ACIT, Calicut V. Shri T.P. Abdulla, Calicut

ITA 278/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52271 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 10-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Gift; Source of fund
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO.278/COCH/2009 ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, CALICUT. VS. SHRI T.P.ABDULLA, CHEROOTTY ROAD, CALICUT-673032. [PAN:ADTPT 7429C] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA DATE OF HEARING 10/10/2011 DATE OF PRONOUNCEMENT 21/10/2011 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE ARISING OUT OF TH E ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI (THE CIT(A) FOR SHO RT) DATED 19.2.2009 FOR THE ASSESSMENT YEAR (A.Y.) 2006-07. 2. THE ONLY ISSUE IN THE INSTANT APPEAL IS THE VALI DITY IN LAW OF THE ADDITION IN THE SUM OF ` 6,60,979/- EFFECTED BY THE ASSESSING OFFICER (AO) U /S. 68 OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER) VIDE ASSESSMENT U/S. 143(3) DATED 19/12/2008, SINCE DELETED BY THE LD. CIT(A) VIDE THE IMPUGNED ORDER. 3.1 THE REVENUES CASE IS THAT THE LD. CIT(A) HAS, IN DELETING THE IMPUGNED ADDITION, RELIED UPON THE STATEMENT OF HIS BANK ACCOUNTS WITH HDFC BANK LTD. AND FEDERAL BANK I.T.A. NO.278 /COCH/2009 (ASSTT. YEAR: 2006-07) 2 FOR THE RELEVANT FINANCIAL YEAR/PERIOD, ADDUCED BY THE ASSESSEE BEFORE HIM. THIS WAS IN CONTRAVENTION OF RULE 46A OF THE INCOME-TAX RULES, 1962 (`THE RULES HEREINAFTER), INASMUCH AS THE LD. CIT(A) DID NOT AFFORD AN OPPORT UNITY TO THE AO TO EXAMINE THE SAME; THE ASSESSEE HAVING ADMITTEDLY ADDUCED NO MORE THAN A MERE CONFIRMATION FROM THE CREDITOR BEFORE THE AO. THE CREDIT/S IN THE INSTANT CASE IS A GIFT/S, THE BURDEN OF PROVE THE GENUINENESS OF WHICH IS ALL THE MORE, WHILE IT IS T RITE LAW THAT MERE CONFIRMATION FROM THE CREDITOR WOULD NOT BY ITSELF PROVE THE CREDIT. THE ACTION OF THE AO IN BRINGING THE IMPUGNED CREDIT AMOUNT TO TAX, IN THE ABSENCE OF TH E MATERIALS ON RECORD TOWARD THE GENUINENESS OF THE CREDIT/S, RELYING ON THE DECISIO N BY THE APEX COURT IN THE CASE OF CIT VS. P. MOHANAKALA (2007) 291 ITR 278(SC), THEREFORE, MERITS CONFIRMA TION. 3.2 THE ASSESSEES CASE, ON THE OTHER HAND, IS THAT THE BANK STATEMENTS PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A) ARE ONLY ON THE CALL ING OF THE SAID AUTHORITY. AS SUCH, ALL THE INGREDIENTS, I.E., AS TO THE IDENTITY, CAPACITY AS WELL AS THE GENUINENESS OF THE TRANSACTIONS; THE DONOR BEING ONLY THE BROTHER OF T HE ASSESSEE-DONEE, HAVING BEEN ESTABLISHED BY THE ASSESSEE, THE ONUS ON HIM STANDS EFFECTIVELY DISCHARGED, AND SHIFTED ON TO THE AO, WHO HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD. TOWARD THIS, HE PLACES RELIANCE ON THE DECISION IN THE CASE OF CIT VS. MAYAWATI, 59 DTR 177 (DEL.), TO THE EFFECT THAT THE GIFT NEED NOT BE WITH REFERENCE TO AN OCCA SION. RELIANCE IS ALSO PLACED ON THE DECISION IN THE CASE OF AMITA DEVI SANGANERIA VS. ACIT , 129 ITD 72 (GAU.) (TM). THE RELIANCE BY THE REVENUE ON THE DECISION IN THE CASE OF CIT VS. P. MOHANAKALA (SUPRA) IS MISPLACED IN-AS-MUCH AS THE SAME IS DISTINGUISHABLE ON FACTS; THE DONOR BEING A RELATIVE, AND THE REVENUE HAVING NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE IMPUGNED FUNDS BELONGED TO THE DONEE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW RELIED UPON. 4.1 WITHOUT GOING INTO THE MERITS OF THE ADDIT ION, IT IS AN ADMITTED FACT THAT THE LD. CIT(A) HAS RELIED ON THE COPY OF THE ASSESSEES TWO BANK ACCOUNTS FURNISHED BY THE ASSESSEE BEFORE HIM FOR THE FIRST TIME TOWARD SATIS FYING HIMSELF WITH REGARD TO THE I.T.A. NO.278 /COCH/2009 (ASSTT. YEAR: 2006-07) 3 GENUINENESS OF THE IMPUGNED CREDITS. THE ASSESSEE H AS NOT PRODUCED ANY MATERIAL TO SHOW THAT THE SAME HAD BEEN CALLED FOR BY THE LD. CIT(A) , THE FIRST APPELLATE AUTHORITY, ON HIS OWN, EVEN AS OBSERVED DURING HEARING. EVEN SO, IT I S APPARENT THAT THE SAME FORMED PART OF THE MATERIALS RELIED UPON BY HIM TO ARRIVE AT A SATISFACTION IN THE MATTER. AGAIN, AS ALSO OBSERVED DURING HEARING BY THE BENCH, R. 46A OF THE RULES PRECLUDES THE FIRST APPELLATE AUTHORITY FROM PLACING RELIANCE ON ANY MATERIAL ADD UCED BEFORE HIM BY THE ASSESSEE IN SUPPORT OF ITS CASE FOR THE FIRST TIME, WITHOUT FIR ST AFFORDING AN OPPORTUNITY TO THE AO TO EXAMINE AND VERIFY THE SAME, AS WELL AS TO MEET THE ASSESSEES CASE BASED THEREON. THIS ACCORDS WITH THE SALUTARY PRINCIPLES OF NATURAL JUS TICE. FURTHER, THE ADDITION UNDER REFERENCE IS U/S. 68, WHICH SPECIFICALLY CONTEMPLAT ES A `SATISFACTION BY THE AO, AND BY NO OTHER. ALSO, IN THE INSTANT CASE THE AO HAS RECORDE D A SPECIFIC FINDING THAT THE ASSESSEE DID NOT ADDUCE ANY EVIDENCE BEFORE HIM APART FROM A CONFIRMATION. THE SAME IS FROM A NON-ASSESSEE AND DOES NOT INDICATE THE SOURCE OF FU NDS. WHAT VERIFICATION THE AO WOULD UNDERTAKE TO ARRIVE AT HIS SATISFACTION AS TO THE N ATURE AND SOURCE OF FUNDS, OR CONSIDERS AS NECESSARY OR SUFFICIENT BY HIM FOR THE PURPOSE, IS A MATTER FOR HIM TO DECIDE, AND NO OTHER. AS SUCH, THE CONTENTION RAISED BY THE LD. AR THAT T HE BANK STATEMENTS STOOD PRODUCED BEFORE THE LD. CIT(A) ONLY TO SATISFY HIM WITH REGA RD TO NON-RECEIPT OF THE GIFTS IN CASH, IS OF LITTLE MOMENT. IF ANYTHING, THE SAME ONLY VALIDA TES THE AOS NON-SATISFACTION WITH REFERENCE TO THE MATERIALS BEFORE HIM. 4.2 UNDER THE OBTAINING FACTS AND CIRCUMSTANCES, WH ICH ARE NOT IN DISPUTE, WE, THEREFORE, ONLY CONSIDER IT FIT AND PROPER TO, VACA TING THE FINDINGS OF THE LD. CIT(A), REMIT THE MATTER BACK TO THE FILE OF THE AO TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE IN RELATION TO THE IMPUGNED GIFTS BEFORE H IM, AND TO DECIDE THE SAME AFRESH ON MERITS, IN ACCORDANCE WITH LAW, PER A SPEAKING ORDE R. THE SAME WOULD AT ONCE MEET THE PREJUDICE CAUSED TO THE REVENUE DUE TO NON-OBSERVAN CE OF R. 46A BY THE LD. CIT(A), AS WELL AS ENABLE THE SATISFACTION OF THE MANDATE OF S EC. 68, PER WHICH THE OBLIGATION ON THE ASSESSEE TO EXPLAIN A CREDIT SATISFACTORILY IS TOWA RD THE ASSESSING AUTHORITY. THE PURVIEW OF THE HIGHER APPELLATE AUTHORITIES IN THE MATTER, ON A CHALLENGE TO THE AOS ACTION, THEREFORE, IS ONLY AS TO WHETHER THE SAID ONUS CAST BY THE STATUTE ON THE ASSESSEE STANDS I.T.A. NO.278 /COCH/2009 (ASSTT. YEAR: 2006-07) 4 DISCHARGED BY IT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OR NOT. THE DECISIONS RELIED UPON BY THE ASSESSEE ARE QUA THE MERITS OF AN ADDITION U/S. 68 AND, CONSEQUENTL Y, NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, PARTICULARLY IN THE CONTEXT OF OUR DECISION, WHICH IS NOT ON MERITS BUT ONLY QUA PROCEDURE. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. . . SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 21ST OCTOBER, 2011 GJ COPY TO: 1. SHRI T.P.ABDULLA, CHEROOTTY ROAD, CALICUT - 6730 32 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRA L CIRCLE-2, CALICUT. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .