Mr. Vijay Kumar Aggarwal, New Delhi V. ACIT, New Delhi

ITA 2212/DEL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8357 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: D V TANEJA
• Keywords: Gift; Earning of tax free income
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2212/DEL./2011 ASSTT. YEAR : 2006 - 07 VIJAY KUMAR AGGARWAL, VS. A.C.I.T., CIRCLE 29(1), C/O DHARAM TANEJA ASSOCIATES, NEW DELHI 13/17, PUNJABI BAGH EXTN., NEW DELHI [PAN:ABIPA2090F] (APPELLANT) (RESPONDENT) APPELLANT BY : SH.D.V. TANEJA, CA RESPONDENT BY : SH. S.K. JAIN , SR. DR DATE OF HEARING : 11.02.20 1 6 DATE OF PRONOUNCEMENT : 01 .0 4 .20 1 6 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER DATED 23.03.2011 OF LD. CIT(A) - XXV, NEW DELHI FOR THE ASSESSMENT YEAR 2006 - 07 ON THE FOLLOWING GROUNDS : 1. THE LD. A.O. ERRED IN THE FACTS AND LAW IN MAKING ADDITION OF RS.6,00,000/ - WHEREAS ADVANCE WAS RECEIVED FROM NALINI AGARWAL NIECE AND NOT GIFT AND CONFIRMATION BY LD.CIT(A) IS BAD IN LAW. 2. THAT LD. CLT(A) MISDIRECTED IN M AKING BASELESS AND UNWARRANTED ALLEGATION THAT IT WAS A BOGUS GIFT TO CHEAT THE DEPARTMENT AND CONFIRMATION OF ADDITION OF RS.6,00,000/ - IS OPPOSED TO FACTS LAW AND CIRCUMSTANCES OF THE CASE. ITA NO. 2212/DEL./2011 2 3. LD. A.O AND LD.CIT(A) OVERLOOKED GENUINE MISTAKE COMMITTED BY NIECE INADVERTENTLY TREATING ADVANCE AS A GIFT WHICH WAS RETRACED AND ADVANCE OF RS.6,00,000/ - WAS REFUNDED BY APPELLANT BEFORE COMPLETION OF ASSESSMENT AND THUS CONFIRMATION OF ADDITION IS BAD IN LAW. 4. THAT CONFIRMATION OF ADDITION OF RS.6,00,000/ - IS BAD IN LAW. 2. DURING THE COURSE OF SCRUTINY, THE AO NOTICED THAT RS.6 ,0 0,000/ - WAS RECEIVED AS GIFT FROM NALINI AGGARWAL, NIECE OF THE ASSESSEE AS PER GIFT DEED DATED 22.11.2005. THE CONTENTS OF THE GIFTS DEED IS REPRODUCED HERE AS UNDER : 1. NALINI AGG ARWAL CONFIRM THAT I HAVE GIVEN A GIFT OF RS 6,00,000/ - (RUPEES SIX LACS ONLY) BY CHEQUE NO. 292923 DT. 22/11/2005 OF UNION BANK OF INDIA, MAIN BRANCH, HAZARTGANJ, LUCKNOW TO SHRI VIJAY KUMAR AGGARWAL S/O SH SRI BHOLANATH AGGARWAL. FURTHER TO CERTIFY THAT I HAVE GIVEN THE ABOVE GIFT OUT OF MY SAVINGS. I AM A REGULAR INCOME TAX ASSESSEE VIDE PAN NO. ACTPA4345H WARD 29(1) ASSESSED AT NEW DELHI. I FURTHER DECLARE THAT THE SAID GIFT ALONG WITH INCOME EARNED THEREON SHALL BELONG TO VIJAY KUMAR AGGARWAL AND NONE OF MY OTHER CLAIMANTS SHALL HAVE ANY RIGHT, TITLE OR ANY INTEREST ON THE SAME. I HAVE GIVEN THE ABOVE GIFT OUT NATURAL LOVE AND AFFECTION FOR THE DONEE. GIVEN ON THIS 22ND NOVEMBER, 2005. SIGNED NALINI AGGARWAL DONAR I HEREBY THANKFULLY ACCEPT THE ABOVE GIFT FROM NALINI AGGARWAL. SIGNED VIJAY KUMAR AGGARWAL DONEE ITA NO. 2212/DEL./2011 3 3. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS OF GIFT ALONG WITH DOCUMENTARY EVIDENCE. IN THIS RESPECT, THE ASSESSEE PRODUCED AN AFFIDAVIT OF MS. NALINI AGGARWAL DATED 07.12.2008. THE CONTENTS OF THE AFFIDAVIT ARE AS UNDER : I, NALINI AGGARWAL D/O SRI SUBHASH CHANDRA AGGARWAL R/O 2238, GALI HINGA BEG, TILAK BAZAR, DELHI 110006 DO HEREBY, SOLEMNLY, CONFIRM THAT: - 1. I AM A REGULAR INCOME TAX ASS ESSEE VIDE PAN NO. ACTPA4345H WARD 29(1) ASSESSED AT NEW DELHI. 2. I GAVE A GIFT OF RS 6,00,000/ - (RS SIX LAC ONLY) TO SHRI VIJAY KUMAR AGGARWAL BY CHEQUE NO. 292923 DT. 22/11/2005 OF UNION BANK OF INDIA, MAIN BRANCH, HAZARTGANJ, LUCKNOW . 3. I GAVE TH E ABOVE GIFT OUT OF NATURAL LOVE AND AFFECTION FOR THE DONEE. 4. I AM RELATED TO SHRI VIJAY KUMAR AGGARWAL, THE DONE E . HE IS MY UNCLE (BROTHER OF MY FATHER). I DECLARE THAT THE ABOVE SAID IS TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF. SIGNED (NALIN I AGGARWAL) 4. THE ASSESSEE CLAIMED IT AS EXEMPT INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. A SUMMON WAS ISSUED U/S. 131 TO MS. NALINI AGGARWAL ON 18.12.2008 TO THE ATTEND THE OFFICE OF THE AO ON 23.12.2008. HER CONSULTANT SUBMITTED WRITTEN REPLY DATED 22.12.2008 WHICH IS AS UNDER : 'KINDLY REFER TO SUMMONS TO NALINI AGGARWAL IN THIS CONNECTION WE HAVE INSTRUCTED TO RESPECTFULLY SUBMIT: - ITA NO. 2212/DEL./2011 4 1. NALINI AGGARWAL IS UNWELL AND SHE IS NOT IN A POSITION TO APPEAR PERSONALLY. 2. COPY OF NALINI AGGARWAL IS IN ACCOUNT PREMIER CAR SALES LTD . IS ENCLOSED. 3. COPY OF BANK STATEMENT IS ENCLOSED. 4. NALINI GAVE A GIFT OF 6,00, 000 / - BY CHEQUE TO SH. VIJAY AGGARWAL. 5. GIFT DEED HAS ALREADY BEEN FILED. 6. COPIES OF ACKNOWLEDGEMENT CONFIRMING FILING OF RETURN FOR A.Y . 2005 - 06 AND 2003 - 04 ARE ENCLOSED. 7. P / A IN OUR FAVOR IS ENCLOSED. 5. THE AO ANALYSED SECTION 56(2)(V) OF THE ACT AND OBSERVED THAT MS. NALINI AGGARWAL IS NOT COVERED UNDER THE RELATIVES AS DEFINED IN THE SECTION. THE AO ISSUED SHOW CAUSE NOTICE ON 23. 12.2008 TO ATTEND ON 26.12.2008 TO SHOW CAUSE AS TO WHY THE GIFT OF RS.6,00,000/ - SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES OF THE ASSESSEE. NONE ATTENDED ON THE GIVEN DATE. ULTIMATELY, THE AO ADDED THE AMOUNT OF GIFT AS INCOME OF THE ASSESSEE FRO M UNDISCLOSED SOURCES. 6. AGAINST THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED BEFORE HIM THAT THE GIFT HAS BEEN RECEIVED BY MIS T AKE . HE STATED THAT THE SAID AMOUNT WAS, IN FACT, INTEREST FREE ADVANCE, WHICH HA S BEEN RETURNED TO THE DONOR ON 01.12.2008. THE LD. CIT(A) AFTER RELYING ON VARIOUS JUDGMENTS CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF CIT(A), THE ASSESSEE HAS COME UP IN THIS APPEAL BEFORE THE TRIBUNAL. ITA NO. 2212/DEL./2011 5 7. TH E LD. AR SUBMITTED THAT IT WAS NOT A GIFT, BUT WAS RECEIVED BY ASSESSEE AS ADVANCE. THE LD. AO HAS WRONGLY TREATED IT AS GIFT. THE SAID AMOUNT HAS BEEN RETURNED ON 0 1 .12.2008 TO MS. NILINI AGGARWAL THROUGH BANKING CHANNEL BEFORE THE COMPLETION OF ASSESSMENT. THE LD. CIT(A) HAS RELIED ON VARIOUS CASE LAWS WHICH ARE NOT APPLICABLE IN THE ASSESSEE S CASE. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF THE AO AND CIT(A). HE SUBMITTED THAT THE LOWER AUTHORITIES HAVE MADE CORRECT ORDER AS PER L AW AND THE SAME DO NOT REQUIRE ANY INTERFERENCE 9. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD WE FIND NO SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED AMOUNT RECEIVED BY THE ASSESSEE WAS NOT RECEIVED A S GIFT BUT AS INTEREST FREE ADVANCE. THE LD. COUNSEL FOR THE ASSESSEE FAILED TO REBUT THE FINDINGS OF THE LD. CIT(A) THAT A GIFT DEED WAS FILED BEFORE THE AO WHICH WAS SUPPORTED BY AFFIDAVIT OF DONOR. HAD IT BEEN A INTEREST FREE ADVANCE, THERE WAS NO OCCA SION TO FURNISH THE GIFT DEED AND ITS CONFIRMATION BY WAY OF AFFIDAVIT. MOREOVER, THE ALLEGED GIFT WAS RECEIVED THROUGH BANKING CHANNEL. INITIALLY THE ASSESSEE CLAIMED THE ALLEGED GIFT AS EXEMPT FROM TAX HAVING BEEN RECEIVED ITA NO. 2212/DEL./2011 6 FROM RELATIVE AS CONTEMPLATED U /S. 56(2)(V) OF THE ACT. IT WAS ONLY WHEN THE AO CONCLUDED THAT BROTHER S DAUGHTER (THE DONOR IN THE PRESENT CASE) DOES NOT COME WITHIN THE PURVIEW OF RELATIVE AS DEFINED IN THE SAID SECTION AND HENCE, THE IMPUGNED GIFT IS NOT EXEMPT FROM TAX , THE ASSESSEE CHANGED ITS STAND BEFORE THE LD. CIT(A) STATING THAT THE IMPUGNED AMOUNT WAS RECEIVED AS INTEREST FREE ADVANCE WHICH WAS RETURNED TO THE LENDER. IN VIEW OF THESE FACTS, THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT IT WAS NOT A GENUINE GIFT AND THE ALLEGED GIF T WAS NOT FROM A GENUINE DONOR BECAUSE IF THERE WAS A GENUINE GIFT THEN EITHER THE DONOR OR THE DON E E WOULD NEVER THINK ABOUT THE TAX IMPLICATIONS AS THE GIFT IS GENERALLY GIVE OUT OF LOVE AND AFFECTION OF THE DONOR FOR THE DONEE. IN PRESENCE OF THESE FAC TS, IN OUR CONSIDERED OPINION THE LD. CIT(A) HAS COMMITTED NO ERROR IN RELYING UPON THE PRINCIPLE OF LAW LAID DOWN BY HON BLE APEX COURT IN THE CASE OF MCDOWELL & CO. LTD. VS. CTO, 154 ITR 148 (SC) WHERE IT HAS BEEN LAID DOWN THAT COLOURABLE DEVICES CANNO T BE PART OF TAX PLANNING AND IT IS WRONG TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF TAX BY DUBIOUS METHODS. IN THE INSTANT CASE, THE CHANGE OF STAND BY THE ASSESSEE BEFORE THE LD. CIT(A) IS NOTHING BUT A COLOURABLE DEVICE FOR TAX AVOIDANCE WHICH CANNOT BE ACCEPTED UNDER LAW. WE, THEREFORE, FIND NO JUSTIFICATION TO INTERFERE WITH THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) AFTER FOLLOWING VARIOUS CASE LAWS OF HIGHER COURTS. ITA NO. 2212/DEL./2011 7 ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE NO MERIT AND IS LIABLE TO BE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04.2016 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.04.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI