Smt. Jayaben Dahyabhai Patel, Surat V. The ACIT.,Circle-3, Surat

ITA 2958/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50979 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained cash credit; Gift; Corroborative evidences; Onus to prove
• Section: 143(3); 68

Judgement Text

, , . .. . . .. . , , , , ! ! ! ! ' '' '# ## # ' ' ' '. .. .$ #$ $ #$ $ #$ $ #$ , %& ' %& ' %& ' %& ' % ! % ! % ! % ! IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE HONBLE SHRI G.C.GUPTA, V.P. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) # # # #. ITA NO. 2958 / AHD./2009 : ()- 200 6 -200 7 SMT. JAYABEN DAHYABHAI PATEL, SURAT VS- ACIT, CIRCLE-3, SURAT (PAN : AAXPP 9891R) (,- /APPELLANT) ( ./,- /RESPONDENT ) ,- 0 1 % / APPELLANT BY : SHRI J. P. SHAH, A.R. ./,- 0 1 % / RESPONDENT BY : SHRI VINOD TANWANI, SR.D.R. 2 0 34& / DATE OF HEARING : 29/11/2011 5$( 0 34& / DATE OF PRONOUNCEMENT : 02/12/2011 %6 %6 %6 %6 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT IN AP PEAL NO.CAS/II/155/08-09 DATED 24.08.2009 FOR THE ASSESSMENT YEAR 2006-2007 PASSED UNDER SECTION 251 R.W.S.143(3) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN HER AP PEAL. HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING TH E ORDER OF THE AO WHO HAD MADE AN ADDITION OF RS.13,33,983/- DISBELIEVING THE GIFT OF RS.13,33,983/- RECEIVED FROM SHRI MANSUKHLAL PARSOTTAMBHAI PATEL, THE BROTHER OF THE ASSESSEE. 3. THE ASSESSEE, AN INDIVIDUAL, FILED RETURN OF INC OME ON 04.09.2006 SHOWING TOTAL INCOME OF RS.5,40,186/-, ACCOMPANIED BY AUDITED ACC OUNTS IN FORM NO.3CB AND 3CD. THE CASE WAS SELECTED FOR SCRUTINY AND FINALLY ASSE SSMENT WAS COMPLETED UNDER SECTION ITA NO. 2958-AHD-2009 2 143(3) OF THE ACT ON 29.08.2008. THE ASSESSEE IS EN GAGED IN THE BUSINESS OF PURCHASE AND SELLING OF SHARES AND SECURITIES. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. A.O. THAT THE ASSESSEE HAS RECEIVED GIFT OF RS.13,33,983/- FROM SHRI MANSUKHBHAI P. PATEL, THE BROTHER OF THE ASSES SEE. THE ASSESSEE WAS, THEREFORE, ASKED TO FURNISH THE CONFIRMATION FOR THE GIFT RECE IVED AND PROVE THE CREDITWORTHINESS AND FURNISH THE NAME AND ADDRESS OF THE DONOR. AFTE R RECEIVING REPLY FROM THE ASSESSEE, THE LD. A.O. CAME TO THE FOLLOWING CONCLUSION: (I) THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE R EGARDING IDENTITY OF DONOR I.E. SHRI MANSUKH P. PATEL. THE ASSESSEE COULD HAVE FURNISHED SOCIAL SECURITY NUMBER OR PASSPORT OF ALLEGED DONOR. THE ASSESSEE H AS CLAIMED THAT DONOR IS HER REAL BROTHER, HENCE ASSESSEE COULD EASILY ARRAN GE ABOVE REFERRED EVIDENCE IN SUPPORT OF IDENTITY OF DONOR. (II) THE ASSESSEE HAS NOT BEEN ABLE TO PROVE CREDI TWORTHINESS OF THE DONOR AS TO OUT OF WHICH SOURCE THE GIFT IS MADE AND WHETHER TH E SAID PERSON IS CAPABLE OF MAKING THE GIFT OF RS. 13,33,986. THE ASSESSEE COUL D HAVE FURNISHED LETTERS FROM BANKS, .WHICH ARE CONVENTIONAL IN USA TO PROVE CRED ITWORTHINESS OF DONOR. (III) THE ASSESSEE HAS ONLY SUBMITTED CERTIFICATE O F FOREIGN INWARD REMITTANCE, WHEREIN NAME OF REMITTER HAS BEEN MENTIONED AS PAMR APO SAVINGS BANK S.L.A., 611 AVENUE C, BAYONNE, NJ 07002. GENUINENESS OF GIF T TRANSACTION HAS NOT BEEN PROVED AS NAME OF DONOR IS NOT APPEARING IN TH E ABOVE SAID DOCUMENT OF REMITTANCE, MOREOVER ASSESSEE FAILED TO ADDUCE SUPP ORTING EVIDENCE WHICH MAY SUGGEST THAT PAMRAPO SAVINGS BANK HAS TRANSFERRED T HE SUM ON BEHALF OF DONOR. 4.5 IN THE CASE OF GIFTS, THE CONCLUSIVE FINDINGS H AVE BEEN GIVEN BY THE HON'BLE HIGH COURT, DELHI IN THE CASE OF K. L. AGGRAWAL VS. CIT 190 ITR 0303 (1991) THAT THE ONUS TO PROVE THE VALIDITY OF GIFT LIES ON THE ASSESSEE AND THE ONUS IS GREATER ON THE ASSESSEE IN THE CASE OF RELATIVE. TH E ASSESSEE HAS NOT BEEN ABLE TO SUBMIT SUPPORTING EVIDENCE REGARDING IDENTITY AND C REDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE GIFT TRANSACTION. IN VIEW OF ABOVE, THE UNEXPLAINED GIFT OF RS.13,33,983 /- IS BROUGHT TO T AX AS INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME-TAX ACT, 1961. PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE ACT ARE INITIATED ON THIS ISSUE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED WHAT WAS SUBMITTED BEFORE THE LD. A.O. THE LD. CIT(A) EXAMIN ED THE FACTS OF THE CASE AND ANALYZED THE FOLLOWING CASE LAWS RELIED BY THE ASSE SSEE. I) CIT-VS- PADAM SINGH CHOUHAN (2008) 215 CTR (R AJ.) 303 II) ITO-VS- DHARAM VIR TULI (2003) 81 TTJ (CHD.) (TRIB.) 1028 ITA NO. 2958-AHD-2009 3 II) NARINDER KUMAR SEKHRI VS- ACIT [2003] 81 TTJ (ASR.)(TRIB.) 1036 IV) CIT-VS- MANOJ KUMAR SEKHRI [2008] CTR (PUNJ.& HAR.) 141 V) NARESH KUMAR SEKHRI 4.1 AFTER EXAMINING AND ANALYZING THE ABOVE CASE LA WS, THE LD. CIT(A) HELD THE MATTER AGAINST THE ASSESSEE PLACING RELIANCE OF THE HONBLE SUPREME COURT IN THE CASE OF CIT-VS- MOHANAKALA [2007] 291 ITR 278. THE RELEV ANT PORTION OF THE ORDER IS REPRODUCED HEREINBELOW FOR REFERENCE. 5.13 IN VIEW OF THE PRONOUNCEMENTS OF THE HON'BLE SUPREM E COURT, THE VIEWS EXPRESSED BY THE RAJASTHAN HIGH COURT IN THE CASE O F PADAM SINGH CHOUHAN, NO LONGER REMAINS VALID. THE RAJASTHAN HIGH COURT O BSERVED THAT BLOOD RELATIONSHIP OR ANY OTHER RELATIONSHIP OF LOVE AND AFFECTION IS NOT NECESSARY FOR MAKING A GIFT. IT IS ALSO TO BE SHOWN THAT THE GIFT ACTUALLY REPRESENTED MONEY ADVANCED BY THE RECIPIENT TO THE DONOR WHICH IS REC EIVED BACK IN THE FORM OF A GIFT, AND THAT, IN THE ABSENCE OF ANY EVIDENCE TO S HOW THAT THE TRANSACTION IS BY WAY OF MONEY LAUNDERING, NO GIFT CAN BE TREATED AS UNEXPLAINED AND ADDED THE HON'BLE SUPREME COURT AND THE DELHI HIGH COURT W HO HAS FOLLOWED THE VIEW OF THE HON'BLE SUPREME COURT, HAVE CLEARLY HELD THA T ANY TRANSACTION OF GIFT WHERE THERE IS NO RELATIONSHIP OF LOVE AND AFFECTIO N OR ANY OTHER RELATIONSHIP, WOULD BE 'NOT ONLY QUITE UNUSUAL BUT A/SO QUITE UNN ATURAL', AND THE ALLEGED GIFT TREATED AS UNEXPLAINED AND BOGUS. IT IS ALSO NOT RE QUIRED TO BE SHOWN THAT THE GIFT RECEIVED IS ACTUALLY THE MONEY OF THE RECIPIEN T SINCE, THE ONUS IS CLEARLY ON THE RECIPIENT TO REBUT THE INFERENCE WHICH AUTOMATI CALLY ARISES U/S-68 THAT, ONCE A RECEIPT IS SHOWN AND ENTRY IS MADE IN THE BOOKS, IT IS THE INCOME OF THE RECIPIENT. IT HAS BEEN SPECIFICALLY POINTED OUT BY THE HON'BLE SUPREME COURT THAT WHILE IN ALL CASES IN WHICH A RECEIPT IS SOUGH T LA BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS W ITHIN THE TAXING PROVISIONS, IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN AN EXEMPTION PROVIDED BY TH E ACT, LIES UPON THE ASSESSEE. HOWEVER, IN THE SITUATION COVERED BY SEC.68, THE BU RDEN LIES ON THE ASSESSEE TO REBUT THE INFERENCE THAT SUCH RECEIPT IS IN THE NAT URE OF INCOME. EVEN OTHERWISE, THE VIEW EXPRESSED BY THE RAJASTHAN HIGH COURT MAY BE SEEN TO BE PERVERSE. SEC.68 IS A DEEMING PROVISION, WHICH TREATS ANY SUC H RECEIPT AS INCOME. IN CASES OF DEEMING PROVISIONS, THE DEPARTMENT IS NOT REQUIRED TO PRODUCE CONCLUSIVE EVIDENCE, ESPECIALLY WHEN THE RULES OF E VIDENCE DO NOT APPLY TO INCOME-TAX PROCEEDINGS. THIS IS AN UNDISPUTABLE PROPOSITION ACCEPTED EVEN B Y THE HIGHEST COURT. IN THE SAME MANNER, THE OTHER CASES DECIDED BY THE AMRITSAR AND CHANDIGARH BENCHES OF THE ITAT WHICH HAVE BEEN RELIED UPON BY THE AR, ALSO STAND NULLIFIED. NOT ONLY THESE CASES, BUT ALS O SEVERAL OTHER CASES ESPECIALLY THE DECISION OF THE GUJARAT HIGH COURT I N THE CASE OF ROHINI BUILDERS AND SEVERAL OTHER CASES WHICH HAVE BEEN DECIDED BY THE AHMEDABAD BENCH OF THE ITAT RELYING UPON THE CASE OF ROHINI BUILDERS, WOULD ALSO STAND NEGATED ITA NO. 2958-AHD-2009 4 AND NULLIFIED, THE LAW HAVING BEEN CLEARLY LAID DOW N IN THE CASE OF P. MOHANAKALA AS REPORTED IN 291 ITR 278. 5.14 GIVEN SUCH FACTS AND CIRCUMSTANCES OF THE CASE WHICH I HAVE DISCUSSED ABOVE IN CONSIDERABLE DETAIL, ARID THE VIEW;- EXPRE SSED BY THE HON'BLE SUPREME COURT AND THE DELHI HIGH COURT, IT IS HELD THAT THE AO WAS FULLY JUSTIFIED IN TREATING THE GIFT OF RS.13,33,983 AS BOGUS. HIS ACT ION IS THEREFORE SUSTAINED, AND THE ADDITION OF RS.13,33,983 UNDER THE PROVISIONS O F SEC.68 OF THE IT ACT, IS CONFIRMED . 5. AT THE TIME OF HEARING, THE LD. A.R. SUBMITTED B EFORE US THAT THE ASSESSEE HAS FURNISHED AFFIDAVIT OF THE DONOR DULY NOTARIZED IN THE STATE OF NEW JERSEY, UNITED STATES OF AMERICA AND FURTHER COUNTER-NOTARISED IN INDIA. HE FURTHER VEHEMENTLY ARGUED THAT THE ASSESSEE HAS ALSO SUBMITTED XEROX C OPIES OF THE PAY ORDER AND THE CERTIFICATES FROM THE BANK OF INDIA FOR INWARD REMI TTANCE, ETC. IT WAS ALSO SUBMITTED THAT FROM THE AFFIDAVIT, IT IS EVIDENT THAT THE DON OR IS THE BROTHER OF THE ASSESSEE AND THE AMOUNT WAS RECEIVED FROM HIM FROM HIS EARNINGS IN U NITED STATES OF AMERICA. THEREFORE, IT WAS PRAYED THAT THE ADDITION MADE BY THE LD. A.O. MAY BE DELETED. 6. ON THE OTHER HAND, THE LD. D.R. PLACED RELIANCE ON THE ORDER OF THE LD. AO AND THE LD. CIT(A) AND ARGUED STATING THAT THE ASSESSEE HAS NOT ESTABLISHED THAT THE DONOR IS HER BROTHER AND ALSO HAS NOT ESTABLISHED THE CREDIT WORTHINESS OF THE DONOR. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE PAPER BOOK CONTAINING 1 TO 29 PAGES AND OTHER MATERIALS AND CASE LAWS SUBMITTED B Y EITHER PARTIES. THE ASSESSEE HAD PRODUCED BEFORE THE REVENUE AUTHORITIES COPIES OF T WO CHEQUES DATED 29.9.2005 AND 23.12.2005 EACH OF 15,000 DOLLAR, THE CREDIT ADVICE DATED 29.10.2005 AND 25.02.2006 FOR RS.6,70,208/- AND RS.6,63,778/- ISSUED BY BANK OF INDIA, SURAT. THE CERTIFICATE OF FOREIGN INWARD REMITTANCE DATED 04.07.2006 ISSUED B Y BANK OF INDIA, SURAT WAS ALSO SUBMITTED BEFORE THE REVENUE AUTHORITIES. FURTHER, THE XEROX COPIES OF THE PASSPORT OF NON-RESIDENTS SHRI MANSUKHBHAI P. PATEL AND SMT. PU SPABEN M. PATEL WERE ALSO FURNISHED. THE ASSESSEE HAS ALSO FURNISHED THE INCO ME STATEMENT OF SHRI MANSUKHBHAI P. PATEL. FURTHER THE DECLARATION OF GIFT FURNISHED BY THE DONOR, SUBMITTED BEFORE THE REVENUE DULY SIGNED AND NOTARIZED, READS AS UNDER: ITA NO. 2958-AHD-2009 5 INDIA NON-JUDICIAL STAMP PAPER OF RS.50/- SEAL OF THE NOTARY JAGRUTI I. YADAV, ADVOCATE SURAT REG. NO.4590 GOVT. OF INDIA DECIARATIQN OF GIFT I MANSUKHLAL S/O PARSOTTAMBHAI PATEL AGED 57 YEARS RESIDING AT 45, EAST, 51 STREET BAYONNE N.J. 07002 DO HEREBY DECLARE AS UNDER:- 1. THAT I AM EMPLOYED WITH UNITED STATES POSTAL S ERVICE SINCE 25 YEARS. 2. THAT I AM A PERSON RESIDENT OUTSIDE INDIA WITH IN THE MEANING ASSIGNED IN CLAUSE (Q) OF SECTION 2 OF FOREIGN EXCHANGE REGULAT ION ACT, 1973. 3. THAT I HAVE MADE TWO GIFTS OF $ 15000 EACH I.E . (DOLLARS THIRTY THOUSANDS) ONLY TO MY SISTER SMT. JAYABEN W/O DAHYABHAI PATEL VIDE CHEQUE NO. 268791106 AND 268791226 DATED 29-09-2005 AND 29-12- 2005 RESPECTIVELY DRAWN ON PAMRAPO SAVINGS BANK S. L. A. ACCOUNT NO. 342221 WITH PAMRAPO SAVINGS BANK S. L. A. 4. THE GIFT AMOUNT HAS BEEN GIVEN TO MY SISTER SM T. JAYABEN DAHYABHAI PATEL BY GIVING HER THE AFORESAID CHEQUES DRAWN ON MY SAID BANK. 5. THE SAID GIFT HAS DULY BEEN ACCEPTED BY MY SIST ER SMT. JAYABEN DAHYABHAI PATEL SD/- SIGNATURE OF DONOR ADDRESS: 45, EAST. 51 STREET BAYONNE N J. 07002 THE SAID GIFT HAS BEEN ACCEPTED BY JAYABEN DAHYABHA I PATEL SEAL OF THE NOTARY SD/- SIGNATURE OF DONEE ADDRESS: 77, NARMAD NAGAR, ATHWALINES, SURAT ATTESTED SD/- J.I.YADAV, NOTARY SD/- DIANE VOCCARO NOTARY PUBLIC STATE OF NEW JERSEY MY COMMISSION EXPIRES 11-27-12 ITA NO. 2958-AHD-2009 6 7.1 AFTER EXAMINING ALL THESE DOCUMENTS WHICH WERE PART OF PAPER BOOK FURNISHED BY THE ASSESSEE, IT IS QUITE DIFFICULT TO PRESUME T HAT THE ASSESSEES CLAIM IS NOT BONA FIDE . FROM THE STATEMENT OF INCOME, FURNISHED BY THE AS SESSEE AND THE NUMBER OF YEARS THE DONOR BEING EMPLOYED IN UNITED STATES OF AMERIC A, THE CREDITWORTHINESS OF THE DONOR CANNOT BE DOUBTED. THE REVENUE HAS NOT BROUGH T OUT ANY MATERIALS TO ESTABLISH THAT THE DONOR WAS NOT THE BROTHER OF THE ASSESSEE, EVEN THOUGH ALL THE DETAILS OF THE DONOR WERE IN THE HANDS OF THE REVENUE. CONSIDERING THE FACTS OF THIS CASE AND THE DOCUMENTS PERUSED, WE ARE OF THE CONSIDERED VIEW TH AT THE ASSESSEE HAD GENUINELY RECEIVED GIFT OF RS.13,33,983/- FROM HER BROTHER WH O IS RESIDING AND SERVING IN UNITED STATES OF AMERICA. THEREFORE, WE HEREBY DELETE THE ADDITION MADE BY THE LD. A.O. UNDER SECTION 68 OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7 %6 0 5$( 8#) 02 / 12 /2011 $ 9 0 2 : SD/- SD/- (G.C.GUPTA) (A.MOHAN ALANKAMONY) VICE PRESIDENT A CCOUNTANT MEMBER DATED : 02/12/2011 %6 %6 %6 %6 0 00 0 .3; .3; .3; .3; <%;(3) <%;(3) <%;(3) <%;(3)- -- - 1. ,- 2. ./,- 3. ## 3 @ 4. @- - 5. ;C .3 , , : 6. E F7 %6 %, / # , : TALUKDAR/ SR. P.S.