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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-II’ NEW DELHI
Before: SMT DIVA SINGH
The present appeal has been filed by the assessee assailing the correctness of the order dated 19.02.2015 of CIT(A)-16, New Delhi pertaining to 2010–11 assessment year on various grounds.
The Ld. AR, Sh. K.Sampath, Adv. appearing on behalf of the assessee, submitted that in the present appeal the assessee is assailing the action of the CIT(A) in sustaining the addition of Rs.5,76,920/-; and Rs.5,54,300/- made by the Assessing Officer wherein the assessee’s claim of sale of jewellery and return of share application money respectively has been dismissed and treated as unaccounted and unexplained income of the assessee.
Referring to the facts on record, it was submitted by the Ld. AR that as far as the addition on account of return of share application money is concerned, the admitted facts on record are that it has been received back from M/s D.U. Securities Private Limited. Inviting attention to page 3 of the assessment order it was submitted that the Assessing Officer, as mentioned in para 2.2 of his order, required the assessee to explain the RTGS receipt of Rs.5,54,300/- in the assessee’s disclosed saving bank account maintained with Dena Bank Account No.052610003211, Chawri Bazar, Delhi. The information as per the record was that the specific amount was transferred by RTGS from M/s D.U. Securities Private Limited. As per
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Page 2 of 10 record, it was submitted by the assessee that payment for acquiring shares of the company through an agent were made. These payments were paid by cheque No.533893 dated 09.08.2008 of Rs.2,62,000/- and Cheque No.533894 dated 13.08.2008 for Rs.2,95,000/-. The payments it was stated had been made to the said concern from the very same bank account and since ultimately no shares were allotted, the amount was returned by the said concern by RTGS again to the very same bank account of the assessee. 3.1. Accordingly, it was submitted that all along the assessee has been submitting that this was a return of assessee’s own money. The tax authorities it was submitted have not accepted the explanation only because notice sent by the AO at the address of the said concern came back unserved on 06.03.2013 with the comment “always locked”. It was submitted by the Ld.AR that the assessee cannot be held answerable in 2013 if the office of D.U. Securities Pvt. Ltd. is locked. Referring to the evidence on record, it was submitted that admittedly the receipt of money from the said concern is not handed over in cash. Inviting attention to the copy of the bank account, it was submitted the amount has been repaid by way of an RTGS. In the circumstances, the act of making and subsequently sustaining the addition in the hands of the assessee in the face of the evidence on record, it was submitted does not arise.
The Ld. Sr.DR relying on the orders submitted that the said concern was not in existence and this is a fact on record where the attempts made by the tax authorities were not successful as the premises were always found locked, this fact has been confronted to the assessee. Accordingly, it was his submission that these facts raised a presumption that all was not well with the explanation filed by the assessee. Hence, the addition made, it was submitted deserves to be sustained.
The Ld. AR re-iterated that the amount has been paid by cheque from the assessee’s bank account and has returned back also using the banking channels. The amount has returned also from the very same concern and this fact is also an admitted fact on record. Thus, it was submitted that in view of the above facts and documents as evidence on record
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Page 3 of 10 the assessee had adequately discharged the burden of proving the bonafides of return of his own share application. It was questioned what further queries were required to be addressed in the self speaking facts. It was submitted that incase these facts and documents are to be ignored then the Revenue must refer to atleast same material, fact, evidence in rebuttal to show that the assessee’s transaction was not genuine. It was questioned how can the assessee be answerable for a future conduct of a concern which for whatever reason is found subsequently not reachable as its premises as per Revenue’s version are found to be locked at the time the Revenue wants to cross verify a transaction which occurred a few years ago. It was submitted that the Report is not that the concern is “not found there” but that its premises are “always locked” according to some assertion of some unconnected person relied upon by the Inspector. In the circumstances, it was his submission he would have no objection to verification by the Revenue but before that the Revenue atleast should be called upon to spell out what further verification is required.
I have heard the rival submissions and perused the material available on record. It is seen that the AO required the assessee to explain the deposits of Rs.5,54,300/- on 23.03.2010 in the assessee’s Dena Bank A/c No052610003211. The transaction as per the bank statement was described as “RTGS D.U. SECURITIES PRIVATE”. I find from the explanation reproduced in the assessment order by the Assessing Officer in para 2.3 that the assessee explained alongwith supporting evidences that from the specific bank account number-52610003211 in Dena Bank, Chawri Bazar, Delhi payments of Rs.5,57,000/- vide cheque No.533893 dated 09.08.2008 and of Rs.2,62,000/- vide cheque No.533894 dated 13.08.2008 for Rs.2,95,000/- were made to the account of D.U. Securities Pvt. Ltd. The payments were explained as share application money in the said company. Supporting evidence by way of bank statement were filed stating that since no shares were allotted the money was returned. The AO as per record attempted to verify this from M/s D.U. Securities Pvt.Ltd. and found that the office of the said concern was always locked. After confronting the fact to the assessee, addition was made by the AO. The CIT(A) sustained the addition
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Page 4 of 10 holding that the transaction has not been confirmed by the said concern. A perusal of page 5 of the assessment order brings out the fact that as per report of the ITI (Inspector of Income Tax) i.e. dated 18.03.2013 it has been reported that “Room No. 203 was found to be always locked”. Based on this fact, it has been consistently concluded that its affairs were not in order. I find there is nothing on record to show that the party was not in existence. The recordings made in the third partly documents namely entries in the bank pass book of the assessee demonstrate that funds flowed towards the said concern from the specific bank account in 2008 and returned to it again through the banking channels in 23.03.2010. These admitted facts have not been rebutted by the Revenue. The fact that its office was found to be consistently locked in 18.03.2013 can be explained from the following extract of the assessment order itself:- “At this locked primes there is a demand notice for Rs,19,99,145/- against the final order passed by the Tribunal on 23.11.2012 of O/o Debts Recovery Tribunal-III, Keshav Kunj, Sanskriti Bhavan, D.B.Gupta Road, Jhandewalan, New Delhi-110055 vide R.C.No.24/13 dt. 05.02.2013 signed by Shri Ranjan Kumar Recovery Officer-II, DRT-III, Delhi was affixed for notice u/s 25 to 28 of the recovery of Debts due to Banks and Financial Institutions Act-1993, Rule 2 of second schedule to the IT Act-1961 for.” (emphasis provided) 6.1. Thus, the presumption drawn by the tax authorities if any about the existence of the said concern, it is seen is misplaced. Further, I also find that the tax authorities have also misdirected themselves by holding and sustaining an addition on the presumption of holding the assessee liable for failure to address the future proper functioning of M/s D.U. Securities Private Limited. There is nothing on record to show that the assessee had any control over M/s D.U. Securities Pvt. Ltd. Considering the consistent explanation of the assessee, I am of the view that the facts as borne out from the record adequately demonstrate that the payment flowed from the specific bank account of the assessee to M/s D.U. Securities Pvt.Ltd. and in the absence of any rebuttal on the explanation consistently on record that it was for acquiring shares when considered in the context of the complete facts on record the claim has to be allowed. It is an accepted fact that the transaction amount under consideration flows back from the said concern by RTGS. The fact that the premises are found to be always locked
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Page 5 of 10 can be explained by the notice affixed at the premises of Debt Recovery Tribunal (hereinafter referred to as “DRT”) which has been extracted by the Assessing Officer himself. These facts adequately demonstrate that the said concern definitely was in existence and found in occupation at the premises when the ITI visited though now always found locked. Although the Ld AR had submitted that he has no objection if the fact is verified, I find that as far as the facts of the present case are concerned any further verification would have been relevant if the fact that the amount had flown to the said concern was required to be proved or the fact that it has come back from the said concern was to be proved. Both the material facts stand proved from the record as admitted by both the parties. There is admittedly no connection between the said concern and the assessee nor any control exercised by the assessee on the said concern as the transaction is at arms length. Hence, the occasion to verify the reasons and causes why the said concern was having its office locked up after a few years is not a relevant issue for adjudicating whether the amount flowed back from the said concern to the assessee again through the banking channels was adequately explained or not. The Revenue has nowhere doubted the fact that the funds flew towards the said concern through the very same bank account of the assessee. Thus I find that the occasion to consider and ponder on the issue why its premises after a few years were found to be locked is not a relevant issue for the purposes of the present case. As noted the third party evidence showing flow of money to the said concern by way of the Bank statement of the assessee and again the flow back by RTGS from M/s D.U. Securities Pvt. Ltd. to the very same bank account where existence of M/s D.U Securities Pvt. Ltd. is not in doubt and the consistent unrebutted explanation that it was for share application money all fully support the claim of the assessee. Accordingly, in the afore-mentioned peculiar facts and circumstances, I find that the addition on facts has wrongly been made and sustained and accordingly is directed to be deleted.
Addressing the next issue raised by the assessee in the present appeal in regard to claim of sale of jewellery, the Ld. AR invited specific attention to pages 5 and 6 of the Paper
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Page 6 of 10 Book which it was submitted had been filed before the tax authorities. It was submitted that the said lady who is the mother-in-law of the assessee has accepted that she had gifted ornament weighing 440 gram which had cost her Rs.1,75,000/- on 10.02.1989, to the assessee on the date of his marriage anniversary out of love and affection for his son-in-law. The said statement was supported by way of an Affidavit by the said lady. Attention was also invited to the receipt of Gupta Jewellers P.Ltd., dated 01/11/2009 wherein the said jewellery was sold for Rs.5,76,920/-. Inviting attention to the assessment order, it was submitted that the said Jeweller had also accepted that the said jewellery had been sold to him. It was submitted that simply because the assessee failed to produce the donor, the addition has been made.
The Ld. Sr. DR inviting attention to the assessment order, submitted that in fact the assessee had made a surrender of the said amounts through his counsel and the addition on facts was warranted.
The Ld. AR submitted that the addition has not been sustained by the CIT(A) on this ground and therefore, the argument of the Ld.Sr.DR, is dehorse the facts. It was also his submission that in fact no surrender was made by the assessee and the AO merely recorded that the counsel offered to surrender the amount subject to the condition that the AO would not levy any penalty on the assessee for concealment. The mere conditional offer of the counsel and that too without the specific authority of the assessee to do so it was submitted cannot lead to the conclusion that there was a surrender. It was conceded that in certain circumstances, an assessee may be willing to surrender the amount but since on facts the Assessing Officer initiated penalty proceedings, admittedly the offer, if any, was not accepted. It was also submitted that the fact that there was no surrender is evident from the fact that the issue was challenged in appeal before the CIT(A) and even the Ld. Commissioner has not proceeded on the basis of the surrender. Thus, on facts it was his submission that the addition was wrongly made.
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Page 7 of 10 10. Considering the submissions of the parties, I find that the argument of the Ld.Sr.DR that the amount was surrendered by the assessee on facts cannot be accepted. The law requires that the return of income has to be signed by the assessee. Even if the tax payer is illiterate even then the return of income cannot be signed by his counsel and it is the thumb impression of the tax payer which makes it a legitimate return of a tax payer’s income.
Similarly the position in regard to the raising of grounds either before the CIT(A), ITAT or for that matter any higher forum are concerned the law necessitates nay mandates that the grounds raised are to be signed by the assessee and assessee alone and cannot be signed by his counsel. Even in case of a tax payer’s illiteracy, it is the assessee’s thumb impression which authenticates the grounds. Thus, surrender, if any has to be acknowledged/accepted by the assessee. A counsel entrusted to argue and represent a taxpayer no doubt may offer to surrender keeping the facts and best interests of his client in mind. However, the surrender becomes effective only if it is on the authority of his client and approved by him then too if it is accepted by the other side. Where on facts the taxpayer disputed the surrender then the surrender cannot be said to have been authorized by the taxpayer. The fact that an Assessing Officer has no power to negotiate for a surrender in regard to levying and imposing a penalty u/s 271(1)(c) is also a legal position which needs to be appreciated. Addressing the fact it is seen that the assessee was required to support the claim of long term capital gain of Rs.18,673/- on account of sale of jewellery (sale consideration shown of Rs.5,76,920/- whose indexed cost of acquisition was shown of Rs.5,58,247/- by adopting the rate of gold in the year 1991-92), the AO required the assessee to prove the same by filing documentary evidence to substantiate its claim. The assessee in support thereof furnished reply dated 25.03.2013 before the AO stating as under:-
“Regarding gift of jewellery in the year 1991-92 to the assessee, the gift was made by mother-in-law Smt. Santosh Devi wife of Sh. Dwarka Das to their Damad Sh. Shyam Lal Tayal costing jewellery of Rs.175000/- and the assessee has sold the same jewellery weighted 442 gm to M/s Gupta Jewellers pVt.ltd. for a sum of Rs.5,76,920/-. The indexed cost of the said jewellery comes to Rs.558247/- as mentioned in detail in our computation of income already filed to your good self, showing the long term capital gain of Rs.18673/-. We have already produced the Managing Director of the buyer M/s Gupta Jewellers Pvt.Ltd. alongwith their books of accounts and other requisite documents and ready to produce the donor at your I.T.A .No.-2442/Del/2015 Shyam Lal Tayal vs DCIT
Page 8 of 10 order and do herewith file detailed statement and affidavit of the donor Mrs. Santosh Devi for your kind consideration and hence the sales consideration of Rs.576920/- may not be held out income from other sources.”
10.1. The AO holding that no affidavit was found and noting that the assessee was required to produce the donor vide order sheet entry dated 25.03.2013 added the same in the hands of the assessee. The assessment order it is noted is dated 26.03.2013. In this background when considering the Ld.Sr.DR’s submission that the assessment order records that the Ld.AR offered to surrender the amount, I find that the argument has been objected to by the Ld.AR on the ground that it is of no relevance in view of the fact that (a) the offer if any was made without the consent of the assessee; (b) even if for a moment it is considered that it was made by the Counsel then the offer being negotiated would have been that the amount may be taxed as unexplained but do not levy penalty and thus since penalty has been levied as is evident from para 3.5 of the assessment order; and (c) even if there was any offer made it was not accepted by the Assessing Officer. I find that in the peculiar facts and circumstances, the said argument of the Ld.Sr.DR is without merit because although the assessment order records that the Ld.AR offered to surrender the glaring fact which stands out on record is that the presence of the mother-in-law of the assessee as per the Assessing Officer’s own version was directed for the first and the only time on 25.03.3013. The relevant extract is reproduced hereunder:-
“………..The assessee vide order sheet entry dated 25.03.2013 was required to produce the above noted donor (Mrs. Santosh Devi) for verification, in person and to produce the affidavit, etc. which has not been produced though mentioned in the reply…….”
10.2. As noted, it is seen that the assessment order is dated 26.03.2013 in these circumstances, the Ld.AR representing the assessee may have deemed it prudent to offer to surrender the amount though on the condition of no penalty being levied. It goes without saying that the AO as per law does not have the power to negotiate the levy of penalty and the issue has to be decided by the AO as per law, thus the offer by a party to a conditional surrender is not only dehorse the Statutory provisions but even otherwise the LD.AR had no authority to surrender any amount unless and until the surrender is backed by the acceptance
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Page 9 of 10 of the assessee which admittedly was lacking in the facts of the present case. As already noted, it goes without saying that however, illiterate a taxpayer may be in order to file the return of income or raise the grounds before the appellate forum or for that matter for execution of a Power of Attorney all require either the signature or a thumb impression of the assessee and the assessee alone. Similarly, au contraire however, capable, well-informed or competent an authorized representative of the assessee may be vis-à-vis the taxpayer, he still has no authority to sign the grounds of the appeal or the return of the taxpayer. Thus, whenever and wherever a taxpayer disputes that his authorized representative did not have the authority to settle/surrender an issue then the surrender or settlement becomes questionable. In the facts of the present case it is also seen that even the CIT(A) has not proceeded on the footing that the issue has been surrendered by the assessee. Reverting to address the correctness of the decision of the Ld.CIT(A), it is seen that the claim of the assessee has been rejected holding that the assessee has failed to produce his mother-in-law for examination on the date of hearing. It is seen that the Ld.CIT(A) has not taken care to note the fact that the direction to produce the donor was given only on 25.03.2013 and no time was given to the assessee to produce her as the assessment order it is noticed is dated 26.03.2013. Considering the fact that the written submissions dated 16.08.2013 were filed before the CIT(A) as part of which have been reproduced in page 4 of the impugned order while considering the first ground it is also seen that it is accompanied by an affidavit of Smt. Santosh Devi, W/o-Late Sh. Dwarka Das, Aged 65 years and R/o-1/5265. Balbir Nagar, Shahdara, Delhi-110032 affirming the fact that ornament weight 440 grams was gifted by her to her son-in-law on 10.02.1989 i.e. date of his marriage anniversary. The said affidavit is dated, attested and notarized on 25.03.2013. There is nothing on record to rebut the fact that the specific jewellery was not sold to M/s Gupta Jewellers P.Ltd. whose M.D. as per the claim of the assessee itself was produced for cross-verification before the AO. This assertion of fact in the assessment order also stands unrebutted. In these circumstances, I find no justification for denial of assessee’s claim. Being satisfied by the consistent explanation offered and I.T.A .No.-2442/Del/2015 Shyam Lal Tayal vs DCIT Page 10 of 10 supported by affidavit of the donor on record alongwith copy of the Bill of M/s Gupta Jewellers Pvt. Ltd. through whom the jewellery was sold, I find that the addition on facts has wrongly been made and sustained. Accordingly, the addition is directed to be deleted.
In the result, the appeal of the assessee is allowed. The order is pronounced in the open court on 17th of January, 2017. Sd/- (DIVA SINGH) JUDICIAL MEMBER *Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI
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