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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY & SHRI SUDHANSHU SRIVASTAVA
ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals), Ghaziabad dated 04.10.2012 pertaining to the Assessment Year (A.Y.) 2008-09.
Facts in brief:- The assessee is an Individual. He is employed as a Driver in the Indian Railways. He filed his return of income declaring gross total income of Rs.2,35,672/ on 29.12.2008.
2.1. The Assessing Officer (AO) issued a notice to the assessee u/s 143(2) of the Act on 30.7.2010. The assessee vide letter dated 7.7.2010 requested the A.O. to treat the return filed earlier on 29.12.2008, as that which is filed in response to the notice u/s 148 of the Income Tax Act 1961 (the Act).
2.2. The reasons recorded for reopening were as follows.
Sh.Narender Kumar Sharma “The return of income for A.Y. 2008-09 has been filed by the assessee on 28.12.2008 at the total income of Rs.1,91,578/- on ITR-1. In this case an information has been received that the assessee has maintained a S.B.A/c no.39460001000 45583 with PNB, Ghaziabad. The assessee has deposited Rs.40,80,000/- in cash in this bank account on different dates from the unexplained sources. Since the cash deposit of Rs.40,80,000/- in the bank account of assessee is from unexplained / undisclosed sources, I have reasons to believe that the income of Rs.40,80,000/- chargeable to tax has escaped assessment within the meaning of S.147 of the Act. Hence, the case is reopened u/s 147 of the Act and notice u/s 148 of the Act is issued accordingly.”
2.3. The A.O. completed the assessment u/s 143(3) of the Act on 30.9.2011 determining the total income at Rs.31,91,580/-, inter alia making additions of Rs.30 lakhs being an addition u/s 68 of the Act claimed to have been received by the assessee from his mother Smt.Chandervati Devi of Rs.15 lakhs and from his father Sh. Prem Dutt Sharma of Rs.15 lakhs.
2.4. Aggrieved, the assesse carried the matter in appeal without success.
Further aggrieved, the assessee filed this appeal before us, challenging both the reopening of the assessment u/s 147 of the Act, as well as the addition made u/s 68 of the Act on gift received by him from his mother and his father.
We have heard Sh.Rajan Bhatia, Ld.Counsel for the assessee and Sh.P.Dam Kanunjna, Ld.Sr.D.R. on behalf of the Revenue.
On a careful consideration of the facts and circumstances of the case, perusal of material placed on record, orders of lower authorities, as well as case laws cited, we hold as follows.
The Ld.Counsel for the assessee Mr. Rajan Bhatia submitted that : (a) The reopening is bad in law as the A.O. had time to issue notice u/s 143(2) of the Act on the return of income originally filed, up to Sh.Narender Kumar Sharma December,2009, as the material based on which notice u/s 148 of the Act was issued, was in the knowledge and possession of the A.O. before December,2009. In other words his submissions that, though the entire information was with the A.O. before December, 2009, as the Investigation Wing had recorded the statement of oath from the assessee and others on 19th December,2008 and sent its report along with the information to the A.O. and notice u/s 143(2) of the Act was not issued to the assessee picking up the case for scrutiny. The A.O. waited for 18 months and issued a notice u/s 148 of the Act, reopening the assessment based on the very same material received by him in December,2008. Hence he submitted that the reopening For this proposition that such reopening is bad in law, he relied on the following case law. CIT vs. Ved & Co. Reported in 302 ITR 328
(b) That the reopening is bad in law for non application of mind and as there is no nexus between the finding of facts and the belief that the income has escaped the assessment. He argued that the A.O. acted on vague information. He submitted that it is not permissible to reopen the case just to make one more investigation. He contended that when time to complete the assessment had not expired notice u/s 148 of the Act cannot be issued as no fresh information was available with the A.O. He submitted that what cannot be done directly, cannot be attempted to be done indirectly also. He relied on number of case laws. (c) On merits he submitted that the assessee has filed confirmations, source of funds and such evidence from both the donors, who are parents of the assessee and hence discharged the onus that lay on him to prove he genuineness of the gift. He further submits that evidence of the source of source has also been furnished to the A.O. In the case of Smt.Chandervati Devi, he pointed out that the A.O. was requested to depute Officers to examine her on oath as she could not move out of the house due to advanced age and illness and the A.O.
Sh.Narender Kumar Sharma neglected the same. Regarding the gift from his father he submitted that the person who gave money to his father Shri Ram Kumar Sharma was examined on oath by the A.O. and he had confirmed having given the money. He pointed out that no independent investigation could be made by the A.O. and he merely made the addition by disbelieving the evidence filed by the assessee and the affidavits collected on oath by the AO on examination of parties. He gave point wise rejoinder to each of the findings given by the A.O. as well as the Ld.CIT(A).
The Ld.Sr.D.R. on the other hand opposed the contentions of the assessee and submitted that the reopening was based on information received from the Investigation Wing. He argued that the statement of the assessee that the Investigation Wing had sent information to the A.O. on 19.12.2008 itself or immediately thereafter is only a presumption and it could have been that the information came into the possession of the A.O. only after 30.9.2009. He submitted that as no notice u/s 143(2) of the Act was given till 30.9.2009, the assessment u/s 143(3) of the Act could not be done and hence the propositions laid down by the Hon’ble Delhi High Court in the case of CIT vs. Ved & Co. 302 ITR 328 cannot be applied to the facts of the case. He submitted that tangible material came into the possession of the A.O. and only on application of mind the reasons were recorded and reopening was made and that there was nexus between the material and the belief of escapement. He relied on certain case laws in support of his contention.
On merits he relied on the order of the Ld.CIT(A) and submitted that the credit worthiness of Smt.Chandervati and Shri Prem Dutt Sharma were not proved and submitted that the source of gift could not be substantiated. He submitted that the affidavits of various persons were fabrications and that the mother was not produced before the A.O. for examination. In the case of the father he submitted that the sale agreement is a concorded story
Sh.Narender Kumar Sharma and Sh.Ram Kumar Sharma, statement cannot be relied upon. He prayed that the order of the Ld.CIT(A) be upheld.
On hearing rival contentions and perusing papers on record as well as orders of the authorities below, case laws cited, we hold as follows.
We first take up the issue on merits. The A.O. accepted as genuine the gift received by the assessee from his wife Smt.Kaushal Sharma to the extent of Rs.9,10,000/-. Amount received as gift from the mother and father of the assessee were disbelieved and addition made. On perusal of the evidences, we are of the considered opinion that the assessee has lead sufficient evidence to prove the genuineness of these gifts. Both the mother and father have confirmed having given the gifs and have filed affidavits in support of the same. Gift deeds were executed by both of them. As the mother was not keeping well, she could not be produced before the A.O. Nevertheless, the assessee had vide letter dt. 5.7.2011 requested the A.O. to depute a Departmental Officer to the residence, so that the statement of Smt.Chandervati could be recorded. This was not done. Thus, to make an addition on the ground that she was not produced is wrong. Smt. Chandervati Devi filed various documents to substantiate the sources from where she had given a gift to her son. The A.O. has not conducted any independent investigation nor brought any evidence on record, to lead us to a conclusion that the evidence produced by the assessee is not reliable. Smt.Chandervati Devi had filed a return of income for the A.Y. 2008-09. There is no basis to doubt the will written by Smt.Ramkali who is the mother of Smt.Chandravati Devi. Registration of will is not mandatory. The will was notarised will and has two witnesses. If the A.O. chose to dispute the will, he could have examined the witnesses. He failed to do. The affidavits from various persons filed by the assessee have wrongly been dismissed as fabrications. No inquiry was made by the A.O. nor was any material gathered to come to such a conclusion. The evidence was dismissed based on surmises and conjectures. Hence for all these reasons, we are of the considered opinion that the gift of Rs.15 lakhs given by the Sh.Narender Kumar Sharma assessee’s mother Smt.Chandravati Devi is a genuine gift and cannot be added u/s 68 of the Act.
Coming to the gift received from the father Shri Prem Dutt Sharma, we find that he has been examined on oath and he has confirmed the same. The source of funds were explained as amount received from Sh.Ram Kumar Sharma on the execution of an agreement to sell. Mr.Ram Kumar Sharma confirmed this agreement on oath. The AO has not an iota of evidence to disbelieve these evidences or these statements recorded of oath. The A.O. rejected the evidence filed by the assessee based on surmises and conjectures. If the source of funds cannot be proved by the father or by Mr.Ram Kumar Sharma, the course of action should have been to make an addition in their hands. Sh.Sharma has filed his return of income for the A.Y. 2008-09. Thus in our view, the assessee discharged the burden of proof that lay on him and had proved the genuineness of these gifts.
11.1. Even otherwise the assessee being an engine driver in the Railways does not maintain books of accounts. Thus technically the addition cannot be made u/s 68 of the Act and entries in bank pass book cannot be considered as entry in the books of accounts. The Hon’ble Bombay High Court in the case of CIT, Pune vs. Bhaichand H Gandhi 141 ITR 67, held as follows.
“Income-Cash Credit-Bank Pass book is not a book maintained by assessee or under his instructions – cash credit for previous year shown in assessee’s bank pass book – not shown in cash book of assessee for that year – cannot be treated as income of that previous year – I.T.Act, 1961 Sec.68. When moneys are deposited in a bank the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. The pass book supplied by the bank to its constituent is only a copy of the constituent’s account in the books maintained by the bank. It is not as if the pass book is maintained by the bank as the agent of the constituent nor can it be said that the pass book is maintained by the Sh.Narender Kumar Sharma bank undr the instructions of the constituent. Hence, the pass book supplied by the bank to the assessee cannot be regarded as the book of the assessee, that is, a book maintained by the assessee or under his instructions. Therefore, a cash credit for the previous year shown in the assessee’s bank pass book but not shown in the cash book maintained by the assessee for that year, does not fall within the ambit of S.68 of the Act and as such the sum so credited is not chargeable to tax as income of the assessee of that previous year.”
11.2. In view of the above discussion, both in law and on merits, the addition in question is bad in law and hence deleted. These grounds of the assessee are allowed.
11.3. As we have deleted the addition on merits and granted relief to the assessee, we do not adjudicate the arguments on the issue of reopening of assessment as it would be an academic exercise.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 05th February, 2016.