Shri Jagdish Rai Karnani, Kolkata V. ITO, Ward - 35(3), Kolkata, Kolkata

ITA 1473/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3952 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 56(2); 68

Judgement Text

ITA NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) I.T.A. NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 SRI JAGDISH RAI KARNANI,........................... ..........................APPELLANT 33, BRABOURNE ROAD, 7 TH FLOOR, KOLKATA-700 001 [PAN: AFAPK 1013 Q] -VS.- INCOME TAX OFFICER,................ ....RESPONDENT WARD-35(3), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYPASS, KOLKATA-700 107 APPEARANCES BY: SHRI RAKESH JAIN, FCA, FOR THE APPELLANT SHRI SATYAJIT MONDAL, ADDL. CIT, D.R. , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 16, 2018 DATE OF PRONOUNCING THE ORDER : OCTOBER 31, 2018 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA DA TED 31.05.2018 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.11,00,000/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF GIFT RECEIVED BY THE ASS ESSEE BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 12.11.2014 DECLARING TOTAL INCOME OF RS.19,14,600/-. IN THE BALANCE-SHEET FILE D ALONG WITH THE SAID RETURN, A SUM OF RS.11,00,000/- RECEIVED FROM SMT. KUSUM KARNANI WAS SHOWN AS ADVANCE BY THE ASSESSEE IN THE LIABILITY S IDE. IN THIS REGARD, A ITA NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 COPY OF BALANCE-SHEET OF SMT. KUSUM KARNANI FOR THE RELEVANT YEAR WAS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSME NT PROCEEDINGS BEFORE THE ASSESSING OFFICER. FROM THE PERUSAL OF THE SAID BALANCE-SHEET, THE ASSESSING OFFICER NOTICED THAT A SUM OF RS.11,00,00 0/- WAS REDUCED FROM THE CAPITAL ACCOUNT OF SMT. KUSUM KARNANI INDICATIN G IT AS A GIFT GIVEN TO THE ASSESSEE. HE, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN THE DIFFERENT TREATMENT GIVEN TO HIM TO THE SAID AMOUNT OF GIFT A S ADVANCE RECEIPT. IN THIS REGARD, IT WAS CLAIMED BY THE ASSESSEE THAT TH ERE WAS A TYPING ERROR IN INDICATING THE AMOUNT OF GIFT AS ADVANCE RECEIPT IN HIS BALANCE-SHEET. THE ASSESSEE ALSO FILED RELEVANT DOCUMENTARY EVIDEN CE IN THE FORM OF BANK STATEMENT OF SMT. KUSUM KARNANI AS WELL AS THE RELEVANT GIFT DEEDS TO ESTABLISH THE IDENTITY AND CAPACITY OF THE DONOR AS WELL AS THE GENUINENESS OF THE GIFT TRANSACTIONS. FROM THE PERU SAL OF THE BANK STATEMENT OF SMT. KUSUM KARNANI, THE ASSESSING OFFI CER NOTICED THAT SHE HAD RECEIVED A CHEQUE AMOUNTING TO RS.11,00,000/- O N 19.03.2014 FROM ROHIT SERVICE PVT. LIMITED AND THE SAID AMOUNT WAS UTILIZED FOR GIVING GIFT TO THE ASSESSEE ON THE SAME DATE. HE HELD THAT THE GIFT IN QUESTION THUS WAS NOT GIVEN BY SMT. KUSUM KARNANI FROM HER ACCUMU LATED FUNDS. HE ALSO HELD THAT THE AMOUNT OF GIFT EXCEEDING RS.50,0 00/- RECEIVED BY THE ASSESSEE WAS LIABLE TO BE ADDED TO HIS TOTAL LINCOM E UNDER SECTION 56(2) OF THE ACT. ACCORDINGLY AN ADDITION OF RS.11,00,000 /- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESS EE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 28.12.2016. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND THE FOLLOWING SUBMISSIONS WERE MAD E ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF HIS CASE THAT THE ADDITION OF RS.11,00,000/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF GIFT WAS NOT SUSTAINABLE:- (A) THAT SMT. KARNANI WAS THE WIFE OF THE APPELLAN T AND WAS 71 YEARS OF AGE AND ASSESSED TO INCOME TAX SINC E LONG. COPY OF PAN CARD, AADHAR CARD, ITR, P/L & B/S & ITA NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 BANK STATEMENT OF SMT. KUSUM KARNANI WERE ALSO SUBMITTED. B. THAT SHE HAD HER OWN CAPITAL OF MORE THAN RS.54 LACS AS ON 01.04.2013. C. THAT SHE DERIVED INCOME FROM RENT AND INTEREST INCLUDING INTEREST FROM VARIOUS INVESTMENTS AND BAN KS. D. THAT SHE PAID [GIFTED] THE AMOUNT OF RS.11,00,00 0/-- ON RECEIPT OF THE SAID AMOUNT FROM M/S ROHIT SERVIC ES (P) LTD OUT OF HER INVESTMENTS LYING WITH THE COMPA NY. E. THE ASSESSEE SUBMITTED THE BANK STATEMENT FOR TH E RELEVANT PERIOD FROM ROHIT SERVICES P. LTD.; CONFIR MATION OF THE DONOR SMT. KARNANI WITH SAID ROHIT SERVICES P. LIMITED FOR FY 2013-14. F. THE ASSESSEE-APPELLANT ALSO SUBMITTED THE BANK STATEMENT OF SMT. KARNANI FOR THE RELEVANT PERIOD. G. THAT SMT. KARNANI HAS NOT ONLY PAID TAXES FOR TH E RELEVANT YEAR. BUT THAT THE SAME WAS DULY ACCEPTED BY DEPARTMENT, AS ALSO THAT TDS HAD BEEN DEDUCTED ON T HE INCOME. 4. THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE S UBMISSIONS MADE BY THE ASSESSEE. ACCORDING TO HIM, THE ONUS WAS ON THE ASSESSEE TO ESTABLISH NOT ONLY THE IDENTITY AND CAPACITY OF THE DONOR TO MAKE SUCH GIFT BUT ALSO TO PROVE THE GENUINENESS OF THE GIFT. HE HELD THAT KEEPING IN VIEW THE SURROUNDING CIRCUMSTANCES AS WELL AS THE PREVAILING PRACTICE/CUSTOMS OF THE SOCIETY, THE GIFT CLAIMED TO BE RECEIVED BY THE ASSESSEE COULD NOT BE TREATED AS A GENUINE GIFT AS THERE WAS NO SUCH OCCA SION FOR THE DONOR TO GIVE SUCH HUGE AMOUNT OF GIFT TO THE ASSESSEE. HE H ELD THAT SECTION 68 THUS WAS CLEARLY ATTRACTED AND CONFIRMED THE ADDITI ON MADE BY THE ASSESSING OFFICER BY TREATING THE AMOUNT OF GIFT IN QUESTION RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE GIFT IN ITA NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 QUESTION WAS RECEIVED BY THE ASSESSEE FROM HIS WIFE SMT. KUSUM KARNANI AND THE PROVISIONS OF SECTION 50(2) OF THE ACT INVO KED BY THE ASSESSING OFFICER WERE NOT APPLICABLE. MOREOVER, THE RELEVANT DOCUMENTARY EVIDENCE IN THE FORM OF BALANCE-SHEET OF SMT. KUSUM KARNANI, HER BANK STATEMENT AS WELL AS INCOME TAX RETURN FOR THE RELE VANT YEAR, WAS FILED BY THE ASSESSEE AND THE FACT THAT THE GIFT OF RS.11,00 ,000/- GIVEN BY HER TO THE ASSESSEE DULY REFLECTED IN THE RELEVANT BALANCE -SHEET WAS ACCEPTED BY THE ASSESSING OFFICER. IDENTITY AND CAPACITY OF THE DONOR THUS WAS DULY ESTABLISHED BY THE ASSESSEE BY FILING THE RELEVANT DOCUMENTARY EVIDENCE. EVEN THE GENUINENESS OF THE GIFT WAS DULY ESTABLISH ED BY THE ASSESSEE BY FILING THE GIFT DEED, WHEREIN IT WAS CLEARLY DECLAR ED BY SMT. KUSUM KARNANI THAT THE AMOUNT OF RS.11,00,000/- WAS GIVEN BY HER TO THE ASSESSEE OUT OF THE NATURAL LOVE AND AFFECTION. KEE PING IN VIEW THIS COGENT EVIDENCE PRODUCED BY THE ASSESSEE I AM OF THE VIEW THAT THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN DOUBTING THE GEN UINENESS OF THE GIFT MERELY ON THE GROUND THAT THERE WAS NO SUCH OCCASIO N FOR GIVING THE GIFT BY THE DONOR TO THE ASSESSEE. I, THEREFORE, SET ASI DE HIS IMPUGNED ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELE TE THE ADDITION OF RS.11,00,000/- ON ACCOUNT OF GIFT BY TREATING THE S AME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 31, 2 018. SD/- (P.M. JAGTAP) VICE-PRESIDENT (KZ) KOLKATA, THE 31 ST DAY OF OCTOBER, 2018 COPIES TO : (1) SRI JAGDISH RAI KARNANI, 33, BRABOURNE ROAD, 7 TH FLOOR, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-35(3), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYPASS, KOLKATA-700 107 ITA NO. 1473/KOL/2018 ASSESSMENT YEAR: 2014-2015 (3) COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLK ATA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.