ACIT, New Delhi V. Smt. Kusum Gupta, New Delhi

ITA 2795/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3649 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J MISHRA
• Keywords: Unexplained cash credit; Gift; Assessment record; Condonation of delay
• Section: 153A; 2(22)(e); 260A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 2795(DEL)2010 ASSESSMENT YEAR: 2001-02 ASSTT.COMMISSIONER OF INCOME TAX, SMT. KUSUM GUPT A, CENT. CIR.15, NEW DELHI. V . 21/40, SHAK TI NAGAR, DELHI. (APPELLANT) (RESP ONDENT) APPELLANT BY: SHRI J. MISHRA, DR RESPONDENT BY: SHRI SALIL AG GARWAL, ADVOCATE ORDER PER A.D. JAIN, J.M . THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2001-02 AGAINST THE ORDER DATED 15.3.2010, PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX(APPEALS)II, NEW DELHI. THE FOLLOWING GROUNDS HAVE BEEN RAISED:- 1 (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF OF ` 60,00,000/- ON ACCOUNT OF UNEXPLAINED GIFTS U/S 68 OF THE INCOME T AX ACT, 1961. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BY DELETING ADDITION OF ` 22,80,000/- ON ITA 2795(DEL )2010 2 ACCOUNT OF UNEXPLAINED CREDIT IN THE NAME OF SH. PR AMOD KUMAR JAIN. 2. THE FACTS ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, DECLARING TOTAL INCOM E OF ` 3,36,250/-. VIDE ASSESSMENT ORDER DATED 18.3.04, PASSED U/S 143 (3) OF THE INCOME TAX ACT, AN ADDITION OF ` 60,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED GIFT, WAS MADE. THE LD. CIT(A) UPHELD THIS ADDITION. THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AGAIN ST THE LD. CIT(A)S ORDER. SUBSEQUENTLY, ON 7.2.2007, A SEARCH WAS CO NDUCTED AT THE PREMISES OF THE ASSESSEE. A NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE F ILED A RETURN OF INCOME, AGAIN DECLARING A TOTAL INCOME OF ` 3,36,250/-. DURING THE CONTINUATION OF ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT, THE TRIBUNAL PASSED ORDER DATED 24.10.2008, DELETING TH E AFORESAID ADDITION OF ` 60,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED GIFT. THE ASSESSEE PRODUCED A COPY OF THE SAID TRIBUNAL O RDER BEFORE THE AO. THE AO, HOWEVER, REFUSED TO TAKE COGNIZANCE O F SUCH COPY OF THE TRIBUNAL ORDER AND DID NOT DELETE THE ADDITION, OBSERVING THAT THE ASSESSEE HAD ONLY FILED A PHOTO COPY OF THE TRIBUNAL ORDER AND THAT THE TRIBUNAL ORDER HAD NOT BEEN RECEIVED IN HIS (TH E AOS) OFFICE. AS ITA 2795(DEL )2010 3 SUCH, THE AO MAINTAINED THE ADDITION IN THE ORDER P ASSED U/S 153A OF THE ACT ALSO. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DIRECTED THE AO TO GIVE EFFECT TO THE AFORESAID TRIBUNAL ORDER A ND TO DELETE THE ADDITION. 4. AGGRIEVED, THE DEPARTMENT HAS RAISED GROUND NO. 1(A) BEFORE US. 5. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS C ONTENDED THAT NO INDEPENDENT FINDING HAS BEEN GIVEN BY THE L D. CIT(A) AND THAT THEREFORE, THE DIRECTION ISSUED BY THE LD. CIT(A) I S NOT SUSTAINABLE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS STRONGLY SUPPORTED THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT THE TRIBUNAL ORDER (SUPRA) HAS BEEN UPHELD BY THE HONB LE HIGH COURT, VIDE THEIR ORDER DATED 16.7.2010. COPIES OF BOTH, THE ORDER OF THE TRIBUNAL, AS WELL AS THE ORDER OF THE HONBLE HIGH COURT HAVE BEEN PLACED ON RECORD. 7. THE ADDITION OF ` 60,00,000/- , IT IS SEEN, WAS DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 24.10.2008 (SUPRA). THE SAID DELETION, HAS BEEN UPHELD BY THE HONBLE HIGH COURT, HOLDING AS FOLLOWS:- ITA 2795(DEL )2010 4 CM APPL. 11720/2010 THIS IS AN APPLICATION FOR CONDONATION OF DELAY OF 197 DAYS IN REFILING THE APPEAL. FOR THE REASONS STATED IN THE APPLICATION, DELAY OF 197 DAYS IN REFILING THE APPEAL IS CONDONED. ACCORDINGLY, APPLICATION STANDS DISPOSED OF. ITA 831/2010 1. PRESENT APPEAL HAS BEEN FILED UNDER SEC. 260A OF IN COME TAX ACT, 1961 (FOR BREVITY ACT 1961) AGAINST THE ORDER DATED 24 TH OCTOBER, 2008 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, DELHI(IN SHORT ITAT) RELATING TO THE ASSESSMENT YEAR 2001-2002. 2. MS. SONIA MATHUR, LEARNED COUNSEL FOR REVENUE SUBMI TTED THAT ITAT ERRONEOUSLY DELETED THE ADDITION OF ` 60,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE DURING T HE RELEVANT ACCOUNTING PERIOD. SHE FURTHER SUBMITTED THAT ITAT HAD NOT APPRECIATED ALL THE SURROUNDINGS CIRCUMSTANCES AS THE GIFTS DID NOT MEET TEST OF HUM AN PROBABILITIES. 3. HOWEVER, WE FIND THAT NOT ONLY WAS THE GENUINENESS OF THE TWO GIFTS ESTABLISHED INASMUCH AS REGISTERED GI FT DEEDS WERE PRODUCED BUT ALSO THE STATEMENTS OF TWO DONORS ALONG WITH THE ASSESSEE WERE RECORDED. IN F ACT, THE TRIBUNAL IN THE IMPUGNED ORDER HAS CONCLUDED ON FACTS THAT THE IDENTITY AND CREDIT-WORTHINESS OF TH E DONORS WAS PROVED BEYOND DOUBT. 4. IN OUR OPINION, AS GIFTS WERE MADE BY WAY OF REGIST ERED GIFT DEEDS AS WELL AS PAYMENTS WERE MADE BY WAY OF ACCOUNT PAYEE CHEQUES AND BOTH THE DONORS ARE INCOM E TAX ASSESSES, IT CANNOT BE SAID THAT THE GIFTS ARE NOT ITA 2795(DEL )2010 5 GENUINE. RESULTANTLY, THE APPEAL STANDS DISMISSED IN LIMINE BUT WITH NO ORDER AS TO COSTS. 8. THE LD. CIT(A), DIRECTED THE AO TO DELETE THE AD DITION WHILE GIVING EFFECT TO THE TRIBUNAL ORDER, OBSERVING AS F OLLOWS:- 3.3 I HAVE VERIFIED THE ASSESSMENT RECORDS OF THE APPELLANT. THE ORDER HAS BEEN DULY RECEIVED BY THE AO SUBSEQUE NTLY. ACTUALLY, IT IS SEEN THAT DEPARTMENT HAS PREFERRED APPEAL ALSO AGAINST THE SAID ORDER BEFORE HONBLE DELHI HIGH CO URT. THUS THOUGH ON THE DATE OF PASSING ORDER U/S 153A, AO MI GHT NOT BE HAVING THE OFFICIAL COPY BUT SINCE NOW THE SAME IS DULY RECEIVED, HE IS DUTY BOUND TO GIVE EFFECT TO THIS O RDER EVEN THOUGH APPEAL HAS BEEN FILED AGAINST THIS ORDER. H E IS, THEREFORE, DIRECTED TO GIVE EFFECT, IF NOT GIVEN EA RLIER, AND DELETE THIS ADDITION. 9. WE DO NOT FIND ANYTHING ERRONEOUS ABOUT THE ORD ER OF THE LD. CIT(A). THE TRIBUNAL ORDER, WHICH HAS BEEN CO NFIRMED BY THE HONBLE HIGH COURT, HAS UNDENIABLY BEEN RECEIVED IN THE OFFICE OF THE AO SUBSEQUENT TO HIS ORDER PASSED U/S 153 A OF THE ACT. THAT BEING SO, THE LD. CIT(A) CORRECTLY DIRECTED HIM TO GIVE EFFECT TO THE TRIBUNAL ORDER AND TO DELETE THE ADDITION. ACCORD INGLY, GROUND NO. 1(A) CARRIES NO MERIT AND, AS SUCH, IS REJECTED. 10. APROPOS GROUND NO. 1(B), DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FILE CONF IRMATION FROM HIS CREDITOR OF ` 22,80,000/-, I.E., SHRI PRAMOD KUMAR JAIN. THIS C REDIT ITA 2795(DEL )2010 6 WAS APPEARING IN THE BOOKS OF THE PROPRIETARY CONCE RN OF THE ASSESSEE, NAMELY, M/S. AMAN TRADING COMPANY. THE ASSESSEE PRODUCED HIS CREDITOR BEFORE THE AO AND THE AO RECO RDED HIS STATEMENT. THE CREDITOR, SHRI PRAMOD KUMAR JAIN C ONFIRMED HAVING GIVEN THE CREDIT TO THE ASSESSEE. HE ALSO PRODUCED A COPY OF THE BANK ACCOUNT NO. 68933 IN BANK OF RAJASTHAN, KAMALA NAGAR BRANCH, NEW DELHI, MAINTAINED BY HIM. HE STATED TH AT THE CREDIT WAS GIVEN FROM THIS BANK ACCOUNT. ON VERIFICATION OF THIS BANK ACCOUNT, THE AO NOTED THAT THE IMMEDIATE SOURCE OF THIS CREDIT WAS RECEIPT OF TWO CHEQUES OF ` 12,00,000/- AND ` 10.80 LAKHS, ON 5.7.2000 AND 7.7.2000, RESPECTIVELY, FROM M/S. PEE AAR SECURITIES LTD. THE AO OPINED THAT THIS AMOUNT WAS NOTHING O THER THAN THE ASSESSEES MONEY ROUTED THROUGH SHRI PRAMOD KUMAR J AIN FOR AVOIDING PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT, SINCE THE ASSESSEE WAS A MAJOR SHARE-HOLDER AND DIRECTOR OF M /S. PEE AAR SECURITIES LTD. WHILE OPINING SO, HE OBSERVED THA T SHRI PRAMOD KUMAR JAIN, HAD PURCHASED SHARES WORTH ` 3 LAKHS OF M/S. GROWEL PVT. LTD., A FINANCE COMPANY OF SHRI UMESH GUPTA, H USBAND OF THE ASSESSEE; THAT THESE SHARES WERE LATER SOLD THROUGH M/S. PEE AAR SECURITIES LTD. AND THE SALE PROCEEDS WERE DEPOSITE D IN THE BANK ITA 2795(DEL )2010 7 ACCOUNT OF SHRI PRAMOD KUMAR JAIN, FROM WHICH BANK ACCOUNT, THIS CREDIT HAD BEEN GIVEN TO M/S. AMAN TRADING CO., THE PROPRIETARY CONCERN OF THE ASSESSEE. IT WAS ON THIS BASIS, THA T THE AO TREATED THE AMOUNT OF ` 22,80,000/- AS UNEXPLAINED CREDIT AND ADDED IT TO T HE INCOME OF THE ASSESSEE. 11. BY VIRTUE OF THE IMPUGNED ORDER, THE CIT(A) DE LETED THE ADDITION OF ` 22,80,000/- 12. AGGRIEVED, THE DEPARTMENT IS BEFORE US BY WAY OF GROUND NO. 1(B). 13. THE LD. DR HAS CONTENDED THAT WHILE WRONGLY DE LETING THE ADDITION OF ` 22,80,000/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE NAME OF SHRI PRAMOD KUMAR JAIN, THE LD. CIT(A) HAS FAILED TO TAKE INTO CONSIDERATION THE FACT THAT THE IMMEDIATE SOUR CE OF THE CREDIT OF ` 22,80,000/- WAS RECEIPT OF TWO CHEQUES FROM M/S. PE E AAR SECURITIES LTD.; THAT THE ASSESSEE IS A MAJOR SHARE -HOLDER AND DIRECTOR OF M/S. PEE AAR SECURITIES LTD.; THAT SHRI PRAMOD K UMAR JAIN HAS PURCHASED SHARES WORTH ` 3 LAKHS, OF M/S. GROWEL PVT. LTD., A FINANCE COMPANY OF SHRI UMESH GUPTA, HUSBAND OF THE ASSESSE E; THAT THESE SHARES WERE LATER SOLD THROUGH M/S. PEE AAR SECURIT IES LTD. AND THE ITA 2795(DEL )2010 8 SALE PROCEEDS THEREOF WERE DEPOSITED IN THE BANK AC COUNT OF SHRI PRAMOD KUMAR JAIN; THAT THE CREDIT IN QUESTION EMAN ATED FROM THIS BANK ACCOUNT AND IT WENT TO THE PROPRIETARY CONCERN , NAMELY, M/S. AMAN TRADING COMPANY OF THE ASSESSEE. 14. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE O THER HAND, HAS STRONGLY SUPPORTED THE IMPUGNED ORDER IN THIS R EGARD. IT HAS BEEN SUBMITTED THAT SHRI PRAMOD KUMAR JAIN HAD DULY FILED A CONFIRMATION BEFORE THE AO, CONCERNING THE OUTSTAND ING LOAN OF ` 22,80,000/-; THAT SHRI PRAMOD KUMAR JAIN HAD APPEAR ED IN PERSON BEFORE THE AO AND HAD FILED A COPY OF THE BANK ACCO UNT, SHOWING THE TRANSACTION OF ` 22,80,000/-, BEING THE AMOUNT GIVEN TO THE ASSESSE E VIDE CHEQUE; THAT HIS STATEMENT WAS ALSO RECORDED; THAT SHRI PRAMOD KUMAR JAIN HAD EXPLAINED THAT HE HAD RECEIVED ` 22,80,000/- FROM M/S. PEE AAR SECURITIES LTD.; THAT AS SUCH, THE IDE NTITY OF THE CREDITOR STOOD ESTABLISHED; THAT THE CREDITOR DULY CONFIRMED THE LOAN IN HIS STATEMENT; THAT THE TRANSACTION WAS ROUTED THROUGH PROPER BANKING CHANNEL; THAT AS SUCH, THE GENUINENESS OF THE TRANS ACTION WAS ALSO ESTABLISHED; AND THAT SINCE THE SOURCE OF THE CREDI T HAD BEEN DULY EXPLAINED BY THE CREDITOR HIMSELF, HIS CAPACITY TO PAY STOOD AMPLY PROVED AND HIS CREDIT-WORTHINESS STOOD ESTABLISHED. ITA 2795(DEL )2010 9 15. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IT IS NOWHERE THE CASE OF THE AO THAT SHRI PRAMOD KUMAR JAIN WAS NOT OWNING THE SHARES OF M/S. GROWE L PVT. LTD., I.E., A FINANCE COMPANY OF SHRI UMESH GUPTA, HUSBAND OF THE ASSESSEE. NOW, MERELY BECAUSE M/S. GROWEL PVT. LTD., WAS A FINANCE COMPANY OWNED BY SHRI UMESH GUPTA, HUSBAND OF THE ASSESSEE, THE F ACTUM OF THE SHARES BELONGING TO SHRI PRAMOD KUMAR JAIN DOES NOT GET DE MOLISHED AND IT DOES NOT STAND ESTABLISHED THAT THE SHARES IN FACT BELONGED TO THE ASSESSEE. THE TRANSACTION OF SALE OF SHARES THROU GH M/S. PEE AAR SECURITIES LTD. TOO HAS REMAINED UNQUESTIONED. TH E CHEQUES DEPOSITED IN THE BANK ACCOUNT OF SHRI PRAMOD KUMAR JAIN HAVE ALSO NOT BEEN SHOWN TO BE CHEQUES OF THE SALE PROCEEDS OF THE SHA RES. THE AO BROUGHT NOTHING ON RECORD TO SHOW THAT THE SHARES O F M/S. GROWEL PVT. LTD. WERE THE INVESTMENT OF THE ASSESSEE. IN THES E CIRCUMSTANCES, THERE IS NOTHING ON RECORD TO INDICATE THAT THE CREDIT GI VEN BY SHRI PRAMOD KUMAR JAIN TO THE ASSESSEE WAS IN FACT THE MONEY OF THE ASSESSEE HERSELF, ROUTED THROUGH SHRI PRAMOD KUMAR JAIN. F URTHER, THERE WAS NO FORCE IN THE AOS OBSERVATION THAT THE ASSESSEE WAS TRYING TO EVADE THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT. T HE AO COULD NOT SHOW IF THE MONEY RECEIVED BY THE ASSESSEE WAS OUT OF TH E ACCUMULATED ITA 2795(DEL )2010 10 PROFITS OF M/S. PEE AAR SECURITIES LTD. AND SO IT C OULD NOT BE HELD TO BE THE ASSESSEES MONEY. THAT BEING SO, IT DID NOT S TAND ESTABLISHED AS TO HOW, IF AT ALL, THE ASSESSEE WAS TRYING TO EVADE TH E PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 16. WHILE RIGHTLY DELETING THE ADDITION WRONGLY MA DE, THE LD. CIT(A) HAS DULY TAKEN INTO CONSIDERATION ALL THESE FACTS AND CIRCUMSTANCES. THEREFORE, FINDING NO ERROR WITH I T IN THIS REGARD ALSO, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ALSO C ONFIRMED, REJECTING GROUND NO. 1(B). 17. IN THE RESULT, THE APPEAL FILED BY THE DEPARTM ENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 30.06.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ITA 2795(DEL )2010 11 DEPUTY REGISTRAR