Sapna Sandip Shah, Navsari vs Department Of Income Tax

Assessee(s) by : Shri Tushar Hemani, AR Revenue by : Shri M J Paul, Sr. DR सुनवाई क तार ख/Date of Hearing 05/05/2015 घोषणा क तार ख /Date of Pronouncement 14/05/2015

आदे श/O R D E R

PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER:

These are the cross appeals filed by the assessee and Revenue against the order of the Commissioner of Income-tax (Appeals), Valsad dated 05.01.2010 for Assessment Year 2006-07.

ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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2. The assessee is an individual. She derives income from interest income, commission income from LIC and short term capital gain.

ITA No. 1674/Ahd/2010 - Revenue's appeal 3. First we take up the Revenue's appeal. The Revenue has raised following grounds of appeal:-

1. On the facts and in the circumstance of the case and in law, the learned C.I.T.(A) erred in deleting the addition made U./S 69 B by the assessing officer on account of unaccounted investment made in LIC.

2. On the facts and in the circumstance of the case and in law, the learned C.I.T.(A) erred in deleting the addition of Rs.2,88,000/-u/s.56 as the cash gift received from non relatives on varsi tap & Birthday occasion was exceeding Rs.25,000/- and not covered u/s.56.

3. On the facts and in the circumstance of the case and in law, the learned C.I.T.(A) erred in deleting the addition of Rs.6,41,000/- made on account of unexplained cash credit u/s. 68 of the Act. Whereas the assessee failed to prove the genuineness of the transaction at the time of assessment.

4. On the facts and in the circumstance of the case and in law, the learned C.I.T.(A) ought to have upheld the order of the A.O. and dismissed the plea of the assessee.

5. It is therefore, prayed that the order of the learned C.I.T.(A) be set-aside and that the order of the Assessing officer be restored.

ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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3.1 The first issue is with regard to addition of Rs.6,01,598/- u/s 69 of the Act on account of unexplained investments. The Assessing Officer made addition of Rs.6,01,598/- by invoking provisions of Section 69 of the Act, as discussed in paragraph 7 of assessment order.

3.2 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) has granted relief to the assessee and the same has been opposed before us on behalf of the Revenue inter alia submitting that the CIT(A) erred in deleting the addition of Rs.6,01,598/- u/s 69 of the Act on account of unexplained investments and accordingly, order of CIT(A) be set aside on this issue and that of Assessing Officer be restored. On other hand, learned Authorized Representative for the assessee supported the order of CIT(A).

3.3 After going through the rival submissions and material on record we find that the Assessing Officer had made addition in respect of investments of Rs.6,01,598/- in LIC, treating the same as unexplained investments u/s 69B of the Act. The investment of Rs.6,01,598/- in LIC was duly recorded in assessee's balance-sheet. It was explained to Assessing Officer that the assessee had enough cash balance owing to gifts received on account of varshi tap and birthday of her children which were sufficient for making the said investments. However, the Assessing Officer treated such investment as unexplained and made the addition u/s 69B of the Act. He ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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failed to appreciate that Section 69B can be invoked only in case where an assessee has made investment in any bullion, jewellery or valuable article which is not recorded in the books of accounts and in respect of which the assessee could not give explanation or explanation offered by the assessee was not found to be satisfactory to the Assessing Officer. In the present case, the investment is duly reflected in the books of accounts and the assessee has also offered explanation in respect of the same. The provisions of Section 69B are applicable only when investments are not recorded either in full in part. In the present case, the Assessing Officer has not mentioned that the assessee has left concerned investments unrecorded either in part or in full. In view of above, the CIT(A) was justified in deleting the addition in question. We uphold the same.

4. Next issue is with regard to the addition of Rs.2,88,000/- u/s 56 on account of cash gift received from non-relatives on varsi tap & birthday occasion.

4.1 The assessee received gift of Rs.5,50,000/- on the occasion of varsi tap and birthday of her three children out of which Assessing Officer made the addition of Rs.2,88,000/- in respect of gifts received from non-relatives. Detailed break-up of the said sum of Rs.2,88,000/- alongwith reference of various documentary evidences in respect of concerned donors such as names, addresses, PAN, affidavits, confirmation letters, statement recorded by Assessing Officer, Voter's ID, etc., were ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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annexed at Annexure A placed before us. Varsi-tap, in Jain community, is celebrated with full enthusiasm and gift are received during these occasions. As per provisions of Section 56(2)(v) of the Act, the gifts not exceeding Rs.25,000/- received from non-relatives on or before 31.03.2006 is exempt. Such limit of Rs. 25,000/- is applicable in respect of each and every donor and not in respect of aggregate of gifts received. There is nothing on record to suggest that any of the gifts received from non-relatives exceeded Rs.25,000/-. Accordingly, such gifts are exempt in light of Section 56(2)(v) of the Act and no addition is called for. As per scheme of the Act, if a sum received from a non-relative does not exceed Rs.25,000/-, the same cannot be included in the total income. In any case, the provisions of Section 68 cast an initial burden on the assessee to prove identity, genuineness and creditworthiness of depositors. Assessee has placed on record various documentary evidences in respect of concerned donors as discussed above. Thus, the initial onus cast upon assessee has been discharged. Having discharged the initial onus with satisfactory explanation, onus shifts on the Revenue. The provisions of Section 68 does not require an assessee to establish the source of the source of deposits. Hence, no addition could be made even in provisions of Section 68 of the Act. In view of the above, it cannot be said that the CIT(A) was not justified in deleting the addition. Thus, the finding of CIT(A) in this regards needs no interference from our side. We uphold the same.

ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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5. Next issue is with regard to the addition of Rs.6,41,000/- made on account of unexplained cash credit u/s 68 of the Act.

5.1 The Assessing Officer made addition u/s 68 in respect of unsecured loans aggregating to Rs.6,41,000/-. Detailed break- up of the said sum along with documentary evidences such as affidavits, confirmation, etc. were placed on record in respect of the concerned persons and the same is annexed before us as Annexure "B". The concerned transactions were through banking channel. The assessee has also proved identity of creditors, creditworthiness of creditors and genuineness of transactions by placing on record requisite documentary evidences. The provisions of Section 68 cast an initial burden on the assessee to prove identity, genuineness and creditworthiness of depositors. Assessee has discharged such onus. Having discharged the initial onus with satisfactory explanation, onus shifts on the Revenue. As per the provisions of Section 68, an assessee is not required to prove source of the source of deposits. Hence, no addition is called for u/s 68. Having furnished the aforesaid details, it cannot be said that the same remained unexplained in the hands of the assessee. Therefore, in the light of above, the order of the CIT(A) in this regard was justified in deleting the addition in question and the same is upheld.

6. In the result, the Revenue's appeal is dismissed.

7. Now we take-up the Assessee's appeal vide ITA No.1563/Ahd/2010 for Assessment Year 2006-07.

ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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8. In the assessee's appeal, the only issue is with regard to addition of Rs.1,50,000/- on account of unexplained cash credit by invoking provisions of Section 68 of the Act.

8.1 The Assessing Officer observed that there was an outstanding liability in the books of the assessee towards purchase of share and mutual funds. During the course of assessment proceedings, the Assessing Officer asked for the explanation in respect of the same and did not appreciate the explanation of the assessee for which the Assessing Officer made following observation:-

"10. Further, the assessee has shown an amount of Rs.1,50,000/- as outstanding payable for purchase of shares/mutual funds on liability side of Balance Sheet. The assessee has furnished her written reply dated 22.12.2008 to show cause notice at para no.3 sub para no.(f),(g), (h) (i), (j) and (k). However, the contention of the assessee is not acceptable because

(a) the assessee is not an agent or share broker dealing in shares and securities.

(b) the assessee has not furnished any evidence/proof of having invested the amounts received from the above referred parties in a particular scrip of shares/units of mutual funds.

(c) the assessee has not furnished the particulars i.e. name of the company, number of shares, date of purchase as well as quantity of shares of each company where she had invested Rs.1,11,540/- and in whose name the said investment stands.

(d) It is surprise to note that the assessee has offered income in the form of short term capital gain from transactions of shares. The assessee has offered entire amount of Rs.45,010/- as income, even though ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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the short term capital gain attracts only 10% taxation as special rate. Moreover, the assessee has not furnished the workings of how she has earned the amount of short term capital gain. The assessee appears to have introduced her unaccounted moneys in the form of short term capital gains which is more particularly shown in the absence of gain which is more particularly shown in the absence of details of workings on short term capital gains. In view of the above, I presume, that the assessee may have earned Rs.45,010/- from speculative transactions of shares and hence treat the same speculative income.

(e) The assessee has also not furnishing contracts issued by brokers for the transactions of sales and purchases of shares.

Since the assessee has not satisfactorily explained the source and nature of credit entry in his books of account, the addition of Rs.1,50,000/- is made on account of unexplained cash credit u/s.68,"

8.2 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) upheld the order of the Assessing Officer by observing that the assessee did not have any evidence like contract note to justify the claim of liability outstanding Rs.1,50,000/- towards purchase of share and mutual funds. As the assessee was short of the details and supporting evidences to justify its claim, the same was not allowable expenditure in the hands of the assessee. In this regard, the Authorized Representative for the assessee also failed to present the documentary evidence namely broker's note either before the Assessing Officer or before the appellate authorities; he simply mentioned that producing the notes during the course of assessment proceedings or appellate ITA Nos. 1563 Ahd 2010 & 1674 Ahd 2010 Sapna Sandip Shah-Cross Appls AY 2006-07

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proceedings was not possible because the time gap between the transaction done by the assessee and that required to be produced was large. In this background, the CIT(A) rightly observed that the assessee was not having the details regarding the transactions in question. In view of the above, the CIT(A) was justified in upholding the addition of Rs.1,50,000/- made by the Assessing Officer u/s 68 of the Act. This reasoned finding of the CIT(A) needs no interference from our side. We uphold the same.

9. In the result, the Revenue's appeal as well as assessee's appeal, both are dismissed.

Order pronounced in the Court on 14th day of May, 2015 at Ahmedabad.

Sd/- Sd/-

(ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 14/05/2015 *BT

आदे श क ूितिल&प अमे&षत/Copy षत of the Order forwarded to :

1. अपीलाथ) / The Appellant

2. ू*यथ) / The Respondent.

3. संबिं धत आयकर आयु+ / Concerned CIT

4. आयकर आयु+(अपील) / The CIT(A),

5. &वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदे शानुसार/ ार BY ORDER,

//TRUE COPY// उप/सहायक उप सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण अिधकरण, करण अहमदाबाद / ITAT, Ahmedabad