The ITO, Ward-2(2), Ahmedabad V. Smt. Pushpaben Sevantila Vora, Ahmedabad

ITA 2132/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6536 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAWANSI
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : AH MEDABAD ( BEFORE HONBLE SHRI T.K.SHARMA, J.M. & HONBLE SHRI A.N.PAHUJA, A.M.) I.T.A.NO. 2132/AHD./2009 : ASSESSMENT YEAR 200 6-07 ITO, WARD-2(2), AHMEDABAD VS- SMT. PU SHPABEN SEVANTILAL VORA, ABAD (PAN : ABJPV 2938E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S.SOURYAWANSI, D.R. RESPONDENT BY: SMT. URVASHI SHODHAN, A.R. O R D E R PER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT(A)-VII, AHMEDABAD DATED 09.04.2009 DELETING THE ADDITION OF RS.20,59,913/- MADE BY THE AO UNDER SECTION 68 OF THE I.T. ACT ON ACCOUNT OF UND ISCLOSED INCOME FOR THE ASSESSMENT YEAR 2006-2007. 2. THE FACTS IN BRIEF ARE THAT ON GOING THROUGH THE BALANCE-SHEET OF THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN AN AMOU NT OF RS.20,59,913/- ON LIABILITY SIDE AS INDIAN MILLENNIUM BOND (IMD). IT WAS ALSO O BSERVED BY THE AO THAT THE AFORESAID ENTRIES ARE ACCOMMODATIVE TRANSACTIONS. T HE ASSESSEE HAS NOT PROVIDED ANY DETAILS TO PROVE IDENTITY AND CREDITWORTHINESS OF T HE DONOR AND FOR THE REASONS DISCUSSED IN THE ASSESSMENT ORDER, HE ADDED RS.20,5 9,913/- AS ALLEGED UNEXPLAINED GIFT UNDER SECTION 68 OF THE I.T. ACT, 1961. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) , DELETED THE ADDITION MADE BY THE AO FOR THE DETAILED REASONS GIVEN IN PARA 7 AND 7.1, WHICH READ AS UNDER: 7. I HAVE PERUSED THE SUBMISSIONS MADE BY THE A. R . OF THE APPELLANT. I HAVE ALSO PERUSED THE OBSERVATIONS OF THE ASSESSING OFFI CER IN THE ASSESSMENT. ON PERUSAL OF THE ASSESSMENT ORDER AND THE SUBMISSIONS IT IS FOUND THAT THE FACT THAT THE GIFT OF IMDS WAS GIVEN TO THE APPELLANT BY VINOD S. SHAH IN THE YEAR 2 ITA NO.2132/AHD./2009 2001-02 I.E. A.Y.2002-03 IS NOT IN DISPUTE. EVEN TH IS IS SUPPORTED BY DOCUMENTARY EVIDENCE SUCH AS TRANSFER OF IMDS BY SB 1 BY WAY OF GIFT TO THE NAME OF THE APPELLANT IN SEPTEMBER 2001. THE APPELL ANT HAS ALSO PROVIDED IDENTITY OF THE PERSON MAKING THE GIFT BY GIVING HI S TENANCY AGREEMENT AND TELEPHONE BILL WHICH CONTAINS THE SAME ADDRESS AS I S GIVEN IN THE IMDS CONCERNED. APART FROM THIS, AS POINTED OUT BY THE A .R. THE GIFT RECEIVED IN A.Y. 2002-03 WAS SPECIFICALLY DISCLOSED IN THE INCOME-TA X RETURN BY WAY OF NOTE. THE APPELLANT ALSO RIGHTLY POINTED THAT THE BONDS W ERE NOT LIABLE TO TAX WHICH IS SPECIFICALLY STATED IN CLAUSE 11 OF THE TERMS AND C ONDITIONS AS UNDER: TAX TREATMENT . INCOME ON THE IMDS WILL BE EXEMPT IN THE HANDS OF T HE DEPOSITOR FROM INDIAN INCOME TAX. THE IMDS WILL ALSO BE FREE FROM WEALTH- TAX AND GIFT TAX IN INDIA. THE TAX CONCESSIONS WILL BE AVAILABLE TO THE DONEES AND TRANSFEREES ALSO IN INDIA. THE TAX CONCESSIONS WILL BE AVAILABLE TILL T HE MATURITY OF THE IMDS TO THE NRI DEPOSITORS / DONEES/ TRANSFEREES IF THEY RETURN TO INDIA BEFORE MATURITY OF THE IMDS AND ALSO TO RESIDENT DONEES. IN CASE OF PR EMATURED ENCASHMENT OF THE IMD CERTIFICATES IN NON-REPATRIABLE INDIAN RUPEES B Y DEPOSITORS /DONEES/ SURVIVORS, THE PROCEEDS IN THE HANDS OF THE DEPOSIT ORS/ DONEES/ SURVIVORS WILL BE FREE FROM ANY TAX IN INDIA. IN REGARD TO TAX IMP LICATIONS OUTSIDE INDIA IN RESPECT OF INTEREST ON THE IMDS AND ASSIGNMENT OR G IFT OF THE IMDS THE DEPOSITORS SHOULD INDEPENDENTLY EXAMINE THE TAXABIL ITY AT THE LEVELS AND BASIS OF TAXATION IN THE COUNTRIES OUTSIDE INDIA. IF THE DEPOSITORS HAVE ANY DOUBT AS TO THE TAXATION IMPLICATIONS OUTSIDE INDIA, THEY SHOUL D CONSULT THEIR INDEPENDENT TAX ADVISOR'. 7.1. HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE APPELLANT HAS CLEARLY ESTABLISHED GENUINENESS OF GI FT OF IMDS. THE CAPACITY OF THE DONOR FOR MAKING SUCH INVESTMENT CANNOT BE QUES TIONED ON PRESUMPTION BASIS PARTICULARLY WHEN THE DONOR IS HAVING BUSINES S INCOME AND HAS BEEN PAYING ANNUAL RENT 90,000 DIRHAM. THIS ITSELF SHOWS HIS CAPACITY TO MAKE SUCH INVESTMENT. IN ANY CASE, IT IS ALSO ESTABLISHED THA T THE GIFT WAS GIVEN BY WAY OF IMDS TO THE APPELLANT IN A.Y. 2002-03. IN THE CIRCU MSTANCES THERE IS NO QUESTION OF TAXING THE MATURED AMOUNT OF SUCH IMD A S UNEXPLAINED CASH CREDITS IN A.Y. 2006-07. HAVING REGARD TO THE ABOVE POSITION THE ADDITION MADE AT RS.20,59,913/- IS DELETED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, SHRI G.S.SOURYAWANSI, D.R. APPEARED AND, RELYING ON THE REASONS GIVEN BY THE AO IN THE 3 ITA NO.2132/AHD./2009 ASSESSMENT ORDER, CONTENDED THAT THE ADDITION OF RS . 20,59,913/- UNDER SECTION 68 OF THE I.T. ACT WAS RIGHTLY MADE BY THE AO AND THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE SAME ON THE GROUND THAT GIFT WAS GIVEN BY WAY O F IMDS TO THE ASSESSEE IN THE ASSESSMENT YEAR 2002-03. TO A QUERY FROM THE BENCH THAT WHETHER HE IS DISPUTING THAT GIFT IN QUESTION WAS NOT RECEIVED IN THE ASSESSMENT YEAR 2002-03, NO SATISFACTORY EXPLANATION WAS FURNISHED BY THE LD. COUNSEL OF THE ASSESSEE. 6. ON THE OTHER HAND, SMT. URVASHI SHODHAN, A.R., A PPEARING ON BEHALF OF THE ASSESSEE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). SHE DREW OUR ATTENTION TO THE DETAILS FURNISHED BEFORE THE AO, WHICH IS MENTI ONED BY THE LD. CIT(A) IN PARA 4.1 OF THE IMPUGNED ORDER AND POINTED OUT THAT THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE GIFT, IN QUESTIO N, BY WAY OF IMDS WAS RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2002-03. THEREF ORE, THE MATURED AMOUNT OF SUCH IMDS CANNOT BE TAXED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AS UNEXPLAINED CASH CREDIT. THIS REASONING G IVEN BY THE LD. CIT(A) IS IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 68 OF THE I.T. ACT, 1961. THEREFORE, WE INCLINE TO UPHOLD THE ORDER OF THE LD . CIT(A). RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.201 1 SD/- SD/- (A.N.PAHUJA) (T.K.SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03/06/2011 4 ITA NO.2132/AHD./2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT 3) CIT(A) CONCERNED 4) CIT CONCERNED 5) D.R., ITAT, AHMEDABAD TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.