DR H.C. CHEN, MUMBAI V. ITO WD 11(2)(3), MUMBAI

ITA 3118/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92714 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 09-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Additional evidence; Tangible material; Condonation of delay; Reassessment proceedings
• Section: 69C; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY AROR A, AM ./ I.T.A. NO. 3118/MUM/2013 ( / ASSESSMENT YEAR: 2006-07) DR. H. C. CHEN DR. CHENS DENTAL CLINIC RAHEM CASTLE, 185/187, S. V. P. ROAD, DONGRI (E), MUMBAI-400 009 / VS. ITO-11(2)(3), 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 ' ./ ./PAN/GIR NO. AABPC 9202 B ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' / APPELLANT BY : SHRI NITESH JOSHI %&'$ ' / RESPONDENT BY : SHRI JITENDRA KUMAR ) *+, ' - . / DATE OF HEARING : 10.03.2015 /01 ' - . / DATE OF PRONOUNCEMENT : 05.06.2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (CIT(A) FOR SHO RT) DATED 08.11.2011, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2006-07 VIDE ORDER DATED 26.12.2008. 2 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO 2. WE HAVE GONE THROUGH THE ASSESSEES CONDONATION PETITION DATED 22/4/2013 AS WELL AS THE ACCOMPANYING AFFIDAVIT, EXPLAINING THE DELAY OF 459 DAYS IN FILING THE APPEAL. IT IS CLEAR THERE-FROM THAT THE ASSESSEE HAD ACCEPTED THE DECISION OF THE FIRST APPELLATE AUTHORITY. IT IS ONLY ON THE RECEIPT OF THE PENALTY ORDER DATED 25.03.2015, LEVYING PENALTY U/S. 271(1)(C) AT RS. 2,58,202/- IN RESPECT OF THE IMPUGNED ADDITION, THAT THE ASSESSEE APPROACHED HIS CHARTERED ACCOUNTANT/COUNSEL, AND TH EREAT, DURING CONFERENCE, THE DECISION IN THE CASE OF CIT VS. AMITABH BACHCHAN [2012] 349 ITR 76 (BOM) DATED 05.07.2012 CAME TO NOTICE, AND BEING CONSIDERED AS APPLICABLE IN THE FACTS OF THE CASE, WAS ACCORDINGLY ADVISED FOR FILING THE INSTANT APPE AL, WHICH WAS SO DONE ON 23/4/2013 (AND NOT 25/4/1013, AS STATED IN THE PETITION). THE SAID DECISION IS, FIRSTLY, NOT ON CONDONATION OF DELAY. ON MERITS, THE SAID DECISION, IN RATIO, HOLDS THAT A REASONABLE BELIEF FOR ESCAPEMENT OF INCOME BY THE ASSESSING OFFICER ( A.O.) COULD NOT BE MADE IN THE ABSENCE OF FRESH TANGIBLE MATERIAL, SO THAT THERE W AS NO BASIS FOR THE ISSUE OF A NOTICE U/S. 148 WHERE THE INCOME HAD BEEN ASSESSED U/S. 143(3), WHEREAT THE SAME MATERIAL STOOD CONSIDERED BY THE AO. WE ARE UNABLE TO SEE ANY CORR ELATION OF THE SAID DECISION WITH THE FACTS OF THE PRESENT CASE, FOR IT TO BE RELEVANT, W HICH, EVEN OTHERWISE, I.E., WHERE SO, WOULD IMPACT THE MERITS OF THE CASE AND NOT EXPLAIN THE D ELAY IN FILING THE APPEAL, IN ANY MANNER. THE SAID DECISION EVEN OTHERWISE REITERATES THE TRITE LAW THAT A REVIEW IS IMPERMISSIBLE UNDER REASSESSMENT PROCEEDINGS. COULD IT BE UNDER THE CIRCUMSTANCES SAID THAT THE ASSESSEE HAS EXPLAINED THE DELAY ? WE THINK NOT. SO HOWEVER, THE DECISIONS ON THE CONDONATION OF DELAY AS RELIED UPON BY THE LD. COUN SEL, AS UNDER, LEAN IN FAVOUR OF A LIBERAL APPROACH, SO THAT AN ABSENCE OF MALA FIDES SHOULD ORDINARILY LEAD TO CONDONATION OF DELAY, I.E., EVEN IN A CASE OF LACHES, THOUGH TH E OTHER SIDE SHOULD BE ADEQUATELY COMPENSATED FOR THE COST OF LITIGATION AND THE INCO NVENIENCE IT IS PUT TO: A) N. BALAKRISHNAN VS. M. KRISHNAMURTHY [1998] 7 SCC 123; B) RAM NATH SAO ALIAS RAM NATH SAHU & ORS VS. GOBARDHA N SAO & ORS. [2002] 3 SCC 145; AND C) LAND ACQUISITION VS. MST. KATIJI & ORS [1987] 167 ITR 471 (SC) 3 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO WE, ACCORDINGLY, IN THE INTEREST OF JUSTICE, CONDON E THE DELAY AND ADMIT THE APPEAL, WHILE IMPOSING COST, WHICH WE AWARD AT RS. 10,000/- IN FA VOUR OF THE REVENUE, TO BE DEPOSITED BY THE ASSESSEE THEREWITH WITHIN ONE MONTH OF THE R ECEIPT OF THIS ORDER. 3. COMING TO THE APPEAL, THE PRINCIPAL ISSUE RAISED THEREIN IS THE MAINTAINABILITY OR OTHERWISE IN LAW OF THE ADDITION BY WAY OF UNEXPLAI NED EXPENDITURE U/S.69C OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. IT W OULD BE RELEVANT TO RECOUNT THE FACTS OF THE CASE. THE ASSESSEES BALANCE-SHEET AS AT THE YE AR-END (31.03.2006/COPY ON RECORD) REFLECTED A CREDIT OF RS.8,85,102/- TO HIS CAPITAL ACCOUNT. EXPLAINING THE BACKGROUND FACTS, IT WAS SUBMITTED DURING HEARING THAT THE ASSESSEES SISTER, MRS. HUAPING CAROLINE CHIANG, A CANADIAN NATIONAL, SETTLED THEREAT SINCE 1979, WA S PLANNING TO VISIT INDIA ALONG WITH HER FAMILY, AS COMMUNICATED BY HER TO HER BROTHER, THE ASSESSEE, VIDE LETTER DATED 18.05.2005 (COPY ON RECORD), ALSO STATING OF ENCLOSING A DRAFT FOR US $10000 (RS.4.4 LACS APPROX.) ALONG WITH FOR PREPARATION OF THE VISIT AND TOWARD EXPENSES . THIS WAS FOLLOWED BY A CHEQUE FOR US $10000 VIDE LETTER DATED 25.06.2005. SHE, HOWEVER, CANCELLED THE TRIP IN VIEW OF HER FATHER KEEPING ILL, AND ACTUALLY VISITE D INDIA ALONE FROM 01.10.2005 TO 08.10.2005, AS EVIDENCED FROM HER PASSPORT, TO SEE HIM. THIS WAS FOLLOWED BY TWO OTHER CHEQUES OF US $8000 AND US $2000 VIDE LETTERS DATED 21.11.2005 AND 19.11.2005 (COPIES ON RECORD) RESPECTIVELY. THE ASSESSEE CLAIMED THE E NTIRE SUM OF US $ 20,000 (US DOLLAR TWENTY THOUSAND) RECEIVED FROM HIS SISTER DURING TH E YEAR AS A GIFT, AND WHICH EXPLAINED ITS CREDIT TO HIS CAPITAL ACCOUNT. IN VIEW OF THE A SSESSING OFFICER (A.O.), THE SAME WAS TOWARD MEETING THE EXPENSES BY THE ASSESSEE ON HIS SISTERS VISIT TO INDIA, AND WHICH WAS DEEMED AS HIS INCOME U/S. 69C IN-AS-MUCH AS THE SOU RCE THEREOF WAS UNEXPLAINED; NO EXPENDITURE IN ITS RESPECT BEING REFLECTED IN THE A SSESSEES ACCOUNTS. IN APPEAL, IT WAS CONTENDED THAT THE ADDITIONAL EXPENDITURE INCURRED ON THE SISTERS VISIT WAS ONLY TO THE TUNE OF INR 30,000, WITHDRAWN IN CASH ON 03.10.2005 (RS.20,000/-) AND 07.10.2005 (RS.10,000/-). THIS WAS IN ADDITION TO THE REGULAR MONTHLY HOUSEHOLD WITHDRAWAL OF RS.13,000/-. AS MS. CHIANG WAS UNABLE TO LOOK AFTER HER FATHER, SHE, IN APPRECIATION OF HER BROTHER TAKING CARE OF THEIR FATHER, REMITTED T HE SUMS OUT OF LOVE AND AFFECTION BY WAY 4 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO OF GIFT/S. COPIES OF PASSPORT OF HER TWO SONS WERE ALSO FILED AS AN ADDITIONAL EVIDENCE, IN SUPPORT OF THE CLAIM OF THEIR NON-VISIT TO INDIA AL ONG WITH THEIR MOTHER (OR EVEN OTHERWISE DURING THE YEAR), WHICH WAS THOUGH NOT ADMITTED BY THE LD. CIT(A) AS THERE WAS NO REASON FOR NOT FILING THE SAME AT THE ASSESSMENT STAGE, NO R ANY USEFUL PURPOSE WOULD BE SERVED IN VIEW OF THE ADMITTED FACT OF MS. CHIANG VISITING IN DIA ALONE IN OCTOBER, 2005, I.E., DURING THE RELEVANT YEAR. IN THE VIEW OF THE LD. CIT(A), T HE A.O.S ACTION WAS JUSTIFIED. NOT ONLY WOULD THE ASSESSEE HAVE SPENT SUMS ON HIS SISTERS VISIT, THE ASSESSEE HAD ALSO BORNE MEDICAL EXPENSES OF HIS FATHER, WHICH WERE NOWHERE REFLECTED IN HIS ACCOUNTS. EVEN THE HOUSEHOLD EXPENSES WERE, AT RS.1.56 LACS (RS.13,000 /- P.M. X 12), LOW FOR A PERSON OF THE ASSESSEES STANDING. CONSIDERING THE TOTALITY OF TH E FACTS, THE IMPUGNED ADDITION WAS CONFIRMED TOWARD UNEXPLAINED, I.E., AS TO THEIR SOU RCE, EXPENSES ON ALL THE THREE COUNTS. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE EXP ENDITURE ON ALL THE THREE AREAS, VIZ. FOR THE UNEXPLAINED SOURCE TOWARD WHICH, OR TO THE EXTENT OF ITS INADEQUACY, ADDITION U/S. 69C HAS BEEN SUSTAINED IN THE PRESENT CASE, RE MAINS UNSPECIFIED. TRUE, THE SOURCE OF EXPENDITURE HAS TO BE EXPLAINED BY THE ASSESSEE; RA THER, PROVING HIS CLAIM AS TO SOURCE. HOWEVER, UNLESS THE EXPENDITURE IS QUANTIFIED, EVEN IF BY WAY OF AN INFORMED ESTIMATE, HOW COULD THE EXTENT OF DEFICIENCY TOWARD THE SAME, I.E., WITH REFERENCE TO THE ASSESSEES DISCLOSED/STATED SOURCE OF INCOME, BE STATED OR CLA IMED. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEES HOUSEHOLD EXPENDITURE, WHI CH HAS BEEN CLARIFIED WITH REFERENCE TO THE CAPITAL ACCOUNT, FORMING PART OF THE BALANCE -SHEET (COPY ON RECORD), TO BE AT RS.6,20,292/- FOR THE YEAR (I.E., AS AGAINST RS.1.5 6 LACS STATED BY THE LD. CIT(A), WHICH ONLY REPRESENTS EXPENDITURE INCURRED IN CASH), I.E. , EXCLUDING THE MAINTENANCE CHARGES (RS.20,004/-) AND LIC PREMIUM (AT RS.81,656/-) AND, TWO, IN KEEPING WITH THAT INCURRED IN THE PAST, STAND DISCLOSED AT A LOWER SUM, SO AS TO INFER THE SAME BEING INCURRED OUT OF UNDISCLOSED INCOME. SIMILARLY, THERE IS AGAIN NOTHI NG TO SHOW THAT THE ASSESSEE INCURRED ANY SUM TOWARD THE VISIT OF HIS SISTER FOR A FEW DA YS IN OCTOBER, 2005, EVEN AS THE ASSESSEE ADMITS TO HAVE WITHDRAWN AN ADDITIONAL SUM OF RS.30,000/- TOWARD THE SAME 5 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO AND, THEREFORE, OF THE ASSESSEE AS HAVING INCURRED EXPENDITURE IN EXCESS OF THE SAID AMOUNT? WHERE DID SHE STAY DURING HER VISIT TO INDI A? WHICH PLACES DID SHE VISIT? WHETHER ANY GIFT/S WAS GIVEN TO HER BY THE ASSESSEE OR HIS FAMILY ON THE OCCASION? THESE ARE ALL IN THE REALM OF SPECULATION. ON THE CONTRAR Y, IN THE CIRCUMSTANCES OF THE CASE, SHE VISITING HER AILING FATHER, IN OUR VIEW, THE STATED SUM OF RS.30,000/- IS ADEQUATE. THIS WOULD THOUGH NOT IMPACT THE WITHDRAWAL FOR PERSONAL PURPOSES, WHICH WOULD THUS STAND REDUCED TO AN AGGREGATE OF RS.5.90 LACS, TO ANY MAT ERIAL EXTENT. THIS LEAVES US ONLY WITH THE EXPENDITURE ON THE FAT HERS ILLNESS. IN THIS REGARD, WHAT WAS, TO BEGIN WITH, THE FATHERS ILLNESS, I.E. , ITS NATURE? FOR HOW LONG HE HAD BEEN ILL, AND WHAT WAS ITS GRAVITY INASMUCH AS IT PROVED FAT AL - HE FINALLY EXPIRING ON 06.01.2006. WHAT WAS THE IMMEDIATE CAUSE OF HIS DEATH? WAS HE H OSPITALIZED DURING THE RELEVANT YEAR AND, IF SO, WHERE AND FOR HOW LONG? THESE AND THE L IKE QUESTIONS WOULD NORMALLY ARISE QUA THE EXPENDITURE ON THE FATHERS ILLNESS, WHO WAS AP ART THERE-FROM, ALSO IN AN ADVANCED AGE, WHICH ITSELF CARRIES HEALTH PROBLEMS. THE ASSE SSEE, HOWEVER, HAS CHOOSEN TO BE SILENT ON THIS, EVEN AS HE, BEING A MEDICAL PROFESSIONAL ( DENTIST), WOULD BE FAR MORE EDUCATED ABOUT THE SAME THAN PERHAPS ANY (NON-MEDICAL) PERSO N WOULD BE, AND THUS ACUTELY AWARE OF THE MEDICAL TREATMENT BEING UNDERTAKEN. WHAT DID THE SAME ENTAIL? WAS HE REQUIRED TO VISIT HOSPITAL REGULARLY, ETC. THE ASSESSEE, DESPIT E THIS BEING THE FULCRUM OF THE MATTER, HAS BEEN TOTALLY SILENT ON THE MATTER. WHY? THAT APART, NO EXPENDITURE HAS BEEN STATED TO HAVE BEEN EXPENDED ON MEDICAL TREATMENT OF HIS FATHER. T HIS IS INCOMPREHENSIBLE, WHEN EVEN IN THE NORMAL COURSE, THE ELDERLY - THE ASSESSEE (H IS SON) BEING HIMSELF AGED 55 YEARS AT THE RELEVANT TIME, I.E., WITHOUT BEING ILL, MUCH LE SS SERIOUSLY, REQUIRE MEDICATION/PHYSICAL ATTENDANCE, IF NOT NURSING, ENTAILING COST, DUE TO AGE RELATED PROBLEMS. THE SISTERS FAMILY ABANDONED ITS PLAN TO VISIT INDIA, WHICH ONLY INDIC ATES OF HER FATHERS ILLNESS BEING AN ISSUE, AND A SERIOUS ONE AT THAT. NO MATERIAL OR EX PLANATION TOWARD THE SAME HAS BEEN FURNISHED AT ANY STAGE, AND EVEN BEFORE US, WHICH F ORMS THE ASSESSEES APPEAL, FILED WITH A DELAY OF 459 DAYS, I.E., 519 DAYS AFTER THE RECEIPT OF THE IMPUGNED ORDER, PASSED IN NOVEMBER 2011, I.E., ALMOST 40 MONTHS AGO. 6 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO COMING TO THE ASSESSEES EXPLANATION OF THE REMITTA NCE FROM HIS SISTER BEING A GIFT, AND NOT TOWARD ANY EXPENDITURE, THE SAID EXPLANATIO N HAS SEVERAL GAPS AND INFIRMITIES. THE ASSESSEES SISTER, AS APPARENT FROM HER AFFIDAV IT/DECLARATION, WAS NOT ONLY AWARE OF HER FATHERS ILLNESS, BUT IN FACT PLANNED A VISIT T O MUMBAI ALONG WITH HER FAMILY TO, AS STATED, SEE HER AILING FATHER, BESIDES MEETING THE REST OF THE FAMILY. THIS, AGAIN, IS INDICATIVE OF THE FATHER BEING SERIOUS, SO THAT SHE WISHED TO SEE HIM AS WELL AS DESIRED HER FAMILY TO DO SO. TWO THINGS ARE, THUS, EMINENT. FIR STLY, THAT SEEING HER AILING FATHER WAS A PREDOMINANT CONSIDERATION FOR THE VISIT. TWO, THAT THE FATHER WAS ILL, PERHAPS SERIOUSLY, WITH NOT LONG TO SURVIVE, FOR SHE TO HAVE, LIVING F AR AWAY, PLANNED A VISIT TO MUMBAI SO AS TO ABLE TO SEE AND MEET HIM. THAT HER FAMILY COULD NOT FINALLY ACCOMPANY HER IS ANOTHER MATTER, STATED TO BE FOR VARIOUS REASONS. CONTINUIN G FURTHER, WHY WOULD SHE THEN SEND MONEY TO HER BROTHER FOR HER VISIT? WHAT WAS THE EX PENDITURE REQUIRED, OR ANTICIPATED TO BE INCURRED, FOR THEIR VISIT. THE TRAVEL TICKETS, W HICH WERE UNDISPUTEDLY INCURRED BY HER OR, IN ANY CASE, NOT INCURRED BY THE ASSESSEE, I.E., ON HER VISIT IN OCTOBER, 2005, WERE NOT IN CONTEMPLATION. IN FACT, NO ARRANGEMENT COULD POSSIB LY BE MADE AS THE DATES OF THE VISIT WERE THEMSELVES NOT FINALIZED, AND THE PROGRAMME WA S AT THE PLANNING STAGE, SANS ANY DETAILS. THE EXPLANATION, IF ONE MAY CALL IT SO, OF THE REMITTANCE AS BEING TOWARD PREPARATION FOR HER VISIT, IS INCONSISTENT WITH AND DE HORS THE FACTS AND CIRCUMSTANCES OF THE CASE; WITHOUT SUBSTANCE, AND FANCIFUL. WE HAVE ALREADY STATED OF THE FATHER BEING ILL, UNDERGOING MEDICAL TREATMENT AT THE RELEVANT TIME, SO THAT THERE WAS NO QUESTION OF VISITING ANY PLACE DURING THE VISIT. THE LETTER DAT ED 18.05.2005 IS AGAIN ONLY AN AFTER CREATION, AS EVIDENT FROM THE FACT THAT IT STATES O F DRAFT OF US $10000 AS ENCLOSED ALONG WITH, WHILE, ADMITTEDLY, THE FIRST REMITTANCE WAS S ENT ONLY BY CHEQUE VIDE LETTER DATED 25.06.2005, I.E., AFTER OVER A MONTH. FURTHER, THE SAME STATES OF THE AMOUNT BEING REMITTED PER CHEQUE AND, FURTHER, AS A GIFT. HAD THE PLAN OF THE VISIT BEEN DROPPED BY THEN? IF SO, WHAT EXPLAINS THE CHANGE IN THE PURPOSE OF THE REMI TTANCE FROM EXPENDITURE ON THE (PROPOSED) VISIT TO GIFT, EXCEPT PERHAPS BY WAY O F CONTRIBUTION TOWARD THE FATHERS MEDICAL TREATMENT? THE OTHER TWO CHEQUES, I.E., FOL LOWING HER VISIT, AGAIN, THOUGH STATED TO BE GIFTS (VIDE THE FORWARDING LETTERS DATED 21.1 1.2005 AND 19.12.2005), CLEARLY REFLECT 7 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO THE UNDERLYING CONCERN FOR THE FATHER AND, FURTHER, OF BEING UNABLE TO TAKE CARE OF HIM, WITH A VIEW TO CONTRIBUTE, IN WHATEVER SHE WAY SHE COULD UNDER THE CIRCUMSTANCES. THIS, APART FROM BEING INFERABLE FROM HER CONDUCT AND THE COURSE OF EVENTS, IS EXPLICIT IN HER DECLARATION ITSELF: THAT SOMEWHERE AROUND MAY, 2005, I DECIDED TO MAKE A TRIP TO MUMBAI ALONG WITH MY FAMILY TO SEE MY AILING FATHER MR. SH AO CHAN CHEN AND INFORMED HIM OF MY DESIRE TO SEE ALL IN MUMBAI. I F URTHER STATE THAT I SENT A CHEQUE DATED 06.06.2005 OF US $ 10,000 TO MY BROT HER MR. HSIN CHU CHEN IN THE FORM OF GIFT TO HIM FOR WHATEVER EXPENS ES HE MAY HAVE TO MEET ON OUR VISIT. THAT ULTIMATELY I ARRIVED IN MUMBAI ALONE ON 01/10/ 2005 AND WAS WITH MY BROTHER AND FATHER TILL I LEFT INDIA ON 08/10/20 05 AND DUE TO VARIOUS REASONS NOBODY ELSE IN THE FAMILY ACCOMPANIED ME TO INDIA. THAT SINCE MY FATHER WAS NOT KEEPING GOOD HEALTH AT THE TIME, IN ORDER TO SPEND TIME IN HIS COMPANY, I REMAINED MOSTLY WITH M Y BROTHER AND HIS FAMILY TILL I LEFT INDIA ON 08/10/2005. THAT I WAS WORRIED ABOUT THE HEALTH OF MY FATHER AN D THEREFORE AS A MORAL OBLIGATION ON MY PART TO CONTRIBUTE MY BIT FOR HIS MEDICAL TREATMENT I SENT TO MY BROTHER DR. HSAN CHAN CHEN AN AMOUNT OF US $8 ,000 ON 21.11.2005 AND ANOTHER AMOUNT OF US $2000 ON 19.12. 2005 IN THE FORM OF GIFT. AGAIN, TWO THINGS ARE MANIFEST IN HER CONDUCT, TAKE N IN TOTALITY: AN OVERARCHING CONCERN FOR AND DESIRE TO SEE HER FATHER; HAVING SP ECIALLY PLANNED A VISIT TO SEE HIM AND, TWO, TO BE ABLE TO, AS HIS DAUGHTER (AND BEING IN A POSITION TO) CONTRIBUTE TOWARD THE COST OF HIS MEDICAL TREATMENT. SHE WAS NOT ONLY AWARE OF THE NATURE OF THE FATHERS ILLNESS; ITS GRAVITY, BUT ALSO THE COST THAT HIS MEDICAL TREATME NT ENTAILED. THE AMOUNTS WERE PAID TO HER BROTHER, WITH WHOM, AND IN WHOSE CARE, THE FATH ER WAS, INCURRING ALL THE EXPENDITURE, AND WITH NO EXPECTATION FOR A RETURN BACK, AND WHIC H EXPLAINS THE USE OF THE WORD GIFT BY HER, I.E., TO CONTRIBUTE TO THE EXPENDITURE ON T HE FATHERS ILLNESS AS A GIFT. ONE COULD ARGUE, WITH REFERENCE TO THE PENULTIMATE PART OF TH E DECLARATION OF THE REMITTANCE BEING A GIFT TO THE BROTHER, WITH NO RELATION WITH THE ACTU AL AMOUNT SPENT BY HIM FOR THE PURPOSE OF STAY IN AND TRAVEL TO INDIA OR THE MEDICAL EXPEN SES, IF ANY, INCURRED ON THE TREATMENT OF 8 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO HER FATHER. THE SAID DISCLAIMER, AS WOULD BE APPROP RIATE TO REFER THERETO, HAS TWO ASPECTS TO IT. ONE CONTRARY, I.E., TO WHAT STANDS STATED IN THE EARLIER PART OF THE DECLARATION, AND THE SECOND, EXPLANATORY AND CORROBORATIVE. WE WILL CONS IDER THE LATTER ASPECT FIRST. ALL IT SAYS IS THAT THE REMITTANCE HAS NO RELATION TO THE ACTUA L SUM EXPENDED BY THE BROTHER. THE SAME MEANS ONLY THAT. IT IS NOBODYS CASE OR CLAIM THAT THE AMOUNT WAS BY WAY OF REIMBURSEMENT TO THE BROTHER OF THE EXPENSES INCURR ED BY HIM, OR THAT THE TWO HAD AGREED TO SHARE THE SAME IN SOME DEFINED RATIO, AND WHICH WOULD IN FACT ONLY BE POSSIBLE IF DETAILED AND METICULOUS ACCOUNTS OF THE EXPENDITURE HAD BEEN MAINTAINED, WHICH MAY HAVE BEEN FOR YEARS, I.E., EVEN EARLIER TO THE CURR ENT YEAR. ALL SHE INTENDS TO IS TO CONTRIBUTE HER BIT TOWARD THE EXPENSES ON HER FATHE RS MEDICAL TREATMENT (TO THE ACTUAL AMOUNT SPENT THEREON). RATHER, IF ANYTHING, IT CLAR IFIES OR ENDORSES THE INCURRING OF THE EXPENDITURE. THIS IS AS ONLY IN THE EVENT OF THE EX PENDITURE BEING INCURRED, WOULD THE QUESTION OF THE SAME BEING CONTRIBUTED TO, OR OF BE ING IN RELATION THERETO, ARISE. AS REGARDS THE ASPECT WHICH CONTRADICTS, IN OUR CLEAR VIEW, TH E SAME BEING INCONSISTENT WITH THE CONSPECTUS OF THE CASE, IS, TO THAT EXTENT, CONTRAD ICTORY, AND DEVOID OF VALUE. IF NO EXPENDITURE WAS TO BE INCURRED OR PLANNED TO BE, ON THE VISIT, WHERE IS THE QUESTION OF REMITTING THE MONEY TOWARD THE SAME ? FURTHER, HOW COULD IT THEN BE A GIFT, OR HAVE NO RELATION, AS STATED, TO THE EXPENDITURE. AGAIN, THE ACTUAL AMOUNT SPENT BY THE ASSESSEE BEING ADMITTEDLY A FRACTION OF THE EXPENDITURE, WHI CH A BROTHER WOULD IN ANY CASE FEEL PRIVILEGED TO INCUR FOR A SISTER ON HER VISIT, WHY WAS THE AMOUNT RECEIVED, BEING IN EXCESS BY FAR, NOT REPAID ? ON THE CONTRARY, SHE REMITS A FURTHER SUM OF US $ 10,000 PER TWO INSTALLMENTS. WE COULD GO ON. THIS IS WHAT EXPLAINS OUR CLEAR STAND OF THE LATTER PART OF THE DECLARATION, AS UNDER, TO THE EXTENT CONTRARY, AS LIABLE TO BE IGNORED: THAT IT SHOULD BE EXPRESSLY UNDERSTOOD BY THAT AMO UNT SENT BY ME TO MY BROTHER AS GIFT AGGREGATING TO US $ 20,000 HAS NO R ELATION TO THE ACTUAL AMOUNT SPENT BY HIM FOR THE PURPOSE OF MY STAY AND TRAVEL IN INDIA AND ALSO ON THE MEDICAL EXPENSES, IF ANY, ON THE TREATM ENT OF MY FATHER. 9 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO IN FACT, EVEN OTHERWISE, A DOCUMENT WHERE AND TO TH E EXTENT INTERNALLY INCONSISTENT, IS TO BE, TO THAT EXTENT, IGNORED, AND A VIEW, TAKING A V IEW IN HARMONY WITH THE ENTIRETY OF THE FACTS AND EVENTS, AS ACTUALLY TRANSPIRED, TAKEN OR ADOPTED. IN OUR VIEW, THEREFORE, THE AMOUNTS WERE CLEARLY RE MITTED TOWARD THE FATHERS MEDICAL TREATMENT. IT COULD ALSO BE ARGUED, AS INDE ED OBSERVED BY US AT THE BEGINNING OF THIS ORDER, THAT THE EXPENDITURE, FOR ITS SOURCE TO BE QUESTIONED, SHOULD BE PROVED, THE ONUS FOR WHICH IS ON THE REVENUE, WHILE IN THE PRES ENT CASE THERE IS NO INDICATION OF THE EXPENDITURE INCURRED ON THE FATHERS ILLNESS. TRUE; RATHER, THE ONUS TO ESTABLISH THAT THE CONDITION/S OF TAXABILITY IS FULFILLED, IS ALWAYS O N THE REVENUE (REFER: K.P. VARGHESE VS. ITO [1981] 131 ITR 597 (SC)). SO, HOWEVER, AS AGAIN CLA RIFIED THEREIN, AS WELL AS IN THE DECISION BY THE HONBLE COURTS, VIZ. C.K. SUDHAKARAN VS. ITO [2005] 279 ITR 533 (KER), THE PROVING OF THE EXISTENCE OF AN INVESTMENT, ETC. (EXPENDITURE, IN THE PRESENT CASE), COULD ALSO BE ON THE BASIS OF THE INFERENCE DRAWN F ROM PROVEN FACTS. INFERENTIAL FINDINGS OF FACT ARE ALSO (AND AS MUCH) FINDINGS OF FACT. IN THE PRESENT CASE, THE UNMISTAKABLE INFERENCE IS OF THE ASSESSEES SISTER PLANNING A VI SIT TO INDIA TO SEE, REMITTING SUMS TOWARD THE COST OF MEDICAL TREATMENT OF, HER AILING FATHER , SHAO CHAN CHEN, WHO EXPIRED THREE MONTHS AFTER HER VISIT, MADE SPECIFICALLY TO SEE HI M, WHEREAT SHE STAYED WITH HER BROTHER AND FATHER. WHY, IN THE PRESENT CASE, THE ASSESSEE HAS HIMSELF CONFIRMED THE (CASH) WITHDRAWAL OF RS.30,000/- AS TOWARD THE EXPENDITURE ON HIS SISTERS VISIT TO INDIA, EVEN THOUGH THERE IS NO DIRECT EVIDENCE OF SUCH EXPENDIT URE, VALIDATE THE INCURRING OF THE EXPENDITURE TO THAT EXTENT. PUT DIFFERENTLY, THE PROOF OF THE PUDDING LIES IN I TS EATING; THE WITHDRAWAL EXPLAINING THE EXPENDITURE TO THAT EXTEN T . IT IS AGAIN NOT TO BE LOST SIGHT OF THAT THE REMITT ANCE STATED TO BE A GIFT, TO THE EXTENT NOT SO, IS LIABLE TO BE DEEMED AS THE ASSESSEES IN COME U/S. 68 OF THE ACT. THIS IS AS A CREDIT, TO BE NOT SO DEEMED, IS TO BE SATISFACTORIL Y EXPLAINED AS TO ITS NATURE AND SOURCE. THERE IS NO DOUBT IN THE PRESENT CASE AS TO THE SOU RCE; THE ASSESSEES SISTER, MS. HAPIPING C. CHIANG, WHO IS WORKING WITH CANADIAN TRUST COMPA NY, HAVING ADEQUATE INCOME/ CAPITAL. IT IS THE NATURE OF THE CREDIT, HOWEVER, T HAT THE ASSESSEE HAS NOT BEEN ABLE TO SATISFACTORILY PROVE, SO THAT TO THAT EXTENT IT BEC OMES AN UNEXPLAINED CREDIT. IN FACT, GIFTS 10 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO ARE CONSIDERED AS INCOME, I.E., GENERALLY, ONLY ON ACCOUNT OF THE INABILITY TO EXPLAIN OR SUBSTANTIATE THE NATURE OF THE SUM CREDITED, WHICH INCLUDES THE CREDIT TO, AS IN THE INSTANT CASE, THE ASSESSEES CAPITAL ACCOUNT, EVEN AS THERE IS LITTLE TO DOUBT QUA ITS SOURCE. IN SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC), THE APEX COURT UPHELD THE PRINCIPLE OF PREPONDERANCE OF HUMAN PROBABILITIES AS A TEST FOR CREDIBILITY OF THE ASSESSEES EXPLANATION. AGAIN, PER DECISIONS, AS IN THE CASE O F ROSHAN DI HATTI VS. CIT [1977] 107 ITR 938 (SC); CIT VS. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 194 (SC); CIT VS. MANICK SONS [1979] 74 ITR 1(SC), IT STANDS CLARIFIED, INTER ALIA , BY IT THAT ONCE THERE IS AN UNEXPLAINED CREDIT, IT IS OPEN TO THE AO TO HOLD IT AS THE ASSESSEES INCOME AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT IT IS FROM A PARTICULAR SOURCE. TO STATE DIFFERENTLY, THE CREDITS WOULD CONSTITUTE A VALID GROUND FOR INC LUDING THE SAME AS INCOME U/S. 68, THAT IS, SEPARATE AND DISTINCT FROM THAT FOR BEING UNABL E TO PROVE OR EXPLAIN SATISFACTORILY THE SOURCE OF THE EXPENDITURE. THAT THE REVENUE HAS, HO WEVER, NOT MADE TWO SEPARATE ADDITIONS, AS THE LAW ADMITS OF, AND FOR WHICH WE A RE SUFFICIENTLY EMPOWERED IN LAW TO RECOMMEND; THERE BEING NO ESTOPPEL AGAINST LAW (REF ER, INTER ALIA, KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC); AHMEDABAD ELECTRICITY CO. LTD. V. CIT [1993] 199 ITR 351 (BOM)(FB)), ONLY GOES TO ITS CREDIT, I.E., FOR BEING FAIR. THE REASON IS SIMPLE AND NOT FAR TO SEEK. THE REVENUE REJECTS THE ASSESSEES EXP LANATION OF THE REMITTANCE/S BEING A GIFT ONLY FOR THE REASON OF IT BEING TOWARD THE EXP ENDITURE INCURRED BY THE ASSESSEE ON, INTER ALIA , THE FATHERS ILLNESS, WITH WE HAVING DISCOUNTENAN CED THE OTHER AREAS OF EXPENDITURE, ALSO CONSIDERED UNEXPLAINED BY THE REV ENUE. THERE IS THUS LITTLE SCOPE FOR THE TWO ADDITIONS THE TWO GETTING TELESCOPED ON E EXPLAINING AND CORROBORATING THE OTHER, PROVIDING ITS PROOF AS IT WERE. THE FATHER BEING SERIOUSLY ILL AND UNDER MEDICAL TREATMENT; THAT EXPENDITURE WAS INCURRED FOLLOWS AS A NATURAL COROLLARY. THE SAME EXPLAINS THE REMITTANCE, INDIRECTLY PROVING THE EXP ENDITURE. THE FACTS AND CIRCUMSTANCES OF THE CASE PROVIDE FOR - THOUGH NOT URGED BEFORE U S, AS THERE IS, RATHER THAN OVERT AN IMPLICIT ALLOWANCE OF TELESCOPING BY THE REVENUE, A ND JUSTIFY THE TELESCOPING OF THE TWO ADDITIONS, I.E., ON ACCOUNT OF UNEXPLAINED CREDIT/S , STATED AS GIFT/S, AND UNEXPLAINED EXPENDITURE ON ACCOUNT OF THE MEDICAL TREATMENT OF THE FATHERS ILLNESS (REFER: DEVI 11 ITA NO. 3118/MUM/2013 (A.Y. 2006-07) DR. H. C. CHEN VS. ITO PRASAD VISHWANATH PRASAD (SUPRA); ANANTHARAM VEERASINGHAIAH & CO. VS. CIT [1980] 123 ITR 457 (SC)). IN SUM, THE FACTS AND CIRCUMSTANCES LEAD TO AN UNMI STAKABLE CONCLUSION OF THE ASSESSEES FATHER BEING CRITICALLY ILL, AND THE ASS ESSEES SISTER, LIVING FAR AWAY, SHOWING HER CONCERN AND RESPONSIBILITY TOWARD HER FATHER AS WELL AS APPRECIATION FOR HER BROTHER IN LOOKING AFTER HIM - HER FATHER, WITH WHOM HE WAS ST AYING, AND BEING IN A POSITION TO, CONTRIBUTING THERETO AS HER MORAL OBLIGATION. WE, ACCORDINGLY, CONFIRM THE ADDITION OF RS.8,85,102/- FOUND CREDITED TO THE ASSESSEES CAPI TAL ACCOUNT IN HIS ACCOUNTS AS HIS INCOME FOR THE FOREGOING REASONS. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 3 1-4 *563 - ' 3 ' - 7 ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 05, 2015 SD/- SD /- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) , MUMBAI; 9 * DATED : 05.06.2015 +.*../ ROSHANI , SR. PS, SHARWAN !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ) :- ( ) / THE CIT(A) 4. ) :- / CIT - CONCERNED 5. =+> %-*5 , . 5 1 , ) , / DR, ITAT, MUMBAI 6. 6 A, / GUARD FILE ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , ) , / ITAT, MUMBAI