AYYAZUDDIN J, KHAN, NAVI MUMBAI V. CIT- 22,

ITA 2881/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2986 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: KISHORE K PODDAR
• Keywords: Gift; Onus to prove
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI PAWAN SINGH, JM ./ I.T.A. NO. 2881/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) AYYAZUDDIN J. KHAN BLOCK NO. 103, AGGARWAL UPAVAN, PLOT NO. 11, SECTOR 19, NERUL, NAVI MUMBAI - 400 706 / VS. ITO - 22(3) - 1, TOWER NO. 6, VASHI RAILWAY STATION, COMPLEX, VASHI, NAVI MUMBAI - 400 073 ./ ./ PAN/GIR NO. ATXPK 4365 N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI KISHORE K. PODDAR / RESPONDENT BY : SHRI H. N. SINGH / DATE OF HEARING : 16.5.2016 / DATE OF PRONOUNCEMENT : 29 . 6 .2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER U/S. 263 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE COMMISSIONER OF INCOME TAX - 22 , MUMBAI (CIT FOR SHORT) DATED 19.2.2014 , SETTING ASIDE THE A SSESSEES ASSESSMENT U/S.143(3) OF THE ACT FOR THE ASSESSMENT YEAR (A.Y.) 2009 - 10 VIDE ORDER DATED 19.12.2011 . 2 ITA NO. 2881/MUM/2014 (A.Y.2009 - 10) AYYAZUDDIN J. KHAN VS. ITO 2. THE BACKGROUND FACTS OF THE CASE ARE THAT THE ASSESSEE WAS OBSERVED BY THE ASSESSING OFFICER (A.O.) DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TO HAVE DEPOSITED RS.17.61 LACS IN CASH IN HIS SAVING BANK (S/B) ACCOUNT WITH ICICI BANK LTD., NERUL BRANCH, MUMBAI DURING THE RELEVANT PREVIOUS YEAR. THIS WAS EXPLAINED BY THE ASSESSEE AS BEING ON ACCOUNT OF AND FROM THE FOLLOW ING SOURCE S : A) FROM WIFE AND CLOSE RELATIVES : RS.3.20 LACS B) INTERNAL ACCRUALS FROM BUSINESS : RS.2.61 LACS C) LOANS FROM SUNDRY PERSONS IN CASH : RS.11.80 LACS ( FROM WHOM LOAN CONFIRMATIONS WERE PRODUCED AS WELL AS INCOME TAX RETURNS FROM SOME OF THEM ) . THE ASSESSMENT WAS COMPLETED BY THE A.O. MAKING AN ADDITION , OUT OF THE TOTAL SUM OF RS.17.61 LACS , FOR RS.3.20 LACS STATED AS RECEIVED AS GIFT S FROM CLOSE RELATIVES IN THE ABSENCE OF ANY SUBSTA NTIATION OF THE GIFT S . WITH REGARD TO RS.11.80 LACS, THE ASSES SEE HAD, IT WAS NOTED BY THE LD. CIT IN THE REVISION PROCEEDINGS, PRODUCED MERELY A LIST OF NAMES AND ADDRESSES (WITHOUT PAN) OF PERSONS FROM WHOM LOANS WERE STATED AS TAKEN IN CASH . NO CONFIRMATIONS WERE FILED IN RESPECT OF TH E S E CASH LOANS DURING THE ASS ESSMENT PROCEEDINGS. THE ASSESSEES EXPLANATION IN RESPECT THEREOF WAS ACCEPTED BY THE A.O. WITHOUT DUE VERIFICATION. NO ENQUIRY WAS MADE BY THE A.O. , WHO MERELY ACCEPTED THE GENUINENESS OF THE SE LOANS. NEARLY ALL THE DONORS RESIDE IN THE SAME SOCIETY (I.E ., SIBILI COMPLEX, MUMBRA), WITH ONLY TWO (OUT OF 67) HAVING PAN. FURTHER, ALL THE LOANS WERE IN CASH, BELOW RS.20,000/ - EACH , AND TAKEN IN THE MONTH OF SEPTEMBER, 2008. THE ASSESSMENT ORDER ACCEPTING THE SAME WAS ACCORDINGLY, IN HIS VIEW , PASSED WITHOUT D UE APPLICATION OF MIND AND, THEREFORE, W AS HELD BY THE LD. CIT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE , ACCORDINGLY, SET ASIDE THE ASSESSMENT, DIRECTING THE A.O. TO VERIFY THE CLAIMS AS REGARDS THE CREDITWORTHINESS AND GENUINENESS O F THE SAID LOANS. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 3 ITA NO. 2881/MUM/2014 (A.Y.2009 - 10) AYYAZUDDIN J. KHAN VS. ITO W E FIRSTLY OBSERVE THAT THOUGH THE LD. CIT HAS SET ASIDE THE ASSESSMENT, HE HAS IN FACT RESTORED THE MATTER AS REGARDS THE ACCEPTANCE OF THE CASH LOANS FOR RS.11.80 LACS , STATED AS RECEIVED FROM 67 PERSONS , BACK TO THE FILE OF THE A.O. IN VIEW OF LACK OF PROPER ENQUIRY AND VERIFICATION BY THE A.O. IT IS OPEN TO THE COMMISSIONER TO INITIATE REVISION PROCEEDINGS U/S. 263 OF THE ACT EITHER WHERE A WR ONG DECISION HAS BEEN TAKEN BY THE A.O. ON THE BASIS OF THE MATERIALS ON RECORD OR HE HAS NOT MADE AN ENQUIRY INTO MATTERS, WHERE SUCH ENQUIRY IS PRIMA FACIE WARRANTED. THE LAW IN THE MATTER IS WELL SETTLED AND LACK OF ENQUIRY , WHERE WARRANTED, M AKES THE ORDER PER SE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS EXPLAINED BY THE HONBLE A PEX C OURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [ 2000 ] 243 ITR 83 (SC) . E XPLAINING ITS RATIONALE , WITH REFERENCE TO THE TWO DECISIONS BY THE SAID C OURT, NAMELY, TARA DEVI AGGARWAL VS. CIT [ 1973 ] 88 ITR 0323 (SC) AND RAMPYARI DEVI SARAOGI VS. CIT [ 1968 ] 67 ITR 84 (SC) , THE HONBLE DELHI HIGH COURT CLARIFIED IN GEE VEE ENTERPRISES VS. ADDL. CIT [ 1975 ] 99 ITR 0375 (DEL) , THAT THIS IS SO AS THE POSITION AND FUNCTION OF THE I NCOME TAX OFFICER (I TO ) IS VERY DIFFERENT FROM THAT OF A C IVIL COURT. THE STATEMENTS MADE IN A PLEADING , PROVED BY THE MINIMUM AMOUNT OF EVIDENCE , MAY BE ACCEPTED BY A CIVIL C OURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEU TRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE ITO IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRC UMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD 'ERRONEOUS'' IN S. 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. THE CASE LAW IN THE MATTER , I.E., THAT ABSENCE OF PROPER INQUIRY AND/OR PASSING AN ORDER WITHOUT DUE APPLICATION OF MIND, MAKES THE SAME AS 4 ITA NO. 2881/MUM/2014 (A.Y.2009 - 10) AYYAZUDDIN J. KHAN VS. ITO ERRONEOUS IN - SO - FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE , LIABLE FOR REVISION U/S. 263 , IS LEGION , AND FOR WHICH WE MAKE REFERENCE TO THE FOLLOWING DECISIONS: THALIBAI F. JAIN V. ITO [1975] 101 ITR 1 (KAR); CIT (ADDL.) VS. MUKUR CORPORATION [1978] 111 ITR 312 (GUJ.); SWARUP VEGETABLE PRODUCTS VS. CI T [1991] 187 ITR 412 (ALL); TARAJAN TEA CO. (P.) LTD. VS. CIT [1994] 205 ITR 45 (GAU); CIT VS. ACTIVE TRADERS (P.) LTD. [1995] 214 ITR 583 (CAL); CIT VS. MAHAVAR TRADERS [1996] 220 ITR 167 (MP); K.A. RAMASWAMY CHETTIAR VS. CIT [1996] 220 ITR 657 (MAD); MOFU SSIL WAREHOUSE & TRADING CO. LTD. VS. CIT [1999] 238 ITR 867 (MAD.); CIT VS. EXPORT HOUSE, AMRITSAR [2002] 256 ITR 603 (P&H ) ; PT . LASHKARI RAM VS. CIT [2005] 272 ITR 309 (ALL.); CIT VS. DEEPAK KUMAR GARG [2008] 299 ITR 435 (MP); CIT VS. TOYOTA MOTOR CORPN. [2008] 306 ITR 49 (DEL) (AFFIRMED BY THE APEX COURT, VIDE ITS JUDGMENT AT [2008] 306 ITR 52 (SC)) ; CIT VS. ARUNABEN SUMANKUMAR [2003] 259 ITR 386 (GUJ); BESIDES BY THE LARGER BENCH OF THE TRIBUNAL IN RAJALAKSHMI MILLS LTD. VS. ITO [2009] 121 ITD 343 (CHEN ) (SB) , SIGNIFYING THE APPLICATION OF THE CONCEPT IN A VARIETY OF FACT SITUATIONS. COMING TO THE FACTS OF THE CASE, IT IS NOT CLEAR IF THE LOAN CONFIRMATIONS WERE FILED BY THE LOAN CREDITORS ; WHILE THE ASSESSMENT ORDER RECORDS THE ASSESSEE HAVING FILED TH E SAME, THE IMPUGNED REVISION ORDER STATE S OF NO SUCH CONFIRMATIONS BEING ON RECORD. BE THAT AS IT MAY, THE LOAN CONFIRMATION S (WHICH ADMITTEDLY WERE, SAVE T W O, WITHOUT PAN) DO NOT PROVE A CREDIT , WHICH HAS TO BE PROVED ON THE THREE PARAMETERS OF IDENTITY, CREDITWORTHINESS AND GENUINENESS. WHY, IN THE ABSENCE OF PAN, WE REGARD THAT EVEN THE IDENTITY AS NOT BEEN CONCLUSIVELY PROVED IN THE PRESENT CASE , I.E., N OT TO SPEAK OF CAPACITY AND GENUINENESS OF THE LOANS, TOWARD WHICH THERE IS NO EVIDENCE ON RECORD. COMING TO THE DECISION IN THE CASE OF CIT VS. GREENWORLD CORPORATION [2009] 314 ITR 81 (SC) , RELIED UPON BY THE ASSESSEE BEFORE US, WE CONSIDER THE SAME AS MISPLACED. THE SAID DECISION H O LD S THAT THE ASSESSMENT BY THE A.O. SHOULD NOT BE INTERFERED WITH IN CASE ANOTHER VIEW IS POSSIBLE. W HERE THE A.O. HAS TAKEN ONE OF THE TWO VIEWS , EQUALLY POSSIBLE, HIS ORDER I S NOT LIABLE FOR REVISION, AS IS AGAIN WELL SETTLED PER A SERIES OF DECISIONS BY THE A PEX C OURT, INCLUDING MALABAR INDUSTRIAL CO. LTD. (SUPRA). THE REVISION IN THE PRESENT CASE I S, ON THE CONTRARY, BEING MADE FOR WANT OF 5 ITA NO. 2881/MUM/2014 (A.Y.2009 - 10) AYYAZUDDIN J. KHAN VS. ITO ANY BASIS, MUCH LESS OBJECTIVE , AS WELL AS THE ABSENCE OF ANY MATERIAL ON RECORD, TO FORM A OPINION BY THE A.O. WITH REGARD TO THE GENUINENESS OF THE CREDITS, I.E., FOR BEING SATISFIE D THEREWITH IN TERMS OF SECTION 68. IT IS ONLY , WE MAY CLARIFY , WHERE THE RELEVANT MATERIAL TOWARD ESTABLISHING THE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE CREDIT/S HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE THAT IT CAN BE SAID TO HAVE DISCHARGED PRIMA FACIE THE BURDEN OF PROOF THAT LIES ON IT, AND THAT THE ONUS TO REBUT THE SAME IS ON THE A.O. WE HAVE ALREADY OBSERVED COMPLETE ABSENCE OF ANY SUCH MATERIAL, MUCH LESS ANY VERIFICATION AS TO THE TRUTH OR ITS VERACITY BY THE A.O. 4. IN VIEW OF THE FO REGOING, WE UPH O LD THE IMPUGNED ORDER AND , ACCORDINGLY , DECLINE INTERFERENCE. WE MAY, HOWEVER, BEFORE PARTING WITH THE ORDER, CLARIFY THAT WE MAY NOT CONSTRUED AS HAVING EXPRESSED ANY VIEW IN THE MATTER RATHER, HAVING OBSERVED AN ABSENCE OF ANY SUCH MATE RIALS TO FORM AN INFORMED OPINION IN THE MATTER. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 29 , 201 6 SD/ - SD/ - ( PAWAN SINGH ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 29 . 0 6 .201 6 . . ./ ROSHANI , SR. PS 6 ITA NO. 2881/MUM/2014 (A.Y.2009 - 10) AYYAZUDDIN J. KHAN VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI