASSESSEE. THE ASSESSEE WAS A PROPRIETOR OF M/S. RUBY WINES, M/S. OLD PAL WINES AND M/S. BAGGA ENTERPRISES AND FINANCIERS. THE ASSESSEE HAS DECLARED INCOME IN ITS RETURN OF INCOME FIL ED FOR THE ASSESSMENT YEAR 1990-91 TO 1995-96 AT RS.4,26,220 AND IN ADDITION THERETO, THERE WAS OPENING BALANCE IN HAND AS ON 1.4.1 989. HE SUBMITTED THAT THE CASH IN HAND AS ON 1.4.1989 WAS RS.1, 15,525. HE SUBMITTED THAT THERE IS NO MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REVENUE TO SHOW THAT THE ASSESSEE WAS NOT HAVING THE OPEN ING CASH BALANCE AS DECLARED BY IT AS ON 1.4.1995. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPO SED THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE AND RELIE D ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). HE SUBMITT ED THAT THE IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 6 ASSESSEE HAS SHOWN HOUSEHOLD EXPENSES OF RS.10,000 TO 15,000 PER ANNUM FOR THE RELEVANT ASSESSMENT YEARS WHICH ARE QUITE LOW CONSIDERING THE STATUS OF THE ASSESSEE. HE SUBMITTED THAT NO EVIDENCE O F CASH IN HAND AS ON 1.4.1989 OF RS.1,15,525 WAS PRODUCED . HE SU BMITTED THAT THE PREPONDERANCE OF PROBABILITIES GO AGAINST THE ASSE SSEE AND THE ASSESSEE COULD NOT HAVE SAVED RS.4 LAKHS AS ON 1.4.1995 OUT OF THE TOTAL INCOME OF ASSESSMENT YEARS 1990-91 TO 1995-96 DECLARED AT RS.4,26,220, AFTER MEETING HOUSEHOLD EXPENSE AND OTHER LIABILITIES. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) ON TH IS ISSUE. WE FIND THAT THE ASSESSEE HAS FILED A DETAILED EXPLANATION EXPLA INING THE SOURCE OF CASH IN HAND CLAIMED BY IT. THE OPENING BALANCE OF CASH IN HAND AS ON 1.4.1989 HAS BEEN SHOWN AT RS.1,15,525 BY THE ASSESSEE, FO R WHICH IT COULD NOT PRODUCE ANY EVIDENCE. THE ASSESSEE HAS DECLARED T OTAL INCOME OF RS.4,26,220 FOR THE SIX ASSESSMENT YEARS FROM 1990-91 TO 1995-96 AND HAS CLAIMED THAT IT WAS HAVING RS.4 LAKHS AS OPENI NG BALANCE AS ON 1.4.1995, AFTER MEETING HOUSEHOLD EXPENSES AND OTHER L IABILITIES. WE FIND THAT THE HOUSEHOLD EXPENSES DECLARED BY THE ASSESSEE ARE ON LOWER SIDE. HOWEVER, THE SUBMISSION OF THE ASSESSEE WAS THAT IT WAS FILI NG RETURN OF INCOME PRIOR TO ASSESSMENT YEAR 1990-91 ALSO, COULD NOT BE CONTROVERTED BY THE REVENUE BEFORE US. THE ASSESSEE WAS HAVING SEVERAL PROPRIETARY BUSINESSES AND WAS FINALLY SETTLED IN AUTO CONSULTANCY BUSI NESS IN THE YEAR 1995-96. THE ASSESSEE LIQUIDATED THE ENTIRE BUSINE SS AND WAS HAVING CASH IN HAND AND ADVANCES GIVEN ON INTEREST FOR SH ORT INTERVALS. THE ASSESSEE HAS FILED CASH FLOW STATEMENT BEFORE THE ASSESSING OFFICER. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ENTIRE OPENING CASH IN HAND OF RS.4 LAKHS AS ON 1.4 .1995 COULD NOT BE IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 7 EXPLAINED BY THE ASSESSEE. HOWEVER, WE ARE OF THE CONSID ERED VIEW THAT THE ESTIMATE OF UNEXPLAINED CASH AT RS.2 LAKHS BY THE CIT(A), OUT OF TOTAL ADDITION OF RS.4 LAKHS ON THAT COUNT MADE BY THE ASSESSING OFFICER, IS ON THE HIGHER SIDE. WE HOLD THAT ENDS OF JUSTICE SHALL BE MET IF THE ADDITION ON THIS COUNT IS RESTRICTED TO RS.1 LAKH AS AGAINST RS.4 LAK HS MADE BY THE ASSESSING OFFICER AND RS.2 LAKHS SUSTAINED BY THE CIT(A). WE ORDER ACCORDINGLY AND TO THAT EXTENT GROUND OF APPEAL NO.4 OF THE ASSESSEE IS PARTLY ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. REVENUES APPEAL : IT(SS)A NO.67/HYD/05 17. GROUNDS OF APPEAL NO.1 TO 3 OF THE REVENUE ARE AS UNDER- 1. THE DECISION OF THE CIT(APPEALS) IS CO NTRARY TO LAW. 2. THE CIT(APPEALS) OUGHT TO HAVE UPHELD THE INCLUSI ON OF THE INCOM E PERTAINING TO ASSESSMENT YEAR 2001-02AS INCOME FOR THE BLOCK PERIOD. 3. THE CIT(APPEALS) IN THE LIGHT OF SECTION 158BB(1 )(C), OUGHT TO HAVE CONCLUDED THAT THE INCOM E PERTAINING TO ASST. YEAR 2001-02 WOULD FORM PART OF UNDISCLOSED INCOME AS THE ASSESS EE DID NOT FILE REGULAR RETURN OF INCOME FOR THAT ASST. YEAR W ITHIN THE DUE DATE. 18. LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT PRE SSED THESE GROUNDS OF APPEAL OF THE REVENUE, WHICH ARE ACCORDINGLY REJECTED. INSTEAD, HE HAS REQUESTED FOR ADMISSION OF THE FOLLOWING REVISED GROUND OF APPEAL- IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 8 THE CIT(A) ERRED IN NOT UPHOLDING THE ENTIRE ADDIT ION OF RS.4,00,000/- FOR THE A.Y. 1996-97 TOWARDS OPENING CASH BALANCE AND ALLOWING A RELIEF OF RS.2,00,000/- BASED ON THE CLAIMS MADE BY THE ASSESSEE WHICH WERE NOT SUPPORTED BY ANY EVIDEN CE. 19. AFTER HEARING THE PARTIES, THE REVISED GROUND O F APPEAL RAISED BY THE REVENUE IS ADMITTED FOR ADJUDICATION. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON THE ISSUE INVOLVED IN THE REVISED GROUND O F APPEAL RAISED BY THE REVENUE. IN VIEW OF OUR DECISION WHILE DISPOSI NG OFF THE GROUND OF APPEAL NO.4 IN THE ASSESSEES APPEAL, VIDE PARA 15 OF THIS ORDER, WE HOLD THAT THERE IS NO MERIT IN THE REVISED GROUND OF APPEAL OF THE REVENUE, WHICH IS ACCORDINGLY REJECTED. 20. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. TO SUM UP, APPEAL OF THE ASSESSEE, BEING IT(SS)A NO.66/HYD.2005 IS PARTLY ALLOWED AND THE APPEAL OF T HE REVENUE, BEING IT(SS)A NO.67/HYD/2005 IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH FEBRUARY,2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 11 TH FEBRUARY, 2011 COPY FORWARDED TO: 1. SHRI MAHENDER SINGH BAGGA, C/O. SHRI N.SAIBABA & CO., CHARTERED ACCOUNTANTS, 3-2-177 & 180,4 TH FLOOR, VAJRA PLAZA, KALASIGUDA, SECUDNERABAD-500 003. 2. DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-I, HY DERABAD IT(SS)A NO.66 & 67/HYD/05 SHRI MAHENDER SINGH BAGGA, HYDERABAD. 9 3. COMMISSIONER OF INCOME-TAX(APPEALS) I, HYDERABAD . 4. COMMISSIONER OF INCOME-TAX (CENTRAL), HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S .