JER KERSI CONTRACTOR, MUMBAI V. ITO WD 12(2)(3), MUMBAI

ITA 1892/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49286 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 21-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: J D MISTRY; K K VED
• Keywords: Gift; Income from undisclosed sources; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI VIJAY PAL R AO, J.M. I.T.A. NO.: 1892/MUM/2009 ASSESSMENT YEAR : 2005-06 MRS. JER KERSI CONTRACTOR 72, FERENA 25, ARTHUR BUNDER CROSS ROAD, COLABA, MUMBAI-400 005 PAN NO: AADPC0827G VS. THE INCOME-TAX OFFICER WARD-12(2)(3) AYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J. D. MISTRY & SHRI K. K. VED RESPONDENT BY : SHRI S. K. SINGH ORDER PER PRAMOD KUMAR (AM) : THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICATE IN THIS APPEAL IS WHETHER OR NOT THE LD. CIT(A) WAS JUSTIFIED IN UPHO LDING THE ADDITION OF RS.2,30,924 AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE. THE ASSESSMENT YEAR INVOLVED IS 2005-06 A ND THE IMPUGNED ASSESSMENT IS FRAMED U/S.143(3) OF THE INCOME TAX A CT, 1961. 2. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.2,30,924 FROM CAPT. R. K. BEHRAM, BASE D IN CANADA. THIS AMOUNT WAS STATED TO HAVE BEEN RECEIVED AS GIFT BY THE ASSESSEE. HOWEVER, AS ASSESSEE COULD NOT SUBMIT DOCUMENTARY EVIDENCES IN SUPPORT OF THE SAID GIFT, THE ASSESSING OFFICER ADDED THIS AMOUNT OF RS.2,30, 924 AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. AGGRIEVED, ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND PRODUCED ALL THE R ELEVANT DETAILS AND ITA NO: 1892/M/2009 MRS. JER KERSI CONTRACTOR 2 SUPPORTING EVIDENCES, BUT THE LEARNED CIT(A) DECLIN ED TO ADMIT THESE EVIDENCES, AND UPHELD THE STAND OF THE ASSESSING OF FICER. THE ASSESSEE IS NOT SATISFIED WITH THE STAND OF THE LD. CIT(A) AS WELL, AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATTER OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 4. WE FIND THAT HON'BLE BOMBAY HIGH COURT, IN THE C ASE OF PRABHAVATI S. SHAH VS. CIT (231 ITR 1), HAS OBSERVED THAT WHILE R ULE 46A DOES FETTER THE RIGHT OF THE ASSESSEE TO PRODUCE ADDITIONAL EVIDENC E BUT IT DOES NOT RESTRAIN CIT(A)S POWERS U/S.250(4) OR 250(5), AND IF PRIMA FACIE AN INFORMATION IS NECESSARY TO EXAMINE CLAIM OF THE ASSESSEE, THE LD. CIT(A) SHOULD CONSIDER THE NECESSARY EVIDENCE IN EXERCISE OF HIS POWERS UN DER SECTION 250. WHENEVER AN AUTHORITY IS VESTED WITH ANY POWERS, SU CH AN AUTHORITY HAS A CORRESPONDING OBLIGATION TO EXERCISE SUCH POWERS WH EN CIRCUMSTANCES SO WARRANT OR JUSTIFY, IT CANNOT BE ON THE WHIMSY AND FANCY OF A PUBLIC AUTHORITY TO DECIDE AS TO WHEN THE STATUTORY POWERS ARE TO BE USED. AS WAS OBSERVED BY A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ELECTRA (JAIPUR) PVT. LTD. VS. IAC (26 ITD 236), THE ASSES SEE SHOULD NOT BE DISQUALIFIED FROM PRODUCING THE ADDITIONAL EVIDENCE MERELY ON THE GROUND THAT EVIDENCE WAS NOT PLACED BEFORE AUTHORITIES BEL OW. SIMILARLY, IN THE CASE OF B. L. CHOWDHURY VS. CIT (105 ITR 371), HON'BLE O RISSA HIGH COURT HAS HELD THAT BY THE VIRTUE OF SECTION 250, WIDE PROVIS ION HAS BEEN MADE FOR CONFERRING JURISDICTION ON THE FIRST APPELLATE AUTH ORITY TO MAKE SUCH ENQUIRES AS HE DEEMS FIT AND THE LD. CIT(A) DOES NOT EXCEED THIS JURISDICTION IF HE ASKS OR ALLOWS THE ASSESSEE TO FILE ADDITIONAL EVIDENCES . VIEWED IN THIS PERSPECTIVE, AND HAVING REGARD TO THE FACT THAT NO EVIDENCES AT ALL COULD BE PRODUCED AT THE ASSESSMENT STAGE, THE LD. CIT(A) WAS CLEARLY IN ERROR IN NOT ADMITTING THE EVIDENCES SUBMITTED BY THE ASSESSEE PARTICULARLY AS ASSESSEE IS AN ELDERLY LADY, WITH PASSIVE INCOMES IN HER EIGHTIES, AND PAR TICULARLY AS INFORMATION ITA NO: 1892/M/2009 MRS. JER KERSI CONTRACTOR 3 WAS TO BE OBTAINED FROM ABROAD. IN VIEW OF THESE DI SCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE STAND OF THE LD. CIT(A) CA NNOT BE APPROVED. 5. HAVING HELD SO, NORMALLY WE WOULD HAVE REMITTED THE MATTER TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATION ON MERITS, BUT, ON THE PECULIAR FACTS OF THIS CASE AND HAVING NOTED THAT THE ASSESSEE IS A SENIOR CITIZEN AND NON BUSINESS ASSESSEE THAT ISSUE INVOLVED IS IN A NARROW COMPASS A FACTS, AND THAT THE AMOUNT INVOLVED IS SMALL, WE WOULD LIKE TO DEAL WIT H THE SUBMISSIONS OF THE ASSESSEE ON MERITS. 6. WE HAVE NOTED THAT THE ASSESSEE HAS FILED CERTAI N EVIDENCES IN SUPPORT OF BEHRANS IDENTITY, BY WAY OF COPY OF CAP. R. K. BEHRANS, CANADIAN PASSPORT AND THE ASSESSEE HAS ALSO FILED CAPT. BEHR ANS AFFIDAVIT WHICH STATES AS FOLLOWS :- AFFIDAVIT OF RUCKY KHOORSHED BEHRAM I, RUCY KHOORSHED BEHRAM, SON OF KHOORSHED BEHRAM, OF 645 SIXTH AVENUE WEST, IN THE CITY OF OWEN SOUND, INT E H COUNTRY OF GREY, PROVINCE OF ONTARIO, MAKE OATH AND SAY : 1. IAM A CANADIAN CITIZEN HOLDING A PASSPORT NO. JE 94 9102. 2. I AM AN OLD FRIEND OF CAPTAIN KERSI S. CONTRACTOR A ND HIS WIFE, MRS. JER K. CONTRACTOR, WHO RESIDE AT 72, FERENA, 2 5, ARTHUR BUNDER CROSS ROAD, COLABA, MUMBAI-400 005, INDIA. 3. WE FIRST MET EACH OTHER ON THE TRAINING SHIP TS DUF FERIN IN THE YEAR 1943 WHERE I WAS HIS SENIOR BY ONE YEAR. 4. THEREAFTER ON ACCOUNT OF THE FACT THAT THE MERCHANT MARINE FRATERNITY IN THOSE DAYS WAS QUITE SMALL WE WERE IN REGULAR TOUCH WITH EACH OTHER, MORE SO ON ACCOUNT OF THE FA CT THAT WE WERE ALSO OF THE SAME COMMUNITY. 5. DURING THE YEARS 1951 TO 1963 I WAS IN CALCUTTA, NO W KALKOTA, AS A HOOGLY RIVER PILOT AND KERSI PASSED HIS CAPTAI NS (FOREIGN GOING) EXAM. I GOT HIM A JOB IN INDIA GENERAL NAVI GATION & RAILWAY CO. LTD. A SUBSIDIARY OF KILLICK NIXON LTD ., WHICH USED TO RUN PADDLE STEAMERS FROM CALCUTTA (NOW KALK OTA) TO ASSAM AND PATNA. 6. DURING THIS PERIOD 1953 TO 1955 KERSI AND I SHARED THE SAME ACCOMMODATION AND LIVED LIKE BROTHERS UNTIL 1955 WH EN HE CAME TO MUMBAI AS A HARBOUR PILOT. ITA NO: 1892/M/2009 MRS. JER KERSI CONTRACTOR 4 7. IN 1963 I MIGRATED TO CANADA, BUT WAS IN CLOSE TOUC H WITH KERSI THROUGH CORRESPONDENCE AND TELEPHONE AND ALSO WHEN ON VISITS TO MUMBAI. 8. DURING YEARS 1972 AND ONWARDS WHEN KERSI WAS IN TEH RAN, IRAN, DUE TO INCREASED FINANCIAL LIABILITIES INCLUD ING THE MORTGAGE OF MY RESIDENTIAL PROPERTY, I TOOK UP KERS IS OFFER OF FINANCIAL ASSISTANCE FROM TIME TO TIME, WITH AN UND ERSTANDING THAT I WOULD REPAY THE AMOUNT AS AND WHEN I COULD. THE TOTAL AMOUNT RECEIVED FROM TIME TO TIME WAS $50,003.00 (U S DOLLARS), FROM HIS EARNINGS IN IRAN. 9. THEREAFTER, OVER THE LAST MANY YEARS WHEN MY MONETA RY CONDITION HAD IMPROVED, I HAVE WANTED TO RETURN THE SAID MONEY TO CAPTAIN KERSI S. CONTRACTOR WHO KEPT ON SA YING THAT THERE WAS NO URGENCY. 10. EVENTUALLY DURING THE YEARS UNDER CONSIDERATION DUE TO MY HEART CONDITION AND OLD AGE, EIGHTY-ONE YEARS, I WA S INSISTENT ON PUTTING MY FINANCIAL AFFAIRS AND OBLIGATIONS IN ORDERS, AND MADE A REMITTANCE OF USD $50,003.00 ON MAY 19, 2004 , TO COVER THE MONIES I HAD RECEIVED FROM TIME TO TIME, SO THAT MY WIFE AS EXECUTRIX OF MY WILL WOULD NOT HAVE ANY TRO UBLE IF I LEFT FOR HER TO MAKE THE PAYMENT. THE PAYMENT WAS EFFECT ED FROM MY ACCOUNT AT THE SCOTIABANCK, OWEN SOUND, ONTARIO BRANCH, ACCOUNT NO.12062 0062286. 11. IN VIEW OF MY NATURAL LOVE AND AFFECTION FOR MRS. J ER K. CONTRACTOR I HAD GIFTED A SUM OF 230924 (INDIAN RUP EES), BY A BANK DRAFT (CANADIAN $6,881.54) FROM MY ACCOUNT TO HER. I DECLARED THAT THE ABOVE STATEMENTS ARE TRUE AND C ORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF. SWORN BEFORE ME AT THE ) CITY OF OWEN SOUND, IN ) THE COUNTRY OF GREY, ) THIS 20 TH DAY OF MARCH, ) 2008. ) RUCY KHOORSHED BEHRAN ______________________________ A COMMISSIONER, ETC. 7. WE HAVE ALSO NOTED THAT THE ASSESSEE IS ALSO NOT ENGAGED IN ANY BUSINESS, HER INCOMES ARE ONLY PASSIVE INCOMES, AND THE MONEY RECEIVED BY HER IS NOT USED IN ANY OTHER INVESTMENT OR SUCH PURPOSES. ITA NO: 1892/M/2009 MRS. JER KERSI CONTRACTOR 5 8. TAKING ALL THE RELEVANT FACTORS INTO CONSIDERATI ONS, WE SEE NO REASONS TO DISBELIEVE THE GENUINENESS OF GIFT RECEIVED BY T HE ASSESSEE BEFORE US. THE ASSESSEE, AS ALSO PERSON HAVING MADE THE REMITTANCE , ARE KNOWN TO EACH OTHER FOR OVER HALF A CENTURY, THERE IS A PLAUSIBLE EXPLANATION FOR REMITTANCE HAVING BEEN MADE TO THE ASSESSEE, THE RECEIPT IS NO T OF AN INCOME NATURE, AND IT IS NOT A CASE WHERE THERE ARE INCONSISTENCIE S CONTRADICTIONS IN THE EXPLANATIONS OF THE ASSESSEE. 9. WE HAVE ALSO NOTED THE ASSESSING OFFICERS OBSE RVATIONS ABOUT AN APPARENT CONTRADICTION IN THE STAND OF THE ASSESSEE INASMUCH AS THE AMOUNT WAS SAID TO HAVE BEEN RECEIVED FROM HER HUSBAND, BU T EVENTUALLY MONEY WAS FOUND TO HAVE BEEN RECEIVED FROM HER HUSBANDS OLD FRIEND. HOWEVER, AS IS CLEAR FROM THE CONTENTS OF THE AFFIDAVIT THIS MONEY WAS BELIEVED TO HAVE BEEN OWED BY HER HUSBANDS FRIEND TO HER HUSBAND, AND, T HEREFORE, IN A WAY MONEY, CAN BE SAID TO ACTUALLY BELONG TO HER HUSBAN D BUT PAID OVER TO HER. IN ANY CASE, THIS DISCREPANCY IS NOT REALLY VERY RE LEVANT BECAUSE THERE IS A REASONABLE AND PLAUSIBLE EXPLANATION FOR REMITTANCE TO THE ASSESSEE, AND, AS WE HAVE WORKED, IT IS NOT OF INCOME NATURE. 10. FOR THE REASONS LET OUT ABOVE WE UPHOLD THE GRI EVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE IMPUGNED ADDITIONS. 11. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2011. SD/- SD/- ( VIJAY PAL RAO ) ( PRAMOD KU MAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 30/06/2011 ITA NO: 1892/M/2009 MRS. JER KERSI CONTRACTOR 6 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, J - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI