SUJATA KABRAJI, MUMBAI V. ITO WD 19(3)(4), MUMBAI

ITA 1816/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2513 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 21-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SATHYA MOORTHY
• Assessee Lawyers: P J PARDIWALA
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENCH MUMBAI BEFORE SHRI RAJENDRA, A M & SHRI C.N.PRASAD , J M INCOME TAX APPEAL NO. 1816/ MUM/201 3 ( ASSESSMENT YEAR : 20 08 - 2009 ) SUJATA KABRAJI, 31, PERIDOT, 22A PERRY CROSS ROAD, BANDRA (W), MUMBAI - 400050 VS. ITO, WD - 19(3)(4), MUMBAI PAN/GIR NO. : ABUPK 7920 N /ASSESSEE BY : SHRI P.J.PARDIWALA /REVENUE BY : SHRI N.SATHYA MOORTHY DATE OF HEARING : 2 1 /07/2016 DATE OF PRONOUNCEMENT : 21 / 10 / 2016 O R D E R PER C.N.PRASAD (J.M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) - 18, MUMBAI, DATED 20 - 12 - 2012, FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, THE ASSESSEE IS CHALLENGING THE ORDER OF THE CIT(A) IN SUSTAINING THE DISALLOWANCE OF RS.10,471/ - REPRESENTING GIFTS PRESENTED BY ASSESSEE AND DISALLOWANCE OF RS.3,30,000/ - WITH REGARD TO GIFT RECEIVED BY ASSESSEE FROM H ER GRAND - MOTHER. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF FINANCIAL ADVISORY SERVICES FILED HER RETURN OF INCOME ON 30.6.2008 DECLARING INCOME OF RS.3,07,230/ - . THE ASSESSMENT WAS 2 SUJATA KABRAJI ITA NO. 1816/MUM/2013 COMPLETED U/S 143(3) OF THE ACT ON 11.11.2010 DETERMINING THE TOTAL INCOME AT RS.7,37,700/ - . THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED RS.10,471/ - REPRESENTING GIFT EXPENDITURE INCURRED BY THE ASSESSEE OBSERVING THAT THE EXPENDITURE INCURRED ON PURCHASE OF GIFTS IS NOT AN EXPENDITURE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. HE ALSO OBSERVED THAT ASSESSEE HAS NOT FURNISHED ANY EXPLANATION WITH RESPECT TO ALLOWABILITY OF THE GIFT EXPENSES. ON APPEAL, THE CIT(A) S USTAINED THE DISALLOWANCE OBSERVING THAT ASSESSEE HAS FAILED TO SUBMIT ANY EVIDENCE TO PROVE THAT THIS EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 21 OF THE PAPE R BOOK SUBMITS THAT DETAILS OF EXPENDITURE INCURRED TOWARDS GIFTS FOR THE PURPOSES OF BUSINESS OF ASSESSEE WERE FURNISHED. THE LEARNED COUNSEL SUBMITS THAT THE GIFTS WERE GIVEN ON VARIOUS OCCASIONS LIKE BIRTHDAYS, WEDDINGS, ETC., THEREFORE, HE SUBMITS THA T THE GIFTS WERE GIVEN TO THE CLIENTS TO KEEP GOOD RELATION AND SUCH EXPENDITURE IS INCURRED FOR THE BUSINESS OF THE ASSESSEE AND WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF ASSESSEES BUSINESS OF FINANCIAL ADVISORY SERVICE. 5. COMING TO THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF GIFT RECEIVED BY THE ASSESSEE, THE LEARNED COUNSEL SUBMITS THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS BY LETTER DATED 4.8.2010 , IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ASSESSEE RECEIVED GIF T OF RS.3,30,000/ - FROM HER MATERNAL GRANDMOTHER, MRS. RUKMA THADANI AND 3 SUJATA KABRAJI ITA NO. 1816/MUM/2013 FURNISHED THE ADDRESS AND PAN OF HER GRANDMOTHER. HOWEVER, HE SUBMITS THAT THE ASSESSING OFFICER MADE ADDITION STATING THAT ASSESSEE HAS NOT PROVED HER RELATIONSHIP WITH MRS. RUKMA T HADANI EXCEPT STATING THAT GIFT HAS BEEN RECEIVED FROM HER MATERNAL GRANDMOTHER. THE LEARNED COUNSEL SUBMITS THAT CIT(A) SUSTAINED THE ADDITION OBSERVING THAT THE GENUINENESS OF THE TRANSACTION IS NOT PROVED BY THE ASSESSEE. THE LEARNED COUNSEL REFERRING TO PAGE 14 OF THE PAPER BOOK SUBMITS THAT THE GRAND MOTHER HAS GIVEN A DECLARATION OF GIFT STATING THAT GIFT WAS GIVEN TO THE ASSESSEE BY WAY OF CHEQUE NO. 0452390 FROM BANK OF MAHARASHTRA FROM HER S AVINGS BANK ACCOUNT. THE LEARNED COUNSEL FURTHER REFERR ING TO PAGES 22 - 25 OF THE PAPER BOOK, WHICH ARE COPIES OF PASSPORTS OF ASSESSEE AND HER MOTHER, SMT. MIRCHANDANI SAROJ MOTI SUBMITS THAT IN THE PASSPORT OF ASSESSEES MOTHER IT WAS CLEARLY MENTIONED THAT SMT. RUKMA THADANI IS MOTHER OF SMT. MIRCHANDANI SAR OJ MOTI AND THAT SMT. MIRCHANDANI SAROJ MOTI IS THE MOTHER OF THE ASSESSEE, SMT. SUJATA KABRAJI. THEREFORE, THE LEARNED COUNSEL SUBMITS THAT THE RELATIONSHIP OF ASSESSEE WITH SMT. RUKMA THADANI IS ESTABLISHED. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT ASSESSEES GRAND - MOTHER HAS GIVEN GIFTS TO ASSESSEE, HER BROTHER AND SISTERS WITH AN EQUAL AMOUNT OF RS.3,30,000/ - EACH . THE LEARNED COUNSEL SUBMITS THAT THE GIFT WAS EVIDENCED BY A DECLARATION OF GIFT DATED 22.6.2007 AND THIS WAS ALSO FURNIS HED BEFORE THE ASSESSING OFFICER. THE DONOR IS ASSESSED TO TAX AS IS BORNE OUT BY THE PAN THAT WAS FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE LEARNED COUNSEL FURTHER SUBMITS THAT SMT. RUKMA THADANI EXPIRED ON 5.3.2011 AND PRIOR TO HER DEMISE, SHE WAS AILING. HENCE, ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE RELEVANT MATERIALS AT THAT JUNCTURE. THE LEARNED COUNSEL 4 SUJATA KABRAJI ITA NO. 1816/MUM/2013 FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE IN THE COURSE OF APPEAL PROCEEDINGS ENCLOSED A COPY OF HER GRANDMOTHERS RETURN FOR ASSESSMENT YEAR 2008 - 09 WHICH DISCLOSES THAT HER TOTAL INCOME WAS RS.10,08,160/ - . THEREFORE, THE LEARNED COUNSEL SUBMITS THAT SINCE ASSESSEE HAS ESTABLISHED THE RELATIONSHIP WITH THE DONOR AND THE DONOR HAS GIVEN A DECLARATION OF GIFT STATING THAT SHE HAS GIVEN GIFT TO HER GRAND DAUGHTER BY WAY OF CHEQUE FROM HER SAVINGS BANK ACCOUNT , THE SOURCE OF THE GIFT IS PROVED. THEREFORE, THERE IS NO JUSTIFICATION IN HOLDING THAT GIFT IS NOT A GENUINE TRANSACTION. THE LEARNED COUNSEL FURTHER REFERRING TO PAGES 40 - 42 OF PAPER BOOK SUBMITS THAT THE DONOR HAS GIVEN GIFT TO THE ASSESSEE AND HER BROTHER AND SISTERS FROM OUT OF THE BALANCES LYING IN HER SAVINGS BANK ACCOUNT AND FROM RS.5,60,000/ - LOAN RETURNED BY M/S. PMS GRATE FLOORINGS PVT. LTD. TO THE ASSESSEES GR AND MOTHER. 6. THE LD. DR PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY SUPPORTED THE ORDERS . 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. INSOFAR AS GROUND OF APPEAL NO. 1 IS CONCERNED, I.E., DISALLOWANCE OF GIFT ARTICLES GIVEN BY THE ASSESSEE TO HER CLIENTS, WE FIND FROM THE DETAILS FURNISHED BEFORE THE CIT(A) THAT ASSESSEE HAS MENTIONED THE AMOUNTS OF GIFTS TO VARIOUS PERSONS ON THE OCCASIONS OF BIRTHDAYS AND WEDDINGS. IT IS NOT BROUGHT ON RECORD THAT THESE PERSONS WERE CLIENTS OF THE ASSESSEE AND WHAT KIND OF SERVICES ASSESSEE HAS PROVIDED TO THEM. IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF 5 SUJATA KABRAJI ITA NO. 1816/MUM/2013 BUSINESS, W E ARE INCLINED TO SUSTAIN THE DISALLOWANCE. THUS, THIS GROUND OF APPEAL IS REJECTED. 8 . COMING TO THE ADDITION IN RESPECT OF GIFT RECEIVED BY THE ASSESSEE FROM HER GRANDMOTHER, THERE IS AMPLE EVIDENCE ON RECORD TO ESTABLISH THAT THE DONOR IS THE GRANDMOT HER OF ASSESSEE, THE GRAND - MOTHER IS ASSESSED TO TAX AND SHE HAS GIVEN GIFT TO HER GRAND DAUGHTER, NAMELY THE ASSESSEE, BY WAY OF DECLARATION OF GIFT , THROUGH ACCOUNT PAYEE CHEQUE FROM HER SAVINGS BANK ACCOUNT. THUS, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. THE ASSESSEE HAS GIVEN THE DETAILS OF SOURCE OF THE GIFT, NAMELY, THE SAVINGS BANK ACCOUNT OF HER GRANDMOTHER. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY VALID REASON TO TREAT THE GIFT AS NON - GENUINE. FURTHER, WE FIND THAT THE CIT(A) DOUBTED THE CREDIT WORTHINESS OF THE DONOR FOR THE REASON THAT THE BANK STATEMENT OF THE DONOR REFLECTS AN AMOUNT OF CREDIT OF RS.5,60,000/ - ON THE DATE OF ISSUE OF CHEQUE TO THE ASSESSEE AND THIS TRANSACTION WAS NOT EXPLAINED. WE FIND THAT THE ASSESSEE HAS RECEIVED THE GIFT FROM THE DONOR FROM HER SAVINGS BANK ACCOUNT AND THE SOURCE FOR CREDIT OF RS.5,60,000/ - WAS ALSO EXPLAINED THAT THIS WAS THE LOAN RETU RNED BY M/S. PMS GRATE FLOORINGS PVT. LTD. TO THE ASSESSEES GRAND - MOTHER ALONGWITH INTEREST OF RS.18,181/ - AND THE DONOR HAS, IN FACT, ADMITTED THIS INTEREST IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008 - 09 AND IT IS ALSO NOT THE CASE OF THE ASSE SSING OFFICER THAT THE ASSESSEE HERSELF DEPOSITED THIS AMOUNT IN HER GRAND - MOTHERS ACCOUNT AND OBTAINED AS GIFT. THE AUTHORITIES BELOW HAVE NOT DISPROVED THE VERSION OF THE DONOR THAT THE CREDIT ENTRY OF RS.5,60,000/ - MADE ON THE DATE OF ISSUE OF CHEQUE WAS NOT FROM THE LOAN RETURNED BY M/S. PMS GRATE 6 SUJATA KABRAJI ITA NO. 1816/MUM/2013 FLOORINGS PVT. LTD. IN THE CIRCUMSTANCES, WE HOLD THAT THE GIFT IS GENUINE AND NO ADDITION SHOULD BE MADE AS UNEXPLAINED CASH CREDIT. THUS, WE DELETE THE ADDITION MADE OF RS.3,30,000/ - AS CASH CREDIT U/SEC . 68 OF THE ACT . 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 1 S T O C T . 2016 S D / - S D / - RAJENDRA C.N.PRASAD / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED 2 1 / 1 0 /2016 /SSL , SPS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//