Mr. Mahesh G. Madhyan, Ahmednagar V. DCIT, Circle 1(2), Ahmednagar

ITA 1631/PUN/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9374 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-01-2017
• Assessment Year: 1995-1996
• Appeal Filed On: 28-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Principle of natural justice
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! , # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.1631/PUN/2013 & & / ASSESSMENT YEAR : 1995-96 SHRI MAHESH G. MADHYAN, TELIKHUNT, AHMEDNAGAR. PAN: AAWPM0672N . / APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), AHMEDNAGAR. . / RESPONDENT . / ITA NO.1632/PUN/2013 & & / ASSESSMENT YEAR : 1995-96 SHRI HARESH G. MADHYAN, TELIKHUNT, AHMEDNAGAR. PAN: AAWPM0674L . / APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), AHMEDNAGAR. . / RESPONDENT . / ITA NO.1633/PUN/2013 & & / ASSESSMENT YEAR : 1995-96 MRS.KAVITA G. MADHYAN, TELIKHUNT, AHMEDNAGAR. PAN: ABBPM3997J . / APPELLANT 2 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), AHMEDNAGAR. . / RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 29.05.2017 / DATE OF PRONOUNCEMENT: 31.05.2017 ' / ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF APPEALS FILED BY DIFFERENT ASSESSEE ARE AGAINST SEPARATE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) I, PUNE, ALL DATED 21/06/2013 RELATING TO ASSESSMENT YEAR 1995-96 AGAINST THE RES PECTIVE ORDERS PASSED U/S 143(3) READ WITH SECTION 254 OF INCOME TAX ACT 1961 (IN SHORT THE ACT). 2. THE ASSESSEE IN ITA NO.1631/PUN/2013 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT APPEAL HAS NOT IMPLEMENTED THE D IRECTIONS OF HON.ITAT VIDE PARA 7 ON PAGE 4 OF ITAT ORDER 31/05/ 2011 HENCE THE ORDER PASSED IS ILLEGAL AND NOT TENABLE IN LAW. 2. CIT APPEAL HAS NOT INTERROGATED THE APPELLANT TO DECIDE GENUINENESS OF GIFT NOR PUT ANY QUESTION TO THE APP ELLANT. HENCE THE ORDER PASSED IS PERVERSE AND AGAINST THE PRINCI PLE OF NATURAL JUSTICE. 3. THE CIT APPEAL NEVER ISSUE ANY SUMMONS/ NOTICE T O THE DONOR/DONEE TO DECIDE AND FIND OUT THE TRUTH OF THE MATTER AS DIRECTED BY HON. ITAT HENCE THE ORDER PASSED DATED 21/06/2013 IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 3 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 4. IT IS ILLEGAL ON PART OF CIT APPEAL TO READ IN B ETWEEN THE LINE THAT GIFT AMOUNT IS REIMBURSEMENT OF EXPENSES. WHEN THE DONO R SENT LETTER DATED 20/12/1994 FOR GIFT WHICH READS AS UNDER AS A GESTURE OF LOVE, I ENCLOSE HEREWITH A GIFT OF US $15,000 BY DE MAND DRAFT NO F134211 DRAWN ON H.K(HONGKONG) BANK FOR THE BENEFIT OF YOU AND YOUR FIANCE MANJU. WHEN YOU ARE VISITING HONG KON G? WHY NOT MAKE A SHORT TRIP THIS SIDE DEFIANTLY AFTER YOUR WE DDING. HOPE TO SEE YOU SOON. WITH LOVE & REGARDS TO YOUR DAD BOB 5. THIS IS NORMAL LETTER ACCOMPANYING THE DRAFT, OU T OF NATURE LOVE AND AFFECTION, YOU CANT CALL THIS AS REIMBURSEMENT OF EXPENSES. 6. THIS SHOWS NARROWNESS OF MIND OF CIT APPEAL. HE NCE ORDER PASSED BY CIT APPEAL IS ILLEGAL & ADDITION MADE MAY PLEASE BE DELETED. 7. ANY AMENDMENT OF FINANCE BILL IN 2004 IS ALSO NO T RELEVANT HENCE APPEAL ORDER FOR AY-1995-96 CANT BE DISMISSED. 8. ANY COMMENTS PRIOR TO AY IN APPEAL ARE NOT RELEV ANT AS GIFT WAS RECEIVED DURING AMNESTY SCHEME OF FOREIGN REMITTANC E IN 1991 & HENCE CAN NOT BE BASIS FOR REFUSING THE GIFT. 3. THESE THREE APPEALS RELATING TO THREE DIFFERENT ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING M ADE TO THE FACTS IN ITA NO.1631/PUN/2013 TO ADJUDICATE THE PRESENT ISSUE. 4. THE ONLY ISSUE RAISED IN THE APPEAL IS AGAINST T HE ADDITION MADE ON ACCOUNT OF NON ACCEPTANCE OF THE GIFT RECEIVED OF U S $15000 BY THE ASSESSEE, EQUIVALENT TO RS.4,68,000/-. 5. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH U/S 13 2(1) OF THE ACT WAS CARRIED OUT IN THE CASE OF SHRI GIRDHARILAL RADHAKISAN MADH YAN, WHO IS THE FATHER OF THE ASSESSEE. THE SAID SEARCH ACTION WAS CARRIED OUT B ETWEEN 11/04/1995 TO 13/4/1995 AT BOTH RESIDENCE AS WELL AS BUSINESS PRE MISES OF THE ASSESSEE. 4 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 CERTAIN INCRIMINATING DOCUMENTS, DIARIES, BOOKS OF ACCOUNTS, ETC., WERE FOUND DURING THE SEARCH. AS A RESULT OF THE EVIDENCE FOU ND, IT WAS ESTABLISHED IN THE CASE OF THE FATHER OF THE ASSESSEE THAT HE WAS ENGA GED IN MONEY LENDING AND MATKA BUSINESS AND HAD COLLECTED WEALTH WHICH WAS N EVER DISCLOSED TO THE DEPARTMENT. FURTHER EVIDENCE OF GIFTS RECEIVED FRO M NRI WERE FOUND AND SUM OF RS.12,51,000/- (RS.4,68,000/- + RS.4,68,000/- + 3,1 5,000/-) WAS ADDED ON PROTECTIVE BASIS VIDE ORDER PASSED U/S 143(3) R.W.S 147 IN THE CASE OF SHRI GIRIDHARILAL R MADHYAN. CONSEQUENT THERETO, T HE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE WERE RE-OPENED U/S147 A ND 148 OF THE ACT. PROTECTIVE ADDITIONS HOWEVER WERE MADE IN THE HANDS OF THE ASSESSEE AND HIS BROTHER IN RESPECT OF THE SAID GIFTS RECEIVED TOTAL ING RS.9,36,000/-. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF SHRI GIRDHARILAL R. MADHYAN HELD THAT THE GIFTS WERE TO BE TAXED IN THE HANDS OF THE RECIPIENTS AS INCOME FROM UNDISCLOSED SOURCE. CONSEQUENT THERETO , ASSESSMENT ORDER WAS PASSED IN THE CASE OF THE ASSESSEE AND ADDITION OF RS.4,68,000/- WAS MADE AS UNEXPLAINED INVESTMENT IN ACQUIRING FOREIGN REMITTA NCE / GIFTS. 6. IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEA LS) CONFIRMED THE ADDITION IN THE FIRST ROUND. HOWEVER, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NOS.632 TO 634/PUN/2002 VIDE ORDER DATED 12/11/2003. THEREAFTER, COMMISSIONER O F INCOME TAX (APPEALS) AGAIN DISMISSED THE APPEAL OF THE ASSESSEE VIDE ORD ER DATED 19/04/2007 AND CONSEQUENT THERETO THE TRIBUNAL IN ITA NOS.932 TO 9 35/PUN/2007 REMANDED THE MATTER AGAIN BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS) TO DECIDE THE GENUINENESS OF THE GIFTS AFRESH AFTER GIVING OPPORT UNITY OF HEARING TO THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK UP THE MATTER 5 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 BEFORE WHOM THE ASSESSEE FURNISHED THE EXPLANATION AND NOTED THAT IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER HAD GIVEN OPPORTUNITY TO SHRI GIRDHARILAL R. MADHYAN TO PRODUCE PERSON FOR C ROSS VERIFICATION FROM WHOM GIFTS WERE RECEIVED, BUT SHRI GIRDHARILAL R. MADHYA N FAILED TO DO SO. THE COMMISSIONER OF INCOME TAX (APPEALS) THEREAFTER HAD CONSIDERED THE EVIDENCE FOUND AND THE CONTENTIONS OF THE ASSESSEE ON EACH O F THE ISSUE VIDE PARA 3.7 ONWARDS AND HAD HELD THAT WHERE NEITHER THE IDENTIT Y NOR THE CREDIT WORTHINESS OF THE DONORS WAS ESTABLISHED, AND THE GENUINENESS OF THE GIFTS IN QUESTION HAVE ALSO NOT BEEN ESTABLISHED BY THE ASSESSEE, ADDITION WAS TO BE MADE IN THE HANDS OF ASSESSEE AND THE OTHER ASSESSEES BEFORE US. 7. THE SECOND ASPECT WHICH WAS NOTED BY THE COMMISS IONER OF INCOME TAX (APPEALS) WAS THE ALTERNATE PLEA RAISED BY THE ASSE SSEE THAT THE IMPUGNED GIFTS WERE ASSESSABLE IN THE HANDS OF SHRI GIRDHARILAL R. MADHYAN WAS DISMISSED HOLDING, AS UNDER:- 3.12 THERE IS ANOTHER ASPECT TO THE ISSUE. THE AS SESSMENT OF FOREIGN GIFTS IN HANDS OF SHRI G.R.MADHYAN FOR THE VARIOUS ASSESSMENT YEARS 1990-91 TO 1995-96 WAS CONSIDERED BY CIT(A) NASHIK WHO DECIDED AGAINST THE APPELLANTS BUT ADMITTED THE ALTERNATIVE PLEA THAT THE SAME MAY BE ASSESSED IN THE HANDS OF THE FAMILY MEMBERS. WH ILE DOING SO, THE CIT(A) GAVE A CATEGORICAL FINDING THAT ALL THE ALLE GED GIFTS IN QUESTION SHOULD BE ASSESSED IN THE HANDS OF RECIPIENTS AS IN COME FROM UNDISCLOSED SOURCES. THIS ORDER OF THE CIT (A) NASHIK HAS NOT BEEN CONTESTED BY THE APPELLANT SHRI G.R.MADHYAN WHICH IS APPARENT FROM T HE ITAT ORDER DATED 26.2.2001 IN ITA NOS.583 TO 592/PN/1999, 550 TO 559 /PN/1999 READ WITH C.O.NOS. 58 TO 67/PN/1999. THE ISSUE THAT THE IMPU GNED GIFTS ARE ASSESSABLE IN THE HANDS OF THE APPELLANTS, HAS THUS BECOME FINAL. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEAL) BEFORE US. 6 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 9. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT WITHOUT GOING INTO THE MERITS OF THE ADDITIONS IN T HE HANDS OF ASSESSEE, THE SET OFF OF THE INCOME ASSESSED IN THE HANDS OF SHRI G R MAD HYAN SHOULD BE ALLOWED AGAINST THE INCOME ASSESSED IN THE HANDS OF THE ASS ESSEE BEFORE US. HE REFERRED TO THE ORDER OF THE TRIBUNAL IN THE CASE O F SHRI G.R.MADHYAN WHEREIN ADDITIONS HAVE BEEN CONFIRMED IN THE HANDS OF THE A SSESSEE. 10. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE ON THE OTHER HAND OPPOSED THE SUBMISSIONS OF THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES BEFORE US IS IN RELATION TO THE ADDITI ON MADE IN THE HANDS OF ASSESSEE, HIS BROTHER AND MOTHER ON ACCOUNT OF THE ALLEGED FOREIGN GIFTS RECEIVED BY THEM. THE ASSESSEE HAD RECEIVED GIFT OF RS.4,68 ,000/- AND SIMILARLY SHRI HARISH G. MADHYAN HAD RECEIVED GIFT OF RS.4,68,000/ - AND MRS. KAVITA G. MADHYAN, GIFT OF RS.3,15,000/-. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE BEFORE US HAS NOT AGITATED THE ADDITION MA DE ON ACCOUNT OF THE UNEXPLAINED INVESTMENT IN FOREIGN GIFTS IN THE INDI VIDUAL HANDS. HOWEVER, THE PLEA OF THE LD.AUTHORISED REPRESENTATIVE FOR THE AS SESSEE WAS THAT THE SET OFF OF THE SAID ADDITION MAY BE GIVEN AGAINST THE INCOME F ROM UNDISCLOSED SOURCE ASSESSED IN THE HANDS OF THE SHRI G.R.MADHYAN, WHO IS THE FATHER OF THE ASSESSEE. THERE IS A FINDING ON RECORD THAT IN ITA NO.583 TO 592/PN/1999, 550 TO 559/PN/1999 READ WITH C.O.NOS. 58 TO 67/PN/1999 ORDER DATED 26/02/2001 IN THE CASE OF SHRI G R MADHYAN, NO ISSUE WAS RAISED A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF SHRI G.R.MADHYAN, GIVING A FINDING THAT THE ALLEGED GIFTS IN QUESTION SHOULD BE ASSESSED IN THE HANDS OF THE 7 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 RECIPIENTS AS INCOME FROM UNDISCLOSED SOURCES. THE ISSUE THAT THE IMPUGNED GIFTS ARE ASSESSABLE IN THE HANDS OF THE ASSESSEE H AS THUS BECOME FINAL. THIS IS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPE ALS) GIVEN VIDE PARA 3.12 AT PAGE 11 OF THE APPELLATE ORDER WHICH HAS BEEN REPRO DUCED BY US IN THE PARAS HERE IN ABOVE. IN VIEW THEREOF, WE FIND NO MERIT I N THE PLEA OF THE ASSESSEE THAT THE ADDITION MADE IN THE HANDS OF THE ASSESSEE BE S ET OFF AGAINST THE INCOME ASSESSED IN THE HANDS OF THE SHRI G.R.MADHYAN. WE REJECT THE SAME AND UPHOLD THE ADDITION IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS DISMISSED. 12. THE ISSUE IN ITA NO.1632/PUN/2013 AND 1633/PUN/ 2013 ARE IDENTICAL TO THE ISSUE IN ITA NO.1631/PUN/2013 AND OUR DECISION IN ITA NO.1631/PUN/2013 SHALL APPLY MUTATIS MUTANDIS TO THE ISSUE IN ITA NO .1632/PUN/2013 AND 1633/PUN/2013. 13. IN THE RESULT, ALL THE APPEALS RELATING TO DIFF ERENT ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST MAY, 2017 . 8 ITA NO.1631 TO 1633/PUN/2013 FOR AY: 1995-96 G G A A N N G G A A D D H H A A R R ' ( ) *+ ,+ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ! ! ' () / THE CIT(A)- I, PUNE; 4. ! ! ' / THE CIT-I, PUNE; 5. %&' (()*, ! )* , , / DR A, ITAT, PUNE; 6. '-. / / GUARD FILE. ' / BY ORDER, % ( // TRUE COPY // 0 1 / ASSISTANT REGISTRAR, ! )* , / ITAT, PUNE