Sri. SHANTILAL S. VORA, MUMBAI V. ITO Wd. - 9(7), MUMBAI

ITA 1710/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2345 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 20-10-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 26-02-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: MADAN DEDHIA
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E: MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SHRI R.S. PADVEKAR (JM ) ITA NO. 1710/MUM/2007 (ASSTT. YEAR : 1998-99) SHRI SHANTILAL S. VORA APPELLANT C/O. M/S. CHETAN DRESSES SHREE BUILDING, RANADE ROAD, DADAR (W), MUMBAI-400 028 PAN : AAAPU5951D V/S. INCOME TAX OFFICER, WD- 9(7), RESPONDENT MUMBAI APPELLANT BY :MR. MADAN DEDHIA RESPONDENT BY :MR. NAVEEN GUPTA : O R D E R : PER R.S. PADVEKAR, J.M IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMP UGNED ORDER OF THE LD CIT(A) XVIII, MUMBAI DATED 03.02.2003 FOR THE A.Y. 1998-99. 2. THE ASSESSEE HAS FILED THE REVISED GROUNDS WHICH ARE AS UNDER : 1 )ADDITION OF RS.7,35,264=00 U/S. 68 OF I.T. ACT THE LEARNED INCOME-TAX OFFICER ADDED THE GIFT AMOUN TOF RS.7,35,264=00 RECEIVED BY ASSESSEE CASH GIFT RS. 7,04,264/- AND H IS MINOR SON CHEQUE GIFT RS. 31,000/- FROM VARIOUS FAMILY RELATIVES/FRI ENDS/TREATING AS UNEXPLAINED CASH CREDIT U/S.68 CONSIDERING THE GIFT S AS NON-GENUINE AND ASSESSEES OWN MONEY RECEIVED IN THE GUISE OF GIFTS . 2) ADDITION FOR SALE OF GOLD AND SILVER RS. 7,99,48 8=00 U/S.68 OF THE I.T. ACT. THE LEARNED INCOME TAX OFFICER ADDED THE SALE PROCE ED AMOUNT OF RS.7,99,488/- RECEIVED BY ASSESSEE RS.6,78,794=00 O N SALE OF GOLD ITA NO. 1710/MUM/2007 2 ORNAMENTS AND RS.1,20,694=00 ON SALE OF SILVER UTEN SILS TREATING AS UNACCOUNTED CASH CREDIT U/S.68 OF THE ACT. 3. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER. THE ASSESSEE IS AN INDIVIDUAL FILED RETURN OF INCOME FOR THE A.Y. 1 998-99 DECLARING THE TOTAL INCOME OF RS. 1,32,240/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. I T WAS NOTICED BY THE A.O THAT THE ASSESSEE HAS SHOWN AMOUNT OF RS. RS.7,04,2 64/- RECEIVED TOWARDS GIFTS. THE ASSESSEE HAS ALSO SHOWN THE GIFT FROM H IS SON MASTER SANTOSH. THE A.O REQUIRED THE ASSESSEE TO FILE THE DETAILS OF TH E DONORS AND THE LIST OF 26 PERSONS WAS FILED FROM WHOM THE ASSESSEE HAS CLAIME D TO HAVE RECEIVED THE GIFT. THE A.O ASKED THE ASSESSEE TO PRODUCE THOSE PERSONS FOR VERIFICATION. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THO SE PERSONS. THE A.O ISSUED THE SUMMONS U/S. 131 REQUIRING THEIR PERSONAL APPEA RANCE. IT APPEARS THAT THOUGH THE A.O RECEIVED THE CONFIRMATION BY THE DON ORS THROUGH POST, BUT NONE APPEARED. MANY OF THE DONORS INFORMED THAT DU E TO THE EARTHQUAKE DISASTER IN KUTCH, THEY HAD GONE THERE, AND HENCE T HEY COULD NOT ATTEND. IT APPEARS THAT THE ASSESSEES STATEMENT WAS RECORDED ON 13/3/2001 AND THE A.O HAS REPRODUCED THE PART OF THE SAID STATEMENT I N THE ASSESSMENT ORDER AT PAGE NO.4 AND ON THE BASIS OF THE SAID STATEMENT, THE A.O REJECTED THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE RECEIVED THE GIF T OF RS.7,35,264/- AND MADE THE ADDITION AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 4. ON FURTHER VERIFICATION, IT WAS SEEN BY THE A.O THAT THE ASSESSEE HAS SHOWN THE RECEIPT OF RS. 6,78,794/- ON THE SALE OF GOLD ORNAMENTS AND RS.1,20,694/- ON THE SALE OF SILVER UTENSILS. IT A PPEARS THAT IN THE STATEMENT RECORDED U/S. 131, THE ASSESSEE STATED THAT THERE I S NO PROOF EITHER FOR PURCHASE OR SALE OF THESE ITEMS. THE A.O TREATED T HE SALE OF THE GOLD ORNAMENTS AND SILVER UTENSILS AS NON-GENUINE AND MA DE THE ADDITION OF RS.7,99,488/-. THE ASSESSEE CHALLENGED THE ADDITIO N BEFORE THE LD CIT(A). THE LD CIT(A) CONFIRMED THE ADDITION IN RESPECT OF THE GIFT BY GIVING THE FOLLOWING REASONS : I) ALL THE GIFTS WERE RECEIVED IN CASH. ITA NO. 1710/MUM/2007 3 II) THE 19 OUT 26 PERSONS HAVE GIVEN EXACTLY THE S AME AMOUNT I.E. RS.30,000/- (THE PURPOSE III) THOUGH THE DONORS HAVAE GIVEN GIFTS AS BIG AS RS.30,000/- IN MOST OF THE CASES, THE APPELLANT IS NOT IN A POSITI ON TO EVEN RECOGNIZE OR IDENTIFY THE PERSONS WHEN HIS STATEMENT WAS RECORDE D BY THE A.O. HE WAS NOT ABLE TO EVEN STATE AS TO WHICH HAS BEEN ACC OUNTED IN WHOSE ACCOUNT. IV) HE RATHER TOOK SOME NAMES WHICH DO NOT APPEAR I N THE LIST OF DONORS. V) THE APPELLANTS FAMILY GETS GIFTS OF SUCH HEAVY DENOMINATIONS, TOTALING TO RS.20,81,931/- ON A OCCASION LIKE RELIG IOUS FASTING THOUGH THEY HAVE HARDLY GIVEN GIFTS OF MORE THAN RS. 1,00 0/- ON ANY OCCASION TO THEIR COMMUNITY MEN. VI) NONE OF THE DONORS IS ABLE TO APPEAR BEFORE THE A.O. WHEN THE SUMMONS WERE ISSUED AND THEY TOOK UNIFORM STAND FOR NOT BEING ABLE TO ATTEND BEFORE THE A.O. VII) THE DONORS, WHO ARE LIVING IN MUCH POORER COND ITIONS (SOME LIVING IN CHAWLS), HAVING INCOME IN THE RANGE OF RS.45,000 /- TO RS. 55,000/- IN MOST OF THE CASES SURPRISINGLY GIVE GIFTS AS BIG AS RS. 30,000/- TO THE APPELLANT WHO IS ENJOYING MUCH HIGHER FINANCIAL STA TUS. VIII) THE BEHAVIOUR OF DONORS DEFIES BASIC PRINCIPL ES OF ECONOMICS. NO JUSTIFIABLE REASONS EXIST FOR GIVING AWAY OF GIFTS BEYOND THE MEANS BY THE DONORS BECAUSE THE APPELLANT IS NEITHER A RELIG IOUS AUTHORITY NOR HAVING ANY SOCIAL OR RELIGIOUS PURPOSE FOR RECEIVING THE GIFTS. THE PROCEEDS FROM THE SO CALLED GIFTS HAVE BEEN UTILIZE D FOR THE PURCHASING THE PROPERTY FOR HIMSELF. (REF.PARA 6) IX) NONE OF THE GIFTS ARE DEPOSITED IN THE BANK ACC OUNT THOUGH THE APPELLANT MAINTAINS MORE THAN ONE BANK ACCOUNT AND IS IN HABIT OF TRANSACTING THROUGH BANKS QUITE FREQUENTLY. THE GI FTS ARE CLAIMED TO BE RECEIVED IN SEPTEMBER 1997 THOUGH EVEN ON 31.3.199 8 THE APPELLANT ITA NO. 1710/MUM/2007 4 DID NOT DEPOSIT THE MONEY IN BANK ACCOUNT AND DISCL OSED CASH IN HAND IN THE BALANCE SHEET. 5. IN RESPECT OF THE ADDITION ON ACCOUNT OF CLAIM O F SALE PROCEEDS OF THE JEWELLERY AND SILVER UTENSILS, THE LD CIT(A) CONFIR MED THE ENTIRE ADDITION. THE REASONS/OBSERVATIONS OF THE CIT(A) FOR CONFIRMING T HE SAID ADDITION ARE AS UNDER : I) NO EVIDENCE HAS BEEN FURNISHED TO PROVE WHETHER ANY SALE OF JEWELLERY TOOK PLACE AT ALL. THIS FACT HAS ALSO BEEN ADMITTED BY THE APPELLANT, IN HIS STATEMENT, THAT HE DOES NOT HAVE ANY EVIDENCE TO PROVE THE SALES. II) THE APPELLANT DOES NOT REMEMBER AS TO WHEN EXACTLY THE SALES WERE EFFECTED. HE ONLY MENTIONED IN HIS STATEMENT THAT THE SALES WERE MADE TO VARIOUS SHOPS DURING THE MONTH OF AUGUST SEPTEMBER. III) NO LINK HAS BEEN ESTABLISHED BETWEEN THE RECE IPT OF MONEY AND THE ALLEGED SALE OF JEWELLERY. IN OTHER WORDS, IT CANNOT BE SAID THAT THE AMOUNT HAS BEEN RECEIVED FROM THE SALE OF JEWELLERY . III) NO LINK HAS BEEN ESTABLISHED BETWEEN THE MONEY CREDITED IN THE BOOKS ON ACCOUNT OF SALE OF JEWELLERY AND THE PERSO N FROM WHOM IT WAS ALLEGEDLY RECEIVED, AS THE WHOLE AMOUNT IS CREDITE D IN CASH AND THERE IS NO BANK ENTRY TO ESTABLISH THE LINK. IV) NO IDENTIFICATION OF PERSONS WHO PURCHASED THE JEWELLERY OR WHO BROKERED THE SALE COULD BE DONE BY THE APPELLANT W HEN HIS STATEMENT WAS RECORDED ON 13.3.2001 V) THOUGH THE SALE IS CLAIMED TO HAVE BEEN DONE IN AUGUST SEPTEMBER, 1997, THE MONEY WAS NOT DEPOSITED IN THE BANK ACCOUNT EVEN TILL THE END OF THE YEAR THOUGH THE APPELLANT IS MAINTAINING MORE THAN ONE BANK ACCOUNT. THE APPELLANT HAS SHOWN WHO LE OF THE ALLEGED SALE PROCEEDS AS CASH IN HAND ON 31.3.1998 IN THE B ALANCE SHEET. ITA NO. 1710/MUM/2007 5 VI) THE JEWELLERY IS CLAIMED TO HAVE BEEN RECEIVED FROM THE MOTHER OF APPELLANTS MOTHER-IN-LAW, BUT NO DETAILS HAVE B EEN FURNISHED ABOUT HER. THE APPELLANT HAS NOT EVEN FURNISHED THE NAME AND ADDRESS OF THE LADY. IT IS INTERESTING TO NOTE THAT WHOLE OF THE JEWELLERY CLAIMED TO HAVE BEEN SOLD BY THE THREE MEMBERS HAS BEEN CLAIME D TO HAVE BEEN RECEIVED SUCH RELATIONS ONLY. THE JEWELLERY OF RS. 10 LAC IS SHOWN BY THE APPELLANT FROM HER AUNT, OF RS. 7 LAC IS SHOWN BY H ER HUSBAND FROM HIS MOTHER-IN-LAWS MOTHER AND OF RS.10 LAC IS SHOWN BY HER BROTHER-IN-LAW FROM FATHER-IN-LAW. VII) NO CONFIRMATION IS AVAILABLE FROM THE LADY TH AT SHE HAD EVER GIFTED THE JEWELLERY TO THE APPELLANT. VIII) NO DETAILS OF THE JEWELLERY HAVE BEEN FURNISH ED BY THE APPELLANT. THE APPELLANT HAS ONLY CLAIMED THAT AMOUNT OF RS.7, 99,488/- WAS REALIZED FROM THE SALE OF JEWELLERY AND SILVER UTEN SILS WITHOUT GIVING ANY PARTICULARS OF THE ITEMS INVOLVED. IX) NO EVIDENCE HAS BEEN FURNISHED TO PROVE THAT WH ETHER THE IMPUGNED JEWELLERY WAS EVER POSSESSED BY THE MOTHER OF MOTHER-IN-LAW OF THE APPELLANT. X) NO DOCUMENTS HAS BEEN FURNISHED TO PROVE THE ST ATUS OF THE LADY. XI) NO EXPLANATION HAS BEEN GIVEN AS TO WHAT WAS TH E OCCASION FOR THE LADY TO GIFT SO MUCH OF THE JEWELLERY TO THE A PPELLANT AND WHETHER SHE HAS GIFTED SIMILAR AMOUNT OF JEWELLERY TO OTHER RELATIONS WHO MAY BE MORE DIRECTLY RELATED TO HER THAN THE APPELLANT. XII) NO INFORMATION HAS BEEN FURNISHED REGARDING T HE GIFT TAX RETURN FILED BY THE DONOR LADY. IF THE FACT OF GIFT OF SO MUCH JEWELLERY WOULD HAVE BEEN CORRECT THE LADY WOULD HAVE BEEN COVERED BY THE GIFT TAX ACT AND SHE WOULD HAVE FILED THE GIFT TAX RETURN. ITA NO. 1710/MUM/2007 6 XIII) AS MENTIONED EARLIER, THERE ARE GLARING DISCR EPANCIES IN THE CLAIM OF THE APPELLANT AS MADE IN THE STATEMENT RECORDED IN 13.3.2001 AND AS MADE BEFORE ME WITH REGARD TO THE PURCHASER OF THE JEWELLERY AND BROKER INVOLVED. IN THE STATEMENT IT WAS ADMITTED BY THE APPELLANT THAT THE JEWELLERY WAS SOLD TO VARIOUS SHOPS IN THE CITY BUT NOW THE APPELLANT HAS CLAIMED THAT THE JEWELLERY WAS SOLD TO ONE MRS. ARUNA SANJAY SHAH. SIMILARLY THE INVOLMENT OF BROKER WAS NOT ADMITTED AT THE TIME OF STATEMENT, BUT NOW THE APPELLANT HAS CLAIMED THAT A BROKER WAS INVOLVED. BOTH THE ABOVE EVIDENCES HAVE HOWEVER BE EN REJECTED BY ME CONSIDERING THE BASIC INCONSISTENCIES INVOLVED. 6. WE HAVE HEARD THE PARTIES. THE LD COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY TO PROVE THE GENUINENESS OF THE GIFTED AMOUNT. IT IS ARGUED THAT THE ASSESS EE, WHICH BELONGED TO A PARTICULAR COMMUNITY, THERE IS A CONVENTION FOR GIV ING THE GIFT AND IT IS A NORMAL PRACTICE. IT IS ARGUED THAT BOTH THE LOWER AUTHORITIES WERE PREJUDICED FOR THE NON-ATTENDANCE OF THE DONORS, BUT THE FACT WAS THAT THERE WAS A DISASTER IN THE KUTCH DUE TO EARTHQUAKE AND THE RE LATIVES OF THE DONORS BELONGED TO KUTCH AND DUE TO EARTH-QUAKE, ALL THE D ONORS HAD GONE TO KUTCH AND COULD NOT REMAIN PRESENT BEFORE THE A.O. IT IS ARGUED THAT SEC. 68 IS A RULE FOR EVIDENCE AND THE AMOUNTS AS GIFTS WERE VER Y SMALL AND THE ASSESSEE HAS DISCHARGED THE BURDEN BY PROVING THE IDENTITY, GENUINENESS AND CREDIT- WORTHINESS OF THE DONORS. HE FURTHER ARGUED THAT AL L THE DONORS SENT THE CONFIRMATION LETTER AND IN FACT, IT WAS NOT THE CA SE THAT THE A.O SHOULD HAVE INSISTED FOR PERSONAL APPEARANCE OF THE DONORS. IT IS ARGUED THAT ALL THE DONORS HAVE DISCLOSED THEIR SOURCE AND MERELY BECAUSE THE GIFTS WERE RECEIVED IN CASH, THE A.O MADE THE ADDITION. IN RESPECT OF THE SALE OF THE JEWELLERY AND SILVER UTENSILS, IT IS ARGUED THAT NO OPPORTUNITY W AS GIVEN TO THE ASSESSEE TO SUBSTANTIATE THE CLAIM. IT IS ARGUED THAT THE QUAN TITY OF THE GOLD JEWELLERY WAS A REASONABLE ONE CONSIDERING THE FAMILY OF THE ASSE SSEE AS WELL AS THE CONVENTION IN THE COMMUNITY. IT IS ARGUED THAT NOT HING WAS ABNORMAL TO DISBELIEVE THE EXPLANATION OF THE ASSESSEE. HE, TH EREFORE, PLEADED THAT THE ITA NO. 1710/MUM/2007 7 ADDITIONS MADE BY THE A.O ON BOTH THE COUNTS MAY BE DELETED. THE LD D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE GIVEN OUR ANXIOUS CONSIDERATIONS TO THE RIVAL CONTENTIONS. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. IT APPEARS THAT SO FAR AS THE ADDITION TO THE GIFT IS CONCERNED, IT APPEAR S THAT THE A.O ISSUED SUMMONS TO ALL THE PARTIES, BUT NOBODY APPEARED. I T IS ALSO SEEN THAT ALL THE DONORS SENT THE CONFIRMATIONS THROUGH THE POST. IT IS SEEN THAT ALL THE DONORS SENT THE CONFIRMATIONS THROUGH THE POST. IT IS SEE N THAT THE AMOUNTS OF THE GIFT CLAIMED BY THE ASSESSEE ARE SMALL AND, IN OUR OPINION, IT IS NOT NECESSARY AS A RULE THAT THE PERSONAL ATTENDANCE OF EACH AND EVERY DONOR SHOULD BE ENFORCED WHEN THE IDENTITY AND SOURCE IS EXPLAINED, MORE PARTICULARLY CONSIDERING THE SMALLNESS OF AMOUNTS. IN OUR OPIN ION, THE ASSESSEE HAS DISCHARGED HIS BURDEN PUT ON HIM U/S. 68 OF THE I.T . ACT BY PROVING THE IDENTITY AND GENUINENESS OF THE GIFTS. PRODUCING T HE RESPECTIVE DONOR MAY NOT BE CONVENIENT EACH AND EVERY TIME FOR THE ASSESSEE BEFORE THE A.O. IN OUR OPINION, THERE IS NO JUSTIFICATION TO SUSTAIN THE A DDITION OF RS. 7,04,264/-. SO FAR AS THE ADDITION MADE IN RESPECT OF THE MINOR SO N IS CONCERNED, WE SUSTAIN THE SAME FOR THE REASON THAT THE ASSESSEE HAS NOT D ISCHARGED THE BURDEN PUT ON HIM U/S. 68. SO, TO THE EXTENT OF RS. 31,000/-, THE ADDITION IS CONFIRMED. ACCORDINGLY, GROUND NO. 1 IS PARTLY ALLOWED. 8. IN RESPECT OF THE SALE OF THE GOLD JEWELLERY AND SILVER UTENSILS, WE FIND THAT THE A.O SOUGHT THE EXPLANATIONS ON THE ACQUISI TION OF THE GOLD JEWELLERY AND SILVER UTENSILS, BUT THE ASSESSEE COULD NOT PRO DUCE ANY EVIDENCE. EVEN THE A.O HAS NOTED THAT THE ASSESSEE COULD NOT PRODU CE THE EVIDENCE TO SUPPORT THE PROOF OF THE SALE OF THE GOLD JEWELLERY AND UT ENSILS. THE LD COUNSEL ARGUED THAT THE ASSESSEE IS READY TO PRODUCE THE RE QUIRED EVIDENCE. AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF TH E OPINION THAT THIS MATTER NEEDS TO BE RESTORED TO THE FILE OF THE A.O FOR FRE SH ADJUDICATION. WE, THEREFORE, SET ASIDE THE ORDER THE CIT(A) AND RESTO RE THE MATTER TO THE FILE OF THE A.O IN RESPECT OF THE ABOVE ADDITION WITH THE D IRECTION THAT HE SHOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND DECIDE THE SAME AFRESH. ACCORDINGLY, GROUND NO.2 IS ALLOWED FOR ST ATISTICAL PURPOSE. ITA NO. 1710/MUM/2007 8 9. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16TH DAY OF APRIL, 2010. SD/- SD/- (P.M. JAGTAP) (R.S. PADVEKAR) ACCOUNTANT MEMBER JU DICIAL MEMBER MUMBAI, ON THIS 16TH DAY OF APRIL, 2010. :US COPY TO: 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)- XVIII, MUMBAI 4.THE CIT MC XVIII, MUMBAI 5.THE DR, E BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO. 1710/MUM/2007 9 US DATE INITIALS 1. DRAFT DICTATED ON 31/3/10/13/4/10--------------S R.P.S. 2. DRAFT PLACED BEFORE AUTHORITY 05/13/4/10 ----- --------- SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----