The ITO, 4(1), V. Shri Shefuddin Khambati,

ITA 137/IND/2002

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2732 (ITAT-INDORE)
• Duration Of Justice: 8 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-04-2008
• Assessment Year: 1997-1998
• Appeal Filed On: 14-03-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: P N DIXIT
• Keywords: Gift; Business income
• Section: 133A; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NO.137/IND/2002 A.YS.1997-98 INCOME TAX OFFICER 4(1) INDORE APPELLANT VS SHRI SAIFUDDIN KHAMBHATI INDORE GIR S -1059 RESPONDENT C.O. NO. 37/IND/2002 ARISING OUT OF ITA NO. 137/IND/2002 SHRI SAIFUDDIN KHAMBHATI INDORE OBJECTOR VS INCOME TAX OFFICER 4(1) INDORE RESPONDENT ITA NO.138/IND/2002 A.YS.1997-98 INCOME TAX OFFICER 4(1) INDORE APPELLANT VS SHRI MOHD. A. KHAMBHATI INDORE GIR M-923 RESPONDENT 2 C.O. NO. 38/IND/2002 ARISING OUT OF ITA NO. 138/IND/2002 SHRI MOHD. A. KHAMBHATI INDORE OBJECTOR VS INCOME TAX OFFICER 4(1) INDORE RESPONDENT DEPARTMENT BY : SHRI P.K. MITRA, SR. DR RESPONDENT BY : SHRI P.N. DIXIT, ADVOCATE O R D E R PER JOGINDER SINGH, JM THE REVENUE HAS FILED THESE APPEALS WHEREAS THE ASS ESSEES HAVE FILED THE RESPECTIVE CROSS OBJECTIONS AGAINST THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 3.1.2002 . THE FOLLOWING COMMON GROUNDS HAVE BEEN RAISED BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN (I) DELETING THE ADDITION OF RS.2,57,785/- OUT OF ADDITION OF RS.3,12,500/- AND RS.1,54,670/- OUT OF RS.1,87,500/- MADE ON ACCOUNT OF EXCESS STOCK NOT SURRENDERED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT. (II) DELETING THE ADDITION OFRS.9,25,000/- AND RS.12,20,000/- MADE BY THE AO U/S 68 OF THE ACT BY DISALLOWING THE NRE GIFTS. 3 THE RESPECTIVE ASSESSEE ALSO CHALLENGED THE ACTION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN MAINTAINING THE ADDITION OF RS.54,715/- AND RS.32,830/-, RESPECTIVELY. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI P.K. MITRA, LEARNED SENIOR DR AND SHRI P.N. DIXIT, LD. COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS I N SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LD. COUNSEL FOR THE AS SESSEE DEFENDED THE IMPUGNED ORDER. MR. DIXIT DID NOT PRESS THE RE SPECTIVE CROSS OBJECTIONS,THEREFORE, THESE CROSS OBJECTIONS ARE DI SMISSED AS NOT PRESSED. 3. AS FAR AS THE ISSUE OF DELETING THE ADDITION MAD E ON ACCOUNT OF EXCESS STOCK, NOT SURRENDERED DURING THE COURSE OF SURVEY, IS CONCERNED, THE BRIEF FACTS ARE THAT A SURVEY U/S 133A OF THE A CT WAS CONDUCTED IN THE CASE OF THE ASSESSEE WHEREIN STOCK BELONGING TO THE ASSESSEE CONCERN WAS FOUND MIXED UP WITH THAT OF M/S MOHD. KHAMBATI & COMPANY, A PROPRIETARY CONCERN OF HIS BROTHER, SHRI MOHD. A. K HAMBATI. THE STOCK FOUND WAS VALUED AT RS. 1,29,52,431/- AS COMPARED T O STOCK OF RS.88,74,893/- AS PER THE DETAILS OF BOOKS. THE AS SESSEE OFFERED UNDISCLOSED INCOME OF RS.25 LACS IN HIS HANDS AND R S.15 LACS IN THE HANDS OF SHRI MOHD. KHAMBATI. THE ASSESSEE IS ENGAG ED IN TRADING OF VARIOUS KINDS OF BLACK PIPES THROUGH ITS PROPRIETAR Y CONCERN M/S INDIA TUBE CORPORATION AND M/S ASIAN TUBE SUPPLIERS. TH E ASSESSEE FILED 4 THE AUDITED PROFIT AND LOSS ACCOUNT/BALANCE SHEET F OR BOTH THESE CONCERNS. THE ASSESSEE SHOWED TOTAL SALES OF RS.4,4 0,97,449/- IN M/S INDIA TUBES CORPORATION AS COMPARED TO THE SALES OF RS.4,37,57,334/- DURING THE PRECEDING YEAR. THE GROSS PROFIT OF RS.4 0,90,376/- WAS EARNED BY THE ASSESSEE AGAINST RS.13,90,274/- RESUL TING INTO 3.38% AGAINST 3.17% IN THE PRECEDING YEAR. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS CERTAIN ARITHMATICAL MISTAKES IN PREPAR ING THE INVENTORY WERE NOTICED. IN THE CASE OF M/S MOHD. A. KHAMBATI , DURING SURVEY, THE STOCK WAS WORKED OUT AT RS.4,24,467/- AND THAT OF I NDIA TUBE CORPORATION AT RS.44,49,525/-. THE ASSESSEE ALSO H AD CONSIGNMENT STOCK OF RS.36,21,523/-. AS PER THE REVENUE, THE AM OUNT OF RS.,3,69,378/- WAS NOT ENTERED IN THE BOOKS. IN THE CASE OF SHRI SAIFUDDIN KHAMBATI AN ADDITION OF RS.3,12,500/- WAS MADE AND IN THE CASE OF SHRI MOHD. A. KHABATI THE ADDITION OF RS.1, 87,500/- WAS MADE TO THE TOTAL INCOME. ON APPEAL, THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) DELETED THE RESPECTIVE ADDITION WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. 4. IT IS SEEN THAT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) A STRONG PLEA WAS RAISED BY THE ASSESSEE THAT ADDITION OF RS.5 LACS WAS WRONGLY MADE BY THE AO ON ACCOUNT OF CALCU LATION MISTAKE BY DELIBERATELY IGNORING THE FACTS AND THE DIFFERENCE IN OPENING STOCK SHOULD HAVE BEEN PROPERLY TAKEN INTO ACCOUNT AS TAX ON THE HIGHER FIGURES WAS 5 ALREADY PAID IN EARLIER ASSESSMENT YEAR. THE DIFFER ENCE OF RS.33,575/- WAS ON ACCOUNT OF TAKING THE STOCK AT RS.52,52,618/ - WHEREAS THE CLOSING STOCK WAS SHOWN AT RS.52,86,193/- IN THE BA LANCE-SHEET FILED ON 31.3.1996. THE LD. FIRST APPELLATE AUTHORITY HAS JU DICIOUSLY EXAMINED THE CLAIM OF THE ASSESSEE ALONG WITH STOCK INVENTORY PR EPARED DURING SURVEY AND FOUND THAT THERE WAS APPARENT MISTAKE IN THE IN VENTORY. ON FAIR CONCLUSION IT WAS FOUND BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT THE AMOUNT OF RS.87,545/- WAS NOT SU RRENDERED BY THE ASSESSEE INSPITE OF THE FACT THAT IT WAS ADMITTED A S AN UNACCOUNTED STOCK WHICH WAS AFFIRMED AND THE ASSESSEE HAS ALREA DY CHALLENGED THE SAME THROUGH ITS CROSS OBJECTION AND THE SAME HAS B EEN DISMISSED AS NOT PRESSED. IDENTICAL IS THE SITUATION IN THE CASE OF SHRI MOHD. A. KHAMBATI WHEREIN THE ADDITION OF RS.32,830/- WAS RI GHTLY AFFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND TH E LD. COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THE ADDITION BY NOT PR ESSING ITS CROSS OBJECTION. THE LEARNED CIT(A) HAS ALREADY DELIBERAT ED THE QUANTITY VIZ-A- VIZ RATE AND THE STOCK AT PAGE 6 OF THE IMPUGNED OR DER. IN VIEW OF THESE FACTS, WE FIND NO INFIRMITY IN THE STAND OF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRM THE SAME. 5. AS FAR AS THE ISSUE OF DISALLOWING THE NRE GIFTS BY MAKING ADDITION U/S 68 OF THE ACT IS CONCERNED, IT IS SEEN THAT THE MINOR CHILDREN OF THE ASSESSEE RECEIVED NRE GIFTS AS HAS BEEN DETAILED AT PAGE 8 OF THE 6 IMPUGNED ORDER FROM MURTZA (RS.3 LAC ON 15.7.1996), RS.2 LAC FROM SHRI ZEOB ALI ON 6.7.1996, RS.2,25,000/- FROM MOHD. MANS OOR ON 16.5.1996 AND RS.2 LAC FROM SMT. BANO BAI ON 24.6.1996. THE AFFIDAVITS FROM THE DONORS WERE FURNISHED BY THE ASSESSEE AND THE RESPE CTIVE AMOUNTS CAME FROM NRE ACCOUNTS THROUGH BANK DRAFTS. THE DON ORS DULY ADMITTED THAT THE RESPECTIVE GIFTS WERE GIVEN BY THEM. THE S TATEMENT AND THE FACTS NARRATED IN THE ASSESSMENT ORDER HAVE BEEN DULY CON SIDERED AS IS EVIDENT FROM PAGE 9 AND 10 OF THE IMPUGNED ORDER. THE LEARNED AO, AFTER CONSIDERING THE JUDICIAL PRONOUNCEMENTS LIKE DC RASTOGI HUF V. ACIT (61 ITD 295), JYOTSNA SURI V. DCIT; 61 ITD 139 , LALCHAND V. CIT; 22 CTR 135 (P&H); ITO V. DR. A.K. SHARMA; 63 TTJ 38 0 (ASR) AND SUMATI DAYAL V. CIT; 125 CTR 124 (SC), MADE THE IMP UGNED ADDITIONS. HOWEVER, THE UNCONTROVERTED FACTS ARE THAT THE PHOT OCOPIES OF THE GIFT DEEDS, PASSBOOKS AND BANKERS CERTIFICATES FROM THE BANK MENTIONING THAT THE MONEY INVOLVED CAME TO NRE ACCOUNTS AND AL SO THE FACT THAT THE DONORS RECEIVED THE AMOUNTS IN FOREIGN EXCHANGE AND THE SAME WERE CREDITED IN THE BANK ACCOUNTS. SHRI MOHD. A. K HAMBATI WAS CROSS EXAMINED WHEREIN HE CATEGORICALLY FURNISHED THE COM PLETE AND FULL DETAILS OF THE DONORS, THEIR OCCUPATION AND RELATIO NSHIP WITH THE DONEES. IT IS SEEN THAT THE LEARNED AO MADE THE ADDITION U/ S 68 MERELY ON PRESUMING THE SAME TO BE BOGUS GIFTS AND GENUINENES S OF THE GIFTS WERE DOUBTED. WE HAVE FOUND THAT THE RESPECTIVE ASSESSE E HAS DISCHARGED 7 THE INITIAL BURDEN AND THERE WAS NO MATERIAL AVAILA BLE WITH THE AO TO DOUBT THE GENUINENESS. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALREADY DISCUSSED/CONSIDERED VARIOUS DECISIONS LIKE ORIENT TRADING COMPANY V. CIT; SARAOGI CREDIT CORPO RATION AND DAULATMAL RAWATMAL (PAGE 14 OF THE IMPUGNED ORDER), R.K. SYAL V. ACIT (CHANDIGARH TRIBUNAL) 66 TTJ 656 AND JAWAHARLAL O SWAL V. ACIT; 71 TTJ 240. IN FACT, THERE IS NO MATERIAL ON RECORD T HAT THESE AMOUNTS IN FACT BELONGED TO THE DONEES OR THE SAME WERE RECEIV ED IN A CLANDESTINE MANNER OR OWN MONEY WAS ROUTED THROUGH THE DONORS. AS FAR AS THE CONTENTION OF THE LEARNED SR. DR THAT THERE WAS NO CLOSE RELATION BETWEEN THE DONEES AND THE DONORS, WE ARE OF THE VI EW THAT THAT NO SUCH RELATION IS REQUIRED UNLESS AND UNTIL IT IS PR OVED THAT OWN MONEY HAS BEEN TRANSACTED UNDER THE GUISE OF GIFT, THEREFORE, NO ADDITION CAN BE SUSTAINED MERELY ON THE BASIS OF PRESUMPTION AND SU SPICION, CONSEQUENTLY WE FIND NO INFIRMITY IN THE STAND OF T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ALSO AND CONFIRM THE SAME. FINALLY, THE APPEALS OF THE REVENUE ARE HAVING NO MERIT, THEREFORE, DISMISSED, WHEREAS THE CROSS OBJECTIONS OF THE ASSE SSEE ARE DISMISSED AS NOT PRESSED. 8 ORDER PRONOUNCED IN OPEN COURT ON 29 TH JUNE, 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER JUNE 29 , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DBN/