Income-tax Officer, Nashik V. Smt. Indira Kamalakar Yeola, Nashik

ITA 21/PUN/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9817 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Keywords: Gift; Business income; Source of fund
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER, AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER. ITA.NO.021/PN/2012 (ASSTT. YEAR : 2006-07) ITO. WARD-1(4), NASHIK. .. APPELLANT VS. SMT.INDIRA KAMALAKAR YEULA, 27, NAVPARAG SOCIETY, ASHOK STAMBH, NASHIK. .. RESPONDENT PAN: AAPPY0099J ASSESSEE BY : SHRI SUNIL GANOO DEPARTMENT BY : SMT.VINITA MENON DATE OF HEARING : 27.11.2012 DATE OF PRONOUNCEMENT : 27.11.2012 ORDER PER G.S.PANNU, AM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-I, NASHIK, DATED 21.10.2011 FOR THE A.Y. 2006-07. 2. IN THIS APPEAL OF THE REVENUE, THE SOLITARY DISP UTE RELATES TO AN ADDITION OF RS.14,36,000/- MADE BY THE ASSESSING OF FICER U/S.68 OF THE I.T.ACT, 1961, (IN SHORT THE ACT), HOLDING TH AT GIFTS IN CASH RECEIVED BY THE ASSESSEE FROM HER BROTHERS WAS UNEX PLAINED. THE CIT(A), HOWEVER, HAS DELETED THE ADDITION ON THE GR OUND THAT THE ASSESSEE HAD DISCHARGED THE BURDEN CAST ON HER U/S. 68 OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS AN INDIVIDUAL WHO FILED HER RETURN OF INCOME FOR A.Y. 2006-07 DECLARING 2 TOTAL INCOME OF RS.1,92,182/-. THE INCOME RETURNED COMPRISED OF BUSINESS INCOME, RENTAL AND OTHER INCOME UNDER THE HEAD OTHER SOURCES. THE ASSESSING OFFICER NOTICED THAT DURIN G THE YEAR UNDER CONSIDERATION, ASSESSEE HAD SHOWN RS.14,36,000/- AS GIFTS RECEIVED FROM HER THREE BROTHERS IN CASH ON VARIOUS DATES, A S PER THE DETAILS EXTRACTED BY THE ASSESSING OFFICER IN PARA 5 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS CALLED UPON TO PROVE THE G ENUINENESS OF THE GIFTS AND THE FINANCIAL CAPACITY OF THE DONORS TO MAKE THE GIFT. IN RESPONSE, ASSESSEE FURNISHED CONFIRMATION LETTER S AND AFFIDAVITS FROM HER THREE BROTHERS CONFIRMING THE AMOUNTS GIVE N TO THE ASSESSEE AS GIFTS. THE AFFIDAVITS CONTAINED THE SO URCES OF THE INCOME OF BROTHERS AS BEING AGRICULTURAL INCOME. C OPIES OF 7/12 EXTRACTS FOR LAND HOLDINGS IN THE NAMES OF THREE BR OTHERS WAS ALSO FURNISHED. THE ASSESSING OFFICER CONSIDERED THE MA TERIAL ON RECORD AND INFERRED THAT THE THREE DONORS DID NOT HAVE SUF FICIENT CREDITWORTHINESS TO MAKE THE IMPUGNED GIFTS TO THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, THE AFORESAID A MOUNTS WERE DEPOSITED BY THE ASSESSEE HERSELF IN HER BANK ACCOU NT UNDER THE GUISE OF GIFTS AND, THEREFORE, HE PROCEEDED TO ADD THE AMOUNT OF RS.14,36,000/- AS INCOME CHARGEABLE TO TAX U/S.68 O F THE ACT. 4. IN APPEAL, ASSESSEE CHALLENGED THE ADDITION BOTH ON FACTS AND IN LAW. THE ASSESSEE REFERRED TO THE CONFIRMATION LETTERS AND AFFIDAVITS OF THE THREE DONORS, SUPPORTING HER CLAI M THAT THE IMPUGNED AMOUNTS WERE RECEIVED AS GIFTS. THE ASSES SEE ALSO SUBMITTED THAT INITIAL BURDEN CAST ON HER IN TERMS OF SECTION 68 OF THE ACT WAS DISCHARGED BY FILING OF CONFIRMATIONS, AFFIDAVITS AND 7/12 EXTRACTS OF THE DONORS LAND HOLDINGS. HOWEVE R, THE CAPACITY OF THE DONORS TO MAKE GIFTS TO THE ASSESSEE COULD N OT BE THE LIABILITY OF THE ASSESSEE TO EXPLAIN. THE CIT(A) AFTER CONSI DERING THE SUBMISSIONS HAS DELETED THE ADDITION BY THE FOLLOWI NG DISCUSSION CONTAINED IN PARA 10.2 OF THE IMPUGNED ORDER: 10.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BE EN NOTICED THAT, THE APPELLANT IS LADY AGED MORE THAN 60 YEARS AND IS NOT 3 MUCH, EDUCATED. IT HAS ALSO BEEN NOTICED THAT HER S ONS HAVE ENTERED INTO SHARE TRANSACTIONS OF FUTURE AND OPTIO N ON HER BEHALF AND HAS INCURRED SUBSTANTIAL LOSS. IN VIEW O F THIS FACT THE BROTHERS OF THE APPELLANT HAVE GIVEN GIFTS TO THEIR SISTER, WHO HAS NOT CLAIMED ANY SHARE IN ANCESTRAL PROPERTY, WH EN SHE WAS IN FINANCIAL NEED. IT HAS ALSO BEEN NOTICED THAT TH E BROTHERS/DONORS OF THE APPELLANT ARE AGED 58 TO 62 YEARS AND WERE HAVING SOURCE OF INCOME SINCE LAST 35 TO 40 YE ARS. THE APPELLANT HAS FILED CONFIRMATION LETTERS, AFFIDAVIT S AND 7/12 EXTRACTS GIVEN BY THE DONORS. IN VIEW OF THE ABOVE FACTS THE APPELLANT HAS ESTABLISHED THE INITIAL BURDEN THAT T HE AMOUNTS WERE RECEIVED FROM THE DONORS. THE A.O. HAS REJECTE D THE AFFIDAVITS STATING THAT THEY ARE SELF SERVING EVIDE NCE. IT IS SETTLED LAW THAT THE AFFIDAVITS HAVE SUBSTANTIAL EVIDENTIAR Y VALUE AND CANNOT BE IGNORED WITHOUT VERIFYING/CROSS EXAMINING THE DEPONENTS. THIS PROPOSITION OF LAW IS SUPPORTED BY THE ABOVE MENTIONED DECISIONS RELIED ON BY THE APPELLANT INCL UDING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF DILIP KUMAR ROY VS. CIT 94 ITR 1 (BOM.). THE APPELLANT HA S ESTABLISHED GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE DONORS IN VIEW OF THE AFFIDAVITS AND IDENTITY P ROOFS FILED ON RECORD. AS REGARDS CAPACITY OF THE DONORS, THE APPE LLANT HAS PRIMARILY ESTABLISHED HER INITIAL BURDEN AS STATED EARLIER IN RESPECT OF GIFTS RECEIVED. FURTHER THE HON'BLE RAJA STHAN HIGH COURT IN THE CASE OF LABH CHAND BOHARA VS. ITO (200 8) 219 CTR 57L (RAJ) HAS LAID DOWN THAT IN A CASE WHERE ID ENTITY OF CREDITORS HAS BEEN ESTABLISHED AND THEY HAVE CONFIR MED THE CREDITS BY MAKING STATEMENTS ON OATH, THE BURDEN ON THE PART OF THE ASSESSEE TO PROVE GENUINENESS OF THE TRANSACTIO NS STANDS DISCHARGED; CAPACITY OF THE LENDER TO ADVANCE MONEY TO THE ASSESSEE WAS NOT A MATTER WHICH THE ASSESSEE COULD BE REQUIRED TO ESTABLISH AS IT WOULD AMOUNT TO CALLING UPON HIM TO ESTABLISH THE SOURCE OF THE SOURCE AND HENCE THE AD DITION U/S. 68 CANNOT BE SUSTAINED. IT HAS ALSO BEEN LAID DOWN BY HON'BLE MADRAS HIGH COURT IN THE CASE OF S. HASTIMAL VS. CI T 49 ITR 273 THAT SOURCE OF SOURCE NEED NOT BE ESTABLISHED P ARTICULARLY CONSIDERING LAPSE OF SUBSTANTIAL PERIOD. THEREFORE CONSIDERING THE FACTS OF THE CASE, CONTENTIONS OF THE APPELLANT AND RATIO LAID DOWN BY THE ABOVE MENTIONED DECISIONS, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS PROVED THE CAPACITY OF THE DONORS TO THE EXTENT POSSIBLE. THE DEPARTMENT IS FREE TO INIT IATE PROCEEDINGS IN THE CASES OF THE SAID DONORS TO VERI FY SOURCE OF THE SAID AMOUNTS OF GIFTS ADVANCED TO THE APPELLANT , IF NECESSARY. IN VIEW OF THE ABOVE FACTS AND DISCUSSIO N, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN TREATING THE GIFTS OF RS. 14,36,000/- RECEIVED BY THE APPELLANT AS UNEXPLAINED. THE ADDITION OF RS.14,36,000/- IS, THE REFORE, DELETED. GROUND NO. 7 STANDS ALLOWED. 4 5. AGAINST THE AFORESAID, THE LD. DR APPEARING FOR THE REVENUE HAS CONTENDED THAT THE ASSESSING OFFICER EVALUATED THE SOURCES OF INCOME OF THE DONORS AND HAD INFERRED THAT THERE WA S INSUFFICIENT CAPACITY TO MAKE THE IMPUGNED GIFTS TO THE ASSESSEE . ACCORDING TO THE LD. DR, THE ASSESSEE HAS NOT ONLY TO ESTABLISH THE IDENTITY OF THE DONORS BUT ALSO THE GENUINENESS AND FINANCIAL CAPAC ITY OF THE DONORS TO MAKE THE IMPUGNED GIFTS. ACCORDING TO HE R, THE CIT(A) HAS ERRED IN HOLDING THAT THE CAPACITY OF THE DONOR S TO MAKE GIFTS TO THE ASSESSEE STANDS PROVED IN THIS CASE. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUPPORTED THE ORDER OF THE CIT(A) BY PLACING RELIAN CE ON THE FINDINGS CONTAINED THEREIN. APART THEREFROM, IT HAS BEEN SU BMITTED THAT THE BURDEN CAST U/S.68 OF THE ACT IS TO ESTABLISH THE N ATURE AND SOURCE OF THE CREDIT APPEARING IN THE ACCOUNT BOOKS AND TH E SAME DOES NOT EXTEND TO PROVING THE ULTIMATE SOURCE OF THE CREDIT ORS, ONCE THE CREDITORS IDENTITY IS PROVED AND PRIMA FACIE SOURCE S OF INCOME OF THE CREDITOR STAND ESTABLISHED. THE LD. COUNSEL HAS RE FERRED TO THE FOLLOWING DECISIONS IN HIS SUBMISSIONS: 1. NEMI CHAND KOTHARI VS. CIT & ANR. (2003) 264 ITR 25 4 (GAU)]. 2. LABH CHAND BOHRA VS. ITO (2008) 219 CTR (RAJ) 571. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE ASSESSING OFFICER HAD FOUND CERTAIN CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE ON VARIOUS DATES DURIN G THE YEAR TOTALLING TO RS.14,36,000/-. THE SAID AMOUNTS WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN RECEIVED AS GIFTS FROM HER TH REE BROTHERS. THE CONFIRMATION LETTERS AS ALSO THE AFFIDAVITS OF THE THREE BROTHERS SUPPORTED THE EXPLANATION RENDERED BY THE ASSESSEE WITH REGARD TO THE NATURE OF IMPUGNED CREDITS. THE ASSESSING OF FICER FOUND THE CREDITS UNEXPLAINED WITHIN THE MEANING OF SECTION 6 8 OF THE ACT PRIMARILY FOR THE REASON THAT THE DONORS WERE NOT H AVING ADEQUATE FINANCIAL CAPACITY TO MAKE GIFTS TO THE ASSESSEE. ON THIS ASPECT WE 5 FIND THAT THE DONORS EXPLAINED THEIR SOURCE OF INCO ME, AS BEING AGRICULTURAL INCOME. THE COPIES OF 7/12 EXTRACTS E VIDENCING LAND HOLDINGS WAS ALSO PLACED ON RECORD. THE ASSESSEE A LSO EXPLAINED THAT THE DONORS ARE HER REAL BROTHERS AND THAT SHE HAD NOT CLAIMED ANY SHARE IN THE ANCESTRAL PROPERTY AND THAT THE BR OTHERS HAD ADVANCED THE IMPUGNED SUMS AS GIFTS IN THE TIME OF HER NEED. THE ASSESSEE HAD INCURRED FINANCIAL LOSSES ON ACCOUNT O F CERTAIN DEALINGS DONE ON HER BEHALF BY HER SON ON ACCOUNT O F FORWARD AND OPTION DERIVATIVES. THE CIT(A) HELD THAT THE AFFI DAVITS FURNISHED BY THE DONORS CANNOT BE TREATED AS A SELF-SERVING EVID ENCE AND REJECTED IN THE MANNER DONE BY THE ASSESSING OFFICER. IN OU R CONSIDERED OPINION, THE CIT(A) IS CORRECT IN ADOPTING SUCH AN APPROACH IN AS MUCH AS THE AVERMENTS CONTAINED IN THE AFFIDAVITS H AVE BEEN MERELY DISBELIEVED BY THE ASSESSING OFFICER WITHOUT SUBJEC TING IT TO ANY CROSS VERIFICATION TO BRING OUT ANYTHING TO THE CON TRARY. 8. APART THEREFROM, WE FIND THAT IN THIS CASE, THE IDENTITY OF THE DONORS AND THE OCCASION TO MAKE THE GIFTS HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER. PRIMA FACIE THE DONORS HAVE BEEN ABLE TO POINT OUT THE SOURCES OF THEIR INCOME WHICH ALSO IS NOT DISPUTED IN AS MUCH AS THE DONORS HAVE INCOME FROM AGRICULTURAL SOURCES. WHAT IS DISPUTED BY THE ASSESSING OFFICER IS THE SU FFICIENCY OF INCOME OF THE DONORS TO MAKE THE GIFTS TO THE ASSES SEE. IN OUR VIEW, THE FINANCIAL CAPACITY OF THE DONORS CANNOT BE PROV ED TO THE HILT BY THE ASSESSEE WHEN THE ASSESSEE IS SHOW CAUSED TO EX PLAIN A CREDIT APPEARING IN ITS BOOKS OF ACCOUNT IN TERMS OF SECTI ON 68 OF THE ACT. OSTENSIBLY, IN THE PRESENT CASE THE ASSESSEE HAS PR IMA FACIE EXPLAINED THE NATURE AND SOURCE OF THE CREDIT AND S UCH EXPLANATION IS SUPPORTED BY THE DONORS AND, THEREFORE, THE SUBS EQUENT BURDEN WAS ON THE ASSESSING OFFICER TO SHOW THAT THE EXPLA NATION WAS WRONG OR THAT THE IMPUGNED SUM REPRESENTED ASSESSEE S OWN INCOME. IN THE CASE ON HAND, THE ASSESSING OFFICER HAS FAILED TO SHOW THAT THE IMPUGNED AMOUNT OF GIFTS WHICH HAVE B EEN DEPOSITED BY THE ASSESSEE IN HER BANK ACCOUNT INDEED BELONGED TO HER. THEREFORE, IN THE ABSENCE OF ANY SUCH EVIDENCE, THE ASSESSING 6 OFFICER COULD NOT HAVE TREATED THE SAID AMOUNTS AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IN THIS VIEW OF THE MATTER, WE THEREFORE, FIND NO JUSTIFIABLE REASONS TO INTERFERE WITH THE CONCLUSION DRAWN BY THE CIT(A), WHICH WE HEREBY AFFIRM. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF NOVEMBER, 2012. SD/- SD/- ( R.S.PADVEKAR ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER GSPS PUNE, DATED THE 27 TH NOVEMBER, 2012 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-1(4), NASHIK. 3. THE CIT(A)-I, NASHIK. 4. THE CIT-I, NASHIK. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.