VINOD CHATURBHUJ VALECHA, MUMBAI V. ITO 19(1)(2), MUMBAI

ITA 2761/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8949 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H MUMBAI BEFORE SHRI JASON P BOAZ, AM & SHRI RAM LAL NEGI, JM ITA NO.2761/MUM/2015 ( ASSESSMENT YEAR :2005-06 ) SHRI VINOD CHATURBHUJ VALECHA, FLAT NO.301, SAI MALHAR BLDG., 3 RD FLOOR, 12 TH ROAD, KHAR (W), MUMBAI 400 052 VS. ITO 19(1)(2), MUMBAI PAN/GIR NO. AACPV7652B APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI VIMAL PUNMIYA REVENUE BY SHRI RAJAT MITTAL DATE OF HEARING 04 /01/2017 DATE OF PRONOUNCEMENT 11 / 01 /201 7 / O R D E R PER JASON P BOAZ (A.M) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 34, MUMBAI DATED 23/02/2015 FOR A.Y. 2005-06 UPHOLD ING THE LEVY OF PENALTY OF RS.4,75,730/- U/S.27(1)(C) OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT) ON INCOME OF RS.15,00,000/- ON WHICH TAX WAS SOUGHT TO BE EVADED. 2. THE GROUNDS RAISED BY THE ASSESSEE ON THIS APPEA L ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND L AW, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.4,75,730/- UN DER SECTION 271 (1)(C) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD FURTHER GROUND S OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE T HE DATE OF HEARING. 3. AT THE OUTSET OF THE HEARING ITSELF THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE ON WHICH PENALTY OF RS.4,75,730/- WA S LEVIED U/S.271(1)(C) OF THE ACT WAS IN RESPECT OF GIFTS AMOUNTING TO RS.15 LACS DECLARED BY THE ASSESSEE ITA NO.2761/MUM/2015 SHRI VONOD CHATURBHUJ VALECHA 2 WHICH WERE HELD TO BE NOT GENUINE AND TREATED AS UN EXPLAINED U/S.68 OF THE ACT. ACCORDING TO THE LEARNED AR, IN QUANTUM APPEAL BY T HE ASSESSEE, A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE F OR THE YEAR UNDER CONSIDERATION IN ITS ORDER IN ITA NO.8065/MUM/2011 DATED 15/05/2015 HAS DELETED THE ADDITION OF RS.15 LAKHS MADE BY THE AO U/S.68 OF THE ACT. THEREFORE THE ADDITION OF RS.15 LAKHS U/S.68 OF THE ACT ON TH E BASIS OF WHICH THE PENALTY U/S.271(1)(C) OF THE ACT WAS LEVIED HAVING ITSELF B EEN DELETED, THE PENALTY WOULD NOW NO LONGER SURVIVE AND THE SAME IS TO BE DELETED . THE LEARNED DR FOR REVENUE FAIRLY CONCEDED THE MATTER. 4.1. WE HAVE HEARD THE PARTIES AND PERUSED AND CARE FULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL PRONOUNC EMENTS CITED. WE HAVE PERUSED THE ORDER OF THE CO-ORDINATE BENCH IN THE A SSESSEES APPEAL BEFORE IT QUANTUM PROCEEDINGS IN THE YEAR UNDER CONSIDERATION IN ITA NO.8065/MUM/2011 DATED 15/05/2015 AND FIND THAT THE SUBMISSION OF THE LEARNED AR IS CORRECT THAT THE CO-ORDINATE BENCH HA D DELETED THE ADDITION OF RS.15 LAKHS MADE BY THE AO U/S.68 OF THE ACT ON THE BASIS OF WHICH THE IMPUGNED PENALTY U/S.271 (1)(C) OF THE ACT HAD BEEN IMPOSED. AT PARA 9 OF ITS ORDER THE CO-ORDINATE BENCH DELETED THE SAID ADDITI ON OF RS.15 LAKHS HOLDING AS UNDER:- 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. OSTENSIBLY, SECTION 68 OF THE ACT CASTS AN OBLIGATION ON THE ASSESSEE T O SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF ANY SUM FOUND CREDITED IN THE ACCOUNT BOOKS. IT IS QUITE WELL SETTLED THAT THE ONUS CAST ON THE ASSESS EE U/S 68 CAN BE SAID TO HAVE BEEN DISCHARGED IN A GIVEN CASE, WHERE ASSESSE E IS ABLE TO SATISFACTORILY EXPLAIN THE IDENTITY OF THE CREDITOR , CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE, THE PLEA OF THE ASSESSEE IS THAT THE IMPUGNED CREDITS FROM S EVEN PERSONS ARE IN THE NATURE OF GIFTS TOTALING TO RS. 15,00,000/-, AS PER THE DETAILS ENUMERATED IN PARA 5 OF THE ASSESSMENT ORDER. THE ASSESSEE FURNIS HED THE GIFT DEED/DECLARATIONS DULY AVERRED BY THE DONORS IN SUP PORT OF THE NATURE OF CREDITS. ASSESSEE ALSO FURNISHED HIS OWN BANK ACCOU NT WHICH EVIDENCED RECEIPT OF MONEY THROUGH BANKING CHANNELS. IN THE P APER BOOK FILED, ITA NO.2761/MUM/2015 SHRI VONOD CHATURBHUJ VALECHA 3 ASSESSEE HAS DRAWN OUR ATTENTION TO THE BANK ACCOUN T OF SIX OF THE SEVEN DONORS FROM WHERE THE MONIES HAD FLOWED TO THE BANK ACCOUNT OF THE ASSESSEE. ASSESSEE HAS ALSO ADDUCED COPIES OF THE C HEQUES ISSUED BY THE DONORS BEFORE THE LOWER AUTHORITIES, THE SAME HAVE ALSO BEEN PLACED IN THE PAPER BOOK FILED BEFORE US. THE DONORS HAVE INDEED CONFIRMED THE FACT OF GIVING GIFTS TO THE ASSESSEE IN THEIR CONFIRMATIONS WHICH, INTER-ALIA, INCLUDED THE PARTICULARS OF INCOME TAX PAN NUMBERS. THE OCCA SION FOR GIVING THE GIFT WAS ALSO EXPLAINED BY THE ASSESSEE TO BE HIS THREAD CEREMONY AND IN SUPPORT XEROX COPY OF THE INVITATION CARD WAS ADDUCED BEFOR E THE LOWER AUTHORITIES. IN THE FACE OF THE AFORESAID MATERIAL, THE POINT TO BE DECIDED IS AS TO WHETHER THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED HIS INI TIAL BURDEN CAST U/S 68 OF THE ACT. AS PER THE REVENUE, THE DONORS WERE NOT ME N OF MEANS AS THEIR ANNUAL INCOME WAS AROUND RS. ONE LAC TO RS. ONE LAC SIXTY THOUSAND; AND, THEREFORE, THEY COULD NOT BE EXPECTED TO GIVE GIFTS RANGING FROM RS. 2 LAKH TO 2.5 LAKH TO THE ASSESSEE. IN OUR CONSIDERED OPINION , THE AFORESAID OBSERVATION OF THE ASSESSING OFFICER IS QUITE SUBJE CTIVE AND DEVOID OF ANY OBJECTIVE MERITS. MOREOVER, THE OBJECTION OF THE AS SESSING OFFICER THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONORS WA S NOT ESTABLISHED IS ALSO BASED ON SURMISES AND CONJECTURES. IN THIS CONTEXT IT IS TO BE NOTED THAT THOUGH ASSESSEE HAD FAILED TO PRODUCE THE PARTIES, BUT THE SAID FACTOR WAS EXPLAINED BY THE APPELLANT. ACCORDING, TO THE APPEL LANT HIS FATHER PASSED AWAY AFTER THE SAID EVENT AND SUBSEQUENTLY, IT WAS DIFFICULT FOR HIM TO PERSUADE THE DONORS TO PHYSICALLY PRESENT THEMSELVE S BEFORE THE INCOME TAX AUTHORITIES. ON THE CONTRARY, COPIES OF THE RESPECT IVE BANK ACCOUNTS INCLUDING THEIR CONFIRMATIONS, PAN ETC., WERE PRODU CED AND IN OUR VIEW IT LENDS CREDENCE TO THE ASSERTIONS OF THE ASSESSEE TH AT THE DONORS ARE NOT STRANGERS TO THE ASSESSEE. THEREFORE, IN OUR VIEW, THE STAND OF THE ASSESSING OFFICER AS ALSO OF THE CIT(A) IS BASED ON MERE DOUB TS AND SUSPICION, WHICH CANNOT TAKE THE PLACE OF EVIDENCE. THE MATERIAL ON RECORD SUGGESTS THAT ASSESSEE HAS DULY ESTABLISHED THAT THE SOURCE OF MO NIES ARE THE SEVEN PERSONS AND THE NATURE OF CREDIT ALSO STOOD ESTABLI SHED IN TERMS OF THE GIFT DEEDS/DECLARATIONS FURNISHED BY ASSESSEE. IT IS ALS O PERTINENT TO NOTE THAT IF AT ALL THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSERTIONS OF THE ASSESSE, IT WAS OPEN TO HIM TO MAKE NECESSARY ENQUI RIES FROM THE INCOME TAX RECORDS OF THE DONORS, WHOSE PARTICULARS WERE MADE AVAILABLE TO HIM. NO SUCH EFFORT HAS BEEN MADE BUT THE MATERIAL FURNISHE D BY THE ASSESSEE IS SOUGHT TO BE DISBELIEVED. AS A CONSEQUENCE AND AFTE R CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE DEEM IT FIT AND PROPER TO HOLD THAT ASSESSEE HAS SUCCEEDED IN ESTABLISHING THE NATURE AND SOURCE OF IMPUGNED CREDITS, BEING GIFTS RECEIVED FROM THE SEV EN PERSONS, AS DETAILED IN PARA 5 OF THE ASSESSMENT ORDER; AND ACCORDINGLY THE INGREDIENTS OF SECTION 68 OF THE ACT STAND FULFILLED. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT (A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDI TION OF RS. 15,00,000/- MADE U/S 68 OF THE ACT. 4.2. IN VIEW OF THE CO-ORDINATE BENCH DELETING THE ADDITION OF RS.15 LAKHS MADE U/S.68 OF THE ACT IN ITS ORDER (SUPRA), THE BASIS O N WHICH THE PENALTY OF RS.4,75,730/- WAS LEVIED U/S.271(1)(C) OF THE ACT D OES NOT NOW SURVIVE AND ITA NO.2761/MUM/2015 SHRI VONOD CHATURBHUJ VALECHA 4 CONSEQUENTLY THE SAID PENALTY ALSO WOULD NOT SURVIV E FOR CONSIDERATION. WE, THEREFORE, ACCORDINGLY QUASH THE PENALTY AND ALLOW THE ASSESSEES APPEAL FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y.200 5-06 IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11/01/20 17 SD/ - (RAM LAL NEGI) SD/ - (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 11/01/2017 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//