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2016 (3) TMI 326 - CALCUTTA HIGH COURT

2016 (3) TMI 326 - CALCUTTA HIGH COURT - [2016] 386 ITR 708 - Addition u/s 68 - accumulation of capital in the books of the petitioner - ITAT reversing the order of CIT(A) in deleting the addition - Held that:- From the order of the CIT(A) it is evident that each donor had offered an explanation supported by documentary evidence. Furthermore a donor cannot be expected to disclose or answer any question which was not specifically put to him in the course of proceedings u/s.131. The inspector depu .....

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o hold one way or the other and then to dispel those reasons. If the Tribunal fails to make such an exercise the judgment will suffer from serious infirmity - We are thus clearly of the opinion that the Tribunal fell into an error in interfering with the order of the CIT(A) without first dislodging the reasons given by him. Assuming that another view was possible, that itself would be no ground to interfere with the order of the CIT(A) unless it is shown that the appreciation of evidence by .....

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sessee has come up in appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) against a judgment and order passed by the Income Tax Appellate Tribunal, D Bench, Kolkata in ITA No.2541 (Cal) of 2003 dated 29th April, 2004 pertaining to the assessment year 1996-97. The following substantial questions of law arise for determination in the instant appeal:- I) Whether on a true and proper interpretation of Section 68 of the Act the Learned Tribunal was correct in 1 .....

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of the Learned Tribunal giving a complete gobye to the findings of the CIT(A) and thereafter confirming the order of the Assessing Officer was perverse? Briefly stated the facts and circumstances of the case are as follows:- The assessee an individual, filed his return of income for the assessment year 1996-97 indicating therein a total income of ₹ 42,760/-, which was processed u/s.143(1)(a). Upon examining the return filed for the assessment year 1995-96 the Assessing Officer (hereinafte .....

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ance-Sheet as at 31st March 1996 was ₹ 3,76,100/- and hence there was a difference of ₹ 3,26,550/-. The A.O. reopened the assessment under Section 147 and issued notice to the assessee u/s.148. However no one appeared in response to the notice. Thereafter the case was fixed for hearing on three several occassions but even then no one turned up. By an order dated 14th March, 2001 u/s. 144 r/w 147, the assessing officer made an addition of ₹ 3,26,550/- on account of increase in o .....

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to the total income of the assessee. The assessee appealed before the Commissioner of Income Tax (Appeals) (hereinafter referred to as the CIT(A) ) against the order of the assessing officer. Before the CIT(A) the assessee raised the contentions that:- 1. he had handed over all the notices to his Advocate who did not attend the hearings and that he himself was unaware of this non-compliance on the part of his Advocate; 2. he is an under graduate with income from pooja and other allied activities .....

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46 of the Income Tax Rules, 1962. The AO vide his letter dated 8th April, 2003 stated as follows:- a) As regards increase in opening stock the addition was justified as the assessee could not furnish any explanation. b) As regards the addition of opening capital of ₹ 3,26,500/- an amount of ₹ 2,40,000/- was obtained by way of gifts from relatives and others which was mentioned in the personal balance sheet. After verifying the gifts and sources of the donors the assessing officer rep .....

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tress 85 IT file is available. She made a statement in response to notice u/s 131 (copy enclosed) were she stated that she made gift ₹ 65,000/- to her husband in cash in various date out of his salary income. In case of Haridas Sinha [Donor] The donor is brother-in-law in relation of the assessee. He declared in the statement in response to notice u/s 131 (copy of statement enclosed) that he made gift ₹ 40,000/- in cash in several dates to Sri Prahallad Bhattacharya out of his pensio .....

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- in two several dates (on 02-01-95 & on 12-02-96) in cash out of his salary. He is an employee of SBI. He produce no evidence except declaration & gift deed. In case of Rabindra Nath Ghorai (donor) The donor has not any blood relationship with dale donee. As per ITI s report the donor had made cash gift ₹ 10,000 on 10-04-95 out of his business & agricultural income & could not produce any evidence except declaration & affidavit. The CIT(A) by an order dated 14th March, .....

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is ground. As regards addition on account of introduction of capital amounting to ₹ 3,26,550/-, I have considered the argument of the A. R. and the report of the A. O. The appellant has received gift from several donors which has been verified by the A. O. In case of donor Rani Bala Bhattacharya, Manasi Metia, Haridas Sinha & Dhrubajoyti Bhattacharya the source of gift has been established as per report of A. O. But in case of Sanjay Panda and Rabindra Nath Ghorai who have donated S .....

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he addition of ₹ 2,40,000/- is deleted. As regards balance amount of ₹ 86,550/- (i.e. 3,26,550 - 2,40,000) the A. R. argued that the appellant had income from profession since 31.3.80 and the accumulated capital was introduced in one year. I have considered the argument and I find that the A. R. could not produce any evidence of professional income since 1980 except filing a Chart. Hence the addition of ₹ 86,500/- is held to be justified. The assessee and the revenue both appea .....

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in which it was explained that the assessee allegedly received certain donations from most unlikely source. (a) In the case of Smt. Rani Bala Bhattacharya, who is the mother of the assessee, the donor is alleged to have made the gift of ₹ 85,000/- in sevral dates in cash. It was alleged that the sources of the funds were selling of agricultural land. In respect of that she furnished some copy of land deed. No evidence of sale was provided. (b) In the case of Manasi Metia, the donor is the .....

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from out of his pension income. It was never explained as to what his pension was and the reason for making the gift of ₹ 40,000/- . (d) In the case of Sanjay Panda, the donor is not any blood relation. In this case there was a declaration of gift but there was no evidence on record to show that this donor had ability to make the gift as alleged. (e) In the case of Dhrubajyoti Bhattacharya, elder brother of the assessee, he is alleged to have made gift of ₹ 30,000/- on two dates in c .....

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sessee on 10.04.95. 6. It was admitted before the CIT(A) also that the cash difference between the closing stock and opening stock of ₹ 50,000/- could not be established by any cogent reason. Such being the case, we find it was a very weak effort on unsubstantiated submissions to try to explain away the closing balance and opening balance of ₹ 3,26,550/- by making certain story about unproved alleged gifts to cover up the difference. Before the CIT(A), there was not even an iota of e .....

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is on the correct basis and/ or evaluation of the facts on record which the CIT(A) should not .have interfere with Reversing the order of CIT(A), we confirm the addition of ₹ 2,40,000 and agreeing with the order of CIT(A), we uphold the addition of ₹ 86,550/- being unexplained opening balance. 8. In the result, the assessee s appeal is dismissed and the departmental appeal is allowed. The assessee has come up in appeal against the impugned order of the Tribunal. Mr. Ananda Sen, learn .....

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urt in the case of CIT-vs- Padam Singh Chouhan reported in (2009) 315 ITR 433 for the proposition that:- There is no legal basis to assume, that to recognize the gift to be genuine, there should be any blood relationship, or any close relationship, between the donor and the donee. He further submitted that instances are not rare, when even strangers make gifts, out of very many considerations, including arising out of love, affection and sentiments. The learned Counsel appearing for the revenue .....

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nces that the assessing officer by his order dated 14th March 2001 u/s. 144 r/w. 147 rightly concluded that the assessee had no explanation to offer regarding the increase in opening stock and opening capital and the same was income of the assessee from undisclosed sources. In this view of the matter the action of the assessing officer in adding back these amounts to the total income could not be faulted and the CIT(A) fell in error by interfering with the same. We have heard the arguments advan .....

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an iota of evidence that the gifts were genuine... . From the order of the CIT(A) quoted above, it is evident that each donor had offered an explanation supported by documentary evidence. Furthermore a donor cannot be expected to disclose or answer any question which was not specifically put to him in the course of proceedings u/s.131. The inspector deputed by the assessing officer had full opportunity to make inquiry and the assessee should not suffer on account of a lapse on the part of the i .....

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firmity. We are supported in our view by the following judgments of the Supreme Court. In Padma Uppal v. State of Punjab, reported in (1977) 1 SCC 330 wherein the Apex Court while discussing the scope of appellate power held as follows:- Moreover, there is a prudent condition to which the appellate power, generally speaking is subject. A Court of appeal interferes not when the judgment under attack is not right but only when it is shown to be wrong. (See Special Land Acquisition Officer, Bangalo .....

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