The ACIT, Circle-1, Bhavnagar V. Shri Ravi Ashokkumar Patel, Bhavnagar

ITA 1906/AHD/2007

• Counselvise Citation: 190620514 RSA 2007
• Duration Of Justice: 4 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y C SURTI
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Onus to prove
• Section: 68; 44AD

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ . .. . . .. .% % % % , , , , &' % &' % &' % &' % & # & # & # & # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND B.R. BASKARAN, ACCOUNTANT MEMBER) ITA NO.1906/AHD/2007 WITH CO NO.169/AHD/2007 [ASSTT.YEAR : 2004-2005] ACIT, CIR.1 BHAVNAGAR. /VS. SHRI RAVI ASHOKUMAR PATEL 1153, PATANI ROAD BHAVNAGAR. ( (( ()* )* )* )* / APPELLANT) ( (( (+,)* +,)* +,)* +,)* / RESPONDENT) % - . &/ REVENUE BY : SHRI Y.C. SURTI 01 - . &/ ASSESSEE BY : SHRI S.N. SOPARKAR 2 - 13'/ DATE OF HEARING : 24 TH JANUARY, 2012 456 - 13'/ DATE OF PRONOUNCEMENT : 25-01-2012 &7 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 28-02-2007 PASSED BY LD CIT(A) AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. THE REVENUE IS ASSAILING THE DECISION OF LD CIT(A) IN DELETING THE FOLLOWING AMOUNTS ADDED BY THE ASSESSING OFFICER. (A) CARTING AND LABOUR CHARGES - RS.1,17,620/ - (B) UNEXPLAINED GIFTS U/S 68 - RS.16,50, 000/- 3. IN THE CROSS OBJECTION, THE ASSESSEE IS ASSA ILING THE DECISION OF LD CIT(A) IN CONFIRMING THE UNEXPLAINED GIFT AMOUNT OF RS.77, 298/-. ITA NO.1906/AHD/2007 WITH CO -2- 4. THE FACTS RELATING TO THE ABOVE SAID ISSUES ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION WORKS AND ALSO DER IVING COMMISSION FROM BOOKING OF AIR TICKETS. AS AGAINST THE RETURNED IN COME OF RS.5,24,500/-, THE AO DETERMINED THE TOTAL INCOME AT RS.23,69,420/- BY MA KING VARIOUS ADDITIONS. THE APPEAL FILED BY THE ASSESSEE BEFORE LD CIT(A) W AS PARTLY ALLOWED. HENCE BOTH THE PARTIES ARE BEFORE US. 5. THE FIRST ISSUE IN THE APPEAL OF THE REVENUE PERTAINS TO DISALLOWANCE OF A PORTION OF CARTING AND LABOUR CHARGES. THE ASSESSE E HAD CLAIMED A SUM OF RS.9,91,080/- AS EXPENSES UNDER THIS HEAD. THE SAI D EXPENSES WERE SUPPORTED BY ONLY SELF MADE VOUCHERS. IT WAS ALSO NOTICED TH AT ALL THE PAYMENTS HAD BEEN MADE IN CASH AND FURTHER THE ASSESSEE WAS HAVING SU PPORTING (SELF MADE VOUCHERS) ONLY TO THE TUNE OF RS.7,42,300/-. HENCE THE AO DISALLOWED THE PORTION OF EXPENSES WHICH WERE NOT SUPPORTED BY ANY VOUCHER AMOUNTING TO RS.1,17,620/-. BEFORE LD CIT(A), THE ASSESSEE SUBM ITTED THAT THE NET PROFIT DECLARED BY HIM WORKS OUT TO 19.76%, WHICH IS FAR M ORE THAN THE RATE OF 8% PRESCRIBED FOR CIVIL CONTRACTORS U/S 44AD OF THE AC T. THE LD CIT(A), ON BEING CONVINCED WITH THE SAID EXPLANATION OF THE ASSESSEE , DELETED THE IMPUGNED ADDITION. 5.1 WE HAVE GONE THROUGH THE RIVAL CONTENTIONS O N THIS ISSUE. WE ARE UNABLE TO AGREE WITH THE VIEWS OF LD CIT(A) THAT THE RATE OF NET PROFIT DECLARED BY THE ASSESSEE SHOULD INFLUENCE THE DISALLOWANCE. THERE CANNOT BE ANY DISPUTE THAT THE RESPONSIBILITY TO PROVE THE CLAIM OF EXPENSES L IES UPON THE ASSESSEE. IN THE INSTANT CASE, IT IS THE RESPONSIBILITY OF THE ASSES SEE TO PROVE THAT HE HAD INCURRED A SUM OF RS.9,91,080/- TOWARDS LABOUR AND CARTING C HARGES. THE ASSESSEE COULD PRODUCE SELF MADE VOUCHERS ONLY IN SUPPORT OF THIS EXPENSES, THAT TOO ONLY FOR A SUM OF RS.7,24,300/-. IT IS A WELL KNOWN FACT THAT IT IS VERY DIFFICULT TO SUBJECT THE SELF MADE VOUCHERS FOR VERIFICATION. AT THE SA ME TIME, WE HAVE TO APPRECIATE ALSO THE DIFFICULTY OF THE ASSESSEE, AS THE LABOURERS MAY NOT BE ITA NO.1906/AHD/2007 WITH CO -3- HAVING PRINTED BILL BOOKS. FURTHER, ABSENCE OF VOU CHERS DOES NOT ALWAYS MEAN THAT THE EXPENSES WERE NOT INCURRED. HENCE, ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT A ROUND SUM DISALLOWANCE OF RS .25,000/- MAY BE MADE TO TAKE CARE OF DEFICIENCIES AND WE HOPE THAT THE SAID DISALLOWANCE WOULD MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. THE OR DER OF LD CIT(A) ON THIS ISSUE STANDS MODIFIED. 6 THE NEXT ISSUE PERTAINS TO ADDITION OF UNEXPL AINED GIFTS U/S 68 OF THE ACT. THE ASSESSEE HAD SHOWN RECEIPT OF GIFTS FROM THE FO LLOWING PERSONS:- SHRI LAXMANBHAI DHANJIBHAI HIRANI - RS.10,00,0 00/- SMT. ROHINI S KAMDAR - RS. 6,50,000/- SHRI CHETANBHAI ARVINDRAI PATEL - RS. 77, 298/- THE EXPLANATIONS OFFERED WITH REGARD TO THESE THREE GIFTS AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE ABOVE MENTIONED THREE G IFTS WERE NOT UP TO THE SATISFACTION OF THE AO AND HENCE HE ADDED THE ABOVE SAID AMOUNTS TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDIN GS, THE LD CIT(A) DELETED THE ADDITION PERTAINING TO THE FIRST TWO GIFTS AND CONFIRMED THE ADDITION OF THIRD GIFT. 7. BEFORE US, THE LD A.R PLACED RELIANCE ON HOS T OF DECISIONS RENDERED BY VARIOUS TRIBUNALS AND HIGH COURTS TO CONTEND THAT T HERE IS NO SCOPE FOR MAKING ANY ADDITION U/S 68 IN RESPECT OF THE IMPUGNED GIFT S. BEFORE ADDRESSING THE SAID CASE LAW, WE WOULD LIKE TO EXAMINE THE FACTS PREVAI LING IN THE INSTANT CASE AND ALSO WHETHER THE ASSESSEE HAS DISCHARGED THE PRIMAR Y BURDEN PLACED UPON HIM. 8.. THERE CANNOT BE ANY DISPUTE THAT THE PRIMAR Y BURDEN OF PROOF WITH REGARD TO THE CASH CREDITS IS PLACED UPON THE ASSESSEE U/S 68 OF THE ACT. THE COURTS HAVE HELD THAT IN ORDER TO DISCHARGE THE SAID PRIMA RY BURDEN, THE ASSESSEE HAS TO PROVE THREE MAIN INGREDIENTS VIZ., THE IDENTITY OF THE CREDITOR; GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE CR EDITOR. IF THE ASSESSEE FAILS ITA NO.1906/AHD/2007 WITH CO -4- EVEN IN ANY ONE OF THE THREE INGREDIENTS STATED ABO VE, IT WOULD BE HELD THAT THE ASSESSEE HAS FAILED IN DISCHARGING THE PRIMARY BURD EN. IN THAT CASE, THE PROVISIONS OF SEC. 68 WOULD BE ATTRACTED IN RESPECT OF THE SAID CASH CREDIT. 9. IN RESPECT OF GIFT RECEIVED FROM SHRI LAXMAN BHAI DHANJIBHI HIRANI, THE ASSESSEE HAS FURNISHED FOLLOWING DOCUMENTS:- (A) 2 GIFT CONFIRMATION DEEDS FOR RECEIPT OF GIFT S OF RS.5,00,000/- EACH. (B) TWO CERTIFICATES FROM THE CORPORATION BANK, BH UJ BRANCH CERTIFYING THAT THE DEMAND DRAFTS OF RS.5,00,000/- EACH WAS IS SUED FROM NRE SB A/C NO.187 MAINTAINED BY THE DONOR. (C) PHOTOCOPY OF FIRST PAGE OF PASS BOOK ISSUED BY REP UBLIC OF SEYCHELLES. NOW, WE SHALL EXAMINE THESE THREE DOCUMENTS VIS--V IS THE THREE INGREDIENTS TO SATISFY THE PRIMARY BURDEN OF PROOF, WHICH WERE STA TED ABOVE. THE IDENTITY OF THE DONOR IS PROVED BY THE PHOTOCOPY OF PASS PORT. THE ASSESSEE HAS RECEIVED THE IMPUGNED GIFT CHEQUES BY WAY OF DEMAND DRAFTS. SINCE THE CORPORATION BANK HAS CERTIFIED THAT THE SAID DEMAND DRAFTS WERE TAKEN FROM OUT OF THE NRE SB ACCOUNT MAINTAINED BY THE DONOR, WE MAY TAKE THA T THE GENUINENESS OF THE TRANSACTION IS ALSO ESTABLISHED. THE CONFIRMATION LETTER ONLY CERTIFIES THAT THE SAID AMOUNTS WERE GIVEN TO THE ASSESSEE AS GIFTS. WITH REGARD TO THE CREDIT WORTHINESS OF THE DONOR, WE NOTICE THAT THE ASSESSE E DID NOT FILE ANY DOCUMENT, WHICH MEANS THAT THE ASSESSEE HAS FAILED IN PROVING THE CREDIT WORTHINESS OF THE DONOR. IN OUR VIEW, THE BANK CERTIFICATE CANNOT PR OVE THE CREDIT WORTHINESS. IT IS ALSO PERTINENT TO NOTE THAT THE AO DID NOT PROVI DE OPPORTUNITY TO THE ASSESSEE TO FURNISH FURTHER EVIDENCES IN SUPPORT OF CREDIT W ORTHINESS OF DONORS. 10. IN RESPECT OF GIFT RECEIVED FROM SMT.ROHINI BEN S KAMDAR, FOLLOWING DOCUMENTS HAVE BEEN FURNISHED:- (A) GIFT DEED DATED 10-06-2003. (B) PHOTO COPY OF FIRST PAGE OF PASS PORT. ITA NO.1906/AHD/2007 WITH CO -5- (C) PHOTO COPY OF CHEQUE DRAWN ON THE KARUR VYSYA BANK, RAJKOT FOR RS.6,51,300/-. THE CHEQUE HAS BEEN DRAWN IN FAVOUR OF THE KARUR VYSYA BANK ONLY. (YOURSELF CHEQUE). (D) THE CERTIFICATE ISSUED BY THE KARUR VYSYA BANK , IN WHICH IT IS STATED THAT THE DEMAND DRAFT WAS ISSUED THROUGH ST ATE BANK OF INDORE. HOWEVER, IN THE GIFT DEED, IT IS STATED THAT THE DE MAND DRAFT HAS BEEN TAKEN FROM STATE BANK OF SAURASHTRA, WHICH IS IN CONTRA DICTION TO THE CERTIFICATE ISSUED BY THE BANK. IN THE INSTANT CASE ALSO, THE ASSESSEE HAS PROVED THE IDENTITY OF THE CREDITOR AND IN A WAY, THE GENUINENESS OF TH E TRANSACTION. IN THIS CASE ALSO, THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO FUR NISH FURTHER EVIDENCES IN SUPPORT OF THE CREDIT WORTHINESS OF DONOR. 11. IN THE CASE OF CHETANKUMAR ARVINDRAI PATEL, IT IS STATED THAT THE SAID DONOR WAS WORKING AS A SUPERVISOR IN THE WORKS CARR IED ON BY HIS FATHER. HE HAS STATED THAT HE HAS SAVED MONEY FROM OUT OF THE MONEY GIVEN BY HIS FATHER FOR HIS PERSONAL USE. HE WAS NOT FILING RETURN OF INCOME, SINCE HE DID NOT HAVE TAXABLE INCOME. HE DOES NOT HAVE A BANK ACCOUNT AND THE IMPUGNED GIFT WAS GIVEN BY WAY OF A PAY ORDER. IT IS PERTINENT TO NOT E THAT THE ASSESSEE HAS FILED ONLY CONFIRMATION LETTER FROM THIS DONOR. FROM THE ABOVE SAID DISCUSSIONS, WE ARE OF THE VIEW THAT THE SAID DONOR DID NOT HAVE CR EDIT WORTHINESS TO MAKE THE IMPUGNED GIFT. 12. FROM THE FOREGOING DISCUSSIONS, WE FEEL THA T THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF SHRI CHETANKUMAR ARV INDRAI PATEL. ACCORDINGLY, ORDER OF LD CIT(A) IN RESPECT OF THE GIFT RECEIVED FROM CHETANKUMAR ARVINDRAI PATEL IS CONFIRMED. IN RESPECT OF OTHER TWO GIFTS, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE SAME TO THE FILE OF THE AO WITH A DIRECTION TO PROVIDE NECESSARY OPPORTUNITY TO THE ASSESSEE TO SU BMIT EVIDENCES IN SUPPORT OF CREDIT WORTHINESS. THE ORDER OF LD CIT(A) IN RESPE CT OF DISALLOWANCE OF LABOUR CHARGES STANDS MODIFIED. ITA NO.1906/AHD/2007 WITH CO -6- 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT ( . .. . . .. .% % % % /B.R. BASKARAN) &' % &' % &' % &' % /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD