Ashok Kumar Deora (HUF), Kolkata V. ITO, Ward 45(1), Kolkata, Kolkata

ITA 305/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1782 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARYA
• Assessee Lawyers: A K TIBREWAL
• Keywords: Gift; Income from undisclosed sources; Source of fund; Onus to prove
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.305/KOL/2017 ( / ASSESSMENT YEAR : 2004-05 ASHOK KUMAR DEORA HUF P-37, MANIKTALA MAIN ROAD, KOLKATA-700054 VS. ITO-45(1), KOLKATA 3-GOVERNMENT PLACE (WEST), KOL 1. ./ ./PAN/GIR NO. : AACHA 0813 M ( /ASSESSEE ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI A.K. TIBREWAL, FCA /REVENUE BY : SHRI ARINDAM BHATTACHARYA, SR. DR / DATE OF HEARING : 16/06/2017 /DATE OF PRONOUNCEMENT: 02/08/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2004-05, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-13, KOLKATA IN APPEAL NO. 63/CIT(A)-13/W-45(1)/KOL/2014-15, DATED 03.10.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 27.12.2006. 2. BEFORE US, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEALS: ITA NO.305/17 ASHOK KR. DEORA HUF 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN AGREEING WITH THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF THE GIFTS OF RS. 5 LACS. RECEIVED FROM FIVE PERSONS AND ON THE BASIS OF SUCH ERRONEOUS OBSERVATION, THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) FURTHER ERRED IN CONFIRMING THE ADDITION OF THE SAID RS. 5 LACS. TO THE ASSESSEES TOTAL INCOME. 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHILE CONFIRMING THE ADDITION OF RS. 5 LACS ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT IN MAKING ADDITIONS OF THE SAID RS. 5 LACS, THE ASSESSING OFFICER EXCEEDED HIS JURISDICTION IN ENQUIRING INTO THE SOURCE OF THE SOURCES OF THE DONORS OF GIFT. 3. THAT, IN CONFIRMING THE ADDITION OF RS. 5 LACS AS STATED HEREIN ABOVE THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN RELYING ON THE DECISIONS OF OTHER HIGH COURTS WITHOUT HAVING ANY REGARD TO THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. DATAWARE PRIVATE LIMITED, THE RATIO OF WHICH SQUARELY APPLIES TO THE ASSESSEES CASE. 3. ALTHOUGH, IN THIS APPEAL, THE ASSESSEE HAS RAISED A MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING, THE MAIN GRIEVANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ISSUE THAT ASSESSEE HAS NOT FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF THE GIFTS OF RS. 5 LACS AND THEREFORE ADDITION OF RS. 5 LACS ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE, IS BAD IN LAW. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 ON 05.01.2005 SHOWING TOTAL INCOME OF RS. 1,10,500/-. THE ASSESSEES CASE WAS SELECTED FOR ITA NO.305/17 ASHOK KR. DEORA HUF 3 SCRUTINY U/S 143(2) OF THE INCOME TAX ACT AND THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT BY MAKING ADDITION ON ACCOUNT OF UNEXPLAINED GIFT RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED GIFT OF RS. 5 LAKHS WITHOUT ANY PROOF. THE MODUS OPERANDI OF GIFT TRANSACTION WAS THAT CASH WAS DEPOSITED TO ONES ACCOUNT HAVING ANNUAL INCOME OF RS. 52,100/- AND IN TURN THE SAID ACCOUNT HOLDER REPAID LOAN OF RS. 1,00,000/- EACH TO FIVE PERSONS WHICH NOT AT ALL EXISTED. THOSE FIVE PERSONS MADE GIFT TO THE ASSESSEE OF RS. 1 LAKH EACH AND ALL THESE TRANSACTIONS HAPPENED ON THE SAME DATE THEREFORE, AO HELD THAT IT IS CLEAR THAT ALL WERE ARRANGED BY THE ASSESSEE TO INTRODUCE INCOME FROM UNDISCLOSED SOURCES IN THE GARB OF THE GIFT. THEREFORE, THE ASSESSING OFFICER MADE ADDITION AT RS. 5 LAKH TO THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE, THAT IS, ASHOK KR. DEORA HUF RECEIVED GIFT OF RS. 5 LAKH FROM SHRI OM PRAKASH AGARWAL, SMT. RADHA DALMIA, SHRI HARIKANT DALMIA, SMT. RAMA TULSIYAN AND SHRI CHANDRA KANT DALMIA RS. 1 LAKH EACH. THE ASSESSING OFFICER EXAMINED THE SOURCES OF THE FUNDS OF THE ABOVE SAID DONATION MADE ITA NO.305/17 ASHOK KR. DEORA HUF 4 BY FIVE PERSONS. THE ASSESSING OFFICER INDIVIDUALLY EXAMINED THE BANK ACCOUNT OF THESE DONORS. THERE WERE FIVE DONORS AS EXPLAINED ABOVE AND EACH DONOR HAS DONATED OF RS. 1 LAKH TO ASHOK KR. DEORA HUF. WHILE EXAMINING THE SOURCE OF FUND IN BANK ACCOUNT OF DONORS THE ASSESSING OFFICER FOUND THAT THE FUNDS WERE RECEIVED ONE ACCOUNT WHICH WAS HELD BY SMT. DRAUPADI AGARWAL AND IN THE ACCOUNT OF SMT. DRAUPADI AGARWAL RS. 5 LAKH WAS DEPOSITED IN CASH JUST BEFORE THE ISSUANCE OF CHEQUES. THE ASSESSING OFFICER FURTHER OBSERVED THAT SMT. DRAUPADI AGARWAL WAS RELATIVE OF THESE DONORS EXCEPT SMT. RAMA TULSYAN. IT IS PERTINENT TO MENTION HERE THAT THE CASH DEPOSIT MADE BY SMT. DRAUPADI AGARWAL IN HER ACCOUNT ON 23.10.2003 AND ON THE VERY SAME DATE RS. 1 LAKH EACH WAS TRANSFERRED IN THE ACCOUNT OF AFORESAID SO-CALLED DONORS AND THESE ABOVE REFERRED PERSONS TRANSFERRED AFORESAID MONEY IN THE HANDS OF MR. ASHOK KR. DEORA HUF. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE KARTA OF THE HUF MR. ASHOK KR. DEORA WAS THE NEPHEW OF SMT. DRAUPADI AGARWAL. THE ASSESSING OFFICER OBSERVED THAT THE SAID DONORS HAVE NEVER BEEN SHOWN AS A LENDER TO SMT. DRAUPADI AGARWAL IN HER BALANCE SHEET. THE AFORESAID INFORMATION WAS RECEIVED FROM ITO W-1(2), HOOGHLY, WHO SEND THE COPY OF IT RETURN OF SMT. DRAUPADI AGARWAL IN WHICH ONE OF THE SO-CALLED DONORS SMT. RADHA DALMIA NAME WAS APPEARING AS LOAN DEBTOR IN THE BALANCE ITA NO.305/17 ASHOK KR. DEORA HUF 5 SHEET OF SMT. DRAUPADI AGARWAL. THEREFORE, THE ASSESSING OFFICER OBSERVED THAT SMT. DRAUPADI AGARWAL IN WHOSE ACCOUNT CASH WAS DEPOSITED AND THEN THE SAME WAS TRANSFERRED IN THE ACCOUNT OF DONORS AND FINALLY THE AFORESAID FIVE DONORS TRANSFERRED THE SAME AMOUNT TO MR. ASHOK KR. DEORA HUF. THEREFORE, LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE GENUINENESS OF THE GIFTS. THE LD. CIT(A) RELIED ON THE JUDGMENT ON THE MADRAS HIGH COURT IN CIT VS. C.R. RANGANATHAN CHETTY 153 ITR 456 WHEREIN IT WAS HELD THAT IN ORDER TO BE A GENUINE GIFT THE DONORS SHOULD DEMONSTRATE HIS ABILITY TO GIVE THE GIFT AND THERE WAS NO OCCASION FOR GIVING THE GIFTS. ROUTING THE SAME AMOUNT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. THEREFORE, KEEPING IN VIEW THE AFORESAID FACT THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE HAS PROVED THE CAPACITY OF THE DONORS, IDENTITY OF THE DONOR AND GENUINENESS OF THE GIFT. THE ASSESSEE HAS RECEIVED GIFT OF RS. 1 LAKH EACH FROM SMT. RAMA TULSYAN, SHRI CHANDRA KANT DALMIA, SMT. RADHA DALMIA, SHRI HARIKANT DALMIA AND SHRI O.P. AGARWAL. ALL THE DONORS HAVE DECLARED BY SUBMITTING THE ITA NO.305/17 ASHOK KR. DEORA HUF 6 AFFIDAVIT THAT THEY ARE GIVING THE GIFT TO THE ASSESSEE. THEY SUBMITTED THE INCOME TAX RETURN, THEY SUBMITTED THE COPY OF THE PAN CARD. THE DONORS SUBMITTED THE ACCOUNTS STATEMENT, THE DONORS ALSO SUBMITTED THE SOURCES OF FUNDS AND THE COPY OF THE BANK ACCOUNT. THEREFORE, WITH HELP OF THESE EVIDENCES, IT IS CRYSTAL CLEAR THAT THE GIFT WAS GENUINE AND IDENTITY OF DONOR, CAPACITY OF THE DONOR, SOURCES OF THE GIFT AND GENUINENESS OF THE TRANSACTION HAVE PROVED BEYOND DOUBT. THE ASSESSING OFFICER DOES NOT HAVE RIGHT TO EXAMINE THE SOURCE OF THE SOURCES. THE ASSESSEE UNDER CONSIDERATION HAS EXPLAINED THE SOURCE OF THE GIFT BY FILING THE AFFIDAVIT OF THE DONORS, THE GIFT DEED, INCOME TAX RETURN, PAN CARD OF THE DONORS, SOURCES OF FUNDS OF THE DONORS AND COPY OF BANK STATEMENT OF THE DONORS. THEREFORE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE HAS RECEIVED GENUINE GIFT FROM ALL THE FIVE PERSONS. BESIDES THE PERSONS, WHO HAVE GIVEN THE GIFT TO THE ASSESSEE ARE RELATIVE OF THE ASSESSEE AND THEREFORE, THE GIFT RECEIVED FROM THE RELATIVE OF THE ASSESSEE IS EXEMPTED FROM TAX U/S 56 OF THE ACT. THE LD COUNSEL ALSO RELIED ON THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DATAWARE PRIVATE LTD.ITA NO.263/2011,GA NO. 2856/2011 DATED 21.09.2011, WHEREIN IT WAS HELD THAT: BOTH THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL BELOW HAVE IN DETAILS CONSIDERED THE FACT THAT THE SHARE APPLICATION MONEY WAS PAID BY ACCOUNT PAYEE CHEQUE, THE CREDITOR APPEARED BEFORE THE ASSESSING OFFICER, DISCLOSED ITS PAN NUMBER AND ALSO ITA NO.305/17 ASHOK KR. DEORA HUF 7 OTHER DETAILS OF THE ACCOUNTS BUT IN SPITE OF THAT THE ASSESSING OFFICER DID NOT ENQUIRE FURTHER FROM THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD, HIMSELF PROCEEDED TO CONSIDER THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR AND OPINED THAT HE HAD SOME DOUBT ABOUT THE GENUINENESS OF SUCH AMOUNT. IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IN AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS SUBMITTED THAT IT IS A PLANNED GIFT WHERE DONOR AND DONEE, BOTH MADE THE PLANNING TO EVADE THE TAX. IT IS VERY MUCH CLEAR FROM THE FACT THAT BEFORE THE GIFT WAS GIVEN TO THE ASSESSEE UNDER CONSIDERATION THE CASH WAS DEPOSITED IN THE ACCOUNT OF SMT. DRAUPADI AGARWAL AND THEREAFTER, MONEY HAS BEEN TRANSFERRED TO THE DONORS ACCOUNT AND THE DONORS IN TURN TRANSFERRED THE AMOUNT IN THE BANK ACCOUNT OF THE ASSESSEE (DONEE). THEREFORE, IT IS A PLANNING OF THE ASSESSEE NOT TO PAY THE TAX ON THE UNDISCLOSED INCOME. 7. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS. HE ALSO PROVED THE SOURCE OF THE GIFT. IT IS VERY ITA NO.305/17 ASHOK KR. DEORA HUF 8 MUCH CLEAR THAT EACH DONOR SUBMITTED AFFIDAVIT, INCOME TAX RETURN, COPY OF PAN CARD, THE COPY OF THE SOURCES OF FUNDS, AND THE STATEMENT OF ACCOUNTS AND COPY OF THE BANK STATEMENT WHERE THE TRANSACTIONS ARE DONE THROUGH BANK. THEREFORE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE GIFTS HAVE BEEN PROVED BY THE ASSESSEE. IN ADDITION TO THIS, THE ASSESSEE HAS EXPLAINED THE SOURCES OF THE DONORS. WE ARE OF THE VIEW THAT ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE GIFTS, AND HE ALSO EXPLAINED THE SOURCE OF THE DONORS. THE LD COUNSEL SUBMITTED THE JUDGMENT OF HON`BLE CALCUTTA HIGH COURT IN THE CASE OF DATAWARE PRIVATE LTD (SUPRA), WHEREIN THE HONBLE COURT OBSERVED THAT THE SOURCE OF THE SOURCE NEED NOT TO BE EXPLAINED BY THE ASSESSEE. THEREFORE, CONSIDERING THE FACTUAL POSITION AS EXPLAINED ABOVE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION OF RS. 5 LACS. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02/08/2017. SD/ - (A.T. VARKEY) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 02/08/2017 SB , SR.PS. ITA NO.305/17 ASHOK KR. DEORA HUF 9 / COPY OF THE ORDER FORWARDED TO : SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE- ASHOK KUMAR DEORA HUF 2. / THE RESPONDENT.- ITO, WARD-45(1), KOLKATA 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER