ITO 25(2)(2), MUMBAI V. SHRI TUSHAR P. KALE, MUMBAI

ITA 1989/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3840 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Bench Allotted: J
• Next Hearing Date: 24-11-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 10-03-2011
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Unexplained cash credit; Gift; Business income; Opportunity of being heard
• Section: 143(3); 80HHC; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJITSINGH , J M ./ ITA NO . 1989 /MUM /20 1 1 ( / ASSESSMENT YEAR : 20 0 1 - 20 0 2 ) ITO 25(2)(2), MUMBAI VS. SHRI TUSHAR P. KALE, FLAT NO.6, KIRAN SOCIETY, OFF.SVP ROAD, BORIVALI (W), MUMBAI - 400092 ./ ./ PAN/GIR NO. : A A OPK 9820 C ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI K. MOHANDAS /ASSESSEE BY : SRI VIJAY C. KOTHARI / DATE OF HEARING : 09 / 02 /201 6 / DATE OF PRONOUNCEMENT 27/04 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE A SSESSEE AGAINST THE ORDER OF CIT(A), MUMBAI, FOR THE ASSESSMENT YEAR 2001 - 02 , IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S.254 OF THE I.T. ACT . 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR DELETION OF ADDITION OF RS. 45,53,821/ - MADE BY THE AO U/S.68 IN RESPECT OF AMOUNT OF GIFT RECEIVED BY THE ASSESSEE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF EXPORT OF BISCUIT MANUFACTURING MACHINERY. IN THIS CASE ASSESS MENT U/S.143(3) WAS ORIGINALLY COMPLETED ON 12.3.2003 IN WHICH THE AO ADDED A SUM OF RS. 45,53,821/ - UNDER THE HEAD UNEXPLAINED CREDIT U/S.68 WHICH ITA NO. 1989 /1 1 2 REPRESENTED THE GIFT RECEIVED BY THE ASSESSEE. THE CIT(A) BY ORDER DATED 29 - 12 - 2003 DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS : - I HAVE CONSIDERED THE SUBMISSIONS OF T HE A.R. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS NOTICED THAT AN AMOUNT OF RS.45,53,821/ - WAS RECEIVED BY THE APPELLANT IN ITS PROPRIETARY CONCERN FROM SHRI BASSAM A NASSOR OF NIGERIA. THE APPELLANT HAS BUSINESS RELATION WITH THE SAID SHRI BASSAM. IT IS ALSO NOTICED THAT THE APPELLANT IT NOT A DIRECT EXPORTER AND NO INVOICE NO. 01/99 - 2000 DATED 25.3.2000 WAS RAISED BY HIM. EVEN HIS FATHER'S CONCERN NAMELY M/ S. BAKE - O - NOMIC - CO RP. HAS ALSO NOT RAISED SUCH INVOICE. IT IS PLEADED THAT DUE TO STRINGENT LAWS OF REMITTANCE, AN INVOICE NUMBER WAS MENTIONED AGAINST THE SAID REMITTANCE JUST TO FACILITATE THE REMITTANCE. THUS IT IS VERY CLEAR THAT NEITHER THE APPELLANT NOR HIS FATHER HAS RAISED ANY SUCH INVOICE AND MADE ANY EXPORTS THERE AGAINST THE SAID INVOICE. PRESUMING EVEN IF T HE EXPORTS H AVE BEEN MADE AGAINST THE S A ID INVOICE, THE APPELLANT COULD HAVE VERY WELL CLAIMED DEDUCTION U/ S. 80HHC. NO BENEFIT TO THE APPELLANT COULD HAV E VE RY WELL CLAIMED DEDUCTION U/ S. 80HHC. NO BENEFIT TO THE APPELLANT WOULD ACCRUE IN CASE BUSINESS RECEIPT IS SHOWN AS A GIFT BECAUSE BY SHOWING BUSINESS RECEIPT THE APPELLANT'S INCOME WAS OTHERWISE DEDUCTIBLE U/ S.80HHC. IN SUCH A SITUATION, NO BUSINESS MAN W OULD RESORT TO SUCH ACT. I, THEREFORE, FEEL THAT THERE IS NO POINT IN SAYING THAT THE SAID RECEIPT IS AGAINST THE EXPORT. THE SAID INVOICE NO.01/99 - 2000 DATED 25.3.2000 COULD NOT BE FOUND. IT IS FURTHER SEEN THAT THE AO SHOULD HAVE VERIFIED THE ISSUE FURTH ER FROM SHRI BASSAM A NAS SAR EITHER ON INTERNE T OR ON CELL PHONE IN ORDER TO ARRIVE AT THE EXACT NATURE OF THE TRANSACTION. THIS HAS NOT BEEN DONE. THUS THE SAID RECEIPT CANNOT BE TREATED AS BUSINESS RECEIPT, MOREOVER THERE IS A DECLARATION FROM SHRI BAES A M A N A SS A R THE HE IS GIVING GIFT TO THE APPELLANT ON THE OCCASION HIS MARRIAGE . IN THE ABSENCE OF ANY CONTRARY EVID ENCE, THIS EVIDENCE CANNOT BE IG NORED. CONSIDERING THE FACTS OF THE CASE I FEEL THAT THE AMOUNT OF RS.45,53, 821/ - CANNOT BE TREATED AS UNEXPL AINED CASH. CREDIT U/ S. 68 OF THE I. T.ACT AS SATISFACTORY EXPLANATION IS ALREADY AVAILABLE ON RECORD AND THERE IS NO VALID GROUN D TO REJECT IT. THE ADDITION OF RS.45, 53, 821/ - IS, THEREFORE, DELETED. 4 . ON FURTHER APPEAL BY THE DEPARTMENT THE ITAT SET ASIDE T HE ISSUE TO THE FILE T HE A.O. WITH THE FOLLOWING REMARKS: - 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF. THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN THIS CASE, THE ONLY IS SUE TO BE DECIDED BY US IS WHETHER THE LEARNED CIT(A) IS RIGHT IN ACCEPTING THE GIFT OF RS.45,53,821/ - AS GENUINE. WE FIND THE ASSESSEE HAS SHOWN TO HAVE RECEIVED GIFT OF RS.45,53,821/ - FROM HIS NRI FRIEND, MR. BASSAM NASSAR SETTLED AT NIGERIA WHO HOLDS A BRITISH PASS PORT. THE MONEY IS REMITTED THROUGH .BANK OF NEW YORK, NEW YORK, USA. ITA NO. 1989 /1 1 3 WE FIND THE GIF DECLARATION IS NOT ACCEPTED BY THE DONEE. THE GIFT DECLARATION IS NEITHER WIT NESSED BY ANYONE NOR MADE BEFORE A MAG ISTRATE OR AN EMB ASSY OFFICIAL ANY SUCH A UTHORITY SO AS TO GIVE CREDIBILITY TO THE DECLARATION. SIMILARLY, AS PER THE INFORMATION OBTA I NED BY THE A. O . FROM THE MANAGER OF SAWASWAT BANK, WE FIND THE AMOUNT IS RECEIVED AGAINST INV. NO. 01/99 - 00 DATED 25.3.2000. HO WEVER , WE FIND THE LEARNED CIT(A) W ITHOUT ANY MATERIAL BEFORE HIM HAS SIMPLY ACCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT THE SAME IS NOT RECEIVED AGAINST ANY BILL EITHER RAISED BY THE ASSESSEE OR HIS FATHER WHO IS ENGAGED IN EXPORT BUSINESS. NO REMAND REPORT H AS ALSO BEEN OBTAINED FROM TH E A. O . THEREFORE, IN ABSENCE OF ANY SUCH MATERIAL BEFORE HIM, WE FAIL TO UNDERSTAND AS TO HOW THE LEARNED CIT(A) COULD ARRIVE AT SUCH A CONCLUSION THAT THE AMOUNT IS NOT RECEIVED AGAINST ANY BILL. IT IS THE SETTLED PROPOSITION OF RAW THAT FOR ACCEPTING AN Y GIFT AS G ENUINE, THE IDENTITY AND CAPACITY OF THE DONOR AND THE G ENUINENESS OF THE GIFT TRANSACTIONS HAS TO BE ESTABLISHED BY THE ASSESSEE TO THE SATISFACTION OF THE A.O . THE ONUS IS ALWAYS ON THE ASSESSEE. IN THE INSTANT CASE, WE FIND THESE CONDITIONS A PPARENTLY ARE NOT FULFILLED. THEREFORE, CONSIDERING THE REQUEST OF THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS IN THE INTEREST OF JUSTICE AND FOREPLAY TO BOTH SIDES, WE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O . FOR DECID ING THE ISSUE AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE U: PROVE THE IDENTITY AND CAPACITY OF THE DONE AND GENUINENESS OF THE GIFT TO THE SATISFACTION OF THE A. O. THE ASSESSEE IS ALSO R EQUIRED TO SATISFY THE A.O . THAT THE GIFT IS NOT RECEIVED AGAINST ANY INVOICE RAISED BY HIM OR HIS FATHER. FOR THIS PURPOSE HE MAY OBTAIN A DECLARATION FROM THE DONOR DULY AUTHENTICATED BEFORE A MAGISTRATE OF THAT COUNTRY IN WHICH THE DONOR RESIDES OR ANY EMBASSY OFFICIAL OR SUCH OTHER AUTHORITY AS THE AO MAY THINK FIT. THE ASSESSEE MAY ALSO PRODUCE SUCH OTHER DOCUMENTS TO PROVE THE GIFT TO BE GENUINE. WE HOLD AND DIRECT ACCORDINGLY. 5 . WHILE PASSING ORDER TO GIVE EFFECT TO THE DIRECTION OF THE TRIBUNAL, THE AO REPEATED THE ADDITION SO MADE WITHOUT FOLLOWING DIRECTIONS GIVEN BY THE TRIBUNAL. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATION : - 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESENTATIVE AND THE ST AND TAKEN BY THE A. O . ADMITTEDLY, THE APPELLANT RECEIVED 45,53,821/ - FROM SHRI BASSAM A NASSAR OF NIGERIA WHO WAS HAVING BUSINESS RELATION WITH THE APPELLANT. THE APPELLANT FILED DEED OF GIFT DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE HON'BLE TRIB UNAL DIRECTED THE A.O. TO VERITY THE IDENTITY AND THE CAPACITY OF THE DONOR. IT IS TRUE THAT THE HON'BLE TRIBUNAL HAS OBSERVED THAT THE APPELLANT MAY OBTAIN DECLARATION FROM THE DONOR DULY AUTHENTICATED ITA NO. 1989 /1 1 4 BEFORE A MAGISTRATE OF THAT COUNTRY IN WHICH THE DONO R RESIDES OR ANY EMBASSY OFFICIAL. HOWEVER, THE HON'BLE TRIBUNAL ADDED THAT THE APPELLANT MAY ALSO PRODUCE SUCH OTHER DOCUMENT TO PROVE THE GIFT TO BE GENUINE. ADMITTEDLY, THE APPELLANT RECEIVED THE AMOUNT THROUGH BANKING CHANNEL AS PER FOREIGN REMITTANCE CERTIFICATE WHICH IS NOT DISPUTED. AS THE APPELLANT COULD NOT OBTAIN DECLARATION AUTHENTICATED BEFORE THE MAGISTRATE, THE APPELLANT FILED OTHER EVIDENCES IN THE FORM OF INCOME TAX CLEARANCE CERTIFICATE OF M/S NIGER BISCUIT COMPANY LTD. FOR 3 YEARS, 2006, 2 007 & 2008 WHERE HE WAS A FOUNDER DIRECTOR. THE A. O . HAS NOT EVEN REFERRED TO TH IS CERTIFICATE IN THE ASSESSMEN T ORDER. THE LETTER FILED. BY THE APPELLANT INDICATES THAT THE APPELLANT WENT TO EUROPE, WHEN THE APPELLANT PERSONALLY VISITED NIGERIA AND, THERE FORE, THE SIGNATURE COULD NOT BE OBTAINED BEFORE NOTARY. THE A.O. IGNORED THE SAME AND DID NOT CONSIDER THE EVIDENCES IN THE FORM OF INCOME LAX CLEARANCE CERTIFICATE OF THE COMPANY NI/ S NIGER BISCUIT COM PANY LTD. BELONGING TO SHRI BAS SAM A NASSAR OF NIGER IA AND THE DETAILS OF BYBLOS BANK WHERE SHRI BASSAM A NASSAR OF NIGERIA WAS CHAIRMAN OF THE BANK. THE A. O . WITHOUT CONSIDERING THE ABOVE EVIDENCES CONCLUDED THAT THE APPELLANT DID NOT PROVE THE IDENTITY AND THE CAPACITY OF THE DONOR. R FIND THAT WHEN THE A PPELLANT COULD NOT OBTAIN DECLARATION FROM THE DONOR BEFORE THE NOTARY, HE HAS FILED ALTERNATIVE EVIDENCES TO PROVE THE IDENTITY AND THE CAPACITY OF THE DONOR AND THE GENUINENESS OF GIFT CA N NOT BE DOUBTED AS THE AMOUN T WAS RECEIVED THROUGH BANKING CHANNEL. 7. FURTHER THE A.O. DID NOT C ARRY OUT ANY VERIFICATION REGAR DING THE DIRECTION OF THE HON'BLE TRIBUNAL THAT WHETHER THE AMOUNT WAS RECEIVED AGAINST ANY INVOICE RAISED BY THE APPELLANT OR HIS FATHER. THE CL T(A) BY ORDER DT. 29.12.2003 HAD GIVEN A FINDING THAT NO INVOICE NO. 01 /99 - 00 DATED 25.3.2000 WAS RAISED BY THE APPELLANT OR HIS FATHER. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ABOVE FINDING OF THE CIT(A) IS INCORRECT. I HAVE ALSO EXAMINED THE INCOME TAX STATEMENTS OF THE APPELLA NT AND HIS FATHER INCLUDING ALL THE SALES INVOICES RAISED BY BOTH OF THEM AND I FIND THAT THERE IS NO INVOICE NO. 0 1/99 - 00 DATED 2.5.3.2000. EVEN OTHERWISE THE ENTIRE BUSINESS PROFIT OF THE APPELLANT IS CLAIMED AS DEDUCTION U/S . 80HHC AS OBSERVED BY THE C IT (A) BY ORDER DT. 29.12.2003 AND, THEREFORE, THERE WAS NO NECESSITY FOR THE APPELLANT TO TAKE THE SALE PROCEEDS AS GIFT WITH THE VIEW TO AVOID TAX. I FIND THAT THE APPELLANT DISCHARGED THE ONUS OF PROVING THE IDENTITY AND CAPACITY OF THE DONOR AND THE GENUI NENESS OF TRANSACTIONS AND, THEREFORE, THERE IS NO WARRANT FOR MAKING ADDITION AS UNEXPLAINED CASH CREDIT AND THE SAME IS DELETED. 6. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULL Y GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AS WELL AS ORDER OF THE TRIBUNAL IN FIRST ITA NO. 1989 /1 1 5 ROUND, WHEREIN THE TRIBUNAL HAS GIVEN DIRECTION TO THE CIT(A) FOR DECIDING THE ISSUE IN TERMS OF THOSE DIRECTIONS. WE FOUND THAT CIT(A) HAS GIVEN DETAILED DECISION FO R HOLDING THAT GIFT SO RECEIVED WAS DULY EXPLAINED IN TERMS OF IDENTITY, GENUINEN ESS AS WELL AS CREDITWORTHINESS. THE DETAILED FINDING RECORDED BY CIT(A) AS REPRODUCED AT PARAS 6 & 7 HAS NOT BEEN CONTROVERTED BY LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF NRI GIFTS SO RECEIVED BY THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27/04 / 201 6 . SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/04 /201 6 . . /PKM , . / PS / 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//