Income Tax Appellate Tribunal - Ahmedabad
Pravin Ratilal Share Dalal, Ahmedabad vs Assessee on 12 May, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "A"
Before Shri MUKUL Kr. SHRAWAT, JUDICIAL MEMBER and
Shri D.C. AGRAWAL, ACCOUNTANT MEMBER
Date of hearing : 11.5.2011 Drafted on: 12.5.2011
ITA No.1200/AHD/2009
Assessment Year : 2006-07
Shri Pravin Ratilal Share Vs. The Dy.CIT
Dalal Central Circle-2(2)
Ratnakar 27-B, Brahmin Ahmedabad
Mitra Mandal
Society
Ellisbridge, Ahmedabad
PAN/GIR No. : ARSPS 8711 K
(APPELLANT) .. (RESPONDENT)
Appellant by : Shri Deepak Soni
Respondent by: Shri S.A. Bohra, Sr. D.R.
ORDER
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
This is an appeal at the behest of the Revenue which has emanated from the order of the Learned CIT(Appeals)-III, Ahmedabad dated 12/02/2009 passed for Assessment Year 2006-97.
2. First few grounds are general in nature therefore do not require any legal adjudication. However, ground Nos.3 & 4 are the substantive grounds which are argued before us, hence reproduced below:
ITA No.1200/Ahd/2009Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -2-
3.0. The Commissioner of Income tax (Appeals) erred in upholding addition of Rs.1,45,000/- alleging income derived by the appellant. The appellant submits that the income of Rs.1,45,000/- was derived by Smt. Sulochanaben P.Sharedalal out of retail business carried on by her. The appellant submits that retail business was carried on by the lady and the income of Rs.1,45,000/- was considered in computation of the toal income of the lady. The appellant submits that he had not carried on any retail business and he had derived no income and therefore addition of Rs.1,45,000/- is contrary to the facts. The addition of Rs.145000/- be deleted.
4.0 The Commissioner of Income tax (Appeals) erred in upholding addition of Rs.95,000/- alleging income derived by the appellant. The appellant submits that the income of Rs.95,000/- was derived by Shri Pravin Ratilal Sharedalal (HUF) out of retail business carried by it. The appellant submits that retail business was carried on by the HUF and the income of Rs.95,000/- was considered in computation of the total income of the HUF. The appellant submits that he had not carried on any retail business and he had derived no income and therefore addition of Rs.95,000/- is contrary to the facts. The additions of Rs.95,000/- be deleted.
ITA No.1200/Ahd/2009Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -3- 2.1. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the Act dated 27/12/2007 were that the assessee in his individual capacity was covered under search action u/s.132 of the Act on 22/09/2005. A return of income was filed on 31/12/2006 and an income of Rs.12,66,800/- was declared. The assessee is in the business of share trading and share brokerage. During the course of assessment proceedings, it was found that wife of the assessee Smt.Sulochnaben has also filed here income tax return u/s.44AF of the Act and a business profit of Rs.1,45,000/- was disclosed. Her statement was recorded on 06/10/2005 and she has stated to be a house-wife. The AO has also noted that a statement of Shri Atul was also recorded on 22/09/2005, son of the assessee, and in his statement he has not mentioned the retail business of ready-made garments claimed to have been carried out by Smt.Sulochnaben. On the basis of those statements, the AO has remarked as under:
"Assessee's above reply has been considered carefully and it is not found tenable for the reason that the assessee was given opportunity of hearing on 24/12/2007. However, instead of availing opportunity of hearing assessee has chosen to file written submission in dak. The assessee had applied for copies of seized material and statements and whatever documents required by assessee were provided to assessee. Even though Smt. Sulochnaben and Shri Pravin Ratilal Sharedalal (HUF) have shown income from retail business, they have not proved the factum of the turnover. The assessee's demand that in absence of any business the income be deleted from the computation of income of Smt. ITA No.1200/Ahd/2009 Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -4- Sulochnaben and Shri P.R.Sharedalal (HUF) is not tenable in law since they have shown this income in their respective returns which have been assessed on protective basis and it can be deleted only if it is admitted by the assessee that it is really his income."
2.2. With those remarks it was concluded by the AO that the assessee has undisclosed source of income which was shown in the name of his wife hence accordingly taxed on substantive basis in his hands. The matter was carried before the first appellate authority.
3. The ld.CIT(A) has affirmed the action of the AO on the ground that the business of the assessee's wife was not mentioned at the time of recording of statement. He has also mentioned that the return was filed after the search action. In his opinion, it was the obligation of the wife to establish the provisions of section 44AF of the Act as applicable on the business run by her. In the result, the addition was affirmed.
4. We have heard both the sides. We have also carefully perused the orders of the authorities below in the light of the compilation filed before us. From the side of the assessee, ld.AR Mr.Deepak Soni appeared and drawn our attention on the acknowledgement of the income tax return filed in the case of Smt.Sulochnaben, wife of the assessee. He has also emphasized that ITA No.1200/Ahd/2009 Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -5- the Revenue Authorities have relied upon the statements but those statements were not provided to the assessee. Ld.AR has vehemently contested that since those statements have not been confronted to the assessee, therefore the Revenue Department has wrongly placed reliance on those statements. We find force in the arguments of ld.AR because the Hon'ble Delhi High Court has held in the case of Indocon Finance & Investment Ltd reported at 1 DTR 25 that unless and until the assessee is not allowed to cross-examine the said person who has deposed before the Revenue Authorities, such a statement cannot be used as an evidence against the assessee. There is one more aspect of this issue that before arriving at the conclusion that the wife of the assessee was merely a name lender or "benami" of the assessee it was necessary on the part of the Department to establish that the funds of the assessee have been diverted to run the said business of ready-made garments claimed to have been managed by the wife of the assessee. Though on one hand, the Revenue has alleged that there was no conclusive evidence found at the time of search that the said business was run by the wife of the assessee, but likewise, even no such evidence was found that the assessee had diverted his funds or there was unexplained investment by the assessee in the name of his wife. Facts have revealed that a return u/s.44AF of the Act was filed by Smt.Sulochnaben and the assessment was made on protective basis in her hand vide an order dated 27.12.2007 passed ITA No.1200/Ahd/2009 Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -6- u/s.143(3) of I.T. Act. While taking such decision the A.O. had given the only reson,quote " In her statement dated 6.10.2005, she has stated that she is simply a house-wife. Further, Shri Atul Sharedelal in his statement dated 22.9.2005 has categorically given the details of family business which does not include the retail business of hosiery/readymade gaments claimed to be carried out and profit shown under Sec. 44AF of the Act." unquote. It appears that the Revenue has adopted a one sided approach by not confronting with those statements which were used against the assessee. It is a settled law that a statement without any supporting evidence is nothing but a bald or stale statement , therefore , merely on that basis an adverse inference should not be drawn. Thus, the totality of the circumstances demands to reverse the findings of the authorities below since there was no evidence found that the business of the wife was a "benami" business of the assessee. Merely because a return u/s.44AF was filed of assessee's wife and apart from that no clinching evidence was in possession of the Revenue and that was the only genesis of the impugned addition, we hereby hold that the action of the AO was merely on presumption, hence to be reversed. This ground of the assessee is therefore allowed.
5. Apropos another ground, it was found by the Assessing Officer that a return was filed by the HUF of retail business ITA No.1200/Ahd/2009 Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -7- u/s.44AD/44AF of the Act disclosing an income of Rs.95,000/-. A statement of one Shri Atul was recorded and since in that statement he has not mentioned the retail business of the HUF, therefore AO was of the view that the profit disclosed in the name of HUF was undisclosed income of the assessee. In identical manner, the action of the AO was affirmed by the ld.CIT(A).
6. Having heard the submissions of both the sides, we have noticed that in respect of the impugned addition a protective assessment was made in the hands of the HUF vide an order dated 27.12 2007 U/s 143(3) of the Act. Further, the statement of Shri Atul was not confronted to the assessee. It has also been noted that there was no evidence found at the time of search to demonstrate that the funds of the assessee were diverted for the said business of HUF. Since on identical facts we have already taken a view (supra) therefore on the same lines, we hereby reverse the findings of the authorities below and grant relief accordingly. This ground is allowed.
7. In the result, appeal of the Assessee is allowed.
Order signed, dated and pronounced in the Court on 13TH May, 2011.
Sd/- Sd/- ( D.C. AGRAWAL) ( MUKUL Kr. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/ 05 /2011 ITA No.1200/Ahd/2009 Shri Pravin Ratilal Share Dalal vs. Dy.CIT Asst.Year - 2006-07 -8- T.C. NAIR, Sr. PS Copy of the Order forwarded to : 1. The Assessee. 2. The Department. 3. The CIT Concerned 4. The ld. CIT(Appeals)-III, Ahmedabad 5. The DR, Ahmedabad Bench 6. The Guard File. BY ORDER, स×याǒपत ूित //True Copy// (Dy./Asstt.Registrar), ITAT, Ahmedabad
1. Date of dictation.......................11.5.2011
2. Date on which the typed draft is placed before the Dictating Member 12.5.2011.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S......13.5.2011
6. Date on which the file goes to the Bench Clerk.................. 13.5.2011
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................