Kalawati Sharma, Kolkata vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA [Before Shri P.K.Bansal, A.M. & Shri Mahavir Singh, J.M.]

I.T.A. No.1906/Kol/2012 : Assessment Year : 2005-06

Smt. Kalawati Sharma -vs- ITO, Ward-2, Malda (Appellant) (PAN: AVQPS 9629G) (Respondent)

Date of concluding the hearing : 19.05.2015 Date of pronouncing the Order : 19.05.2015

Appearances :For the Assessee : Shri P.K.Himmatsinghka, Advocate :For the Department : Shri Sanjay, Addl. CIT, Sr.DR

ORDER

Per Shri P.K.Bansal, A.M.

This appeal filed by the assessee is directed against the order dated 12.09.2012 of ld. CIT(A), Jalpaiguri for the a ssessment year 2005-06 by taking the following effective grounds of appeal.

"1. L'd CIT(A) erred in confirming the addition of Rs.2,00,000/- representing the gift received from Smt. Shobha Rani Chaudhury as income ignoring the material on record.

2. L'd CIT(A) erred in confirming the addition of Rs.9,00,000/- representing the unsecured loan taken from loan creditors as income ignoring the material on record.

3. L'd CIT(A) erred in confirming the addition of Rs.32,000/- & Rs.47,520/- towards interest on unsecured loan."

2. Ground no.1 relates to the sustenance of the addition of Rs.2 lakhs representing the gifts received from Smt. Shobha Rani Chaudhury. The AO noted that the assessee has received a gift of

1 2 ITA No.1906/Kol/2012 Smt. Kalawati Sharma : A. Yr: 2005-06

Rs.2 lakhs from Smt. Shobha Rani Chaudhury. But the assessee even though proved the identity and filed confirmation but could not prove the creditworthiness to make the gift genuine. He, therefore, made the addition under section 68. When the matte r went before the C IT(A), the CIT(A) confirmed the addition.

3. We heard the rival submissions and carefully considered the same. We noted that the assessee has received a gift of Rs.2 lakhs from Smt. Shobha Rani Chaudhury. The assessee has filed confirmation from Smt. Shobha Rani Chaudhury, who is an income- tax asse ssee and regularly assessed to income-tax. Except the confirmation, no evidence proving the creditworthiness for the occasion of making the gift was explained. The gift has been made in cash. In our opinion, the onus is on the assessee to prove that the donor wa s having cash in hand as on 01.06.2004. In the absence of the discharge of the onus by the assessee, we confirm the order of the CIT(A) sustaining the addition of Rs.2 lakhs. Thus, the ground no.1 taken by the asse ssee stands dismissed.

4. Ground no.2 relates to the sustenance of the addition of Rs.9 lakhs under section 68. Brief facts relating to this ground are that the AO noted that the assessee has received loans from the following parties:

Smt. Laxmi Mahato Rs.1,00,000/- Smt. Jyoti Sharma Rs.3,00,000/- Smt. Chanda Devi Sharma Rs.3,00,000/- Smt. Geeta Sharma Rs.2,00,000/-

In the absence of genuinity of the transactions and creditor s worthiness, the AO treated the sum of Rs.9 lakhs as the income of the assessee under section 68 of the Income-Tax Act. The assessee 3 ITA No.1906/Kol/2012 Smt. Kalawati Sharma : A. Yr: 2005-06

went in appeal before the C IT(A). The CIT(A) also confirmed the addition.

5. We heard the rival submissions and carefully considered the same. We noted that all the four partie s from whom the assessee has received the loans amounting to Rs.9 lakhs are the income-tax assessee and regularly assessed to income-tax. They ha ve filed confirmations as well as affidavit. All the loans have been received through account payee cheque. Except the case of Smt. Jyoti Sharma, none of the assessee has deposited cash prior to the issue of the cheque to the assessee. Smt. Jyoti Sharma no doubt has deposited the cash into her account before issue of cheque to the assessee. The loan advanced to the asse ssee has duly been sho wn, even by Smt. Chanda Devi Sharma in her balance -sheet, the copy of which was duly filed before the AO. The AO just rejected the affidavit without bringing any evidence on the contrary. Even in the case of Smt. Geeta Sharma, the assessee has filed the balance- sheet, which proved the advance being made to the assessee. The provisions of section 68 are very clear, which stipulates that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so c redited may be charged to income-tax as the income of the asse ssee of that previous year. In this case, the assessee has duly submitted the explanation. The AO treated the said explanation to be non- satisfactory. A satisfaction of the AO, in our opinion, must be as no material available on record. It cannot be based merely on assumption and presumption. Where the asse ssee has duly proved 4 ITA No.1906/Kol/2012 Smt. Kalawati Sharma : A. Yr: 2005-06

the identity, genuinene ss of the transactions as well as the creditworthiness, in our opinion, the addition cannot be sustained in the hands of the assessee. Only in the case of Smt. Jyoti Sharma, who has deposited the cash in her b ank account prior to advancing of the loan to the assessee. Except Smt. Jyoti Sharma, none of the creditors has deposited cash in their accounts so that the genuineness of the transactions can be doubted. We, therefore, set aside the order of the CIT(A) and delete the addition in respect of each of the cash creditor, except Smt. Jyoti Sharma, who ha s advanced a sum of Rs.3 lakhs. Therefore, we delete the addition to the extent of Rs.6 lakhs and sustain the addition of Rs.3 lakhs. Thus, this ground taken by the assessee is partly allo wed.

6. Ground no.3 is consequential in nature, which relates to the interest paid by the assessee on the unsecured loans, which has been added by the AO. Since we have already deleted the addition of Rs.6 lakhs out of the sum of Rs.9 lakhs added by the AO, therefore, we direct the AO to re-compute the disallowance towards the interest on unsecured loans to the extent it relates to the sum of Rs.3 lakhs in respect of loan advanced by Smt. Jyoti Sharma to the assessee. The rest of the interest stands deleted.

7. In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the Open Court on 19th May, 2015.

Sd/- Sd/- (Mahavir Singh) (P.K.Bansal) Judicial Member Accountant Member th Dated : 19 May, 2015

Talukdar(Sr.P.S.) 5 ITA No.1906/Kol/2012 Smt. Kalawati Sharma : A. Yr: 2005-06

Copy of the order forwarded to:

1. Shri P.K. Himmatsinghka, AA-4, Salt Lake, Kolkata - 700 064

2 ITO, Ward-2, Malda

3. The CIT(A),

4. CIT,

5. DR, True Copy, By order,

Asstt. Registrar, ITAT, Kolkata