K.sivakumar v. The Assistant Commissioner Of Income Tax, Business Circle Vchennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 26.11.2013 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice T.S.SIVAGNANAM Tax Case (Appeal) No.513 of 2013 K.Sivakumar -vs- ... Appellant The Assistant Commissioner of Income Tax, Business Circle VChennai ...Respondent Prayer: Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Chennai 'D' Bench dated 13.02.2013 in ITA.No.1115/Mds/2012 for theassessment year 2008-2009 against the order of the Commissioner ofIncome Tax (Appeals-VIII), 2nd floor, Main Building, 121, M.G.Road,Nungambakkam, Chennai-600034 dated 22.2.2012 and made inITA.No.47/10-11.(A)-VIII against the order of the AssistantCommissioner of Income-Tax, Circle V, Chennai dated 22.9.2010 andmade in PAN/GIR.NO. , For appellant: Mr.P.B.Sampath KumarFor respondent : Mr.M.Swaminathan Standing Counsel for Income Tax DepartmentJUDGMENT (The Judgment of the Court was made byCHITRA VENKATARAMAN, J.)The assessee seeks admission of the Tax Case (Appeal) on thefollowing questions of law: "1. Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right in holdingthat the assessee has to produce the cash flow statement ofthe donor and prove the capacity, credit worthiness andgenuineness of the donor who donated a sum of Rs.7,50,000/- https://hcservices.ecourts.gov.in/hcservices/ to the assessee? 2. Whether on the facts and the circumstances of thecase the Assessing Officer is right in invoking theprovisions of Section 68 of the Income Tax Act merely on thedoubt whether the donor has the capacity to donate? 3. Whether on the facts and circumstances of the case,the Department is right in demanding the proving of thecredit worthiness of the donor notwithstanding the fact thatsuch a donor is an assessee and the said gift is allowed inthe assessment of the donor? 4. Whether on the facts and in the circumstances ofthe case the Assessing Officer is right in shifting the onusof proving the gift is genuine after the assessee has provedthe existence of all the ingredients of a gift? 5. Whether on the facts and in the circumstances ofthe case, the addition under Section 68 of the Income TaxAct in the hands of the assessee would not result in doubletaxation especially when the gift is made out of the taxedincome of the donor?" 3. Whether on the facts and circumstances of the case,the Department is right in demanding the proving of thecredit worthiness of the donor notwithstanding the fact thatsuch a donor is an assessee and the said gift is allowed inthe assessment of the donor? 4. Whether on the facts and in the circumstances ofthe case the Assessing Officer is right in shifting the onusof proving the gift is genuine after the assessee has provedthe existence of all the ingredients of a gift? 5. Whether on the facts and in the circumstances ofthe case, the addition under Section 68 of the Income TaxAct in the hands of the assessee would not result in doubletaxation especially when the gift is made out of the taxedincome of the donor?" 2. The assessment year under consideration is 2008-2009. Theassessee is an individual carrying on business in share trading. Itis seen from the facts stated that, the accounts of the assesseereflected receipt of Rs.7,50,000/- as gift received from his brotherone K.Shridhar. On further verification, it was found that the saidbrother had an income of Rs.1,61,913/- from business and professionand the total income was Rs.10,89,134/-, which included a sum ofRs.90,000/- received as salary from the assessee's wife. TheAuthorized Representative was asked to prima facie prove the abovegift, capacity of the donor who gave Rs.7,50,000/-, the genuinenessof the transaction by producing statement of affairs, cash flowstatement, return of income with computation of the said K.Shridhar.Evidently, the assessee could not produce the statement of cash flowto show that the gift was genuine one. It was further seen that thesaid donor had a liability of Rs.25,09,921/- during the financialyear 2007-2008. In the absence of any compelling reason andmaterials to show as regards the genuineness of the gift, the saidamount was sought to be assessed under Section 68 of the Income TaxAct, 1961. Apart from the said fact, the assessee had debited asum of Rs.1,55,234/- towards car maintenance. The assessee was askedto substantiate the above claim that, the car was running exclusivelyfor the purpose of the business by producing the details of thetravel, the clients visited, the vehicle service maintenance record,fuel bill, repair bills, etc. Since no evidence was produced by theassessee to that end, the assessment was completed giving benefit ofdoubt to the assessee that 50% of the above expenditure be held as relatable to the business. Thus 50% of the above expenditure wasadded back to the total income of the assessee. 3. Aggrieved by the same, the assessee went on appeal before theCommissioner of Income Tax (Appeals), who agreeing with the findingsof the Assessing Officer dismissed the appeal. Aggrieved by this,the assessee went on further appeal before the Income Tax AppellateTribunal, who found as a matter of fact that the assessee had notplaced any material before the Authority to substantiate the receiptof Rs.7,50,000/- as gift from his brother, in the context of thequery raised by the Officer on the cash flow statement of the donor.This was necessitated to prove the credit worthiness of the person tomake such a gift. Thus finding that the assessee had not producedany of the material as sought for, the assessment was confirmed underSection 68 of the Income Tax Act, 1961. 4. As regards the claim of the assessee, on the maintenance ofcar, the Income Tax Appellate Tribunal once again confirmed the orderof the Assessing Officer restricting 50% of the expenditure on theground that the assessee had not substantiated his claim, byproducing supporting documents that the expenditure was towards hisbusiness purposes. 5. In the circumstances, we do not find any substantial questionof law arising out of this Tax Case (Appeal) for consideration.Accordingly, the Tax Case (Appeal) is dismissed at the admissionstage itself. No costs. Sd/Assistant Registrar /True Copy/Sub Assistant Registrar 4. As regards the claim of the assessee, on the maintenance ofcar, the Income Tax Appellate Tribunal once again confirmed the orderof the Assessing Officer restricting 50% of the expenditure on theground that the assessee had not substantiated his claim, byproducing supporting documents that the expenditure was towards hisbusiness purposes. 5. In the circumstances, we do not find any substantial questionof law arising out of this Tax Case (Appeal) for consideration.Accordingly, the Tax Case (Appeal) is dismissed at the admissionstage itself. No costs. Sd/Assistant Registrar /True Copy/Sub Assistant Registrar vj2 To 1. The Assistant Registrar,The Income Tax Appellate Tribunal, Chennai 'D' BenchRajaji Bhavan II Floor, Besant Nagar, Chennai-90. 2.The Commissioner of Income Tax Appeals(VIII) 2nd Floor, Main Building, 121, M.G.Road, Nungambakkam, Chennai-34. 3.The Assistant Commissioner of Income Tax Circle-V, Chennai-34. 1cc to Mr.M.Swaminathan,Advocate, Sr.61412 1cc to Mr.P.B.Sampath Kumar,Advocate, Sr.61636 Tax Case (Appeal) No.513 of 2013 ng(CO)GKG/12/12/13