SRI M N VISWESARAIAH V. INCOME TAX OFFICER

ITA/416/2017

AI Insights

The case involves an income tax appeal by the assessee, Sri. M.N. Viswesaraiah, against the order of the ITAT, Bengaluru, which confirmed the addition of Rs.24,75,400 to the assessee's income for the assessment year 2009-10. The addition was based on the grounds that the Will under which the money was received was not properly notarized or registered, and the creditworthiness of the father-in-law, from whom the money was allegedly received, was not established. The High Court of Karnataka, after considering the arguments and the precedents cited, allowed the appeal, stating that the tax authorities could not question the validity of the Will and that the CIT(A) had not conducted a proper enquiry.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 753960 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-09-2022
• Assessment Year: misc
• Other Referred Cases: Kumar Nirman & Nivesh (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Bangalore, Commissioner of Income Tax Vs. Daulat Ram Rawatmull
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DILIP
• Assessee Lawyers: A SHANKAR; B S BALACHANDRAN
• Keywords: Assessment Year 2009-10; Cash Credits; Income tax appeal; Will Not Properly Notarized or Registered; Creditworthiness Not Established; Section 68 of the I.T. Act 1961
• Section: 143(3); 68; 260-A

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF SEPTEMBER, 2022 PRESENT THE HON’BLE MR.JUSTICE P.S.DINESH KUMAR AND THE HON’BLE MR.JUSTICE UMESH M. ADIGA INCOME TAX APPEAL No.416/2017 BETWEEN: SRI. M.N.VISWESARAIAH, NO.76, 1ST FLOOR, 7TH MAIN, 4TH CROSS, MICO LAYOUT, 2ND STAGE, VIJAYANAGAR, BENGALURU-560040. PAN:AHFPM4469F ... APPELLANT [BY SRI. A.SHANKAR, SR. ADVOCATE FOR SRI.B.S.BALACHANDRAN, ADVOCATE FOR APPELLANT] AND: INCOME TAX OFFICER, WARD-13(4), ASSIGNED FROM ITO, WARD 14(4), BENGALURU, ROOM NO.322, 3RD FLOOR, HMT BHAVAN, GANGANAGAR, BELLARY ROAD, BENGALURU-560032. ... RESPONDENT (BY SRI. DILIP M, ADV. FOR SRI.K.V.ARAVIND, STANDING COUNSEL FOR RESPONDENT) THIS INCOME TAX APPEAL FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04/07/2016 PASSED IN ITA NO.762/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010. - 2 - THIS APPEAL COMING ON FOR ADMISSION, THIS DAY P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:- J U D G M E N T This appeal by the assessee directed against the order dated 04.07.2016 in ITA No.762/Bang/2014 passed by the ITAT1, Bengaluru Bench, for the assessment year 2009-10 has been admitted to consider three questions of law. 2. During the course of argument, Sri.A.Shankar, learned Senior Advocate for the appellant does not press questions No.2 & 3 and submits that only the following question is relevant: \"1. Whether in the facts and circumstances and evidences on record and the law applicable the lower authorities were in error in confirming the assessment of Rs.24,75,400/- on the ground that the WILL was not properly notarized or registered and on the further ground that creditworthiness of the father-in-law is not established in view of undisputed fact that there was no cash credits and Section 68 of the I.T.Act 1961 did not apply to the facts of the appellant's case\"? 3. Brief facts of the case are, assessee deposited various sums of money aggregating to Rs.24,75,400/- during the assessment year 2009-10. The return filed by the assessee 1 Income tax Appellate Tribunal, Bengaluru Bench - 3 - was taken up for scrutiny. The A.O2 passed an order under Section 143(3) of the Income Tax Act, 19613 adding the aforesaid amount. 4. The CIT(A)4 and ITAT have confirmed the order passed by the A.O. 5. Sri. Shankar submitted that Assessee had deposited the amount in his bank after receiving the same from his father-in-law. Placing reliance on the judgment of this Court in Kumar Nirman & Nivesh (P.) Ltd., Vs. Assistant Commissioner of Income Tax, Bangalore5 and judgment of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Daulat ram Rawatmull6, he contended that a person could be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money was found to be incorrect. 6. In reply, Sri. M.Dilip, learned Senior Standing Counsel for the Revenue submitted that the Will of assessee's 2 Assessing Officer 3 ('the Act' for short) 4 Commissioner of Income Tax (Appeals) 5 [2020] 121 taxmann.com 174 (Karnataka) para 6 6 (1973) 87 ITR 349 - 4 - father-in-law is a created one. The assessee's father-in-law did not have so much of financial capacity to give money to his son-in-law. The, CIT(A), in his order has considered the same in detail and recorded that the assessee had taken inconsistent stand. Hence, there is no legal infirmity in the orders passed by the Assessing Officer and confirmed by both CIT(A) and ITAT. 7. We have carefully considered rival submissions and perused the records. 8. Undisputed facts of the case are, for the assessment year 2009-10, assessee has deposited Rs.24,75,400/- in the bank. The A.O. has held that said amount belongs to assessee. the Assessee's case is, his father-in-law had given that money to his wife. Assessee has not appeared before the Assessing Officer. The explanation given by Shri Shankar for non- appearance is that notice was issued to assessee's employer and the same was not made known to him. He submitted that assessee has stated both the facts namely, that a sum of Rs.3,20,0000/- was received from one Smt.Nagarathna to make payment to a housing co-operative society; and that a sum of Rs.25 Lakhs was received from his father-in-law. - 5 - Therefore, the facts recorded by the CIT(A) are factually incorrect. 9. Shri Shankar also contended that CIT(A) and the ITAT have misdirected themselves with regard to a Will executed by a Hindu. This Court in Kumar Nirman's case has followed the decision in Daulat Ram Rawatmull, wherein it is held that even though explanation is not satisfactory, it can still be held that person could to be the owner of money. The question for consideration in this appeal is, whether the Revenue could have travelled beyond the settled position of law. It was conceded that none appeared on behalf of the assessee before the Assessing Officer. Before the CIT(A), the assessee has urged that he had received money from two sources namely, Smt.Nagarathna and his father in law. The CIT(A) has held that copy of the Will was signed before a notary and it was written on plain sheet and not on a stamp paper. Shri Shankar has placed a copy of the Will for our perusal. It is mentioned in the Will that a sum of Rs.25 Lakhs was received by the assessee for his personal purpose from April 2008 on different occasions and the same shall be held as bequest. In the same Will, a bequest of Rs.25 Lakhs has been made to Shri Chandrababu, the first - 6 - son-in-law of Shri D.Krishne Gowda. Shri Shankar pointed out that no enquiry has been made so far as bequest made to Shri Chandrababu. 10. It is settled that tax authorities cannot record any findings with regard to validity of the Will. They may look into any Will for satisfying themselves with regard any transaction. In view of the authority in Daulat ram Rawatmull and the fact that another sum of Rs.25 Lakhs has been paid to assessee's co-brother under the very same Will and there has been no enquiry in that regard, we are of the view that the findings recorded by the CIT(A) by making critical analysis with regard to validity of the Will are not sustainable. The ITAT has upheld the order of CIT(A). Therefore, the said order is also unsustainable. If the CIT(A) was not satisfied with the source, he could have enquired into the matter by issuing notice to the legal representatives of the assessee's father-in-law. Admittedly, no such enquiry was conducted. Therefore, additions could not have been sustained by the CIT(A) based on surmises and incorrect application of law. - 7 - 11. In view of the above, the following: ORDER (i) Appeal is allowed; (ii) The question of law raised in this appeal is answered in favour of the Assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE JS/-Yn. "