Income Tax Appellate Tribunal - Nagpur
Ito vs Pravin Ramkrishna Upganla War on 30 December, 2003
Equivalent citations: (2004)88TTJ(NAG)511
ORDER
N.V. Vasudevan, J.M. This is an appeal by the revenue against the order dated 6-6-2001, of the Commissioner (Appeals)-II, Nagpur relating to the assessment year 1994-95. The grounds of appeal of the revenue read as follows "(1) On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in directing to delete addition of Rs. 8,50,000 made on account of unexplained deposit in United Western Bank Ltd., Chandrapur.
(2) On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in holding that the money deposited at Rs. 8.50 lakhs in the joint account held by assessee with Smt. Yojana Wattamwar (NRI) with United Western Bank did not belong to assessee.
(3) On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in not appreciating the fact that Smt. Yojana Wattamwar (NRI) is a housewife and during the year visited India from 12-7-1993, to 15-8-1993.
(4) On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in not appreciating the fact that the Bank account held by assessee together with Smt. Yojana Wattamwar with United Western Bank, Chandrapur is a saving Bank account and not NRI account in which the entire money of Rs. 8.50 lakhs was credited by transfer entries.
(5) On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erredin directing to delete addition of Rs. 11,111 on account of interest credited by United Western Bank, Chandrapur."
2. The facts and circumstances under which the above grounds of appeal arise are as follows.
The assessee is an individual who derives income in the form of salary from M/s Janata Textiles, Chandrapur which is the proprietrix business of his mother. For the assessment year 1994-95, the assessee filed the return of income showing salary income of Rs. 33,000. As to whether any assessment was made originally or not is not mentioned in the order of assessment which is the suhject-matter of this appeal passed under section 147. It was later noticed by the assessing officer that in the balancesheet of the assessee as on 31-3-1993, a loan of Rs. 4,08,870 was outstanding which was payable to M/s Janata Textiles. In the balance sheet as on 31-3-1994, the loan payable to M/s Janata Textiles was shown only at Rs. 2,63,711. A sum of Rs. 1,45,159 was, therefore, paid by the assessee to M/s Janata Textiles during the previous year. Considering the meagre income 133 returned by the assessee, the assessing officer was of the view that the assessee had no source of income for making repayment of the loan to M/s Janata Textiles. He, therefore, issued a notice under section 148. The assessee, in reply, requested the assessing officer to treat the return of income originally filed as a return of income filed in response to notice under section 149. The assessing officer called upon the assessee to explain the source of funds for repayment of the loan. The source was explained as follows by the assessee vide his reply dated 15-12-2001. The assessee had a total credit in his account with Ws Janata Textiles during the previous year of a sum of Rs. 2,11,745 and total, debits of Rs. 66,586. The net credit, viz., Rs. 1,45,159 was thus loan returned. The source of Rs. 2,11,745 was explained, by the assessee as follows:
Rs.
17,330 Maturity proceeds of his wife's F.D. Rs.
59,415 Maturity proceeds of FDR in assessee's name.
Rs.
50,000 Received from Smt. Yojana Suresh Wattamwar, sister of the assessee by cheques on United Western Bank, Chandrapur.
Rs.
40,000 40,000 Rs.
5,000 Receipt from Janata Fabrics.
Rs.
2,11,745 An abstract of the Bank Account of Mrs. Yojana Suresh Wattamwar, hereinafter referred to as 'Mrs. Yojana' with United Western Bank, Chandrapur a/c No. 93/224, hereinafter referred to as 'the UW Bank, Chandrapur' was also filed by the assessee. The copy of the account filed by the assessee gave an impression that the transactions reflected therein were the only, transactions and that Mrs. Yojana was the sole account holder. The assessing officer called for a Bank statement from UW Bank, Chandrapur and found that a/c No. 93/224 stood in the joint names of Mrs. Yojana and the assessee and that there were 20 other transactions during the previous year in the said account apart from what was reflected in the abstract of Bank account filed by the assesse. It also transpired that the assessee was operating the Bank account for and on behalf of Mrs. Yojana also. A power of attorney empowering the assessee to operate this Bank account on behalf of Mrs. Yojana was also filed.
3. On scrutiny of this Bank statement obtained from UW Bank, Chandrapur, the assessing officer noticed that there were deposits in this Bank account to the extent of Rs. 8,50,000 on six different dates between 20-5-1993, to 28-5-1993. There were withdrawals of these amounts also. The deposits as wen as withdrawals were by the assessee and this finding is based on the pay-in-slips, withdrawal slips, DD/Cheques, copies of which were obtained by the assessing officer from the Bank. The assessing officer, therefore, called upon the assessee to explain the source of funds for the deposits to the tune of Rs. 8,50,000. The reply of the assessee was that these moneys never belonged to him but belonged to Mrs. Yojana. A fax message from USA by Mrs. Yojana was filed before the assessing officer (Mrs. Yojana is the sister of the assessee and was a non-resident Indian living in USA). The same reads as follows :
"I have received a request of clarification from my brother Mr. Pravin Upganlawar. In response to his request, I would like to present the following facts.
My name is Mrs. Yojana Suresh Wattarnwar formerly Yojana Ramakrishna Upganlawar. We are married since 1978. I moved to United States in 1979 and since then I am residing in United States of America.
I opened an NRI account in United Western Bank at Chandrapur. The a/c No. was 93/224 and my brother Mr. Pravin Upganlawar was given Power of Attorney to handle my account and conduct all official business on my behalf, cashing my travellers cheques with kind help from Bank manager made the original deposit. Additionally I sent the funds as required. As I understand that Mr. Pravin Upganlawar's role was limited to power of attorney and he had no ownership of the account."
The assessing officer examined the assessee under section 131 of the Act. The assessing officer noticed that it was the assessee who had the benefit of all these deposits in the joint account since the moneys were utilized by the assessee for discharging his loan to M/s Janata Textiles to the tune of Rs. 1,45,149 and making payment to one Mr. Dixit of Rs. 3,00,000. According to the revenue; this was for surrender of tenancy of shop which was adjacent to M/s Janata Textiles. According to the assessee, this was a loan by the assessee to Mr. Dixit. Mr. Dixit also confirmed that this was a loan. A sum of Rs. 50,000 was also paid to one Mrs. Chandramani Joshi who was the landlady~ of the adjacent shop originally leased to Mr. Dixit and now leased to the assessee. On the above evidence, the assessing officer came to the conclusion that the deposit of Rs. 8,50,000 was the money of the assessee for the following reasons :
(a) Mrs. Yojana confirmed that the account was a NRI account but the fact was that the account was a saving Bank account.
(b) The withdrawals from the account were for the benefit of the assessee.
Since there was no satisfactory explanation of the source, the assessing officer treated the sum of Rs. 8,50,000 as the assessee's moneys for which the source was unexplained and, therefore, deemed income of the assessee. A sum of Rs. 11, 111 was interest credited in this joint account which was also treated by the assessing officer as the assessee's income and added to the total income of the assessee.
4. Aggrieved by the aforesaid addition, the assessee preferred appeal before the Commissioner (Appeals). Before the Commissioner (Appeals), the assessee gave the break up of deposit of Rs. 8 50,000 in the joint saving Bank account which were as follows :
(a) Five deposits of Rs. 40,000 each by DD drawn on United Western Bank, Solapur.
(b) Rs. 6,50,000 being moneys belonging to Mrs. Yojana which was lying with one Mr. Hitesh Kumar Patel of Mumbai which was collected by the assessee from Mr. Hitesh Kumar Patel on behalf of Mrs. Yojana and deposited in the joint account with UW Bank, Chandrapur.
With regard to the deposit of Rs. 40,000 each by five drafts, it was the case of the assessee that Mrs. Yojana had lent a sum of Rs. 2,00,000 to one Mr. V.G. Raghaji, Solapur in 1989 and the said loan was repaid by the borrower by five demand drafts all drawn on United Western Bank, Solapur favouring Mrs. Yojana. Mr. V.G. Raghoji filed confirmation letter confirming the facts as stated by the assessee and he was also an assessee on the file of Income Tax Officer, Ward 2(1), Solapur under PAN 39-017-PV-0742. Mrs. Yojana also filed an affidavit duly notarized by a Notary Public of USA before the Commissioner (Appeals) confirming the fact that she was the owner of all the funds lying in the joint account with the assessee in UW Bank, Chandrapur. She also filed a certificate duly notarized confirming that the source of moneys deposited in the said joint account was out of her NRI funds. In the light of all these documents, the Commissioner (Appeals) held that since the source of the deposit was duly explained by the assessee, the assessee cannot be said to be the owner of funds to the extent of Rs. 2,00,000 4.1 With regard to the deposit of Rs. 6,50,000, the money had come from United Western Bank, Fort, Bombay. The explanation of the assessee was that Mrs. Yojana had given a sum of Rs. 6,50,000 to one Mr. Hiteshkumar Patel of Panchratan Building, Opera House, Bombay who happened to be her family friend. This sum was given from time to time out of sale proceeds of debentures, left-over currencies, sale of assets, encashment. of travelers cheques etc. The money was stated to be sent to Mr. Hiteshkumar Patel for purchase of real estate as an investment in Mumbai. The idea of investment was later given up and Mrs. Yojana requested the assessee to collect the money from Mr. Hiteshkumar Patel from Mumbai and deposit the same in her account. A fax confirmation to this effect was filed before the Commissioner (Appeals) from Mrs. Yojana. On the basis of these documents, the Commissioner (Appeals) came to the conclusion that the sum of Rs. 6,50,000 also did not belong to the assessee and deleted the addition made by the assessing officer.
4.2. The Commissioner (Appeals) also gave a finding that the evidence in the form of fixed deposit receipt evidencing investment in Dollar and their encashment from time to time by Mrs. Yojana, proved her source of fund and the same cannot be doubted.
4.3. The addition of Rs. 11,111 was interest accumulation in the joint saving Bank account and the interest accumulation was also directed to be deleted by the Commissioner (Appeals) in view of his finding that the funds in the joint account did not belong to the assessee and that it belonged only to Mrs. Yojana. Aggrieved by the order of the Commissioner (Appeals), the revenue is in appeal before us.
5. We have heard the rival submissions. The learned departmental Representative brought to our notice the fact that the assessee originally filed an account extract of Mrs. Yojana which was not a reflection of the true state of affairs. According to him, this suspicious circumstance coupled with absence of evidence before the assessing officer that the funds belonged to Mrs. Yojana and the utilization of the funds by the assessee for his own benefit was enough to sustain the addition. According to him, the Commissioner (Appeals) erred in admitting certain additional evidence. Apart from this, he also submitted that there was no evidence before the Commissioner (Appeals) to substantiate the case of the assessee that money was given for investment in India by Mrs, Yojana to Mr. Hiteshkumar Patel or evidence that loan was given in the year 1989 by Mrs. Yojana to Mr. V.G. Rahoji. He also submitted that there is no correlation between the FDs and the source of funds to the extent of Rs. 8,50,000.
6. The learned counsel for the assessee very strongly relied on the order of the Commissioner (Appeals). In particular, he relied upon the circumstances viz., the confirmations, affidavit and certificate of Mrs. Yojana filed in the proceedings which have gone unrebutted in the proceedings. His submission was that the fact that Mrs. Yojana confirmed the ownership of the funds was enough to discharge the burden that lay on the assessee. According to him, the assessee has gone one step ahead and proved the source of Mrs. Yojana also. According to him, there was no new additional evidence filed before the Commissioner (Appeals). Affidavits or certificate or confirmations cannot be equated to additional evidence. In any event, according to him, the Commissioner (Appeals) had inherent power to receive such additional evidence. He also brought to our notice the fact that the assessing officer was afforded due opportunity by the Commissioner (Appeals).
7. We have considered the rival submissions. We at the outset wish to state that as far as the third parties, i.e., other than the Banker is concerned, there is no presumption that the money lying in the joint account belongs to either or any one of the joint deposit holders. It will be a question of fact in each case as to who is the real owner of the amounts lying in a joint account. In the present case, the assessing officer has proceeded under the assumption that the assessee is the owner of the various deposits lying in the joint account. It is also not clear as to whether the assessing officer has made the addition under the deeming provisions of section 68 or S. 69 or section 69A of the Act. An addition under section 68 of the Act can be made only where a credit appears in the Bank account maintained by the assessee and the assessee fails to prove the nature and source of such credit, the assessing officer can treat the credit as income of the assessee. In the present case, no such entry is found in the books of account of the assessee but what is found is only entries in the Bank pass book which cannot be equated to a credit appearing in the books of account of an assessee. Under section 69, if the assessee has made any investment which is not recorded in the books of account and no explanation is offered about the nature and source of investment, the value of the investment may be deemed to be the income of the assessee. Under section 69A, if an assessee is found to be the owner of money, bullion, etc. and if the assessee offers no explanation about the nature and source of acquisition of money, the money may be deemed to be income of the assessee. Assuming that the assessing officer had invoked the provisions of section 69 or section 69A in the present case, the first condition that was required to be satisfied was that the assessee had either made the investment or that the assessee is found to be the owner of the money lying in the Bank account. In the light of the assertion by Mrs. Yojana that she was the owner of the moneys lying in the joint account which was not denied but affirmed by the assessee, any further enquiry against the assessee, in our view, was not warranted. As already stated that there is no presumption that the moneys lying in a joint account, with a Bank, vis-a-vis third parties other than the Bank, belongs to only one of them or to both equally. In our view, therefore, there was no case for making any enquiry in the assessee's case. Any enquiry about the source of money lying in the Bank account ought to have been directed only against Mrs. Yojana and not the assessee. It is not the case of the revenue that there are some other material to show that the assessee is, in fact, the owner of these moneys or it is the assessee's investment except the fact that the moneys were lying in a joint account and one of the account holder was the assessee. In such circumstances, the assessing officer has not made out any phina facie case by rejecting the claim of Mrs. Yojana that the moneys belonged to her.
7.1. Even otherwise, Mrs. Yojana's credibility is beyond doubt. The various investments in her name in FDRs amply prove that she was a lady of enough means. The loans given by her to one Shri V.J. Raghoji in 1989 were repaid by five demand drafts all drawn in favour of Mrs. Yojana and these DDs were deposited in the joint account. The confirmation of Mr. Raghoji has not been established to be false. Thus, the source of Mrs. Yojana to the extent of Rs. 2,00,000 stands established. Regarding the source of Rs. 6,50,000 being moneys collected by the assessee, on behalf of Mrs. Yojana from Mr. Hiteshkumar Patel of Mumbai, the assessee had confirmed these facts and so has Mrs. Yojana in a Fax message before the Commissioner (Appeals). To put the matter beyond doubt, the assessee also filed an affidavit of Mrs. Yojana before the Commissioner (Appeals). These documents beside establishing the source of funds also go to show that there was no basis for making addition in the case of the assessee. The assessing officer seems to have got carried away by the utilization by the assessee of these funds. This aspect was rightly held by the Commissioner (Appeals) to be irrelevant.
7.2. In the proceedings before the Commissioner (Appeals), the assessing officer was present and had the opportunity of perusing the various documents filed by the assessee and he did not raise any objection as is now sought to be raised by the learned Departmental Representative before us. The Commissioner (Appeals), as a first appellate authority, has inherent power to direct production of additional, evidence under rule 46A(4). Reliance is placed on the decision of the Hon'ble Bombay High Court in the case of Smt. Prabhavati S. Shah v. CIT (1998) 231 ITR 1 (Bom).
7.3. Looking into all these circumstances as brought out in the order if the Commissioner (Appeals), we are of the view that the Commissioner (Appeals) was justified in coming to the conclusion that a sum of Rs. 8.50 lakhs deposited in the joint account was, not the money of the assessee. His action in deleting the addition of Rs. 8,50,000 made by the assessing officer and also deleting interest of Rs. 11, 111 on account of interest credited in the said account, does not call for any interference. The same is confirmed and this appeal of the revenue is dismissed.
8. In the result, the appeal of the revenue is dismissed.