Ita/1/2012 Of Shri D S Kumar v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THER 3 DAY OF JULY, 2012) PRESENT THER HON BLE MR. JUSTICE K.SREEBEDHAR ANT THR HON'BLE MR. JUSTICK B.MANOHAR 1.T.A. No. 1 OF 2012 BBRITIWE shri D.S. Kumar,“orinivasa Nilaya’,Railway Station Road,Tumkur. (By Sri A. Shankar & M. Lava, Advocates) Appellant AND: The Deputy Commissioner of Income Tax,Circle-1,II Floor, Aayakar Bhavan,Ramakrishnanagar,Kunigal Road,Tumkur —- 572 105 (By Sri G. Kamaladhar, Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTot|Orderdated26.08.2011passed1nNITANo.894/Bang/2009, for the Assessment Year 2004-05,praying that this Hon’ble Court may be pleased to (i)formulate the substantial questions of law stated therein and(11)setasidetheorderOT|theTribunal1nITA No.894/Bang/2009 dated 26/08/2011, Annexure-A, in theinterest of justice and equity. This appeal is coming on for admission this day,SREEDHAR RAO, J..,delivered the following: JU DBGMENT The substantial questions of law framed in para 32-33of the appeal memo are admitted for consideration: (1.Whether the Tribunal was justifiedin upholding the addition of Rs.21 lakhs whichis transfer entry and further is not cash creditduring the year and passed a perverse order onthe facts and circumstances of the case? 2.Whether the Tribunal was justifiedin not appreciating that the introduction ofRs.20 lakhs is out of the funds available andthus passed a perverse order on the facts andcircumstances of the case?9 2.The appellant is an assessee, the matter relatesto assessment year 2004-2005, wife of the assesseeSmt.Padma Rekha is also an income tax assessee. [t is thecontention|OT|theappellantheborrowedloan09Rs.35,00,000/- as on 33.13.2002 for business purpose. Thappelant had shown the said loan transaction in his accounts for the year 2003-2004. In the year 2004-2005 hetransferred a sum of Rs.21,00,000/- to his _ proprietconcern viz Sreenivasa Wines for his business investment.The department disputed the contention and considered it ascash credit. The Assessing Officer assessed Rs.21,00,000/-towards tax as cash credit under section 68 of the IncomeTax Act. The Commissioner of Income Tax confirmed theorder of the Assessing Officer. The tribunal has alsoconfirmed the order. The assessee aggrieved by the saidorders is in appeal, 3.It is his contention that Rs.21,00,000/- to hispropriety concern namely Sreenivasa Wines is not a cashcredit but transferred the entry from personal account tobusiness account. The appellant for the assessment year2004-2005 not disclosed in his returns that a sum ofRs.20,00,000/- gifted by his wife in the year 1998 has beencredited to his business account. The Assessing Officer,Commissioner of Income Jax and the tribunal all ot themconcurrently held that the gift version of Rs.20,00,000/- isuntenable and not substantiated by any credible material except self serving version of the assessee and there are nodocumentary material to corroborate the contention thatthere was gift of Rs.20,00,000/- on O1.10.1998, thereforeconsidered the said amount is an unexplained investment.The appellant aggrieved by both the orders filed this appeal. 4Heard the counsel for the appellant andrespondent. 5.The crux of the matter appears to be: Whetherthe loan of Rs.35,00,000/- borrowed was a genuinetransaction. Of course, it is borne on record that Smt.PadmaRekha wife of the appellant is an income tax assessee andher income tax assessment is declared as Rs.2,00,00,000/-in VDI scheme in the year 1997. In her statement she hasstated the grant of loan of Rs.35,00,000/- and she hasfurther stated that after declaring under VID scheme she hasstated in her statement a gift of Rs.20,00,000/- to theappellant on 1.10.1998 out of an amount available with heralter paying tax of Rs.60,00,000/- out of Rs.2,00,00,000/-.she was left with balance of Rs.1,40,00,000/- and from the 4Heard the counsel for the appellant andrespondent. 5.The crux of the matter appears to be: Whetherthe loan of Rs.35,00,000/- borrowed was a genuinetransaction. Of course, it is borne on record that Smt.PadmaRekha wife of the appellant is an income tax assessee andher income tax assessment is declared as Rs.2,00,00,000/-in VDI scheme in the year 1997. In her statement she hasstated the grant of loan of Rs.35,00,000/- and she hasfurther stated that after declaring under VID scheme she hasstated in her statement a gift of Rs.20,00,000/- to theappellant on 1.10.1998 out of an amount available with heralter paying tax of Rs.60,00,000/- out of Rs.2,00,00,000/-.she was left with balance of Rs.1,40,00,000/- and from the said amount it is stated that Rs.20,00,000/- paid to theappellant. The Appellate Authorities and the AssessingOfficer have concurrently found that the theory of gift ofRs.20,00,000/- by Smt. Padma Rekha to the appellant is adoubtful circumstance and held that it is an unexplainedinvestment. After going through the impugned orders and thematerial that is produced, we feel it just and proper that thematter should be remanded to the Assessing Officer for freshconsideration to give opportunity to the appellant to provehis contention with available material if any. Accordingly thematter is remanded to the Assessing Officer for disposal inaccordance with law. The impugned order of the AppellateAuthorities is set aside. od/-JUDGE 3*;K od/-JUDGE