Rajesh Thakker, Rayagada V. ITO, Rayagada

ITA 221/CTK/2012

• Counselvise Citation: 22122114 RSA 2012
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 14-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTYDR
• Assessee Lawyers: J M PATTNAIKA K MISHRA ARS
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 221/CTK/2012 / ASSESSMENT YEAR 2005 - 06 RAJESH THAKKER, B.C.ROAD, J.K.ROAD, RAYAGADA PAN: ABGPT 1355 E - - - VERSUS - INCOME - TAX OFFICER, RAYAGADA WARD, RAYAGADA. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.M.PATTNAIK/A.K.MISHRA, ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY,DR / DATE OF HEARING: 14.12.2012 / DATE OF PRONOUNCEMENT: 21.12.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE ON THE CONFIRMATION OF THE AMOUNT RECEIVED AS GIFT IN CASH DULY INCORPORATED IN THE BOOKS OF AC COUNT OF THE DONOR AS WELL AS THE DONE DISALLOWED AND TAXED AS INCOME IN THE HANDS OF THE ASSESSEE THAT TOO PARTLY BEING 4,20,000 BY HOLDING A VIEW THAT THE DONOR COULD ONLY GIVE ONLY 80,000 OUT OF THE TOTAL GIFT AMOUNT OF 5,00,000. 2. THE LEARNED COUNS EL OF THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THE BRIEF FACTS THAT THE ASSESSEE IN THE INSTANT CASE IS A SMALL TRADER DEALT WITH GENERAL MERCHANDISE HAVING PLACE OF BUSINESS AT J.K.PUR, RAYAGARA AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED U/S.44AB OF THE IT ACT. THE ASSESSEE HAS SUBMITTED HIS RETURN IN HIS INDIVIDUAL STATUS BY DISCLOSING TOTAL INCOME AT 2,57,680 FOR THE ASSESSMENT YEAR 2005 - 06. THIS CASE HAS BEEN SELECTED FOR SCRUTINY DUE TO INTRODUCTION OF FRESH CAPITAL AMOUNTING TO 11,50,000 IN THE ASSESSMENT YEAR 2005 - 06. I.T.A.NO. 221/CTK/2012 2 THE BOOKS OF ACCOUNTS HA VE BEEN DULY AUDITED AS PRODUCED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME IN ORDER TO MEET THE QUERIES OF THE ASSESSING OFFICER. THE BASIC QUERY OF THE ASSESSING OFFICER WAS REGARDING INTRODUCTION OF FRESH CAPITAL AMOUNTING TO 11,50,000 IN THE BUSINESS OF THE ASSESSEE AS HIS OWN. IN THAT SUPPORT, THE ASSESSEE SUBMITTED TWO GIFT DEEDS ONE OF SRI PRAVEN KUMAR PITAMBER DAS, FATHER OF THE ASSESSEE AND THE OTHER OF SMT. JANHABI THAKKER, MOTHER OF THE ASSESSEE. THE ASSESSING OFFICER HAS ACCEPTED THE GIFT OF 6,50,000 GIVEN BY THE FATHER OF THE ASSESSEE, WH EREAS DISALLOWING PARTLY THE GIFT GIVEN BY JANHABI THAKKER TO THE ASSESSEE ON 2.4.2004. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT IN ORDER TO SUBSTANTIATE THE GENUINENESS OF TRANSACTIONS THE ASSESSEE HAS SUBMITTED THE IT PARTICULARS OF HIS MOTHER WHO IS AN EXISTING INCOME TAX ASSESSEE IN THE DEPARTMENT. THE MOTHER OF THE ASSESSEE HAS AGREED THAT SHE HAS GIFTED 5 LAKHS OUT OF HER OWN FUND ACCUMULATED IN HER HAND SINCE YEARS TOGETHER AS THE SOURCE OF SUCH INCOME IS A POSITIVE SOURCE I.E. RENTAL INCOME FROM HOUSE PROPERTY WHICH IS NOT DISBELIEVED BY THE DEPARTMENT. THE ASSESSING OFFICER HAS PARTLY DISALLOWED THE G IFT WHICH IS A SACROSANCT DOCUMENT SUPPORTED WITH A LEGAL INSTRUMENT I.E. GIFT DEED. THE LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT IN NO CIRCUMSTANCES THE ASSESSING OFFICER CAN PARTLY ALLOW THE GIFT DEED AND NOT ALLOW THE BALANCE PART WHICH IS NOT SUSTAI NABLE IN THE EYE OF LAW. EITHER THE ASSESSING OFFICER SHOULD HAVE ACCEPTED THE SAME ON ITS ENTIRETY OR DISALLOW THE SAME ON ITS ENTIRETY. THERE IS NO SCOPE TO PARTLY DISALLOW THE GIFT AND PARTLY ACCEPTED IT AS GIFT. FURTHER HE SUBMITTED THAT THE MOTHER O F THE ASSESSEE HAS SUBMITTED A CASH FLOW STATEMENT BY DISCLOSING HER INCOME FROM HOUSE PROPERTY, MATURITY OF RD, MATURITY OF NSC, RECEIPT FROM LIC MONEY BACK POLICY. IT IS A MATTER OF FACT SMT. JAYANTI THAKKER BEING A HOUSE WIFE HAS ALSO SAVE D SOME AMOUNT FROM THE HOUSE I.T.A.NO. 221/CTK/2012 3 HOLD EXPENSES FROM HER OWN SAVINGS IN SHAPE OF CASH. IT IS ALSO AN ADMITTED FACT, THE ASSESSING OFFICER HAS DISALLOWED THE GIFT BEING THE SAME WAS PAID THROUGH CASH ON PARTLY BASIS. EVEN THOUGH, THE IDENTITY, CREDITWORTHINESS HAVE BEEN PR OVED BEYOND REASONABLE DOUBT EXCEPT DOUBTING THE MODE OF PAYMENT WHY NOT IN CHEQUE FOR WHICH THE ASSESSING OFFICER HAS DISALLOWED 4,20,000 OUT OF 5 LAKHS. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE ALSO STATED BEFORE THE LEARNED CIT (A), BERHAMPUR REGARDING GENUINENESS OF TRANSACTIONS AS REVEALED FROM THE ORDER OF APPEAL AT PARA - 4.2 OF THE INTERNAL PAGE - 2 OF THE ORDER OF LEARNED CIT( A). THE LEARNED CIT(A) HAS REWRO TE THE CONTENTION OF THE ASSESSING OFFICER AT PARA - 4.3 OF THE ORDER AN D GIVING HIS COMMENT AT PARA - 4.3.1 OF THE SAID ORDER OF APPEAL. THE BASIC REASON FOR SUCH DISALLOWANCE BY THE LEARNED CIT(A) AS TO WHY THE ASSESSEE WOULD NOT DEPOSIT THE CASH IN HER BANK A/C. WHICH WAS VERY MUCH IN OPERATION AT THAT RELEVANT POINT OF TIME . PAYMENT IN SHAPE OF CASH IS NOT ACCEPTABLE AS THE GENUINENESS OF TRANSACTION, EVEN THOUGH THE CREDITWORTHINESS OF THE ASSESSEE IS THERE WHICH IS NOT DISPUTED BY THE ASSESSING OFFICER , WHEREAS THE LEARNED CIT(A) WITHOUT ANY RHYME AND REASON HAS STATED TH E DONOR LACK S CREDITWORTHINESS WHO IS AN EXISTING ASSESSEE BEING ASSESSED BY THE SAME SAID ASSESSING OFFICER. HENCE, THE LEARNED CIT(A) HAS UPHELD THE VIEW OF THE ASSESSING OFFICER FOR SAKE OF REVENUE. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS PARTLY DISALLOWED THE CAPITAL OF THE ASSESSEE BASING ON PARTLY DISALLOWANCE OF GIFT, WHICH OUGHT TO BE ADDED U/S. 68 OF THE IT ACT, WHEREAS THE ASSESSING OFFICER HAS ADDED THE SAME AS INCOME FROM OTHER SOURCES, WHICH IS NOT SUSTAINABLE IN THE EYE OF LAW, THEREBY THE ORDER OF ASSESSMENT OUGHT TO HAVE BEEN QUASHED BY THE LEARNED CIT(A) AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE MADE KNOWN TO HIM . IN VIEW OF THE I.T.A.NO. 221/CTK/2012 4 ABOVE, THE LEARNED COUNSEL OF THE ASSESSEE SOUGHT FOR DELETION OF THE IMPUGNED ADDITION OF 4,20,000 BY PARTLY DISALLOWING THE CLAIM OF GIFT AS STATED ABOVE. 2.1. IN SUPPORT OF THE ABOVE CONTENTIONS, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED A PAPER BOOK WHICH INTER ALIA INCLUDES THE COPIES OF THE ACCOUNTS BEING THE CASH FLOW WHEN THE STATEMENT OF AFFAIRS OF THE DONOR AS WELL AS THE DONEE INSOFAR AS THE I.T.RETURNS OF THE DONEE, THE FATHER AND THE MOTHER OF THE DONEE , HAVING ALSO BEEN INCORPORATED TO GENERATE SUFFICIENT CASH IN HANDS OF THE ASSESSEE AND THE DONOR WHEN A DOUBT HAS BEEN RAISED FOR HOLDING A BANK ACCOUNT SHOULD NOT CORRESPOND TO HOLDING SUBSTANTIAL CASH IN HAND ONLY IS TO BE CONSIDERED WITH ITS INGENUI NITY. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED IT IS NOT A VIEW WHICH CORRESPONDS TO THE VIEW O F THE ASSESSING OFFICER WHEN CASH DEPOSITS IN BANK ARE ALSO TO BE CONSIDERED FOR SCRUTINY. HE SUBMITTED THAT IT WAS NOT A CASE OF THE ASSESSING OFFICER THAT THE DRAWINGS ALREADY MADE BY THREE INDIVIDUALS LEFT SUFFICIENT BALANCE IN THE HANDS OF THE DONORS O F GIFT A SUM OF 5 LAKHS TO THE ASSESSEE WHO ACCEPTED THE GIFT BY INCREASING HIS CASH BALANCE INSOFAR AS THE GIFT WAS RECEIVED ON 2 ND A PRIL,2004 AND THE CASH BALANCE HELD WAS MORE THAN 5 LAKHS ON 31 ST MARCH,200 5 IN THE HANDS OF THE DONEE. THE LEARNED COUN SEL OF THE ASSESSEE CONCLUDED HIS ARGUMENTS BY SUBMITTING THAT HAVING ACCEPTED THE IDENTITY AND CREDITWORTHINESS OF THE DONOR IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO MAKE THE ASSESSEE THE AVAILABILITY OF CASH IN HANDS OF THE DON OR ASSESSEE TO ESTAB LISH THAT THE CASH GENERATED BY HER WAS NOT SUFFICIENT WHICH HE FAILED TO LINK TO THE AVAILABILITY OF THE CASH IN HANDS OF THE DONOR TO BE GIFTED TO THE DONEE NAMELY THE ASSESSEE. IN OTHER WORDS, THE IDENTITY, GENUINENESS AND CREDITWORTHINESS ALL HAVE BEEN ESTABLISHED BY THE ASSESSING OFFICER HIMSELF TO THE EXTENT THAT A SUM OF 80,000 IS ACCEPTABLE TO I.T.A.NO. 221/CTK/2012 5 IT AS AVAILABLE TO THE DONOR FOR THE PURPOSE OF GIFTING TO THE DONEE(ASSESSEE) WHICH HE PARTLY DISALLOWED. THE LEARNED CIT(A) THEREFORE SECONDED THE FINDING OF THE ASSESSING OFFICER WITHOUT REASONING OUT AS TO HOW A CASH TRANSACTION MAY BE CONSIDERED AS NON - GENUINE JUST BECAUSE THE MAGNITUDE OF CASH AVAILABLE TO THE DONOR AND THE DONEE ARE NOT DISPUTED BUT BECAUSE ONLY THE GENERATION OF CASH AND HOLDING OF CAS H IS ON THE BASIS OF BIAS FINDING AS MAY BE PERUSED FROM THE ORDERS OF THE AUTHORITIES BELOW. 3. THE LEARNED DR OPPOSED THE CONTENTIONS OF THE LEARNED COUNSEL OF THE ASSESSEE AND SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. HE ARGUED THAT IT WAS FINDING OF FACT BY THE ASSESSING OFFICER THAT WHEN THREE INDIVIDUALS BEING THE HUSBAND, WIFE AND SON ARE HOLDING SEPARATE BANK ACCOUNTS HOLDING OF CASH WHICH IS USUALLY BEING DEPOSITED IN THE BANK OUGHT NOT HAVE BEEN GIFTED AS CASH INSOFAR AS THE CREDITWO RTHINESS AND IDENTITY OF THE DONOR AND DONEE HAVE BEEN ESTABLISHED BY THE ASSESSEE. THE SURPLUS CASH THEREFORE GENERATED COULD NOT BE IDENTIFIED BY THE ASSESSEE ON THE BASIS OF DONORS SUBMISSION THAT THE INCOME WAS SUFFICIENT INSOFAR AS THE AMOUNT OF CASH HELD BY THE DONOR WAS LESS THAN 5 LAKHS AS ON 31 ST MARC H,2004 WHEN THE GIFT WAS GIVEN ON 2 ND APRIL, 2004 WHEN NEED AROSE BY THE DONEE TO INCUR CASH EXPENDITURE BUT THE GIFT WAS TO BE ON THE OCCASION OF BIRTH DAY OF THE DONEE WHICH FALLS SIX MONTHS LATER. THEREFORE, THE GENUINENESS OF THE TRANSACTIONS TO THE EXTENT OF REMAINING AMOUNT WAS RIGHTLY CONFIRMED BY THE LEARNED CIT(A) WHICH MAY BE UPHELD. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON OUR PERUSAL OF THE ASSESSMENT ORDER, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS PROCEEDED TO DOUBT THE CASH GIFT BY CALLING FOR INFORMATION FROM THE DONOR WHETHER THE SAID CASH WAS AVAILABLE TO HER WHEN THE GIFT WAS MADE ON 2 ND APRIL,2004 IN THE IMPUGNED ASSESSMENT YEAR UNDER CONSIDERATION. THE I.T.A.NO. 221/CTK/2012 6 ASSESSEE FILED THE CASH FLOW STATEMENT HOLDING OF CASH FROM ASSESSMENT YEAR 2003 - 04 WHEN SUCH HUGE CASH BALANCE WAS AVAILABLE TO THE DONOR WAS LYING IDLE EVEN AFTER DEPOSITS IN BANK INSOFAR AS THE ASSESSMENT FOR THE THREE AYS PRIOR TO THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED BY THE SAME ASSESSING OFFICER FOR THE ASSESSEE BEFORE US. IN OTHER WORDS, THE IDENTITY AND CREDITWORTHINESS OF THE DONOR ASSESSEE HAS BEEN ESTABLISHED BY THE ASSESSING OFFICER HIMSELF BY ACCEPTING THAT THE INCOME IN THE HANDS OF THE DONOR AS SESSEE WAS SUFFICIENT TO GIVE A GIFT OF 5 LAKHS. IT WAS ONLY A FINDING BY ANALYZING THE AVAIL ABILITY OF CASH AND NOT AVAILABLITY OF INCOME IN THE HANDS OF THE DONOR ASSESSEE WHICH WAS HIGHLIGHTED BY THE ASSESSING OFFICER WHICH WAS RESTRICTED TO 80,000 ON LY. WE ARE UNABLE TO SATISFY OURSELVES TO THIS PROPOSITION OF THE ASSESSING OFFICER INSOFAR AS THE INCOMES LEADING TO HOLDING OF CASH HAS NOT BEEN DOUBTED BY HIM. IT IS PURELY ON ASSUMPTION AND PRESUMPTION THAT THE THREE INDIVIDUALS OF THE SAME FAMILY HOLD ING BANK ACCOUNTS INDIVIDUALLY OUGHT TO HAVE TRANSACTED THIS GIFT BY CHEQUE OR BY DEPOSIT IN THE BANK IF SUCH CASH WAS AVAILABLE. THE LEARNED COUNSEL OF THE ASSESSEE BEFORE US HAS DEMONSTRATED THAT THE CASH HAS BEEN UTILISED BY THE DONEE ASSESSEE IN ITS B USINESS WHEN THE BOOKS OF ACCOUNT DULY AUDITED WERE VERIFIED BY THE ASSESSING OFFICER. IN OTHER WORDS, THE CASH HAS NOT LOST ITS IDENTITY FOR INCURRING EXPENDITURE OR HOLDING IT AT THE END OF THE YEAR CANNOT BE CALLED AS AN AFTERTHOUGHT IN THE MINDS OF EI THER THE DONOR OR THE DONEE INSOFAR AS BOTH HAVE RENDERED THE SAID INCOME TO THE AUTHORITIES AND MERELY BECAUSE IT WAS CASH TRANSACTION IS TO BE DOUBTED UPON TO HOLD THE TRANSACTION AS NOT GENUINE, THE AUTHORITIES BELOW HAVE PARTLY ACCEPTED THE GIFT IN CA SH OF 80,000 WHEN THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THE CASH HELD BY THEM WAS MORE THAN 5 LAKHS AND IN VIEW OF THE FINDING AND SUBMISSION OF THE LEARNED DR THAT THE CASH HELD BY THE DONOR AS ON 31 ST I.T.A.NO. 221/CTK/2012 7 MARCH,2004 WAS ONLY 4 ,69,188 WHEN THE AMOUNT OF D ONATION ON 2 ND APRIL,2004 WAS 5 LAKHS. THE ASSESSING OFFICER ON PERUSAL OF THE CASH FLOW STATEMENT HAS ALLOWED THE AVAILABILITY OF CASH INCOME OF 80,000 THEREFORE CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE TO THE EXTENT THAT THE SAID 80,000 BEING THE DIFFERENCE BETWEEN 31 ST MARCH, 2004 AND 2 ND APRIL,2004 WAS THE INCOME RENDERED TO TAX BY THE DONOR ASSESSEE. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS NOTHING REMAINING TO BE DISCHARGED AS ONUS BY THE ASSESSEE WHEN ALL THE ING REDIENTS LEADING TO ESTABLISHING THE GENUINENESS OF THE GIFT WAS EXPLAINED AS PER THE REQUIREMENT OF THE ASSESSING AUTHORITIES. THE ASSESSING OFFICER AND THE LEARNED CIT(A) THEREFORE ONLY DOUBTED THEIR OWN OPINION OF HAVING ESTABLISHED THE CREDITWORTHINESS OF THE DONOR TO DOUBT THAT THE CASH COULD NOT HAVE BEEN AVAILABLE WHICH INCOMES WERE RECEIVED IN CASH ONLY. THEREFORE, IN THIS VIEW OF THE MATTER, THE ADDITION OF 4,20,000 BEING OUT OF GIFT 5,00,000 RECEIVED BY THE ASSESSEE CANNOT BE PARTLY DISALLOWED ON THE B ASIS OF FACTS AND CIRCUMSTANCES BROUGHT ON RECORD. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD AND DIRECT DELETION OF THE ADDITION OF 4,20,000 MADE ON THIS COUNT BY ALLOWING THE APPEAL OF THE ASSESSEE. 5. IN THE R ESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 21.12.2012 ( ), ( H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 221/CTK/2012 8 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : RAJESH THAKKER, B.C.ROAD, J.K.ROAD, RAYAGADA 2 / THE RESPONDENT: INCOME - TAX OFFI CER, RAYAGADA WARD, RAYAGADA. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 17.12.2012 . 2. DATE ON W HICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..