Shri Fakruddin Seth, V. The I T O 5 (3),

ITA 328/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2827 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: K C AGRAWAL
• Keywords: Gift; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH-I, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 328/IND/2008 AY: 2003-04 FAKRUDDIN SETH INDORE (PAN ADUPS-9385-B) ..APPELLANT V/S. INCOME-TAX OFFICER, 5(3), INDORE ..RESPONDENT APPELLANT BY : SHRI K.C. AGRAWAL, C.A. DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER THIS APPEAL IS BY THE ASSESSEE CHALLENGING THE ORD ER OF THE LD. CIT(A) DATED 6.5.2008 WHEREIN THE FIRST GROUND RELA TES TO SUSTENANCE OF ADDITION MADE ON ACCOUNT OF GIFT RECEIVED AT RS. 2, 90,000/-, BY THE 2 CIT(A). DURING HEARING, THE CONTENTION RAISED BY T HE LD. COUNSEL FOR ASSESSEE IS THAT EARLIER THE ASSESSEE WAS WORKING I N KUWAIT FOR ABOUT 25 YEARS AND DUE TO RITES HE HAD TO COME BACK BY HANDI NG OVER THE BUSINESS TO OTHER RELATIVES. THE ASSESSEE IS TRADI NG IN PLYWOOD BUSINESS IN INDORE. IT WAS CLAIMED THAT THE ASSESSEE RECEIVE D DONATIONS FROM SUCH RELATIVES/FRIENDS WHO RESIDE IN KUWAIT AND ALS O TO WHOM THE BUSINESS WAS HANDED OVER BY THE ASSESSEE. ON THE OT HER HAND, THE LEARNED SENIOR DR, SMT. APARNA KARAN, STRONGLY DEFE NDED THE ADDITION BY CONTENDING THAT IT IS THE UNACCOUNTED MONEY OF T HE ASSESSEE WHICH WAS GIVEN COLOUR OF GIFT WHICH HAS BEEN RECEIVED FR OM STRANGERS. 2. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESSE E RECEIVED GIFTS FROM FOUR PERSONS THE DETAILS OF WHICH ARE SUMMARISED AS UNDER :- S.NO. NAME OF DONOR AMOUNT (RS.) RELATION OF DONOR WITH DONEE 1 MR. ARWA HALDAR HUSSAIN 40,000 SISTERS HUSBAND 2 SHRI FAKHRUDDIN PEETH 50,000 WIFES BROTHER 3 SHRI FAKHRUDDIN FIDA HUSSAIN SETH 1,00,000 SISTERS HUSBAND 4 SHRI GULAM HUSSAIN SETH 1,00,000 SISTERS HUSBAND TOTAL 2,90,000 3 AS FAR AS THE GIFT OF RS.40,000/- IS CONCERNED, IT WAS RECEIVED FROM HUSBAND OF SISTER OF THE ASSESSEE WHO WAS LIVING IN SAGWARA AND COPY OF THE DEED ALONGWITH CONFIRMATION LETTER WERE OBTAINE D ON 1.4.2007. THE COPY OF THE DEMAND DRAFT FOR RS.40,000/-, PROOF OF RELATIONSHIP WITH THE DONOR WAS ALSO FURNISHED BEFORE THE AO. FO R THE GIFT OF RS.50,000/- FROM SHRI FAKRUDDIN PEETH, WHO IS BROTH ER IN LAW OF THE ASSESSEE, ALSO RESIDING IN SAGWARA, THE GIFT WAS MA DE THROUGH DEMAND DRAFT AND THE GIFT DEED ALONG WITH CONFIRMATION LET TER WAS OBTAINED ON 4.1.2007. THE RELATIONSHIP IS ALSO NOT IN DOUBT. LIKELY FOR THE GIFT OF RS.1 LAC FROM SHRI FAKRUDDIN FIDA HUSSAIN SETH, THE ASSESSEE IS THE BROTHER IN LAW OF THE DONOR AND IS A NON RESIDENT I NDIAN (RESIDING IN KUWAIT), COPY OF GIFT DEED, COPY OF VISA AFFIXED PA SSPORT, PROOF OF INCOME OF THE DONOR, CONFIRMATION DATED 3.1.2007 AN D THE PAYMENT THROUGH DEMAND DRAFT WAS NOT IN DOUBT. IDENTICALLY, THE GIFT FROM THE SAME PERSON WAS ACCEPTED IN THE AY 1998-99 THAT TO O ON THE BASIS OF REMAND REPORT SUBMITTED BY THE LEARNED AO. IDENTIC AL IS THE SITUATION FOR A GIFT OF RS.1 LAC FROM SHRI GULAM HUSSAIN FIDA HUSSAIN SETH. THESE GIFTS WERE CLAIMED TO BE OUT OF LOVE AND AFFECTION. THE ASSESSEE ALSO FURNISHED THE COPY OF PASSPORT EVIDENCING PROOF OF THEIR STAY IN KUWAIT FOR THE LAST SO MANY YEARS TO THE EFFECT THAT THEY ARE NRIS. EVEN FOR THE AY 1998-99 THE GIFTS RECEIVED FROM THESE PERSON S WERE ACCEPTED BY 4 THE DEPARTMENT AND THE SAME WAS CONFIRMED BY THE TR IBUNAL. LIKELY THE GIFTS RECEIVED DURING THE AY 2001-02 AND 2004-0 5 THE LEARNED AO ACCEPTED THESE GIFTS AS GENUINE GIFT. THE COPIES O F THE ORDERS FORM PART OF PAGES 32 TO 45 OF THE PAPER BOOK. THE OBSER VATION OF THE AO AS WELL AS OF THE LEARNED FIRST APPELLATE AUTHORITY TH AT IT IS THE OWN UNACCOUNTED MONEY OF THE ASSESSEE IS NOT SUBSTANTIA TED WITH ANY EVIDENCE. THERE IS NO MATERIAL ON RECORD THAT IDENT ICAL MONEY WAS DEPOSITED IN THE ACCOUNTS OF THE DONEE BEFORE MAKIN G THE IMPUGNED GIFTS. THE GIFT IS ALSO THROUGH BANKING CHANNEL. ANOTHER SUSPICION RAISED IS THAT THE ASSESSEE ALSO RECEIVED GIFTS IN THE AY 1998-99 AND 2004-05, THEREFORE, THESE ARE ARRANGED AFFAIRS IN T HE GARB OF ROTATION OF OWN UNACCOUNTED MONEY OF THE ASSESSEE IS ALSO NO T SUBSTANTIATED WITH ANY EVIDENCE. THE ASSESSEE DULY FILED THE COPY OF DECLARATION OF GIFT SUPPORTED BY AFFIDAVIT THEREFORE THE IDENTITY IS PROVED. I DO NOT AGREE WITH THE SUSPICION RAISED IN THE IMPUGNED ORD ER/ASSESSMENT ORDER BECAUSE IDENTICALLY FOR THE AY 1998-99 AND 20 04-05 GIFTS WERE ALLOWED TO THE ASSESSEE, THEREFORE, IT CANNOT BE SA ID THAT THESE GIFTS ARE EITHER FROM STRANGERS OR UNRELATED PERSONS. THE DECISION OF THE CHANDIGARH BENCH IN THE CASE OF R.K. SYAL V. ACIT; 66 TTJ 656 SUPPORTS THE CASE OF THE ASSESSEE WHEREIN IT WAS HELD THAT O NCE CONFIRMATION IS FILED, THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED ITS INITIAL ONUS. THE 5 RATIO LAID DOWN IN ACIT V. YOGESH KUMAR JHINGEN (20 10) 14 ITJ 407 (INDORE), ACIT V. RAJESH KUMAR BAJAJ; 9 ITJ 604 (IN DORE), DHANKUMAR BADJATIYA V. ITO; 14 ITJ 51 (INDORE) AND AVNISH KUM AR SINGH V. ITO; 14 ITJ 240 (AGRA) SUPPORT THE CASE OF THE ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT THE AGRA BENCH OF THE TRIBUNAL WH ILE COMING TO A PARTICULAR CONCLUSION RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS AS AVAILABLE AT PAGE 241 OF THE SAID ORDER. IF THE TOT ALITY OF FACTS IS ANALYSED, THE DECLARATION OF GIFT, IDENTITY OF THE DONORS ARE ATLEAST NOT IN DOUBT. AS FAR AS THE CAPACITY OF THE DONORS IS CONCERNED, SINCE IDENTICALLY IN EARLIER AYS, THE GIFTS WERE ALLOWED, THEREFORE, IT CANNOT BE SAID THAT IN THE LATER YEAR THE DONOR BECAME MAN OF NO MEANS ESPECIALLY WHEN NO SUCH EVIDENCE WAS BROUGHT ON REC ORD BY THE REVENUE. MERE SUSPICION CANNOT TAKE THE SHAPE OF E VIDENCE HOWSOEVER STRONG IT MAY BE. IT IS MADE CLEAR THAT THIS ORDER MAY NOT BE QUOTED AS A PRECEDENT BY THE ASSESSEE FOR FURTHER REFERENCE A S IT HAS BEEN TAKEN TO THE PECULIAR FACTS OF THE IMPUGNED AY ONLY. WIT H THESE FINDINGS/OBSERVATION, THIS GROUND OF THE ASSESSEE I S ALLOWED. 3. GROUND NOS. AND 3 RELATE TO MAINTENANCE OF THE D ISALLOWANCE MADE AT RS. 3,320/- BEING 20% OF TOTAL PETROL AND C ONVEYANCE EXPENSES AND DEPRECIATION OF VEHICLE FOR ALLEGED PERSONAL US E, BY THE CIT(A). AFTER HEARING THE RIVAL SUBMISSIONS, IT IS SEEN THA T THE ASSESSEE DEBITED 6 RS.16,598/- IN ITS PROFIT AND LOSS ACCOUNT AS PETRO L AND CONVEYANCE EXPENSES OUT OF WHICH 20% WERE DISALLOWED ON THE PL EA THAT PERSONAL USE BY THE ASSESSEE CANNOT BE RULED OUT. LIKEWISE T HE ASSESSEE DEBITED RS.1,13,053/- ON ACCOUNT OF DEPRECIATION. THE STA ND OF THE REVENUE IS THAT NO LOG BOOK WAS MAINTAINED BY THE ASSESSEE FOR RUNNING THE CAR, THEREFORE, PERSONAL USE CANNOT BE DENIED. THE AMOUN T OF RS.33,910/- WAS DISALLOWED. SINCE PERSONAL USE CANNOT BE DENIED , THEREFORE, THE DISALLOWANCE IS RESTRICTED TO 15%, THEREFORE, THESE GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED. 4. GROUND NO. 4 RELATES TO MAINTENANCE OF DISALLOWA NCE MADE AT RS.966/- BEING 20% OF TOTAL SALARY TO DRIVER FOR AL LEGED PERSONAL USE, BY THE CIT(A). I FIND NO JUSTIFICATION IN MAKING THIS DISALLOWANCE UNLESS AND UNTIL IT IS PROVED THAT THE SALARY IS NOT PAID OR PAID EXCESSIVE. THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 5. GROUND NO. 5 RELATES TO MAINTENANCE OF DISALLOWA NCE MADE AT RS. 5,270/- BEING 20% OF TOTAL TELEPHONE EXPENSES FOR A LLEGED PERSONAL USE, BY THE CIT(A) . ADMITTEDLY, THE PERSONAL USE C ANNOT BE RULED OUT OTHER THAN BUSINESS PURPOSES, THEREFORE, THERE IS N O MERIT IN THIS GROUND OF THE ASSESSEE CONSEQUENTLY IT IS DISMISSED . 7 FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 2.6. 2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER DATED: 2.6.2010 D/- COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE