Kanta Sadashiv Bhagwat,, Jalgaon v. ITO Wd.-2(1),, Jalgaon

ITA 834/PUN/2011 | 2006-2007
Pronouncement Date: 22-07-2013 | Result: Allowed

Appeal Details

RSA Number 83424514 RSA 2011
Assessee PAN AATPB5641F
Bench Pune
Appeal Number ITA 834/PUN/2011
Duration Of Justice 2 year(s) 1 month(s) 7 day(s)
Appellant Kanta Sadashiv Bhagwat,, Jalgaon
Respondent ITO Wd.-2(1),, Jalgaon
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-07-2013
Date Of Final Hearing 27-11-2012
Next Hearing Date 27-11-2012
Assessment Year 2006-2007
Appeal Filed On 15-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 834/PN/2011 (ASSESSMENT YEAR 2006-07) KANTA SADASHIV BHAGWAT AT POST LONDHARI TAL : JAMNER DIST :JALGAON .. APPELLANT PAN NO. AATPB 5641F VS. ITO WARD-2(1) JALGAON. .. RESPONDENT ITA NO. 835/PN/2011 (ASSESSMENT YEAR 2006-07) RAJMAL NAMDEO BHAGWAT AT POST LONDHARI TAL : JAMNER DIST :JALGAON .. APPELLANT PAN NO. AJCPB 8389A VS. ITO WARD-2(1) JALGAON. .. RESPONDENT ASSESSEE BY : SHRI JAYESH P. DOSHI RESPONDENT BY : SHRI Y.K. BHASKAR DATE OF HEARING : 15-07-2013 DATE OF PRONOUNCEMENT : 22-07-2013 ORDER PER R.K. PANDA AM : THE ABOVE 2 APPEALS FILED BY THE RESPECTIVE ASSESSE ES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 30-03-2011 OF THE CIT(A)-II NASHIK RELATING TO ASSESSMENT YEAR 2006-07. SINCE FACTS AR E IDENTICAL IN BOTH THESE CASES THEREFORE THESE WERE HEARD TOGETHER A ND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2 2. THESE APPEALS WERE EARLIER DISMISSED BY THE TRIB UNAL FOR NON- PROSECUTION. SUBSEQUENTLY THE TRIBUNAL VIDE ORDER DATED 31-05-2013 RECALLED THE EARLIER ORDER. HENCE THESE ARE RECAL LED MATTERS. ITA NO.834/PN/2011 (A.Y. 2006-07) (KANTA SADASHIV B HAGWAT) : 3. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY THE ASSESSEE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN CONFI RMING THE ADDITION OF RS.15 LAKHS OUT OF RS.23 15 000/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF GIFTS RECEIVED AND FURTHER ADDITION OF R S.7 13 100/- AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT. 3.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND IS ONE OF THE DIRECTORS IN NAMLILA COTTON INDUS TRIES PVT. LTD. PREVIOUSLY ASSESSEE WAS ALSO A DIRECTOR IN A COMPA NY BY THE NAME NAMLILA SUGAR LTD WHICH HAS SINCE BEEN WOUND UP. T HE ASSESSEE FILED HER RETURN OF INCOME ON 29-01-2007 DECLARING INCOME FROM SALE OF FOOD ITEMS BANK INTEREST AND AGRICULTURE INCOME. SHE A LSO HOLDS APPROXIMATELY 8 HECTARES OF AGRICULTURAL LAND AT LO NDHARI ON WHICH SHE IS CULTIVATING COTTON. 3.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF NAMLILA COTTON INDUSTRIES PVT. LTD. IT WAS SEEN BY THE AO THAT THE ASSESSEE HAD INVESTED AN AMOUNT OF RS.30 15 000/- I N THE COMPANY IN THE FORM OF SHARE APPLICATION MONEY. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE IN THE CASE OF THE COMPANY IN HER STATEMENT HAD STATED THAT THE INVESTMENT WAS OUT OF HER AGRIC ULTURAL INCOME AND 3 GIFTS WHICH SHE HAD RECEIVED FROM VARIOUS PERSONS. AFTER VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE THE AO TREATE D AN AMOUNT OF RS.27 30 000/- AS UNEXPLAINED INVESTMENT. THE AO T HEREAFTER ISSUED NOTICE U/S.148 TO THE ASSESSEE BY RECORDING THE FOL LOWING REASONS : 'ASSESSEE IS A DIRECTOR IN NAMLILA COTTON INDUSTRIE S (P) LTD. PAHUR DIST. JALGAON AND THEREFORE ASSESSABLE IN THIS WARD . DURING THE YEAR UNDER CONSIDERATION SHE HAS INTRODUCED ` 27 30 000/- IN THE FORM OF SHARE CAPITAL AND UNSECURED LOANS IN THE COMPANY. T HE SOURCE OF FUNDS FOR INTRODUCTION OF THE ABOVE SUM IS STATED T O BE GIFTS RECEIVED FROM DIFFERENT RELATIVES AND AGRICULTURE I NCOME. DURING THE COURSE OF ASSESSMENT PRECEDING IN THE CA SE OF THE COMPANY CERTAIN INFORMATION WERE CALLED FOR AS WEL L AS VERIFICATION CARRIED OUT. IT IS SEEN THAT ON NO PREVIOUS OCCASIO NS HAVE THE DONORS GIVEN ANY GIFTS AND FURTHER IN MOST OF THE CASES T HE CASH DEPOSIT INTO THEIR(DONORS) BANK A/CS HAVE ALSO BEEN MADE BY THEM (DONOR). IT APPARENTLY APPEARS THAT THE GIFTS ARE NOT GENUINE A ND ASSESSEE HAS INTRODUCED HER UNACCOUNTED / UNEXPLAINED INCOME IN THE GUISE OF GIFT. THOUGH COPY OF GIFT DEEDS ARE PRODUCED AND THE GIFT AMOUNTS ALSO RECEIVED BY CHEQUE PRIMA FACIE IT APPE ARS THAT THE ALLEGED GIFTS ARE NOT GENUINE AND THAT DOCUMENTS HA VE BEEN SYSTEMATICALLY PREPARED TO GIVE COLOUR OF LEGITIMAC Y TO THE GIFTS. I THEREFORE HAVE REASONS TO BELIEVE THAT INCOME TO T HE EXTENT OF AT LEAST ` 27 30 000/- HAVE ESCAPED ASSESSMENT . NOTICE U/S. 148 IS THEREFORE ISSUED.' 3.3 DESPITE REPEATED OPPORTUNITIES GIVEN BY THE AO THE ASSESSEE DID NOT ATTEND BEFORE HIM. THOUGH CERTAIN DOCUMENTS WE RE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO DISBELIEVED THE GENUINENESS OF SUCH GIFTS ON THE GROUND THAT IDENTITY AND CREDI T WORTHINESS OF THE DONORS WERE NOT PROVED BY THE ASSESSEE. ACCORDING TO HIM ALTHOUGH THE GIFTS ARE RECEIVED BY CHEQUE THE SOURCE FROM WHICH THE DONORS HAVE ISSUED SUCH CHEQUES HAVE NOT BEEN PROVED. THE AO THEREFORE TREATED THE INVESTMENT IN SHARE CAPITAL AND UNSECURED LOAN TO THE EXTENT OF RS.27 30 000/- AS OUT OF UNDISCLOSED SOURCE AND TRE ATED THE SAME AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT. 4 3.4 BEFORE THE CIT(A) THE ASSESSEE MADE ELABORATE A RGUMENTS. IT WAS SUBMITTED THAT THE ASSESSEE HAS INTRODUCED RS.3 0 15 000/- AS SHARE APPLICATION MONEY AND UNSECURED LOANS AND NOT RS.27 30 000/- AS STATED BY THE AO. OUT OF THE ABOVE AN AMOUNT OF RS.25 90 000/- REPRESENTS GIFTS RECEIVED FROM VARIOUS PERSONS WHO ARE CLOSE R ELATIVES OF THE ASSESSEE SUCH AS FATHER BROTHER MOTHER-IN-LAW UN CLE AND HUSBAND. COMPLETE DETAILS IN THIS BEHALF HAVE BEEN FILED DUR ING THE COURSE OF SCRUTINY ASSESSMENT OF THE COMPANY. ALL THE GIFTS WERE MADE BY ACCOUNT PAYEE CHEQUES. THE CREDIT WORTHINESS OF TH E DONORS WERE PROVED. VARIOUS JUDICIAL DECISIONS WERE ALSO RELIE D UPON BY THE ASSESSEE. 3.5 BASED ON THE VARIOUS SUBMISSIONS FILED BY THE A SSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE SAME AS WELL AS THE BANK ACCOUNTS OF THE DONORS AND OTHER MATERIAL ON RECORD HE DELETED AN AMOUNT OF RS.8 15 000/- OUT OF THE TOTAL GIFT OF RS.23 15 000/-. HE HOWEVER SUSTAINED THE GIFTS REC EIVED FROM THE FOLLOWING PERSONS : 1. LILABAI NAMDEO BHAGWAT (MOTHER-IN-LAW) RS.3 50 000/- 2. SURESH NAMDEO BORSE (BROTHER) RS.1 50 000/- 3. ARJUN BHIKA BORSE (UNCLE FATHERS BROTHER) RS. 2 00 000/- 4. PANDHARI BHIKA BORSE (UNCLE FATHERS BROTHER) RS.2 50 000/- 5. RAMESH BHIKA BORSE (UNCLE FATHERS BROTHER) RS .2 50 000/- 6. PUNDLIK BHIKA BORSE (UNCLE-FATHERS BROTHER) RS. 3 00 000/- ------------------ RS.15 00 000/- ------------------ WHILE DOING SO HE RELIED ON THE DECISION OF THE AH MEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ABHAY DEVILAL RATHOD VS . DCIT ACCORDING TO WHICH IN ADDITION TO FULFILMENT OF NORMAL REQUIREME NTS FOR A GENUINE 5 LOAN TRANSACTION I.E. IDENTITY AND CREDIT WORTHINE SS OF THE PERSONS AND GENUINENESS OF THE TRANSACTIONS A GIFT TRANSACTION REQUIRED A CLOSE RELATIONSHIP BETWEEN A DONOR AND A DONEE. IT ALSO INVOLVES HUMAN PROBABILITIES AND IT REQUIRED VALID REASON APART FR OM LOVE AND AFFECTION. 4. SO FAR AS THE DISALLOWANCE OF RS.17 13 000/- AS UNEXPLAINED INVESTMENT U/S.69 HE OBSERVED AS UNDER : 14. AVAILABILITY OF FUNDS WITH THE APPELLANT: THE APPELLANT HAS FURNISHED A COPY OF HER RETURN FOR AY 2006-07 FILED ON 09/01/2007. ACCORDING TO THE COMPUTATION SHEET THE APPELLANT HAD AN INCOME OF ` 78 840/- FROM THE SALE OF FOOD ITEM BESIDES INTEREST INCOME OF `9 041/- AND AS NET AGRICULTURAL INCOME OF ` 1 89 019/-. APART FROM THE ABOVE THE APPELLANT HAD A DEPOSIT OF ` 2 10 000/- IN NAMLILA SUGAR LTD.. AS DISCUSSED ABOV E GIFTS OF ` 8 15 000/- WERE FOUND TO BE GENUINE. HENCE THE TOTA L AVAILABILITY OF FUNDS WITH THE APPELLANT WAS ` 13 01 900/- ( ` 78 840/- + ` 9 041/- + ` 1 89 019/- + ` 2 10 000/- + ` 8 15 000/-). AS AGAINST THIS THE APPELLANT HAD INVESTED ` 25 90 000/- AS LOAN AND ` 4 25 000/- AS SHARE APPLICATION MONEY IN NAMLILA CO TTON IND. PVT. LTD. HENCE THE APPELLANT'S INVESTMENT OF ` 17 13 100/- REMAINS UNEXPLAINED ( ` 30 15 000 - ` 13 01 900) THE ADDITION TO THE EXTENT OF ` 17 13 100/- IS THEREFORE CONFIRMED AS AN UNEXPLAINE D INVESTMENT U/S 69 OF THE IT ACT 1961. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS MADE U/S.144 WITHOUT GIVING PROPER O PPORTUNITY TO THE ASSESSEE. HE SUBMITTED THAT THE COPY OF GIFT DEEDS AND BANK ACCOUNTS EXTRACTS WERE PRODUCED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS. ALL THE PERSONS HAD APPEARED BEFORE T HE ASSESSING OFFICER AND HAVE CONFIRMED TO HAVE GIVEN THE GIFTS. HE SUB MITTED THAT WHEN AN AMOUNT OF RS.8 15 000/- HAS BEEN ACCEPTED AS GENUIN E THE SAME PRINCIPLE 6 SHOULD HAVE BEEN ADOPTED FOR DISALLOWANCE OF THE BA LANCE RS.15 LAKHS. HE SUBMITTED THAT THE DONORS IN THE INSTANT CASE AR E CLOSE RELATIVES OF THE ASSESSEE AND THEREFORE THE DECISION RELIED ON BY TH E LD.CIT(A) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. FURTH ER THE COPIES OF THE STATEMENTS GIVEN BY THE DONORS WERE NOT GIVEN TO TH E ASSESSEE. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE THE ASSES SEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE HIS CASE BEFORE TH E ASSESSING OFFICER TO HIS SATISFACTION BY PROVING THE CREDIT WORTHINESS O F THE DONORS SINCE THE IDENTITY HAS ALREADY BEEN PROVED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THA T THE ORDER OF THE CIT(A) IS VERY FAIR. THE ASSESSEE WAS UNABLE TO PR OVE THE CREDIT WORTHINESS OF THE DONORS FOR WHICH THE LD.CIT(A) HA S SUSTAINED AND UPHELD THE ADDITION U/S.69. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE WE FIND OUT OF GIFTS OF RS.23 15 000/- THE LD.CIT(A) HAS ALLOWED AN AMOU NT OF RS.8 15 000/- TO BE GENUINE AND SUSTAINED THE ADDITION OF BALANCE RS.15 LAKHS ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO PROVE THE CR EDIT WORTHINESS OF SUCH DONORS AND THAT THE GIFT TO THE TUNE OF RS.15 LAKHS IS BOGUS. 7.1 IT IS THE SETTLED PROPOSITION OF LAW THAT FOR A LLOWING ANY GIFT AS GENUINE THE ASSESSEE HAS TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF 7 THE DONORS AND THE GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE THE ASSESSEE NO DOUBT HAS FILED THE GIFT DEEDS AND PRO DUCED THE DONORS BEFORE THE ASSESSING OFFICER THUS PROVING THE IDENT ITY OF THE DONORS. HOWEVER THE CREDIT WORTHINESS OF THE DONORS AND GE NUINENESS OF THE TRANSACTION HAS NOT BEEN DISCHARGED PROPERLY. THE ASSESSEE HAS NOT FILED THE BANK STATEMENTS OF SOME OF THE DONORS. THE ASS ESSEE HAS ALSO NOT SATISFACTORILY EXPLAINED THE AVAILABILITY OF CASH T O THE EXTENT OF RS.2 13 000/- WHICH ACCORDING TO HIM HAS BEEN INVES TED OUT OF HIS PAST SAVINGS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE T HE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS S ATISFACTION REGARDING THE CREDIT WORTHINESS OF THE DONORS TO THE TUNE OF RS.15 LAKHS AND ALSO AVAILABILITY OF THE CASH TO THE TUNE OF RS.2 13 100 /-. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN ACCORDANCE WITH L AW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOL D AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE AR E ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.835/PN/2011 (A.Y. 2006-07) (RAJMAL NAMDEO BH AGWAT) : 8. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSE E IN THE GROUNDS OF APPEAL HAS CHALLENGED THE ORDER OF THE CIT(A) IN SU STAINING THE ADDITION OF RS.5 51 000/- U/S.69 OF THE I.T. ACT WHICH COMPR ISES OF DISALLOWANCE OF GIFTS TO THE TUNE OF RS.2 90 000/- AND AN AMOUNT OF RS.2 61 000/- OUT OF CURRENT INCOME/CREDITORS AND LOANS ETC. 8 8.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS ING OFFICER MADE ADDITION OF RS.33 03 000/- U/S.69 BEING UNEXPLAINED INVESTMENT IN SHARE CAPITAL AND UNSECURED LOAN IN THE COMPANY NAMED NAM LILA COTTON INDUSTRIES PVT. LTD. IN APPEAL THE LD.CIT(A) SUSTA INED AN AMOUNT OF RS.5 51 000/- AND DELETED THE BALANCE AMOUNT. WE F IND THE GROUNDS IN THE INSTANT CASE ARE IDENTICAL TO THE GROUNDS IN IT A NO.834/PN/2011. WE HAVE ALREADY DECIDED THE ISSUE IN THE PRECEDING PARAS AND THE MATTER HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFI CER FOR FRESH ADJUDICATION WITH CERTAIN DIRECTIONS. FOLLOWING TH E SAME RATIO THE GROUNDS BY THE ASSESSEE ARE ALSO RESTORED TO THE FI LE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE DIRECTIONS GIVEN THEREIN. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT BOTH THE APPEALS FILED BY THE RES PECTIVE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF JULY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA ) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 22ND JULY 2013 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II NASHIK 4 CIT-II NASHIK 5. THE D.R A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES PUNE