Shri Chhaganlal K.Patel,HUF, V. The Income tax Officer,Ward-2(3), Bhavnagar

ITA 2521/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6814 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 07-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K TOPIWALA
• Assessee Lawyers: NIMISH V VAYAWLA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI D.K.TYAGI, HONBLE JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, HONBLE ACCOUNTANT MEMBER ITA NO.2521/AHD/2008 ASSESSMENT YEAR:2004-05 DATE OF HEARING:31.3.11 DRAFTED:6.4.11 CHHAGANLAL K PATEL, HUF, VILLAGE NARI, DIST. BHAVNAGAR PAN NOAADHP3097H V/S . INCOME TAX OFFICER, WARD-2(3), AAYKAR BHAVAN, NR JASONATH CHOWK, NAKU BAG, BHAVNAGAR 364001 (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI NIMISH V VAYAWLA, AR RESPONDENT BY:- SHRI R.K. TOPIWALA, DR O R D E R PER D.K.TYAGI, JUDICIAL MEMBER:- THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF COM MISSIONER OF INCOME-TAX(APPEALS)-XX, AHMEDABAD IN APPEAL NO. CIT (A)-XX/180/06-07 DATED 20-03-2008 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION THAT OF RS.90,000/- IN VIEW OF THE FACTS AS WELL AS LAW CIT(A) OUGHT TO HAVE APPRECIATE THAT, CREDIT WORTHINESS OF DONOR IS FULLY ESTABLISH. ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 2 3. THE BRIEF FACTS OF THE CASE ARE THAT WHILE ANALY ZING THE ASSESSMENT THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS RECEIV ED GIFTS FROM THE FOLLOWING PERSONS:- S NO. GIFT RECEIVED FROM AMOUNT 1. AMRUTBEN POPATBHAI RS.2,00,000/- 2. POPATBHAI PARSHHOTTAMBHAI RS.2,00,000/- 3. POPATBHAI PARSHOTTAMBHAI (HUF) RS.2,00,000/- 4. AMRUTBEN POPATBHAI RS. 50,000/- 5. POPATBHAI PARSHOTTAMBHAI (HUF) RS.1,00,000/- 6. AMRUTBEN POPATBHAI RS. 50,000/- 7. POPATBHAI PARSHOTTAMBHAI RS.1,00,000/- TOTAL RS.9,00,000/- THE ASSESSEE FURNISHED DECLARATION OF GIFT DEED OF THE ABOVE DONORS DURING THE ASSESSMENT PROCEEDINGS AND ALSO FURNISHED COPY OF BANK ACCOUNT TO SHOW THE DEPOSITS MADE BY THEM. THE ASSESSING OFFICER MA DE DETAILED INQUIRIES AND DURING THOSE INQUIRIES THE ASSESSEE IN SUPPORT OF HIS CLAIM FURNISHED AFFIDAVITS FROM ALL THE DONORS. 4. AFTER TAKING INTO CONSIDERATION ALL THE SUBMISSI ON OF THE ASSESSEE ASSESSING OFFICER TREATED THE GIFT SHOWN BY HIM AT RS.9 LAKH AS NON-GENUINE AND ADDED THE SAME AS INCOME OF ASSESSEE WHILE OBSE RVING AS UNDER:- 11. THE SUBMISSION FURNISHED BY THE ASSESSEE IS CO NSIDERED. HOWEVER, THE SAME IS NOT ACCEPTED FOR FOLLOWING REASONS:- 1. SHRI POPATBHAI PARSHOTTAMBHAI FROM WHOM ASSESSEE HAS RECEIVED GIFT IS CLOSE RELATIVE. BROTHER IN LAW OF THE ASSES SEE WHO IN HIS STATEMENT STATED THAT HE DOES NOT KNOW WHETHER HE I S HAVING BANK ACCOUNT. 2. IN ANSWER TO QUESTION NO.9 SHRI POPATBHAI PARSHO TTAMBHAI CLEARLY STATED THAT HE IS WORKING IN SPARE TIME LABOUR WORK AT RS.40 TO RS.50 PER DAY. A PERSON WHO IS WORKING IN SPARE TIME FOR RS.40 TO 50 PER DAY AS LABOURER CAN NOT GIVE GIFT OF SUCH HUGE AMOU NT. THIS PROVES THAT ASSESSEE HAS NOT CREDITWORTHINESS TO GIVE GIFT . 3. SHRI POPATBHAI PARSHOTTAMBHAI AS A KARTA OF HUF AS WELL AS IN HIS INDIVIDUAL CAPACITY AND SMT. AMRUTBEN POPATBHAI HAV E GIVEN GIFT SUCH A HUGE AMOUNT OF GIFT FOR WHICH THEY FIRST OPE NED BANK ACCOUNTS AND THEN DEPOSITED THE AMOUNT IN PEACE MEAL AS REFE RRED ABOVE. ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 3 4. FURTHER IN ANSWER TO QUESTION NO. 11, SHRI POPAT BHAI PARSHOTTAMBHAI STATED THAT HIS WIFE AMRUTBEN IS HELPING IN HIS AGR ICULTURE ACTIVITY AND SHE IS ALSO TAKING CARE OF HIS CATTLE THIS PROVES T HAT ALL THE THREE PERSONS WHO HAVE GIFTED SUCH HUGE AMOUNT TO THE ASS ESSEE HAVE NO CREDITWORTHINESS SO AS TO GIVE GIFT. 5. IN HIS SUBMISSION ASSESSEE HAS SUBMITTED THAT SH RI POPATHBHAI PARSHOTTAMBHAI AND SMT. AMRUTBEN PARSHOTTAMBHAI ARE ASSESSED TO TAX, PARTICULARLY FOR ASSESSMENT YEAR 2004-05. IT I S WORTH NOTING THAT TO LEGALISE THE GIFT GIVEN TO THE ASSESSEE, ASSESSE E HAS MANAGED TO FILE RETURN ON INCOME OF SHRI POPATBHAI PARSHOTTAMB HAI AND AMRUTBEN POPATBHAI, EVEN THOUGH THERE WAS NO TAXABL E INCOME BY THE DONOR. 6. THE ASSESSEE IN HIS SUBMISSION AND IN RESPONSE T O SHOW-CAUSE NOTICE SUBMITTED THAT THERE ARE INTERNAL AND EXTERN AL EVIDENCES WITH THE INCOME TAX DEPARTMENT FOR THE VALID GIFT SUCH A S VALID GIFT DEDUCTION, PREPAID ON NON-JUDICIAL STAMP PAPER AND COPY OF BANK ACCOUNTS. THE ASSESSEES ARGUMENT IS TOTALLY BASELE SS AS GIFT DEED PREPAID ARE BASICALLY INVALID AS ON DECLARATION OF GIFT DEEDS, THERE ARE IMPRESSION OF LEFT HAND THUMB OF SHRI POPATBHAI PAR SHOTTAMBHAI ON THE DECLARATION OF GIFT DEED PREPAID FOR KARTA OF H UF AS WELL AS PREPAID FOR HIS INDIVIDUAL CAPACITY. DURING THE COU RSE OF PROCEEDINGS FOR TAKING OF STATEMENT ON OATH UNDER SECTION 131(1 ) OF THE ACT, SHRI POPATBHAI HAS SIGNED THE STATEMENT RECORDED ON 14/1 1/2006. THAT MEANS THAT SHRI POPATBHAI PARSHOTTAMBHAI IS LITERAT E AND KNOWS TO SIGN DOCUMENTS. IN SHOW CAUSE NOTICE IT WAS SPECIFI CALLY INFORMED THE ASSESSEE THAT THE GIFT DEDUCTION AS WELL AS ARE BOGUS ONE AND NOT ACCEPTABLE AS SAME HAS NOT BEEN SIGNED BY POPAT BHAI. 7. IN RESPECT OF MISTAKE MADE BY SHRI POPATBHAI PAR SHSOTTAMBHAI IN GIVING WRONG STATEMENT DUE TO HIS ILLS HEALTH AND P OOR REMEMBRANCE IS NOT ACCEPTED AS SHRI POPATBHAI WAS IN SOUND HEAL TH AND ALSO GIVEN IN SOUND MIND ALSO THE STATEMENT WAS RECORDED IN THE PRESENCE OF ASSESSEE. SHRI C.K. PATEL AS WELL AS IN PRESENCE OF SHRI J.K. SHAH, CHARTERED ACCOUNTANT. AS SUCH, STATEMENT WAS RECORDED AS PER PROCEDURE AND AS PER LAW. ONLY BECAUSE TDHE STATEMENT GIVENBY SHIR POPATBHAI PARSHOTTAMBHAI WHICH LEADS TO INVALID GIFT AND NON-GENUINE LOAN CANNOT BE ALTERED STATING THAT POPATBHAI PARSHOTTAMBHAI WAS NOT IN GOOD HEALTH AND IS HAVING POOR REMEMBRANCE. 8. IT IS WORTH NOTHING THAT ASSESSEE INDUCED SHRI P OPATBHAI PARSHOTTAMBHAI TO OPEN BANK ACCOUNT DEPOSITED IN HI S FUND IN THIS ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 4 ACCOUNTS IN PEACE MEAL AND THEN MATERIALIZE TO GIVE GIFT. THIS CAN BE PROVED FROM THE FACT THAT SHRI POPATBHAI PARSHOTTAM BHAI IS STAYING AT DADVA TAL. UMRALA, WHEREAS ACCOUNT IS OPENED AT BHA VNAGAR. EVEN BANK ACCOUNT IS ALSO OPENED IN JOINT NAME OF SHRI P OPATBHAI PARSHOTTAMBHAI AND PARESH, CLOSE RELATIVE. 9. IN RESPECT OF UNSECURED LOAN RECEIVED BY THE ASS ESSEE FROM VASANTBEN C PATEL OF RS.400000/-, IT IS NOTICE THAT VASANATBEN IS WIFE OF ASSESSEE WHO HAS RECEIVED GIFT OF RS.2,00,0 00/- ON 03/01/2004, RS.1,00,000/- ON 08/01/2004, AND RS.1,0 0,000/- ON 10/01/2004 FROM ANANDBHAI SAVJIBHAI GOYANI. AN INQU IRY WAS ALSO CARRIED OUT IN THE CASE OF SHRI ANANDBHAI SAVJIBHAI GOYANI AND WAS GATHERED THAT ANNANDBHAI HAS DEPOSITED THESE AMOUNT IN PEACE MEAL BASIS IN THE SAME MODUS OPERANDI AS IN THE CAS E OF POPATBHAI PARSHOTTAMBHAI. ANANDBHAI SAVJIBHAI STAYS AT PARVAD I. TAL. GANYADHAR, HOWEVER, THE BANK ACCOUNT IS OPENED AT B HAVNAGAR AND THAT TO JOINTLY WITH KALPESHBHAI, SOON OF THE ASSES SEE. 12. IN THE CASE OF ANANBHAI SAVJIBHA GOYANI (HUF), IT WAS GATHERED THAT ANANDBHAI SAVJIBHAI HAS ALSO GIVEN GIFT OF RS. 400000/- TO SMT. VASANTEN C PATEL, WIFE OF THE ASSESSEE. 03.01.2004 RS.200000/- 08.01.2004 RS.100000/- 12.01.2004 RS.100000/- AS DISCUSSED ABOVE, THE ASSESSEE HAS SHOWN AS RECEI VED LOAN OF RS.400000/- FROM SMT. VASANATBEN C PATEL. FURTHER, ON VERIFICATION OF BANK ACCOUNT OF SHRI ANANDBHAI SAVJIBHAI FOLLOWING AMOUNTS ARE CREDITED BY OPENING BANK ACCOUNT. DATE CASH DEPOSIT 24/12/03 RS. 1100/- 29/12/03 RS. 45000/- 30/12/03 RS. 45000/- 31/12/03 RS. 45000/- 02/01/04 RS. 49000/- 03/01/04 RS. 16000/- RS.201100/- 06/01/04 RS. 49000/- 07/01/04 RS. 49000/- 08/01/04 RS. 5000/- RS.103000/- 10/01/04 RS. 49000/- 12/01/04 RS. 49000/- ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 5 RS. 98000/- IT WAS WORTH NOTING THAT ANANDBHAI HAS OPENED BANK ACCOUNT WITH SHRI KALPESHBHAI, SON OF THE ASSESSEE. FURTHER, MOST WORTH NOTING IS THAT INTRODUCER OF TH E BANK ACCOUNT IS SHRI C.K. PATEL AND IT WAS ALSO GATHERED FROM PAY-IN-SLI P OF BANK DEPOSIT THAT DEPOSITS MADE IN THIS ACCOUNT ARE BY SHRI K.C. PATE L AND BY SHRI C.K. PATEL. FUND SO COLLECTED BY THE ASSESSEE IS UTILIZED BY HI M (HUF) IN THE FIRM M/S. ANANAPURNA JEMS, MUMBAI AND C.K. PATEL (PERSON AL). 13. THEREFORE, IT CAN BE EASILY ARRIVED THAT GIFT R ECEIVED BY THE ASSESSEE OF RS. 3 LACS EACH FROM POPATBHAI PARSHOTTAMBHAI (H UF). POPATBHAI PARSHOTTAMBHAI (INDIVIDUAL) AND AMRUTBEN POPATLAL A RE THE FUND OF THE ASSESSEE. FURTHER LOAN SHOWN AS RECEIVED OF RS.4 LA CS FROM HIS WIFE IS ALSO THE FUND OF THE ASSESSEE. THEREFORE, THE GIFT SHOWN BY THE ASSESSEE OF RS. 9 LACS IS TREATED AS NON-GENUINE GI FT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE FIRST APP ELLATE AUTHORITY AND THE SUBMISSION OF THE ASSESSEE BEFORE HIM WAS AS UNDER: - 3.2 THE APPELLANTS SUBMISSION IS AS UNDER: GIFT RECEIVED BY THE ASSESSEE FROM FOLLOWING PERSO NS: A) POPATBHAI PARSHOTTAMBHAI (INDL.) RS.3,00,000/- B) POPATBHAI PARSHOTTAMBHAI (HUF) RS.3,00,000/- C) AMRUTBHAI POPATBHAI RS.3,00,000 EACH OF THE ABOVE DONOR IS CREDITWORTHY AND THE FOL LOWING POINTS MAY BE NOTED DOWN IN CONNECTION WITH EACH OF THEM: A) PAPATBHAI PARSHOTTAMBHAI INDIVIDUAL: POPATBHAI HAS FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 & ASSESSMENT YEAR 2003-04 IN WARD-2(4) HE IS HAVING INCOME FROM SELLING OF MILK AND CURDS. INCOME FOR ASSESSMENT YEAR 2004-05 RS.56,972/- GIFT CLEARLY DISCLOSED IN HIS RETURN OF INCOME. GIFT GIVEN OUT OF CURRENT YEARS INCOME AND PAST YE ARS SAVINGS ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 6 LOAN AND ADVANCES OF RSS.2,59,000/- AS DISCLOSED IN RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04 RECEIVED BACK BY THE DONOR. THE AMOUNT USED IN GIFTING RS.3,00,000/- TO C.K.PAT EL HUF. SHRI POPATBHAI RECEIVED BACK THE ADVANCE OF RS.2,59,000/ - GIVEN ON ACCOUNT OF PURCHASE OF IMMOVABLE PROPERTY JOINTLY W ITH HIS WIFE AMRUTBEN POPATBHAI WHICH WAS CANCELLED LATER ON. B) POPATBHAI PURSHOTTAMBHAI (HUF):- AGRICULTURISTS HOLDING 17 BIGHA LAND GROWING KAPAS AND JOWAR 17 BIGHAS WILL YIELD 680 MANN, ASSUMING A RATE OF R S.500/- PER MANN (20 KG.) THE YIELD WILL BE RS.3,40,000/- (GROSS). POPATBHAI CONFIRMED IN HIS STATEMENT RECORDED BY A. O THAT HE IS HAVING AVERAGE NET AGRICULTURE INCOME OF RS.2.00 LA KHS PER ANNUM (REF. ANS. NO.8) GIFT SQUARELY COVERED FROM NET AGRICULTURE INCOME A S CALCULATED ABOVE. C) AMRUTBEN POPATBHAI DONOR FILED RETURN OF INCOME FOR A.Y 2004-05 & A.Y 2003-04 DISCLOSING RETURNED INCOME OF RS.58,308/- & 57,687/ - RESPECTIVELY. AMRUTBEN ENGAGED IN CATTLE REARING AND SUPPLY OF MI LK AND CURDS. ADVANCE OF RS.2,73,650/- RECEIVED BACK BY THE DONOR IN A.Y 2004-05 UTILIZED IN GIVING THE GIFT. SMT. AMRUTBEN RECEIVED BACK THE ADVANCE OF RS.2,73,650/- GIVEN ON ACCOUNT OF PURCHASE OF IM MOVABLE PROPERTY JOINTLY WITH HER HUSBAND ON CANCELLATION O F THE AGREEMENT TO PURCHASE (SATA KHAT). AMRUTBEN NOT EXAMINED BY A.O LD. CIT(A), HOWEVER, DISMISSED THE APPEAL OF ASSESS EE AND CONFIRMED THE ACTION OF ASSESSING OFFICER. FURTHER, AGGRIEVED ASS ESSEE NOW IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE REITERATED THE SAME SUBMISSION AS MADE BEFORE LOWER AUTHORITIES AND ALS O RELIED ON THE DECISION OF ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 7 MADHYA PRADESH HIGH COURT IN THE CASE OF PRAKASH CHAND NAHATA V. CIT (2008) 301 ITR 134 (MP) FOR MAKING THE SUBMISSION T HAT SINCE AFFIDAVITS WERE FILED BY THE DONORS BEFORE ASSESSING OFFICER, HE SH OULD HAVE RE-EXAMINED THEM AND FOR THIS PURPOSE MATTER MAY KINDLY BE REST ORED BACK TO THE FILE OF ASSESSING OFFICER. 6. ON THE OTHER HAND LD. DR PLACING RELIANCE OF THE LOWER AUTHORITIES SUBMITTED THAT ORDER OF LOWER AUTHORITIES MAY KINDL Y BE CONFIRMED. 7. THE ASSESSING OFFICER HAS SUMMARIZED THE REASONI NG FOR TREATING THESE GIFTS AS NON-GENUINE IN PARA-11 OF HIS ORDER. SINCE THE FINDING OF AO REMAINED UN-CONTROVERTED BY ASSESSEE BEFORE LD. CIT(A) AS WE LL AS BEFORE US, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY LOWER AUTHORITIES. THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF PRAKASH CHAND NAHATA (SUPRA) THAT AFTER SUBMISSIONS OF AFFIDAVITS BY THE DONORS AO SHOULD HAVE EXAMINED THEM AND THEREFORE MATTER SHOULD GO BACK T O THE FILE OF AO FOR SUCH RE-EXAMINATION OF THE DONORS IS DEVOID OF MERIT AS WE FIND THAT THE AFFIDAVITS WERE FILED BY THE DONORS WITHOUT ANY SUPPORTING EVI DENCE IN RESPECT OF THE CONTENTS OF THE AFFIDAVIT. MERELY FILING OF AFFIDAV IT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IS NOT A SUFFICIENT GROUND F OR RE-EXAMINATION OF THE DONORS BY THE AO. IN VIEW OF THE ABOVE, THE GROUND TAKEN BY ASSESSEE IN THIS APPEAL IS DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/04/2011 SD/- SD/- (D.C.AGRAWAL) (D.K. TYA GI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 21/04/2011 ITA NO.2521/AHD/2008 A.Y. 2004-05 CHHAGANLAL K PATEL HUF V. ITO WD-2(3) BNG PAGE 8 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XX, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD