ABHINAV RAMKUMAR KHANNA, MUMBAI V. INCOME TAX OFFICER 2(3)(2), MUMBAI

ITA 2683/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6372 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITNYA ANJARIA
• Keywords: Unexplained cash credit; Gift
• Section: 68; 69; 2

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, ITA NO.2683/MUM/2018 ASSESSMENT YEAR: 2014-15 ABHINA V RAMKUMAR KHANNA, 101, HAZARIBAG CHS, 10 TH ROAD, JVPD, MUMBAI-400049 / VS. INCOME TAX OFFICER - 2(3)(2) , MUMBAI / ASSESSEE / REVENUE P.A. NO.ALBPK3260G ' # $% ASSESSEE BY SHRI RAKESH KAPOOR - AR ' # $ / REVENUE BY SHRI CHAITNYA ANJARIA - DR % DATE OF HEARING 08/01/2019 $ / DATE OF ORDER: 08/01/2019 $ % O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 28/03/2018 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, UPHOLDING THE ADDITION ON ACCOUNT OF GIFTS RECEIVED FROM CLOSE RELATIVES OF RS.19,82,824/- UND ER ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 2 SECTION 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) 2. DURING HEARING, SHRI RAKESH KAPOOR, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE ASSESS EE RECEIVED GIFTS THROUGH BANKING CHANNEL FROM FATHER, MOTHER AND FATHER-IN-LAW. MY ATTENTION WAS INVITED TO VARIOUS PAGES OF THE PAPER BOOK INCLUDING BANK STATEMENTS OF THE DONORS EVIDENCING THAT THE MONEY WAS GIVEN BY THE RESPECTIVE DONORS FROM THEIR ACCOUNTS THROUGH BANKING CHANNEL. ON THE OTHER HAND, THE LD. DR, SHRI CHAITNYA AJNARIA, DEFENDED THE ADDITION MADE B Y THE LD. ASSESSING OFFICER AND SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE PAID THE IMPUGNED OF RS.19,82,824/- TO M/S SIDHARTH ENCLAVE TOWARDS PURCHASE OF FLAT NO.506 IN THE PROJECT SIDHARTH ENC LAVE. THE ASSESSEE UTILIZED HIS OWN FUNDS AND BORROWED FU NDS ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 3 FROM HIS PARENTS AND FATHER-IN-LAW. THIS PAYMENT WA S CONSIDERED AS UNEXPLAINED CASH CREDIT BY THE LD. ASSESSING OFFICER AND THE FIRST APPELLATE AUTHORITY SUSTAINED THE SAME. BEFORE ADVERTING FURTHER, I AM REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE S ECTION 68 OF THE ACT, SO THAT THE MATTER MAY BE ANALYZED APPROPRIATELY. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND T HE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIAL LY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SH ARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALS O OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY : PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME TH E ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 4 SUM REFERRED TO THEREIN IS RECORDED, IS A VENTURE C APITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE (23FB)OF SECTION 10. 2.2. AS PER SECTION 68 OF THE ACT, ONUS IS UPON TH E ASSESSEE TO DISCHARGE THE BURDEN SO CAST UPON. FIRS T BURDEN IS UPON THE ASSESSEE TO SATISFACTORILY EXPLA IN THE CREDIT ENTRY CONTAINED IN HIS BOOKS OF ACCOUNTS. TH E BURDEN HAS TO BE DISCHARGED WITH POSITIVE MATERIAL (OCEANIC PRODUCTS EXPORTING COMPANY VS CIT 241 ITR 497 (KERALA.). THE LEGISLATURE HAD LAID DOWN THAT I N THE ABSENCE OF SATISFACTORY EXPLANATION, THE UNEXPLAINE D CASH CREDIT MAY BE CHARGED U/S 68 OF THE ACT. OUR V IEW IS FORTIFIED BY THE RATIO LAID DOWN IN HONBLE APEX CO URT IN P. MOHANKALA (2007)(291 ITR 278)(SC). A CLOSE READI NG OF SECTION 68 AND 69 OF THE ACT MAKES IT CLEAR THAT IN THE CASE OF SECTION 68, THERE SHOULD BE CREDIT ENTRY IN THE BOOKS OF ACCOUNT WHEREAS IN THE CASE OF 69 THERE MA Y NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WE LL SETTLED, THE ONUS OF PROVING THE SOURCE OF A SUM, F OUND TO BE RECEIVED/TRANSACTED BY THE ASSESSEE, IS ON HIM A ND WHERE IT IS NOT SATISFACTORILY EXPLAINED, IT IS OPE N TO THE ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 5 REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE A ND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INC OME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSE SSEE FAILED TO PROVE SATISFACTORILY THE SOURCE AND NATUR E OF SUCH CREDIT, THE REVENUE IS FREE TO MAKE THE ADDITI ON. THE PRINCIPLE LAID DOWN IN GANPATI MUDALIAR (1964) 53 ITR 623/A. GOVINDA RAJULU MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DURGA PRASAD MORE (72 ITR 807)(SC) ARE THE LANDMARK DECISIONS. THE RATIO LAID DOWN THEREIN ARE THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISF ACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE . THE RATIO LAID DOWN IN DAULAT RAM RAWATMAL 87 ITR 3 49 (SC) FURTHER SUPPORTS THE CASE OF THE ASSESSEE. IN THE CASE OF A CASH ENTRY, IT IS NECESSARY FOR THE ASSES SEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALS O THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECORD. A HARMONIOUS CONSTRUCTI ON OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF T HE INCOME TAX ACT WILL BE THAT APART FROM ESTABLISHING THE ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 6 IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLI SH THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITORS. IN CIT VS KORLA Y TRADING COMPANY LTD. 232 ITR 820 (CAL.), IT WAS HEL D THAT MERE MENTION OF FILE NUMBER OF CREDITOR WILL N OT SUFFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATE LY BY THE ASSESSEE (CIT VS R.S. RATHAORE) 212 ITR 390 (RA J.). THE HONBLE GUWAHATI HIGH COURT IN NEMI CHANDRA KOTHARI VS CIT (264 ITR 254)(GAU) HELD THAT TRANSAC TION BY CHEQUES MAY NOT BE ALWAYS SACROSANCT. IN THE PRESENT APPEAL, THE ASSESSEE DULY FULFILLED THE CON DITIONS ENSHRINED U/S 68 OF THE ACT AND PRODUCED NECESSARY EVIDENCE FOR ITS CLAIM. 2.3. THE RATIO LAID DOWN IN ACIT VS RAJEEV TANDON 294 ITR (AT) 219 (DEL.), WHICH WAS CONFIRMED BY HON BLE HIGH COURT , IN 294 ITR 488, SUPPORTS THE CASE OF T HE REVENUE. IDENTICAL RATIO WAS LAID DOWN IN CIT VS A NIL KUMAR 392 ITR 552 (DEL.), WHEREIN IT WAS HELD THAT MERE IDENTIFICATION OF THE DONOR AND MOVEMENT OF GIFT TH ROUGH ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 7 BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF GIFT. IF THE PROVISION OF SECTION 68 OF THE ACT IS ANALYZED WITH THE FACTS OF THE CASE AND THE DISCUSSION MADE ABOVE, IT IS NOTED THAT SMT. TRIPTI KHANNA IS THE MOTHER OF THE ASSESSEE, ASSESSED TO T AX DISCLOSING INCOME OF RS.6,73,120/- FOR ASSESSMENT Y EAR 2014-15 AND DURING THE YEAR UNDER CONSIDERATION, SH E GAVE A LOAN OF RS.10,75,960/- WHICH IS SUMMARIZED HEREUNDER:- DATE PARTICULARS PAPER BOOK AMOUNT DEPOSITED IN 29/05/13 CHQ NO.148646 DRAWN ON CANARA BANK PAGE - 55 2,04,960/ - ICICIT BANK A/C- 036601500855 PB PAGE-34 10/07/13 CHQ NO.148650 DRAWN ON CANARA BANK PAGE - 55 75,000/ - CANARA BANK A/C 137310101005 PB PAGE-25 07/12/13 CHQ NO.148660 DRAWN ON CANARA BANK PAGE - 55A 3,00,000/ - ICICI BANK A/C - 036601500855 PB PAGE-39 17/03/14 CHQ NO.827727 DRAWN ON CANARA BANK PAGE-56 96,000/- DIRECTLY PAID TO M/S SIDHARTA DEVELOPERS 27/03/14 CHQ NO.15463DRAWN ON CANARA BANK PAGE-56 4,00,000/- ICICIT BANK A/C- 036601500855 TOTAL RECD. DURING YEAR 10,75,960/- ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 8 THE COPY OF THE LOAN CONFIRMATION, BANK STATEMENT WITH CANARA BANK, COMPUTATION OF INCOME, BALANCE SH EET AND PROFIT & LOSS ACCOUNT WAS DULY SUBMITTED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. 2.4. THE NEXT LOAN TAKEN BY THE ASSESSEE IS FROM HIS FATHER I.E. SHRI R. K. KHANNA, WHO IS ALSO ASSE SSED TO TAX (PAN NO.AAMPK9866G). THE FATHER OF THE ASSESSEE DULY DISCLOSED THE INCOME OF RS.7,84,690/- DURING ASSESSMENT YEAR 2014-15. THE LOAN GIVEN BY THE FATH ER TO THE ASSESSEE IS ALSO SUMMARIZED HEREUNDER:- DATE PARTICULARS PAPER BOOK AMOUNT DEPOSITED IN 29/05/13 CHQ NO.148212 DRAWN ON CANARA BANK, A/C- 1373 PAGE-67 1,48,665/- ICICI BANK A/C- 036601500855 PB PAGE-34 04/06/13 TRANSFER FROM ICICI BANK A/C NO.036601504652 PAGE-64 5,00,000/- ICICI BANK A/C- 036601500855 PB PAGE-34 07/06/13 TRANSFER FROM ICICI BANK A/C NO. PAGE-64 95,000/- ICICI BANK A/C- 036601500855 PB PAGE-34 10/07/13 TRANSFER FROM ICICI BANK A/C NO. PAGE-65 2,001/- ICICI BANK A/C- 036601500855 PB PAGE-37 09/10/13 CHQ NO.154149DRAWN ON CANARA BANK A/C-1373 PAGE-68 4,50,000/- CANARA BANK A/C 137310101005 PB PAGE-26 16/11/13 CHQ NO.154149DRAWN ON CANARA BANK A/C-1373 PAGE-69 4,45,000/- ICICI BANK A/C- 036601500855 PB PAGE-39 ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 9 22/03/14 CHQ NO.154149DRAWN ON CANARA BANK A/C-1373 PAGE-70 5,00,000/- ICICI BANK A/C- 036601500855 PB PAGE-41 21,40,066/ - 2.5. SO FAR AS, THE GIFT OF RS.4 LAKHS RECEIVED FR OM SHRI SANJIV MEHROTRA (FATHER-IN-LAW OF THE ASSESSEE ), IS CONCERNED, SHRI SANJIV MEHROTRA IS ALSO ASSESSED TO INCOME TAX (PAN NO.ABWPM1011WE). THE COPY OF THE PAN CARD, BANK ACCOUNT STATEMENT WITH PUNJAB NATION AL BANK (A/C NO.3729000100005896), SHOWING DEBIT OF RS.4 LKAHS ON 22/04/2013 IN THE NAME OF THE ASSESSE E WAS DULY SUBMITTED DURING ASSESSMENT PROCEEDINGS. T HE INCOME TAX ACKNOWLEDGMENT IS ALSO AVAILABLE ON RECO RD. IN VIEW OF THIS FACTUAL MATRIX, IT IS FOUND THAT TH E ASSESSEE HAS DULY ESTABLISHED THE IDENTITY OF THE D ONOR, LOAN, GENUINENESS OF THE TRANSACTION AND THE CAPACI TY OF THE DONORS/PARENTS. THE ADDITION HAS BEEN MADE MERE LY ON THE BASIS OF SUSPICION, WHICH CANNOT BE SAID TO BE JUSTIFIED. THE REVENUE HAS NOWHERE ESTABLISHED THAT ANY CASH WAS DEPOSITED BY THE ASSESSEE IN THEIR (FATHER -IN-LAW & PARENTS) ACCOUNTS BEFORE THE GIFT/LOAN IS GIVEN T O THE ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 10 ASSESSEE. IT IS ALSO NOTED THAT ALL THE NECESSARY DOCUMENTS WERE DULY SUBMITTED BY THE ASSESSEE DURIN G ASSESSMENT STAGE, FIRST APPELLATE STAGE AND EVEN BE FORE THIS TRIBUNAL. THE TRANSACTIONS OF GIFT/LOAN WERE M ADE THROUGH BANKING CHANNEL, THUS, THE ADDITION SO MADE IS DIRECTED TO BE DELETED. THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 08/01/2019. SD/- (JOGINDER SINGH) '() / VICE PRESIDENT MUMBAI; ' DATED : 08/01/2019 F{X~{T? P.S / #$ $&'*+,-.$-/, / COPY OF THE ORDER FORWARDED TO : 1. %&'( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. ++ ,-%&. / THE CIT, MUMBAI. 4. ++ , / CIT(A)- , MUMBAI ITA NO.2683/ MUM/2018 ABHINAV RAMKUMAR KHANNA 11 5. /01)#2+%&%#32 / DR, ITAT, MUMBAI 6. 145&/ GUARD FILE. $& / BY ORDER, / (DY./ASSTT. REGISTRAR) / ITAT, MUMBAI