Shri Bhavesh R Mehta, Rajkot V. The Assistant Commissioner of Income Tax, Circle-2, Rajkot

ITA 306/RJT/2017

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4788 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 26-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHKUMARPANDEY; FORASSESSEETOMAKESUCHCLAIMANDPROVEITAT
• Assessee Lawyers: SHRIVIMALDESAI
• Keywords: Gift

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनायपीप INTHEINCOMETAXAPPELLATETRIBUNAL, (ConductedthroughE-Court,Rajkot) BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER आयकरअपीलसं ./ITANo.306/Rjt/2017 निर्धररवरध / Asstt.Year:2011-12 BhaveshRameshchandra Mehta, 2 nd Floor,LallubhaiCentre, SirLakhajiRajRoad, Rajkot-360001. PAN:ACKPM8890J Vs. A.C.I.T, Circle-2, (Presently,Circle-2(1)) Rajkot. (Applicant)(Respondent) Assesseeby:ShriVimalDesai,A.R Revenueby:ShriAshishKumarPandey,Sr.D.R सुिव्ईकीत्रीख/DateofHearing:12/10/2023 घोरर्कीत्रीख/DateofPronouncement:06/12/2023 आदेश /ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: Thecaptionedappealhasbeenfiledattheinstanceoftheassesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals)-3,Rajkot,(in short“Ld.CIT(A)”)arisinginthematterofassessmentorderpassedunders. 143(3)oftheIncomeTaxAct1961(here-in-afterreferredtoas"theAct") relevanttotheAssessmentYear2011-12. ITAno.306/Rjt/2017 Asstt.Year2011-12 2 2.ThesolitaryissueraisedbytheassesseeisthatLd.CIT(A)erredin confirmingtheadditionmadebytheAOforRs.67,00,000/-representingthegift receivedfromthebrotherwhichwastreatedasundisclosedincome. 3.Thenecessaryfactsarethattheassesseeinthepresentcaseisan individualandfiledhisreturnofincomedeclaringincomeofRs.24,210/-only.The assesseeintheyearunderconsiderationhasshownreceiptofgiftthrough bankingchannelforanamountofRs.67,00,000/-fromhisbrothernamelyShri TejasRMehta.TheassesseeinresponsetosuchgifthasfiledthecopyofPANof hisbrother,copyofcomputationofincomeandfreshlymadegiftletters.However, theAOfoundthattheincomeofthebrotherisnotsufficienttograntsuchahuge amountofgifttotheassessee.Thus,aspertheAO,thecreditworthinessforthe giftwasnotprovedbasedonfinancialcapacityofthedonor.Accordingly,theAO treatedthesameasbogustransactionandaddedtothetotalincomeofthe assessee. 4.Aggrieved,assesseepreferredanappealtoLd.CIT(A).Theassessee beforetheld.CIT-Ahasfiledthecopyofgiftletters,capitalaccountwherethegift wascredited,bankstatement/PAN/ITRofthedonor.Theassesseealsosubmitted thegiftwasreceivedthroughthebankingchannelasevidentfromthe confirmationgivenbythedonor.Theassesseealsosubmittedthathehasgiven gifttothetuneofRs.70,00,000/-incashtohisbrotherondifferentoccasions whichisevidentfromcapitalaccountformingpartoftheauditedaccounts.But theAOhasnottakennoteofsuchfactappearinginthecapitalaccountofthe assesseewhichwasalsoavailableduringtheassessmentproceedings.Accordingly, itwassubmittedbytheassesseethatthecapacityofthedonorisbeyonddoubt. Assuch,thegiftreceivedbytheassesseeisfullycoveredbytheamountofgift givenbytheassesseetohisbrother.Itwasalsosubmittedthattheincomecannot beacriteriontojudgethefinancialcapacityofthedonor.Assuch,thecapacityof thedonorcanbejudgedbasedonthefinancialstatementofhisbrother.The ITAno.306/Rjt/2017 Asstt.Year2011-12 3 assesseeinsupportofhiscontentionhasfiledtheAnnualaccountofthedonor whichwerealreadyavailablewiththeAOalongwiththeITRfiledbythedonor. 5.Withoutprejudicetotheabove,theassesseealsocontendedthathehas receivedthegiftbywayofrotation/indifferentinstalmentandthereforethe entireamountcannotbeassumedasunexplainedincomeoftheassessee. 6.Ld.CIT(A),calledfortheremandreportvideletterdated23/12/2016for giftofRs.70lacsgivenbytheassesseetothedonorbeinghisbrother.TheAO videletterdated10/03/2017furnishedtheremandreportreiteratingthatthere wasnocapacityofShriTejasMehtatoextendgiftofRs.67lacstotheassessee. TheAOintheremandreportalsosubmittedthattheassesseehasclaimedto havegivengifttothebrotherofRs.70lacsincashondifferentoccasionsbut mostofsuchcashentriesdidnotmatchwiththecashbookofdonor.Assuch,the amountgivenbytheassesseeincashtohisbrotherasgiftwasnotreflectedin thecashbookofhisbrother. 7.Theassesseeinrejoindersubmittedthatthefactofgivinggifttohis brotherofRs.70lacswasbroughttothenoticeoftheAOtojustifythe creditworthinessofthedonor.Assuchthepleawasnottakentojustifythesource ofgiftreceivedbytheassesseefromhisbrother.Theassesseealsosubmitted thathehasfurnishedthesourceofgiftofRs.67,00,000/-duringtheassessment proceedingsvideletterdated04/01/2017buttheAOhasnotconsideredthesame. 7.1Theassesseealsosubmittedthatthereisamismatchinthedatewhen accountingentriesweremadebytheassesseevis-à-vishisbrotherbutsuch mismatchinthedatecannotbethebasisoftreatingtheamountofgiftasbogus innature. 7.2Theassesseealsosubmittedthatthedonori.ebrotherofassessee,Shri TejasR.MehtaappearedbeforetheAOforhispersonalverificationdated ITAno.306/Rjt/2017 Asstt.Year2011-12 4 15/02/2017buttheAOhasnotverifiedtheveracityofsuchdonor.Theassessee alsosubmittedthathehassubmittedthebankbook/cashbookofShriTejasR. Mehtaalongwiththecapitalaccountandentirebookofaccountsbutnodefectof whatsoeverhasbeenpointed. 8.However,theLd.CIT(A)rejectedthecontentionoftheassesseeand confirmedtheorderoftheAObyobservingasunder: InviewofthesefactstheAOinremandreporthasrejectedcontentionofassessee.Inthe rejoindertheappellanthascontendedthattherebeingnoentryincashbookofTejas Mehtadoesnotadverselyaffectthegiftreceivedbyappellantandthattheappellantnever submittedthatthegiftsreceivedweredirectlysourcedbythegiftsgiven. Fromabovefactsandcircumstances,Ifindthattheassesseeatassessmentstagenever claimedthattheassesseehadgivengiftstotheTejasMehta.Thisisanimportantfactin thematter.ItisatappellatestagethatheclaimedthatAOdidnotappreciatethat assesseehadgivenagiftofRs.70,00,000/-toTejasMehta.Itisverypeculiarthatthe assesseewhenconfrontedwiththeissueatassessmentstagekeptquietaboveanysums donatedbyhimtoTejasMehta.Itwasforassesseetomakesuchclaimandproveitat assessmentstage.ItistotallyfallaciousonpartofassesseetoclaimthatAOshouldhave appreciatedthisfactwhennosuchclaimwasmadebyassesseebeforetheAO. Itisalsonoteworthythatduringremandproceedings,theAOverycogentlyhasbrought outthatreceiptofgiftsbyTejasMehtaisnotprovedastherearenocorrespondingentries inthecashbookofTejasMehtaandthattwoofthegiftsarepriortoanysumwasgifted asclaimedtoTejasMehta.Whenconfrontedwiththisfact,theassesseecameoutwitha newpleathatgiftsfromassesseewereneverclaimedtobetheimmediatesourcesofgifts totheassessee.Suchanargumentcontradictstheverybasicpremiseofassesseeduring entireappellantproceedingsthatAOhadfailedtoappreciatethatassesseehadadvanced Rs.70lacstoTejasMehtaasgifts.Whenthesegiftsmadewerenottheimmediatesource ofreceiptsofgifts,whydidheventureintothewholeexerciseofclaimingthisamountto provecapacityofthedonor.Therefore,(i)Inviewoftheassesseechangingitsstand constantly,(ii)therebeingselfcontradictioninclaimofassessee,(iii)therebeingno propergiftdeedsonanyofoccasions,(iv)therebeingnooccasiontomakethesecounter giftstoeachother,(v)thegiftsclaimedtohavebeenmadebyassesseebeingincash,(vi) theassesseeclaimingthatgiftswerenottheimmediatesourcesinhandsofTejasMehta and(vii)somegiftsbeingmadebyTejasMehtapriortosaidreceiptofgifts,Ihaveno hesitationinholdingthatthisisallaconcoctionandmakebelievestorybyassessee.The assesseehasfailedtoprovecapacityofdonorandgenuinenessofgiftandaccordinglythe additionisconfirmedandgroundofappealisrejected. 9.BeingaggrievedbytheorderofLd.CIT(A),theassesseeisinappealbefore us. ITAno.306/Rjt/2017 Asstt.Year2011-12 5 10.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to183and otherdetailsonthedirectionoftheITATrunningfrompages1to120and contendedthatallthedetailsweredulyprovidedtotheAOduring assessment/remandproceeding.Thereweresufficientfundsavailablewiththe donortoadvancethegifttotheassesseewhichcanbeverifiedfromthebank statement. 11.Ontheotherhand,Ld.DRvehementlysupportedtheorderofthe authoritiesbelow. 12.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Thecontroversybeforeusarisesforadjudication whethertheamountofgiftreceivedbytheassesseefromhisbrotherisfrom genuine/disclosedsourcesornot.Inthisregard,wenotethattheassesseehas furnisheddetailssuchascopyofgiftletter,capitalaccount,bankstatement,PAN andreturnofincomeofthedonor.Wehavealsoperusedthecashbookandbank statementoftheassesseewhichareavailableonrecord.Onperusalofthecash bookoftheassesseeplacedonpages1to50,wenotethattherewassufficient cashavailablewiththeassesseewhichwasarisingoutofwithdrawalfromthe bankaccount.Thus,itcanbesafelyconcludedthattherewassufficientcash availablewiththeassesseetoadvancethegifttohisbrother.Thisfacthasalso notbeendisputedbytheauthoritiesbelow. 12.1Atthisjuncture,itisequallyimportanttonotethattheassesseefirsthas receivedpartofthegiftbeforegivinganygifttohisbrotherincashbutwhatwe findisthisthattherewassufficientfundavailableinthebankaccountofthe brotherandthereforeitcannotbesaidthatsuchgiftcouldbegiventothe assesseeoutofunaccountedincome. 12.2Admittedly,thecrosstransactionbetweenthebrotherscancreatea suspiciousbutthatdoubtcannotbetreatedasgospeltruth.Assuch,itistheonus ITAno.306/Rjt/2017 Asstt.Year2011-12 6 upontherevenuetoprovetheallegationframedbyitagainsttheassessee.But, fromtheprecedingdiscussion,wenotethattheassesseehasfurnishedthe necessaryevidence,discussedabove,tojustifythegiftreceivedfromthebrother, therefore,noadditioninthegivencaseiswarranted.Accordingly,wesetaside thefindingsofLd.CIT(A)anddirecttheAOtodeletetheadditionmadebyhim. Hence,thegroundofappealoftheassesseeisallowed. 13.Intheresult,theappealfiledbytheassesseeisallowed. OrderpronouncedintheCourton06/12/2023atAhmedabad. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated06/12/2023 Manish