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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI G.S. PANNU
The captioned appeal by the assessee is directed against the order of CIT(A)-28, Mumbai dated 12.11.2014, pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 24.11.2008 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
At the outset it may be noticed that at the time of hearing none appeared on behalf of the assessee inspite of serving notice by Registered Post A.D. Therefore, I proceed to decide the appeal ex parte qua the assessee after hearing the Ld. DR on merits in terms of Rule 24 of the Appellate Tribunal Rules, 1963.
In this appeal, assessee has raised two Grounds challenging the addition of Rs.5,65,475/- and Rs.1,920/- made on account of Short Term Capital Gain and bank interest respectively.
After hearing the Ld. DR, and on the basis of orders of authorities below, the following fact-position emerges. The assessee, an individual, filed his return of income for Assessment Year 2006-07 declaring a total income of Rs.97,900/- which was subject to scrutiny assessment. The Assessing Officer determined the total income at Rs.15,25,540/- after making additions on account of unexplained cash credit u/s 68 – Rs.8,61,147/-; Short Term Capital Gain on Mutual Funds – Rs.5,65,475/-; and, bank interest – Rs.1,920/-. The aforesaid additions were carried in appeal before CIT(A) who has deleted the addition of Rs.8,61,147/- and retained the balance. Against the additions retained by the CIT(A), assessee is in further appeal before the Tribunal.
Insofar as the addition of Rs.5,65,475/- is concerned, this represents profit on account of redemption of Mutual Fund units of Fidelity Investment Mutual Fund. It appears from the order of the authorities below that assessee resisted said addition on the ground that the investment in this regard was made out of amount deposited into assessee’s account by his father, Shri Guruswarup Srivastava. Therefore, the case set-up by the assessee was that such income was liable to be taxed in the hands of his father. The order of CIT(A) reveals that the aforesaid plea of assessee was sent to the Assessing Officer and a remand report was obtained. The remand report of the Assessing Officer has been reproduced by the CIT(A) in his order and para 6 of such report reads as under :-
“6. In remand proceedings, cognizance was taken of a debit in the assessee’s account with Standard Chartered Bank appearing on April 19, 2005 with narration “PO issued FVG FIDELITY” for an amount of Rs.25,00,000/- and it was also seen that immediately before this debit was a credit for Rs.25,49,586/- on April 13, 2005 with narration “STS- KOTAK MAHINDRA MUTUAL FUND”. Therefore, the authorized representative, Shri Dinesh Agarwal, CA was requested to explain why claim of source of investment in Fidelity MF being transfer of money from assessee’s father, not be rejected as unsubstantiated since bank statement of assessee shows that investment in Fidelity Mutual Fund has been made out of money received on redemption of Kotak Mahindra MF. As requested by the Authorised Representative, Shri Dinesh Agarwal, CA, time was granted upto 5.00 p.m. on 27-12-2013 and the hearing was refixed accordingly, but regrettably the requirement has not been fulfilled till date. Hence this addition may also kindly be confirmed.”
On the basis of such report of the Assessing Officer, CIT(A) sustained the addition of Rs. 5,65,475/- in the hands of the assessee on account of Short Term Capital Gain on redemption of Fidelity Mutual Fund units by making the following discussion :-
“In respect of short term capital gain on redemption of Fidelity Mutual Funds, it is undisputed that there has been a gain of Rs.5,65,475/- on its redemption. The sources of investment have not been established to be from the assessee’s father. It was accepted by Authorised Representative that the explanation offered in this regard during assessment/appellate proceedings has been contradictory and necessary details and supporting evidences to claim that the money invested belonged to assessee’s father, have not been submitted before the Assessing Officer. The return of income filed by assessee’s father also does not show this income. Accordingly, the action of the Assessing Officer in making an addition of Rs.5,65,475/- for the short term capital gain on redemption of Fidelity Mutual Fund in the hands of the assessee, is correct and is hereby upheld. Ground of Appeal No. 2 is, therefore, dismissed.”
7. Before me, the Ld. DR appearing for the Revenue contended that the decision of CIT(A) is based on a factual appreciation of the affairs and, therefore, it does not need any interference.
8. I have considered the submissions of the Ld. DR as well as the findings recorded by the lower authorities. It is quite clear that the plea of the assessee that the income on redemption of Mutual Fund of Rs.5,65,475/- be taxed in the hands of his father has not been found to be tenable for the reason that assessee could not explain that the source of investment in Mutual Fund was by way of transfer of money from his father. Rather, in the remand report submitted by the Assessing Officer it is pointed out that the investment in Mutual Fund has been made out of funds received by the assessee on redemption of Kotak Mahindra Mutual Fund units. In this view of the matter, I, therefore, find no reason to interfere with the conclusion of CIT(A), which is hereby affirmed. Thus, on this aspect, assessee fails.
9. The only other Ground in this appeal is with regard to an addition of Rs.1,920/- made to the returned income on account of bank interest. In para 3 of the assessment order, Assessing Officer records that the bank account of the assessee reveals that there was a credit of Rs.1,920/- on account of interest. It is also recorded by the Assessing Officer that the representative of assessee submitted before him that the interest income of Rs.1,920/- was inadvertently omitted to be offered for tax. In view of the aforesaid, I find no reason to interfere with the aforesaid addition made to the returned income, which is hereby affirmed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 24th August, 2016.