TaxTMI 
TaxTMI 
2020 (11) TMI 647
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....alment of income. 1.2] That on the facts and in the circumstances of the case and in law Ld CIT[A] erred in approving the action of the Ld Assessing officer in issuance of the notice U / s 148 of the Act merely on the basis of information as received by him without properly appreciating the facts of the case and submission made before him and without independent applications of his mind prior to the issuance of the notice U / s 148 of the Act 2] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in maintaining the addition of Rs. 31,10,000/- to the total income of the appellant by invoking the provisions of section 68 of the Act merely for the reason that the same was offered by the appellant in the return as filed in response to the notice as issued U/s 148 of the Act without properly appreciating the facts of the case and submission made before him. 3] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in maintaining the addition of Rs. 1,00,000/- as made by the assessing officer to the total income of the appellant on account of low marriage expenses without properly appreciating the....
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....dual and having salary income being employed as Chartered Accountant. He filed his return of income for the A.Y. 2012-13 by way of e-filing on 28.07.2012 declaring total income of Rs. 2,02,437/-. Assessee had purchased an agricultural land at Gram Ahirkhedi Tehsil & Dist. Indore, on 19.10.2011 at sale consideration of Rs. 60,00,000/-. On the basis of the information received from the office of the registrar assessment of the assessee was reopened u/s 147 of the Act, On the ground that the assessee had purchased an agricultural land thereby he made investment of Rs. 64,66,000/-. In pursuance to the notice u/s 148 the assessee filed return of income declaring income at Rs. 33,12,440/- however, during the course of assessment proceedings he stated that the return of income filed u/s 139 be treated as the income tax return filed in response to the notice u/s 148 of the Act. The Assessing Officer during the course of assessment proceedings called upon the assessee to explain source of investment. In response, thereto, the assessee submitted that the source of investment was gift received from his father who retired from the service of Railways who gave gift of Rs. 17,00,000/-, Further h....
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....he appellant for the Assessment Year 2012-13 was reopened for verification of source of purchase of agricultural land by the appellant. The appellant categorically explained during the course of reassessment proceedings that source of purchase of the said land was out of gifts/ loan received from relatives/ friend. The appellant also filed ample documentary evidences in support of his contentions. However, the assessing officer did not accept the contentions put forth by the appellant and made the following additions to the total income of the appellant: S. No Particulars Amount [in Rs.] 1 Total income declared in the income-tax return filed under section 139 of the Act 2,02,437 Add Additional income surrendered by assessee/ Addition on account of gifts received from relatives and loan received from friend 31,10,000 Add Addition on account of Marriage expenses 1,00,000 Total income assessed in the assessment order passed under section 143(3) r.w.s. 147 of the Act 34,12,437 A.5] Party-wise details of addition of Rs. 31,10,000/- as maintained by the assessing officer is tabulated and summarized hereunder for your ready refe....
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....from relatives/ friend 1.1 Shri Gopal Singh Tomar Gift 17,00,000 11,00,000 6,00,000 17,00,000 1.2 Smt Nilima Tomar Gift 5,26,000 3,26,000 2,00,000 5,26,000 1.3 Smt Jasoda Bai Tomar Gift 6,00,000 4,00,000 2,00,000 6,00,000 1.4 Smt Kirti Tomar Gift 4,15,000 2,94,000 1,21,000 4,15,000 1.5 Smt Madhu Bala Rajput Gift 5,00,000 NIL 5,00,000 5,00,000 1.6 Shri Virendra Singh Rajput Gift 7,00,000 NIL 7,00,000 7,00,000 1.7 Shri Awadesh Singh Rajput Gift 3,00,000 NIL 3,00,000 3,00,000 1.8 Shri Ravi Gurjar Loan 9,90,000 9,90,000 NIL 9,90,000 1.9 Opening balance of capital Opening Capital 8,43,150 NIL 8,43,150 8,43,150 Sub-Total [A] 65,74,150 31,10,000 34,64,150 65,74,150 2 Opening balance of capital added twice [Double Addition] Opening Capital 8,43,150 8,43,150 Sub-Total [B] 65,74,150 31,10,000 43,07,300 74,17,300 3 Addition on account of marriage expenses Sub-Total [C] 1,00,0....
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....ns, gifts, liquidation of investment or sale of another property etc. It is only if there is any definite information that the assessee has some additional income, which is not disclosed by him and is invested in purchase of property, then alone the notice under Section 148 of the Act can be issued, and that too, only after recording the basis on which the Assessing Officer has formed his opinion that he has 'reason to believe' that any such income has escaped assessment. 1.4.2] In the facts of the present case, appellant provided details regarding the source of purchase of land to the assessing officer wherein it was categorically mentioned that the land was purchased out of gifts received from relative, loan received from friend and out of past savings of the appellant. However, the assessing officer did not consider the submission made by the appellant and reopened his case for the Assessment Year 2012-13 merely for verification of source of purchase of asset which is not permissible within the garb of reopening under section 147 of the Act. 1.4.3] The reason recorded by the assessing officer prior to reopening of the case of the appellant for the Assessment Ye....
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.... present case also the reason for reopening is for further investigation to find out the source of investment for the purchase of the property, which is not permissible in law. 18. In the present case, what we find is that there is no nexus or live link between the material which had come to the notice of the Assessing Officer, and the formation of his belief that there was escapement of income by the assessee which may be assessable to tax. Merely by mentioning the income of the assessee in the assessment year, and the investment made by him for the purchase of residential property, it cannot be concluded that the difference would automatically be the income which had escaped assessment. 20. The submission of Sri E.I.Sanmathi, learned counsel for the respondent-Revenue is that the difference between the investment made by the assessee and his income during the year in question, would be the income which had escaped assessment from tax, is also not worthy of acceptance. Investment is not necessarily to be made from the income derived during one particular year in question. An investment to purchase a residential house or a capital asset, can always be made from th....
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.... the source of income. A bare perusal of the aforesaid notice dated October 10, 1991, clearly indicates that the officer was wanting to know the details with regard to the source of funds with regard to purchase of the said flat for a sum of Rs. 2,50,000. Obviously in the above, there is no question of the Assessing Officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped assessment and that such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts. Under the aforesaid facts and circumstances, we find no merit in the above appeal, hence the same stands dismissed, however, no order as to costs." [Emphasis Supplied] 1.5.3] The Hon'ble ITAT Agra Bench in the case of Shri Raj Singh Vs. ITO- 3(3), Mathura [ITA No. 408/Agra/2018] has held that: "28. Thus, the judicial opinion and mandate of law is clear and loud that proceedings under section 148 cannot be initiated for verification of the sources of investment. Such an action of the AO in respect of the case on hand cannot be approved in law and is therefore, quashed. 29.....
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....ons recorded by the learned Assessing officer, are no reasons in the eye of law for assuming jurisdiction in this case for issuing notice under section 148 of the Act. 31. We therefore, quash the assessment orders u/s 144 read with section 147 of the Act dated 30.03.2016 passed in consequence to notice dated 20.03.2015 for Assessment Year 2008-09 in the present appeal." [Emphasis Supplied] 1.5.4] The Hon'ble ITAT Lucknow Bench 'B' in the case of Shri Chunnilal Prajapati v. ITO-II, Faizabad [ITA Nos. 290 to 293/LUC/2010] has held that: "13. From the above, it is crystal clear that the Assessing Officer acted upon the information received from the Investigation Wing. In the said information, it was stated that the assessee invested a sum of $5,38,860/- in purchase of land situated in 150, Rafi Ahmad Kidwai Nagar Scheme (Eldeco Green), Gomti Nagar, Lucknow. However, it has not been stated that the said investment was out of undisclosed income of the assessee or out of income which escaped assessment. The Assessing Officer also had not mentioned in the aforesaid reasons that he was satisfied that the said sum of $5,38,860/- escaped Income-tax assessment. H....
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....ce of purchase of land was therefore grossly unjustifiable and wholly unwarranted and entire reassessment proceedings deserve to be quashed and set-aside on this count itself. 1.7.1] It has been held in various judicial precedents that the assessing officer should have reasons to believe and not reasons to suspect that income chargeable to tax has escaped assessment and reopening based on mere suspicion was held to be bad in law and without jurisdiction. It has been reiterated that suspicion against the assessee howsoever strong it may be without any basis and tangible material in possession of the assessing officer could not become reason to believe. 1.7.2] It has also been postulated that there must be a live link or direct nexus between tangible material in possession of the assessing officer and the formation of belief that income chargeable to tax has escaped assessment. It is also well settled that reopening cannot be done for making fishing and roving enquiries. It is also a settled position of law that the assessing officer cannot reopen the case of the assessee merely on the basis of borrowed opinion and he must independently apply his mind to the tangibl....
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....sue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. LakhmaniMerwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this case, the reasons as made a....
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....tantamount to reopening for making fishing and roving inquiries which is not at all permissible in law." 7] GROUND NO. 8 - CHARGEABILITY OF INTEREST UNDER SECTION 234B AND SECTION 234C OF THE INCOME-TAX ACT, 1961 7.1] The appellant in this ground of appeal has challenged the chargeability of interest under section 234B and section 234C of the Act of Rs. 3,61,774/- and Rs. 32,141/- respectively. 7.2] The interest under these sections is consequential and mandatory in nature. Hence, it is humbly submitted that the assessing officer shall be directed to charge interest as per law on the amount of income that may be finally assessed. 6. On the contrary, Ld. Sr. DR opposed the submission made by the Ld. counsel for the assessee and submitted that admittedly the assessee had purchased immovable property and purchase of immovable property does not commensurate with the income disclosed by the assessee. Therefore, the assessing officer was justified on the opening assessment. She submitted that at this stage it is to be seen whether material was available before AO to form belief that income chargeable to tax has escaped assessment and the case laws relied by ....
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....m relatives/ friend and opening balance of capital. 2.2.1] The income-tax return of the appellant under section 139 of the Income-Tax Act, 1961 was filed on 27-07-2012 wherein total income was declared at Rs. 2,02,437/-. 2.2.2] However, the income-tax return of the appellant in response to the notice issued under section 148 of the Income-Tax Act, 1961 was filed on 02-07-2015 wherein total income was declared at Rs. 33,12,440/- including an amount of Rs. 31,10,000/- which was received as gift/ loan from relatives/ friend but was inadvertently offered for tax in the income- tax return of the wrong advice of the previous consultant. 2.3] It is pertinent to note that the appellant lodged his claim during the course of assessment proceedings itself to exclude the amount of Rs. 31,10,000/- from his total income. Copy of the submission dated 30-10- 2015 as filed before the assessing officer to exclude the amount of Rs. 31,10,000/- as offered for tax in the income-tax return from his total income, has been filed on Page No. 40-47 of the Compilation. RIGHT OF THE ASSESSEE REGARDING EXCLUSION OF INCOME INADVERTENTLY OFFERED FOR TAX IN THE INCOME-TAX RETUR....
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....ready reference: 2.5.1] The Hon'ble Calcutta High Court in the case of CIT v. Bhaskar Mitter as reported in [1994] 73 Taxman 437 (Calcutta) has held that: "8. The controversy raised in the second question is as to whether the annual letting value of the property determined by the Tribunal could be a figure lower than that returned by the assessee. The principles for determining the annual letting value under section 23 are now well-settled and if the value returned is not in accordance with such principles, it is open to the assessee to contend that the value as may be determined upon correct application of the law should form the basis of assessment. The revenue authorities, in our view, cannot be heard to say that merely because the assessee has returned a figure which is higher than the annual value determined in accordance with the correct legal principles, such higher amount and not the correct amount should be lawfully assessed. An assessee is liable to pay tax only upon such income as can be in law included in his total income and which can be lawfully assessed under the Act. The law empowers the ITO to assess the income of an assessee according to law and ....
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....led by the assessee can be a figure lower than the income returned by the assessee. It is a well settled that the principle for determining the taxable income of the assessee under the Income-tax Act should be within the purview of the law in force. If the taxable income determined by the Assessing Officer is not in accordance with such principle it is open to the assessee to contend the same before the higher authorities to follow the correct application of law to determine the actual taxable income of the assessee. In our considered view, the lower authorities, are not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by the Assessing Officer to assess the income according to law and determined the tax payable thereon. In doing so, the Assessing Officer cannot assess the income of the assessee an amount which is not taxable as per law though shown by the assessee in the return: It is always open to the assessee to take a plea that the taxable incom....
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.... claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore it is open to the assessee to bring facts to the notice of the concerned authority on the basis of the return furnished which may have a bearing on the quantum of the refund, such as those the assessee could have urged under section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take....
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.... relatives, out of loan received from friend and out of his past savings represented in the form of capital. 2.8.2] Party-wise details of the source of investment made by the appellant which was also provided during the course of reassessment proceedings is as under: S. No Name of the Party Nature of Receipt Relation with appellant PAN Amount [in Rs.] 1 Shri Gopal Singh Tomar Gift Father ACPPT6950P 17,00,000 2 Smt Nilima Tomar Gift Mother AOXPT5375G 5,26,000 3 Smt Jasoda Bai Tomar Gift Grandmother N.A. 6,00,000 4 Smt Kirti Tomar Gift Spouse AQLPT1730H 4,15,000 5 Smt Madhu Bala Rajput Gift Mother-in-law N.A. 5,00,000 6 Shri Virendra Singh Rajput Gift Father-in-law AWZPR3103Q 7,00,000 7 Shri Awadesh Singh Rajput Gift Brother-in-law BTAPS4374K 3,00,000 8 Shri Ravi Gurjar Loan Friend BLIPG9820L 9,90,000 9 Opening balance of capital Opening Capital - - 8,43,150 Total 65,74,150 2.9] The assessing officer while passing the assessment order accepted ....
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....pension received in bank was withdrawn and gifted to the appellant 72 2 Smt Nilima Tomar, Mother of the appellant - Gift of Rs. 5,26,000 2.1 Confirmation of Gift duly notarized 73 3 Smt Jasoda Bai Tomar, Grandmother of the appellant - Gift of Rs. 6,00,000/- 3.1 Confirmation of Gift duly notarized 74 4 Smt Kirti Tomar, Spouse of the appellant - Gift of Rs. 4,15,000 4.1 Confirmation of Gift duly notarized 75 5 Smt Madhu Bala Rajput, Mother-in-law of the appellant - Gift of Rs. 5,00,000/- 5.1 Confirmation of Gift duly notarized 76 5.2 Sale deed of agricultural land which was the source of making gift to the appellant 77-82 6 Shri Virendra Singh Rajput, Father-in-law of appellant - Gift of Rs. 7,00,000/- 6.1 Confirmation of Gift duly notarized 89 6.2 Sale deed of agricultural land which was the source of making gift to the appellant 90-94 7 Shri Avdhesh Singh Rajput, Brother-in-law of appellant - Gift of Rs. 3,00,000/- 7.1 Confirmation of Gift duly notarized 83 7.2 Sale deed of agricultural land which was the so....
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....n, source of gift is not fully acceptable but considering the past saving, gift of Rs. 2,00,000/- was accepted and Rs. 3,26,000/- is treated as unexplained Confirmation of Gift duly notarized was filed before the assessing officer. The PAN of donor was also provided. If the assessing officer was not satisified with the source of gift made by donor, he could have made addition in the hands of the donor but not in the hands of the appellant. Considering the age of mother of the appellant and her past savings, amount of gift of Rs. 5,26,000/- requires to be accepted as genuine and reasonable 3 Smt Jasoda Bai Tomar N.A. 6,00,000 In absence of income-tax return, source of gift is not fully acceptable but considering the past saving, gift of Rs. 2,00,000/- was accepted and Rs. 4,00,000/- is treated as unexplained Confirmation of Gift duly notarized was filed before the assessing officer. Considering the age of grandmother of the appellant and her past savings, amount of gift of Rs. 6,00,000/- requires to be accepted as genuine and reasonable 4 Smt Kirti Tomar AQLPT1730H 4,15,000 The assessee has not properly explained the source of gift as given by her....
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....n this regard is considered The assessing officer duly accepted the contentions of the appellant. However, the Ld CIT (A) grossly erred in adding this amount to the total income of the appellant under section 68 of the Act even when such amount of capital was duly justified looking at the qualification of the appellant and also looking at the fact that he was in job for the last three to four years Total 65,74,150 2.12.2] The Ld CIT(A) during the course of appellate proceedings further enhanced the income of the appellant on account of gifts received from relatives by observing that section 68 of the Act embodies the expression "nature and source" which has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise can be inferred. The Ld CIT(A) further observed that the appellant failed to file the requisite documentary evidences in respect of gift and therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. 2.12.3] With due respect, it is ....
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....urce of income of the appellant apart from his salary income. Looking at the circumstantial evidences and applying the test of human probability which is heavily relied upon the Department of late, the onus was on the Department who was alleging that the apparent was not real, to prove that such exorbitant amount was actually the unaccounted/ undisclosed income of the appellant which was routed back to him by means of gifts/ unsecured loan. 2.13] In view of the above discussion, addition of Rs. 31,10,000/- as maintained by the assessing officer and enhancement of Rs. 34,64,150/- as made by the Ld CIT(A) seems to be merely based on surmises and conjectures which is grossly unjustifiable and wholly unwarranted more so when the appellant satisfactorily discharged the primary onus cast upon him under section 68 of the Act. Relevant extracts from few of the judicial precedents which have enunciated the above-mentioned principles are reproduced hereunder for your ready reference: 2.14.1] The Hon'ble Delhi High Court in the case of CIT v. Ramesh Suri as reported in [2015] 57 taxmann.com 84 (Delhi) has categorically held that: "7. It was submitted that t....
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....out of her natural love and affection towards her nephew, the AO ought not to have entertained further doubts. If for facilitating receipt of a gift the assessee has opened an account, we do not find anything wrong in that. In our opinion, the whole approach of the AO is wholly perverse which cannot be sustained. Equally, the reasons assigned by the two appellate bodies confirming the order of the AO are also perverse. 22. The findings of the CIT(A) that gifts are traditional in nature, that they are given in functions like marriages etc., that there was no such occasion warranting receipt of gift from Nirmala to the assessee, and that it is very odd to note that the entire amount received from her daughter has been diverted to the assessee as a gift without any consideration, look to us to be empty sermons as the CIT (A) evidently judged the conduct of the parties from his personal perception, which is wholly impermissible. 23. When the Act itself does not envisage any occasion for a relative to give a gift, it is well-nigh impermissible for any authority and even for that matter for the Court to import the concept of occasion and develop a theory based on such c....
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....he source of the jewellery in her possession. However, the Tribunal was not satisfied with the evidence produced by her father and father-in-law. This cannot be lead to be conclusion that the explanation offered by the respondent-assessee in respect of the jewellery in her possession is not satisfactory. In the normal course of human conduct, on occasions such as marriage the parents and parents-in-law of a bride do normally gift jewellery to the bride. On occasion such as this, it is not possible to expect the bride to ask for evidence of bills/invoices to support the purchase of the jewellery. One has to proceed on the basis that it is genuine. Thus her explanation that she received the jewellery as gifts from her father and father-in-law is sufficient explanation of the jewellery in her possession and the gifts are not denied by her father and father-in- law. We are of the view that invocation of Section 69 of the Act is these facts is completely unwarranted." [Emphasis Supplied] 2.14.5] The Hon'ble Andhra Pradesh High Court in the case of CIT v. Dr. Kodela Siva Prasada Rao as reported in [2013] 263 CTR 703 (Andhra Pradesh) has held that: "12............Even....
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....editor, the burden on the assessee under section 68 is definitely limited." According to the said decision, therefore, creditor's creditworthiness has to be judged vis-à-vis transactions, which have taken place between the assessee and the creditor, and it is not the business of assessee to find out source of money of his creditor or genuineness of transactions which took place between creditor and sub-creditor and/or creditworthiness of sub-creditors, for these aspects may not be within special knowledge of the assessee.....................In view of the above, in my considered opinion, the lower authorities were not justified in stating that the gifts were undisclosed income of the assessee, which was acceded to by ld. A.M. 22. Further, it is an established position that for arriving at the conclusion that the gift was not genuine and the same was undisclosed income of the assessee, the department ought to have brought on record evidence for such specific finding. Here in this case the department could not bring on record any evidence except alleging on presumption and suspicion that the gifts were bogus and represented assessee's undisclosed inco....
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....eep Singh v. ITO, Ward-1, Jagraon as reported in [2020] 113 taxmann.com 265 (Chandigarh - Trib.) has held that: "8. We have heard the contentions of both the parties. We are not in agreement with the Ld.CIT(A) holding the explanation of the source of cash deposited in the bank of the assessee to the extent of Rs. 19, 17,000/- as unsatisfactory. The assessee had explained the source as being received as gift from his father which in turn had been explained as sourced from land sold by him in the preceding year and out of his own savings as under: Out of land sold = Rs. 9,45,000 + Rs. 4,73,000 Savings = Rs. 4,65,000/- The assessee had filed evidence of sale of land in the preceding year for the said amount which the AO had examined and found and reported as correct in his remand report. Even the ld. CIT(A),we find, has not doubted the veracity of the said document but has not accepted the explanation for the reason that it was improbable that the father would have kept the money with him for a period of eight months before gifting it to his son. We do not find any merit or strength in this reasoning of the ld. CIT(A). There is nothing extraordinari....
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.... u/s 68 of the Act. It is stated by the Ld. Counsel for the assessee that the amount was received from the minor children of Rs. 3,70,000/-. He submitted that the assessing officer and CIT(A) both erred in not allowing the claim of the assessee and making addition. We find that in the remand proceedings, the A.O. has categorically stated that these advances were received from the minor children and these amounts pertain to the past savings of the children. The Ld. CIT(A) has not brought on record any adverse material rebutting the finding of the A.O. We therefore, direct the A.O. to delete this addition. [Emphasis Supplied] 2.15] In view of the above discussion and findings reiterated in the judicial precedents cited supra, it is humbly submitted that there was no justification for maintaining addition of Rs. 31,10,000/- and enhancing the income by Rs. 34,64,150/- in light of the fact that there was no doubt regarding the identity of the donor and their relationship with the appellant, genuineness of the gift/ loan transactions and such parties duly owned up the amount gifted/ lent to the appellant. Hence, it is humbly submitted that the entire amount of Rs. 65,74....
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....partment." [Emphasis Supplied] 2.17.2] The Hon'ble Rajasthan High Court in the case of Aravali Trading Co. v. ITO as reported in [2008] 220 CTR 622 (Rajasthan) has held that: "19. This Court held by the parity of reasonings which prevailed in Daulat Ram Rawatmull's case (supra) that it can well be said that merely because the explanation furnished by Shri Bhopal Singh, Om Prakash Gupta and Shri Gauri Shanker Singhal, about the purpose for which the gold ornaments were delivered for making new ornaments and that the ornaments were belonging to their family was found to be not acceptable, could not have provided any nexus for drawing inference therefrom that the primary gold and gold ornaments belonged to the assessee. 20. This principle is fully applicable to the present case. The fact that the explanation furnished by the aforementioned four creditors about the sources wherefrom they acquired the money was not acceptable by the revenue could not provide necessary nexus for drawing inference that the amount admitted to be deposited by these four persons belonged to the assessee. The assessee having discharged his burden by proving the existenc....
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....creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee, is not relevant for the purposes of rejecting the explanation furnished by the assessee. and make additions of such deposits as income of the assessee from undisclosed sources by invoking section 68 of the IT Act, unless it can be shown by the Department that the source of such money comes from the assessee himself or such source could be traced to the assessee itself. In the present case while existence of Sri Devendra Sankhla the creditor is not in doubt, and he has admitted to have advanced the loan to the assessee. The fact that the explanation furnished by Sri Devendra Sankhla about his source of such advancement has not been accepted by the Revenue authority cannot lead to any presumption that the source of such advancement by Sri Devendra Sankhla ....
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....o income-tax as the income of the assessee of that previous year:" Definitions. 2. In this Act, unless the context otherwise requires,- ............. ............ (7A) "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act" [Emphasis Supplied] 3.2.2] On a conjoint reading of the provisions of section 68 and section 2(7A) of the Income-Tax Act, 1961, it becomes abundantly clear that provision of section 68 of the Act can be invoked only if the Assessing Officer is not satisfied with the explanation provided by the assessee regarding the sum credited in the books of accounts.....
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....thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.' From the above definition, it is noted that Section 68 of the Act does not empower the ld. CIT(A) to make addition under this Act. Thus the addition u/s 68 can only be made by the Assessing Officer. The definition of the Assessing Officer has been provided in Section 2(7A) of the Act which reads as under:- [(7A) "Assessing Officer" means the Assistant Commissioner [or Deputy Commissioner] [or Assistant Director] [or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the [Additional Commissioner or] [Additional Director or] [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;] Thus the ld. CIT(A) is....
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....N'BLE SUPREME COURT IN THE CASE OF SMT. P.K. NOORJAHAN 4.1] The appellant in this ground of appeal has challenged the addition of Rs. 31,10,000/- maintained by the assessing officer and enhancement of Rs. 34,64,150/- made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend in light of the decision of Hon'ble Supreme Court in the case of Smt. P.K. Noorjahan. 4.2] At the outset, it is pertinent to mention that the appellant is a Chartered Accountant in service who qualified as a Chartered Accountant in the month of January, 2009 only. The appellant received salary income to the tune of Rs. 2,02,437/- during the year under consideration. 4.3] Apart from the salary income shown by the appellant, the Department has not brought on record any other source of income of the appellant. 4.4] A summary showing the amount of total income declared by the appellant during the previous years' 2011-12 to 2013-14 relevant to the Assessment Years 2012-13 to 2014-15 is as under for your ready reference: S. No Assessment Year Date of filing income-tax return Total income declared in the income-tax return [in Rs.] 1 2012-13 ....
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....he same were financed from out of the savings from the income of the properties which were left by her mother's first hasband. The said explanation offered by the assessee was rejected except to the extent of Rs. 2,000 by the ITO who made an addition of Rs. 32,628 as income from other sources in the assessment year 1968-69 and an addition of Rs. 25,902 in the assessment year 1969-70. The said orders were affirmed in appeal by the AAC. The Tribunal, however, held that even though the explanation about the nature and sources of the purchase money was not satisfactory but in the facts and circumstances of the case, it was not possible for the assessee to earn the amount invested in the properties and that by the stretch of imagination could the assessee be credited with having earned this income in the course of the assessment year or was even in a position to earn it for a decade or more. The Tribunal took the view that although the explanation of the assessee was liable to be rejected. Section 69 of the Income-tax Act, 1961 ('the Act') conferred only a discretion on the ITO to deal with the investment as income of the assessee and that it did not make it mandatory on his....
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....the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. 4. In the instant case, the Tribunal has held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. We also do not find any error in the said finding recorded by the Tribunal. There is, thus, no merit in these appeals and the same are, accordingly, dismissed. No order as to costs." [Emphasis Supplied] 4.9] The decision rendered by the Hon'ble Supreme Court....
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.... the income of the appellant at Rs. 34,12,440/- after making an addition of Rs. 1,00,000/- on account of marriage expenses. The AO has not made any addition of Rs. 31,10,000/-. Therefore, the appeal on this ground is dismissed. 4.4 Enhancement of income: A notice u/s 251(2) of the I.T. Act dated 30.08.2017 was given to the appellant stating that why the income of Rs. 34,64,150/- (Rs. 65,74,150/-- Rs. 31,10,000/-) cannot be enhanced on account of income from undisclosed sources. In response to the above show cause, the appellant furnished the written submission dated 06.12.2017. The appellant is in receipt of the gift from following persons: 4.4.1 (1) Gopal Singh Tomar -Gift of Rs. 17,00,000/- The appellant has allegedly received the gift of Rs. 17,00,000/- from Shri Gopal Singh Tomar. The AO made the addition of Rs. 11,00,000/- only. The appellant was requested to show cause why an enhancement of Rs. 6,00,000/- cannot be made considering the remaining amount as income from undisclosed sources. The appellant was requested to furnish the documentary evidences in support of claim or the gift like bank statement of Shri Gopal Singh Tomar and....
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....ty to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. (2) Smt.Kirti Singh Tomar Gift of Rs. 4,15.000/- The appellant has allegedly received the gift of Rs. 4,15,000/- from Smt. Kirti Singh Tomar. The AO made the addition of Rs. 2,94,000/- only. The appellant was requested to show 'cause why an enhancement of Rs. 1,21,000/- cannot be made considering the remaining amount as income from undisclosed sources. The appellant was requested to furnish the documentary evidences in support of the claim of the gift like bank statement of Smt. Kirti Singh Tomar and corresponding entry in appellant's bank statement, Registered gift deed. occasion of the gift, source of income of Smt. Kirti Singh Tomar and copy of income tax return filed by Smt, Kirti Singh Tomar, creditworthiness of the donor etc. and any other documents';" on which appellant rely. The appellant was also requested to explain why part gift is considered as genuine and part as non genuine. As per law either gift is genuine or non genuine. There is no concept of part gift as genuine a....
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.... cause why an enhancement of Rs. 2,00,000/- cannot be made considering the remaining amount as income from undisclosed sources. The appellant's bank statement, Registered gift deed, 0cas'ion of the gift. source of income of Smt. Nilirna Tomar and c0py of income tax return filed by Smt.Nilima Tomar, creditworthiness of the donor etc. and any other documents on which appellant rely. The appellant was also requested to explain why part gift is considered as genuine and part as non genuine. As per law either gift is genuine or non genuine. There is no concept 0f part gift as genuine and part gift as non-genuine. The appellant has not furnished the above asked documents in respect of the gift. The appellant only furnished the notarized confirmation of gift only. The other documents asked have not been i furnished. The appellant failed to establish the genuineness transaction and creditworthiness of the donor. The AO himself has considered the Rs. 3,26,000/- as non genuine gift. There is no reason to consider the gift of Rs. 2,00,000/- as genuine. There is no concept of part genuine and part non-genuine gift. Section 68 provides that any cash credit found in the books re....
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....shed the above asked documents in respect of the gift. The appellant only There is no concept of pan gift as genuine and part gift as non-genuine. The appellant has not furnished the above asked documents in respect of the gin. The appellant only furnished the notarized confirmation of gift only. The other documents asked have not been furnished. The appellant failed to establish the genuineness of the transaction and creditworthiness or the donor. The AO himself has considered the Rs. 4,OO,OOO/- as non genuine gift. There is 110 reason to consider the gift of Rs. 2.00,OOO/as genuine. There is no concept of part genuine and part non-genuine gift. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory, such credits could charge to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was alw ays understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books, since the relevant facts are exclusively withi....
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....at any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory, such credits could be charged to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books, since the relevant facts are exclusively within his knowledge. The expression "nature and source" has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory. The Income Tax Authority can disbelieve the alleged transaction of gift. But the law is equally settled that if initial burden is discharged by the appellant by producing sufficient mate....
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.... of the source, So that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation given or the explanation given by the appellant is not satisfactory. The Income Tax Authority can disbelieve the alleged transaction of gift. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the 'It the onus shifts upon the Income Tax Authority and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Income Tax Authority of the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. (7) Shri Awadesh Singh Rajput - Gift of Rs. 3,OO,OOO/- The appellant has allegedly received the give of ",3,00,000/- from Shri Awadesh Singh Rajput, Th AO has made 'my addition in this regard. The appellant was requested ....
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....pon the income Tax Authority and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Income Tax Authority to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. Therefore, the income of the appellant is enhanced by Rs. 34,64,150/- (Rs. 65,74,150/- - Rs. 31,10,000/-). Penalty proceedings u/s 271(1)(c) are separately initiated on this enhancement. 10. On the contrary, Ld. Sr.-DR opposed the submission made by the Ld. counsel for the assessee, and supported the orders of authorities below. Further, Ld. Sr. DR contended that the assessee failed to prove genuineness of gift and creditworthiness of donors. She contended that under the facts and circumstances of the present case the authorities below were justified in making the impugned additions. 11. We have heard the rival submissions and perused the materials available on record. The contention of the assessee is that requisite material was placed on record before the lower authorities but the lower authorities did not consider the....
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....assessing officer regarding gift received from grand-mother and mother of the assessee respectively. We find that the assessing officer has partly accepted the gift of Rs. 2,00,000/- each from mother and grandmother of the assessee. Looking to the family background and in the absence of specific evidences we modify the finding of assessing officer and allow the gift received from grandmother of Rs. 3,00,000/- and mother of Rs. 2,50,000/-. Rest of the addition made on account of gifts received from mother and grandmother of the assessee are sustained. Thus, assessee gets relief of Rupees Twenty two lac fifty thousands (Rs. 17,00,000/- + 3,00,000/- + 2,50,000/-) is gift received from parent and grandmother. Now coming to the gift received from other persons. The assessee claimed to have received gift from his wife, father-in-law, mother-in-law, brother-in-law and his friend. These gifts need verification at the end of the assessing officer. The assessee is hereby directed to furnish the requisite evidences in support of the gift received from other relatives and friends more particularly mentioned in the assessment order. This ground of the assessee is partly allowed. Further, it was....
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....t Jasoda Bai Tomar Gift 6,00,000 4,00,000 2,00,000 4 Smt Kirti Tomar Gift 4,15,000 2,94,000 1,21,000 5 Smt Madhu Bala Rajput Gift 5,00,000 NIL 5,00,000 6 Shri Virendra Singh Rajput Gift 7,00,000 NIL 7,00,000 7 Shri Awadesh Singh Rajput Gift 3,00,000 NIL 3,00,000 8 Shri Ravi Gurjar Loan 9,90,000 9,90,000 NIL 9 Opening balance of capital Opening Capital 8,43,150 NIL 8,43,150 Total 65,74,150 31,10,000 34,64,150 5.3] On perusal of the above table, it is quite clear that enhancement of Rs. 34,64,150/- made by the Ld CIT(A) included enhancement of Rs. 8,43,150/- on account of opening balance of capital of the appellant. 5.4] Hence, further enhancement of Rs. 8,43,150/- as made by the Ld CIT(A) on account of opening balance of capital led to double taxation of the same amount which is grossly unjustifiable and wholly unwarranted. Therefore, it is humbly submitted that further enhancement of Rs. 8,43,150/- made by the Ld. CIT(A) on account of opening balance of capital requires to be deleted in entirety. 13. On the cont....
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....rne by the in-laws of the appellant and therefore, amount of Rs. 1,75,000/- was incurred by the appellant on account of marriage related expenses. 6.3] However, the assessing officer did not accept the contentions put forth by the appellant and made lump sum addition of Rs. 1,00,000/- to the total income of the appellant on account of marriage expenses which is again very high-handed looking at the income of the appellant and his living standards. 6.4] It has been in various judicial precedents that lump sum addition made on account of marriage expenses merely on the basis of guess work without bringing on record any such evidence that actual expenditure was much more as shown by the assessee is not sustainable. Relevant extracts from few of the judicial precedents which have enunciated the above-mentioned principles are reproduced hereunder for your ready reference: 6.5.1] The Hon'ble Madras High Court in the case of CIT Cent. II, Chennai v/s A.N. Dyaneswaran [Tax Case (Appeal) No.150 of 2004] has held that: "The addition in respect of the estimated expenses towards marriage of the assessee's son Sri.Senthureswaran is of Rs. 7,50,00....
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....e Assessing Officer in the assessment order, considering the status of the assessee has presumed that assessee might have incurred so many expenditure on different occasions but nothing was brought on record whether assessee has performed any of such ceremonies which are large in number noted in the assessment order. Therefore, the order of the Assessing Officer was wholly based upon assumptions on certain facts which did not exist. In this case, at the time of hearing of the appeal, the assessment record was available with Ld. DR but no tax evasion petition was containing. From the settlement arrived at between the husband and wife before Hon'ble High Court, as noted above, which contained the disposal of the income tax matter, would clearly reveal that from the side of in-laws of Ms. Megha Garg, daughter of the assessee, same information might have been provided to the Income Tax Department so as to initiate the above proceedings but the Assessing Officer did not record statement of any of the in-laws of Ms. Megha nor arrived at fair estimate of marriage expenses. It is, therefore, a clear case of additions made merely on assumptions and presumptions. Thus, there were no basi....
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....hich was duly accepted by the Assessing officer. 3) That on the facts and in the circumstances of the case and in law the Ld CIT[A) erred in levied penalty on the amount of addition as made by him through enhancement without disproving the documents as filed by the assessee. 4) That on the facts and in the circumstances of the case and in law the Ld CIT[A) erred in levied penalty U/s 271[1][c] of the Act of Rs. 13,30,955/- . The said penalty so levied is unsustainable, the same now requires to be 1. deleted in full. 21. The facts giving rise to the present appeal are that while framing the assessment, the assessing officer also initiated penalty proceedings u/s 271(1)(c) of the Act. Thereafter, the assessing officer issued a notice u/s 271(1)(c) on 29.12.2016. Subsequently, show cause notice was issued on 12.04.2017 and 16.05.2017. Thereafter, the assessing officer imposed penalty amounting to Rs. 9,60,990/-. 22. Aggrieved against this the assessee preferred an appeal before the Ld. CIT(A) dismissed the appeal and also imposed penalty of Rs. 13,30,955/- including the penalty on the enhanced income. Against this assessee preferred present appeal before this T....