Kushal Virendra Tandon Vs ACIT (ITAT Mumbai)
Kushal Tandon (Appellant) filed an appeal against the order passed by the Commissioner of Income Tax, Mumbai (Respondent), dated September 17, 2019, which in turn arises from the order passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (IT Act), dated December 27, 2016 for Assessment Year 2014-15.
The point of contention in this case was that the AO while assessment:
- Disallowed the deduction under Section 35 (1) (ii) of the IT Act with respect to donation of Rupees 10 Lakhs given to school of human genetics and pollution health. (Issue 1)
- Furthermore, disallowance of 20% of the expenses by attributing the same on an ad-hoc basis as personal expenses. (Issue 2)
- Also an addition of the gift received from father as unexplained cash credit under Section 68 of the IT Act. (Issue 3)
In the case, the Appellant contended that the AO has wrongly added the gift of Rs. 30 lacs that was received by him from his father as an unexplained cash credit under Section 68 of the Income Tax Act and furthermore, the Appellant has also sought for allowance pertaining to the rest of the issues.
On perusal of all the facts and evidences, the Income Tax Appellant Tribunal, Mumbai (“the ITAT”) adjudicated on all the three issues at hand, they opined:
Issue 1. If the Appellant acting upon a valid registration/approval granted to an institution to whom he had donated the amount for which deduction is claimed, such deduction cannot be disallowed if at a later point of time the same is cancelled with retrospective effect.
Issue 2. It was held that neither of the lower authorities had pointed out as to what all expenses claimed by the assesse were not supported by documentary evidences, nor earmarked those which did not inspire much of confidence.
Further nothing was evident from the records which would reveal as to what all expenses the AO was of the view that had not been incurred by the assesse wholly and exclusively for the purpose of his profession.
In the backdrop of the aforesaid facts, the ITAT found substantial force in the claim of the Appellant that devoid of any such specific finding by the lower authorities, the disallowance of the aforesaid expenses in a most arbitrary manner and on an ad hoc basis, which could by no means be held to be justified.
Issue 3. As both the financial statement of Shri. Virendra Tandon (Father) for the Assessment Year 2014-15, as well as his admission in the ‘gift deed’, dated July 21, 2013 along with a mention of the source of the gift transaction in question, that is, accumulated savings of the past, as were filed by the assesse with the A.O in the course of the assessment proceedings, therein, clearly sufficed to discharge the primary onus that was cast upon him to prove the ‘nature’ and ‘source’ of the cash credit in his books of accounts. Hence, the ITAT deletes addition of Rupees. 30 Lacs received by Actor Kushal Tandon as a gift from his Father.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-4, Mumbai, dated 17.09.2019, which in turn arises from the order passed by the A.O u/s 143(3) of the income Tax Act, 1961 (for short „Act‟, dated 27.12.2016 for A.Y. 2014-15. The assessee has assailed the impugned order on the following grounds before us:
“1. On the facts and circumstances of the case the ld. CIT(A) erred in confirming the.. Assessment order, passed by the Id. AO u/s143(3) assessing the total income at Rs. 1,10,50,730/- as against the income declared by the assessee of Rs.57,28,770/-.
2. On the facts and circumstances of the case the Ld CIT(A) erred in confirming the disallowance of the deduction of Rs.17,50,000/- claimed u/s 35(1)(ii) in respect of payment of Rs.10,00,000/- made to “School of Human Genetics and Pollution Health” which is unjust, illegal, arbitrary and against the facts and circumstances of the case.
3. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the disallowance of the genuine expenditure amounting to Rs.5,71,958/- being 20% of the expenses of Rs.28,59,700/- made by the AO in view of section 37(1) and thereby treated the same for non business purpose and added the same to the total income of the Assessee.
4. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the addition of Rs.30,00,000/- made by the AO in view of section 68 and thereby treated the same as undisclosed income of the assessee and added the same to the total income of the assessee. The ld. CIT(A) erred in considering the genuine fact that the said amount of Rs.30,00,000/- was received as gift from his father.
5. The ld. CIT(A) erred in confirming the charging of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961.
6. The ld. CIT(A) erred in confirming the initiation of the penalty proceeding under Sec. 271(1)(c) of the Income tax Act 1961.
7. The assessee craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.”
2. Briefly stated, the assessee who is a film actor/model by profession had filed his return of income for A.Y. 2014-15 on 28.11.2014, declaring a total income of Rs.57,28,770/-. The return of income filed by the assessee was initially processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.
3. The A.O while framing the assessment made the following additions/disallowances:
