M/s. Publicity Parlour, Ahmedabad V. The Jt.CIT.,Range-11, Ahmedabad

ITA 3089/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72848 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Principle of natural justice; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO. 3089/AHD/2010 (ASSESSMENT YEAR: 2007-08) M/S. PUBLICITY PARLOUR 8/9/10, VIJAY PLAZA 1 ST FLOOR, KANKARIA ROAD OPP ABAD DAIRY AHMEDABAD V/S THE JT. CIT RANGE 11, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABFP8415B APPELLANT BY : SHRI S.N. SOPARKAR RESPONDENT BY : SHRI O.P. BATHEJA, SR. D.R. ( )/ ORDER DATE OF HEARING : 31-12-2013 DATE OF PRONOUNCEMENT : 10 -01-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-XVI, AHMEDABAD DATED 01.09.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM ENGAGED AS PUBLICITY AGENT. ASSE SSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING TOT AL OF RS. 89,10,250/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE IT A NO 3089/AHD/2010 . A.Y. 20 07-08 2 ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 29.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,18,14, 630/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFO RE CIT(A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED B Y THE AFORESAID ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. (A) THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADD ITIONS MADE U/S. 68 OF RS.15,41,000/- TREATING GIFT AS INVALID AND OTHER CASH ENTRIES NOT PROVED. (B) THAT THE CIT(A) CONTENTION IN CONFIRMING THE AD DITION MADE IS THAT THE CREDIT WORTHINESS OF THE DONOR AND GENUINENESS OF TRANSACTION IS NOT PROVED IS TOTALLY WRONGLY IN SPITE OF SUFFICIENT EVIDENCES WERE SUBMITTED TO PROVE IT AND THE ASSESSING OFFICE R HAS ACCEPTED THE CREDIT WORTHINESS OF THE DONOR A S WELL AS GENUINENESS OF THE TRANSACTION. FURTHER THE OTHER VARIOUS REASONS GIVEN INCLUDING THE TEST OF HUMAN PROBABILITIES ARE BASELESS AND CONTRARY TO TH E FACTS OF THE CASE AND HENCE THE ADDITION MADE BY A.O. SHOULD BE DELETED. 2. (A) THAT THE CIT(A) HAS ERRED IN CONFIRMING TH E ADDITIONS MADE FOR COMMISSION EXPENSE OF RS. 5,26,900/- AS PER SEC. 40(A)(IA) OF THE I. T. ACT A LTHOUGH THE DISALLOWANCE IS NOT MADE AS PER THIS SECTION BY A.O. (B) THE CIT(A) HAS WRONGLY CONCLUDED THAT NO. TDS H AS BEEN DEDUCTED, ALTHOUGH TDS HAS BEEN MADE ON COMMISSION PAID AND IS ALSO ACCEPTED BY ASS ESSING OFFICER. THE ASSESSING OFFICER HAS MADE ADDITION ON THE BASIS THAT NO SERVICES RENDERED ARE PRODUCED, AND THIS FACT HAS BEEN ACCEPTED BY CIT(A) IN HIS ORDER. HENCE THE REASON GIVEN FOR CON FIRMING THE ADDITION IS TOTALLY WRONG AS TDS IS ALREADY DEDUCTED AND THEREFORE DISALLOWANCE MADE BY A.O. SHOULD BE DELETED. THAT THE APPELLANT REQUESTS THAT THEY MAY BE PERMIT TED TO ADD, TO ALTER AND/OR TO AMEND ANY OF THE GROUNDS OF APPEAL BEFORE THE FINAL HEARING OF THE A PPEAL. GROUND NO. 1 IS WITH RESPECT TO ADDITION OF RS. 15, 41,000/- U/S. 68 OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED FROM THE CAPITAL ACCOUNT OF SHRI ANAND V VYAS THAT CASH WAS DEPOSITED IN HIS ACCOUNT ON VARIOUS DAYS. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF IT A NO 3089/AHD/2010 . A.Y. 20 07-08 3 CASH DEPOSIT IN THE CAPITAL ACCOUNT. ASSESSEE INTER ALIA SUBMITTED THE SOURCE OF RS. 15 LAKHS IN CASH WAS GIFT FROM HER RE AL SISTER SMT. AMI V VYAS. THE ASSESSEE ALSO SUBMITTED THE CAPITAL ACCOU NT OF SMT. AMI V VYAS AS ON 31.03.2007 WHICH SHOWED THE GIFT GIVEN B Y HER TO THE ASSESSEE. WITH RESPECT TO THE REMAINING CASH OF 41 ,000/- DEPOSITED ON VARIOUS DAYS, ASSESSEE SUBMITTED THAT THE SAME WAS DEPOSITED FROM THE EARLIER WITHDRAWALS MADE FROM THE FIRM. THE SUBMISS ION OF THE ASSESSEE WITH RESPECT TO THE GIFT OF SMT. AMI V VYAS WAS NOT FOUND ACCEPTABLE TO THE A.O. FOR THE REASON THAT THE ASSESSEE HAD NOT P RODUCED ANY EVIDENCE SHOWING THE ACCEPTANCE OF GIFT BY SHRI ANAND V VYAS . A.O. WAS FURTHER OF THE VIEW THAT AS PER THE PROVISIONS OF TRANSFER OF PROPERTY ACT, THE GIFT OF MOVABLE PROPERTY IS COMPLETE WHEN THE GIFT IS AC CEPTED BY THE DONEE. SINCE THE ASSESSEE HAD NOT SUBMITTED THE COPY OF GI FT DEED SHOWING GIFT GIVEN BY SMT. AMI V. VYAS TO SHRI ANAND V. VYAS, TH E A.O. WAS OF THE VIEW THAT THE GIFT WAS NOT VALID. WITH RESPECT TO THE AGGREGATE CASH DEPOSITS OF 41,000/-. A.O. WAS OF THE VIEW THAT THE ASSESSEE HAS NOT PROVED WITH EVIDENCE THE SOURCE OF CASH DEPOSITED. HE ACCORDINGLY MADE ADDITION OF RS. 15,41,000/- U/S. 68 OF THE ACT. AGG RIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CI T(A) CONFIRMED THE ORDER OF A.O. BY HOLDING AS UNDER:- 2.3.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND OBSERVATION OF THE A.O. THE APPELLANT HAS ALSO FILED ON PLAIN SHEET OF PAPER BA LANCE SHEET AS ON 31.03.2006 AND 31.03.2007 OF HIS SISTER, WHICH IS NEITHER SIGNED BY ANY CHARTERED AC COUNTANT, NOR BY ANY OTHER PERSON. THESE TWO PIECES OF PAPER SUPPOSED TO BE BALANCE SHEETS DO NOT BEAR ANY MARKS TO SHOW AS IF THEY WERE PREPARED ON THE REGULAR TIME AND THEY WERE FILED WITH EITHER THE IN COME TAX DEPARTMENT OR ANY OF THE DEPARTMENT. THE APPELLANT HAS NOT FILED COPIES OF INCOME TAX RETURN S OF HIS SISTER. AS PER THESE BALANCE SHEETS, THE ASSESSEE IS HAVING BANK ACCOUNT WITH BANK OF MAHARA SHTRA. SHE IS HAVING GOOD AMOUNT OF INVESTMENT IN PPF. SHE IS ALSO MAKING SHARE INVESTMENTS. IT IS NOT UNDERSTOOD AS TO WHY, IF THE TRANSACTIONS ARE GENUINE THE GIFTS WERE NOT GIVEN BY CHEQUE. THE FIR ST STRANGE THING ABOUT THIS TRANSACTION IS THAT THE IT A NO 3089/AHD/2010 . A.Y. 20 07-08 4 ASSESSEE IS WELL-TO-DO PERSON AND IT IS VERY STRANG E THAT HE IS TAKING GIFT FROM HIS SISTER. NORMALLY IT IS THE BROTHER WHO GIVES GIFT TO THE SISTER AND NOT TH E OTHER WAY ROUND SPECIALLY WHEN HE IS WELL TO DO. IN ANY CASE, EVEN IF THE SISTER WAS GIVING THE GIFT WH Y THE GIFTS WERE NOT GIVEN BY CHEQUE. WHY SUCH HUGE AMOUNTS HAVE BEEN GIVEN IN THREE INSTALLMENTS FIRST ON 10.04.2006, THEN ON 22.05.2006, THEN ON 22.05.2006 AND LASTLY ON 05.06.2006. IF THE SISTER WANTED TO GIVE THE GIFT WHY THE SAME WAS NOT GIVEN IN ONE INSTALLMENT. WHEY THE SISTER FELT THE NEED TO G IVE GIFT EVERY MONTH ONE AFTER ANOTHER ON THREE OCCASIONS? WHY SUCH HUGE GIFTS WERE NOT GIVEN BY CH EQUE? THERE IS NO EVIDENCE THAT THE GIFTS WERE GIVEN BY THE SISTER EXCEPT THE DECLARATION SIGNED B Y THE SISTER AFTER ALL THE THREE GIFTS HAD BEEN GIV EN AND EVEN THIS DECLARATION DOES NOT BEAR ANY MARKS T O SHOW THAT THIS IS GENUINE. AS STATED ABOVE, THE BALANCE SHEETS GIVEN DO NOT BEAR ANY CONFIDENCE. 2.3.2 IN THIS REGARD RELIANCE IS PLACED ON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL (214 ITR 801) WHEREIN THE HONBLE SUPREME COU RT STATED THAT TEST OF HUMAN PROBABILITIES SHOULD HAVE ALSO BE APPLIED IN SUCH CASES. IN THE P RESENT CASE THIS TEST FAILS BECAUSE- WHEN YOU GIVE A GIFT, IT IS DONE ON ONE OCCASION AN D NOT EVERY MONTH IN INSTALLMENTS. NORMALLY A WELL TO DO BROTHER GIVES GIFT TO SISTER & NOT OTHER WAY ROUNDS. WHEN SUCH HUGE FUNDS ARE GIVEN THEN THEY ARE GIVEN BY CHEQUE AS THE ASSESSEE HAS BANK ACCOUNT. 2.3.3 HENCE IN THE PRESENT CASE THE TEST OF HUMAN P ROBABILITIES HAS FAILED. THEREFORE IN THIS CASE, TH E ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF TRA NSACTION AS WELL AS CREDIT WORTHINESS OF THE SISTER FROM WHOM THE GIFTS ARE STATED TO HAVE BEEN RECEIVE D. HENCE THE ADDITION MADE BY THE A.O. IS CORRECT. WITH RESPECT TO THE BALANCE RS. 41,000/- ALSO, IT I S CLEAR THAT THE ASSESSEE HAS FAILED TO LEAD ANY EVIDENCE IN SUPPORT OF HIS CONTENTION. HENCE THE AD DITION MADE BY THE A.O. IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. A.R. SUBMITTED THAT SMT. AMI V. VYAS IS AN INCOME TAX PAYEE AND IS ASSESSED TO TAX. HE POINTED TO THE BALANCE SHEET AS AT 31.02.2006 OF SMT. AMI V. VYAS AND POINTED OUT THAT THE CASH BALANCE AS ON 31.02.2006 WAS RS. 16,69,400/- WHICH WAS USED BY HER TO GIFT THE AMOUNT TO SHRI ANAND VYAS. HE ALSO PLACED ON RECOR D HER CAPITAL ACCOUNT WHICH WAS PLACED ON PAGE 5 OF THE PAPER BOO K TO DEMONSTRATE THAT HER NET WORTH WAS FAR IN EXCESS OF THE AMOUNT WHICH SHE HAD GIFTED IT A NO 3089/AHD/2010 . A.Y. 20 07-08 5 TO SHRI ANAND V VYAS. THE LD. A.R. ALSO SUBMITTED T HAT SMT. AMI V. VYAS HAS FILED HER RETURN OF INCOME FOR A.Y. 06-07 & A.Y. 07-08. HE PLACED ON RECORD THE COPIES OF THE ACKNOWLEDGEMENT AND THE COMPUTATION FOR A.Y. 06-07 & 07-08. HE FURTHER SUBMITTED THAT THE COPY OF THE INCOME TAX RETURN AND COMPUTATION OF SMT. AMI V. VY AS WAS AN ADDITIONAL EVIDENCE WHICH THE ASSESSEE COULD NOT PL ACE BEFORE THE LOWER AUTHORITIES. HE THEREFORE SUBMITTED THAT THE SAME B E ACCEPTED AND TAKEN ON RECORD. HE FURTHER SUBMITTED THAT SINCE THE ASSE SSEE HAS PROVED THE IDENTITY, SOURCE AND GENUINENESS OF THE TRANSACTION , NO ADDITION WAS REQUIRED TO BE MADE WITH RESPECT TO THE GIFT RECEIV ED FROM HER REAL SISTER. HE FURTHER POINTED OUT THAT A.O. HAD MADE ADDITION ONLY FOR THE REASON THAT THE ASSESSEE COULD NOT FURNISH A VALID GIFT DE ED BUT CIT(A) HAS WRONGLY CONFIRMED THE ADDITION ON THE BASIS OF VARI OUS PRESUMPTIONS WHICH WERE NOT SUPPORTED BY ANY EVIDENCE. WITH RESP ECT TO THE SOURCE OF DEPOSITS OF RS. 41,000/-, THE LD. A.R. SUBMITTED TH AT THE SAME WAS OUT OF THE WITHDRAWALS MADE BY THE ASSESSEE ON VARIOUS DAY S. HE POINTED TO PAGE 2 OF THE PAPER BOOK THE DETAILS OF WITHDRAWALS AND DEPOSITS. HE THEREFORE SUBMITTED THAT THE SOURCE OF DEPOSITS HAS BEEN FULLY EXPLAINED BY ASSESSEE AND THEREFORE NO ADDITION IS REQUIRED T O BE MADE U/S. 68. 7. THE LD. D.R. ON THE OTHER HAND STRONGLY SUPPORTED T HE ORDER OF A.O. AND CIT(A) AND HE FURTHER PLACED RELIANCE ON THE DECISI ON OF AGRA BENCH OF TRIBUNAL IN THE CASE OF ITO VS. ALOK AGARWAL (2012) 20 TAXMAN.COM 472 (AGRA). HE ALSO PLACED ON RECORD THE COPY OF T HE AFORESAID ORDER. HE THEREFORE SUBMITTED THAT CONSIDERING THE FACTS OF T HE CASE, THE A.O. WAS FULLY JUSTIFIED IN MAKING THE ADDITION AND CIT(A) H AS RIGHTLY CONFIRMED THE ACTION OF A.O. HE THUS SUPPORTED THEIR ORDERS. IT A NO 3089/AHD/2010 . A.Y. 20 07-08 6 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE MAJOR ADDITION U/S 68 WAS ON ACCOU NT OF RS. 15 LAKHS BEING THE GIFT RECEIVED BY SHRI ANAND V. VYAS FROM HIS SISTER SMT. AMI V. VYAS. FROM THE COPY OF THE BALANCE SHEET OF SMT . AMI V VYAS WHICH IS PLACED ON RECORD, IT IS SEEN THAT SHE WAS HAVING CASH AT HAND AS ON 31.03.2006 OF RS. 16,69,400/- WHICH HAS BEEN STATED TO HAVE BEEN USED FOR MAKING GIFT. BEFORE US, THE ASSESSEE HAS ALSO F ILED ADDITIONAL EVIDENCE IN THE FORM OF INCOME TAX RETURN ALONG WIT H THE COMPUTATION OF SMT. AMI V. VYAS FOR A.Y. 06-07 AND A.Y. 07-08 WHIC H WERE HOWEVER NOT FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORIT IES AND THEREFORE THE SAME COULD NOT BE EXAMINED BY THEM. WE ARE OF THE VIEW THAT IN THE INTEREST OF NATURAL JUSTICE THE ADDITIONAL EVIDENCE PLACED AT ASSESSEE, BEFORE US, SHOULD BE MADE AVAILABLE TO LOWER AUTHOR ITIES FOR ITS EXAMINATION AND THEREFORE THE MATTER NEEDS TO BE RE -EXAMINED AT THE END OF CIT(A). WE THEREFORE REMIT THE MATTER TO THE FIL E OF CIT(A) SO THAT THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE CAN B E EXAMINED BY HIM AND IF DEEM FIT, HE MAY CALL FOR A REMAND REPORT FR OM THE A.O. WHILE DOING SO, HE MAY ALSO EXAMINE THE CASH BOOK OF THE DONOR TO ASCERTAIN THE AVAILABILITY OF CASH ON THE DAYS ON WHICH THE GIFTS WERE CLAIMED TO HAVE BEEN MADE BY THE DONOR. HE MAY THEREAFTER DECIDE TH E ISSUE AS PER LAW AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE CASE LAWS RELIED BY BOTH THE PARTIES. THE ASSESSEE IS ALSO FR EE TO FURNISH ANY OTHER EVIDENCE IN ITS SUPPORT. NEEDLESS TO STATE THAT CI T(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES . CIT(A) SHALL ALSO RE- EXAMINE THE ADDITION MADE OF RS. 41,000/- AND DECID E IT AFRESH AS PER LAW. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. IT A NO 3089/AHD/2010 . A.Y. 20 07-08 7 GROUND NO. 2 HAS NOT BEEN PRESSED AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 10 -01 -2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD