SANJAY H. JAGWANI, MUMBAI V. ITO 19(1)(2), MUMBAI

ITA 3288/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49406 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 29-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K SINGH
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, J BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A NO.3288/ MUM/2010 ASSESSMENT YEAR: 2006-07 SHRI SANJAY H JAGWANI, .. APPELLAN T 229, SAI SMRUT, 6 TH ROAD, KHAR(W), MMBAI-052 PA NO.ACBPJ 0357 N VS INCOME TAX OFFICER 19(1)(2) ,. RESPONDENT AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: VINAY SINHA, FOR THE APPELLANT S.K.SINGH, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE AD DITION OF RS. 25LAKHS ON ACCOUNT OF GIFT SAID TO HAVE RECEIVED BY THE ASSESSEE FROM HIS FATHER-IN-LAW. THE ASSESSMENT YEAR INVOLVED IS 2006-07 AND THE IMPUGNED ASSESSMEN T IS FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS I.T.A NO.3288/ MUM/2010 SHRI SANJAY H JAGWANI 2 RECEIVED GIFT AGGREGATING TO ` . 25 LACS. THE ASSESSEE WAS ASKED TO FURNISH THE D ETAILS IN RESPECT OF GIFTS SO RECEIVED. IN RESPONSE TO TH E REQUISITION MADE BY THE ASSESSING OFFICER, IT WAS EXPLAINED BY THE ASSESSEE THAT THE GIFT WAS RECEIVED FROM HIS DUBAI BASED FATHER-IN-LAW. A COPY OF PASSPORT OF THE DO NOR, COPIES OF TWO DEMAND DRAFTS AGGREGATING TO RS. 25 LAKHS AND ALSO A LETTER DATE D 12.12.2008 ISSUED BY THE DONOR CONFIRMING THAT THESE GIFTS WERE GIVEN FROM HIS BAN K ACCOUNT, WERE FILED BY THE ASSESSEE. THE ASSESSING OFFICER WAS, HOWEVER, NOT SATISFIED AS HE WAS OF THE VIEW THAT THE DOCUMENTARY EVIDENCE FOR ESTABLISHING CRED ITWORTHINESS OF THE DONOR AND THE COPIES OF THE RELEVANT BANK ACCOUNTS, HAVE NOT BEEN FURNISHED BY THE ASSESSEE AND THAT IN THE ABSENCE OF THESE DOCUMENTS, BONAFID ES OF THE GIFT COULD NOT BE ESTABLISHED. THE ASSESSING OFFICER FURTHER NOTED TH AT THE BANK STATEMENTS OF THE DONOR FOR THE RELEVANT PERIODS HAVE NOT BEEN FURNIS HED. HE, ACCORDINGLY, PROCEEDED TO TREAT THE GIFT OF RS. 25 LAKHS AS NOT GENUINE AN D BROUGHT THE SAME TO TAX UNDER SECTION 68 AS UNEXPLAINED CASH CREDIT. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. IT WAS SUBMITTED BY THE ASSESSEE THAT HIS FATHER-IN-LAW IS AN ENGINEER AND MANAGING PARTNER OF M/S. SUPER TECHNICAL ENTERPRISES IN DUBAI AND THE ASSESSEE ALSO FILED A LETTER FROM EMIRATES BANK CONFIRMING THAT THE DONOR IS A PARTNER AND AUTHORIZ ED SIGNATORY OF M/S. SUPER TECHNICAL ENTERPRISES AND MAINTAIN SATISFACTORY BOR ROWING RELATIONSHIP WITH THEM SINCE 16.6.2004. IT WAS ALSO SUBMITTED THAT THE ASS ESSEE HAS FURNISHED SUCH REASONABLE PARTICULARS AS HE COULD NOT OBTAIN AND T HUS DISCHARGED HIS INITIAL BURDEN. IN CASE THE REVENUE WANTED TO MAKE ANY FURTHER ENQU IRIES, IT WAS OPEN FOR THE ASSESSING OFFICER TO DO SO BUT THE ASSESSEE CANNOT BE SADDLED WITH THE RESPONSIBILITY OF COLLECTING INFORMATION AND DETAILS WHICH ARE NOT READILY AVAILABLE WITH HIM. NONE OF THESE SUBMISSIONS IMPRESSED THE CIT(A). HE CONF IRMED THE ACTION OF THE ASSESSING OFFICER AND REJECTED THE SUBMISSIONS MADE BY THE ASSESSEE, INTER ALIA, OBSERVING AS FOLLOWS: I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER , THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT AND OTHER RELEVANT DETAILS. AS REGARDS TO THE LETTER FURNISHED BY THE APPELLANT FROM EMIRA TES BANK, IT IS OBSERVED THAT THE SAID CERTIFICATE HAS BEEN GIVEN B Y THE BANK AND NOT BY THE CONCERN M/S. SUPER TECHNICAL ENTERPRISES IN WHICH THE DONOR IS I.T.A NO.3288/ MUM/2010 SHRI SANJAY H JAGWANI 3 SAID TO BE A MANAGING PARTNER. FURTHER, WHAT IS TH E MONTHLY AND YEARLY INCOME OF THE DONOR FROM THE SAID CONCERN M/ S. SUPER TECHNICAL ENTERPRISES HAS NOT BEEN DISCLOSED. WHAT ARE THE EARNINGS AND EXPENDITURES AND WHAT ARE THE SAVINGS OF THE DO NOR ARE ALSO NOT BEEN EXPLAINED. IN THE ABSENCE OF THIS, THE CREDIT WORTHINESS OF THE DONOR CANNOT BE TAKEN AS PROVED. THE APPELLANT HAS ALSO FURNISHED COPIES OF BANK ACCOUNTS MAINTAINED WITH EMIRATES BA NK OF M/S. SUPER TECHNICAL ENTERPRISES WHICH ARE IN THE CURRENCY OF UAE, DIRHAM. IN THIS RESPECT ALSO, THE APPELLANT HAS NOT CLARIFIED/ EXPLAINED AS WHAT WAS THE SHARE OF THE DONOR IN THE PARTNERSHIP CONCE RN M/S. SUPER TECHNICAL ENTERPRISES AND HOW MUCH OF PROFIT ARISES YEARLY FROM THE AFORESAID CONCERN. THE CONCERN M/S. SUPER TECHNICA L ENTERPRISES MAY BE EARNING A GOOD SUM OF MONEY BUT THAT DOES NO T IPSO FACTO MEANS THAT THE DONOR IS ALSO EARNING THAT MUCH OF A MOUNT. IN THIS REGARD, I AGREE WITH THE OBSERVATION OF THE AO THAT THE ONUS IS CAST ON THE APPELLANT TO PROVE THE GENUINENESS AND CREDITWO RTHINESS OF THE GIFT AND DONOR. THE AO HAS RELIED ON THE CASE LAWS WHICH ARE QUITE RELEVANT TO THE FACTS AND CIRCUMSTANCES OF THE CASE . THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS NOT DISC HARGED THE ONUS CAST UPON HIM TO SATISFACTORILY PROVE THE CREDITWOR THINESS OF THE DONOR AND THEREFORE THE ADDITION MADE BY THE AO OF ` . 25 LAKHS BEING UNEXPLAINED CASH CREDIT U/S.68 OF THE I.T.ACT, 1961 IS ACCORDINGLY CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 3. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPE AL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THE ASSESSEE HAS FURNISHED TH E DETAILS ABOUT IDENTITY OF DONOR, HIS RELATIONSHIP AND ALSO SOME DETAILS ABOUT FINANCIAL STATUS OF THE DONOR. HOWEVER, AS THE AUTHORITIES BELOW HAVE POINTED OUT, THE ASSESSEE HAS NOT GIVEN COMPLETE DETAILS ABOUT FINANCIAL STATUS OF THE DONO R INASMUCH AS THE ANNUAL INCOME OF THE DONOR FROM M/S. SUPER TECHNICAL ENTERPRISES ARE NOT FURNISHED, NOR THE ASSESSEE HAS FILED THE BANK STATEMENT OF THE DONOR FOR THE RELEVANT PERIOD. IN VIEW OF THE FACT THAT THE DONOR IS A CLOSE RELATIVE OF T HE ASSESSEE, IT IS, IN OUR CONSIDERED VIEW, INDEED POSSIBLE FOR THE ASSESSEE TO GIVE MORE SPECIFIC DETAILS ABOUT CREDITWORTHINESS OF THE DONOR BY GIVING DETAILS OF HIS STATUS IN SUPER TECHNICAL ENTERPRISES, AND INCOME FROM THE SAID CONCERN, OR S UCH OTHER COGENT MATERIAL AS I.T.A NO.3288/ MUM/2010 SHRI SANJAY H JAGWANI 4 MAY REASONABLY ESTABLISH THE CREDIT WORTHINESS. IN THE ALTERNATIVE, THE ASSESSEE CAN PRODUCE COPIES OF BANK ACCOUNT FROM WHICH THE REMIT TANCES IN QUESTION HAVE BEEN MADE SO AS TO DEMONSTRATE THAT THE MONIES HAVE ACTU ALLY BEEN DIRECTLY RECEIVED FROM THE SAID PERSON. UNDER SUCH CIRCUMSTANCES, IN OUR CONSIDERED VIEW, TO MEET THE ENDS OF JUSTICE, THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DENOVO AND DIRECTING THE ASSESSEE TO P RODUCE ALL SUCH DETAILS ABOUT CREDITWORTHINESS OF THE DONOR AS HE MAY BE ABLE TO OBTAIN. A LOT OF EMPHASIS HAS BEEN PLACED BY THE ASSESSEE ON THE FACT THAT THE DO NOR IS A MANAGING PARTNER OF M/S. SUPER TECHNICAL ENTERPRISES BUT IN THE ABSENCE OF F INANCIAL STATUS OF THE CONCERN, NOTHING TURNS ON THIS CONTENTION. IT IS THEREFORE, INDEED APPROPRIATE THAT SOME BASIC DETAILS ABOUT ASSESSEES CONTENTIONS ABOUT THE SAID CONCERN ARE PLACED ON RECORD. IN THE LIGHT OF THESE INFORMATION AND SUCH OTHER INFOR MATION AS THE ASSESSEE MAY BE ABLE TO PRODUCE, THE AO CAN REDECIDE THE MATTER ABO UT THE CREDITWORTHINESS OF THE DONOR IN A FAIR AND OBJECTIVE MANNER AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE BY WAY OF A SPEAKING ORDER. 6. AS WE DO SO, WE ARE ALIVE TO THE FACT THAT THE R ECIPIENT OF GIFT CANNOT ALWAYS BE EXPECTED TO PROVE ALL THE FINANCIAL DETAILS OF THE DONOR BEYOND DEMONSTRATING IN GENERAL THE CREDITWORTHINESS OF THE DONOR, BUT IN T HIS PARTICULAR CASE WHEN THE GIFT IS RECEIVED FROM THE CLOSE RELATIVE, IT IS EXPECTED OF THE ASSESSEE TO GIVE SOME SPECIFIC DETAILS ABOUT CREDITWORTHINESS OF THE DONOR, OR TO RESONABLY DEMONSTRATE THAT THE MONEY HAS ACTUALLY BEEN RECEIVED FROM THE DONOR AND IS NOT MERELY CHANNELING OF HIS OWN FUNDS. 7. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2011 (V. DURGA RAO) JUDICIAL MEMBER (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 4 TH JULY, 2011 PARIDA I.T.A NO.3288/ MUM/2010 SHRI SANJAY H JAGWANI 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),30, MUMBAI 4. COMMISSIONER OF INCOME TAX, CITY-19 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.3288/ MUM/2010 SHRI SANJAY H JAGWANI 6