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

ITA 2480/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9297 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 20-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Unexplained cash credit; Gift; Onus to prove; Set aside
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' (BEFORE S/SHRI H.L.KARWA AND A.N.PAHUJA) ITA NO.2480/AHD/2004 (ASSESSMENT YEAR: 2001-2002) SHRI DIPAK AMRATLAL NANAVATI, 9, SNEH SMRUTI SOCIETY, OPP. ADAJAN BUS DEPOT, RANDER ROAD, SURAT-9 V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), SURAT (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI MANISH J SHAH, ADVOCATE RESPONDENT BY:- SHRI C.K.MISHRA DR O R D E R PER H.L.KARWA (JUDICIAL MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 08-06-2004 FOR ASSESSMENT YEAR (AY) 2001-200 2. THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS APPEA L RELATES TO CONFIRMATION OF THE ADDITION OF GIFTS RE CEIVED ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME-TAX ACT, 1961 [THE ACT FOR SHORT] AMOUNTIN G TO RS.8,50,000/-. 2 AT THE OUTSET, BOTH THE LEARNED AR AND THE LEARNED DR AGREED THAT THE ISSUE INVOLVED IN THIS A PPEAL IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. ILABEN A NANAVATI [ITA NO.3103/AHD/200 4], 2 WHEREIN ON SIMILAR FACTS, THE TRIBUNAL HAS DELETED THE SIMILAR ADDITION. 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE MATERIAL ON RECORD ALO NG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAV E ALSO GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE CASE OF SMT. ILABEN A NANAVATI [ITA NO.3103/AHD.2004. WE FIND TH AT THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT CAS E 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 OBS ERVING AS UNDER:- 4. GROUND NO.2 RELATES TO THE ADDITION MADE IN RESPECT OF GIFTS RECEIVED BY THE ASSESSEE. THE FAC TS RELATING TO THIS GROUND ARE THAT THE ASSESSEE CREDITED TO HE R CAPITAL ACCOUNT THE GIFT OF RS.2,00,000/- FROM SHRI DAYALBH AI AHIR AND RS.2,50,000/- FROM SHRI HARISHBHAI G AHIR. WHEN TH E AO ASKED TO PROVE THESE GIFTS, THE ASSESSEE SUBMITTED THE EVIDENCE REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE AO WAS NOT SA TISFIED WITH THE EXPLANATION OF THE ASSESSEE. WHEN THE MAT TER WENT IN APPEAL BEFORE THE CIT(A) WHO ALSO CONFIRMED THE ADDITION. 5. BEFORE US THE LEARNED AR BY REFERRING TO THE PAPER BOOK POINTED OUT THAT THE ASSESSEE HAS RECEIV ED THE GIFTS FROM SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G AHIR. THE ASSESSEE SUBMITTED THE CONFIRMATION ALONG WITH THE PASSBOOK OF THE NRI ACCOUNT OF EACH PARTY. THE AFFI DAVITS OF SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G AHIR WERE ALSO FILED. THE ASSESSEE HAS ALSO SUBMITTED THE COPIES OF PASSPORTS OF SHRI DAYALBHAI AHIR AND SHRI HARISHBHA I G AHIR. OUR ATTENTION WAS DRAWN TOWARDS THE CONFIRMATIONS A S WELL AS THE COPIES OF PASSBOOKS TO POINT OUT THAT THE FUND HAS COME IN THE BANK ACCOUNT OF SHRI DAYALBHAI AHIR TO THE E XTENT OF RS.20 LACS WHICH PROVES THE CREDITWORTHINESS OF SHR I DAYALBHAI. SIMILARLY, THE FUND HAS COME IN THE BAN K ACCOUNT 3 OF SHRI HARISHBHAI G AHIR TO THE EXTENT OF RS.25 LA CS. FOR THIS OUR ATTENTION WAS DRAWN TOWARDS PAGES 65, 66 AND 10 9 OF THE PAPER BOOK. IT WAS POINTED OUT THAT SHRI DAYALBHAI HAS MADE HUGE DONATION AND THE FACT OF MAKING DONATION WAS P UBLISHED IN THE GUJARATI DAILY GUJARAT MITRA DATED 19-5-20 04. HE HAS EVEN DONATED RS.25,000/- TOWARDS CONSTRUCTION OF TE MPLE OF SHREE SIKOTAR MATAJI. HE HAS ENTERED INTO TENANCY CONTRACT FOR ONE SHOP OF DN. 42,000 EQUAL TO RS.5,25,000/- A ND ONE SHOP FOR DN. 1,70,000 EQUAL TO RS.8,75,000/-. THUS, IT WAS CONTENDED THAT THE CREDITWORTHINESS OF SHRI DAYALBH AI CANNOT BE DOUBTED. THE AO WITHOUT BRINGING ANY EVIDENCE O N 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 HANDSOME INCOME. THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DOUBTED AS THE FUND HAD BE EN SENT THROUGH BANK ACCOUNT. THUS, IT WAS CONTENDED THAT T HE ASSESSEE HAS PROVED ALL THE INGREDIENTS LAID DOWN U /S 68 OF THE ACT. THE AO HAS MERELY MADE THE ADDITION BECAU SE THE DONORS WERE HAILING FROM THE ORDINARY BACKGROUND WH EN THEY WERE IN INDIA. THE LEARNED AR ALSO RELIED ON THE DE CISION OF THE AHMEDABAD BENCH-D OF THE TRIBUNAL IN THE CASE O F SMT. KUSUMLATA BANSAL V DCIT (2008) 10 DTR (AHD) (TRIB) 82. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THAT T HERE WAS NO BLOOD RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONORS. EVEN THE ASSESSEE SHOULD ALSO EXPLAIN THE OCCASION FOR GIVING THE GIFTS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE MATERIAL ON RECORD ALO NG WITH THE ORDER OF THE TAX AUTHORITIES. THIS IS AN ADMITT ED FACT THAT BOTH THE PERSONS WHO GIFTED THE AMOUNTS TO THE ASSE SSEE ARE THE NON-RESIDENTS AND THEY ARE WORKING OUTSIDE INDI A. THEY HAVE SENT THE MONEY THROUGH THE PROPER BANKING CHAN NEL. 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 PAS SBOOK 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 C OME IN THE ACCOUNT OF SHRI HARISHBHAI G AHIR. THIS ITSELF PROVES THAT BOTH THE PERSONS WHO HAVE GIFTED THE AMOUNTS TO THE 4 ASSESSEE WERE HAVING THE CAPACITY TO GIFT THE AMOUN T. THEIR CREDITWORTHINESS WAS THERE. NO EVIDENCE OR MATERIAL WAS FURNISHED BEFORE US BY THE LEARNED DR WHICH MAY PRO VE THAT THE FUNDS RECEIVED BY THESE PARTIES WERE NOT GENUIN E. THEREFORE, IN OUR OPINION, SHRI DAYALBHAI AHIR AND SHRI HARISHBBAI AHIR BOTH WERE HAVING THE CREDITWORTHINE SS AND THEIR CREDITWORTHINESS CANNOT BE DOUBTED. THE GENUI NENESS OF THE TRANSACTIONS CAN ALSO NOT BE REJECTED IN VIE W OF THE FACT THAT THE ASSESSEE HAS RECEIVED THE GIFTS THROUGH AC COUNT PAYEE CHEQUES AND THERE IS NO EVIDENCE TO THE CONTR ARY BEING BROUGHT ON RECORD THAT THE ASSESSEE HAS ACTUA LLY NOT RECEIVED THE FUNDS OR HAS PASSED OVER THE FUNDS IN THE FORM OF CASH TO THE DONORS. THE AO HAS NOT ALLEGED SO. T HE AO MERELY HAS OBSERVED ABOUT THE 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 THE BASIS OF HEAR-SAY WITHOUT BRINGING ANY CONCRETE EVI DENCE ON RECORD. RATHER 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 DECISION OF THE HONBLE GUJARA T HIGH COURT IN THE CASE OF 280-ITR-512 IS FULLY APPLICABL E IN THE CASE OF THE ASSESSEE. THE IDENTITY OF THE DONORS IS PROVED. EVEN THE SOURCE OF THE AMOUNTS GIFTED WAS ALSO ACCE PTED 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 THE AFFIDAVITS ARE ALSO AVAILABL E BEFORE US IN THE PAPER BOOK. THE REVENUE 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 SHIFTED ON THE REVENUE. THE GIFTS HAVE BEEN TREATED TO BE NON-GENUINE MERELY ON THE BASIS OF IMAGINATION, SUR MISES AND CONJECTURES. SECTION 68 LAYS DOWN THE RULE OF E VIDENCE. THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITOR. WHERE THE ASSESSE E HAS DISCHARGED HIS BURDEN OF PROOF, THE BURDEN GETS SHI FTED ON THE REVENUE. WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SMT. KUSUMLATA BANSAL V DCIT (2008) 10 DTR (AHD) 5 (TRIB) 82. THIS DECISION ALSO, IN OUR OPINION, SUPP ORTS THE CASE OF THE ASSESSEE. IN THIS CASE THE BENCH HAS DI SCUSSED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT V P MOHANKALA (2007) 291 ITR 278 (SC) AND UNDER PAR A-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 R ECEIVED SUITABLE COMPENSATION FROM THE ASSESSEE AND ON THE BASIS OF THIS MATERIAL, THE AO HELD THAT THE GIFTS, THOUG H APPARENT, WERE NOT REAL AND, ACCORDINGLY, TREATED ALL THOSE A MOUNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASS ESSEE AS HIS INCOME UNDER S. 68 OF THE ACT. IT WAS SPECIF ICALLY NOTED BY THE SUPREME COURT THAT THE ASSESSEE DID NO T CONTEND THAT EVEN IF THAT EXPLANATION WAS NOT SATIS FACTORY, THE AMOUNTS WERE NOT OF THE NATURE OF INCOME AND IN VIEW OF THE CONCURRENT FINDING OF THE AO, THE CIT(A) AND TH E TRIBUNAL, THE SUPREME COURT HELD THAT THE HIGH COUR T WAS NOT JUSTIFIED IN REVERSING THE SAME AND BY OBSERVIN G THAT THE MERE FACT THAT THE MONEY CAME BY WAY OF BANK CHEQUE S AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSAC TION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THIS IS A CLE AR CASE OF UNREAL GIFT AND WAS A RECEIPT OF COMPENSATION TO TH E ASSESSEE IN THE GUISE OF GIFT AND IN THESE CIRCUMST ANCES THE SUPREME COURT UPHELD THE ASSESSMENT OF GIFT. NO SUC H POSITION IS EMERGING IN THIS CASE. THERE IS NO ALLE GATION OF ANY SORT BY REVENUE FOR THE DONORS WERE TO BE COMPENSATED BY THE ASSESSEE FOR A SERVICE RENDERED BY THEM OR OTHERWISE TO THE ASSESSEE. THIS DECISION WO ULD 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 DECISION OF TRIBUNAL DATED 5 TH SEPTEMBER 2008 PASSED IN THE CASE OF SMT. ILABEN A. NANAVATI(ITA NO.3103/AHD/2004) RELATING T O 6 ASSESSMENT YEAR 2001-02 (SUPRA), WE DELETE THE ADDI TION OF RS.8,50,000/- MADE U/S 68 OF THE ACT. 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2009 SD/- SD/- (A.N.PAHUJA) ACCOUNTANT MEMBER (H.L.KARWA) JUDICIAL MEMBER DATE : 31-08-2009 PARAS* COPY OF THE ORDER FORWARDED TO : 1. SHRI HITENDRA AMRATLAL NANAVATI, 3, KOTYARK NAGA R SOCIETY, OPP. NAVYUG COLLEGE, RANDER ROAD, SURAT- 395 009 2. THE ACIT, CIRCLE-3(1), SURAT 3. THE CIT CONCERNED 4. THE CIT(A)-II, SURAT 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, IT AT, AHMEDABAD