Shri Hitendra Amratlal Nanavati, Surat V. The ACIT, Circle-3(1), Surat

ITA 2479/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9352 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 20-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M SHUKLA
• Keywords: Gift; Onus to prove; Set aside
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.2479/AHD/2004 (ASSESSMENT YEAR: 2001-2002) SHRI HITENDRA AMRATLAL NANAVATI, 3, KOTYARK NAGAR SOCIETY, OPP. NAVYUG COLLEGE, RANDER ROAD, SURAT-395 009 V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-3(1), SURAT (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI MANISH J SHAH, ADVOCATE RESPONDENT BY:- SHRI P M SHUKLA, SR. DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 08- 06-2004 FOR ASSESSMENT YEAR (AY) 2001-2002. THE ONL Y GROUND TAKEN BY THE ASSESSEE IN THIS APPEAL RELATES TO CON FIRMATION OF THE ADDITION OF GIFTS RECEIVED ON ACCOUNT OF ALLEGED UN EXPLAINED CASH CREDITS U/S 68 OF THE INCOME-TAX ACT, 1961 [THE AC T FOR SHORT] AMOUNTING TO RS.8,50,000/-. 2 AT THE OUTSET, BOTH THE LEARNED AR AND THE LEARN ED DR AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL IS DU LY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. I LABEN A NANAVATI [ITA NO.3103/AHD/2004], WHEREIN ON SIMILAR FACTS, THE TRIBUNAL HAS DELETED THE SIMILAR ADDITION. 2 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH TH E ORDER OF THIS TRIBUNAL IN THE CASE OF SMT. ILABEN A NANAVATI [ITA NO.3103/AHD.2004, IN WHICH BOTH OF US WERE THE PART IES]. WE FIND THAT THE FACTS AND THE ISSUE INVOLVED IN THE P RESENT CASE ARE EXACTLY SIMILAR TO THOSE IN THE CASE OF SMT. ILABEN A NANAVATI (SUPRA), WHEREIN THIS TRIBUNAL VIDE ORDER DATED 05- 09-2008 HAS DELETED THE SIMILAR ADDITION, BY OBSERVING AS UNDER :- 4. GROUND NO.2 RELATES TO THE ADDITION MADE IN RE SPECT OF GIFTS RECEIVED BY THE ASSESSEE. THE FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE CREDITED TO HER CAPITAL ACCOUNT T HE GIFT OF RS.2,00,000/- FROM SHRI DAYALBHAI AHIR AND RS.2,50, 000/- FROM SHRI HARISHBHAI G AHIR. WHEN THE AO ASKED TO PROVE THES E GIFTS, THE ASSESSEE SUBMITTED THE EVIDENCE REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE AO WAS NO T SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. WHEN THE MATTER W ENT IN APPEAL BEFORE THE CIT(A) WHO ALSO CONFIRMED THE ADDITION. 5. BEFORE US THE LEARNED AR BY REFERRING TO THE PA PER BOOK POINTED OUT THAT THE ASSESSEE HAS RECEIVED THE GIFT S FROM SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G AHIR. THE ASS ESSEE SUBMITTED THE CONFIRMATION ALONG WITH THE PASSBOOK OF THE NRI ACCOUNT OF EACH PARTY. THE AFFIDAVITS OF SHRI DAYALBHAI AHIR AND SH RI HARISHBHAI G AHIR WERE ALSO FILED. THE ASSESSEE HAS ALSO SUBMIT TED THE COPIES OF PASSPORTS OF SHRI DAYALBHAI AHIR AND SHRI HARISHBHA I G AHIR. OUR ATTENTION WAS DRAWN TOWARDS THE CONFIRMATIONS AS WE LL AS THE COPIES OF PASSBOOKS TO POINT OUT THAT THE FUND HAS COME IN TH E BANK ACCOUNT OF SHRI DAYALBHAI AHIR TO THE EXTENT OF RS.20 LACS WHI CH PROVES THE CREDITWORTHINESS OF SHRI DAYALBHAI. SIMILARLY, THE FUND HAS COME IN THE BANK ACCOUNT OF SHRI HARISHBHAI G AHIR TO THE E XTENT OF RS.25 LACS. FOR THIS OUR ATTENTION WAS DRAWN TOWARDS PAG ES 65, 66 AND 109 OF THE PAPER BOOK. IT WAS POINTED OUT THAT SHRI DA YALBHAI HAS MADE HUGE DONATION AND THE FACT OF MAKING DONATION WAS P UBLISHED IN THE GUJARATI DAILY GUJARAT MITRA DATED 19-5-2004. HE HAS EVEN DONATED RS.25,000/- TOWARDS CONSTRUCTION OF TEMPLE OF SHREE SIKOTAR MATAJI. 3 HE HAS ENTERED INTO TENANCY CONTRACT FOR ONE SHOP O F DN. 42,000 EQUAL TO RS.5,25,000/- AND ONE SHOP FOR DN. 1,70,000 EQUA L TO RS.8,75,000/-. THUS, IT WAS CONTENDED THAT THE CREDITWORTHINESS OF SHRI DAYALBHAI CANNOT BE DOUBTED. THE AO WITHOUT BRINGING ANY EVI DENCE ON RECORD HAS MERELY OBSERVED THAT SHRI DAYALBHAI WAS NOT HAV ING THE CREDITWORTHINESS AND MAY BE A SMALL TYPE FARMER. WH EN WORKING IN INDIA HE MAY BE WORKING AS CLASS-IV BUT HE WENT OUT OF INDIA, HE WENT TO DUBAI, HE WAS WELL SETTLED AND WAS HAVING H ANDSOME INCOME. THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DOU BTED AS THE FUND HAD BEEN SENT THROUGH BANK ACCOUNT. THUS, IT WAS CO NTENDED THAT THE ASSESSEE HAS PROVED ALL THE INGREDIENTS LAID DOWN U /S 68 OF THE ACT. THE AO HAS MERELY MADE THE ADDITION BECAUSE THE DON ORS WERE HAILING FROM THE ORDINARY BACKGROUND WHEN THEY WERE IN INDIA. THE LEARNED AR ALSO RELIED ON THE DECISION OF THE AHMED ABAD BENCH-D OF THE TRIBUNAL IN THE CASE OF SMT. KUSUMLATA BANSAL V DCIT (2008) 10 DTR (AHD) (TRIB) 82. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THAT THERE WAS NO BLOOD RELATIONSHIP BETWEEN THE AS SESSEE AND THE DONORS. EVEN THE ASSESSEE SHOULD ALSO EXPLAIN THE O CCASION FOR GIVING THE GIFTS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. THIS IS AN ADMITTED FACT THAT BOTH THE PERSONS WHO GIFTED THE AMOUNTS TO THE ASSESSEE ARE THE NON-RESIDENTS A ND THEY ARE WORKING OUTSIDE INDIA. THEY HAVE SENT THE MONEY THROUGH THE PROPER BANKING CHANNEL. THE FUND HAS COME TO THE BANK. COPY OF THE PASSPORT ALONG WITH THEIR AFFIDAVITS WAS DULY FILED. THEIR IDENTIT Y IS NOT UNDER DISPUTE. THE ASSESSEE SUBMITTED THE COPY OF THE PASSBOOK IN WHICH THE FUND TO THE EXTENT OF RS.40 LACS HAS COME IN THE ACCOUNT OF SHRI DAYALBHAI AHIR AND RS.25 LACS HAS COME IN THE ACCOUNT OF SHRI HARISHBHAI G AHIR. THIS ITSELF PROVES THAT BOTH THE PERSONS WHO HAVE GIFTED THE AMOUNTS TO THE ASSESSEE WERE HAVING THE CAPACITY TO GIFT THE AMOUNT. THEIR CREDITWORTHINESS WAS THERE. NO EVIDENCE OR MA TERIAL WAS FURNISHED BEFORE US BY THE LEARNED DR WHICH MAY PRO VE THAT THE FUNDS RECEIVED BY THESE PARTIES WERE NOT GENUINE. THEREFO RE, IN OUR OPINION, SHRI DAYALBHAI AHIR AND SHRI HARISHBBAI AHIR BOTH W ERE HAVING THE CREDITWORTHINESS AND THEIR CREDITWORTHINESS CANNOT BE DOUBTED. THE GENUINENESS OF THE TRANSACTIONS CAN ALSO NOT BE REJ ECTED IN VIEW OF THE FACT THAT THE ASSESSEE HAS RECEIVED THE GIFTS THROU GH ACCOUNT PAYEE CHEQUES AND THERE IS NO EVIDENCE TO THE CONTRARY BE ING BROUGHT ON RECORD THAT THE ASSESSEE HAS ACTUALLY NOT RECEIVED THE FUNDS OR HAS PASSED OVER THE FUNDS IN THE FORM OF CASH TO THE DO NORS. THE AO HAS 4 NOT ALLEGED SO. THE AO MERELY HAS OBSERVED ABOUT TH E FAMILY STATUS OF SHRI DAYALBHAI THAT HE WAS A SMALL TYPE OF FARMER. THAT MAY BE A PAST HISTORY AND FAMILY BACKGROUND AND THAT IS ALSO ON T HE BASIS OF HEAR-SAY WITHOUT BRINGING ANY CONCRETE EVIDENCE ON RECORD. R ATHER THE AO HIMSELF HAS ACCEPTED THAT HE HAS GONE OUT OF INDIA I.E. DUBAI AND IS WELL SETTLED AND WAS HAVING HANDSOME INCOME. THE DE CISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF 280-ITR-5 12 IS FULLY APPLICABLE IN THE CASE OF THE ASSESSEE. THE IDENTIT Y OF THE DONORS IS PROVED. EVEN THE SOURCE OF THE AMOUNTS GIFTED WAS A LSO ACCEPTED BY THE AO. THE ASSESSEE HAS ADDUCED THE EVIDENCE TO PR OVE THE GENUINENESS OF THE TRANSACTIONS THAT THE GIFTS WERE RECEIVED THROUGH BANKING CHANNEL. THE AFFIDAVITS OF THE DONORS WERE ALSO FURNISHED WHICH WERE NOT REJECTED BY THE REVENUE. COPIES OF T HE AFFIDAVITS ARE ALSO AVAILABLE BEFORE US IN THE PAPER BOOK. THE REV ENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH MAY PROVE THAT THE TRANSACTIONS ARE NOT GENUINE EXCEPT THE OBSERVATIONS MADE BY THE AO. WE ARE OF THE OPINION THAT THE ASSESSEE HAS DULY DISCHARGED T HE BURDEN OF PROOF AND BY PRODUCING THE EVIDENCE, THE BURDEN GETS SHIF TED ON THE REVENUE. THE GIFTS HAVE BEEN TREATED TO BE NON-GENU INE MERELY ON THE BASIS OF IMAGINATION, SURMISES AND CONJECTURES. SEC TION 68 LAYS DOWN THE RULE OF EVIDENCE. THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSA CTIONS AND CREDITWORTHINESS OF THE CREDITOR. WHERE THE ASSESSE E HAS DISCHARGED HIS BURDEN OF PROOF, THE BURDEN GETS SHIFTED ON THE REVENUE. WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SMT. KUSUMLATA BANSAL V DCIT (2008) 10 DTR (AHD) (TRIB) 82. THIS DECISION A LSO, IN OUR OPINION, SUPPORTS THE CASE OF THE ASSESSEE. IN THIS CASE THE BENCH HAS DISCUSSED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V P MOHANKALA (2007) 291 ITR 278 (SC) AND UNDER PARA-16 HAS HELD AS UNDER: 16. IN THE CASE OF P MOHANKALA (SUPRA), THE SUPREM E COURT DEALT WITH A CASE OF FOREIGN GIFTS AND THERE WAS EVIDENCE ON RECORD WHICH INDICATED THAT THE DONOR RECEIVED SUITABLE COMPENSA TION FROM THE ASSESSEE AND ON THE BASIS OF THIS MATERIAL, THE AO HELD THAT THE GIFTS, THOUGH APPARENT, WERE NOT REAL AND, ACCORDINGLY, TR EATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASSESSEE AS HIS INCOME UNDER S. 68 OF THE ACT. IT WAS SPECIFICA LLY NOTED BY THE SUPREME COURT THAT THE ASSESSEE DID NOT CONTEND THA T EVEN IF THAT EXPLANATION WAS NOT SATISFACTORY, THE AMOUNTS WERE NOT OF THE NATURE OF INCOME AND IN VIEW OF THE CONCURRENT FINDING OF THE AO, THE CIT(A) AND THE TRIBUNAL, THE SUPREME COURT HELD THA T THE HIGH COURT WAS NOT JUSTIFIED IN REVERSING THE SAME AND B Y OBSERVING THAT 5 THE MERE FACT THAT THE MONEY CAME BY WAY OF BANK CH EQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THIS IS A CLEAR CASE OF UNREAL GIF T AND WAS A RECEIPT OF COMPENSATION TO THE ASSESSEE IN THE GUISE OF GIF T AND IN THESE CIRCUMSTANCES THE SUPREME COURT UPHELD THE ASSESSME NT OF GIFT. NO SUCH POSITION IS EMERGING IN THIS CASE. THERE IS NO ALLEGATION OF ANY SORT BY REVENUE FOR THE DONORS WERE TO BE COMPENSAT ED BY THE ASSESSEE FOR A SERVICE RENDERED BY THEM OR OTHERWIS E TO THE ASSESSEE. THIS DECISION WOULD ALSO, THEREFORE, BE OF NO HELP TO THE REVENUE. WE DO AGREE WITH THE DECISION OF THE COORDINATE BEN CH AND, THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION MADE U/S 68 OF THE ACT. THUS, THIS GROUND STANDS ALLOWED. 4 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL, WE DELETE THE ADDITION OF RS.8,50,000/- M ADE U/S 68 OF THE ACT. 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-08-2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 21-08-2009 COPY OF THE ORDER FORWARDED TO : 1. SHRI HITENDRA AMRATLAL NANAVATI, 3, KOTYARK NAGA R SOCIETY, OPP. NAVYUG COLLEGE, RANDER ROAD, SURAT-39 5 009 2. THE ACIT, CIRCLE-3(1), SURAT 3. THE CIT CONCERNED 4. THE CIT(A)-II, SURAT 6 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT, AHMEDABAD MRV