Income Tax Appellate Tribunal - Jabalpur
Assistant Commissioner Of Income Tax ... vs Smt. Meeta Khatri,, on 16 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
JABALPUR BENCH, JABALPUR
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
IT(SS)A No. 21/Jab/2016
/ Assessment Year : Block Period 01.04.1990 to 20.09.2000
Asstt. Commissioner of Smt. Meeta Khatri,
Income-tax Vs 109, Adarsh Nagar,
Circle - 2(1), Narmada Road, Jabalpur
Jabalpur PAN : -
/ (Appellant) / (Respondent)
Revenue by : Shri V.B. Sargar, DR
Assessee by : Shri Sumit Nema, Adv.
/ Date of Hearing : 14/03/2018
!" / Date of Pronouncement: 16/03/2018
#$%&/O R D E R
PER KUL BHARAT, JUDICIAL MEMBER:-
This appeal filed by the Revenue is directed against the order of the learned Commissioner of Income-tax (Appeals)-2, Jabalpur dated 08.03.2016 pertaining to block period 01.04.1990 to 20.09.2000.
2. The Revenue has raised following grounds of appeal:-
"1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the addition of Rs. 12,09,362/- made by the AO on account of undisclosed income, without appreciating the fact that the assessee was a non filer of return. Moreover, he was failed to prove the veracity of his claim.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.85,575/- made by the AO on account of undisclosed profit from sale property without appreciating the facts that the assessee could not produce the source of initial acquisition.
3. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the addition of Rs.61,056/- made by the A.O. on account of unexplained opening balance.
4. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the addition of Rs. 5,35,653/- made by the A.O. on account of unexplained cash found during the course of search.ITSSA No. 21/Jab/2016
ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 2
5. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting addition of Rs.5,40,000/- made by the A.O. on account of unexplained expenditure on marriage of assessee's daughters."
3. Briefly stated facts of the case are that assessee is an individual. In consequence to search and seizure operations conducted on 28.09.2000, a notice u/s 158BC was issued on 02.08.2002. In compliance to the notice, assessee filed return of undisclosed income in Form No.2B on 09.09.2002 declaring undisclosed income at Nil. Subsequently, assessment was framed under Section 158BC of the Income-tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 13.09.2002. While framing the assessment, Assessing Officer computed the total undisclosed income at Rs. 48,08,466/- by making various additions in respect of undisclosed income computed u/s 158BB of the Act (Rs.12,09,362), unexplained investment in gold (Rs.83,420/-), unexplained investment and undisclosed profit on trucks (Rs.20,19,475/-), unexplained gift (Rs.1,20,000/-), unexplained investment in plot (Rs.2,39,500/-), unexplained cash (Rs.61,056/-), unexplained cash credit (Rs.5,35,653/-) and unexplained expenditure in marriage (Rs.5,40,000/-).
4. Aggrieved by the order of the Assessing Officer, assessee preferred appeal before the learned CIT(A) who, after considering the submissions of the assessee, partly allowed the appeal thereby deleting part of the additions made by the Assessing Officer. Now, Revenue is aggrieved and is in appeal before the Tribunal against the deletion of addition.
5. The first issue is with regard to deletion of addition of Rs.12,09,362/- made by the Assessing Officer on account of undisclosed income. The Assessing Officer observed that assessee has not filed regular return of income. Therefore, by invoking the provision of Section 158BB, the Assessing Officer made addition of Rs.12,09,362/- on account of ITSSA No. 21/Jab/2016 ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 3 undisclosed income for the block period. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to the assessee by observing as under:-
"6.2.3 DECISION: I have carefully considered the facts of the case and the written submission put forth on behalf of the appellant as well as the material placed on record. I am inclined to accept the arguments advanced on behalf of the appellant. The Hon'ble jurisdictional High Court has been consistently holding that section 158BB has been amended retrospectively and in respect to the years where the income was below taxable limit, same does not constitute undisclosed income, even if no return is filed for such years. In CIT Vs. Maya Chotrani (2007) 210 CTR 413(MP), where the issue involved was whether undisclosed income includes income of those years where return was not filed and the income after allowing deduction u/s SOL was below taxable limit, it has been held that undisclosed income does not include such income. In the case of CIT Vs. Purushottamlal Tamrakar (2004) 270 ITR 314 (MP), that section 158BB has been amended retrospectively and in respect to years where the income was below taxable limit, same does not constitute undisclosed income, even if no return is filed for such years. In the case of CIT Vs. Purushottam Khatri (2007) 290 ITR 260, where income of those years where return was not filed and the income after allowing deduction u/s SOL was below taxable limit, it has been held that undisclosed income does not include such income. Similar view has been taken by the Agra Bench of the Hon'ble Tribunal in Deena Nath Agarwal Vs. Assistant Commissioner of Income Tax (2004) 82 TTJ 689(Tribunal-Agra), wherein it has been held that by Finance Act, 2002, sub-clause (B) of clause (c) of sub- sec. (1) of sec. 158BB has been inserted with retrospective effect from 1st July, 1995, according to which if the return has not been filed for the reason that there was no income exceeding the taxable income, it cannot be considered as undisclosed income. Clause (c) of section 158BB(1), prior to its substation laid down that in computing undisclosed income, income to be reduced for a particular year would be nil if in relation to that year no return of income had been filed even though due date for filing of return of income had expired. Interpretation of this original clause gave rise to serious controversy between taxpayers and the Department plea of the taxpayers used to be that since there was no obligation to file return of income in relation to the year in which income of the taxpayer was below taxable limit, the entire income of such year could not be treated as undisclosed income and subjected to higher rate of tax solely on the ground that no return of such income had been filed. The department relied on literal interpretation of the ITSSA No. 21/Jab/2016 ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 4 words of said clause (c) as it stood prior to its substitution. There were some Tribunal decision in which this point was decided in favour of assessee. The controversy came up for adjudicating before Kerala High Court in CIT vs. M.M. George (2002) 173 CTR (Ker) 357 : (2002) 254 ITR 45 (Ker) in which the decision went against the assessee. The High Court held that income below the taxable limit of any previous year is not to be excluded from the undisclosed income of the block period for the purpose of s. 158BC, if such income has not been declared by the assessee by filing the return of income. Clause (c) has been substituted by new clause w.e.f. 1-7-1995 by the Finance Act, 1995. The decision of Kerala High Court has been rendered redundant in view of said substitution. "See CIT vs. M.M. Thomas (2004) 187 CTR (Ker) 78 : (2004) 265 ITR 327 (Ker)" In CIT vs. Purshottamlal Tamrakar Uchehra (2003) 184 CTR (MP) 349, the Madhya Pradesh High Court held that if for some years which constitute the block period, there is no tax liability on the basis of the books of account i.e. income is below the taxable limit, the income of said years is not to be treated as undisclosed income under s. 158BB. "See also CIT vs. Smt. Chandra Balakrishnan (2003) 184 CTR (Ker) 353. In Chain Sukh Rathi vs. CIT & Anr. (2003) 185 CTR (Raj) 56 it was held that while computing undisclosed income in accordance with the provisions of s. 158BB tax exemption limit has to be kept in mind, and tax should not be charged on that part of the income which is not chargeable to tax in each year. In CIT & Anr. vs. Smt. Lily Tobias (2004) 266 ITR 401 (Pat), it has been held that effect of retrospective amendment w.e.f. 1st July, 1995 is that if the income of particular assessment year falling within the block period is not taxable, the same shall not be treated as undisclosed income. Also refer CIT vs. Ashim Krishna Mondal (2004) 192 CTR (Cal) 336 : (2004) 270 ITR 160 (Cal). In K.P. Mohammed Sawed vs. CIT (2005) 194 CTR (Ker) 4 : (2005) 273 ITR 338 (Ker) the Kerala High Court held that where assessee had failed to file return for the asst. yr. 1996-97 as regards capital gains and notice under s. 158BD had been served on the assessee in January, 1998, such income could be treated as undisclosed income for that year. Relying on CIT vs. Asandas Khatri (2006) 201 CTR (MP) 160 : (2006) 283 ITR 346 (MP) the Rajasthan High Court held in CIT vs. Late Manohar Lal Soni (2008) 214 CTR (Raj) 395, in relation to block period 1988-89 to 1999-2000, that if the income of assessee for any previous year falling within the block period does not exceed the maximum not chargeable to tax, such income is required to be reduced from out of the aggregate income of the block period even if no return was filed within the time prescribed under s. 139, as the assessee was not under an obligation to file any return. See also Rameshwar Soni vs. Asstt. CIT (2008) 214 CTR (Raj) 398. In CIT vs. Smt. Sharmila Pandey (2005) 197 CTR (Raj) 561 it was held that since assessee had not filed returns for the assessment years falling in block period in which her income was below ITSSA No. 21/Jab/2016 ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 5 taxable limit, matter was remitted to the AO to recompute the undisclosed income of the relevant assessment years in the light of cl. (c) of sub-s. (1) of s. 158BB substituted with retrospective effect from 1st July, 1995. In CIT vs. Jugal Kishore Gupta (2009) 221 CTR (All) 352, it was held that Income of the assessee partner in the relevant assessment years being below the taxable limit, it cannot be said that the returns were not filed to hide the income by way of interest and salary and, therefore, income by way of interest and salary from the firm cannot be said to be undisclosed income under the provision of s. 158BB.
6.2.4. Therefore, having regard to the facts and circumstances of the case and the emerging legal position, I am of the view that the income disclosed on the basis of the documents furnished during block assessment proceedings cannot be assessed as the appellant's income from undisclosed sources. Further, the items of income, the aggregate of which has been added as undisclosed income at Rs.12,09,362/-, have been added as undisclosed income separately by the Assessing Officer. Therefore, the addition amounts to a double addition. In view of the foregoing discussion of facts of the case and the principle of law laid down in the decisions of the Hon'ble jurisdictional High Court, I am of the view that the Assessing Officer was not justified in making the impugned addition of Rs. 12,09,362/-. The same is deleted. The appellant gets relief accordingly."
6. Nothing contrary was brought to our knowledge on behalf of the Revenue. Therefore, we are not inclined to interfere in the findings of the CIT(A) who had rightly granted relief to the assessee as discussed in the appellate order. Accordingly, the same is upheld and ground No.1 is dismissed.
7. Second issue is with regard to the deletion of addition of Rs.85,575/- made by the Assessing Officer on account of undisclosed profit from sale of property. Learned CIT(A) observed that since the investment in the property has already been considered in the hands of the assessee's husband, there is no logic in adding the profit on sale of property in the hands of the assessee. This finding of fact could not be controverted by the Assessing Authority. Therefore, we see no infirmity in the order of the ld.
ITSSA No. 21/Jab/2016ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 6 CIT(A) which is confirmed. Ground No.2 raised by the Revenue is thus dismissed.
8. Next issue is related to the deletion of addition of Rs.61,056/- made by the Assessing Officer on account of unexplained opening balance. This issue also elaborately discussed by the CIT(A) in his order and observed that the opening capital balance as on 01.04.1990 could not be treated as the undisclosed income of the block period. He is also satisfied with the explanation offered by the assessee as reasonable which is narrated at page no.33 in his order. These well reasoned finding of facts of ld. CIT(A) have not been controverted by the Revenue by placing any contrary material on record. We, therefore, find no reason to interfere with the findings of the learned CIT(A) which is confirmed. Ground No. 3 is also dismissed.
9. Next issue is regarding deleting the addition of Rs.5,35,653/- made by the Assessing Officer on account of unexplained cash found during the course of search. Learned CIT(A) deleted this addition by following observation:-
"6.10.3 I have considered the facts of the case and the arguments advanced on behalf of the appellant. During the course of proceedings under sec. 158BD of the Act in the case of the appellant's husband late Shri Ashok Kumar Khatri, the assessee had filed cash flow statement vide reply dated 27- 8-2004. As per said cash flow statement, the assessee was in receipt of salary, income from house property and dalali income. Though the assessment made under sec. 158BD had been annulled in appeal, the case of late Shri Ashok Kumar Khatri has since been decided on merits and by virtue of the appellate orders passed by the CIT(A) and the Hon'ble ITAT, the cash flow statements as furnished by the assessee stood accepted.
6.10.4 The availability of cash in the trunk stated to have been kept regularly by late Shri Ashok Kumar Khatri during his life time is supported by the Panchnama drawn at the time of opening the trunk after his death, and his capacity to keep such money with him is supported with the copies of ITRs as also the cash flow statement filed during the block assessment proceedings under sec. 158BD of the Act. The appellant has discharged her onus of proof.ITSSA No. 21/Jab/2016
ACIT Vs. Smt. Meeta Khatri AY : Block Period 01.04.90 to 20.09.2000 7 Having regard to the facts and circumstances of the case, I am of the view that the Assessing Officer was not justified in holding the amount of Rs. 5,35,653/- as the appellant's undisclosed income.sed sources. The addition is, therefore, deleted."
10. Nothing contrary was brought to our knowledge on behalf of the Revenue. Therefore, we are not inclined to interfere in the findings of the CIT(A) who had rightly granted relief to the assessee as discussed in the order. Accordingly, the same is upheld and ground No.4 raised by the Revenue is also dismissed.
11. Last issue is with regard to the deletion of addition of Rs.5,40,000/- made by the Assessing Officer on account of unexplained expenditure on marriage of assessee's daughters. As the ld. CIT(A) had already considered the issues regarding the sources of on income of assessee such as agricultural income, gifts, income from trucks as also cash received from truck of the assessee's husband and also satisfied with the explanation of the assessee for such income, there is no justification for this impugned addition on account of unexplained marriage expenses incurred in the financial yeas 1995-95, 1998-99 and 1999-2000. This addition has been rightly deleted by the ld. CIT(A); therefore, no interference is required. Ground No.5 is also thus dismissed.
12. In the result, appeal of the Revenue is dismissed.
Order pronounced in the Court on 16th March, 2018 at Jabalpur.
Sd/- Sd/-
(MANISH BORAD) (KUL BHARAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Jabalpur; Dated 16/03/ 2018
*Bit
ITSSA No. 21/Jab/2016
ACIT Vs. Smt. Meeta Khatri
AY : Block Period 01.04.90 to 20.09.2000
8
'()* +, -./.0.1 23).4//Copy of the Order forwarded to :
1. 56789:; / The Appellant
2. <=>:; / The Respondent.
3. ?@A@BCD E>FG E>HI / Concerned CIT
4. E>FG E>HI(JKLM) / The CIT(A)
5. BNO9P7> <BDBQBC, RSTU JKLMLS JVWTUX,/ DR, ITAT, Jabalpur
6. P9YZ [9\8 / Guard file.
]^_`abcdae/ BY ORDER, TRUE COPY fg dhaijgklmjae (Dy./Asstt.Registrar) ]ijengmominpqjer nhs^ata^ / ITAT, Jabalpur / ,