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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order of the CIT(A) dated 1.3.2016 for the assessment year 2010-11. The assessee raised following grounds of appeal:-
The Ld. CIT(A) erred in upholding the disallowance of Rs.30 lakhs being loan/advance received from Sri T Krishne Gowda.
2. The Ld CIT (A) erred in upholding the disallowance of Rs. 9,80,000/-being loan/advance received from Mrs Shantha Bhai.
3. The Ld CIT (A) erred in upholding the disallowance of Rs. 950,000 being loan/advance received from Sri Raju alias Rajendra Kumar, and Rs. 950,000 from Sri Hitesh Jain.
4. The Ld CIT (A) erred in upholding the disallowance of Rs. 9,00,000 being loan of Rs. 5,00,000/- received from Sri Govind Joshi and Rs. 4,00,000/-respectively.
5. The Ld CIT (A) erred in upholding the disallowance of Rs. 9,00,000/- being loan/advance from Sri A. Krishna Raju. 6. the Ld CIT (A) erred in upholding the disallowance of Rs. 1,500,000/- being loan/advance received from Sri P.C. Pattabhiram. 7. The Ld CIT (A) erred in upholding the disallowance of Rs. 7,00,505/-being opening cash balance under section 69 of the Income Tax Act. 8. The Ld CIT (A) erred in upholding the law levy of interest under section 234 B of the Income Tax Act. For these and other grounds that may be urged at the time of the hearing of the appeal, the appellant.
The assessee has raised additional grounds as follows and also filed a petition for admission of additional grounds stating that these grounds raised before Ld. CIT(A) by way of ground No.6 but due to typographic error in the last para of said ground, it was mis- construed by the first appellate authority and respondent that assessee as not challenging or was not serious about the said addition. Additional ground: The learned CIT(A) as well as the authorities below erred in disallowing a sum of Rs.15 lakh being cash gifts received from Pushpa T. Jain, Smt. Lalitha Bai, Sri Dharmendra and Sri Sonam P. Jain on the ground they did not constitute to be relatives as per the definition in explanation (e) 56(vii) of the I.T. Act.
The Ld. A.R. submitted that these additions made were actually gifts related to “relatives” as per the explanation (e) of section 56(vii) of the Income-tax Act,1961 ['the Act' for short], therefore was not exigible to tax. In those circumstances, he submitted that the additional ground may be admitted and adjudicated on merit.
We have gone through the orders of the authorities below and perused the materials available on record. The additional ground raised by the assessee is very much relevant to decide the issue in dispute and the assessee explained the reason for raising this additional ground before this Tribunal. In our view, there is a good and sufficient reason for not raising this additional ground on earlier occasion. Accordingly, this additional ground is admitted by placing reliance on the judgement of the Hon’ble Supreme Court in the case of NTPC 229 ITR 383 wherein it was held that when all the facts are already recorded and there is no necessity of investigation of fresh facts, the additional grounds be admitted. Accordingly, the additional ground is admitted for adjudication.
Now coming to the first ground, it is with regard to sustaining addition of Rs.30 lakhs being advance received from Shri T. Krishna Gowda. The facts are that the A.O. brought on record that the said person is not available at the address provided by the assessee as reported by the postal authorities. No confirmation is furnished before lower authorities. During the course of first appellate proceedings, the assessee has claimed that address is correct and the person exists for the reasons that warrant is issued to the said person for default u/s 138 of the Negotiable Instruments Act by Chief Metropolitan Magistrate dated 27.1.2015 and therefore, the claim of Rs.30 lakhs cash loan from the said person to be accepted.
In the present case, the notice served by the A.O. is not served to Shri T. Krishna Gowda. The assessee is not able to establish the identity of the party or creditworthiness and the genuineness of the transaction. All the ingredients required to be proved by the assessee u/s 68 of the Act not complied with. Being so, we have no hesitation in confirming addition made by the A.O. This ground of assessee is rejected.
Next ground is with regard to sustaining of addition of Rs.9.8 lakhs being the loan received from Mrs. Shanta Bai. In this case also, notice issued by the A.O. to this person but not served. There is unproved credits appearing in the books of accounts of the assessee. The assessee not discharging the burden cast upon her. Being so, the addition is sustained. This ground of appeal is rejected.
8. Next ground is with regard to the sustaining addition of Rs.9 lakhs being loan of Rs.5 lakhs received from Shri Govinda Joshi and Rs.4 lakhs from Shri Shrwanlal respectively. In this case also summons u/s 131 of the Act could not be served on the said persons. Even postal authority is not able to trace those persons and these creditors were not assessed to tax and the creditworthiness was not established. The genuineness of the transaction was also not established. Accordingly, we sustain the addition and this ground of the assessee is also rejected.
9. Next ground is with regard to sustaining of addition of Rs.9 lakhs received from Shri A. Krishna Raju. Although a confirmation letter from Shri A. Krishnaraju has been filed before the A.O., the said person is not an income tax assessee and the assessee failed to establish the identity and capacity of the creditor to advance the money to the assessee and also genuineness of the transaction. Accordingly, we confirm the addition made by the lower authorities.
10. Next ground is with regard to sustaining addition of Rs.15 lakhs being loan received from Shri P.C. Pattabhiram. In this case, the assessee is not able to prove the capacity of the lender to advance Rs.15 lakhs to the assessee. Being so, the A.O. doubted the creditworthiness of this creditor. Even before us, the assessee was not able to establish the creditworthiness of the party. In such circumstances, we have no hesitation to confirm the addition made by the A.O. This ground of the assessee is rejected.
11. Next ground is with regard to sustaining disallowance of Rs.7,00,505/- being opening cash balance u/s 69 of the Act. The A.O. has brought this amount out of unexplained opening cash balance claimed to be the source of cash deposit in bank as unexplained income, as the assessee failed to provide any satisfactory detail or evidence before him. Even during the remand proceedings, the assessee failed to provide satisfactory evidence. Hence, the addition made by the A.O.
12. We have gone through the orders of the authorities below and perused the materials on record. In our opinion, this is the opening cash balance. Being so, it cannot be considered as unexplained investment in the assessment under consideration. Accordingly, the addition is deleted.
13. The next ground is with regard to the levy of interest u/s 234B of the Act, which is consequential and mandatory in nature.
14. With regard to the additional ground, the gift received from Smt. Pushpa T. Jain, Smt. Lalita Bai, Shri Dharmendra and Shri Sonam P. Jain, each one has given gift of Rs.3 lakhs each to assessee. The A.O. observed that other than Shri Sonam P. Jain, others are not relatives of assessee. Being so, he treated the amount as taxable gif at Rs.15 lakhs. Before us, once again assessee reiterated that these persons are relatives as defined under explanation (e) of section 56(vii) of the Act and filed a copy of gift deed from Smt. Pushpa Kumari T. Jain, Smt. Lalita Bai, Shri Dharmendra, Smt. Jayanti Bai & Shri Sonam P. Jain explaining that the gifts have been given out of natural love and affection. It was explained in each affidavit of relationship as follows:- Sl.No. Name of donor Relationship 1 Smt. Lalita Bai Niece 2. Smt. Jayanti Bai Niece 3. Shri Dharmendra Uncle 4. Shri Sonam P. Jain No gift deed filed 5. Smt. Pushpa Kumari T. Jain Niece
We have gone through the above gift deeds but the assessee has not explained how the assessee is niece of these 3 persons namely Smt. Lalita Bai, Smt. Jayanti Bai & Smt. Pushpa Kumari T. Jain and also not explained how the donor Shri Sonam P. Jain is uncle to the assessee. No family tree has been produced before us. Hence, in the absence of these facts, we are not in a position to accept the contention of the assessee that the gift has been made by relatives as prescribed in explanation (e) to section 56(vii) of the Act. Accordingly, this additional ground is dismissed.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 15th Mar, 2022