Sh. Baldev Singh, New Delhi V. DCIT, New Delhi

ITA 2471/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3071 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: G S KOHLI
• Keywords: Capital asset; Gift; Business income; Question of law; Capital expenditure
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2471/DEL/2014 AY: 20 05-06 BALDEV SINGH, VS DCIT, PROP. M/S MADAAN PLASSTIC INDUSTRY, CIRCLE 27(1), A-71, NARAINA INDUSTRIAL AREA, NEW DELHI. PHASE-I, NEW DELHI. (PAN: AARPS7097L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. KOHLI, CA RESPONDENT BY : SHRI S.K. JAIN, DR DATE OF HEARING: 9.3.2017 DATE OF PRONOUNCEMENT : 8.6.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE LD. CIT (A)-XXVIII, NEW DELHI VIDE DAT ED 12.02.2014 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MANUFACTURING OF PVC FOOTWEAR IN THE NA ME AND STYLE OF M/S MADAN PLASTIC INDUSTRY. THE RETURN OF INCOME WAS FILED DECLARING THE TOTAL INCOME OF RS. 8,49,018/-. THE TOTAL SALES DURING THE YEAR AMOUNTED TO RS. 8,39,59,189/- YIEL DING GP RATIO OF 10.5%. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 2 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CL AIMED AN AMOUNT OF RS. 1,39,297/- TOWARDS MOULD REPAIRS & MAINTENANCE. A PERUSAL OF THE COPIES OF THE LEDGER ACCOUNT SHOWED THAT MOULDS HAD BEEN SHAPED INTO A FINAL PRO DUCT AND THE ASSESSING OFFICER WAS OF THE OPINION THAT THIS PERTAINED TO CAPITAL EXPENDITURE. THE ASSESSING OFFICER OBSERVE D THAT THE EXPENDITURE WAS INCURRED ON MOULDS TO CHANGE THEM I NTO A PERMANENT AFFIXTURE IS A CAPITAL EXPENDITURE, HAVIN G ENDURING BENEFITS, AND IS IN THE NATURE OF CAPITAL ASSET AND , ACCORDINGLY, THE EXPENSES INCURRED BY THE ASSESSEE TO THE TUNE O F RS. 1,39,297/- WERE ADDED TO THE INCOME OF THE ASSESSEE . FURTHER, DURING THE YEAR, THE ASSESSEE HAD SHOWN GIFTS RECEI VED TO THE TUNE OF RS. 62,91,297/- AND THE SAME WAS CREDITED T O THE CAPITAL ACCOUNT OF THE ASSESSEE. IT WAS SUBMITTED BY THE A SSESSEE THAT THE GIFT RELATED TO THE REALIZATION OF SBIS INDIA MILLENNIUM DEPOSITS VIDE DOCUMENTS EXECUTED ON 21.07.2004 WHIC H WAS RECEIVED BY THE ASSESSEE FROM SHRI SUBHASH CHAND, A N NRI. HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINION T HAT ALTHOUGH THE INDIA MILLENNIUM DEPOSIT WAS TRANSFERABLE FREEL Y BETWEEN AN NRI AND THE INDIAN RESIDENT, THE ASSESSEE HAD FAILE D TO SUBSTANTIATE HIS CLAIM ABOUT THE CREDITWORTHINESS, IDENTITY OF THE I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 3 OWNER AND THE GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFICER OBSERVED THAT EVEN THOUGH THE MODE OF TRANS FER OF THE GIFT WAS THROUGH BANKING CHANNELS, THE IDENTITY OF THE P ERSON WHO MADE THE GIFT, HIS CREDITWORTHINESS OR ANY DIRECT N EXUS BETWEEN THE DONOR AND THE DONEE HAD NOT BEEN ESTABLISHED. THE ASSESSING OFFICER PROCEEDED TO ADD BACK THIS AMOUNT OF RS. 62,91,279 TO THE INCOME OF THE ASSESSEE U/S 68 OF T HE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A) WHO DISMISSED THE ASSESSEES APPEAL AND NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1 (I) THAT THE LEARNED CIT (APPEALS) IS RIOT JUSTI FIED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION AS MADE BY LEARNED ASSESSING OFFICER OF RS.62,91,279/- UNDER S.68 OF INCOME TAX ACT 1961. (II) THAT THE LEARNED CIT (APPEALS) IS NOT JUSTIFIE D ON FACTS AND IN LAW IN TREATING THE MATURITY PROCEEDS OF IND IA MILLENNIUM DEPOSIT AMOUNTING TO RS.62,91,279/- AS UNEXPLAINED AND CONFIRMING THE ADDITION OF THE SAME . (III) THAT THE ADDITION OF RS.62,91,279/- BEING THE MATURITY PROCEEDS OF INDIA MILLENNIUM DEPOSIT (I.E. AMOUNT OF DEPOSIT AND INTEREST THEREUPON) IS NOT JUSTIFIED BOTH ON FACTS AND IN LAW. (IV) THAT THE ADDITION OF RS.62,91,279/- IS WITHOUT ANY BASIS AND REASONING AND THEREFORE NOT JUSTIFIED BOT H ON FACTS AND IN LAW. I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 4 (V) THAT THE PROVISIONS OF SEC. 68 ARE NOT APPLICABLE ON THE FACTS OF THE CASE. (VI) THAT THE ADDITION IS ALSO NOT JUSTIFIED EVEN IN VI EW OF THE FACT THAT THE INVESTMENT IN INDIA MILLENNIUM DEPOSIT WAS NOT MADE IN THE RELEVANT YEAR. (VII) THAT THE LEARNED ASSESSING OFFICER NEVER ASKED THE APPELLANT TO PRODUCE THE PERSON FROM WHOM THE APPELLANT RECEIVED THE INDIA MILLENNIUM DEPOSIT. ON THIS BASIS ALSO, THE ADDITION IS NOT JUSTIFIED. (VIII) THAT THE LEARNED CIT (APPEALS) HAS NOT CONSIDERED THE FACTS OF THE CASE AND ALSO EXPLANATIONS AS SUBMITTED BY THE ASSESSEE. 2 (I) THAT THE LEARNED CIT (APPEALS) IS NOT JUSTIFI ED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF MOULD REPAIRS AND MAINTENANCE EXPENSES OF RS. 1,39,297/-. (II) THAT THE LEARNED CIT (APPEALS) IS NOT JUSTIFIE D ON FACTS AND IN LAW IN CONFIRMING THE TREATMENT OF MOULD REPAIRS AND MAINTENANCE EXPENSES AS CAPITAL EXPENDITURE AND ACCORDINGLY CONFIRMING THE DISALLOWANCE. 3 THAT THE APPELLANT BE ALLOWED TO ADD, ALTER, A MEND, MODIFY OR WITHDRAW ANY OF THE GROUND(S) OF APPE AL BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD RECEI VED GIFT OF TWO CERTIFICATES OF INDIA MILLENIUM DEPOSIT OF 50,0 00/- US$ ON 21.7.2004 WHICH WERE RECEIVED FROM A CLOSE FAMILY F RIEND SHRI SUBHASH CHAND WHO WAS AN NRI. IT WAS FURTHER SUBMI TTED THAT THE INDIA MILLENIUM DEPOSITS WERE ISSUED IN 2000 AN D THAT ONLY THE NON-RESIDENT INDIVIDUALS OF INDIAN NATIONALITY OR ORIGIN WERE ELIGIBLE TO SUBSCRIBE TO THE SAME. IT WAS SUBMITTE D THAT SHRI SUBHASH CHAND HAD SUBSCRIBED TO THESE DEPOSITS IN T HE YEAR I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 5 2000 AND THESE CERTIFICATES WERE ISSUED ON 5.01.200 1 AND THE SAME WERE GIFTED TO THE ASSESSEE ON 21 ST JULY, 2004. LD. AR ALSO SUBMITTED THAT COPIES OF THE CERTIFICATES, BANK CER TIFICATE CONFIRMING THE TRANSACTION OF THE GIFT AS WELL AS I NTIMATION THEREOF ALONG WITH OTHER DETAILS WERE DULY SUBMITTED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS BUT T HE ASSESSING OFFICER DID NOT CONSIDER THE EXPLANATION OF THE ASS ESSEE TO BE TRUE AND OBSERVED THAT THE WHOLE STORY OF THE ALLEGED GI FT FROM THE NRI WAS A COVER UP AND THE ENTIRE AMOUNT OF RS. 6,29,12 ,79/- WAS, IN FACT, THE INCOME OF THE ASSESSEE FROM UNDISCLOSE D SOURCES. IT WAS FURTHER SUBMITTED THAT THE EXPLANATION OF THE A SSESSEE WAS REJECTED BY THE ASSESSING OFFICER WITHOUT ANY BASIS AND REASONING. IT WAS SUBMITTED THAT THE IDENTITY OF T HE DONOR WAS PROVED BY PROVIDING COPY OF THE PASSPORT OF THE DON OR ALONG WITH AFFIDAVIT. IT WAS SUBMITTED THAT THE CREDITWORTHIN ESS OF THE DONOR WAS PROVED FROM THE FACT THAT THE DONOR HAD ACQUIRE D THE CERTIFICATES LONG BACK AND HAD GIFTED THE CERTIFICA TES ONLY AT A LATER DATE. IT WAS ALSO SUBMITTED THAT THE ASSESSI NG OFFICER HAD IGNORED THE DOCUMENTARY EVIDENCE IN FORM OF CERTIFI CATES FROM ABU DHABI BANK AND THE STATE BANK OF INDIA. LD. AR ALSO DREW I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 6 THE ATTENTION OF THE BENCH TO THE FOLLOWING DOCUMEN TS AVAILABLE IN THE PAPER BOOK-I:- I) COPY OF PASSPORT OF THE DONOR (PAGES 8-38) II) AFFIDAVIT OF THE DONOR (PAGES 29-33) III) DIRECT REPLY BY THE DONOR TO THE ASSESSING OFFICER THROUGH FAX (PAGE 34) IV) CERTIFICATE FROM BANK (PAGE 45) 3.1 LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE EVIDENCES SUBMITTED BEFORE THE LOWER AUTHORITIES, T HE GENUINENESS OF THE GIFT WAS AMPLY PROVED. 3.2 ON THE SECOND GROUND RELATING TO DISALLOWANCE O F MOULD REPAIRS AND MAINTENANCE EXPENSES, IT WAS SUBMITTED THAT THE BILLS PERTAINED TO REPAIRS ONLY. IT WAS ALSO SUBMI TTED THAT MOULD REPAIRS WERE ALLOWED AS AN EXPENSE ITEM IN EARLIER AND SUBSEQUENT YEARS BY THE DEPARTMENT. OUR ATTENTION WAS ALSO DRAWN TO PAGE 48 OF THE PAPER BOOK WHICH IS A COPY OF THE LEDGER ACCOUNT OF MOULD REPAIRS AND MAINTENANCE AND ALSO T O PAGES 50 TO 102 WHICH WERE COPIES OF BILLS PAID TOWARDS WELD ING CHARGES. IT WAS SUBMITTED THAT A PERUSAL OF THESE EVIDENCES WOULD SHOW THAT MOST OF THE MOULD REPAIRS PERTAINED TO WELDING CHARGES PAID I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 7 WHICH WAS A DEDUCTIBLE EXPENSE AND NOT A CAPITAL EX PENSE AS CONTENDED BY THE DEPARTMENT. 4. IN RESPONSE, THE LD. DR PLACED RELIANCE ON THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CREDITWORT HINESS OF THE DONOR AS WELL AS THE ASSESSEES RELATIONSHIP WITH T HE DONOR COULD NOT BE PROVED AND, THEREFORE, THE ADDITION WAS RIGH TLY MADE. 4.1 IT WAS FURTHER SUBMITTED THAT AS PER ORDER OF T HE LD. CIT(A), IT IS NOT APPARENT FROM THE LEDGER ACCOUNT WHETHER THE WELDING CHARGES HAD BEEN PAID FOR REPAIRS OR FOR NEW MOULDS AND, THEREFORE, THE DISALLOWANCE ON THIS COUNT WAS ALSO JUSTIFIED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE RELEVANT MATERIAL ON RECORD. AS FAR AS THE ISSUE OF GIFT SAID TO HAVE BEEN RECEIVED BY THE ASSESSEE IS CONCERNED, IT IS S EEN THAT THE AO HAS HELD THAT THOUGH THE GIFT WAS TRANSFERRED THROU GH NORMAL BANKING CHANNELS, THE ASSESSEE HAD FAILED TO ESTABL ISH THE CREDITWORTHINESS, GENUINENESS AND THE IDENTITY OF T HE DONOR AND THE DIRECT NEXUS BETWEEN THE DONOR AND THE DONEE. 5.1 THE AO HAS FURTHER OBSERVED THAT IT HAS NOT BEE N ESTABLISHED THAT THE ASSESSEE HAD MET THE DONOR EIT HER BEFORE OR AFTER RECEIVING THE GIFT AND ALSO WHETHER THE DONOR AND THE DONEE I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 8 KNEW EACH OTHER FROM BEFORE. THE AO ALSO OBSERVED T HAT IT HAS NOT BEEN ESTABLISHED THAT THE BONDS WERE RECEIVED B Y THE ASSESSEE IN PERSON OR THROUGH SOME OTHER SOURCE. TH E AO HAS ALSO OBSERVED THAT IT HAS NOT BEEN ESTABLISHED AS T O WHETHER THE ASSESSEE AND THE DONOR HAD ANY BUSINESS CONNECTION. FURTHER, THE AO NOTED THAT THERE WAS NO EVIDENCE TO SHOW THA T ALL FORMALITIES AND BANKING REGULATIONS BEFORE MAKING T HE GIFTS WERE FOLLOWED IN RIGHT SPIRIT OR NOT. THESE OBSERVATIONS , IN OUR CONSIDERED OPINION, HAVE NO RELEVANCE TO THE ISSUE INVOLVED. 5.2 FURTHER, AS PER THE AO, THE ASSESSEE HAD FAILED TO SATISFY THE CONDITIONS LAID DOWN IN SECTION 68 OF THE ACT. THE AO HAS FURTHER NOTED THAT THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCE REGARDING THE IDENTITY OF THE PERSON MAKING THE GIFT, HIS CREDITW ORTHINESS AND GENUINENESS. FAILED TO PROVIDE REASON FOR FORECLOSURE AND PREM ATURE ENCASHMENT OF THE BONDS FAILED TO PROVIDE EVIDENCE REGARDING RELATIONSHIP OR CIRCUMSTANCES IN WHICH THE GIFT WAS MADE WAS NOT THE BLOOD RELATIVE OF THE DONOR I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 9 FAILED TO FURNISH A GIFT DEED FAILED TO FILE CONFIRMATORY LETTER OR CORRESPONDE NCE CONFIRMING THE GIFTS. 5.3 THE LD. CIT (APPEALS) HAS NOTED THAT THE ASSESS EE HAD FILED AN AFFIDAVIT OF SH. SUBASH CHAND AND ALSO A COPY OF HIS PASSPORT. THE LD. CIT (APPEALS) IN THE IMPUGNED ORDER ACCEPTE D THAT THE IDENTITY OF THE DONOR MAY BE TAKEN AS ESTABLISHED. HOWEVER, HE FURTHER NOTED THAT THERE WAS NOTHING ON RECORD TO S UGGEST THE CREDITWORTHINESS OF THE DONOR, THE RELATIONSHIP OF THE DONOR WITH THE DONEE, THAT THE GIFT WAS OUT OF NATURAL LOVE AN D AFFECTION, THAT THE DONOR KNEW THE ASSESSEE SINCE A LONG TIME, THAT THERE WAS AN OCCASION TO GIVE THE GIFT, THAT THERE WAS ANY QUID PRO QUO ON PART OF THE ASSESSEE, THAT THE DONOR HAD GIVEN ANY OTHER GIFTS TO THE ASSESSEE ON ANY OTHER OCCASION AND THAT THE DONOR W AS A LONG- STANDING FRIEND OF THE ASSESSEE. THE LD. CIT (APPEA LS) HAS FURTHER NOTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE D ONOR IN SPITE OF REPEATED OPPORTUNITIES PROVIDED BY THE AO. THE L D. CIT (APPEALS) HAS FURTHER OBSERVED THAT THE ASSESSEE WA S ASKED TO PRODUCE THE DONOR DURING THE FIRST APPELLATE PROCEE DINGS ALSO BUT THE ASSESSEE RESPONDED BY SUGGESTING THAT THE STATE MENT COULD BE RECORDED EITHER THROUGH SKYPE OR THROUGH VIDEOCO NFERENCING I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 10 WHICH, AS PER THE CIT (APPEALS), DID NOT HAVE ANY E VIDENTIARY VALUE AND, THEREFORE, WAS NOT RESORTED TO. THE LD. CIT (APPEALS) ALSO OBSERVED THAT THE DONOR WAS NOT A MEMBER OF TH E ASSESSEES FAMILY AND NOR WAS THERE ANY SPECIAL OCCASION TO GI VE THE GIFT. THE LD. CIT (APPEALS) HAS ALSO OBSERVED THAT THOUGH ON THE FACE OF IT, THE DOCUMENTARY EVIDENCE WAS COMPLETE BUT IT WAS BE YOND COMPREHENSION AND HUMAN PROBABILITY THAT A PERSON W OULD GIFT AN AMOUNT OF RS. 62 LAKHS TO EVEN A FRIEND. THUS, O N ONE HAND THE LD. CIT (APPEALS) ACCEPTS THAT THE IDENTITY OF THE DONOR IS ESTABLISHED AND ALSO MENTIONS, BY A PASSING REFEREN CE, ON PAGE 16 OF THE IMPUGNED ORDER THAT ON THE FACE OF IT THE APPELLANT HAS PRODUCED ALL THE NECESSARY DOCUMENTARY EVIDENCE , BUT ON THE OTHER HAND OBSERVES THAT IT WAS BEYOND COMPREHENSIO N AND HUMAN PROBABILITY THAT A PERSON WOULD GIFT IN AMOUN T OF RS. 62 LAKHS TO EVEN A FRIEND. THUS, THE LD. CIT (APPEALS) APPARENTLY DISBELIEVES THE CONTENTION OF THE ASSESSEE ON SUSPI CION. 5.4 THE ITAT DELHI BENCH IN THE CASE OF DCIT VERSU S ANIL KUMAR IN ITA NO. 4923/DEL/1991 REPORTED IN 58 TTJ ( DEL) 340 WHILE EXAMINING THE GENUINENESS OF A GIFT, HELD IN PARAGRAPH 6 OF THE ORDER AS UNDER I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 11 ....WE HAVE CONSIDERED THE RIVAL SUBMISSION AND HA VE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HIS CASE WE FIND THAT THE ASSESSEE HAD SHOWN A GIFT FRO M SH. MOHAN LAL AGGARWAL. THE GIFT WAS RECEIVED BY ACCOUNT PAYEE CROSS CHEQUE DRAWN ON HIS S.B. ACCOUN T NUMBER 22107 IN CANARA BANK, AGRA. THE ASSESSEE HAD FILED COPY OF GIFT TAX, DATED 29 TH OF FEBRUARY, 1988 SHOWING PAYMENT OF GIFT. HE HAS FILED A CONFIRMATOR Y LETTER AND AFFIDAVIT. ON ASSESSEES INSTANCE THE DO NOR WAS EXAMINED UNDER SECTION 131. FROM HIS STATEMENT IT IS CLEAR THAT HE HAS CONFIRMED MAKING OF GIFT IN FA VOUR OF ASSESSEE. IN HIS STATEMENT HE HAS ALSO MENTIONED TH AT HE HAD REGULAR SOURCE OF INCOME FROM PREPARING ACCO UNT BOOKS AND FROM INTEREST. THE GIFTED AMOUNT WAS DEPOSITED IN THE S.B. ACCOUNT. ALL THESE EVIDENCE O N RECORD SHOW THAT THE BURDEN WHICH LAY UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE GIFT IS DISCHARGED. NOW THE BURDEN SHIFTS ON THE DEPARTMENT TO SHOW MATERIAL THAT THE GIFT MADE WAS BOGUS AND INGENUINE. NO MATERIAL HAD BEEN BROUGHT ON RECORD T O PROVE THIS EXCEPT RAISING SUSPICION THAT THE DONOR HAD NO PERMANENT SOURCE OF INCOME. THE SUSPICION HOWSOEVER STRONG IT MAY BE CANNOT BE THE BASIS OF REJECTION OF ASSESSEES CLAIM UNLESS IT IS SUPPORTE D BY MATERIAL ON RECORD. IT IS WORTHY TO NOTE THAT THE I DENTITY OF THE DONOR, THE GENUINENESS OF THE GIFT AND THE CAPACITY OF THE DONOR IS PROVIDED BY THE ASSESSEE. SIMPLY BECAUSE THERE IS SUSPICION ABOUT THE SOURCE OF I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 12 INCOME, THE EVIDENCE CANNOT BE DISCARDED. IN OUR VI EW, WE ARE OF THE OPINION THAT THE EVIDENCE PROVIDED BY THE ASSESSEE PROVE THE GENUINENESS OF THE GIFT AND THE BURDEN WHICH LAY UPON THE ASSESSEE HAS BEEN DISCHARGED. 5.5 IN CIT VERSUS MS. MAYAWATI REPORTED IN 243 CTR (DEL) 9, THE HONBLE HIGH COURT OF DELHI HELD THAT SINCE ALL THE DONORS WHO HAD MADE GIFTS TO THE ASSESSEE HAD APPEARED BEFORE THE DEPARTMENT AND SUBMITTED AFFIDAVITS ON OATH CONFIRM ING THE GIFTS MADE BY THEM, CITING THEIR OLD RELATIONS WITH THE A SSESSEE AND PROVED THEIR CAPACITY TO MAKE GIFTS, SAID GIFTS COU LD NOT BE TREATED AS NON-GENUINE SIMPLY BECAUSE THERE WAS NO OCCASION FOR MAKING THE GIFTS OR THERE IS NO BLOOD RELATION BETWEEN THE DONORS AND THE DONEE OR THAT THE GIFTS WERE MADE BY DONORS BY TAKI NG LOANS. THE HONBLE DELHI HIGH COURT HELD THAT NO SUBSTANTIAL Q UESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL UPHOLDING THE ORDER OF THE CIT (APPEALS) DELETING THE ADDITIONS ON ACCOUNT OF THE SAID GIFTS. 5.6 IN CIT VERSUS RS SIBAL REPORTED IN 269 ITR 429, THE HONBLE DELHI HIGH COURT DISMISSED THE APPEAL OF THE DEPART MENT BY OBSERVING THAT NO QUESTION OF LAW MUCH LESS A SUBST ANTIAL QUESTION OF LAW AROSE WHEN THE ONLY GROUND ON WHICH THE GENUINENESS OF THE GIFTS HAD BEEN DOUBTED WAS THE A LLEGED FAILURE I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 13 ON THE PART OF THE ASSESSEE TO ESTABLISH RELATIONSH IP BETWEEN THE DONOR AND THE DONEE. 5.7 SIMILARLY IN CIT VERSUS MRS SUNITA VACHANI REPO RTED IN 184 ITR 121, THE HONBLE DELHI HIGH COURT HELD THAT EVE N THOUGH IT MAY BE SURPRISING AS TO HOW LARGE SUMS OF MONEY ARE RECEIVED BY A FAMILY IN INDIA BY WAY OF GIFTS FROM STRANGERS FR OM ABROAD, UNLESS THERE IS SOMETHING MORE TANGIBLE THAN SUSPIC ION, IT WILL BE DIFFICULT TO REGARD THE MONEY RECEIVED IN INDIA FRO M ABROAD AS REPRESENTING THE INCOME OF THE ASSESSEE IN INDIA. 5.8 THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VERSUS CIT REPORTED IN 221 CTR 456 HELD THAT THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE GIFT BY K TO THE ASSESSEE. THE HONBLE HIGH COURT HELD THAT IN ANY VIEW OF THE MATTER, THE ASSESSEE WAS ABLE TO ESTABLISH THE NATURE AND SOURC E OF THE MONEY. THE NATURE AND SOURCE OF THE MONEY FOUND DEP OSITED IN THE BANK ACCOUNT OF THE ASSESSEE WAS THE MATURITY A MOUNT OF FOUR BONDS WHICH WERE PURCHASED BY K ON 01/10/1998. THEREFORE, SO FAR AS YEAR UNDER CONSIDERATION WAS C ONCERNED, THE NATURE AND SOURCE WERE FULLY ESTABLISHED. THE HONB LE HIGH COURT HELD THAT THERE WAS NO EVIDENCE TO SHOW THAT THE DE POSIT IN THE BANK ACCOUNT WAS THE INCOME FROM OTHER SOURCES OF T HE ASSESSEE I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 14 FOR THE YEAR UNDER CONSIDERATION. THE HONBLE COURT WENT ON TO HOLD THAT AMOUNT FOUND DEPOSITED IN THE ASSESSEES BANK ACCOUNT IN ASSESSMENT YEAR 2004 05 HAVING BEEN EXPLAINED BY THE ASSESSEE AS REPRESENTING MATURITY AMOUNT OF FOUR RE SURGENT INDIA BONDS PURCHASED BY ONE K, AN NRI, ON 01/10/19 98, AND GIFTED TO THE ASSESSEE ON 10/07/1999, COULD NOT BE ADDED IN THE HANDS OF THE ASSESSEE UNDER SECTION 69 OF THE ACT. 5.9 IT IS SEEN IN THE PRESENT CASE THAT THE MAIN TH RUST OF THE DEPARTMENT IS ON THE FACT THAT THE ASSESSEE COULD N OT PRODUCE THE DONOR, THE ALLEGED DONOR WAS NOT A FAMILY MEMBE R OF THE ASSESSEE, THE ASSESSEE HAD NOT GIVEN ANY SIMILAR GI FT TO THE DONOR, THERE WAS NO SPECIAL OCCASION TO GIVE THE GIFT AND THAT IT WAS BEYOND COMPREHENSION AND HUMAN PROBABILITY THAT A P ERSON WOULD GIFT AN AMOUNT OF RS. 62 LAKHS TO EVEN A FRIE ND. THUS, THE ENTIRE CASE OF THE DEPARTMENT IS APPARENTLY BUILT O N SUSPICION ONLY. THE ITAT CALCUTTA BENCH IN SMT. BHAGWATI DEVI VERSUS ITO REPORTED IN 47 ITD 58, WHILE EXAMINING THE ISSUE OF GENUINENESS OF A GIFT HELD, ..THE AAC DID NOT DECIDE THE ISSUE WITH AN OPEN MIND AND WAS PERHAPS BIASED THAT THE ASSESSEE, A LA DY, RESIDING IN INDIA, COULD RECEIVE A GIFT OF RS. 1 LAKH FROM A FOREIGN RESIDENT OUT OF NATURAL LOVE AND AFFECTION AND ALSO WITHOUT THERE BEING ANY I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 15 EVIDENCE OF SOCIAL INTERACTION BETWEEN DONOR AND DO NEE NAMELY, THE ASSESSEE. IT COULD NOT BE UNDERSTOOD AS TO HOW AND WHY IT WAS NECESSARY FOR THE DONOR AND THE ASSESSEE TO PROVE T HE SOCIAL INTERACTION BETWEEN THEM OR FOR THAT MATTER TO PROV E NATURAL LOVE AND AFFECTION BY DONOR TOWARDS DONEE ASSESSEE. A PERSON MAY HAVE OR DEVELOP LOVE AND AFFECTION FOR ANOTHER PERS ON INSTANTLY AND SOME PERSONS MAY NOT EVEN DEVELOP LOVE AND AFFECTIO N FOR YEARS TOGETHER BUT SO FAR AS THE VALIDITY OF A GIFT IS CO NCERNED, THESE ARE NOT THE CONSIDERATIONS WHICH ARE TO BE WEIGHED. AS PER SECTION 122 OF TRANSFER OF PROPERTY ACT, 1882, A GIFT IS COMPLE TE IN RESPECT OF EXISTING MOVABLE AND IMMOVABLE PROPERTY WHEN THERE IS A TRANSFER OF SUCH PROPERTY BY A PERSON CALLED DONOR AND ACCEP TANCE OF SUCH GIFT OF SUCH PROPERTY BY A PERSON CALLED DONEE. IF THESE ESSENTIAL CONDITIONS ARE PREVALENT OR SATISFIED, THEN THE GIF T IS COMPLETE AND IT IS NOT OPEN TO CHALLENGE UNTIL THE SAME IS PROVE D TO THE CONTRARY WITH COGENT AND STRONG EVIDENCE WHICH, IN THE INSTA NT CASE, NEITHER THE ASSISTANT COMMISSIONER NOR THE ASSESSING OFFICE R POSSESSED. THE DONOR HAD CATEGORICALLY STATED MORE THAN ONCE T HAT HE HAD GIFTED RS. 1 LAKH TO THE DONEE ASSESSEE AND HAD A LSO TRANSFERRED THE MONEY. THE DONEE ASSESSEE HAD ALSO STATED THA T SHE HAD ACCEPTED THE GIFT AND RECEIVED THE MONEY. SUCH BEIN G THE CASE, I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 16 THERE WAS NO REASON FOR THE ASSISTANT COMMISSIONER TO COME TO THE CONCLUSION THAT THE GIFT WAS INVALID OR NOT GENUINE . APART FROM EXPRESSING HIS SURPRISE AND DISSATISFACTION OVER TH E AMOUNT GIFTED TO THE ASSESSEE, THE ASSISTANT COMMISSIONER HAD NOT LED ANY IOTA OF EVIDENCE TO PROVE THAT THE GIFT WAS COLLUSIVE OR A DUBIOUS DEVICE OR A SUBTERFUGE TO EVADE TAX . ALTHOUGH, THIS ORDER OF ITAT KOLKATA WAS RENDERED IN 1993, THE OBSERVATIONS OF T HE BENCH ARE STILL RELEVANT. IN THE INSTANT CASE THE LD. CIT (AP PEALS) HAS HIMSELF ACCEPTED THAT THE ASSESSEE HAS PRODUCED ALL THE NECESSARY DOCUMENTARY EVIDENCE AND IT IS ONLY ON TH E PREMISE OF INCOMPREHENSION AND IM-PROBABILITY THAT THE ADDITIO N MADE HAS BEEN SUSTAINED. IT IS UNDISPUTED THAT THE ASSESSEE HAS PLACED ON RECORD AN AFFIDAVIT DATED 28/11/2007 OF THE DONOR W HICH HAS BEEN DISBELIEVED BY THE LD. CIT (A) ONLY ON THE GRO UND THAT THERE WAS AN AGE GAP OF SEVEN YEARS BETWEEN THE DONOR AND THE DONEE AND, THUS, THE AVERMENT OF THE DONOR THAT THE DONOR AND DONE WERE ALMOST OF THE SAME AGE WAS INCORRECT. THIS, IN OUR CONSIDERED OPINION, CANNOT BE A VALID GROUND FOR DI SCARDING THE AFFIDAVIT IN ITS ENTIRETY. FURTHER, THERE IS ANOTHE R AFFIDAVIT ON RECORD DATED 30/03/2010 OF THE DONOR REITERATING TH E AVERMENTS OF THE EARLIER AFFIDAVIT BUT THIS AFFIDAVIT HAS NOT EVEN BEEN I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 17 CONSIDERED BY THE LD. CIT (A). FURTHER, THE DONOR H AS RESPONDED DIRECTLY TO THE ASSESSING OFFICER BY SENDING HIS CO NFIRMATION OF THE TRANSACTION THROUGH FAX ON 23/12/2007 WHICH THE DEPARTMENT HAS NOT DISPUTED. FURTHER, ABU DHABI COM MERCIAL BANK AS WELL AS THE SBI NRI BRANCH BOTH HAVE CONFIR MED THAT THE TRANSACTION WAS THROUGH ITS BANKING CHANNELS. IT IS ALSO UNDISPUTED THAT THE INDIA MILLENIUM DEPOSITS BONDS WERE IN THE NAME OF THE DONOR. THE LD. CIT (A) HAS ALSO MENTION ED THAT THE DONOR WAS NOT PRODUCED EITHER BEFORE THE AO OR BEFO RE HIM BUT HE HAS ALSO ACCEPTED THE FACT THAT THE ASSESSEE HAD OFFERED RECORDING OF STATEMENT THROUGH SKYPE/VIDEO CONFEREN CING WHICH WAS REFUSED BY THE LD. CIT (A). IN OUR CONSIDERED O PINION, SINCE, THE DONOR IS AN NRI, IT MAY BE PRACTICALLY IMPOSSIB LE FOR HIM TO TRAVEL TO INDIA FOR THE RECORDING OF A STATEMENT AN D THE ASSESSEE CANNOT BE MADE TO SUFFER ON THAT ACCOUNT. THE DONOR HAS REFERRED IN HIS AFFIDAVIT TO THE HELP EXTENDED TO THE DONOR S FAMILY IN HIS CHILDHOOD BY THE FATHER OF THE DONEE AS A REASON FO R THE GIFT BUT THE LD. CIT (A) HAS CONFIRMED THE ADDITION ON THE F OOTING THAT THERE WAS NEITHER ANY OCCASION FOR THE GIFT NOR WAS THERE ANY QUID PRO QUO ON THE PART OF THE ASSESSEE- DONEE. THIS AG AIN, IN OUR OPINION, IS NOT A COGENT REASON FOR DISBELIEVING TH E ASSESSEE. I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 18 FURTHER, THE DEPARTMENT HAS NOT DEMONSTRATED WITH A NY COGENT EVIDENCES AS TO HOW THE CONTENTIONS OF THE ASSESSEE WERE INCORRECT. THUS, IT IS OUR CONSIDERED OPINION, THAT ON THE FACTS OF THE CASE, THE ASSESSEE HAD DISCHARGED HIS ONUS AND THE ONUS WAS ON THE DEPARTMENT TO DEMONSTRATE WITH AMPLE EVIDENC E AS TO WHY THE CONTENTIONS OF THE ASSESSEE WERE TO BE DISBELIE VED. THEREFORE, ON AN OVERALL VIEW OF THE CIRCUMSTANCES SURROUNDING THE CASE, WE ARE UNABLE TO AGREE WITH THE FINDINGS OF THE LOWER AUTHORITIES AND RESPECTFULLY FOLLOWING THE RATIO OF THE VARIOUS JUD ICIAL PRECEDENTS AS DISCUSSED IN THE PRECEDING PARAGRAPHS, WE SET AS IDE THE ORDER OF THE LD. CIT (APPEALS) ON THIS ISSUE AND DIRECT T HE AO TO DELETE THE ADDITION. 5.10 AS FAR AS THE SECOND ISSUE RELATING TO DISALL OWANCE OF MOULD REPAIRS AND MAINTENANCE IS CONCERNED, THE ASSESSEE HAS PRODUCED COPIES OF INVOICES/BILLS OF THE VARIOUS AM OUNTS DEBITED TO THE HEAD MOULD REPAIR AND MAINTENANCE AND IT I S EVIDENT THAT MOST OF THE BILLS PERTAIN TO WELDING CHARGES. THE A MOUNTS PAID TOWARDS WELDING CHARGES RANGE BETWEEN RS. 3000/- AN D RS. 12,000/-. THE ASSESSEE HAS ALSO PRODUCED A COPY OF THE MOULDS LEDGER ACCOUNT UNDER FIXED ASSETS WHICH SHOWS PURC HASE OF RS. 1,08,000/- AGAINST BILL NO. 1264 ON 15 TH OF JUNE 2004 WHICH HAS I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 19 BEEN DULY CAPITALISED BY THE ASSESSEE. THE ASSESSEE HAS ALSO FILED COPIES OF ASSESSMENT ORDERS FOR ASSESSMENT YEARS 20 13 14 AND 2012 13 PASSED UNDER SECTION 143 (3) OF THE INCOM E TAX ACT, 1961 AND HAS SUBMITTED THAT NO SUCH DISALLOWANCE WA S MADE IN THESE RESPECTIVE ASSESSMENT YEARS. THE LD. AUTHORIS ED REPRESENTATIVE HAS ALSO DEMONSTRATED BEFORE THE BEN CH THAT THE EXPENSES ON MOULD REPAIRS AND MAINTENANCE FOR THE Y EAR ENDING 31/03/2012 WAS RS. 1,06,633/- AND FOR THE YEAR ENDI NG 31/03/2013 IT WAS RS. 1,31,714/- WHICH HAS BEEN ACC EPTED BY THE DEPARTMENT. THEREFORE, ON AN OVERALL CONSIDERAT ION OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THIS ADDITION ALSO NEEDS TO BE DELETED AS THE ASSESSEE H AS BEEN ABLE TO DEMONSTRATE THAT THESE EXPENSES WERE ESSENTIALLY OF REVENUE IN NATURE AND PERTAINED TO DAY TO DAY REPAIRS OF THE M OULD AND NOT IN THE NATURE OF CAPITAL EXPENDITURE AS CONTENDED B Y THE DEPARTMENT. THEREFORE, WE SET ASIDE THE ORDER OF TH E LD. CIT (APPEALS) ON THIS ISSUE ALSO AND DIRECT THE AO TO D ELETE THIS ADDITION. 6. IN THE FINAL RESULT THE APPEAL OF THE ASSESSEE S TANDS ALLOWED. I.T.A. NO. 2471/DEL/2014 ASSESSMENT YEAR 2005-06 20 ORDER PRONOUNCED IN THE OPEN COURT ON 08.06.2017. SD/- SD/- (N. K. SAINI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH JUNE 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REG ISTRAR ITAT NEW DELHI