Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-18, Kolkata dated 29.06.2016. Assessment was framed by DCIT, Circle-23, Kolkata u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 31.12.2009 for assessment year 2007-08.
Shri Asim Choudhury, Ld. Authorized Representative appeared on behalf of assessee and Shri Dulal Chandra Mondal Ld Departmental Representative represented on behalf of Revenue.
Facts in brief are that assessee in the present case is an individual and derives his income from source of salary. The assessee for the year under consideration has Bijay Kr. De Vs. DCIT, Cir;23 Kol Page 2 filed his return of income declaring total income of ₹ 5,85,470/-. Thereafter case was selected under scrutiny on the basis of AIR and consequently notice u/s. 143(2) was served upon assessee. The assessment was framed u/s. 144 of the Act at a total income of ₹13,60,430/- after treating the investment with Rural Electrification Corporation Ltd. (RECL for short) for ₹ 9 lakh to the total income of assessee. The Assessing Officer, during the course of assessment proceedings observed that assessee has made investment in RECL for ₹ 9 lakh. On question by Assessing Officer about the source of such investment, assessee failed to submit the documentary evidence. Therefore, AO treated the same as income from undisclosed source and added to the income of assessee.
Aggrieved assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that he has not made any investment as discussed above. As per the assessee investment was made by his relatives and their names were reflecting as second or third holder of such investment. The name of assessee’s relatives stands as under:- Investment made Amount (Rs) Name of first PAN of the first Relationship with in holder holder the appellant Lotus India MF 2,00,000 Parna De AEMPD2370N Wife Sundaram MF 2,00,000 Angurbala Dey AHMPD4918M Mother Sundaram MF 2,00,000 Purnima De AHSPD0460J Brother’s wife Principal MF 3,00,000 Swaan Kr. Dutta AGXPD0242Q Father-in-law The assessee further submitted that the investment was made by the relatives and family members out of their own sources of fund. The assessee in support of his claim has also submitted the copies of affidavits along with their bank statement. The assessee further submitted that his PAN was used for the impugned investment. It is because none of the first holders was issued the PAN on the date of impugned investment. However, Ld. CIT(A) observed that none of the person who claimed to have made the investment was the man of means for such huge investment. Accordingly, after considering the submission of assessee granted partly relief to assessee by observing as under:- “…Under the facts and the circumstances of the case, the creditworthiness of Sri Swapan Kumar Dutta dnd Smt. Urnima De are not acceptable. Creditworthiness of Bijay Kr. De Vs. DCIT, Cir;23 Kol Page 3 Smt. Angur Bala De, to the extent of cash deposited in her account, is also not acceptable. As the appellant has actively facilitated the investments made in mutual fund units by giving his PAN and also providing logistical support. It is possible that he has routed his own undisclosed money through his relatives in the garb of investment in mutual fund.”
Aggrieved by this, assessee has come up in appeal before us on the following grounds:- “
1. For that the Commissioner of Income Tax (Appeal) has erred in holding that the assessee has routed his own undisclosed money through his relatives in the garb of investment in mutual fund and confirming the addition made in the order passed by Assessing Officer under section 144 of the Income Tax Act to the extent of Rs.5,88,000/-.
2. For that in findings of the Commissioner of Income Tax (Appeal) that it is possible that the assessee has routed his own undisclosed money through his relatives is without any basis, disputed and arbitrary.
3. For that the CIT(A) has not appreciated the fact that investments in the name of three relatives in which he has upheld the additions made by the Assessing Officer in two out of the three the assessee was the third holder and not even the second holder.
4. For that the CIT(A) has erred on facts that none of the investors had their own PAN Nos at the time of making such investments while falling to call upon any details from the assessee in relation to the same.
5. For that the CIT(A) erred on facts and has not appreciated the facts that the investments were made from accumulated funds which was accumulated over the period of time and which was beyond the mandatory requirements even under the RBI Act for 8 years and hence it was not possible for the assessee to provide all supporting such details. In any event even though it has been accepted by the CIT(A) that the amount was accumulated over a period of time and the same could not be the fund of the assessee.
6. For that the order of the CIT(A) is perverse and erroneous in as such as none of the facts has been appreciated and even making false aspersions as of the fact that PAN numbers were obtained subsequent to the investment.
7. For that the CIT(A) erred in law and on facts to hold that the creditworthiness of the assessee in making investment was not proved and also erred in law not to appreciate the fact that since there was no amount credited in the books f the assessee creditworthiness under no circumstances, had to be proved by the assessee. the assessee has given all the relevant details and creditworthiness, if any, which has to be determined by the Assessing Officer of the persons making the investment and it was not required of the assessee who is standing only as a nominee i.e. second or third holder of the investment to prove creditworthiness.
8. For that the CIT(A) erred in fact that only Rs.500/- was in the account of Nani Gopal Dey whereas details of bank account was provided to CIT(A) and Nani Gopal De being the small time businessman of hardware had a regular source of income and was also regularly filing his income tax return since 1987-1988.
9. For that the order of the CIT(A) is perverse as the bank account statement provided were old and no evidence whatsoever was brought by either the AO or the CIT(A) to refute the evidence provided by the assessee. the evidence provided by the assessee Bijay Kr. De Vs. DCIT, Cir;23 Kol Page 4 has been disregarded. This is against the very basic tenants and provisions of the Indian Evidence Act, 1872.
10. For that the CIT(A) has ignored the Affidavits filed by the different investors (1st holder of the investment without finding any contrary evidence and additions has been made erroneously on surmises and conjectures.
11. For that the ape reserves its right to add further to the above grounds and/or amend any one of them at or before the time of the hearing of the appeal.”
4. Grounds No.1 to 9 are inter-related and therefore being taken up together. Ld. AR for the assessee before us submitted paper book which is running pages 1 to 51 and stated that in all the investments, he is just second holder of investments. His name was given as second holder so that in the event of any mishappening to the first holder the money can be kept safe. Ld. AR in support of his claim submitted the copies of investment where his name was shown as second holder of the investment. Ld. AR further submitted the copies of bank statements which are placed on pages 37 to 41 of the paper book and stated that reasonable opportunity was not provided by AO at the time of assessment proceedings. Ld. AR also submitted that addition sustained in the hands of assessee on surmise and conjecture by Ld. CIT(A) which cannot hold in the eyes of law. On the other hand, Ld. DR submitted that information was gathered through AIR and the name of assessee was very much reflecting in mutual fund units. He vehemently relied on the order of Authorities Below.
We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates to disallowance made by AO by treating the impugned investment as from undisclosed sources. However, Ld. CIT(A) has granted partly relief. Now, the issue before us arise so as to whether the investment made by assessee is the undisclosed income of assessee in the aforesaid facts and circumstances of the case. Admittedly, there is no dispute that assessee’s name in all the investments is reflecting as second or third holder of such investment. There are four relatives of assessee who have made investment and they have given affidavits in support of such investments. We find that Ld. CIT(A) in the instant case has sustained the addition made by AO on surmise and conjecture. At this Bijay Kr. De Vs. DCIT, Cir;23 Kol Page 5 juncture, it is important to highlight the operative portion of the order of Ld. CIT(A) as under:- “As the appellant has actively facilitated the investments made in mutual fund units by giving his PAN and also providing logistical support. It is possible that he has routed his own undisclosed money through his relatives in the garb of investment in mutual fund.”
From the above finding of Ld. CIT(A), we find that Ld. CIT(A) himself is not sure enough to hold whether the investment in the instant case, was made by assessee. Therefore, in our considered view, the addition cannot sustain on the basis of his surmise and conjecture. Moreover, the parties have given their affidavits and bank statements to justify the source of investment. In this connection, we rely in the case of ITO V. Praveen Ramkrishna Upganlawar (2005) 142 taxman 76 (Nagpur) (MAG) and relevant extract is reproduced below: “7.Under section 69, if the assessee has made any investment which is not recorded in the books of account and no explanation is offered about the nature and source of investment, the value of the investment may be deemed to be the income of the assessee. Under section 69A, if an assessee is found to be the owner of money, bullion, etc. and if the assessee offers no explanation about the nature and source of acquisition of money, the money may be deemed to be income of the assessee. Assuming that the Assessing Officer had invoked the provisions of section 69 or section 69A in the present case, the first condition that was required to be satisfied was that the assessee had either made the investment or that the assessee is found to be the owner of the money lying in the bank account. In the light of the assertion by Mrs. Yojana that she was the owner of the moneys lying in the joint account which was not denied but affirmed by the assessee, any further enquiry against the assessee, in our view, was not warranted. As already stated that there is no presumption that the moneys lying in a joint account with a bank, vis-a-vis third parties other than the bank, belongs to only one of them or to both equally. In our view, therefore, there was no case for making any enquiry in the assessee's case. Any enquiry about the source of money lying in the bank account ought to have been directed only against Mrs. Yojana and not the assessee. It is not the case of the revenue that there are some other material to show that the assessee is, in fact, the owner of these moneys or it is the assessee's investment except the fact that the moneys were lying in a joint account and one of the account holder was the assessee. In such circumstances, the Assessing officer has not made out any prima facie case by rejecting the claim of Mrs. Yojana that the moneys belonged to her.”
In view of the above cited case laws, we find that the addition made by Assessing Officer and subsequently sustained by Ld. CIT(A) is not sustainable in the light of aforesaid facts and circumstances of case law (supra). The ld. CIT-A in the instant case has not formed any firmed opinion that it was the assessee money invested in the Bijay Kr. De Vs. DCIT, Cir;23 Kol Page 6 mutual fund through his relatives. The ld. CIT-A has just sustained the addition on the possibility of assessee money used in the impugned investment. In our view the addition cannot sustain on the basis of surmise & conjecture. Hence, we reverse the order of Ld. CIT(A) and this ground of assessee’s appeal is allowed.