2012 (8) TMI 63 - AT - Income Tax

Taxability of Income - income of deceased husband was taxed in the hands of his wife - Held that - The date of death of KKP late husband of the assessee is 8.3.1999 and the receipts of the monies were by KKP during his lifetime and there is no evidence or material brought on record to suggest that the assessee (the widow) has ever received these amounts of monies - The assessee as well as her late husband are clearly separate legal entities, assessable to tax separately. If any action was called for, the department should have initiated the same in the hands of the late KKP through his legal heirs and not in the personal assessment case of the widow of the deceased - the balance addition of Rs.5,98,568/- is also not maintainable since there is no material brought on record by the Revenue to suggest that the amount relates to the assessee and was in the nature of the income in the hands of the assessee - decided in favour of assessee. Addition of Rs.65,000/- made only on the basis of two receipts in the name of the assessee found from the premises of the third party - Held that - AO has wrongly mixed up Shreeji Corporation and Shivshakti Consultancy which are distinct and separate entity and the assessee has no connection with them as she was neither a shareholder nor director of the above entities - AO has not examined the office bearers of the said two entities - in the absence of any evidence brought on record to show that the amount belongs to the assessee, no addition on this count could be made - in favour of assessee. Addition of Ras.3,31,215/- in the hands of the assessee as the scheme Kana Apartment - Held that - From a perusal of the details of the amounts alleged to have been received from kana scheme launched by late husband of the assessee, KKP , all the payments totaling to Rs.3,31,215/- related to the period prior to 8.3.1999, the date of death of husband of the assessee, no action for the payments during the life time of the husband of the assessee could be made in the individual assessment of the assessee - in favour of assessee. Addition of Rs.4,76,000/- various amounts deposited in bank account - Held that - Assessee has tried to explain the source by giving a general explanation that it is out of agricultural income earned by the assessee but has not shown any evidence of having agricultural income and nexus between the income and the deposits made in the bank account, thus sustain the addition of Rs.3,54,500/- on account of entries in the bank accounts with the SBI out of total addition of Rs.4,76,000/- for which assessee has given satisfactory explanation - Partly in favour of assessee. Addition of Rs.1,24,000/- deposited in various accounts consist of small amounts of deposits made in the names of sons and daughters of the assessee, for which no adverse view could be taken in the hands of the assessee. There is no material brought on record to suggest that the amounts belonged to the assessee, and accordingly addition made is deleted - in favour of assessee. Addition of Rs.15,85,000/- made on the basis of a small telephone diary which was not books of accounts nor a document before confirming such amounts the identity of the said persons was not established in this case - pre-dominance of probability was in favour of the assessee as there is no corroborative evidence placed on record to suggest that the figures mentioned in the column found was in fact the income of the assessee - favour of assessee. CIT(A)deleted the addition of Rs.2,00,000/- made on account of unaccounted receipts - Held that - Assessee has claimed that the cheques in question found at the time of search were seized by the department is still lying with them and could not be encashed till date and since money was never transferred to the account of the assessee, no addition could be made in the hands of the assessee - in favour of assessee. Addition of Rs.91,400/- made on account of undisclosed rental income - CIT(A) deleted the addition - Held that - Revenue could not controvert to the submissions of the assessee that the amount in question has already taxed in the hands of the firm and therefore, the same could not be taxed in the hands of the assessee even on protective basis - in favour of assessee. Deletion of the surcharge levied u/s.113 as directed by CIT(A) - Held that - Issue is covered in favour of the Revenue by the decision of Hon ble Supreme Court in the case of CIT Vs. Suresh N. Gupta 2008 (1) TMI 396 - SUPREME COURT

Summary

Issues Involved:
1. Taxability of Rs.70,00,000/- in the hands of the widow of the deceased.
2. Confirmation of Rs.5,98,568/- in the individual status of the widow.
3. Addition of Rs.75,98,568/- based on the statement and diary of a third party.
4. Addition of Rs.65,000/- based on receipts found at a third party's premises.
5. Addition of Rs.3,31,215/- related to a scheme not launched by the widow.
6. Addition of Rs.4,76,000/- deposited in a bank account.
7. Addition of Rs.1,24,000/- deposited in various accounts.
8. Addition of Rs.15,85,000/- based on a telephone diary.
9. Deletion of Rs.50,000/- unaccounted receipts by cheque from abroad.
10. Deletion of Rs.2,00,000/- unaccounted receipts from Shri L.D. Rajput.
11. Inclusion of Rs.70,00,000/- as legal heir of the deceased husband.
12. Deletion of Rs.91,400/- undisclosed rental income.
13. Levy of surcharge under Section 113.

Detailed Analysis:

1. Taxability of Rs.70,00,000/- in the hands of the widow:
The Tribunal held that the addition of Rs.70,00,000/- made by the department on account of monies received by the deceased husband during his lifetime could not be made in the hands of the widow. The assessee and her late husband are separate legal entities, and any action should have been initiated in the hands of the late husband through his legal heirs.

2. Confirmation of Rs.5,98,568/- in the individual status of the widow:
The Tribunal found no material brought on record by the Revenue to suggest that the amount of Rs.5,98,568/- relates to the widow and was in the nature of her income. Therefore, the addition was not maintainable and was deleted.

3. Addition of Rs.75,98,568/- based on the statement and diary of a third party:
The Tribunal held that no addition could be made in the hands of the widow based on the statement of a third party and a diary seized from another individual's premises. The burden of proof was not shifted to the widow, and the addition was deleted.

4. Addition of Rs.65,000/- based on receipts found at a third party's premises:
The Tribunal found that the addition of Rs.65,000/- made on the basis of two receipts found from a third party's premises should not have been made in the hands of the widow. The Revenue failed to prove that the amount was income in the hands of the widow, and the addition was deleted.

5. Addition of Rs.3,31,215/- related to a scheme not launched by the widow:
The Tribunal held that the amount of Rs.3,31,215/- was related to the period prior to the death of the husband, and no action could be made in the individual assessment of the widow. The addition was deleted.

6. Addition of Rs.4,76,000/- deposited in a bank account:
The Tribunal found that the first entry of Rs.21,500/- was below the taxable limit, and the entry of Rs.1,00,000/- was out of a withdrawal from the bank account of the widow. The balance addition of Rs.3,54,500/- was sustained as the widow could not establish the source of the deposits.

7. Addition of Rs.1,24,000/- deposited in various accounts:
The Tribunal deleted the addition of Rs.1,24,000/- as the amounts were deposited in the names of the widow's sons and daughters, and there was no material to suggest that the amounts belonged to the widow.

8. Addition of Rs.15,85,000/- based on a telephone diary:
The Tribunal held that the telephone diary was not sufficient evidence to make an addition of Rs.15,85,000/- as income in the hands of the widow. There was no corroborative evidence, and the addition was deleted.

9. Deletion of Rs.50,000/- unaccounted receipts by cheque from abroad:
The Tribunal found that the entries of Rs.50,000/- represented a gift cheque of 1,000 dollars given by Shri Devendra Patel. No further inquiry was made by the department, and the deletion was upheld.

10. Deletion of Rs.2,00,000/- unaccounted receipts from Shri L.D. Rajput:
The Tribunal found that the cheques in question were seized by the department and were never encashed. Since the money was never transferred to the widow's account, the deletion was upheld.

11. Inclusion of Rs.70,00,000/- as legal heir of the deceased husband:
The Tribunal held that there was no merit in the Revenue's appeal for including Rs.70,00,000/- in the hands of the widow as the legal heir of her deceased husband. The appeal was dismissed.

12. Deletion of Rs.91,400/- undisclosed rental income:
The Tribunal found that the amount in question had already been taxed in the hands of the firm, and the same addition could not be made in the hands of the widow. The deletion was upheld.

13. Levy of surcharge under Section 113:
The Tribunal held that the issue was covered in favor of the Revenue by the decision of the Hon'ble Supreme Court in the case of CIT Vs. Suresh N. Gupta. The surcharge was held to be leviable, and the ground was allowed.

Conclusion:
The assessee's CO and Revenue's appeal were partly allowed. The Tribunal provided a detailed analysis of each issue, considering rival submissions and the evidence on record. The judgment emphasized the importance of corroborative evidence and the proper application of legal principles in tax assessments.