The ITO, Ward-1(1), Bhavnagar V. Shri Satishkumar Kantilal Shah-HUF, Bhavnagar

ITA 1710/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9132 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE S/SHRIBHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1710/AHD/2008 A. Y.: 2004-05 THE INCOME TAX OFFICER, WARD 1 (1), BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF), PLOT NO.622/E, NEAR GEETA CHOWK, BHAVNAGAR PA NO. AAGHS 1595 G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. DHANISTA, DR RESPONDENT BY SHRI TUSHAR P. HEMANI, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XX , AHMEDABAD DATED 18-01-2008 FOR ASSESSMENT YEAR 2004 -05 ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.9,51,257/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I. T. ACT. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE TO IGNORE THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT SATISFACTORY/ACCEPTABLE TO THE A. O. AND THAT THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF THE DONOR. 3. THE CIT(A) ERRED IN LAW IN NOT CONSIDERING THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT V/S. P. MOHANKALA & OTHERS (2007) 291 ITR 278 (SC). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO UPHELD THE ORDER OF THE A.O. ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND T HE MATERIALS AVAILABLE ON RECORD. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THE A SSESSMENT ORDER THE AO HAS STATED THAT DURING THE YEAR THE AS SESSEE HAS RECEIVED GIFT OF RS.9,51,257/- FROM SMT. BHANUMATI J. DOSHI, NEW YORK, USA. HE STATED THAT ON VERIFICATION OF TH E DETAILS/EVIDENCE SUBMITTED BY THE ASSESSEE, IT IS F OUND THAT THE ASSESSEE HAS NOT SUBMITTED PROOF/EVIDENCE IN RE SPECT OF CREDITWORTHINESS OF THE DONOR. HENCE, THE AO ISSUED A SHOW CAUSE NOTICE DATED 13-11-2006 TO PRODUCE THE COPY O F BANK PASS BOOK, SALARY CERTIFICATE, COPY OF ACCOUNT AND BALANCE SHEET AND COPY OF RETURN OF INCOME FILED BEFORE THE CONCERNED AUTHORITY IN USA. THE A. O. CONTENDED THAT THE ASSE SSEE HAD FAILED TO PRODUCE THE PROOF/EVIDENCE AND ACCORDINGL Y GIFT OF RS.9,51,257/- IS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 4. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A) AND THE ASSESSEE SUBMITTED VIDE HIS LETTER DATED 0 2-04-2007 THAT THE AO HAS ERRED GRAVELY ON FACTS AND IN LAW IN CONSIDERING THE GIFT RECEIVED FROM NRI RELATIVE THR OUGH INTERNATIONAL BANKING CHANNEL AS INCOME FROM UNDISC LOSED SOURCES. THE AO HAS ACCEPTED THAT THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND THE TRANSACTION TO BE GENUINE BUT HAS CONSIDERED THE GIFT AS UNEXPLAINED CASH CREDIT ON THE GROUND OF FAILURE ON THE PART OF THE ASSESSEE TO ES TABLISH ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 3 CREDITWORTHINESS OF THE DONOR. IT IS STATED THAT TH E AO MISERABLY FAILED TO DIFFERENTIATE THE GIFT FROM NRI RELATIVE RESIDING ABROAD AND GIFT FROM INDIAN CITIZEN RESIDI NG IN INDIA. THE AO HAS ALSO FAILED TO APPRECIATE THAT THE GIFT IS NOT FROM THE NRE OR NRI ACCOUNT IN INDIA BUT FROM ACCOUNT WI TH BANK IN NEW JERSY. IN SUCH NRI GIFT THE MOST VITAL POINT TO BE NOTED IS THAT IT SHOULD HAVE BEEN FLOWN THROUGH INTERNATI ONAL BANKING CHANNEL IN CONVERTIBLE FOREIGN EXCHANGE AS IS THE FACTS IN THE CASE OF THE ASSESSEE. HE FURTHER CONTE NDED THAT THE AO VERY CONVINCINGLY OVERLOOKED THE POSITION RE FLECTED BY BANK TRANSACTIONS AND THE BALANCE SHEET. HE FURTHER STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A LETTER FROM DONOR SMT. BHANUMATI J. DOSHI ADDRESSED TO THE ITO WAS SUBMITTED WHEREIN IT WAS CLEARLY MENTIONED THAT ALL THE LEGALITIES OF US HAS BEEN PROPERLY8 MET IN GIVING G IFT. MOREOVER, A STATEMENT OF WEALTH AS WELL AS BANK STA TEMENT OF THE DONOR WAS ALSO SUBMITTED TO THE ITO. IT WAS CON TENDED THAT IN THE ASSESSMENT ORDER, IT TRANSPIRES THAT UN FORTUNATELY THE ITO HAS NOT TAKEN NOTE OF ANY OF THE PROOF OF S TATUS AND CAPABILITIES OF THE DONOR. AFTER CONSIDERING THE SU BMISSIONS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE AO WAS ASKED TO SUBMIT A REMAND REPORT IN THE LIGHT OF THE EXPLANATION FILED BY THE LEARNED COUNSEL FOR THE AS SESSEE ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 4 BEFORE THE LEARNED CIT(A) DATED 02-04-2007. THE AO VIDE HIS LETTER DATED 13-04-2007 SUBMITTED HIS REPORT WHICH IS REPRODUCED AS UNDER: IN THIS CASE, ASSESSMENT U/S. 143(3) OF THE I. T. ACT WAS COMPLETED BY THE ITO, WARD 1(3), BHAVNAGAR ON 18.12.2006, DETERMINING TOTAL INCOME OF RS.11,12,669/- AGAINST RS.1,61,401/- RETURNED INCOME. ASSESSEE, HUF HAS CREDITED RS.9,51,227/- IN ITS CAPITAL ACCOUNT AS GIFT RECEIVED. AS DIRECTED BY YOUR HONOUR TO VERIFY THE GENUINENES S OF THE TRANSACTIONS, SUMMONS WAS ISSUED AND SERVED TO THE ASSESSEE ON 28.04.2007, TO REMAIN PRESENT ON 10.05.2007. HOWEVER, ASSESSEE HAS NOT ATTENDED ON GIVEN DATE OR HAS NOT FILED ANY WRITTEN SUBMISSION. THEREFORE, ONE MORE OPPORTUNITY WAS GIVEN TO REMAIN PRESENT ON 24.05.2005 IN THE OFFICE OF THE UNDERSIGNED. ACCORDINGLY, SHRI SATISH KANTILAL SHAH , KARTA OF HUF ALONG WITH R. A. SHETH AUTHORIZED C. A . OF THE ASSESSEE ATTENDED ON 24.05.2007. A STATEMENT ON OATH RECORDED. Q. NO.9. DURING VISIT IN INDIA WHERE DID SMT. BHANUBEN DOSHI (DONOR) STAYED? AMS.9 GENERALLY, SMT. BHANUBEN STAYS AT MUMBAI ONLY WITH HER SOME RELATIVE. SHE IS JAIN, WHENEVER SHE COMES TO PALITANA (RELIGIOUS PLACE FOR JAIN) FOR WORSHIP/DARSHAN, SHE STAYS AT BHAVNAGAR A BHAVNAGAR IS THE NEAREST CITY FROM PALITANA. Q. NO.10 LASTLY, WHEN DID SHE COME TO INDIA? ANS. 10 LASTLY SHE CAME TO INDIA DURING DECEMBER, 2006 Q. NO.13 DURING WHICH OCCASION DONOR HAS GIVEN GIFT TO HUF? ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 5 ANS.13 AS SHE COMPLETED 25 YEARS IN NEWYORK, ON THIS OCCASION SHE HAS GIVEN GIFT TO THE ASSESSEE. AFTER PERUSAL OF ASSESSEES SUBMISSION, MY COMMENTS ARE AS UNDER: (I) THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE, AS EVEN AFTER AFFORDING AMPLE OPPORTUNITY, THE DETAILS WERE NOT PRODUCED DURING HEARING, PROCEEDINGS IN THIS OFFICE. (II) CREDITWORTHINESS OF THE GIFT RECEIVED BY THE ASSESSEE IS DOUBTFUL ON ACCOUNT OF THE FACT THAT DONOR SMT. BHANUBEN DOSHI IS MANAGING DIRECTOR ONLY IN ONE OF THE COMPANY. (III) ASSESSEE HAS CLAIMED THAT IT HAS RECEIVED GIFT AMOUNT ON THE OCCASION OF THE COMPLETION OF 25 YEARS IN NEW YORK BUT NO COGENT EVIDENCE PRODUCED BY THE ASSESSEE FOR SUCH LONG STAY PERIOD. (IV) THOUGH THE OWNERS HUSBAND IS HAVING INCOME, BUT HE HAS NOT DONATED ANYTHING FROM HIS ACCOUNT. (V) THE GENUINENESS OF THE GIFT IS NOT ESTABLISHED IN VIEW OF THE FACT THAT THERE IS NO DIRECT RELATIONSHIP OF THE DONOR AND THE DONEE (HUF). THE DONOR IS COUSIN SISTER OF THE WIFE OF SHRI SATISH KANTILAL SHAH, KARTA OF HUF, RESIDING IN FOREIGN COUNTRY. THE SIMPLE QUESTION WHICH ARISES IS WHETHER IT IS HUMANLY PROBABLE THAT A PERSON MAY GIVE AWAY HIS/HER HARD EARNED MONEY, EARNED IN FOREIGN COUNTRY AS A GIFT TO THE INDIAN ACQUAINTANCE MERELY OUT OF LOVE AND AFFECTION. PLEASE ALSO FIND ENCLOSE D HEREWITH A COPY OF TAX INDIA ONLINE NEWS SERVICE ARTICLE REGARDING TRIBUNALS OBSERVATION ON NRI GIFT . IN VIEW OF THE ABOVE AND CONSIDERING PREPONDERANCE OF THE PROBABILITIES OF THE GIFTS RECEIVED BY THE ASSESSEE DO NOT APPEAR GENUINENESS. ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 6 A COPY OF THE REMAND REPORT RECEIVED FROM THE AO WA S GIVEN TO THE ASSESSEE FOR HIS COMMENTS ON 25-06-2007. THE AS SESSEE HAS GIVEN HIS COMMENTS ON THE REPORT OF THE AO VIDE SUBMISSION DATED 19-12-2007 AND 17-01-2008. IN THE SUBMISSION, THE ASSESSEE HAS STATED THAT IT IS WELL SETTLED LAW THAT IF THE AMOUNT IS RECEIVED FROM BANKING CHANNEL S THE PRIMARY ONUS OF THE ASSESSEE TO PROVE THE CREDITWOR THINESS STAND DISCHARGED. HE CONTENDED THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF THE SOURCES. IN SUP PORT, THE ASSESSEE RELIED UPON THE CASES OF MURLIDHAR LAHORIM AL VS CIT 280 ITR 512 (GUJ.) AND NEMICHAND KOTHARI VS CIT (20 03) 264 ITR 254 (GAU.). IT WAS STATED THAT THE GIFT HAD BEE N RECEIVED FROM THE BANK ACCOUNT WITH J. P. MORGAN CHASE BANK IN NEW JERSY OF FIRM IN WHICH DONOR IS M. D. EVIDENCE TO T HAT EFFECT HAD BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT. THUS THE PRIMARY ONUS UPON THE ASSESSEE STAND DISCHARGED AND NO ADDITION CAN BE MADE IN ABSENCE OF ANY CONCRETE EVI DENCE WHICH SUGGEST THAT THE MONEY BELONGS TO THE ASSESSE E. HE FURTHER STATED THAT THE AO CONVINCINGLY OVER LOOKED THE ASSET STATEMENT OF DONOR WHICH WAS DULY SUBMITTED AND WHI CH SHOWS THAT DONOR HAS LIQUID ASSETS MORE THAN 14 TIM ES THE GIFT AMOUNT AND TOTAL WEALTH MORE THAN 50 TIMES GIFT AMO UNT. THE IT RETURN OF THE DONOR CLEARLY PROVE THAT HER YEARL Y INCOME WAS ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 7 ALMOST THRICE THE GIFT AMOUNT THIS CLEARLY PROVE TH AT THE DONOR DO HAVE CREDITWORTHINESS TO GIVE A GIFT OF $21000. COPY OF THE SAME WAS FILED BEFORE THE LEARNED CIT(A). HE FURTHE R OBSERVED THAT THE AO IN HIS REMAND REPORT HAD NOT REBUTTED T HE IT RETURN. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF B. S. CORPORATION VS ACIT (2001) 161 TAXMAN 29 AND STATED THAT IN THIS CASE, THE TRIBUNAL HELD THAT IF LINK IS NOT ES TABLISHED THAT THE SAID AMOUNT BELONGS TO THE ASSESSEE OR MONEY IS REPAID TO DONOR NO ADDITION CAN BE MADE. HE FURTHER RELIED UP ON THE CASE OF CIT VS VACHANI 184 ITR 121 (DELHI) AND STAT 4ED THAT IN THIS CASE, THE HONBLE DELHI HIGH COURT HELD THAT I T MAY BE SURPRISING AS TO HOW LARGE SUMS OF MONEY RECEIVED B Y A FAMILY IN INDIA BY WAY OF GIFTS FROM STRANGER FROM ABROAD, BUT UNLESS THERE IS SOMETHING MORE TANGIBLE THAN SUSPICION, IT WILL BE DIFFICULT TO PROJECT SUCH MONEY AS REPRESENTING THE INCOME OF THE ASSESSEE IN INDIA. THUS, THE ADDITION DESERVES TO BE DELETED. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DELETED THE ADDITION. HIS FINDINGS IN PARA 3.6 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: 3.6 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, SUBMISSION MADE BY THE LD. COUNSEL FOR THE APPELLANT AND REMAND REPORT OF THE A.O. AND ALSO COMMENTS MADE BY THE LD. COUNSEL ON THE REMAND ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 8 REPORT. I HAVE ALSO GONE THROUGH THE CASE LAWS RELI ED UPON BY THE LD. COUNSEL. IN THIS CASE, IT IS A FACT THAT THE APPELLANT HAD RECEIVED AN AMOUNT OF RS.9,51,227/- FROM SMT. BHANUMATI J. DOSHI, NEW YORK, USA. THE APPELLANT HAS FURNISHED COPY OF THE GIFT DEED, BANK CERTIFICATE, COPY OF FIRST PAGE OF PASSPORT AND COPY OF RETURN OF INCOME FILED BY THE DONOR, TO PROVE THE GENUINENESS OF THE GIFTS, CREDITWORTHINESS OF THE DONOR AND GENUINENESS OF TH E TRANSACTION AND THE SAME WERE HANDED OVER TO THE A. O. FOR HIS COMMENTS. THE ASSESSING OFFICER HAS NOT REBUTTED IN HIS REMAND REPORT THAT EVIDENCES PRODUCED BY THE APPELLANT ARE INCORRECT. THE APPELLANT HAS DISCHARGES HIS ONUS BY FILING COPY OF GIFT DEED, BANK CERTIFICATE, COPY OF FIRST PAGE OF PASSPORT AND COPY OF RETURN OF INCOME FILED BY THE DONOR, WHICH LAY ON HIM WITH REGARD TO GENUINENESS OF GIFT RECEIVED BY HIM FROM NRI. THE GIFT IS FROM NRI ACCOUNT AND THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT MONEY ALLEGEDLY RECEIVED BY THE APPELLANT WAS IN FACT APPELLANTS MONEY. HENCE, ADDITION MADE BY THE ASSESSING OFFICER U/S. 68 OF THE INCOME-TAX ACT IS NOT FOUND TO BE CORRECT IN TH E EYES OF LAW. THEREFORE, ADDITION TO THE EXTENT OF RS.9,51,227/- MADE BY THE A. O. IS DELETED. 6. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED COPY OF THE BANK PASS BOOK, SALARY CERTIFICATE AND COPY OF THE CAPITAL ACCOUNT AND BAL ANCE SHEET OF THE DONOR BEFORE THE AO. THEREFORE, CREDITWORTHINESS OF THE D ONOR HAS NOT BEEN PROVED IN THE MATTER. THE LEARNED DR FURTHER SUBMITTED THA T THE ASSESSEE HAS ALSO FAILED TO PROVE ANY OCCASION FOR MAKING THE GI FT AND WHATEVER OCCASION WAS EXPLAINED, BUT NO EVIDENCE HAS BEEN PR ODUCED TO SUPPORT THE EXPLANATION. THE LEARNED DR SUBMITTED THAT THER E IS NO RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONOR AND THERE IS NO RECIPROCAL GIFT BETWEEN THEM. THE LEARNED DR SUBMITTED THAT SINCE S UFFICIENT EVIDENCES WERE NOT FILED BEFORE THE AO AT THE ASSESSMENT STAG E, THEREFORE, THE SATISFACTION OF THE AO AS REQUIRED U/S 68 OF THE IT ACT IS NOT PROVED. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSE E REITERATED THE ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 9 SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE DONOR IS THE COUSIN SISTER OF WIFE OF SHRI SATISH K ANTILAL SHAH, KARTA OF THE ASSESSEE HUF AND THEREFORE, IT IS NOT A GIFT BE TWEEN TOTALLY TWO STRANGERS. HE HAS SUBMITTED THAT SUFFICIENT EVIDENC ES WERE PRODUCED BEFORE THE LEARNED CIT(A) FOR SATISFACTION OF THE T HREE INGREDIENTS OF SECTION 68 OF THE IT ACT. THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE DONOR WAS NOT A SALARIED PERSON. THEREFORE , NO SALARY CERTIFICATE IS ISSUED IN HER CASE. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE DOCUMENTS FILED ON RECORD WHICH ARE ALSO FILED IN THE PAPER BOOK I.E. COPY OF THE PASSPORT OF THE DONOR, DECLARATION OF G IFT, BANK CERTIFICATE OF THE AMOUNT RECEIVED AS A GIFT, COPY OF THE RETURN F ILED BY THE DONOR IN USA. THE LEARNED COUNSEL FOR THE ASSESSEE ON GOING THROUGH PB-25 WHICH IS THE COPY OF THE RETURN OF THE DONOR STATED THAT THE FILING STATUS OF THE RETURN IS IN THE CASE OF TWO PERSONS NAMELY JAWAHAR K. DOSHI AND BHANUMATI DOSHI (DONOR) (WHO ARE THE HUSBAND AND WI FE). THE FILING STATUS AT COLUMN NO.2 IS MARRIED FILING JOINTLY (E VEN IF ONLY ONE HAD INCOME). THE LEARNED COUNSEL FOR THE ASSESSEE HOWE VER, FAIRLY STATED THAT NO COPY OF THE BANK PASS BOOK, SALARY CERTIFIC ATE, COPY OF THE CAPITAL ACCOUNT AND BALANCE SHEET WAS FILED BEFORE THE AUTH ORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND THE MAT ERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE R ECEIVED GIFT FROM SMT. BHANUMATI J. DOSHI, USA. THE AO ISSUED SHOW CAUSE N OTICE TO THE ASSESSEE TO PRODUCE COPY OF THE BANK PASS BOOK, SAL ARY CERTIFICATE AND COPY OF CAPITAL ACCOUNT AND BALANCE SHEET OF THE DO NOR FILED BEFORE THE CONCERNED AUTHORITIES IN USA. BUT THE ASSESSEE FAIL ED TO PRODUCE THESE EVIDENCES BEFORE THE AO AT THE ASSESSMENT STAGE AS WELL AS AT THE APPELLATE STAGE. THE AO WANTED TO VERIFY THE GENUIN ENESS OF THE GIFT IN THE ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 10 MATTER AND ACCORDINGLY DIRECTED TO FILE THE ABOVE D OCUMENTS. BUT, AS NOTED ABOVE THE ASSESSEE FAILED TO FILE THE ABOVE E VIDENCES BEFORE THE AO TO HIS SATISFACTION AS REQUIRED U/S 68 OF THE IT AC T. NO RELATIONSHIP AND LOVE AND AFFECTION BETWEEN THE DONOR AND THE DONEE ARE PROVED. THE DONOR IS STATED TO BE COUSIN SISTER OF WIFE OF SHRI SATISHKUMAR KANTILAL SHAH, KARTA OF THE HUF. THUS, NO CLOSE RELATIONSHIP IS PROVED. NO REASON OR OCCASION FOR MAKING THE GIFT IS MENTIONED IN THE GIFT DECLARATION PB- 18. SINCE, THERE WAS NO CLOSE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONOR, THEREFORE, THE AO WANTED TO SCRUTINY THE GIF T TRANSACTION IN THE MATTER AND ASKED FOR SPECIFIC DOCUMENTS FROM THE AS SESSEE IN ORDER TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER BUT THE ASSESSEE FAILED TO FILE COPY OF THE BANK PASS BOOK, SALARY CERTIFICATE AND COPY OF THE CAPITAL ACCOUNT AND BALANCE SHEET OF THE DONOR. THE ASSESSE E HOWEVER, FILED COPY OF THE RETURN OF INCOME FILED BY THE DONOR BEFORE T HE AO. THE SAME ARE FILED IN THE PAPER BOOK ALSO AT PB 20 TO 26. AT PAG E 25 OF THE PAPER BOOK IT IS MENTIONED IN THE RETURN THAT THE SAME IS FILE D IN THE JOINT NAMES OF JAWAHAR K. DOSHI AND BHANUMATI DOSHI. THE FILING ST ATUS IS MENTIONED AS MARRIED FILING JOINTLY (EVEN IF ONLY ONE HAD IN COME). IT WOULD SHOW THAT THE RETURN OF INCOME IS NOT FILED BY THE DONOR SMT. BHANUMATI J. DOSHI BUT, IT WAS FILED JOINTLY BY HER AND HER HUSB AND. THE LEARNED COUNSEL FOR THE ASSESSEE WAS POINTED OUT TO EXPLAIN AS TO WHO HAD THE INCOME FOR FILING THE RETURN OF INCOME IN USA. BUT, HE COULD NOT EXPLAIN AS TO WHETHER THE DONOR, SMT. BHANUMATI J. DOSHI WA S HAVING SOURCE OF ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 11 INCOME OR HER HUSBAND JAWAHAR K. DOSHI. IT IS, THE REFORE, NOT PROVED AS TO WHETHER THE DONOR HAS ANY SOURCE OF INCOME TO MA KE THE GIFT. IN THE ABSENCE OF ANY CLARIFICATION, THE COPY OF THE RETUR N FILED IN USA BY THE DONOR AND HER HUSBAND WOULD NOT SUPPORT THE CONTENT ION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED CIT(A) HAS TH EREFORE, WRONGLY PLACED RELIANCE UPON THE SAME FOR THE PURPOSE OF DE LETING THE ADDITION. THE ASSESSEE IN HIS STATEMENT STATED THAT THE DONOR IS MANAGING DIRECTOR OF THE COMPANY BUT, IS NOT AWARE OF HOW MUCH SALARY SHE WAS EARNING, BUT BOTH HUSBAND AND WIFE HAVE FILED THEIR RETURN O F INCOME. ONCE, THE DONOR IS CLAIMED TO BE THE MANAGING DIRECTOR OF THE COMPANY, IT IS HIGHLY UNBELIEVABLE THAT SHE COULD NOT PRODUCE THE SALARY CERTIFICATE OR ANY OTHER CONFIRMATION/CERTIFICATE TO EXPLAIN HER SOURC E OF INCOME. THE EXPLANATION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS NOT A SALARIED PERSON IS NOT ACCEPTABLE. IT WAS DUE TO THESE AMBIGUITIES THE AO ASKED THE ASSESSEE TO FILE COPY OF THE BANK PASS BOOK, SALARY CERTIFICATE AND COPY OF THE CAPITAL ACCOUNT AND BAL ANCE SHEET OF THE DONOR. BUT THE SAME WERE NOT FILED FOR SCRUTINY BEF ORE THE AO. THE COPY OF THE RETURN OF INCOME SO FILED IS ALSO NOT EXPLAI NED FOR WHAT WAS THE SOURCE OF INCOME OF THE DONOR. THIS ASPECT WOULD CL EARLY PROVE THAT THE SOURCE OF THE GIFT IN THE MATER HAS NOT BEEN PROVED OR EXPLAINED. PB-19 IS THE COPY OF THE BANK CERTIFICATE FOR THE AMOUNT R ECEIVED AS GIFT BY THE INDIAN OVERSEAS BANK. THE SAID CERTIFICATE WOULD NO T PROVE THE SOURCE OF THE GIFT MADE BY THE DONOR. NO EVIDENCE HAS ALSO BE EN FILED TO SHOW THAT ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 12 THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LEAR NED CIT(A) WERE FILED BEFORE THE CONCERNED AUTHORITIES IN USA AS REQUIRED BY THE AO AT THE ASSESSMENT STAGE. SECTION 68 OF THE IT ACT PROVIDES AS UNDER: 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINI ON OF THE [ASSESSING] OFFICER, SATISFACTORY, THE SUM SO CREDI TED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 8. THE ABOVE DISCUSSIONS WOULD SHOW THAT NO COGENT AND SUFFICIENT EVIDENCES WERE FILED BEFORE THE AO TO HIS SATISFACT ION TO EXPLAIN THE GENUINENESS OF THE GIFT IN THE MATTER. THUS, THE CO NDITIONS OF SECTION 68 OF THE IT ACT HAVE NOT BEEN SATISFIED IN THE MATTER . THE COPY OF THE STATEMENT OF THE ASSESSEE IS ALSO FILED IN THE PAPE R BOOK IN WHICH THE ASSESSEE HAS ADMITTED THAT THE ASSESSEE HAS NOT GIV EN ANY GIFT. THEREFORE, THERE IS NO RECIPROCITY OF THE GIFT BETW EEN THE PARTIES. MERE FILING OF THE DECLARATION OF THE GIFT WOULD NOT PRO VE THE CREDITWORTHINESS AND SOURCE OF MAKING THE GIFT. NO EVIDENCE OR MATER IAL SHOWING ANY LOVE AND AFFECTION HAS BEEN FILED BEFORE THE AUTHORITIES BELOW. MERELY BECAUSE GIFT HAS BEEN MADE THROUGH BANKING CHANNEL WOULD NO T PROVE GENUINENESS OF THE GIFT IN THE MATTER. AS PER STATE MENT OF THE ASSESSEE, GENERALLY THE DONOR WHEN COMES TO INDIA SHE STAYED AT HER HUSBANDS RELATIVE HOUSE IN MUMBAI AND ONLY IN DECEMBER, 2002 WHEN SHE VISITED PALITANA HOLY PLACE OF JAIN RELIGION, SHE VISITED THE HOUSE OF THE ASSESSEE. THEREFORE, NO EVIDENCE IS ALSO FILED AS T O WHY GIFT WAS MADE IN DECEMBER, 2003 WITHOUT VISITING THE ASSESSEE. NO SU FFICIENT EVIDENCE HAS BEEN FILED BEFORE THE AUTHORITIES BELOW TO PROVE TH E GENUINENESS OF THE GIFT IN THE MATTER. IT IS CLEAR THAT THE GIFT IN TH E MATTER IS NOT GENUINE AND IS THE ARRANGED AFFAIRS OF THE ASSESSEE. THE ASSESS EE HAS FAILED TO PROVE THE SOURCE OF THE GIFT AND THE GENUINENESS OF THE G IFT IN THE MATTER. THE ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 13 LEARNED CIT(A) WAS THUS NOT JUSTIFIED IN HOLDING TH AT THE AO HAS NOT REBUTTED IN HIS REMAND REPORT THAT THE EVIDENCES PR ODUCED BY THE ASSESSEE ARE INCORRECT. SINCE, THE ASSESSEE DID NOT FILE THE REQUIRED EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION OF THE GIFT AND NO SUFFICIENT E VIDENCE WAS FILED AT THE ASSESSMENT STAGE, THE LEARNED CIT(A) WAS NOT JUSTIF IED IN HOLDING THAT THE ASSESSEE HAD DISCHARGED HIS ONUS IN PROVING GENUINE GIFT IN THE MATTER. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR 292 ITR 552 HELD IN THE CASE OF GIFTS MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BAN KING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF GIFT IS MADE BY THE ASSESSEE, TH E ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSO N MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. IN ASSES SMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1995-96 THE ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RECEIVED TWO GIFTS O F RS.10 LAKHS EACH FROM N. R. E. ACCOUNTS OF TWO DONORS, NAMELY V AND D. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS OF PROVING THE CREDIT-WORTHINESS OF THE DONOR S AND HELD THAT THE AMOUNT OF RS.20 LAKHS WHICH HAD BEEN DECLARED B Y THE ASSESSEE AS GIFT, WAS IN FACT HIS INCOME AND ADDED TO HIS TOTAL INCOME UNDER SECTION 68. THE ADDITION WAS DELETED B Y THE COMMISSIONER (APPEALS) AND THIS WAS UPHELD BY THE T RIBUNAL. ON APPEAL TO THE HIGH COURT: HELD THAT THERE WAS NOTHI NG ON RECORD TO SHOW AS TO WHAT WAS THE FINANCIAL CAPACITY OF THE D ONORS, WHAT WAS THE CREDIT-WORTHINESS OF THE DONORS, WHAT KIND OF RELATIONSHIP THE DONORS HAD WITH THE ASSESSEE, WHAT WERE THE SOU RCES OF FUNDS GIFTED TO THE ASSESSEE AND WHETHER THEY HAD THE CAP ACITY OF GIVING LARGE AMOUNTS OF GIFT TO THE ASSESSEE. FURTHER, THE ASSESSEE WAS ASKED TO APPEAR IN PERSON BEFORE THE ASSESSING OFFI CER, BUT NEVER APPEARED. THE ADDITION OF RS.20 LAKHS WAS JUSTIFIED . THE HONBLE ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 14 SUPREME COURT IN THE CASE OF CIT VS P. MOHANKALA 29 1 ITR 278 HELD THE ASSESSEE RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNT OF THE ASSESSEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CH EQUES SENT FROM ABOARD WERE DRAWN ON THE CITIBANK, N. A. SINGAPORE. THE EVIDENCE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE CO MPENSATION FROM THE ASSESSEES. ON THIS MATERIAL THE ASSESSING OFFIC ER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE ACCOUNT BO OKS OF THE ASSESSEES AS THEIR INCOME APPLYING SECTION 68 OF TH E INCOME-TAX ACT, 1961. THE ASSESSEES DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE N OT OF THE NATURE OF INCOME. THE COMMISSIONER (APPEALS) CONFIR MED THE ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFEREN CE OF OPINION BETWEEN THE TWO MEMBERS OF THE APPELLATE TRIBUNAL A ND THE MATER WAS REFERRED TO THE VICE PRESIDENT WHO CONCURRED WI TH THE FINDINGS AND CONCLUSION OF THE ASSESSING OFFICER AND THE COM MISSIONER (APPEALS). ON APPEAL THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FINDINGS AND CAME TO THE CO NCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL WERE IN THE RE ALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TO TH E SUPREME COURT: HELD, REVERSING THE DECISION OF HIGH COURT, THAT FINDINGS OF THE ASSESSING OFFICER, THE COMMISSIONER (APPEALS) A ND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CH EQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECT ED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT . HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF YASH PAL GOEL VS CIT 310 ITR 75 HELD THAT HELD, DISMISSING THE APPEAL THAT THE FINANCIAL POS ITION OF ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 15 M. SUGGESTED THAT HE NEITHER HAD THE CAPACITY TO MA KE THE GIFT NOR THE SOURCE FROM WHERE THE GIFT WAS MADE. NO REASON WHATSOEVER HAD BEEN ASSIGNED FOR GIFTING SUCH A HUGE AMOUNT BY M TO THE ASSESSEE. M NEVER VISITED THE HOME OF THE ASSESSEE AND HENCE THERE WAS NO LOVE AND AFFECTION. IT WAS NOTHING BUT A SUB TERFUGE TO AVOID INCOME-TAX. THE TRANSACTIONS WERE NOT GENUINE ONES . THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJEEV TANDON VS AC IT 294 ITR 488 HELD, DISMISSING THE APPEAL, THAT THE TWO DONORS H AD ABSOLUTELY NO CONNECTION WITH THE ASSESSEE AND THEY MADE GIFTS TO THE ASSESSEE ONLY BECAUSE HE NEEDED MONEY TO BUY A HOUS E AND THEY WANTED TO HELP HIM. THIS WAS NOT ONLY QUITE UNUSUAL BUT ALSO QUITE UNNATURAL. IT WAS INCREDIBLE THAT A COMPLETE STRANG ER WOULD WANT TO GIFT LAKHS OF RUPEES TO A PERSON ONLY BECAUSE TH AT PERSON WANTED THE AMOUNT FOR PURCHASING A HOUSE. THE TAXING AUTHO RITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES , WHICH THEY DID, AND COME TO THE CONCLUSION THAT THE GIFTS COUL D NOT BE SAID TO BE GENUINE. THE REASON OFFERED BY THE ASSESSEE DID NOT APPEAR TO BE REASONABLE, MUCH LESS ACCEPTABLE. THEREFORE, THERE WAS NO ERROR IN THE VIEW TAKEN BY THE TRIBUNAL. 9. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR T HAT THE ASSESSEE FAILED TO PROVE ANY CLOSE RELATION WITH THE DONOR A ND HER CREDITWORTHINESS TO MAKE THE GIFT. NO SUFFICIENT EVIDENCE OR MATERIA L IS FILED ON RECORD TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER. ME RELY SHOWING THE GIFT WAS MADE THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER. THE HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE 82 ITR 540 AND IN THE CAS E OF SUMATI DAYAL 214 ITR 801 HELD THAT COURTS AND THE TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. IF THE SAID TEST IS APPLIED IN THIS MATTER, IT IS C LEARLY ESTABLISHED THAT THE ASSESSEE HAS FAILED TO PROVE CREDITWORTHINESS OF TH E DONOR AND ITA NO.1710/AHD/2008 ITO, W-1(1) BHAVNAGAR VS SHRI SATISHKUMAR KANTILAL SHAH (HUF) 16 GENUINENESS OF THE GIFTS IN THE MATTER. THE REVENUE HAS, THEREFORE, RIGHTLY RAISED SPECIFIC GROUNDS IN THE GROUNDS OF APPEAL TH AT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT SATISFACTORY AND TH AT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF P. MOHANKALA & OTHERS (SUPRA) HAS NOT BEEN CONSIDERED IN THE MATTER WHILE DELETING TH E ADDITION BY THE LEARNED CIT(A). THUS, THE ASSESSEE FAILED TO DISCHA RGE HIS ONUS OF PROVING THE CREDITWORTHINESS OF THE DONOR AND THE SOURCE OF THE GIFT AND GENUINENESS OF THE GIFT IN THE MATTER. THE ASSESSEE HAS ALSO FAILED TO DISCHARGE THE ONUS ON HIM TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER. WE ACCORDINGLY, DO NOT FIND ANY JUSTIFICATI ON FOR THE LEARNED CIT(A) TO HAVE DELETED THE ADDITION IN THE MATTER. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE T HE ORDER OF THE AO. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED ON 23-12-2010 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 23-12-2010 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANTS 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT , AHMEDABAD