Shri Chakresh Kumar Jain, Indore V. The ITO 2(1), Indore

ITA 110/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2900 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Gift
• Section: 142(1); 68

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 108/IND/2012 A.Y. 2004-05 NEMICHAND JAIN INDORE PAN ADTPJ 3798G :: APPELLANT VS INCOME TAX OFFICER 2(1) INDORE :: RESPONDENT ITA NO. 109/IND/2012 A.Y. 2004-05 BHARTESH KUMAR JAIN INDORE PAN ADRPJ 5382L :: APPELLANT VS INCOME TAX OFFICER 2(1) INDORE :: RESPONDENT 2 ITA NO. 110/IND/2012 A.Y. 2004-05 CHAKRESH KUMAR JAIN INDORE PAN ABZPJ 8616K :: APPELLANT VS INCOME TAX OFFICER 2(1) INDORE :: RESPONDENT APPELLANT S BY SHRI PRAKASH JAIN RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 24.06.2013 DATE OF PRONOUNCEMENT 24.06.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE APPEALS HAVE BEEN FILED BY DIFFERENT ASSESS EES CHALLENGING THE COMMON ORDER DATED 26.12.2011 OF TH E LEARNED CIT(A) ON THE IDENTICAL GROUND CONFIRMING THE ADDIT ION MADE U/S 68 ON ACCOUNT OF GIFTS RECEIVED FROM NRIS. 2. DURING HEARING, WE HAVE HEARD SHRI PRAKASH JAIN, LEARNED COUNSEL FOR THE ASSESSEE AND SHRI R.A. VERMA, LEARN ED SENIOR DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT ALL THE THREE 3 INGREDIENTS REQUIRED TO BE FULFILLED U/S 68 OF THE ACT I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION HAV E BEEN FULFILLED BY THE ASSESSEE. IT WAS ALSO PLEADED THAT THE GIFT ED AMOUNTS WERE RECEIVED THROUGH CHEQUES FROM FAMILY FRIENDS/THROUG H NRE ACCOUNT MAINTAINED WITH THE BANK. OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE PAPER BOOK LIKE DECLARATION OF GIFT (P AGE 9), PHOTOCOPY OF CHEQUE (PAGE 10), COPY OF PASSPORT OF THE DONOR (PAGE 11), CERTIFICATE ISSUED BY THE BANK EVIDENCING THAT THE CHEQUE WAS ISSUED FROM THE NRE ACCOUNT (PAGE 12) AND CONFIRMAT ION LETTER OF GIFT ISSUED BY THE DONOR (PAGE 13), IN THE CASE OF SHRI NEMICHAND JAIN. ON THE OTHER HAND, THE LEARNED SENIOR DR, SH RI R.A. VERMA STRONGLY CONTENDED THAT THOUGH IDENTITY IS PROVED B UT SOURCE OF THE GIFTED AMOUNT IS NOT EXPLAINED, THEREFORE, THE GENU INENESS OF THE GIFTED AMOUNT IS NOT EXPLAINED. 2.1 SO FAR AS THE CASES OF BHARTESH KUMAR JAIN AND CHAKRESH KUMAR JAIN ARE CONCERNED, THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT ALL THE THREE INGREDIENTS OF SECTI ON 68 ARE FULFILLED. FROM VARIOUS DOCUMENTS, THE LEARNED COUNSEL TRIED T O EXPLAIN THE IDENTITY, GENUINENESS AND SOURCE OF THE GIFTED AMOU NT. THE LEARNED 4 SENIOR DR CONTENDED THAT ALL THE DOCUMENTS ARE SELF -SERVING DOCUMENTS, THEREFORE, THE ADDITION WAS RIGHTLY MADE . 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. SINCE COMMON ISSUE IS INVOLVED, WE DISPOSE OF THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENVENCE. THE WHOLE ISSUE INVOLVED IN THESE APPE ALS PERTAINS TO GENUINENESS OF GIFTS RECEIVED FROM DIFFERENT PERSON S. SO FAR AS THE GIFT RECEIVED FROM MRS. MEENAKSHI JAIN WIFE OF SHRI DILIP KUMAR JAIN (IN THE CASE OF NEMICHAND JAIN ITA NO. 108/I ND/2012)) IS CONCERNED, THE ASSESSEE DECLARED INCOME OF RS.1,31, 530/- AND GIFT OF RS.4 LACS WAS CLAIMED TO BE RECEIVED FROM SMT. M EENAKSHI. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 142(1) DATED 1.5.2006, REQUIRING THE ASSESSEE TO PRODUCE DOCUMENTARY EVIDE NCE REGARDING ACCEPTANCE OF GIFT, RELATIONSHIP BETWEEN DONOR AND DONEE, OCCASION FOR THE GIFT, COPY OF BANK STATEMENT OF THE DONOR, COPY OF PASSPORT ALONGWITH MODE OF RECEIPT AND STATEMENT OF ACCOUNT FOR THE PERIOD FROM 1.4.2003 TO 31.3.2004 OF NRE ACCOUNT NO. 10004 4. ADMITTEDLY, IN THE COPY OF ACCOUNT FOR THE RELEVANT PERIOD, CHEQUE NO. 288151 DATED 15.10.2003 WAS FOUND TO BE REFLECT ED. PURSUANT 5 TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE A SSESSEE VIDE LETTER DATED 20.11.2006 FURNISHED THE FOLLOWING DOCUMENTS :- A. ORIGINAL GIFT DEED FOR RECEIPT OF NRI GIFT B. THE GIFT WAS GIVEN BY BROTHER IN LAW OF SMT. MEE NAKSHI JAIN (THE DONOR) TO THE DONEEE PERSONALLY AT THE RESIDEN CE OF DONEE. HENCE THERE WAS NO REQUIREMENT OF ENVELOP AND LETTE R WRITTEN BY THE DONOR. C. COPY OF RETURN OF INCOME OF NRI WAS NEITHER AVAI LABLE WITH US NOR GIVEN BY THE DONOR BECAUSE IT IS A PERSONAL & C ONFIDENTIAL DOCUMENT D. WITH REFERENCE TO PROVE OUR FRIENDSHIP WITH NRI WE ARE ENCLOSING HEREWITH COPY OF CONFIRMATION OF GIFT FAX ED BY THE DONOR FROM CANADA TO INDIA ON DATED 16.11.2006 FROM PHONE NO. 5197518991 IN WHICH NRI ACCEPTED THAT I HAD MAD E A GIFT TO THE DONE E. THE GIFT WAS GIVEN WITHOUT ANY OCCASION FOR MAKI NG A GIFT, FRIENDSHIP NOT REQUIRED ANY OCCASION. THE AFORESAID DOCUMENTS WERE EXAMINED BY THE ASSESS ING OFFICER AND IT WAS FOUND THAT SMT. MEENAKSHI JAIN I SSUED CHEQUES, GIVING GIFTS, TO VARIOUS PERSONS AND FOUND THAT THESE ARE ARRANGED AFFAIRS. IT WAS ALSO OBSERVED THAT TH E DONOR IS NOT THE BLOOD RELATIVE OF THE DONEE AND EVEN THERE WAS NO OCCASION FOR MAKING THE GIFT. IT WAS CONCLUDED THAT THE ASS ESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND CO NSEQUENT ADDITION WAS MADE U/S 68 OF THE ACT. ON APPEAL, THE LEARNED CIT(A) AFFIRMED THE ADDITION. THE ASSESSEE IS IN AP PEAL BEFORE 6 THE TRIBUNAL. ON PERUSAL OF RECORD, WE FIND THAT ID ENTITY OF THE DONOR HAS BEEN DULY ESTABLISHED BY THE ASSESSEE AS AFFIDAVIT OF THE DONOR AND COPY OF PASSPORT HAVE BEEN PLACED ON RECORD. SO FAR AS SOURCE OF INCOME OF THE DONOR IS CONCERNED, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF INCOME OF THE DONOR , THUS ITS GENUINENESS IS CLEARLY IN DOUBT. A QUERY WAS RAISE D BY THE BENCH REGARDING SOURCE OF INCOME OF MRS. MEENAKSHI JAIN. THE LEARNED COUNSEL FAIRLY AGREED ABOUT THE INSUFFICIEN CY OF FUNDS AVAILABLE FOR MAKING THE GIFT AS NO DOCUMENTARY EVI DENCE WAS PRODUCED AT ANY STAGE. IN THE CASE OF GIFTS RECORDE D TO BE RECEIVED IN THE BOOKS OF THE DONEE, MERE IDENTIFICA TION OF THE DONOR, SHOWING THE MOVEMENT OF AMOUNT THROUGH BANKI NG CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF GIFT. HEAVY ONUS LIES ON THE DONEE NOT ONLY TO ESTABLISH THE ID ENTITY OF THE DONOR BUT ALSO THE CAPACITY OF THE DONOR TO MAKE SU CH GIFT. IT IS VERY IMPORTANT INGREDIENT TO PROVE BEYOND DOUBT THE CAPACITY OF GIVING LARGE AMOUNT OF GIFT BY THE DONOR. OUR VIEW IS FORTIFIED BY THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. ANIL KUMAR (2008) 167 TAXMAN 143 (DEL). ADMITTEDLY, A GIFT IS GENERALLY GIVEN OUT OF NATURAL LOVE AND AFFECTION AND WITHOUT ANY 7 CONSIDERATION WHICH NECESSARILY DENOTES THE CLOSENE SS BETWEEN THE DONOR AND THE DONEE. THOUGH THERE ARE VARIOUS DECISIONS ON THIS ISSUE IN FAVOUR AND AGAINST THE ASSESSEE BU T FOR THE GENUINESS OF GIFT, THE TEST OF HUMAN PROBABILITY IS MOST APPROPRIATE TO DECIDE THE ISSUE. FOR PROVING NATURA L LOVE AND AFFECTION, NO CLEAR CUT FORMULA HAS BEEN ADDUCED. H OWEVER, THE RECIPIENT HAS TO PROVE ALL THE THREE INGREDIENTS, O THERWISE THE SAME CAN VERY WELL BE TREATED AN ACCOMMODATION ENTR Y AS OWN MONEY OF THE ASSESSEE. SO FAR AS THE CONTENTION OF THE REVENUE THAT THERE WAS NO OCCASION FOR MAKING SUCH GIFT IS CONCERNED, WE ARE OF THE VIEW THAT IT IS ALWAYS NOT NECESSARY AS GIFT MADE BY MOTHER TO A SON DOES NOT REQUIRE ANY OCCASION. OUR VIEW IS SUPPORTED BY THE DECISION IN CIT VS. SURESHKUMAR KA KKAR (2010) 324 ITR 231 (DEL.). THE TOTALITY OF FACTS AN D THE CIRCUMSTANCES ARE INDICATIVE OF ONE POINT THAT THE ASSESSEE COULD NOT PROVE THE SUFFICIENCY OF SOURCE OF INCOME WITH THE DONOR AS NO EVIDENCE WAS PRODUCED AT ANY STAGE THAT THE DONOR WAS HAVING SUFFICIENT FUNDS/SOURCE OF INCOME SO THA T HUGE AMOUNT CAN BE GIFTED TO A PERSON EVEN WHO IS NOT A CLOSE RELATIVE. TRANSACTION BY CHEQUE ALWAYS MAY NOT BE S ACROSANCT 8 AS WAS HELD IN NEMICHAND KOTHARI (2003) 264 ITR 254 (GAU). CAPACITY OF THE DONOR/LENDER IS AN IMPORTANT INGRED IENT TO PROVE THE CREDIT WORTHINESS AND CONSEQUENT GENUINEN ESS OF THE TRANSACTION FOR WHICH HEAVY BURDEN LIES ON THE ASSE SSEE. THE RATIO LAID DOWN BY HONBLE APEX COURT IN ROSHAN DI HATTI VS. CIT; 107 ITR 938 AND KALE KHAN MOHD. HANIF; 50 ITR 1 (SC) SUPPORTS OUR VIEW. THE CASES RELIED ON BY THE LEARN ED COUNSEL FOR THE ASSESSEE ARE ON DIFFERENT FACTS AND, THEREF ORE, MAY NOT HELP THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE CA SES RELIED UPON BY THE REVENUE. AS PER THE PROVISIONS OF SECT ION 68 OF THE ACT, THE NATURE AND SOURCE OF THE SUM FOUND TO BE C REDITED HAS TO BE EXPLAINED TO THE SATISFACTION OF THE ASSESSIN G OFFICER AND IF THE EXPLANATION IS FOUND TO BE UNSATISFACTORY OR TH E ASSESSEE OFFERS NO EXPLANATION, THE ADDITION HAS TO BE MADE AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. WITHOUT GOING I NTO MUCH DELIBERATION, SINCE THE SOURCE OF INCOME OF THE DON OR AND CONSEQUENT GENUINENESS OF TRANSACTION IS NOT ESTABL ISHED, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ADDITIO N CONFIRMED BY THE CIT(A) IN THE CASE OF NEMICHAND JAIN. THEREFORE , THIS APPEAL OF THE ASSESSEE HAS NO MERIT AND DISMISSED AS SUCH. 9 4. SO FAR AS THE APPEALS OF BHARTESH KUMAR JAIN (IT A NO. 109/IND/2012) AND CHAKRESH KUMAR JAIN (ITA NO. 110/IND/2012) ARE CONCERNED, THE FACTS, IN BRIEF, A RE THAT THE ADDITION OF RS. 5 LACS AND RS. 3 LACS, RESPECTIVELY , ON ACCOUNT OF UNEXPLAINED GIFTS FROM DR. SUBODH BANZAL (JAIN) WAS MADE U/S 68 OF THE ACT. THE LEARNED CIT(A) AFFIRMED THE SA ME. BOTH THE ASSESSEES ARE IN APPEAL BEFORE THE TRIBUNAL. 4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT DR. SUBODH BANZAL (JAIN), HAVING PASSPORT NUMBER Z13029 8, IS THE FAMILY FRIEND OF BOTH THE ASSESSEES. THE GIFTS WER E RECEIVED BY PAY ORDERS FROM NRE ACCOUNT MAINTAINED WITH VIJAYA BANK. THE COPY OF PASSPORT OF THE DONOR, DECLARATION OF GIFT, AFFIDAVIT OF DONOR, CERTIFICATE FROM THE BANK EVIDENCING PURCHAS E OF DD FROM SBNRE ACCOUNT NO. 8182 OF THE DONOR, CERTIFICA TE OF INCOME ISSUED BY EMPLOYER OF THE DONOR AND COPY OF PASSPORT OF THE DONOR WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER. IN VIEW OF THESE FACTS, IDENTITY OF THE DONOR, CREDIT WORTHINESS OF THE DONOR AND CONSEQUENT GENUINENESS OF THE TRANSAC TION ALONG 10 WITH RELATIONSHIP WITH THE DONOR WAS DULY DISCHARGE D. THE DONOR WAS PRACTISING DOCTOR IN SHARJAH (UAE) ALSO D OING PRIVATE PRACTICE WITH ZULEKHS HOSPITAL, DUBAI, AND WAS DRAW ING 16,000 DHIRAM PER MONTH WHICH CLEARLY PROVES THE FINANCIAL STATUS/CAPACITY OF THE DONOR. THE ASSESSEE ALSO PRO DUCED COPY OF THE LETTER ISSUED BY THE CONCERNED HOSPITAL EVID ENCING THAT THE DONOR WAS PROFESSIONALLY ENGAGED. THE BANK STAT EMENT AND OTHER INFORMATION WAS DIRECTLY CALLED BY THE ASSESS ING OFFICER FROM THE BANKER, THUS THE CREDIT WORTHINESS OF THE DONOR IS ESTABLISHED BEYOND DOUBT. THE GENUINENESS OF THE T RANSACTION IS ALSO ESTABLISHED AS THE TRANSACTION WAS MADE THR OUGH BANKING CHANNEL AND THE ASSESSING OFFICER HIMSELF V ERIFIED THE SAME DIRECTLY FROM THE BANK. AN AFFIDAVIT FROM DR. SUBODH BANZAL (JAIN), THE DONOR, WAS ALSO PRODUCED BEFORE THE ASSESSING OFFICER CONFIRMING HAVING MADE THE GIFT. THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION MEA NS WHERE THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEP TABLE EXPRESSION WITH REGARD TO THE SUMS FOUND CREDITED I N THE BOOKS MAINTAINED BY THE ASSESSEE. IT IS TRUE THAT THE OP INION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY 11 THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF T HE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH R EFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPLICATION OF MIND I S THE SINE QUA NON FOR FORMING THE OPINION. IN SUCH A SITUATION, T HE PRESUMPTION OF THE ASSESSING OFFICER THAT OWN MONEY OF THE ASSESSEE WAS TRANSACTED/ROUTED FROM THE DONOR IS NO T SUBSTANTIATED WITH EVIDENCE. THE ADDITION IS MERELY MADE ON THE BASIS OF PRESUMPTION. WE ARE OF THE VIEW THAT P RESUMPTION CANNOT TAKE THE SHAPE OF EVIDENCE HOWSOEVER STRONG IT MAY BE. IN THESE CIRCUMSTANCES, THE RATIO LAID DOWN IN A. R AJENDRAN & OTHERS VS. ACIT 204 CTR 9 (MAD.), MURLIDHAR LAHORIM AL VS. CIT; 280 ITR 512 (GUJ.), SANJAY KHATRI & COMPANY VS. ITO ; 4 ITJ 173 (ITAT, INDORE), R.S. SIBBAL; 187 CTR 291 (DEL), ADDL. CIT VS. BAHRI BROTHERS P. LTD.; 154 ITR 244 (PAT.), KAMAL M OTORS VS. CIT; 131 TAXMAN 155 (RAJ.) SUPPORTS OUR VIEW. SO FA R AS THE CASES RELIED UPON BY BOTH THE SIDES ARE CONCERNED, ALL THE CASES HAVE BEEN DULY PERUSED AND AFTER RESPECTFULLY FOLLO WING THE RATIO LAID DOWN THEREIN, WE FIND THAT THE ASSESSEE HAS DU LY 12 DISCHARGED ITS ONUS IN BOTH THESE CASES. SINCE THE ASSESSEE HAS DULY DISCHARGED THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION U/S 68 OF THE ACT. AC CORDINGLY, BOTH THE APPEALS FILED BY SHRI BHARTESH KUMAR JAIN AND SHRI CHAKRESH KUMAR JAIN ARE ALLOWED. FINALLY, THE APPEAL OF SHRI NEMICHAND JAIN IS DISMISSED WHEREAS THE APPEALS OF SHRI BHARTESH KUMAR JAIN AND SHRI CHAKRESH KUMAR JAIN ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 24.6.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 24.6.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-2424 13