CHANDA B MALI, MUMBAI V. ITO 18(2)(1), MUMBAI

ITA 3249/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75282 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD RIZWAN
• Assessee Lawyers: VINAYAK PANDYA
• Keywords: Reopening of assessment; Gift; Principle of natural justice; Tangible material
• Section: 142(1); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 3249/MUM/2013 (ASSESSMENT YEAR: 2003-04) MRS. CHANDA B. MALI INCOME TAX OFFICER - 18(2)(1) 15, ASHISH INDUSTRIAL ESTATE PIRAMAL CHAMBERS, LALB AUG GOKHALE ROAD (S), DADAR (W) VS. MUMBAI 400012 MUMBAI 400025 PAN - ADSPM1176A APPELLANT RESPONDENT APPELLANT BY: SHRI GIRISH DAVE & SHRI VINAYAK PANDYA RESPONDENT BY: SHRI MOHD. RIZWAN DATE OF HEARING: 07.01.2014 DATE OF PRONOUNCEMENT: 24.01.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.02.2013 PASSED BY CIT(A)-16, MUMBAI AND IT PERTA INS TO A.Y. 2003-04. 2. REOPENING OF ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 147 OF THE ACT AND CONSEQUENT ADDITION OF ` 3,00,000/- MADE BY THE AO IS SUBJECT MATTER OF DISPUTE BEFORE THE TRIBUNAL. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ALONG WITH BALANCE SHEET SHOWING GIFTS RECEIVED BY HER TO THE TUNE OF ` 3,00,000/-. NO ACTION APPEARS TO HAVE BEEN TAKEN ON THE RETURN FIL ED BY THE ASSESSEE ON 04.12.2003. IT APPEARS THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS INITIATED IN THE CASES OF SHRI BHAGARAM P. MALI, HU SBAND OF THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED A GIFT O F ` 3,00,000/- ( ` 1,00,000/- EACH) FROM SHRI KAMESH PRAJAPATI, SHRI R. MAMANIYA AND SMT. SHEELA M. GALA, WHO ARE NO WAY RELATED TO THE ASSESSEE. BASED ON THE INFORMATION RECEIVED FROM THE ACIT (OSD)-1, CENTRAL RANGE-7, MU MBAI AND UPON ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 2 VERIFICATION OF THE DOCUMENTS THE ASSESSEES CASE W AS SOUGHT TO BE REOPENED BY THE AO, HAVING NOTICED THAT THERE ARE REASONS TO BELIEVE THAT THE ALLEGED GIFTS ARE NOTHING BUT INCOME OF THE ASSESSEE FOR A. Y. 2003-04 WHICH HAS ESCAPED ASSESSMENT. ACCORDINGLY NOTICE UNDER SECTIO N 148 OF THE ACT DATED 25.03.2010 WAS ISSUED TO THE ASSESSEE WHICH WAS DUL Y SERVED ON 29.03.2010. THEREAFTER THE AO ISSUED NOTICE UNDER S ECTION 142(1) OF THE ACT CALLING FOR THE DETAILS SUCH AS NAME AND ADDRESS OF THE DONORS, CONFIRMATION OF GIFTS, RELATIONSHIP WITH THE DONORS, OCCASION OF THE GIFT AND COPIES OF THE BANK STATEMENTS. IN RESPONSE TO THE SAID NOTICE THE ASSESSEES REPRESENTATIVE REQUESTED THE AO TO TREAT THE RETURN OF INCOME FILED UNDER SECTION 139(1) AS THE RETURN FILED UNDER SECTION 14 7 AND ALSO STATED THAT THE ASSESSEE HAD NOT RECEIVED ANY REASONS RECORDED FOR REOPENING THE CASE. SUBSEQUENTLY NOTICES UNDER SECTION 143(2) AND SECTI ON 142(1) OF THE ACT WERE ISSUED ALONGWITH A QUESTIONNAIRE AND FORWARDED A COPY OF THE REASONS RECORDED FOR REOPENING OF ASSESSMENT. IN RESPONSE T HERETO THE ASSESSEE SUBMITTED THAT SHE HAD RECEIVED GIFTS OF ` 1,00,000/- EACH FROM THE ABOVE MENTIONED THREE PERSONS ON 17.05.2002. SHE ALSO SUB MITTED THAT SHRI REIPEN MAMANIYA AND SHRI KAMESH ARE LIKE HER BROTHE RS AND SMT. SHEELA GALA IS A FRIEND AND SISTER LIKE. IT WAS ALSO SUBMI TTED THAT RECEIPT OF GIFT IS CAPITAL IN NATURE AND IT CANNOT BE BROUGHT TO TAX W HICH IS EVIDENT FROM THE FACT THAT THE ACT WAS AMENDED W.E.F. 01.09.2004 TO INCLUDE GIFT OF MORE THAN ` 25,000/-, FROM PERSONS OTHER THAN CLOSE RELATIVES, AS INCOME OF THE ASSESSEE.THIS PRESUPPOSES THAT ANY GIFT RECEIVED PR IOR TO THAT DATE FROM PERSONS OTHER THAN RELATIVES ARE NOT TAXABLE UNDER THE INCOME TAX ACT. IT WAS ALSO SUBMITTED THAT SHE HAD RECEIVED THE ABOVE GIFTS AS A TOKEN OF LOVE FROM THEM ON HER MARRIAGE ANNIVERSARY ON 11 TH MAY. 4. THE AO PERUSED THE STATEMENT OF SHRI RIPEN JAYANTIA LAL MAMANIA, RECORDED ON OATH ON 19.11.2008 BY SHRI RAMESH CHAND RA, ACIT (OSD)-1, CENTRAL RANGE-7, MUMBAI WHEREIN SHRI RIPEN SUBMITTE D THAT HE WAS HELPING HIS FATHER IN HIS GARMENT BUSINESS AND THEY EARN ` 2 TO 2.50 LAKHS PER YEAR AND HE DOES NOT KNOW HIS SHARE OF PROFIT IN THE BUS INESS. THE AO FURTHER NOTICED THAT IN THE STATEMENT HE COULD NOT ESTABLIS H HIS RELATIONSHIP WITH THE DONEE AND OCCASION OF GIFT AND EXISTENCE OF REC IPROCITY. IN FACT A PERUSAL ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 3 OF THE BANK ACCOUNT DETAILS SHOWS THAT ONE DAY PRIO R TO THE GIFT A CHEQUE OF ` 1,00,000/- WAS CREDITED TO HIS ACCOUNT AND THE SAME HAS BEEN TRANSFERRED TO THE ACCOUNT OF SMT. CHANDA B. MALI ON 18.05.2002 IN THE GUISE OF GIFT. THE INCOME TAX RETURN FILED FOR A.Y. 2001-02 BY SHR I RIPEN SHOWS THAT HE HAS DECLARED INCOME OF ` 49,227/- ONLY. 5. SIMILARLY THE BANK ACCOUNT OF SHRI KAMESH PRAJAPATI ALSO REFLECTS DEPOSIT OF A CHEQUE OF ` 1,00,000/- ON 17.05.2002 AND THE SAME HAS BEEN TRANSFERRED TO THE ACCOUNT OF SMT. CHANDA B. MALI O N 18.05.2002. FOR A.Y. 2002-03 SHRI KAMESH PRAJAPATI DECLARED INCOME OF ` 51,048/- ONLY. THE AO FURTHER NOTICED THAT SHRI PRAJAPATI WAS ONLY 23 YEA RS OLD AT THE TIME OF GIFT. 6. IN THE SAME WAY SMT. SHEELA M. GALAS BANK STATEMEN T SHOWS DEPOSIT OF A CHEQUE ON 17.05.2002 FOR A SUM OF ` 1,00,000/- WHICH WAS TRANSFERRED TO THE ACCOUNT OF SMT. CHANDA B. MALI ON 18.05.2002 . SHE HAD FILED RETURN OF INCOME FOR A.Y. 2001-02 DECLARING INCOME OF ` 80,550/- ONLY. 7. CONSIDERING THE FACTS THE AO NOTICED THAT IT IS DIF FICULT TO BELIEVE THAT PERSONS HAVING SMALL MEANS COULD HAVE SAVED SO MUCH OF AMOUNT AND COULD HAVE GIVEN GIFT TO OTHERS WITHOUT ANY CONSIDERATION AND WITHOUT ANY OCCASION. HE ALSO NOTICED THAT THE ONUS IS ON THE A SSESSEE TO PROVE THE CAPACITY OF THE DONOR TO GIVE THE GIFT APART FROM P ROVING THE GENUINENESS OF THE GIFT. UNDER THESE CIRCUMSTANCES, THE AO CONCLUD ED THAT PROVISIONS OF SECTION 69A ARE APPLICABLE TO THE CASE IN HAND, WHI CH IN TURN SAYS THAT IF AN ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY AND NO E XPLANATION IS OFFERED FOR ACQUISITION OF THE MONEY, SUCH AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN OTHER WORD S, THE AO CONCLUDED THAT THE ASSESSEE COULD NOT EXPLAIN THE CAPACITY OF THE DONORS AND HENCE THE SAME HAS TO BE TREATED AS INCOME OF THE ASSESSEE UN DER SECTION 69A OF THE ACT. 8. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T REOPENING ITSELF IS BAD IN LAW SINCE NO NEW MATERIAL WAS ON RECORD W HICH MAY EMPOWER THE AO TO REOPEN THE CASE. IT WAS FURTHER CONTENDED THA T THE ASSESSEE HAD CREDITED IN HER CAPITAL ACCOUNT ` 3,00,000/- REFERABLE TO THE GIFTS RECEIVED FROM THREE PERSONS AND FILED COPIES OF THE GIFT DEE D, APART FROM THEIR ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 4 RESPECTIVE INCOME TAX RETURNS BEFORE THE ACIT (OSD) -1, CENTRAL RANGE-7, MUMBAI AND THUS THE ASSESSEE HAS DISCHARGED HER ONU S IN WHICH EVENT ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSE E. IT WAS ALSO SUBMITTED THAT IT IS A CASE OF REOPENING AFTER LAPSE OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION AND HENCE THE O NUS IS UPON THE REVENUE TO PROVE THAT THE ASSESSEE HAS WITHHELD CER TAIN FACTS OR SOME TANGIBLE MATERIAL WAS FOUND TO MAKE IT A BASIS FOR REOPENING OF ASSESSMENT. PLACING RELIANCE UPON THE DECISION OF THE APEX COUR T IN THE CASE OF KELVENIATOR OF INDIA LTD. 320 ITR 561 THE ASSESSEE CONTENDED THAT REOPENING ITSELF IS NOT TENABLE. IT WAS ALSO CONTENDED THAT E VEN WHILE MAKING THE ASSESSMENT THEREAFTER THE AO DID NOT FOLLOW THE PRI NCIPLES OF NATURAL JUSTICE SINCE HE DID NOT CONFRONT THE ASSESSEE WITH ANY INF ORMATION HE RECEIVED FROM ANOTHER AO NOR HAD HE PROVIDED COPIES OF THE STATEM ENT OF SHRI RIPEN J. MAMANIYA, WHICH IS THE BASIS FOR REOPENING THE ASSE SSMENT. TILL DATE THE STATEMENT HAS NOT BEEN PROVIDED TO THE ASSESSEE. 9. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSMENT WAS SOUGHT TO BE REOPENED BY THE AO ON THE BASIS OF SPECIFIC INFORMA TION ARISING OUT OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE S HUSBAND, SHRI BHAGARAM P. MALI, WHEREIN THE STATEMENT OF ONE OF T HE DONORS WAS RECORDED. THEREFORE IT CANNOT BE SAID THAT THE ASSESSMENT WAS REOPENED WITHOUT HAVING ANY INFORMATION OR REASONS TO BELIEVE THAT I NCOME HAD ESCAPED ASSESSMENT. HE FURTHER OBSERVED THAT THE REASONS FO R REOPENING THE ASSESSMENT WERE PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE ASSESSEE DID NOT RAISE ANY OBJE CTION TO THE REOPENING BEFORE THE AO AND THUS THE OBJECTION NOW RAISED IS NOT MAINTAINABLE. 10. AS REGARDS THE STATEMENT OF RECEIPT OF ` 3,00,000/- FROM THREE PERSONS, CLAIMED TO BE GIFTS FROM THREE DONORS, THE LEARNED CIT(A) OBSERVED THAT THE ONUS IS UPON THE ASSESSEE TO PROVE; (A) THE IDENTIT Y OF THE DONORS, (B) CREDITWORTHINESS OR CAPACITY OF THE DONORS TO MAKE GIFT, AND (C) THE GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE THE ASSESSEE MERELY PROVED THE FIRST LIMB, I.E. IDENTITY OF THE DONORS BUT SHE COULD NOT ESTABLISH EITHER THE CAPACITY OF THE DONORS TO MAKE THE ALLEG ED GIFT OR GENUINENESS OF ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 5 THE TRANSACTION. THERE IS NEITHER ANY RELATIONSHIP BETWEEN THE SO CALLED DONORS AND THE ASSESSEE NOR ANY RECIPROCITY ESTABLI SHED. TO HIGHLIGHT THE SAME, THE LEARNED CIT(A) OBSERVED THAT ONE OF THE D ONORS, SHRI RIPEN J. MAMANIYA DID NOT EVEN KNOW HIS SHARE OF PROFIT IN T HE BUSINESS OF HIS FATHER WHO IN TURN EARNS ONLY ` 2 TO 2.5 LAKHS A YEAR, STILL HE IS ABLE TO SPARE ` 1,00,000/- AS GIFT TO THE ASSESSEE. SIMILARLY, THE OTHER TWO DONORS ALSO EARNED MEAGRE INCOME BUT YET CHOSE TO PART WITH ` 1,00,000/- AS GIFT AND FURTHER THE FACT THAT THERE HAVE BEEN TRANSFERS OF MONEYS IN THEIR BANK ACCOUNTS JUST PRIOR TO GIVING OF GIFTS CASTS SHADOW OF DOUBT WITH REGARD TO THE GENUINENESS OF THE GIFTS. UNDER THESE CIRCUMSTANCES THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO. 11. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT THERE IS NO BASIS FOR REOPENING OF ASSESSMENT AND IN FACT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF LENDING MONEY AND EARNING INTEREST INCO ME WHICH WAS OFFERED TO TAX. GIFTS RECEIVED BY THE ASSESSEE WERE REFLECTED IN THE BALANCE SHEET AND THUS IT CAN BE SAID THAT THEY ARE RECORDED IN THE B OOKS OF ACCOUNT. SECTION 69A IS APPLICABLE ONLY WHEN ANY MONEY FOUND IN THE POSSESSION OF THE ASSESSEE HAS NOT BEEN REFLECTED IN THE BOOKS OF ACC OUNT BUT IN THE INSTANT CASE IT IS ALREADY RECORDED IN THE BOOKS OF ACCOUNT AND HENCE NO ADDITION CAN BE MADE BY INVOKING PROVISIONS OF SECTION 69A O F THE ACT. THE LEARNED COUNSEL ALSO REFERRED TO IDENTICAL DECLARATIONS OF GIFTS IN THE CASE OF ALL THE THREE DONORS AND THEIR RESPECTIVE BANK ACCOUNTS TO SHOW THAT THE DONORS HAVE RECEIVED SOME AMOUNT BY CHEQUE WHICH WAS DEPOS ITED AND IMMEDIATELY THE SAME WAS GIVEN AS GIFT TO THE ASSES SEE AND THUS IT CANNOT BE STATED TO BE CASH DEPOSIT ONE DAY PRIOR TO THE DATE OF GIFT. DONORS HAVING ADMITTED TO HAVE GIVEN THE GIFTS AND PROVED THE SOU RCE, THE INITIAL ONUS UPON THE ASSESSEE STOOD DISCHARGED AND IT IS FOR THE REV ENUE TO PROVE THAT THEY DID NOT HAVE THE SOURCE TO GIVE THE GIFT. IT IS NOT FOR THE AO TO PUT HIMSELF IN THE SHOES OF THE DONORS AS TO WHETHER THEY HAD PROP ER REASONS TO GIVE THE GIFT. SO LONG AS THEY HAD SUFFICIENT FUNDS THEY ARE ENTITLED TO GIFT THE SAME AND IF THE AO HAD ANY DOUBT HE COULD HAVE MADE FURT HER ENQUIRIES TO PROVE THAT NO SUCH MONEY WAS EXISTING WITH THE DONORS BUT IN THE INSTANT CASE NO ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 6 FURTHER ENQUIRY WAS MADE BY THE AO AND IN SUCH AN E VENT OF THE MATTER THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE AND HE NCE THE ADDITION IS NOT MAINTAINABLE. HE FURTHER SUBMITTED THAT THE STATEME NT OF SHRI RIPEN J. MAMANIYA WAS RECORDED ON OATH IN THE CASE OF THE HU SBAND OF THE ASSESSEE; SINCE THIS STATEMENT WAS NOT TAKEN DURING THE COURS E OF ASSESSEES ASSESSMENT PROCEEDINGS, THE AO OUGHT TO HAVE FURNIS HED A COPY TO THE ASSESSEE BUT THE SAME WAS NOT PROVIDED. THOUGH THE AO MENTIONED THAT HE HAS VERIFIED THE RECORDS AND DOCUMENTS TO COME TO A CONCLUSION THAT THE ALLEGED GIFTS WERE INCOME OF THE ASSESSEE IT IS NOT KNOWN AS TO WHAT WAS THE BASIS OF SUCH FINDING AND WHAT DOCUMENTS WERE VERIF IED SINCE NOTHING WAS PLACED BEFORE THE ASSESSEE BEFORE ARRIVING AT THE C ONCLUSION AND HENCE THE ASSESSMENT ORDER WAS PASSED IGNORING THE PRINCIPLES OF NATURAL JUSTICE. HE ALSO RELIED UPON SEVERAL CASE LAW IN SUPPORT OF HIS CONTENTION THAT REOPENING IS BAD IN LAW SINCE THERE IS NO TANGIBLE MATERIAL B EFORE THE AO TO PROVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 12. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS MAINTAINED B OOKS OF ACCOUNT AND HENCE THE PLEA OF THE ASSESSEE THAT SECTION 69A IS WRONGLY INVOKED DESERVES TO BE EXAMINED BY CALLING FOR REMAND REPORT BY SEND ING BACK THE MATTER TO THE CIT(A). WITH REGARD TO THE OTHER CONTENTIONS IT WAS SUBMITTED THAT REOPENING OF ASSESSMENT BEYOND FOUR YEARS IS IN ACC ORDANCE WITH LAW SINCE THE STATEMENT OF SHRI RIPEN J. MAMANIYA AND FURTHER ENQUIRIES MADE BY THE AO ARE SUFFICIENT MATERIAL TO ENABLE THE AO TO REOP EN THE ASSESSMENT EVEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSE SSMENT YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT THE ALLEGE D DONORS ARE NO WAY RELATED TO THE ASSESSEE AND THEIR ANNUAL INCOME IS SUCH THAT THERE WOULD HAVE BEEN HARDLY ANY SAVINGS AND IN FACT THE FIRST DONOR DO NOT EVEN KNOW AS TO WHETHER HE HAS ANY SHARE OF THE INCOME EARNED BY HIS FATHER AND AN YOUNG BOY OF 23 YEARS GIVING A GIFT OF ` 1,00,000/- WITHOUT ANY BLOOD RELATION AND WITHOUT ANY RECIPROCITY SHOWS THAT THE GIFT MAY NOT BE TRUE. IT WAS SUBMITTED THAT THE AO AS WELL AS THE CIT(A) HAS THO ROUGHLY GONE INTO THE FACTS OF THE CASE WHILE COMING TO THE CONCLUSION TH AT THERE IS SUFFICIENT MATERIAL FOR REOPENING THE ASSESSMENT AS WELL AS FO R MAKING THE IMPUGNED ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 7 ADDITION, SINCE THE PREPONDERANCE OF PROBABILITY IS IN FAVOUR OF HOLDING THAT THE ASSESSEE HAS RECEIVED NO GIFT FROM THE ABOVE ME NTIONED THREE PERSONS. HE THUS SUPPORTED THE ORDERS PASSED BY THE TAX AUTH ORITIES. 13. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RECORD. THE MAIN PLANK OF ARGUMENT OF THE LEARNED C OUNSEL FOR THE ASSESSEE IS THAT: (A) THE AO HAS WRONGLY INVOKED THE PROVISI ONS OF SECTION 69A WHICH COMES TO PLAY ONLY WHEN SOME MONEY FOUND IN THE HAN DS OF THE ASSESSEE IS NOT RECORDED IN THE BOOKS OF ACCOUNT WHEREAS IN THE INSTANT CASE IT IS ADMITTED THAT IT IS REFLECTED IN THE BALANCE SHEET IMPLYING THEREBY THAT IT IS RECORDED IN THE BOOKS OF ACCOUNT IN WHICH EVENT PRO VISIONS OF SECTION 69A DO NOT COME INTO PLAY, (B) THE INITIAL ONUS IS DISCHAR GED BY THE ASSESSEE BY PROVING THE IDENTITY OF THE DONORS AND SOURCE OF FU ND IN WHICH EVENT THE BURDEN SHIFTS ON TO THE AO TO PROVE AS TO WHETHER T HE DONORS HAVE CREDITWORTHINESS OR NOT WHEREAS IN THE INSTANT CASE THE AO HAS NOT MADE ANY EFFORTS TO POINT OUT AS TO WHETHER THEY HAVE RE CEIVED CHEQUES WORTH ` 1,00,000/- PRIOR TO THE GIFT AND THE SOURCE THEREOF BUT MERELY CONCLUDED THAT THEY HAVE NO CREDITWORTHINESS WITHOUT MAKING A VAILABLE ANY MATERIAL ON RECORD TO THIS EFFECT, AND (C) THE REOPENING OF ASSESSMENT IS BAD IN LAW SINCE THE SO CALLED MATERIAL, WHICH WAS SOUGHT TO B E REFERRED TO, CANNOT BE SAID TO BE SUFFICIENT MATERIAL TO REOPEN THE ASSESS MENT THAT TOO BEYOND FOUR YEARS. AT THE TIME OF HEARING THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT GIFTS WERE RECORDED IN THE BOOKS OF ACCOUNT BU T NO SPECIFIC GROUND APPEARS TO HAVE BEEN TAKEN BEFORE THE TAX AUTHORITI ES TO ENABLE THEM TO VERIFY IN DETAIL. THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT AN OMNIBUS GROUND IS RAISED STATING THAT PROVISIONS OF SECTION 69A WAS WRONGLY INVOKED BUT IT IS ADMITTED THAT NO SPECIFIC PLEA WA S RAISED EVEN IN THE WRITTEN SUBMISSION THAT SECTION 69A IS NOT APPLICAB LE WITH RESPECT TO GIFTS RECORDED IN THE BOOKS OF ACCOUNT. THE LEARNED D.R. SUBMITTED THAT THIS REQUIRES VERIFICATION AND THE LEARNED COUNSEL FOR T HE ASSESSEE DID NOT RAISE ANY SERIOUS OBJECTION EXCEPT CLAIMING THAT THE FACT S ARE ALREADY ON RECORD. IT MAY BE NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CALLED FOR REASONS RECORDED AND THE SAME W AS SUPPLIED TO THE ASSESSEE BUT SHE DID NOT CHOOSE TO RAISE PRELIMINAR Y OBJECTION WITH REGARD TO ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 8 REOPENING OF ASSESSMENT ON THE GROUND THAT SUFFICIE NT MATERIAL IS NOT AVAILABLE ON RECORD. IN MY CONSIDERED OPINION THE A O AS WELL AS THE LEARNED CIT(A) WERE JUSTIFIED IN UPHOLDING THE REOPENING OF ASSESSMENT SINCE THE INFORMATION OBTAINED FROM THE ACIT (OSD)-1, CENTRAL RANGE-7, MUMBAI AND FURTHER VERIFICATION WITH REGARD TO THE SOURCE OF T HEIR FUNDS MAY BE SUFFICIENT TO PRIMA FACIE ARM THE AO TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT SINCE IT CAN BE SAID TO BE SUFFICIENT REASO N TO BELIEVE THAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT. IN FACT THE A O HAS ISSUED NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT AND EVEN AT THAT STAGE THE ASSESSEE APPEARS TO HAVE NOT RAISED ANY OBJECTION; AT THE SAME TIME THE AO CHOSE TO MAKE ADDITION UNDER SECTION 69A OF THE ACT WHICH COMES INTO PLAY ONLY WHEN MONEY FOUND IN THE HANDS OF THE ASSESSEE IS NOT RECORDED IN THE BOOKS OF ACCOUNT WHEREAS IN THE INSTANT CASE THE AS SESSEES BALANCE SHEET REFLECTS GIFTS RECEIVED, WHICH MAY INDICATE THAT TH EY ARE RECORDED IN THE BOOKS OF ACCOUNT. SINCE NO SPECIFIC PLEA WAS TAKEN THE AO AS WELL AS THE CIT(A) HAD NO OCCASION TO EXAMINE THIS ASPECT AND F OR THIS LIMITED PURPOSE I SET ASIDE THE MATTER TO THE FILE OF THE LEARNED CIT (A) TO CALL FOR A REMAND REPORT AND TO EXAMINE AS TO WHETHER THE MONEY RECEI VED BY THE ASSESSEE CAN BE SAID TO HAVE BEEN RECORDED IN THE BOOKS OF ACCOU NT. NEEDLESS TO OBSERVE THAT ONLY SUCH MONEY, WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT, CAN BE CONSIDERED FOR MAKING ADDITION UNDER SECTION 69A OF THE ACT. EQUALLY WELL, IT DESERVES TO BE NOTICED THAT THE AO HAS NOT INVOKED PROVISIONS OF SECTION 68 OF THE ACT TO EXAMINE THE THREE PRONGED CRITERION I .E., IDENTITY, GENUINENESS AND CREDITWORTHINESS. IN THE INSTANT CASE THE ISSUE IS AS TO WHETHER PROVISIONS OF SECTION 69A ARE APPLICABLE OR NOT. TH E ASSESSEE FILED BEFORE THE AO THE DECLARATION OF GIFTS, THE BANK STATEMENTS OF DONORS AND ALSO THEIR SOURCE FOR GIVING THE GIFTS. IN SUCH AN EVENT OF TH E MATTER THE BURDEN CAST UPON THE ASSESSEE HAS BEEN DISCHARGED AND IT IS THE REVENUE TO EXAMINE AS TO WHETHER THE SOURCE SHOWN BY THE PARTIES REALLY E XISTS OR NOT; THE ASSESSEE CANNOT BE CALLED UPON TO PROVE THE SOURCE. NO MATER IAL WAS BROUGHT ON RECORD TO SHOW THAT THE AO HAD MADE ANY EFFORTS EXC EPT ARRIVING AT CERTAIN CONCLUSIONS ON MERE APPREHENSIONS. FOR EXAMPLE, MR. RIPEN HAS INDEPENDENT SOURCE OF INCOME AND FILED RETURN OF IN COME AND IT IS NOT SHOWN ITA NO. 3249/MUM/2013 MRS. CHANDA B. MALI 9 AS TO WHERE HE IS LIVING INDEPENDENTLY OR NOT. WHEN HE IS LIVING WITH HIS FATHER HOW MUCH IS REQUIRED FOR HIM TO EXHAUST ALL HIS RESOURCES. WITHOUT VERIFYING AS TO WHETHER THE PARTY HAD RETAINED SUCH EARNING AND WHETHER HE HAS RECEIVED A SUM OF ` 1,00,000/- ONE DAY PRIOR TO THE GIFT THROUGH CHEQUE , THE AO CANNOT ASSUME THAT HE WOULD NOT HAVE RECEIVE D A SUM OF ` 1,00,000/- AND COULD NOT HAVE GIVEN THE GIFT. COMIN G TO AN ABRUPT CONCLUSION WITHOUT EXAMINING THE PARTIES IN THE CUR RENT ASSESSMENT PROCEEDINGS WOULD AMOUNT TO VIOLATION OF NATURAL JU STICE. THE LEARNED CIT(A) MAY BEAR THIS IN MIND WHILE CONSIDERING THE ISSUE A S TO WHETHER AN ADDITION CAN BE MAINTAINED UNDER SECTION 69A OF THE ACT. WIT H THESE OBSERVATIONS THE MATTER IS SET ASIDE TO THE FILE OF THE CIT(A). AS D ECLARED IN THE OPEN COURT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 24 TH JANUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 16, MUMBAI 4. THE CIT 18, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.