Sh. Pankaj Jain, Mandi Gobindgarh V. ACIT, CC, Patiala

ITA 1407/CHANDI/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4283 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1990-1991
• Appeal Filed On: 13-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: H R SALDI
• Keywords: Gift; Income from undisclosed sources; Principle of natural justice; Reassessment proceedings; Set aside
• Section: 142(1); 143(1); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH , !' # $ % &' , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1407/CHD/2018 / ASSESSMENT YEAR : 1990-91 SHRI PANKAJ JAIN, C/O M/S PEE GEE CORPORATION, G.T.ROAD, NEAR JAIN STEEL INDUSTRIES, MANDI GOBINDGARH THE ACIT, CENTRAL CIRCLE PATIALA ./PAN NO: ABOPJ4643H / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI H.R. SALDI, ADVOCATE ' ! / REVENUE BY : SHRI MANJIT SINGH, CIT DR # $ % /DATE OF HEARING : 15.10.2019 &'() % / DATE OF PRONOUNCEMENT : 13. 01.2020 ')/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 30.08.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT (A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ARBITRARILY DISMISSED THE A PPEAL BY IGNORING THE DIRECTIONS OF THE HON'BLE BENCH OF ITAT ORDER DATED 30.12.2005. ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 2 2. THAT THE LD. CIT(A) ERRED AND NOW DECIDED THE ISSUE AGAINST THE APPELLANT WHICH WAS ALREADY DECIDED BY HIS PREDECESSOR IN FAVOUR OF APPELLANT AND HAD TREATED THE GIFTS AS GENUINE AGAINST WHICH THE DEPARTMENT HAD TRAVELLED TO THE ITAT. 3. HON'BLE BENCH OF ITAT HAD REMANDED BACK TO THE FILE OF A.O. WITH THE DIRECTION THAT IF THE DONORS HAVE PAI D THE GIFT TAX AND PURCHASED THE DRAFTS OF THE GIFTS FROM THEIR BANK ACCOUNT AND THE WEIGHTAGE SHOULD BE GIVEN TO T HIS FACT IN COMPARISON TO DENIAL OF STATEMENT. AS SUCH THE APPEAL MAY BE ALLOWED. 3. THIS IS THE SECOND ROUND OF APPEAL BEFORE US. TH E ASSESSEE IN THIS APPEAL HAS AGITATED THE ACTION OF THE CIT(A) IN CON FIRMING THE ADDITION OF RS. 61,500/- MADE BY THE ASSESSING OFFICER IN RE SPECT OF UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME IN THIS CASE WAS FILED BY THE ASSESSEE ON 13.2.1991 AT AN I NCOME OF RS. 55,610/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON 22.2.1991. HOWEVER, TH E ASSESSMENT WAS REOPENED U/S 147 R.W.S. 148 OF THE ACT WHICH WAS CO MPLETED AT AN INCOME OF RS. 1,37,610/- BY MAKING ADDITION OF RS. 82,000/- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. IT IS MENTIONED BY THE ASSESSING OFFICER THAT DURING THE YEAR, THE ASSESSEE RECEIVE D GIFTS OF RS. 20,500/- EACH FROM FOUR PERSONS WHICH WERE ADDED TO THE INCO ME OF THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), LUDHIANA, WHO ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 3 DELETED THE ADDITION VIDE ORDER DATED 25.02.2005 IN APPEAL NO. ROT/7/IT/CIT(A)-1/02-03. THE DEPARTMENT FILED APPEA L AGAINST THE ORDER OF CIT(A) BEFORE THE TRIBUNAL. THE TRIBUNAL SET-ASIDE THE MATTER TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. N OTICE U/S 142(1) WAS ISSUED ON 19.09.2007 BY THE ASSESSING OFFICER REQUE STING THE ASSESSEE TO FILE COPIES OF GIFT TAX ASSESSMENT ORDERS AND COPIE S OF BANK ACCOUNT ETC. OF THE DONORS. THE ASSESSEE FILED REPLIES WHICH WER E CONSIDERED BY THE AO. HOWEVER, AS PER THE ASSESSING OFFICER, THE ASSE SSEE FAILED TO PROVE THAT THE DRAFTS GIVEN AS GIFTS WERE MADE FROM THE A MOUNTS IN THE BANK ACCOUNTS OF THE DONORS, AS THE ASSESSEE HAS FAILED TO FURNISH THE COPIES OF BANK ACCOUNTS OF THE THREE DONORS NAMELY SH. RAJ KUMAR, SH. JAI PAL AND SH. SUDARSHAN KUMAR INSPITE OF SUFFICIENT TIME ALLOWED IN THIS REGARD. IT IS ALSO MENTIONED BY THE ASSESSING OFFIC ER THAT NEITHER THE ASSESSEE FURNISHED ANY EVIDENCE THAT THE THREE DONO RS WERE REGULAR INCOME TAX ASSESSEE NOR THERE WAS ANY SUCH EVIDENCE AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT AS PER THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSEE HAD TO FULFILL TWO CONDITION S NAMELY (A) TO PROVE BY THE COPIES OF BANK ACCOUNTS OF THE DONORS THAT T HE DRAFTS OF GIFTS WERE PURCHASED FROM AMOUNTS IN THEIR BANK ACCOUNTS AND; (B) THAT THE DONORS HAD PAID GIFT TAX ON THE GIFTS. THE ASSESSING OFFIC ER, THEREFORE, DISALLOWED THE CLAIM OF GIFTS AND ADDED THE AMOUNT OF THREE GIFTS TO INCOME AND ASSESSED RS. 61,500/- AS UNACCOUNTED INC OME OF THE ASSESSEE FROM THE UNDISCLOSED SOURCES. ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 4 AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICE R, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), HOWEVER, THE LD . CIT(A) CONFIRMED THE ADDITIONS SO MADE BY THE ASSESSING OFFICER. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COMMON ORDER OF THE TRIBUNAL DATED 30.12.2015 PASSED IN ITA NO.574/CHD/2005 & OTHERS IN THE FIRST ROUND OF APPEAL, WHEREIN, THE TRIBUNAL WHILE REMANDING THE MATTER FOR ASSESSM ENT AFRESH ON THE ISSUE, HAS MADE THE FOLLOWING OBSERVATIONS: 10. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE MATERIAL ON RECORD. FRO M THE FACTS OF THE PRESENT CASE, IT IS NOTICED THAT W HILE FRAMING ASSESSMENT OF M/S PEE GEE CORP WHEREIN THE ASSESSEE INTRODUCED THE AMOUNT IN QUESTION IN THE CAPITAL ACCOUNT AND THE SOURCE WAS STATED TO BE GIF T RECEIVED FROM FOUR PERSONS, THE GIFTS WERE CONSIDER ED AS GENUINE DURING THE ASSESSMENT PROCEEDINGS OF THE SAID CONCERN, NO ADDITION HAD BEEN MADE FOR THE TRANSACTION. IT IS TRUE THAT EACH AND EVERY CASE IS SEPARATE IN THE INCOME TAX PROCEEDINGS AND THE FINDINGS IN ONE CASE MAY BE RELEVANT BUT NOT CONCLUSIVE FOR ANOTHER CASE. THEREFORE, ON THE BASI S THAT THE ADDITION HAD NOT BEEN MADE IN THE HANDS OF M/S PEE GEE CORP, IT CAN NOT BE HELD THAT GENUINE G IFTS WERE RECEIVED BY THE ASSESSEE AT THE SAME TIME, TH IS FACT CAN ALSO NOT BE IGNORED THAT THE GIFT TAX HAD BEEN PAID BY THE ASSESSEE AND THE GIFTS WERE RECEIVED B Y THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS THE CLAIM OF THE ASSESSEE WAS THAT THE GIFT AGREEMENT S ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 5 WERE ALSO THERE BETWEEN THE ASSESSEE AND THE DONORS , ON THE OTHER HAND, THE OBSERVATION OF THE ASSESSING OFFICER WHILE MAKING ADDITION WAS THAT SO CALLED DONORS DENIED IN THEIR STATEMENTS THAT THEY HAD MAD E ANY GIFTS. IT IS NOTICED THAT LD. CIT(A) HAD GIVE N CONTRADICTORY FINDINGS BECAUSE HE MENTIONED THAT TH E DONORS WHO WERE EXAMINED BY THE ASSESSING OFFICER HAD CONFIRMED THE GIFTS GIVEN TO THE ASSESSEE, ON T HE OTHER HAND, THE OBSERVATION OF THE ASSESSING OFFICE R WAS THAT THE DONORS HAD DENIED IN THEIR STATEMENTS THAT ANY GIFT WAS GIVEN TO THE ASSESSEE, WHICH IS APPARENTLY CLEAR FROM THE FINDINGS OF ASSESSIN G OFFICER GIVEN IN THE ASSESSMENT ORDER IN THE PRE SENT CASE, THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE GIFTS WERE MADE BY THE DONORS OUT OF THEIR BANK ACCOUNT, HOWEVER, NO DISCUSSION HAS BEEN MADE EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT( A) ON THIS ASPECT. THEREFORE, KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE AND THE EQUITY, IT IS NECESSARY TO UNEARTH THE TRUTH. THE STATEMENT GIVEN BY THE DONORS BEFORE THE ASSESSING OFFICER, WHEREIN TH EY HAD DENIED OF GIVING THE GIFTS TO THE ASSESSEE, HAS NO WEIGHTAGE IF IT IS FOUND THAT THEY HAVE PAID THE GI FT TAX AND THE DRAFT HAD BEEN PURCHASED FROM THEIR BANK ACCOUNTS. FOR THAT REASON I THINK IT APPROPRIATE TO SET ASIDE THE ORDER OF LD CIT(A) AND DEEM IT PROPER TO REMAND THE ISSUE BACK TO THE FILE OF ASSESSING OFFI CER FOR FRESH ADJUDICATION PARTICULARLY TO VERIFY AS TO WHETHER THE DONORS HAD PURCHASED THE DRAFTS OF THE GIFTS FROM THE AMOUNT IN THEIR BANK ACCOUNTS AND IF THIS VERSION WAS FOUND TO BE CORRECT THEN WEIGHTAGE SHOU LD BE GIVEN TO THIS FACT IN COMPARISON TO THEN DENIAL IN THE STATEMENT RECORDED ON 28.12.98. IT IS ALSO RELEVANT TO POINT OUT THAT THE LD. CIT(A) WHILE MAKING DELETION HAS CONSIDERED CERTAIN FACTS WHIC H DID NOT FIND PLACE IN THE ASSESSMENT ORDER I.E. THE DONORS WERE REGULAR INCOME TAX ASSESSEES AND THAT T HE COPIES OF GIFT TAX ASSESSMENTS WERE ALSO MADE AVAILABLE AND THAT THE DONORS WERE EXAMINED BY THE ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 6 ASSESSING OFFICER AND ALL THE DONORS CONFIRMED THE GIFTS WHICH THEY HAD GIVEN TO THE ASSESSEE SINCE THERE IS CONTRADICTION IN THE FINDINGS OF LD. CIT(A) AND OBSERVATIONS OF ASSESSING OFFICER, FOR THAT REASON ALSO, IT BECOMES NECESSARY THAT THE ASSESSING OFFICER SHO ULD DECIDE THIS ISSUE AFRESH 7. THE LD. COUNSEL FOR THE ASSESSEE, BEFORE US, HAS MADE THE FOLLOWING WRITTEN SUBMISSIONS:- 1. THE INCOME TAX RETURN IN THIS CASE WAS FILED DECLARING AN INCOME OF RS. 55,614 ON 13.02.1991. THE ASSESSMENT WAS COMPLETED BY THE LD. DCIT, CENTRE CIRCLE, PATIALA AT A SUM OF RS. 1.37,610 (ADDITION OF RS. 82,000/-). 2 . THE ASSESSMENT WAS CHALLENGED BEFORE THE LD. CIT (A), LUDHIANA AND THE APPEAL OF THE APPELLANT WAS ALLOWED VIDE ORDER DATED 25.02.2005 WHEREIN THE LD CIT(A) HAD HELD THAT THE DONORS ARE CLEARLY IDENTIFIABLE. MOST OF THEM INCOME TAX ASSESSEE'S GIFTS HAVE COME THROUGH ACCOUNT PAYEE DRAFTS. GIFT AGREEMENTS ARE THERE, COPY OF GIFT TAX WERE AVAILABLE ON RECORD. 3. BUT THE DEPARTMENT TRAVELLED TO THE HORBLE BENCH OF ITAT, CHANDIGARH AND THE HON'BLE BENCH AFTER HEARING BOTH THE PARTIES SET ASIDE THE ORDER OF THE LD CIT(A) AND REMANDED THE ISSUE BACK TO THE A.O. WITH THE DIRECTIONS TO VERIFY:- (I) WHETHER DONORS HAVE PURCHASED DRAFTS OF THE GIFTS FROM THE BANK ACCOUNT OF THE DONORS THEN THE WEIGHTAGE SHOULD BE GIVEN TO THIS FACT IN COMPARISON TO THEIR DENIAL IN THE STATEMENT. ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 7 (II) AND FIND OUT THAT THE DONORS ARE REGULAR ASSESSEE'S AND COPIES OF THE GIFT TAX ASSESSMENT WERE ON RECORD. 4. THE LD A.O. IN THE REASSESSMENT PROCEEDINGS AT THE LAST PAGE OF THE ASSESSMENT ORDER STATES THA T SINCE AS PER DIRECTIONS OF THE HON'BLE BENCH OF ITAT THE ASSESSEE HAS TO FULFILL THE TWO CONDITIONS AS UNDER: A) TO PROVE BY THE COPIES OF THE BANK ACCOUNTS OF THE DONORS THAT THE DRAFTS OF GIFTS WERE PURCHASED FROM AMOUNTS IN THEIR BANK ACCOUNTS. B) THE DONORS HAVE PAID GIFT TAX ON THE GIFTS. 5. (A) THE LD A.O. VERIFIED THE COPIES OF THE GIFT TAX CHALLANS. BUT THE COPIES BANK STATEMENT COULD NOT BE SUBMITTED BY THE APPELLANT DUE TO THE ILLNESS OF THE MOTHER OF THE APPELLANT AT PUNE. (B) AFTER COMING FROM PUNE THE APPELLANT FILED APPLICATION FOR RECTIFICATION BEFORE THE LD A.O. ALONG WITH COPY OF THE BANK PASS BOOKS OF ALL THE THREE DONORS BUT THE LD A.O. HAD NOT DECIDED THE SAME. 6. AT THIS THE APPELLANT FILED AN APPLICATION UNDER RULE 46A ON 24.01.2012 BEFORE THE LD CIT(A) ALONG WITH THE COPIES OF THE BANK STATEMENT OF ALL THE THREE DONORS FROM WHERE THE DRAFTS OF GIFTS WERE ISSUED. THE THEN CIT(A) SENT THE COPY OF APPLICATION UNDER RULE 46A TO THE CONCERNED A.O. FOR VERIFICATION OF THE FACTS. 7. THE LD A.O. HAD NOT NEGATED THE FACTS AS CLAIMED IN APPLICATION UNDER RULE 46A. ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 8 8. THUS THE APPELLANT FULFILLS BOTH THE CONDITIONS AS DIRECTED BY THE HON'BLE BENCH OF ITAT AS SUCH THE LD. CIT(A) HAD NO REASON TO CONFIRM THE ADDITION. HE HAS ONLY DISCUSSED THE IRRELEVANT POINTS WHICH ARE NOT AVAILABLE IN THE REASSESSMENT ORDER DATED 30.08.2018. THOSE POINTS WERE ALREADY DISCUSSED AND DECIDED BY THE LD CIT(A) IN 25.02.2005. 9. KEEPING IN VIEW THE ABOVE SUBMISSIONS, IT IS SUBMITTED THAT BOTH THE CONDITIONS DIRECTED BY THE HON'BLE BENCH OF IT AT ARE FULFILLED BY THE APPELLANT AS SUCH THE ORDER OF THE LD CIT(A) BE CANCELLED AND THE APPEAL OF THE APPELLANT BE ALLOWED. 8. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E FINDINGS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE RECORD. THOUGH, IN THIS CASE THE ASSESSEE COULD NOT PRODUC E THE BANK STATEMENTS OF THE DONORS BEFORE THE ASSESSING OFFICER, HENCE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITIONS INTO THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSEE DULY PRODUCED BANK ACCOUNT STATEMENTS SHOWING THAT THE DRAFTS WERE MADE BY THE THREE DONO RS OUT OF THE DEPOSITS IN THEIR BANK ACCOUNTS AND THAT EVEN THE D RAFTS CHARGES ALSO BEEN PAID BY THE RESPECTIVE DONOR OUT OF THEIR BANK ACCOUNTS. THE ASSESSEE HAS ALSO PRODUCED THE GIFT TAX CHALLANS T O SHOW THAT THE TAX WAS DULY PAID ON THE SAID GIFTS. ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 9 THOUGH, THE LD. CIT(A) COULD NOT REBUT THE ABOVE P OINT IN FAVOUR OF THE ASSESSEE, HOWEVER, HE WHILE CONFIRMING THE O RDER OF THE ASSESSING OFFICER OBSERVED THAT THE CONCERNED DONORS HAD DENI ED THE PAYMENTS OF GIFTS TO THE ASSESSEE AND FURTHER THAT THE ASSESSEE HAS BEEN RECEIVING SAME TYPE OF GIFTS IN EARLIER YEARS ALSO AND FURTHE R THAT THEIR FAMILY MEMBERS HAD ALSO RECEIVED GIFTS. THE LD. CIT(A) HE LD THAT CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, IT DID NOT APPEAR THAT THE GIFTS WERE GENUINE. HOWEVER, THE LD. CIT(A) WH ILE HOLDING SO, IGNORED THE DIRECTIONS OF THE ITAT VIDE ORDER DATED 30.12.2015 PASSED IN ITA NO.574/CHD/2005 & OTHERS OF THE TRIBUNAL TH AT THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE STATEMENT GIVEN BY THE DONOR BEFORE THE ASSESSING OFFICER, WHEREIN, THEY HAD DENIED OF GIVI NG THE GIFTS TO THE ASSESSEE WOULD BE OF NO WEIGHTAGE IF IT IS FOUND T HAT THEY HAD PAID THE GIFT TAX AND THE DRAFT HAD BEEN PURCHASED FROM THE IR BANK ACCOUNTS. THE ASSESSEE HAS PRODUCED THE COPY OF THE GIFT TAX CHAL LANS AND OTHER RELEVANT DOCUMENTS AND HAS ALSO SHOWN THAT THE GIFT S WERE GIVEN BY THE DONOR BY WAY OF BANK DRAFTS WHICH WERE DRAWN AFTER WITHDRAWAL OF AMOUNT FROM THEIR BANK ACCOUNTS AND DRAFT FEE WAS P AID THROUGH THEIR ACCOUNTS. THE ASSESSEE, IN OUR VIEW, HAS DISCHARGED THE BU RDEN OF PROOF CAST UPON HIM. WE, THEREFORE, DO NOT FIND ANY JUST IFICATION ON THE PART OF THE CIT(A) IN CONFIRMING THE IMPUGNED ADDITIONS DESPITE THE ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 10 REQUISITE EVIDENCE FURNISHED BY THE ASSESSEE. IN V IEW OF THIS, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE A DDITIONS MADE BY THE ASSESSING OFFICER ARE HEREBY ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.01.2020. SD/- SD/- ( # $ % &' / ANNAPURNA GUPTA) '( / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 13.01.2020 .. '+ ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , %2 , 34516 / DR, ITAT, CHANDIGARH 6. 157$ / GUARD FILE ITA NO. 1407-CHD-2018 SHRI PANKAJ JAIN, MANDI GOBINDGARH 11