TaxTMI 
TaxTMI 
2026 (8) TMI 278
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....amounting to Rs. 3,40,73,076/- u/s 56(2) of the Income Tax Act, 1961 and Rs. 86,860/- towards bank interest even though the assessee has not received any sum of money or any property without consideration from any person. 3) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi is not justified in confirming the addition by the Income Tax Officer, ward (1), Machilipatnam, invoking the provisions of section 56(2) of the Income Tax Act,1961 as the credits in the bank account are sale proceeds of the share of brought forward investments of the assessee. 4) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi ought to have considered that the provisions of section 56(2) cannot be invoked by the income tax officer as the assessee has not received any amount without any consideration and amount received from Y. Anjaneyulu is only the share of the sale proceeds of the investment purchased by the assessee himself. 5) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi is wrong in upholding the Assessment Order of the Income Tax Officer, ward (1), Machilipatnam, as there is no escapement of income covered under the ambit of the section 147 of the In....
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....se and in law the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, erred in confirming the addition made by the income tax officer amounting to Rs. 1,58,21,425/- u/s 56(2) of the Income Tax Act, 1961 and Rs. 61,000/- towards bank interest even though the assessee has not received any sum of money or any property without consideration from any person. 3) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi is not justified in confirming the addition by the Income Tax Officer, ward (1), Machilipatnam, invoking the provisions of section 56(2) of the Income Tax Act,1961 as the credits in the bank account are sale proceeds of the share of brought forward investments of the assessee. 4) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi ought to have considered that the provisions of section 56(2) cannot be invoked by the income tax officer as the assessee has not received any amount without any consideration and amount received from Y. Anjaneyulu is only the share of the sale proceeds of the investment purchased by the assessee himself. 5) The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi is wrong in upholding the Assessment Order of ....
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....l and important to thoroughly go through the Assessment Order as all the facts are marshalled in the Order and hence the contents of Assessment Order are summarized in this order: a) For the A.Y. 2013-14, Department received the information that assessee has invested a sum of Rs. 4.72 crores in UTI Mutual Funds and received a large dividend. The details of investment in purchase of units of UTI Mutual Funds is reproduced as follows: - S. No. Amount of investment (Rs.) Date of Purchase 1. 1,25,00,000 19.03.2013 2. 1,00,00,000 19.03.2013 3. 1,00,00,000 19.03.2013 4. 1,00,00,000 19.03.2013 5. 35,00,000 25.06.2012 6. 2,00,000 19.03.2013 7. 2,00,000 19.03.2013 8. 2,00,000 19.03.2018 9. 2,00,000 19.03.2018 10. 2,00,000 19.03.2018 11. 2,00,000 19.03.2018 Total 4,72,00,000 From the above, it is seen that except Rs. 8,00,000/- (Rs.2,00,000/- X 4 i.e., Sl.No.8 to 11), the entire amount added by Ld. Assessing Officer [hereinafter in short "Ld.AO"] relates to this A.Y. 2013-14. b) In view of the above information, a notice under section 148 of I....
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....4275 19/03/2013 12500000 UTI Multi Asset Fund-Regular Dividend Plan - Dividend Paynat 532272154285 19/03/2013 10000000 UTI Multi Asset Fund-Regular Dividend Plan - Dividend Payout 532272154305 19/03/2013 10000000 UTI Multi Asset Fund-Regular Dividend Plan - Dividend Payout 532272154311 19/03/2013 10000000 UTI Multi Asset Fund-Regular Dividend Plan - Dividend Payonat 532272154217 19/03/2013 200000 UTI Multi Asset Fund-Direct Dividend Plan - Dividend Payout 532272154151 19/03/2013 200000 UTI Hybrid Equity Fund-Regular Dividend Plan - Dividend Payout 532272154093 19/03/2013 200000 UTI Dividend Yield Fund-Regular Dividend Plan - Dividend Payout Assessment Year - 2014-15 (Financial Year- 2013-14) FOLIO NO INVESTMENT DATE INVESTED AMOUNT SCHEME 532272797045 29/04/2013 4500000 UTI Liquid Cash Plan -Growth Plan - Growth 532272958577 13/05/2013 1500000 UTI Value Opportunities Fund-Regular Dividend Plan - Dividend Payout 532273632014 28/06/2013 288000 UTI Regular Savings Fund-Direct Growth Plan - Growth 532273633122 28/06/2013 2587500 UTI Divid....
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....the incomes returned by the assessee for all the years is below taxable limit. Even if the incomes retuned are taken into account, after meeting his domestic expenditure, the income left over with the assessee would be negligible or NIL, when considering the status of the assessee as an advocate. In view of this-it can be said that the assessee is not capable of investing of such huge amounts in purchase of Units in UTI with his known sources of income." j) The Ld.AO wrote a letters to Managers of Axis Bank, Indian Bank and Corporation bank requesting them to furnish copies of bank accounts of assessee for the period 01.04.2009 to 31.03.2014 and on verification of them the Ld.AO found that the assessee started investing in UTI Mutual funds at Rs. 1000/- each from 25.02.2010 to 31.03.2010 and the investments in UTI as per bank statements is only Rs. 1.5 lakhs upto 31.03.2010. But the assessee has estimated his investment in UTI at Rs. 3.31 crores as on 01.04.2010 and it is not known how assessee has estimated at this huge figure (Page 9 of assessment order). k) Para 10 of the assessment order has summarized the observations of Ld.AO as follows: "10. The as....
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....neyulu "without any consideration". Hence, the case of assessee falls under section 56(2) of the Act. o) Then, a detailed statement was recorded by Ld.AO and the assessee has reiterated that all the money invested belongs to him only and the sources are savings and earnings of earlier investments. The Ld.AO concluded in Para No. 18, Page No.12 of Assessment Order stating that the assessee could not establish with any satisfactory evidence that he has purchased the units originally in Joint names with his own funds as there are no sources of income to him and hence invoked the provisions of section 56(2) of the Act to hold that assessee received these amounts without consideration. p) The Ld.AO has finally concluded the assessment by saying that assessee does not have independent sources to invest in UTI and the money actually belongs to Shri Yenduri Anjaneyulu and the same was transferred to this bank account. Two more reasons were mentioned by the Ld.AO to conclude that the money actually belong to Shri Yenduri Anjaneyulu i.e., i. Shri Yenduri Anjaneyulu passed away on 29.11.2015, whereas the UTI proceeds were transferred to assessee's account during Mar....
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.... ITAT, the Learned Authorized Representative (for short "Ld.AR") of the appellant filed paper books for both the Assessment years i.e., A.Y. 2013-14 and A.Y. 2014-15 and argued the case for both the years as the issues involved are same for both the assessment years. The arguments of Ld.AR, apart from placing reliance on the grounds of appeal are summarized as under: a) The paper books contained copy of Axis Bank account statements, grounds of appeal before Ld. CIT(A) and ITAT, copy of assessment order, copy of Ld.CIT(A) order and submissions before ITAT. The summarized written submissions before ITAT (as per Paper Book) are as follows. b) Reopening of case under section 148 of the Act is incorrect. c) All the investments made in UTI belong to assessee only as he invested the same over a period of time. d) The assessee had disclosed the professional income in Return of Income and up to 01.04.2010, the total investments with accrued revenues comes to Rs. 3.31 crores and all facts were submitted to Ld.AO. e) The assessee invested in "UNITS" jointly with Shri Yenduri Anjaneyulu and amount was credited to Joint account of Shri Yenduri Anjane....
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....idences, the amounts in joint account belong to Shri Yenduri Anjaneyulu and these amounts were claimed by assessee in the year concerned only, and hence Ld.AO made addition correctly. e) Since the Ld.AO did elaborate investigation, called for bank account, called for information from UTI, went through the tax Returns of assessee and Shri Yenduri Anjaneyulu, recorded a statement from assessee after confronting the material Ld.AO got from UTI etc., principles of natural justice are followed and the addition made by Ld.AO should be confirmed. 9. Heard both sides. After perusing the paper books filed by the Ld.AR, perusing the orders of Ld.AO and Ld. CIT(A), written submissions of both parties and hearing oral arguments, the Bench is inclined to confirm the additions made by the Ld.AO for both the assessment years for the following reasons: a) As far as reopening of assessment is concerned, the Ld.AO is correct because the Department has information in its possession that huge investments were made in UTI and the Return of Income filed by assessee are not commensurate to the investments. At the time of reopening the assessment, what is required is a prima facie bel....
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....n 01.04.2010 is mutual funds of Rs. 3.31 crores was not explained / corroborated by him with any year-wise cash flow statement, balance sheet or statement of affairs to prove genuineness of funds available with assessee. Mere bald claim of appellant that his investments up to 01.04.2010 are the extent of Rs. 3.31 crores, without explaining sources of income cannot be accepted. f) The appellant claims that all purchase and sale of investment are routed through the joint account with Shri Yenduri Anjaneyulu who is his father's friend. When the assessee is having his own separate bank account, the assessee could not explain as to why the transactions are routed through joint account with Shri Yenduri Anjaneyulu. There is no separate Income Tax Return filed to reflect these transactions as Association of persons. g) As far as the "chargeability of tax" and scope of taxable "total income" under section 5 and 6 of the Act, are concerned, the appellant did not elaborate as to why these amounts credited to bank account of Axis Bank do not come under the definition of "income". The definition of "Income" under section 2(24) is "inclusive" and not "exhaustive". Hon'ble Supr....
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....d.AO has not only proved that the assessee does not have sources in earlier years to invest in UTI, but also positively proved that Shri Yenduri Anjaneyulu (joint account holder) is the real investor by bringing on record the taxable incomes / disposable incomes are much higher to the extent of Rs. 40 lakhs per annum. Hence, in these assessment years of A.Y. 2013-14 and A.Y. 2014-15, Ld.AO treated the amounts as 'receipts without consideration" as "income" in terms of Section 56(2)(vii) of the Act k) Another legal argument of appellant is that section 56(2) of the Act is not applicable to transmission of shares. Nowhere the Income-tax Act, endorses assessee's argument that transmission is excluded from the operation of section 56(2) of the Act. In fact, there are various modes of transfers and "transmission" is one mode and hence the argument of appellant is not correct. Moreover, Ld.AO did not make the addition only based on "transmission" of shares. As mentioned in the earlier pages of this order, the addition was made by Ld.AO on the basis of cumulative facts and circumstances mentioned in his order, and not just based on the "transmission" of shares alone. l) ....
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....ara No.7 of Assessment Order, it is observed that the appellant has claimed that the huge investment of more than Rs. 3.31 crores is made out of his accumulated savings and funds invested by his father in his name long back. The assessee has not furnished any details of agricultural income nor his father is assessed to tax, nor any evidence is filed by appellant with respect to investments made by his father in his name. Any statement/averment bereft of evidence is of no value and not to be taken into consideration. Reliance is placed on the decision of CIT v. Krishnaveni Ammal ([1986] 158 ITR 826)], for the proposition that, unless any proof is filed, there is no evidentiary value to these arguments. In this case, the Hon'ble Madras High Court ruled under the Law of Evidence, if a party fails to produce the best and most direct evidence i.e., in their power or reach to support their claim or explanation, such as specific account book, corroborative documents, or primary witness, the court or tax authority is fully entitled to draw an inference against the party. q) Under section 56(2) of the Act, once the sum is credited to an appellant's account from a third party withou....