ITO, CHENNAI V. Smt. P. Abidha Banu & Others, CHENNAI

ITA 1427/CHNY/2005

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51799 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 10-06-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR STDG
• Assessee Lawyers: LH SMT P ABIDHA BANU
• Keywords: Gift
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI B E F O R E DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.1427(MDS)/2005 ASSESSMENT YEAR: 2000-01 THE INCOME-TAX OFFICER, WARD IX(4), CHENNAI. VS. SHRI P.SHEIK OLI, BY L/H SMT.P.ABIDHA BANU & OTHERS, 26, ANDERSON ST., CHENNAI-1. PAN AIYPS9779A. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN , JR.STDG. COUNSEL RESPONDENT BY: SHRI D.ANAND, ADVOCATE . DATE OF HEARING : 10 TH AUGUST, 2011 DATE OF PRONOUNCEMENT : 11 TH AUGUST, 2011 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2000-01. THE APPEAL IS DIRECTED AGAINST THE - - ITA NO.1427 OF 2005 2 ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-IX AT CHENNAI DATED 29-3-2005 AND ARISES OUT OF THE ASSESSMENT CO MPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE I NCOME-TAX ACT, 1961. 2. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT LOANS TOTALING 23,23,0 00/- HAVE BEEN BROUGHT INTO THE BOOKS OF ACCOUNTS OF THE ASSE SSEE IN THE NAMES OF HIS FIVE CHILDREN. WHEN GENUINENESS OF TH ESE LOAN CREDITS WERE ENQUIRED INTO BY THE ASSESSING AUTHORI TY, THE ASSESSEE EXPLAINED THAT THESE LOAN AMOUNTS REPRESEN TED THE GIFTS MADE BY HIS RELATIVES WHO HAD LOAN ACCOUNTS W ITH THE ASSESSEE. HE EXPLAINED THAT THOSE RELATIVES OF THE ASSESSEE HAD DEPOSITED SUBSTANTIAL SUMS IN THE PAST AS INTEREST- FREE LOANS TO THE ASSESSEE. THEY ARE RELIGIOUS MINDED PEOPLE AND THEREFORE NOT CHARGING INTEREST AS PREACHED IN ISLAM. WHEN T HERE WAS A RELIGIOUS CEREMONY IN THE CASES OF THOSE CHILDREN I N THE FAMILY, THE RELATIVES THOUGHT OF TAKING BACK THE LOANS FROM THE ASSESSEE AND GIFTING THE SAME AMOUNTS TO THE CHILDREN OF THE ASSESSEE. IT WAS EXPLAINED FURTHER THAT TO ENSURE THIS ARRANGEME NT THE ASSESSEE HAD ISSUED CHEQUES IN FAVOUR OF THOSE RELA TIVES, WHO IN - - ITA NO.1427 OF 2005 3 TURN, ENDORSED THOSE CHEQUES IN FAVOUR OF THE ASSES SEES MINOR CHILDREN. CONFIRMATION LETTERS WERE FILED BY THE D ONORS. BUT THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF FERED BY THE ASSESSEE AND MADE AN ADDITION OF ` 23,23,000/- IN THE HANDS OF THE ASSESSEE. 3. IN FIRST APPEAL THE COMMISSIONER OF INCOME- TAX(APPEALS) HELD THAT THE IDENTITY OF THE DONORS H AS BEEN PROVED AND THAT THE TRANSACTIONS ALSO HAVE BEEN PROVED AND THEREFORE THERE IS NO HARM IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT HIS MINOR CHILDREN HAD RECEIVED GIFTS TOTALING TO ` 23,23,000/-. HE DELETED THE ADDITION OF ` 23,23,000/-. THE REVENUE IS AGGRIEVED AND THEREFORE THE SECOND APPEAL BEFORE US. 4. WE HEARD BOTH THE SIDES IN DETAIL. ON THE ONE HAND THE ASSESSEE PLEADS THAT EVEN THOUGH GIFTS WERE MAD E BY HIS RELATIVES TO HIS MINOR CHILDREN, THOSE GIFTS WERE O NLY NOMINAL TRANSACTIONS FOR THE REASON THAT THEIR LOAN CREDIT ACCOUNTS WERE ALREADY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AN D THOSE LOANS WERE TRANSFERRED TO THE MINOR CHILDREN OF THE ASSESSEE. THE ASSESSEE ALSO STATES THAT IN ORDER TO MAKE THE TRANSACTIONS HE HAD ISSUED CHEQUES TO THE RELATIVES AND IN TURN THOSE RELATIVES - - ITA NO.1427 OF 2005 4 HAD ENDORSED THEIR CHEQUES IN FAVOUR OF THE ASSESSE ES MINOR CHILDREN. 5. IF THE GIFTS WERE MADE BY WAY OF ASSIGNING THE LOAN ACCOUNTS OF THE RELATIVES TO THE MINOR CHILDREN OF THE ASSESSEE, THERE WAS NO NEED OF ANY PHYSICAL INSTRUMENT OF TRA NSACTION. PASSING OF ADJUSTMENT ENTRIES WOULD HAVE BEEN SUFFI CIENT ALONGWITH CONFIRMATION LETTERS FROM THE CONCERNED C REDITORS. BUT IT IS STATED THAT THE ASSESSEE HAS ISSUED CHEQUES W HICH WERE IN TURN ENDORSED IN FAVOUR OF THE MINOR CHILDREN OF TH E ASSESSEE. WE ARE NOT ABLE TO UNDERSTAND THE EXACT MODE OF GIF TS MADE BY HIS RELATIVES TO THE MINOR CHILDREN OF THE ASSESSEE . THE EXPLANATIONS GIVEN BY THE ASSESSEE SEEM TO BE CONTR ADICTORY. 6. SECONDLY, GIFTS STATED TO BE MADE ON THE OCCASI ON OF RELIGIOUS FUNCTIONS SHOULD BE IN FACT ACTUAL GIF TS IN PRAESENTI. ASSIGNING CERTAIN LOAN ACCOUNTS IN FAVOUR OF THE MI NOR CHILDREN BY WAY OF GIFTS IS A FAR-FETCHED IMAGINATION. BY T RANSFERRING THE LOAN ACCOUNTS FROM THEIR NAMES TO THE NAMES OF THE ASSESSEES MINOR CHILDREN, THE RELATIVES MIGHT HAVE MADE THE G IFTS NOT TO THE ASSESSEES MINOR CHILDREN BUT TO THE ASSESSEE HIMSE LF. - - ITA NO.1427 OF 2005 5 7. AFTER EXAMINING ALL THESE DISTURBING ASPECTS OF THE CASE, WE FIND THAT THE ENTIRE EPISODE IS A COCK AND BULL STORY WITHOUT HEAD OR TAIL. WE DO NOT FIND THE EXPLANATI ON OFFERED BY THE ASSESSEE AS CONVINCING. WE ALSO FIND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUPPORT THE CREDIT ENT RIES REFLECTED IN HIS ACCOUNTS. WHEN THE ASSESSEE SAYS THAT HE HA S ISSUED CHEQUES IN FAVOUR OF HIS RELATIVES WHO IN TURN ENDO RSED THOSE CHEQUES TO THE ASSESSEES MINOR CHILDREN, HE DOES N OT SPEAK ANYTHING ABOUT THE FUNDS AVAILABLE AT THAT POINT OF TIME SO THAT THE CHEQUES COULD BE HONOURED. IT IS NOT NECESSARY TO REPEAT ALL THE FALLACIES OF THE ARGUMENTS ADVANCED BY THE ASSE SSEE BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS). 8. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE ONLY ON THE BASIS OF THE PLEADINGS OF THE ASSESSEE. HE BELIEVED THE STORY O F GIFTS ON THE GROUND THAT THE ASSESSEE COULD BE A GENEROUS MAN BE ING A BUSINESSMAN OF STANDING AND THEREFORE HIS RELATIVES WOULD HAVE THOUGHT IT FIT TO CONVERT THEIR LOANS INTO GIFTS. WE FIND THAT THIS IS SOMETHING LIKE A SUBJECTIVE ADJUDICATION. WE CANNO T ENDORSE IT. - - ITA NO.1427 OF 2005 6 9. IN THE FACTS AND CIRCUMSTANCES WE FIND THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN DELETI NG THE ADDITION OF ` 23,23,000/- MADE BY THE ASSESSING AUTHORITY. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT IS SET ASIDE AND THE ADDITION MADE BY THE ASSESSING AUTHORITY IS RESTORED. 10. IN RESULT THIS APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 11 TH DAY OF AUGUST, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 11 TH AUGUST, 2011. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.