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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI D.T. GARASIA & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 22-03-2017 घोषणा क" तार"ख /Date of Pronouncement : 10-04-2017 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 1st December, 2014 passed by learned Commissioner of Income Tax (Appeals)- 17, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2010-11, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 1st March, 2013 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called “the Act”).
ITA 1249/Mum/2015 2
The grounds of appeal raised by the assessee in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“1. That on the facts and in the circumstances of the case of the appellant and in law, Id. CIT (Appeal) has erred in upholding the addition u/s. 68 of Rs.10,00,000/- gift received by the appellant from his father.
2. That on the facts and in the circumstances of the case of the appellant and in law, Id. CIT (Appeal) has erred in upholding the addition u/s 69A of Rs.32,66,411/- to the income of the appellant.
3. Without prejudice to the ground No.1 & 2 above, on the facts and in the circumstances of the case of the appellant and in law, Id. CIT (Appeal) has erred in not considering that Id. AO has made an addition of Rs.10,00,000/- -gift money to the income of the appellant assuming that Rs.32,66,411/- shown in the appellant's father's account is also the appellant's money, effectively adding the same Rs.10,00,000/- to the income of the appellant twice.
That on the facts and in the circumstance of the case of the appellant and in law, Id. CIT (Appeal) has erred upholding the addition u/s. 68 of Rs.2,60,000/- loan received by the appellant from his brother.
5. That on the facts and in the circumstances of the case of the appellant and in law, Id. CIT (Appeal) has erred in upholding the addition of Rs.9,94,313/ - as undisclosed income of the appellant.
That the impugned order being contrary to law, material on record and facts of the case may kindly be set aside, amended and modified in the light of the grounds of appeal enumerated above and the appellant be granted such reliefs as is called for on the facts and in the circumstance of the case of the appellant and in law.
That each of the grounds of appeal enumerated above is without prejudice to each other and independent of one another.”
Brief facts of the case are that the assessee is Director in M/s LIS (India) Construction Co. Private Limited. During the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of 1961 Act, the A.O. observed that in the personal capital account of the assessee , the assessee has credited gift of ITA 1249/Mum/2015 3 Rs. 10 lacs received from his father, Shri Liyaquet Ali Tanwar. The assessee was asked to prove the genuineness of the said gift transaction and capacity of the donor. The assessee filed a copy of confirmation of the gift and bank statement of the donor i.e. his father Mr. Liyaquet Ali Tanwar . The donor had Saving Bank-NRE A/c no. 50099 maintained with Indian Overseas Bank. The A.O. observed from the bank statement that it showed a payment debit of Rs. 10 lacs towards the assessee on 6th October, 2009 but just ten days before advancing of this gift, the bank account showed receipt credit of Rs.32,66,411/- with the narration ‘RTGS Khalil Ahmed’ . The said ‘Khalil Ahmed’ was confirmed by the counsel of the assessee to be the assessee only.
The assessee was asked by the AO to file details of all bank accounts maintained by the assessee jointly or singly. The assessee submitted that he held only four bank accounts, the two accounts with Indian Overseas Bank and IClCI Bank respectively which were claimed by the assessee to be operative. While the NRE a/c held with the same Indian Overseas Bank and an account with Bank of Baroda were claimed by the assessee to be inoperative. The AO observed that Balance Sheet of the assessee also disclosed these four bank accounts maintained by the assessee. The counsel for the assessee confirmed to the AO that the said amount of Rs. 32,66,411/- was remitted by the assessee and ‘Khalid Ahmed’ as reflected in the bank account of the father of the assessee is none other than the assessee who remitted Rs. 32,66,441/- from overseas to his father , Sh. Liyaquet Ali Tanwar. The AO observed that none of the said bank accounts reflected an amount of Rs. 32,66,411/- being remitted by the assessee to his father , Shri Liyaquet Ali Tanwar. The assessee was asked to produce the bank statement of overseas bank account held by the assessee and simultaneously notice u/s 133(6) of the Act was issued to the Indian Overseas Bank calling the following information:-
ITA 1249/Mum/2015 4 “1) Details of all bank a/c's, singly or jointly held by above assessee during FY 2009-10. 2) Copies of all bank statements of such a/c for the financial year 2009-10. 3) Details of FD's or assets of similar nature maintained by my above assessee during F Y 2009-10. 4) Bank statement of SB-NRE a/c No. 50099 of Shri Liyaquet Ali Tanwar for FY 2009-10 and FIRC of all the credits to such a/c from Shri Khalil Ahmed from FY 2007-08 to 2010-11.”
The Indian Overseas Bank submitted only bank statements of Shri Liyaquet Ali Tanwar from 2007 to 2011 and copies of the bank statement of the assessee bank a/c no. 020901000007217 and 0209100050490 from 01-04- 2009 to 31-03-2010. With regard to the deposit of Rs. 32,66,411/-, the assessee submitted before the A.O. that the assessee was a Non-resident Indian in the year 2006-07 and his father Mr. Liyaquet Ali Tanwar and other family members were all non- resident and were based in the Gulf since 25-30 years. It was submitted that Mr. Khalil Ahmed Tanwar i.e. the assessee, was also in the Gulf for more than 20 years and had acquired many business interest. When he was non- resident (NRI) , the mother of the assessee expired 2-3 years back and a family settlement was not completed and her asset are still not distributed due to absence of any clear ‘Will’ by his mother. The assessee also submitted that the assessee was a Non-resident till 2006-07 and he does not have any overseas bank account as all his NRI or NRE account were closed or defunct. It was submitted that Mr. Liyaquet Ali Tanwar father of the assessee is Non resident of India for 30-40 years and he had many business interest in Gulf. The assessee claimed that one Mr. Khamis Saeed Khamis Mana who is Gulf citizen as well as resident of Gulf had given a power of attorney to Mr. Khalil Ahmed Tanwar(i.e. assessee) to operate his company account with ADBC ITA 1249/Mum/2015 5 bank A/c No. 332742010001 and the said bank account belongs to AI- Khamis Saeed General Maintenance LLC , a company incorporated in Gulf and it was claimed before the AO that assessee does not hold any interest in above said company and the assessee is only a power of attorney holder to operate the said account. It was submitted that the said company started some construction activity and does not have any profit as due to heavy recession in realty market in Gulf , the project could not be sold. It was submitted that the said amount of Rs. 32,66,411/- was paid from the above said company bank account in Gulf to Mr Liyaquet Ali Tanwar on 16.09.2009 and it was just a loan transaction between them. It was submitted that the above contention of the assesse can be verified by bank advice/statement and power of attorney, which was produced by the assessee before the A.O. . The assessee , however, submitted that loan confirmation from the said company AI-Khamis Saeed General Maintenance LLC and Liyaquet Ali Tanwar is being obtained for the said transaction of Rs. 32,66,411/- between them , which will be furnished , But no such confirmation was finally submitted by the assessee.
The A.O., however, rejected the contention of the assessee as the credit of Rs. 32,66,411/- is appearing in the NRE account of the father of the assessee on behalf of the remittance sent by the assessee. The A.O. observed that assessee’s balance sheet did not include any such bank account , Indian or overseas from which such remittance was sent and the assessee has not explained the source of remitting an amount of Rs. 32,66,411/- to his father, with the support of sufficient documentary evidences. The AO, therefore , made an addition of Rs. 32,66,411/- in the hands of the assessee as unexplained money u/s 69A of 1961 Act, vide assessment order dated 01-03- 2013 passed by the AO u/s 143(3) of 1961 Act.
ITA 1249/Mum/2015 6 The AO also observed that the assessee could not establish the genuineness/creditworthiness of his father Mr. Liyaquet Ali Tanwar i.e. the donor in giving gift of Rs. 10,00,000 to the assessee. Thus, the AO made an addition of Rs. 10,00,000/- as unexplained cash credit u/s 68 of 1961 Act, vide assessment order dated 01-03-2013 passed by the AO u/s 143(3) of 1961 Act.
Similarly, the assessee received an unsecured loan of Rs. 2,60,000/- from his brother Shri Basrat Ali Tanwar. The assessee was asked to file copies of bank statement of the loan creditor. The A.O. observed from bank statement that the alleged loan was advanced to the assessee on 27th July 2009 and just six days before advancement of the loan, there was a credit of equal amount in the bank account of Sh. Basrat Ali Tanwar. The assessee was asked to identify the source of such credit and prove the capacity of the loan creditor , but no details were submitted by the assessee . Thus, the A.O. made addition of Rs. 2,60,000/- as unexplained cash credit u/s 68 of the Act , vide assessment order dated 01-03-2013 passed by the AO u/s 143(3) of 1961 Act..
Further, the A.O. observed from the computation of income that the assessee declared in his return of income a short term capital gain of Rs.1,59,644/- on sale of shares. It was observed by the A.O. that both the statement of computation of income and the capital account in the balance sheet mentioned the sale consideration and purchase cost at Rs. 18,06,704/- and Rs. 16,47,060/- respectively and against this income, a brought forward loss of Rs.1,59,644/- of assessment year 2009-10 was set off. The assessee was asked to file details of purchases, sale , demat statement, broker’s ledger, contract note etc. . Against this, the assessee submitted some unsigned statement from M/s MF Global Sify Securities India Pvt. Ltd. whereby the total value of purchase and sale of shares in financial year 2009-10 were ITA 1249/Mum/2015 7 shown at Rs. 68,38,740/- and Rs. 70,16,611/- respectively, with net profit of Rs. 1,59,644/-. The A.O. observed that there was no consistency in the submission of the details. As per the balance sheet, statement of computation of income and form No.10DB, the total value of purchase and sale of shares were shown at Rs.16,47,060/- and Rs. 18,06,704/- respectively. Subsequently, the same was shown at Rs. 68,38,740/- and Rs. 70,16,611/- respectively. As per unsigned statement of MF Global Sify Securities India P. Ltd filed by the assessee, it was observed by the AO that there were total debits of Rs. 48,56,542.64 while credits are to the tune of Rs. 60,80,453.27 including opening balance of Rs. 2,29,597.95 . This statement also showed many debit and credits on account of transfers from and to the derivative segments , while the assessee has not filed any details of derivative transactions. The assessee did not file any evidence that such transactions in derivatives were entered through recognized stock exchanges. No contract notes were filed and compliance as stipulated u/s 43(5) of 1961 Act w.r.t. derivative transaction were not done and the transactions were , thus, treated by the AO as speculative transactions. Thus, net credit balance of Rs. 12,23,910/- appearing in the name of the assessee in the statement of MF Global Sify Securities India Private Limited after reducing the opening balance of Rs. 2,29,597.95, i.e. the remaining credit balance of Rs. 9,94,313/- was added as undisclosed income being speculation profit by the AO in the hands of the assessee , vide assessment order dated 01-03-2013 passed by the AO u/s 143(3) of 1961 Act..
4. Aggrieved by the assessment order dated 01-03-2013 passed by the A.O. u/s 143(3) of 1961 Act, the assessee filed first appeal before the ld. CIT(A) whereby the assessee reiterated the submission what were made before the A.O. The ld. CIT(A), however, rejected the same and the addition made by the A.O. was confirmed and learned CIT(A) dismissed the appeal filed by the assessee, vide appellate order dated 01-12-2014 ITA 1249/Mum/2015 8
Aggrieved by the appellate order dated 01-12-2014 passed by learned CIT(A), the assessee is in appeal before the Tribunal.
6. The ld. Counsel for the assessee argued before us that the evidences filed by the assessee have not been properly appreciated by the lower authorities. The ld. Counsel prayed that if one more opportunity is given, the assessee can produce all the necessary evidences and explain it properly before the authorities below and substantiate its claim, which can be examined and verified by the authorities below on merits. It is submitted that assessee will duly submit all necessary evidences to substantiate creditworthiness, identity and genuineness of gift /loan transactions as well NRI status of the family members will be proved to substantiate its claim to the satisfaction of the AO which can be examined and verified by the AO on merits.
7. Learned D.R. on the other hand relied upon the order of the ld. CIT(A) .
We have considered rival contentions and also perused the material available on record. We have observed that the assessee had received gift of Rs. 10 lacs from his father, Shri Liyaquet Ali Tanwar. The assessee did produced bank statement of the father but could not establish the creditworthiness of his father to the satisfaction of the AO in accordance with mandate of Section 68 of 1961 Act. The assessee has claimed that father is an NRI and has business interest in Gulf but necessary evidences to substantiate the same were not submitted to establish residential status of father and his business interest in Gulf to the satisfaction of the AO. The passport of father was submitted but complete details to establish his residential status as per provisions of the Act were not submitted as also his claim of being NRI based in Gulf having several business interest etc were not ITA 1249/Mum/2015 9 submitted, to the satisfaction of the AO to satisfy the mandate of provisions of the Act. The assessee has now claimed that the evidences and explanations which were submitted before the AO were not properly appreciated and also the remaining evidences as the AO may require to reach satisfaction that mandate of Section 68 of 1961 Act are complied with will be submitted to the satisfaction of the AO. It was also submitted that the AO can make necessary examination and verifications to verify evidences and explanations on merits and the assessee has prayed that one more opportunity be granted to the assessee to produce all these evidences and explanations before the AO and matter may be set aside to the file of AO for de-novo determination of the issue on merits by AO. It is also claimed that the evidences submitted were not properly appreciated by the AO. An amount of Rs. 32,66,411/- was found credited in his father’s bank account and entry in the said bank reflected as credit being sent by the assessee. The assessee has claimed the said amount being loan advanced by a company in Gulf namely AI-Khamis Saeed General Maintenance LLC but cogent documents to substantiate the same were not submitted.However, the assessee submitted an bank advise wherein name of said company is reflected. These evidences need verifications and examination by the AO , and also loan confirmations etc were stated by the assessee to be produced before the AO which was not produced by the assessee, need to be produced with any other documents / explanation which the AO may consider appropriate to satisfy the mandate of provisions of 1961 Act. The assessee has also received loan of Rs. 2,60,000/- from his brother Basrat Ali and the assessee duly submitted bank statement of brother Mr. Basrat Ali . The assesse however could not explain the source of credit in the said bank account of his brother out of which the said loan was advanced by his brother to the assessee. The assessee claimed that the brother of the assessee was settled in Gulf and is an NRI, for which the assessee is directed to produce all necessary evidences before the AO so that necessary verifications and examination can be undertaken by the AO to establish his creditworthiness ITA 1249/Mum/2015 10 etc so that mandate of Section 68 of 1961 Act can be met. With respect to the short term capital gain of Rs. 1,59,644/- on sale of shares, no payment/receipts on account of sale and purchase of shares were appearing in the bank account statement brought on record. The assessee also entered into derivative transactions for which no details were filed as stated by the AO. The assessee , however, has filed statement of brokers which need to be evaluated and examined on merits by the AO to compute correct income which are chargeable to tax. Keeping in view peculiar factual matrix of this case as discussed by us in this order and keeping in view interest of justice in our considered view, in order to compute correct income of the assessee to bring the same to tax in accordance with provisions of 1961 Act, one more opportunity is required to be granted to the assessee to explain its contentions and also so that the assessee can produce all the necessary documents/evidences before the A.O. to enable him to compute correct income chargeable to tax and bring the same to tax w.r.t. all the issues which has arisen in this appeal. As such, we set aside and restore all the issues arising from this appeal back to the file of the A.O. for de novo determination of the issues on merits, after considering explanations/ evidences filed by assessee in his defense and after conducting such verification, enquiry and examination as the AO may consider appropriate in accordance with law. The AO is directed to admit all material and cogent evidences and explanations filed by the assessee in his defense in de-novo proceedings before the AO and consider the same on merits. Needless to say, that the assessee may be given sufficient opportunity of being heard by the AO in accordance with principles of natural justice in accordance with law. We order accordingly.
In the result, appeal filed by the assessee in 2010-11 is allowed for statistical purpose.
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