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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Shri P.M. Jagtap
This appeal preferred by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals), Asansol dated 03.12.2013 for the assessment year 2005-06.
Ground Nos. 1 to 4 involve a common issue relating to the addition of Rs.2,87,040/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) by not accepting the explanation of the assessee as regards the availability of opening cash balance.
3. The assessee in the present case is an individual, who had not filed his return of income in the regular course for the year under consideration. On the basis of AIR data, notice under section 142(1) was issued by the Assessing Officer to the assessee on 26.07.2007 asking to ./2014 Assessment year: 2005-2006 Page 2 of 8 file his return of income. There were, however, no immediate response to the said notice by the assessee and the return of income was finally filed by him on 01.10.2007 declaring total income of Rs.92,814/-. Thereafter a notice under section 148 was issued by the Assessing Officer on 15.01.2008, in response to which a reply was filed by the assessee stating that the return already filed by him on 01.10.2007 may be treated as the return in response to notice under section 148. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to explain the source of investment found to be made by him during the year under consideration in principle Mutual Fund and ICICI Prudential Mutual Fund amounting to Rs.1,60,000/- and Rs.5,00,000/- respectively. One of the sources explained by the assessee in this regard was the availability of opening cash balance of Rs.2,87,040/-, which was claimed to be generated from the amount of Rs.3,42,600/- received in the earlier year on the death of his grandfather on 12.07.2003 as well as gifts of Rs.50,000/- and Rs.25,000/- claimed to be received from Rupa Bigharia and Shyam Sunder Thakur respectively. The explanation of the assessee in respect of this source was examined by the Assessing Officer on the basis of details and documents furnished by the assessee and the same was found to be not acceptable by him for the following reasons given in the assessment order:- The assessee has shown opening cash balance of Rs.2,87,040/- as on 01.04.2004 which has been brought forward horn the preceding year by showing gift of Rs.50,000/- from Rupa Bigharia and Rs.25,000/- from Shyam Sundar Thakur and amount of Rs.3,42,600/- received on the death of his grandfather on 12.07.2003. Out of this he had invested Rs.l,40,000/- in Mutual Fund and the balance figure of Rs.2,87,040/- has been shown as closing cash balance as at 31st March 2004 and opening cash balance as on 01.04.2004.
The assessee was asked to produce the evidence of money received on the death of his grandfather. In his reply dated 12.12.2008 the A/R of the assessee submitted that the assessee has received a gift of Rs.3,42,600/- in cash during 2003-04 from his grandfather and this amount was received by the assessee as legal heir on death of his grandfather, Shri Binay Krishna Pal on 1207.2003. He has also enclosed a copy of so called Memorandum of Understanding signed by all the ./2014 Assessment year: 2005-2006 Page 3 of 8 legal heirs. The document claimed to be the Memorandum of Understanding is nothing but three pieces of paper signed by four persons which has no legal standing. Further, the consent of wife of Late Shri Binay Krishna Pal has not been taken while preparing the so called Memorandum of Understanding as it is not signed by his wife. The A/R of the assessee did not explain anything about the source of income of his Grandfather and it is also not practical that a person would have kept so much amount of cash in his house.
Regarding the other two gift arr aunt shown to be taken from Rupa Bigharia and Shyam Sunder Thakur, Notice u/s. 133(6) of the I.T. Act, 1961 and Summons u/s. 131 were issued to both the persons. But neither the above two person appeared nor any reply from them have been received from them till date and the assessee has also failed to produce them before the undersigned to prove its genuineness. Inspector's enquiry also revealed that no such person exists at the given addresses.
Onus to prove the genuineness and creditworthiness of the above transactions lied on the assessee, which he has failed to discharge. In the absence of any concrete evidence it is concluded that the assessee has tried to give his undisclosed income a color of gift and tried to explain his source of money invested during the F.Y. 2004-05 by showing opening cash balance brought forward from the preceding year. Hence, the claim of opening cash balance of Rs.2,87,040/- by the assessee is not acceptable and it is nothing but the income from some undisclosed source of the assessment year under consideration.
For the reasons given above, the addition of Rs.2,87,040/- was made by the Assessing Officer to the total income of the assessee in the assessment completed under section 143(3) read with section 147 vide an order dated 15.12.2008.
Against the order of the Assessing Officer passed under section 143(3) read with section 147, an appeal was preferred by the assessee before the ld. CIT(Appeals) and the additional evidence in the form of affidavit of Smt. Devdasi Paul dated 19.11.2009 and agricultural income certificate of Late Sadhu Charan Paul issued by the Office of Brajora Gram Panchayat dated 31.01.2009 was filed by the assessee in support of his case on this issue. The said additional evidence was forwarded by the ld. ./2014 Assessment year: 2005-2006 Page 4 of 8 CIT(Appeals) to the Assessing Officer for his verification and comments and after taking into consideration the comments offered by the Assessing Officer in the remand report as well as the counter comments offered by the assessee thereon, the ld. CIT(Appeals) confirmed the addition of Rs.2,87,000/- made by the Assessing Officer by rejecting the claim of the assessee regarding availability of opening cash balance for making investment in the year under consideration after discussing all the relevant aspects in his impugned order as under:- “The additional points to be considered are as under:- a. Legal status of affidavit: The legal position is as under:- An affidavit is a piece of evidence, which along with other material on record, has to be taken into consideration before arriving at a finding. A statement by a deponent can be held to be unreliable either on the basis of cross-examination of the deponent or by reference to other material on record (Gunwantibai Ratilal Vs CIT (MP) 146 ITR 140,Silk Museum Vs CIT (Guj) 257 ITR 22)
Affidavit need not always be accepted as correct. It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggests that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability (Sri Krishna Vs CIT (All) 1421TR 618). b. Validity of memorandum of understanding:- A deceased person may or may not leave behind a will. When will is not left behind appropriate succession law applies. In the memorandum of understanding there is a clause reading as under:-
"That the parties shall execute necessary deeds/documents as and when may be executed in respect hereof”.
This mean that further documents/deeds may be is to be executed if the purported gift is true. However no further validation of the contents is made and if made not produced before Assessing Officer or me. c. Authenticity of certificate from Barjora Gram Panchayat ./2014 Assessment year: 2005-2006 Page 5 of 8
This is not a document prepared to confirm income based on any valid supportive documents. It is a basis of a self declaration from applicant. Moreover the document states income of Rs.25,000/- per month over last 20 years. In a 20 year period agricultural income cannot be uniform. Further in 20 years even if Rs.25,000/- is earned per month, there must be proof of savings.
Considering all the above aspects, I hold that the source of Rs.3,24,600/- claimed as a gift in F.Y. 2003-04 used as a source to explain opening cash in hand as on 01.04.2004 as not proven. I uphold the decision of Assessing Officer to treat the claimed gift Rs.3,24,600/- as bogus.
Two other gifts viz. from Smt. Rupa Bigharia (Rs.50,000/-) and Shri Shyam Sunder Thakur (Rs.25,000/-) also adds upto claimed asset position as on 31.03.2004 of which Rs.2,87,000/- is source of cash as on 01.04.2004. Notice under section 133(6) and under section 131 issued to both these person were not responded by the claimed donors. Personal enquiry by ITI revealed that no such person exist in the address. These are not agitated further in appeal as visible from the submission. Thus the two gifts are also found to be unsubstantiated”.
I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The ld. Counsel for the assessee has reiterated before me the submissions made before the ld. CIT(Appeals) on this issue. It is, however, observed that the explanation offered by the assessee on this issue has already been considered by the ld. CIT(Appeals) in the light of evidence filed by the assessee in support and after discussing all the relevant aspects elaborately in his impugned order, he has held that the explanation offered by the assessee as regards the investment made in the year under consideration on the basis of the availability of opening cash balance was not acceptable. While arriving at this conclusion, the additional evidence filed by the assessee was forwarded by the ld. CIT(Appeals) to the Assessing Officer for verification and the detailed remand report submitted by the Assessing officer giving his comments has been duly taken into account by the ld. CIT(Appeals) along with counter comments offered by the asseessee thereon. After going through the entire material placed on record before me, I find no ./2014 Assessment year: 2005-2006 Page 6 of 8 infirmity in the impugned order of the ld. CIT(Appeals) on this issue calling for any interference.
As regards the other contention of the ld. Counsel for the assessee that the opening cash balance generated in the earlier years cannot be added in the year under consideration, even if it is found to be not satisfactorily explained, it is observed that the ld. CIT(Appeals) has already clarified this point in paragraph no. 6 of his impugned order by observing that the impugned addition is made on account of investment made in the year under consideration under section 69A to the extent the same is not satisfactorily explained and such addition as per the specific provision contained in section 69A has to be made in the year in which such unexplained investment is found to be made by the assessee. We, therefore, find no merit in Ground Nos. 1 to 4 raised in the appeal of the assessee and dismiss the same.
The issues raised in Ground Nos. 5 & 6 relate to the addition of Rs.1,00,000/- and Rs.50,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of gifts claimed to be received by the assessee from Sadhu Charan Paul and Biman Bihari Mondal respectively during the year under consideration treating the same as unproved and unexplained.
The source of investment found to be made in the year under consideration was also explained by the assessee as gifts received from five persons. The claim of the assessee as regards these gifts was examined by the Assessing Officer and the same was not found to be acceptable in respect of two gifts claimed to be received from Sadhu Charan Paul and Biman Bihari Mondal for the following reasons given in the assessment order:- “2. Sadhu Charan Paul :- The assessee has shown gift of Rs.1,00,000/- from Sadhu Charan Paul. A notice u/s -133(6) of the I.T. Act, 1961 was sent to him on the given ./2014 Assessment year: 2005-2006 Page 7 of 8
address. The notice returned unserved with a remark that the person has already died. The assessee was asked to prove the genuineness of the transaction. But he did not produce any evidence to prove the genuineness of the transaction. He did not even submit the death certificate of Sri Sadhu Charan Paul. A/R of the assessee only stated that Sri Sadhu Charan Paul has already expired during Dec. 2005 and reply from him does not arise. The onus to prove the genuineness and creditworthiness of the transaction lied on the assessee, which he failed to discharge. In the absence of any evidence, the claim of the assessee is not acceptable.
Biman Bihari Mondal (Nana) ;- The assessee has shown gift of Rs.50,000/- from Biman Bihari Mondal. Notice U/s -133(6) of the I.T. Act, 1961 was sent to him on 07.05.2008 but reply from him received on 03.10.2008 i.e. after the issuance of summon u/s. 131. In the reply, it is claimed that Rs.50,000/- was paid in cash on 08.07.2004 by him to the assessee. Regarding source of income, it is written, “I have made this gift out of my past savings since last 35 years out of Salary and Agricultural Income. I have not filed any Income tax return in the past as because my taxable income was below the exemption limit." He also attached the copy of his pension paper that is of Rs.2400/- per month out of which Rs.960/- had been commuted and getting pension of Rs.1,440/- Per month. He has retired from the Postal department on 31.01.2004. Summons u/s. 131 was issued to him but she did not appear on the fixed date. The A/R of the assessee submitted that he is sick and is a heart patient and he is very serious due to heart stroke and also enclosed copy of the prescription of cardiologist. The prescription was of 18.08.2008 and he was asked to appear on 10.10.2008. Later on the assessee was also asked to produce him before the undersigned but he reiterated the same thing that he is very sick. Inspector's enquiry also revealed that he was not that much sick that he could not attend the office of the undersigned. From the above facts it is clear that the assessee has failed to prove the genuineness of the transaction”.
On appeal, the ld. CIT(Appeals) confirmed the addition made by the Assessing Officer on account of gifts received from Sadhu Charan Paul and Biman Bihari Mondal after taking into consideration the submissions of the assessee as well as the material available on record including the remand report submitted by the Assessing Officer.
10. I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. My view on these issues is similar to the view expressed by me on the issue of allowability of opening cash balance while deciding Ground Nos. 1 to 4 of the ./2014 Assessment year: 2005-2006 Page 8 of 8 assessee’s appeal, inasmuch as I have found from the entire record placed before me that the ld. CIT(Appeals) has duly taken into consideration the submissions made by the assessee in the light of material available on record including the comments offered by the assessee in the remand report as well as the counter comments offered by the assessee thereon. As found by the ld. CIT(Appeals) on appreciation of the relevant evidence, there was failure on the part of the assessee to establish the capacity of the concerned donors to give the gifts in question to the assessee and the ld. counsel for the assessee has not been able to controvert or rebut the findings recorded by the ld. CIT(Appeals) on this issue. I, therefore, find no justifiable reason to interfere with the order of the ld. CIT(Appeals) confirming the additions made by the Assessing Officer on account of two gifts treating the same as unexplained or unproved and upholding the same, I dismiss Ground Nos. 5 & 6 of the assessee’s appeal.