SRI KAMLESH KUMAR SINGH,DALTONGANJ vs. ACIT,CIR-1, RANCHI
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Income Tax Appellate Tribunal, KOLKATA-RANCHI ‘e-COURT’, KOLKATA
Before: Shri Sanjay Garg & Dr. Manish Borad
Per Dr. Manish Borad, Accountant Member:- The appeal bearing ITA No. 49/RAN/2017 at the instance of assessee namely Smt. Madhu Singh for assessment year 2009-10 is directed against the order of ld. Commissioner of Income Tax (Appeals), Ranchi dated 11.11.2016, which is arising out of the order under section 143(3) of the Act on 31.12.2011 framed by ld. ACIT, Circle-1, Ranchi.
The appeals bearing ITA Nos. 53 & 54/RAN/2017 at the instance of assessee namely Sri Kamlesh Kr. Singh for assessment years 2008-09 and 2009-10 are directed against the order of ld. Commissioner of Income Tax (Appeals), Ranchi dated both 11.11.2016, which are arising out of the orders under section 143(3) of the Act on 31.12.2010 and 30.12.2011 respectively framed by ld. ACIT, Circle-1, Ranchi.
As the issues raised in all these appeals are common and relate to the members of the same family, therefore, these are heard together and are being disposed of through this common order for the sake of convenience and brevity. We first take up
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh the ITA No. 49/RAN/2017 in the case of Smt. Madhu Singh for A.Y. 2009-10, wherein the assessee has raised the following grounds:-
“(1) For that Ld. CIT(A) was not justified in treating income from dairy and fisheries as income from other sources. Appellant had been doing business of dairy, fisheries and agriculture since long possessed tank for fisheries and agricultural land for dairy and income from agriculture. (2) For that the appellant received a loan of Rs.3,54,000/- from her son Sri Surya Sonal Singh, assessed to tax, loan was received by cheque and was reflected in the accounts of Sri Surya Sonal Singh. Ld. CIT(A) deleted the addition made on protective basis in the hands of the appellant and confirmed the addition to be made on substantive basis in the hands of Sri Kamlesh Kumar Singh, her husband. Loan received by appellant was disclosed in her Balance Sheet. There was no connection whatsoever with Sri Kamlesh Kumar Singh. As such, instruction to make addition in the hands of Sri Kamlesh Kumar Singh is unjustified, illegal and incorrect. (3) For that the addition of Rs.10,60,599/- as income from other sources against long term capital gain disclosed at Rs. 10,60,599/- which was exempt u/s 10(38) was unjustified and illegal. Ld. CIT(A) held that the capital gain earned by the appellant which was assessed as income from other sources on protective basis in her hands be assessed on substantive basis in the hands of her husband Sri Kamlesh Kumar Singh is unjustified and illegal. The capital gain was derived by the appellant on the shares purchased by her and sold by her. Ld. CIT(A) was therefore not justified in giving instructions to make addition on substantive basis in the hands of her husband. It may be pointed out that for the A.Y. 2008-09 Ld. CIT(A) in the decision in appeal held that the share profit earned by her can only be added in her assessments. The addition made on substantive basis in the hands of Sri Kamlesh Kumar Singh, therefore, is unjustified, illegal and incorrect.
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh (4) For that interest u/s 234A or 234B should have been charged on returned income and not on the assessed income following the decision of Hon'ble Jharkhand High Court. (5) For that other grounds in detail will be argued at the time of hearing”.
The facts in brief are that the assessee is an individual, who declared income at Rs.14,64,432/- in return filed on 26.03.2010. Case selected for scrutiny by way of valid issuance of notice under section 143(2)/142(1) of the Act. The assessee has declared income from dairy and fisheries business, but for lack of documentary evidence, ld. Assessing Officer treated it as income from other sources. The ld. Assessing Officer also noticed that a land was purchased in the names of assessee Smt. Madhu Singh, and her relatives and it was found that the value of land as per the stamp duty valuation authority/market price is much higher than the amount of consideration appearing in the purchase deed. The ld. Assessing Officer accordingly computed the unexplained investment of Rs.17,77,000/- and added on protective basis in the hands of assessee and on substantive basis in the hands of assessee’s husband Sri Kamlesh Kumar Singh. The ld. Assessing Officer also noticed that during the year the assessee has taken loan from her husband and one from Surya Sonal Singh, her son. So far as the loan taken from her husband Sri Kamlesh Kumar Singh, ld. Assessing Officer held it to be unexplained money in the hands of Kamlesh Kumar Singh 4
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh and made a substantive addition under section 69A of the Act and for loan taken from her son, substantive addition of Rs.3,54,000/- made in the hands of Kamlesh Kumar Singh and on protective basis in the hands of assessee. The ld. Assessing Officer also observed that the assessee also claimed long-term capital gain from sale of equity shares of M/s. Yuma Vayapar Pvt. Limited at Rs.10,60,599/-. Ld. Assessing Officer based on the information received from Calcutta Stock Exchange about doubtful credential of the company came to a conclusion that the said gain is in the nature of accommodation entry and the exemption is claimed to avoid taxes and accordingly denied the exemption under section 10(38) of the Act and added it in the hands of assessee on protective basis at Rs.10,60,599/- and substantive addition made in the hands of assessee’s husband Kamlesh Kumar Singh. Accordingly income assessed at Rs.54,06,030/-.
Aggrieved, the assessee preferred appeal before the ld. CIT(Appeals) and partly succeeded as the ld. CIT(Appeals) deleted some of the addition observing that the same has already been made on substantive basis in the hands of assessee’s husband, therefore, the same deserves to be deleted. Aggrieved, the assessee is in appeal before the Tribunal.
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh 6. Ld. Counsel for the assessee vehemently argued referring to the detailed written synopsis and also referred to the decision of Adjudicating Authority under the Prevention of Money Laundering Act, 2002, order dated 24.07.2013.
On the other hand, ld. D.R. vehemently argued supporting the order of lower authorities and stated that the assessee has no regular source of income and all the income and investment shown under her name are actually the income of the assessee’s husband namely Kamlesh Kumar Singh and he has made the investment in the name of his wife and therefore, the finding of ld. CIT(Appeals) sustaining the addition needs to be confirmed.
We have heard the rival contentions and perused the relevant material placed before us. The first issue for our consideration is that whether the income from dairy business shown by the assessee is to be held as business income or to be treated as income from other sources. We notice that the Tribunal in assessee’s own case for A.Y. 2010-11 has decided this issue in ITA No. 50/RAN/2017, order dated 10.11.2022 holding that the assessee is carrying on the business under the sole proprietorship concern named M/s. Satya Sai Enterprises and has regularly disclosed it in income-tax returns for past many years, which have been accepted by the revenue authorities. This
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Tribunal has also held that the assessee has declared net profit rate higher than of 8% of the gross receipts and the business of the assessee is duly supported by copies of agreement of land purchased, copies of bills, receipt details, vouchers filed before the lower authorities. Thus taking a consistent view since the facts remain the same, we are inclined to hold that the alleged income is earned from carrying out business activity and is to be assessed as business income and ld. CIT(Appeals) erred in treating the amount of Rs.12,29,712/- as income from other sources and also erred in confirming the action of ld. Assessing Officer by invoking the provision of section 68 of the Act. Thus Ground No. 1 raised by the assessee is allowed.
Ground No. 2 in the case of Smt. Madhu Singh relates to the addition of Rs.3,54,000/- made on account of loan received by the assessee from her son Shri Surya Sonal Singh. We notice that the said loan was received during the year. Ld. Assessing Officer made the addition on substantive basis in the hands of Shri Kamlesh Kr. Singh and protective addition in the hands of assessee. The ld. CIT(Appeals) deleted the addition holding that the substantive addition has been made in the hands of Shri Kamlesh Kr. Singh.
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh 10. Before us, the contention of the assessee is that the alleged amount does not call for any addition either in the hands of assessee or her husband. It is simply unsecured loan from assessee’s son. Since the income for the year under consideration was below the taxable limit, return of income was not filed and Shri Surya Sonal Singh has been allotted PAN BHLPS6942L. However, the loan has been given through banking channel, which is not in dispute. The allegation of the lower authorities that this was the unaccounted income of Shri Kamlesh Kr. Singh, which has been routed through their son’s account is unjustified and arbitrary to the extent that it is not a case of revenue that the loan has been given to assessee by immediate deposit of cash in the bank account of Shri Surya Sonal Singh. Since the nature and source of the alleged sum stand duly explained by the assessee based on the fact that the person given the loan is assessee’s son and his identity is proved and genuineness cannot be doubted. It is a transaction between son and mother and creditworthiness is also proved as there is no cash deposit reflected in the bank account and the said loan is given out of the bank balance standing in the name of Surya Sonal Singh. The ld. CIT(Appeals) erred in stating that the addition needs to be confirmed on substantive basis in the hands of assessee without bringing on record any material to indicate that the sum received from Shri Surya Sonal Singh actually belonged to Shri Kamlesh Kr. Singh. Under these given facts and circumstances of the case, 8
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh we are inclined to hold that the finding of ld. CIT(Appeals) of confirming substantive basis in the hands of assessee’s husband is uncalled for. Since the assessee has explained the source of the said sum and, therefore, addition under section 68 of the Act is uncalled for. Thus Ground No. 2 raised by the assessee is allowed.
Ground No. 3 relates to exemption under section 10(38) of the Act at Rs.10,60,599/-. We notice that the ld. CIT(Appeals) deleted the addition in the hands of assessee merely by observing that the said addition should be sustained on substantive basis in the hands of assessee’s husband for arranging the bogus long- term capital gain. We notice that assessee has declared the long- term capital gain from sale of shares at Rs.10,60,599/- in the income tax return and claimed exemption under section 10(38) of the Act. Two issues need to be dealt herewith, firstly whether the assessee made a genuine claim under section 10(38) of the Act and if not whether the said sum is unaccounted money of assessee’s husband. Question No. 2 can arise only if the reply in question no. 1 is negative. We notice that the assessee has filed all necessary details to explain the purchase and sale of equity shares giving rise to capital gain. We also notice that the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 in the Original Complaint No. 204/2013 in
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Provisional Attachment Order No. 02/2013 dated 24.07.2013, wherein the defendants included the assessee also, the claim of capital gain from sale of equity shares of M/s. Yuma Vyapar Pvt. Limited was for consideration and vide order dated 17th January, 2014 at para 6.10 of the said order, it was held as under:-
"6.10. In sum, I am convinced that the defendants have rightfully claimed capital gains to the tune of 95.90 lacs approx and that the 1.0 has largely relied upon the statements recorded U/s 50 of PMLA ignoring the documents produced to substantiate their claim. Income out of sale of shares was exempt from the Income Tax at the material time, as admitted by the 1.0 in his own documents produced. It is nothing but a misuse of power bestowed upon the I.O. One should remember that vexatious investigation and conclusions would offend the very principles of Natural Justice.”
We notice that Hon’ble Jurisdictional High Court in the case of CIT, Jamshedpur –vs.- Arun Kumar Agarwal (HUF) in TA No. 04 of 2011 dated 13th July, 2012 has held as follows:-
“We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enquiry report which may has been brought on record by the efforts of the Assessing Officer and that enquiry report was prepared by the SEBI and from the observations made by the Assessing Officer himself it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. At this juncture, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the shares. If within a period of one year, the share price has risen from Rs.5 to 55 and from 9 to 160 and one person was holding the shares much prior to that start of rise of the share, then how it can be inferred that such person entered into sham transaction few years ago and prepared for getting the benefit after few years when the share will start rising steeply. In present case even there was no reason for such suspicion when the shares were purchased years before the unusual fluctuation in the share price. Here in this case, we have given example of one of the Tax Appeal wherein the shares were purchased in the year 2004 and were sold in the year 2006, which is said to be one of the case wherein the gap in the purchase and sale of the shares was narrowest. In other cases as we have noticed from the various orders of the CIT (Appecils) that, the shares of some of the companies were purchased by the assessees even five years ago from the time of sale and those purchasers were already disclosed in the Balance Sheet of the assesses, then from any angle, it is proved that the assessees had held the shares much prior to 12 months of the sale of the shares. Hence, these Appeals are dismissed”.
Similar view was also taken by the Hon’ble Delhi High Court in the case of PCIT –vs.- Krishna Devi vide order dated 15.01.2021 pertaining to the issue of bogus capital gain and
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Hon’ble Court decided it in favour of the assessee. In the proposition that sudden jump in the share price within two years which is not supported by the financial, does not justify the Assessing Officer’s conclusion that the assessee converted unaccounted money for claiming exemption under LTCG to avoid taxes is a finding purely made on assumption and based on conjectures. By respectfully following judgment as referred herein above as well as the finding of the Adjudicating Authority under Prevention of Money Laundering Act, we are inclined to hold that the claim of the assessee by way of long term capital gain under section 10(38) of the Act was genuine and justified and in no way can be held to be assessed in the hands of assessee’s husband Shri Kamlesh Kr. Singh. Thus the ld. CIT(Appeals) was not justified in confirming the addition substantively in the hands of her husband. Since the alleged LTCG is a genuine one and cannot be held to be treated as undisclosed income of the assessee’s husband, the order passed by the ld. CIT(Appeals) is set aside and Ground No. 3 raised by the assessee is allowed. 14. Grounds No. 4 & 5 are general in nature, which do not call for recording of any finding. 15. In the result, the appeal of the assessee for A.Y. 2009-10 in ITA No. 49/RAN/2017 is allowed.
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh 16. Now we take up the appeal for A.Y. 2008-09 in ITA No. 53/RAN/2017 in the case of Kamlesh Kumar Singh, wherein the assessee has raised the following grounds:-
ITA No. 53/RAN/2017 (A.Y. 2008-09) (1) For that initiation of proceedings u/s 147 was unjustified and illegal. Order of assessment is not based on the recorded reasons based on which proceedings u/s 147 were initiated. That be so, initiation of proceedings itself is ab-initio void and illegal. (2) For that the addition of Rs.4,42,770/- made on estimate for low drawing and foreign travel was unjustified, illegal and incorrect. Ld. CIT(A) failed to consider the submissions made by the appellant in this respect. The drawings disclosed in M/s Kamlesh Kumar Singh (HUF) and wife Smt. Madhu Singh are not looked into. The foreign travel expenses were disclosed in M/s K.K. Singh (HUF) account. Estimated addition of the expenses, therefore, is unjustified and illegal. (3) For that Ld. CIT(A) confirmed an addition of Rs. 68,50,000/- made on the ground that certain properties were purchased by son and daughters of the appellant, investment of which, was not disclosed and accordingly on substantive basis addition was made u/s 69. No protective assessment was made in the case of persons in whose names properties were purchased. Purchase of the properties was duly disclosed in the account of M/s Kamlesh Kumar Singh (HUF) submitted before Ld. A.O. The Return filed by M/s Kamlesh Kumar Singh (HUF) stands accepted. (4) For that Ld. CIT(A) confused regarding the stamp duty valuation of the property purchased and the actual purchase price vide para-6.34 of his order. There were no discrepancies in the amount cited by the appellant. Ld. A.O. made addition of Rs.68,50,000/- for seven properties purchased. The purchase price of these seven properties was Rs.35,25,000/-. To clarify three properties registered at the value of Rs.81.50 lakh were purchased for Rs.18.25 lakhs. As such, there was difference in the purchase price and the stamp duty price. As per details
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh mentioned by Ld. CIT(A) in his order of the appellant and other orders addition cannot be made for stamp duty valuation in the hands of the purchaser. As such, the total purchase consideration was Rs.35.25 lakhs. The addition of Rs.68.50 lakhs is factually incorrect. (5) For that the investment in all the properties was duly disclosed in M/s Kamlesh Kumar Singh (HUF). The son and daughters of the appellant were members of the HUF and there is nothing wrong for purchasing the properties from the HUF funds in the name of members. HUF has sufficient funds for purchase of the property and purchase was duly disclosed in the Balance Sheet filed of the HUF. The addition made on substantive basis, therefore, is unjustified and illegal. (6) For that Ld. CIT(A) was not justified in confirming an addition of Rs.46,35,845/- treating the capital gain as bogus and sale consideration of the shares was considered as income from other sources. Appellant had filed complete details regarding purchase and sale of shares, period for which shares were made, sufficient evidence in support of purchase of shares and sale of shares was filed. Transaction was through proper banking channels and bonafide brokers. On the hearsay basis and ground, the sale of the shares cannot be considered as bogus. Ld. A.O. has not disbelieved purchased of shares which has held by the appellant in his D-mat account for more than one year. Merely because price of the share was increased after amalgamation of the company with other listed companies, genuine transaction cannot be treated as bogus. Ld. CIT(A) was, therefore, not justified in confirming the finding or addition made by Ld. A.O. (7) For that Ld. CIT(A) was not justified in making an enhancement of income by Rs.71,60,000/-. Ld. A.O. made an addition of Rs.71,60,000/- on protective basis in the case of M/s Kamlesh Kumar Singh (HUF). This amount of Rs.71,60,000/- was received as advance for sale of ancestral land belonging in the name Smt. Madhu Singh and in the name of HUF. Ld. CIT(A) observed that the amount was shown as received to explain the undisclosed investment made by Sri Kamlesh Kumar Singh in the name of his family members. By no stretch of imagination any connection was established regarding Rs.71,60,000/- as belonging to Sri Kamlesh Kumar
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Singh or as invested by Sri Kamlesh Kumar Singh for purchase of properties. There was no justification for addition made by making enhancement by Ld. CIT(A) in the case of the appellant. The addition made is unjustified, illegal and incorrect. (8) For that interest charged u/s 234A and 234B on the assessed income was not justified. Interest should be charged on the returned income following the decision of Hon'ble Jharkhand High Court. (9) For that other grounds in detail will be argued at the time of hearing. 17. At the outset, assessee requested for not pressing Ground No. 1, therefore, the same is dismissed as not pressed.
For the remaining grounds, ld. Counsel for the assessee vehemently argued referring to the written submission dated 12.05.2023 and prayed for relief.
On the other hand, ld. D.R. vehemently supported the orders of lower authorities.
We have heard the rival contentions and perused the record placed before us. The first issue for consideration is regarding the addition for low drawings and foreign travel at Rs.4,42,770/-. We notice that the assessee had disclosed drawings of Rs.1,44,000/- i.e. @ 12,000/- per month, whereas ld. Assessing Officer has estimated it
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh @Rs.18,000/- per month. Ld. Assessing Officer also made the addition for foreign travel expenses of Rs.3,30,770/-. We after going through the documents as well as copy of the income tax return, balance sheet and cash flow statement of Kamlesh Kumar Singh (HUF) placed at pages no. 11 to 13 of the paper book and also the assessment order of Kamlesh Kumar Singh (HUF) placed at pages 14 to 17 of the paper book, notice that the foreign travel expenses of Rs.3,70,770/- has been duly disclosed in the financials of assessee HUF and the same has been accepted by the ld. Assessing Authority in the assessment order. Therefore, the addition made by the ld. Assessing Officer for foreign travel expenses of Rs.3,70,770/- out of total addition for low drawings at Rs.4,42,770/- is uncalled for. As far as the remaining addition of Rs.72,000/- is concerned, we notice that apart from the withdrawals made by the assessee and his wife and son, the withdrawals from capital account of the assessee-HUF is Rs.10,04,412/-, which inter alia, includes withdrawal for foreign travel expenses also. Therefore, there is a substantial drawing in respect of withdrawal of the family of assessee’s wife, son and HUF. However, considering the facts and circumstances of the case, we sustain the addition to the extent of
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Rs.24,000/- and partly allow Ground No. 2 raised by the assessee.
Grounds No. 3, 4 & 5 relate to the addition of Rs.68,50,000/- under section 69 of the Act. We observe that an enquiry was made by the ld. Assessing Officer from the office of the Registrar seeking details of the property purchased and registered in the name of the assessee and his family members. We find that there is a property, which is in the name of assessee’s wife and duly disclosed in her income tax return and also the property in the name of assessee’s children as well as HUF, which has also been scrutinized. So far as the impugned addition is concerned, it relates to investment in the seven properties, which is totalling to Rs.68,50,000/-. It is brought to our notice that the said investment in the seven properties amounting to Rs.68,50,000/- has been duly disclosed by Kamlesh Kr. Singh (HUF) in its income tax return for A.Y. 2008-09. We notice that against the investment appearing in the balance sheet of HUF at page 12 of the paper book, the source of the said investment is explained and the said source was from the recovery of sundry advances. Since the income of Kamlesh Kumar Singh (HUF) for A.Y. 2008- 09 has been duly assessed under section 147 of the Act 17
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh and on perusal of the said order dated 31.12.2011, we notice that the addition has already been made in the hands of Kamlesh Kumar Singh (HUF) at Rs.68,50,000/-, but the same was made on protective basis in the hands of HUF and on substantive basis in the hands of assessee. We, however, are of the considered view that since the source of investment in the said properties has been disclosed in the balance-sheet of assessee HUF and duly recorded in the financial statement, it will be erroneous to hold the addition on substantive basis in the hands of assessee by applying provision of section 69A of the Act. Thus alleged addition is uncalled for in the hands of assessee. Finding of ld. CIT(Appeals) is set aside and Grounds No. 3, 4 & 5 and allowed.
Ground No. 6 relates to treating the long-term capital gain from sale of shares as income from other sources. We notice that the assessee filed complete details regarding purchase and sale of shares, period for which shares were held and transactions having carried out through proper banking channels and by bonafide brokers and the equity shares were held in D-mat account for more than one year. In view of our finding given on the same issue in the case of assessee’s wife Smt. Madhu Singh in ITA No. 49/RAN/2017 in the 18
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh preceding paragraph, we apply the same decision mutatis mutandi for the issue raised in Ground No. 6 raised before us and thus hold that the said long-term capital gain is genuine and assessee has rightly claimed benefit of section 10(38) of the Act. Thus Ground No. 6 raised by the assessee is allowed.
Ground No. 7 relates to enhancement of income by ld. CIT(Appeals) at Rs.71,60,000/-. The ld. CIT(Appeals) made enhancement of addition on the ground that the impugned addition was made protectively in the hands of HUF under section 69 of the Act. However, no substantive addition was made in the hands of assessee. We notice that before the ld. CIT(Appeals), the assessee challenged the said action of enhancement of income on the following ground:- (1) The ideal addition made U/s 69A protectively in hands of the HUF of the assessee is itself uncalled for since no addition U/s 69A can be made against the investment duly disclosed in the books. (2) CIT(A) has no power and jurisdiction to make enhancement on a fresh issue which was not looked into by the AO or does not arise from the (3) Assessment of the assessee was completed on 31/12/2010 whereas the assessment of the HUF of the assessee was completed on 31/12/2011 (i.e. after 1 year). It is only when the AO was making the assessment in case of HUF that the issue of Rs. 71,60,000/- which was duly disclosed as advance 19
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh received against sale of Plot came to the knowledge. As such, there was no possibility of the AO having intention to tax in the same in hands of the assessee substantively during the assessment proceedings. (4) The powers of CIT(A) is co-terminus with the power of the AO. In case of any mistake apparent from record for any escapement of income, the AO should have proceeded by invoking section 154 or 148 or 263 as the case may be.
From perusal of the submissions made by the assessee before the ld. CIT(Appeals), we find merit for the reason that the issue of investment in the property and the source of investment in the property in the form of advance received for sale of plot was for consideration before the ld. Assessing Officer assessing the income of assessee HUF for A.Y. 2008-09. All the details of advance received were appearing in the balance sheet of assessee HUF. There is no whisper about any substantive addition in the order of ld. Assessing Officer. Ld. CIT(Appeals) has made an enhancement of addition, which was not justified in making the enhancement expanding its jurisdiction.
Hon’ble Delhi High Court in the case of CIT vs. Union Tyres reported in 240 ITR 556 [Delhi], held as follows:- “The first appellate authority is invested with very wide powers under section 251(1 (a) and once an assessment order is brought before the authority, his competence is not
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the Assessing Officer and determined in the course of assessment. However, there is a solitary but significant limitation to the power of revision, viz., that it is not open to the Commissioner to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subject-matter of original assessment. ” 26. The Hon'ble Delhi High Court in the case of CIT vs. Sardari Lai Co. reported in [2001] 251 ITR 864 (Delhi) held as follows:- “Section 251 of the Income-tax Act, 1961 - Commissioner (Appeals) - Powers of - Whether whenever question of taxability of income from a new source of income is concerned which had not been considered by Assessing Officer, jurisdiction to deal with same in appropriate cases may be dealt with under section 147/148 and section 263 if requisite conditions are fulfilled and it is inconceivable that in presence of such specific provisions a similar power is available to first appellate authority - Held, yes ” 27. On similar issue, based on the above cases, this Tribunal in the case of Binoy Kumar Singh Vs ACIT in ITA No 195/Ran/2019 dated 21/07/2020 and in the recent decision in case of M/s Bharat Coking Coal Limited in ITA No. 290/Ran/2017 dated 31/03/2023, has given a finding that no enhancement by CIT(A) can be made on an issue which does not arise out from the order of assessment.
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh 28. After going through the ratio laid down in the above judgments, we are of the considered view that this issue was not for consideration before the ld. Assessing Officer in assessee’s case for A.Y. 2008-09 and the said issue has already been examined by the ld. Assessing Authority while assessing the income of assessee HUF, wherein the advance for sale of plot of land has been shown and addition has already been made. Therefore, under the given facts and circumstances, the addition made by the ld. CIT(Appeals) for enhancement of alleged income is uncalled for and deserves to be deleted. Thus Ground No. 7 raised by the assessee is allowed.
Grounds No. 8 & 9 are general in nature, which do not call for recording of any finding.
In the result, the appeal of the assessee in ITA No. 53/RAN/2017 is partly allowed.
We now take up the ITA No. 54/RAN/2017 for A.Y. 2009-10 in the case of Shri Kamlesh Kumar Singh, wherein the assessee has raised the following grounds:- ITA No. 54/RAN/2017 (A.Y. 2009-10) (1) For that the addition of Rs.32,687/- made on estimate for low drawing was unjustified, illegal and incorrect. Ld. CTT(A) failed to consider the submissions made by the appellant in 22
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh this respect. The drawings disclosed in M/s Kamlesh Kumar Singh (HUF) and wife Smt. Madhu Singh were not looked into. Estimated addition of the expenses, therefore, is unjustified and illegal. (2) For that Ld. CIT(A) was not justified in confirming an addition of Rs.3,54,000/-. Loan raised by Smt. Madhu Singh from her son Sri S.S. Singh. Ld. CIT(A) confirmed the addition of Rs.3,54,000/- u/s 68 in the hands of the appellant on substantive basis. Loan was received by account payee cheque from Sri Surya Sonal Singh by Smt. Madhu Singh. There was no connection with the appellant so far this loan transaction is concerned. Addition made is, therefore, illegal and unjustified. (3) For that Ld. CIT(A) was not justified in confirming an addition of Rs.2,57,578/- treating the capital gain as bogus and sale consideration of the shares was considered as income from other sources. Appellant had filed complete details regarding purchase and sale of shares, period for which shares were made, sufficient evidence in support of purchase of shares and sale of shares was filed. Transaction was through proper banking channels and bonafide brokers. On the hearsay basis and ground, the sale of the shares cannot be considered as bogus. Ld. CIT(A) was further unjustified in treating capital gain derived by Smt. Madhu Singh as substantive income of the appellant u/s 69. Capital gain derived by Smt. Madhu Singh for A.Y. 2008-09 was considered on substantive basis in the hands of Smt. Madhu Singh. There was no justification or nexus to treat income from Smt. Madhu Singh as income of the appellant. Ld. CIT(A) was, therefore, not justified in confirming the finding or addition made by Ld, A.O. (4) For that Ld. CIT(A) was not justified in sustaining an addition of Rs.51,78,843/- made u/s 69C of the I.T. Act for alleged non-disclosed expenditure on the marriage of two daughters of the appellant. Appellant filed complete detail of the expenses incurred by the appellant and the source thereof. It was also explained that some of the expenses were incurred from funds of HUF. Ld. CIT(A) considered the explanation filed in a very restricted manner without appreciating the facts in detail and evidence available. The addition sustained
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh therefore is unjustified, arbitrary and illegal. Expenses incurred by the appellant or Sri Kamlesh Kumar Singh (HUF) were duly reflected in their respective accounts. (5) For that Ld. CIT(A) was not justified in confirming an addition of Rs.64,61,4967- being the amount of small jewellery received and cash received in the marriage of two daughters of the appellant. The value of jewellery and the amount received was duly credited in the accounts of the HUF. Complete list of the persons giving gift in cash or in kind was filed with evidence. As such, there was no occasion to consider the gift received as unexplained money u/s 69A. (6) For that the appellant had no connection whatsoever with the gift received by his two daughters at the time of their marriage. The cash received was duly credited in the HUF Account out of which expenses were also incurred. Gift received in kind by daughters cannot be considered as unexplained money of the appellant. No money, bullion or cash was found rather it was disclosed by the appellant in the return of the HUF since gift was received by the members of the HUF at the time of their marriage. The addition made therefore is illegal, unjustified and incorrect. (7) For that interest charged u/s 234A and 234B on the assessed income was not justified. Interest should be charged on the returned income following the decision of Hon'ble Jharkhand High Court. (8) For that other grounds in detail will be argued at the time of hearing.
The first issue for our consideration is regarding the addition estimated for low drawings at Rs.32,687/-. We notice that the assessee has disclosed drawings of Rs.2,07,313/- during the year, which was on monthly basis amounting to Rs.17,276/-. It is also brought to our notice that most of expenses regarding family function
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh have already been disclosed in the return of income filed for Kamlesh Kumar Singh (HUF). The impugned addition has been made by the ld. Assessing Officer merely on estimate basis without placing any evidence on record. We thus find no merit in the finding of ld. CIT(Appeals) confirming the action of ld. Assessing Officer. Thus the addition of Rs.32,687/- is deleted. Ground No. 1 raised by the assessee is allowed.
Ground No. 2 raised by the assessee is against the addition of Rs.3,54,000/- made on substantive basis for the loan, which was received by Smt. Madhu Singh from her son Shri Surya Sonal Singh. We notice that the assessee’s wife Smt. Madhu Singh received loan from her son during the year. The ld. Assessing Officer in the case of assessee in hand has made the addition on substantive basis observing that the alleged loan is unaccounted money of the assessee and has been routed through the bank account of his wife. This finding of the ld. Assessing Officer has been confirmed by the ld. CIT(Appeals). We, however, fail to find any merit in the finding of both the lower authorities for the reason that assessee’s wife is regularly assessed to tax and has also earning income from dairy activities. The alleged sum is basically a loan received by her from assessee’s son and 25
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh this transaction has been carried out through banking channel and both Smt. Madhu Singh and Shri Surya Sonal Singh are having Permanent Account Number. While adjudicating the similar issue raised in the case of Smt. Madhu Singh, we have held the said transaction as genuine in ITA No. 49/RAN/2017. Therefore, since the alleged sum is a genuine loan received by Smt. Madhu Singh from her son Shri Surya Sonal Singh, the revenue authorities erred in making substantive addition in the hands of assessee. Thus the impugned addition stands deleted. Ground No. 2 raised by the assessee is allowed.
Ground No. 3 relates to the addition of Rs.2,57,578/-, which was originally claimed by the assessee as an exempt income under section 10(38) of the Act from sale of equity shares. However, ld. Assessing Officer treated it as accommodation entry in the form of bogus long-term capital gain and denied the exemption. We however find that similar issue came for adjudication in the case of assessee for A.Y. 2008-09 in ITA No. 53/RAN/2017 as well as in the case of Smt. Madhu Singh in ITA No. 49/RAN/2017 for A.Y. 2009-10, wherein we after considering the decision of Adjudicating Authority under the Prevention of Money Laundering Act, 2002, order dated 24.07.2013 as well as the applicability of 26
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh Jurisdictional High Court’s order (supra) held that the transaction in respect of purchase and sale of equity shares held for more than many years, carried through Demat account and the transaction performed on-line portal of SEBI after paying security transaction tax thereon is a genuine transaction giving rise to exempt income in the form of long-term capital gain under section 10(38) of the Act. We accordingly set aside the finding of ld. CIT(Appeals) and delete the addition of Rs.2,57,578/-. Further we also notice that an addition of Rs.10,60,599/- has been made on substantive basis in the hands of assessee for the exemption of long-term capital gain claimed under section 10(38) of the Act in the case of assessee’s wife Smt. Madhu Singh, wherein protective addition was made. However, since we have already adjudicated this issue in the case of assessee’s wife for A.Y. 2009- 10 in ITA No. 49/RAN/2017 and held the transaction to be genuine and not in the form of transaction of accommodation entry and eligible for exemption under section 10(38) of the Act, therefore, no addition is called for on substantive basis in the hands of assessee. Thus the finding of ld. CIT(Appeals) is set aside and Ground No. 3 raised by the assessee is allowed.
Ground No. 4 is raised against the addition of Rs.51,78,843/- made under section 69C of the Act for unexplained expenditure on the marriage of two daughters of the assessee. 27
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh
We have perused the finding of both the lower authorities and heard the rival contentions. We notice that during the year under consideration, marriage of two daughters of the assessee was held and expenditure was incurred thereon. The ld. Assessing Officer has estimated the expenditure and the same being not disclosed in the income tax return of the assessee and made the addition under section 69C of the Act. During the course of hearing, ld. Counsel for the assessee took us through the financial statements of Kamlesh Kr. Singh (HUF) indicating that the expenses incurred on the marriage of daughters have been duly accounted for in the books of HUF and the source of expenditure was cash received as gifts by the Hindu Undivided Family and not from assessee’s individual capacity. Further, it was contended by the ld. Counsel for the assessee that the Authority of Enforcement Directorate has held that against gifts received from marriage, appellants should be given benefit of the same.
Therefore, since the source of the alleged expenditure is mainly from gift received from marriage and all the transactions have been duly accounted for in the books of account/financial statements of assessee 28
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh HUF, there remains no basis to make the addition in the hands of assessee. It was also submitted before us that the alleged expenses constituted the expenses incurred from the side of the daughters as well as from the groom’s family, who came from Mumbai and also incurred major part of the expenditure. Thus in absence of any corroborative evidence put forth by the revenue authorities and considering the fact that expenditure on marriage of two daughters of the assessee have been accounted for in the books/financial statements of Kamlesh Kr. Singh (HUF) and the assessment proceedings of the HUF of the assessee has already passed through the scrutiny proceedings, we find no merit in the finding of both the lower authorities confirming the addition in the hands of assessee under section 69C of the Act. Thus Ground No. 4 of the assessee is allowed.
Grounds No. 5 and 6 are raised against the addition of Rs.64,61,496/- being the amount of small jewellery received and cash received on the marriage of two daughters of the appellant. We observe that ld. Assessing Officer in the assessment order at page 30 has observed that the following gifts in cash and in kind on the marriage of assessee’s daughters, namely Ankita Singh 29
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh and Manisha Singh totalling Rs.69,61,496/- were received:- Gift in cash on marriage Rs.21,33,795/- of Ankita Singh Gift in kind on marriage Rs.13,50,350/- of Ankita Singh Gift in cash on marriage Rs.18,14,551/- of Manisha Singh Gift in kind on marriage Rs.16,62,800/- of Manisha Singh
Before us, first plea of the assessee is that the assessee went in appeal challenging the said addition before the ld. CIT(Appeals), by which addition of Rs.5,00,000/- was deleted and the remaining amount of Rs.64,61,496/- was confirmed. It is claimed that the addition has been made under section 69A of the Act for the unexplained money. However, revenue authorities failed to take note of the fact that the alleged transaction of receiving gifts and kind has duly been disclosed in the income tax return of Kamlesh Kumar Singh (HUF) and, therefore, provisions of section 69A of the Act are not applicable.
Only claim of the assessee before us is that the transaction of receiving gifts has been duly accounted for in the return of income of the HUF of the assessee and
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh therefore, section 69A of the Act ought not to have been invoked. We also notice that in para 9.1 to 9.14 of the impugned order, ld. CIT(Appeals) has discussed in details about the transactions of gifts received on the marriage as well as expenditure incurred on the marriage of two daughters of the assessee. It is also an admitted fact that jewellery received by the daughters are part of their Sthreedhan and the taxability, if any, of the same can only arise in the hands of person receiving such gift. However, as regarding the gifts received in cash, we note that the same has been disclosed in the return of income for the HUF and that constitutes the source of making the expenditure for marriage. Therefore, considering the overall facts and circumstances of the case and also considering that ld. CIT(Appeals) has duly considered that the funds having utilised from the HUF for the purpose of marriage and also considering the fact that the gifts have been accounted for in the return of income for HUF and there is no other evidence put forth by the ld. Assessing Officer, which could prove that the same tantamount to unexplained income of the assessee, once revenue authority have admitted the fact that the gifts have been received on the occasion of marriage of daughters of assessee, then for the amount over and above of the gifts shown in the books of HUF, the 31
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh taxability, if any, of the remaining amount can only be examined in the hands of person receiving such gift as provided under the Act but the same cannot be taxed in the hands of assessee. Thus we set aside the finding of ld. CIT(Appeals) and allow Grounds No. 5 & 6 of the assessee’s appeal.
Grounds No. 7 & 8 are general in nature, which do not call for recording of any finding.
In the result, the appeal of the assessee is allowed.
To sum up, ITA No. 49/RAN/2017 in the case of Smt. Madhu Singh for A.Y. 2009-10 is allowed. ITA No. 53/RAN/2017 in the case of Shri Kamlesh Kr. Singh for A.Y. 2008-09 is partly allowed. ITA No.54/RAN/2017 in the case of Shri Kamlesh Kr. Singh for A.Y. 2009-10 is allowed. Order pronounced in the open Court on 7th August, 2023. Sd/- Sd/- (Sanjay Garg) (Manish Borad) Judicial Member Accountant Member Kolkata, the 07th day of August, 2023 32
ITA No. 49/RAN/2017 Assessment Year: 2009-2010 Smt. Madhu Singh & ITA Nos. 53 & 54/RAN/2017 Assessment Years: 2008-2009 & 2009-2010 Shri Kamlesh Kr. Singh
Copies to :(1) Smt. Madhu Singh, Hamidganj, Daltonganj-822101 (2) Shri Kamlesh Kumar Singh, Hamidganj, Daltonganj-822101
(3) Assistant Commissioner of Income Tax, Circle-1, Ranchi (4) CIT(Appeals), Ranchi; (5) Commissioner of Income Tax- ; (6) The Departmental Representative (7) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.
