SHRI NEMICHAND JAIN, Indore V. THE ITO - 2(1), Indore

ITA 331/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5990 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 19-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained cash credit; Gift; Rectification of order; Retrospective amendment
• Section: 142(1); 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 331/IND/2015 A.Y. : 2004-05 SHRI NEMICHAND JAIN, ITO, 101, JUNI KASERA BAKHAL, VS 2(1), INDORE. INDORE. APPELLANT RESPONDENT PAN NO. ADTPJ3798G A PPELLANT S BY : SHRI PRAKASH JAIN, C. A. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 19.11.2014 FOR THE ASSES SMENT YEAR 2004-05. DATE OF HEARING : 06 .0 6 20 16 DATE OF PRONOUNCEMENT : 08 .0 6 . 201 6 SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 2 2 2. THE ONLY GROUND IN THIS APPEAL IS CONFIRMING THE PENALTY OF RS. 1,20,000/- BY THE LD. CIT(A) U/S 27 1(1)(C) OF THE INCOME-TAX ACT, 1961. 3. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 06.09.2004 FOR THE ASSESSMENT YEAR 2004-05 DECLARIN G TOTAL INCOME OF RS. 1,77,750/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO FOUND THAT AS PER THE CAPITAL A CCOUNT FILED ALONGWITH THE RETURN, IT WAS NOTICED THAT THE CAPITAL ACCOUNT WAS CREDITED AT RS. 4,00,000/- BY THE ASSESSEE ON AC COUNT OF NRI GIFT RECEIVED. THE GIFT WAS CLAIMED TO HAVE BEEN RECEIVED FROM SMT. MEENAKSHI JAIN W/O SHRI DILIP KUMAR JAIN R/O 63, RAVENWOOD ROAD, BRAND FORDONT, CANADA FROM HIS NRI ACCOUNT DUE TO FRIENDSHIP. THE DONOR IS NOT A BLOOD RELATIVE. THERE IS NO OCCASION FOR GIFTING. THE ASSESSEE CONT ENDED THAT THE GIFT WAS OUT OF LOVE AND AFFECTION, BUT THE AO WA S OF THE VIEW THAT THERE WAS NO FRIENDSHIP BETWEEN DONOR AND D ONEE WHEREIN SUCH AMOUNT COULD BE GIFTED AND THE AO WAS OF THE VIEW THAT THIS IS A CASE OF GETTING AN ENTRY IN THE CAPITAL ACCOUNT FOR GIFT BY CHEQUE WHICH IS A PRACTICE FREQU ENTLY ADOPTED TO INTRODUCE CAPITAL IN THE FILE BY TAX EVA DERS. THUS, SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 3 3 THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THEN WENT TO I.T.A.T. AND THE APPEAL OF THE ASSESSEE WAS DISMISSE D. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALES OF READYMADE GA RMENTS. THE ASSESSEE HAS CHALLENGED THE LEGALITY OF IMPOSIT ION OF PENALTY AND THE AO HAS IMPOSED THE PENALTY AND HAS WRITTEN THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) ARE SEPA RATELY INITIATED. THEREFORE, IT BECOMES CLEAR THAT THE AO HAS INITIATED PENALTY FOR CONCEALMENT OF INCOME FOR FILING INACCU RATE PARTICULARS OF INCOME. THEREFORE, THE AO IS NOT SUR E WHETHER THE PENALTY IS IMPOSED OR IS FOR INACCURATE PARTICU LARS OF CONCEALMENT OF INCOME. THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE RELIED UPON THE DECISION OF THIS TRIBU NAL IN THE CASE OF ACIT VS. M.P. STATE TOURISM DEVELOPMENT COR PORATION LIMITED AND OTHERS, (2015) 26 ITJ 225 (TRIB.- INDOR E). 6. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY P ARTICULARS SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 4 4 OF INCOME AS THE ASSESSEE HAS FILED THE COPY OF ACC OUNTS OF SMT. MEENAKSHI JAIN. THE ASSESSEE HAS ALSO FILED TH E COPY OF GIFT DEED. THUS, THE ASSESSEE HAS NOT FILED ANY INA CCURATE PARTICULARS OR CONCEALED ANY PARTICULARS OF INCOME. THE ASSESSEE HAS FILED THE COPY OF GIFT DEED, WHICH IS O N PAGE 26, COPY OF CHEQUE ON PAGE 27, COPY OF PASSPORT OF THE DONOR ON PAGE 28, CERTIFICATE OF BANK OF BARODA ON PAGE 29 A ND CONFIRMATION LETTER OF GIFT ISSUED BY THE DONOR SMT . MEENAKSHI JAIN ON PAGE 30. THEREFORE, THE ASSESSEE HAS SUBMIT TED EVERYTHING BEFORE THE AO. THEREFORE, THE ASSESSEE H AS PROVED THAT HE HAS RECEIVED THE GIFT BY FILING COPY OF GIF T DEED ALONGWITH RETURN OF INCOME, ENTRY IN CAPITAL ACCOUNT AT CREDIT SIDE OF THE ACCOUNT OF SMT. MEENAKSHI JAIN. HENCE, THE ASSESSEE HAS FILED ALL THE PARTICULARS OF GIFT AND RETURN OF INCOME. THEREFORE, THE PENALTY CANNOT BE LEVIED. HE RELIED UPON THE DECISION OF CIT VS. BALBIR SINGH, (2008) 2 14 CTR ( P&H ) 147, A. RAJENDRAN & OTHERS VS. ACIT, (2010) 1 34 TTJ 120. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED BEFORE ME THAT THE LEGAL GROUND SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 5 5 TAKEN BY THE ASSESSEE THAT THE AO HAS INITIATED THE PENALTY PROCEEDINGS ONLY BY MENTIONING THAT PENALTY PROCEED INGS U/S U/S 271(1)(C) IS INITIATED SEPARATELY. ACCORDINGLY, THE AMOUNT OF RS. 4,00,000/- IS TREATED AS UNEXPLAINED CREDIT AND CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE AS PER SECT ION 68 OF THE INCOME-TAX ACT, 1961. THE PENALTY PROCEEDINGS U /S 271(1)(C) OF THE INCOME-TAX ACT, 1961, ARE SEPARATE LY INITIATED ON THIS ISSUE. FOR THIS LD. DEPARTMENTAL REPRESENTA TIVE RELIED UPON THE FOLLOWING DECISIONS :- (I) M. SAJJANRAJ NAHAR V. CIT, (2006) 293 ITR 230 (MAD). (II) NAINU MAL HET CHAND V. CIT, (2007) 294 ITR 185 (ALL). (III) (1) MS.MADHUSHREE GUPTA & (2) BRITISH AIRWAYS PLC, VS. UNION OF INDIA AND ANOTHER, (2009) 317 ITR 107 (DEL). 8. THE LD. DEPARTMENTAL REPRESENTATIVES SECOND CONTENTION BEFORE ME IS THAT THE ASSESSEE HAS FILED THE COPY OF THE TRIBUNAL ORDER IN ASSESSEES OWN CASE, WHICH IS ON PAGE 31 TO 42 OF THE PAPER BOOK AND LD. DEPARTMENTAL REPRES ENTATIVE HAS READ THE JUDGEMENT OF TRIBUNAL ON PAGE 4 OF THE ORDER ON SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 6 6 PAGE 35 OF THE PAPER BOOK. THE TRIBUNAL HAS DEALT WI TH THIS ISSUE AND EXAMINED THE DOCUMENTS AND TRIBUNAL HAS H ELD THAT SMT. MEENAKSHI JAIN ISSUED THE CHEQUE GIVING G IFTS TO VARIOUS PERSONS AND FOUND THAT THESE ARE ARRANGED A FFAIRS. IT WAS ALSO OBSERVED THAT DONOR IS NOT A BLOOD RELATIVE OF THE DONE AND EVEN THERE WAS NO OCCASION FOR MAKING THE G IFT AND IT WAS CONCLUDED THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND CONSEQUENT ADDIT ION WAS MADE U/S 68 OF THE INCOME-TAX ACT, 1961. 9. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY A GREED UPON THE INSUFFICIENCY OF THE FUNDS AVAILABLE FOR MAKING THE GIFT AS NO DOCUMENTARY EVIDENCE WAS PRODUCED AT ANY STAGE. THEREFORE, THE GIFT RECEIVED IN THE BOOKS OF DONEE, MERE IDENTIFICATION OF THE DONOR SHOWING THE MOVEMENT OF AMOUNT THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. THEREFORE, THE TRIBUNAL HA S CONFIRMED THE ORDER OF AO AND LD. CIT RELYING UPON THE DECISI ON OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUR ESH KUMAR KAKKAD, 324 ITR 231 (DEL). SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 7 7 10. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. W.J.WALKER AND COMPANY, (1979) 117 ITR 690 (CAL). T HE LD. DEPARTMENTAL REPRESENTATIVE ALSO RELIED UPON THE D ECISION OF CIT VS. PRATHI HARDWARE STORES, (1993) 203 ITR 641 (ORI), WHEREIN THE HON'BLE ORISSA HIGH COURT HAS CONFIRMED THE PENALTY. HE ALSO RELIED UPON THE DECISION OF HON'BL E GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAMNADAS AND CO., (1994) 210 ITR 218 (GUJ). 11. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT FIRST LEGAL GROUND TAKEN BY THE ASSESSEE THAT THE A O HAS ONLY MENTIONED IN THE ASSESSMENT ORDER THAT PENALTY PROC EEDINGS U/S 271(1)(C) ARE SEPARATELY INITIATED ON THIS ISSU E. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISI ON OF THIS TRIBUNAL IN THE CASE OF ACIT VS. M.P. STATE TOURIS M, WHEREIN I HAVE DECIDED THE ISSUE THAT IF THE PENALTY PROCEEDI NGS ARE INITIATED OR INACCURATE PARTICULARS OF INCOME, NO, PENALTY CAN BE IMPOSED FOR CONCEALMENT OF INCOME AND VICE VERSA . IN THE INSTANT CASE, PENALTY PROCEEDINGS ARE SEPARATELY IN ITIATED AND SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 8 8 HAS BEEN MENTIONED BY THE AO THAT THE PENALTY PROCE EDINGS U/S 271(1)(C) INITIATED SEPARATELY. I FIND THAT THE ISSUE HAD COME UP BEFORE THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF NAINU MAL HET CHAND VS. CIT, (2007) 294 ITR 185 (ALL). HON'BLE HIGH COURT OF ALLAHABAD HELD AS UNDER :- IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTORS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEES INCOME; IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E., CONSCIOUS CONCEALMENT, OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE; THE EXPLANATION HAS NO BEARING ON FACTOR NO.1 BUT IT HAS A BEARING ONLY ON FACTOR NO.2; THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 9 9 ASSESSEE; NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES; IF AN ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE, THE EXPLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE ; ALTERNATIVELY, TREATING THE EXPLANATION AS DEALING WITH BOTH THE INGREDIENTS (I) AND (II)ABOVE, WHERE THE CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES EXPLANATION IS FALSE, THE ASSESSEE MUST BE HELD TO HAVE PROVED THAT THERE WAS NO MENS REA OR GUILTY MIND ON HIS PART; EVEN IN THIS VIEW OF THE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 10 10 MATTER, THE EXPLANATION ALONE CANNOT JUSTIFY LEVY OF PENALTY AND ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTMENT CANNOT BE EQUATED WITH FRAUD OR WILLFUL DEFAULT. THE AO SHOULD BE SATISFIED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE SATISFACTION CAN BE GATHERED FROM THE ASSESSMENT ORDER. THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT TO WRITING. 12. I ALSO FIND THAT THE SIMILAR ISSUE HAS BEEN ALSO DISCUSSED BY HON'BLE DELHI HIGH COURT IN THE CASE O F (1) MS.MADHUSHREE GUPTA & (2) BRITISH AIRWAYS PLC, VS. U NION OF INDIA AND ANOTHER, (2009) 317 ITR 107 (DEL), WHEREIN IT IS HELD AS UNDER :- PENALTY - CONCEALMENT OF INCOME PROVISION INTRODUCING DEEMING FICTION WITH RETROSPECTIVE EFFECT THAT DIRECTION SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 11 11 IN ASSESSMENT ORDER TO INITIATE PENATLY PROCEEDINGS TO BE DEEMED SATISFACTION OF ASSESSING OFFICER VALID BUT SUCH SATISFACTION MUT BE DISCERNIBLE FROM ASSESSMENT ORDER SATISFACTION ONLY PRIMA FACIE RETROSPECTIVE OPERATION GIVEN TO SECTION NOT VIOLATIVE OF ARTICLE 14 INCOME-TAX ACT, 1961, SS. 271(1)(C), (1B), 274, 275 CONSTITUTION OF INDIA, ARTS. 14, 226. 13. I ALSO GET SUPPORT FROM THE DECISION OF HON'BLE MAD RAS HIGH COURT IN THE CASE OF M. SAJJANRAJ NAHAR V. CIT , (2006) 293 ITR 230 (MAD), WHEREIN HON'BLE MADRAS HIGH COURT HAS HELD AS UNDER :- DEDUCTION OF TAX AT SOURCE RENT WAREHOUSING CHARGES ASSESSEE DEDUCTING TAX AT 2 PER CENT. TREATING THEM AS CONTRACTUAL PAYMENTS ASSESSING OFFICER HOLDING THAT PAYMENT SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 12 12 WAS RENT AND PASSING ORDER FOR RECOVERY OF DIFFERENCE IN TAX AND INTEREST PAYEE PAYING FULL TAXK ON WAREHOUSING CHARGES APPELLATE TRIBUNAL DECISION THAT ASSESSEE HAS ONLY TO PAY INTEREST VALID INCOME-TAX ACT, SS. 194C, 194I, 201(1A) CIRCULAR NO. 275/201/95-IT(B) DATED JANUARY 29, 1997. APPELLATE TRIBUNAL RECTIFICATION OF MISTAKE MISCELLANEOUS APPLICATION THAT GROUND NOT DECIDED MADE AFTER DISMISSAL BY HIGH COURT OF APPEAL FROM ORDER OF TRIBUNAL MAINTAINABILITY NOT DECIDED INCOME-TAX ACT, 1961, S. 254(2). 14. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ALLAHABAD HIGH COURT (SUPRA), I AM OF THE VIEW THAT THE AO WAS JUSTIFIED IN HOLDING THAT THE PENALTY U/S 271(1) (C) IS SEPARATELY INITIATED. THEREFORE, IT IS NOT NECESSAR Y FOR AO TO MENTION THAT PENALTY PROCEEDINGS IS INITIATED FOR C ONCEALMENT SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 13 13 OF INCOME FOR FILING INACCURATE PARTICULARS OF INCO ME. THEREFORE, THIS LEGAL GROUND OF THE ASSESSEE IS DISMISSED. 15. IN RESPECT OF QUANTUM, THE TRIBUNAL IN ASSESSEES O WN CASE, HAS DECIDED THIS ISSUE BY OBSERVING AS UNDER :- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE COMMON ISSUE IS INVOLVED, WE DISPOSE OF THESE APPEA LS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. THE WHOLE ISSUE INVOLVED IN THESE APPEALS PERTAINS TO GENUINENESS OF GIFTS RECEIVED FROM DIFFERENT PERSON S. SO FAR AS THE GIFT RECEIVED FROM MRS. MEENAKSHI JAI N WIFE OF SHRI DILIP KUMAR JAIN (IN THE CASE OF NEMICHAND JAIN ITA NO. 108/IND/2012)) IS CONCERNED, THE ASSESSEE DECLARED INCOME OF RS.1,31,530/- AND GIFT OF RS.4 LACS WAS CLAIMED TO BE RECEIVED FROM SMT. MEENAKSHI. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 142(1) DATED 1.5.2006, REQUIRING THE ASSESSEE TO PRODUCE DOCUMENTARY EVIDENCE REGARDING ACCEPTANCE OF GIFT, RELATIONSHIP SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 14 14 BETWEEN DONOR AND DONEE, OCCASION FOR THE GIFT, COP Y OF BANK STATEMENT OF THE DONOR, COPY OF PASSPORT ALONGWITH MODE OF RECEIPT AND STATEMENT OF ACCOUNT FOR THE PERIOD FROM 1.4.2003 TO 31.3.2004 OF NRE ACCOUN T NO. 100044. ADMITTEDLY, IN THE COPY OF ACCOUNT FOR THE RELEVANT PERIOD, CHEQUE NO. 288151 DATED 15.10.2003 WAS FOUND TO BE REFLECTED. PURSUANT TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE VIDE LETTER DATED 20.11.2006 FURNISHED THE FOLLOWING DOCUMENTS :- A. ORIGINAL GIFT DEED FOR RECEIPT OF NRI GIFT B. THE GIFT WAS GIVEN BY BROTHER IN LAW OF SMT. MEENAKSHI JAIN (THE DONOR) TO THE DONEEE PERSONALLY AT THE RESIDENCE OF DONEE. HENCE THERE WAS NO REQUIREMENT OF ENVELOP AND LETTER WRITTEN BY THE DONOR. C. COPY OF RETURN OF INCOME OF NRI WAS NEITHER AVAILABLE WITH US NOR GIVEN BY THE DONOR SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 15 15 BECAUSE IT IS A PERSONAL & CONFIDENTIAL DOCUMENT D. WITH REFERENCE TO PROVE OUR FRIENDSHIP WITH NRI WE ARE ENCLOSING HEREWITH COPY OF CONFIRMATION OF GIFT FAXED BY THE DONOR FROM CANADA TO INDIA ON DATED 16.11.2006 FROM PHONE NO. 5197518991 IN WHICH NRI ACCEPTED THAT I HAD MADE A GIFT TO THE DONE E. THE GIFT WAS GIVEN WITHOUT ANY OCCASION FOR MAKING A GIFT, FRIENDSHIP NOT REQUIRED ANY OCCASION. THE AFORESAID DOCUMENTS WERE EXAMINED BY THE ASSESSING OFFICER AND IT WAS FOUND THAT SMT. MEENAKSHI JAIN ISSUED CHEQUES, GIVING GIFTS, TO VARIOUS PERSONS AND FOUND THAT THESE ARE ARRANGED AFFAIRS. IT WAS ALSO OBSERVED THAT THE DONOR IS NOT THE BLOOD RELATIVE OF THE DONEE AND EVEN THERE WAS NO OCCASION FOR MAKING THE GIFT. IT WAS CONCLUDED THAT THE ASSESSEE FAILED TO SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 16 16 ESTABLISH THE GENUINENESS OF THE TRANSACTION AND CONSEQUENT ADDITION WAS MADE U/S 68 OF THE ACT. ON APPEAL, THE LEARNED CIT(A) AFFIRMED THE ADDITION. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ON PERUSAL OF RECORD, WE FIND THAT IDENTITY OF THE DONOR HAS BEEN DULY ESTABLISHED BY THE ASSESSEE AS AFFIDAVIT OF THE DONOR AND COPY OF PASSPORT HAVE BEEN PLACED ON RECORD. SO FAR AS SOURCE OF INCOME OF THE DONOR IS CONCERNED, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF INCOME OF THE DONOR, THUS ITS GENUINENESS IS CLEARLY IN DOUBT . A QUERY WAS RAISED BY THE BENCH REGARDING SOURCE OF INCOME OF MRS. MEENAKSHI JAIN. THE LEARNED COUNSEL FAIRLY AGREED ABOUT THE INSUFFICIENCY OF FUNDS AVAILABLE FOR MAKING THE GIFT AS NO DOCUMENTARY EVIDENCE WAS PRODUCED AT ANY STAGE. IN THE CASE OF GIFTS RECORDED TO BE RECEIVED IN THE BOOKS OF THE DONEE, MERE IDENTIFICATION OF T HE DONOR, SHOWING THE MOVEMENT OF AMOUNT THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 17 17 GENUINENESS OF GIFT. HEAVY ONUS LIES ON THE DONEE NOT ONLY TO ESTABLISH THE IDENTITY OF THE DONOR BUT ALSO THE CAPACITY OF THE DONOR TO MAKE SUCH GIFT. IT IS VERY IMPORTANT INGREDIENT TO PROVE BEYOND DOUBT THE CAPACITY OF GIVING LARGE AMOUNT OF GIFT BY THE DONOR. OUR VIEW IS FORTIFIED BY THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. ANIL KUMAR (2008) 167 TAXMAN 143 (DEL). ADMITTEDLY, A GIFT IS GENERALLY GIVEN OUT OF NATURAL LOVE AND AFFECTION AND WITHOUT ANY CONSIDERATION WHICH NECESSARILY DENOTES THE CLOSENESS BETWEEN THE DONOR AND THE DONEE. THOUGH THERE ARE VARIOUS DECISIONS ON THIS ISSUE IN FAVOUR AND AGAINST THE ASSESSEE BUT FOR THE GENUINENESS OF GIFT, THE TEST OF HUMAN PROBABILITY IS MOST APPROPRIATE TO DECIDE THE ISSUE . FOR PROVING NATURAL LOVE AND AFFECTION, NO CLEAR CU T FORMULA HAS BEEN ADDUCED. HOWEVER, THE RECIPIENT HAS TO PROVE ALL THE THREE INGREDIENTS, OTHERWISE THE SAME CAN VERY WELL BE TREATED AN ACCOMMODATION ENTRY AS OWN MONEY OF THE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 18 18 ASSESSEE. SO FAR AS THE CONTENTION OF THE REVENUE THAT THERE WAS NO OCCASION FOR MAKING SUCH GIFT IS CONCERNED, WE ARE OF THE VIEW THAT IT IS ALWAYS NOT NECESSARY AS GIFT MADE BY MOTHER TO A SON DOES NOT REQUIRE ANY OCCASION. OUR VIEW IS SUPPORTED BY THE DECISION IN CIT VS. SURESHKUMAR KAKKAR (2010) 324 ITR 231 (DEL.). THE TOTALITY OF FACTS AN D THE CIRCUMSTANCES ARE INDICATIVE OF ONE POINT THAT THE ASSESSEE COULD NOT PROVE THE SUFFICIENCY OF SOURCE OF INCOME WITH THE DONOR AS NO EVIDENCE WAS PRODUCED AT ANY STAGE THAT THE DONOR WAS HAVING SUFFICIENT FUNDS/SOURCE OF INCOME SO THAT HUGE AMOUNT CAN BE GIFTED TO A PERSON EVEN WHO IS NOT A CLOSE RELATIVE. TRANSACTION BY CHEQUE ALWAYS MAY NOT BE SACROSANCT AS WAS HELD IN NEMICHAND KOTHARI (2003) 264 ITR 254 (GAU). CAPACITY OF THE DONOR/LENDER IS AN IMPORTANT INGREDIENT TO PROVE THE CREDIT WORTHINESS AND CONSEQUENT GENUINENESS OF THE TRANSACTION FOR WHICH HEAVY BURDEN LIES ON THE ASSESSEE. THE RATIO LAID DOWN BY HONBLE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 19 19 APEX COURT IN ROSHAN DI HATTI VS. CIT; 107 ITR 938 AND KALE KHAN MOHD. HANIF; 50 ITR 1 (SC) SUPPORTS OUR VIEW. THE CASES RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE ON DIFFERENT FACTS AND, THEREFORE, MAY NOT HELP THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE CASES RELIED UPON BY THE REVENUE. AS PER THE PROVISIONS OF SECTION 68 OF THE ACT, THE NATURE AND SOURCE OF THE SUM FOUND TO BE CREDITED HAS TO BE EXPLAINED TO THE SATISFACTION OF THE ASSESSING OFFICER AND IF THE EXPLANATION IS FOUND TO BE UNSATISFACTORY OR THE ASSESSEE OFFERS NO EXPLANATION, THE ADDITION HAS TO BE MADE AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. WITHOUT GOING INTO MUCH DELIBERATION, SINCE THE SOURCE OF INCOME OF THE DONOR AND CONSEQUENT GENUINENESS OF TRANSACTION IS NOT ESTABLISHED, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ADDITION CONFIRMED BY THE CIT(A) IN THE CASE OF NEMICHAND JAIN. THEREFORE, THIS SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 20 20 APPEAL OF THE ASSESSEE HAS NO MERIT AND DISMISSED AS SUCH. 16. FROM THE ABOVE ORDER OF THE TRIBUNAL, THE TRIBUNAL HAS HELD THAT SMT. MEENAKSHI JAIN HAS ISSUED THE CHEQU E GIVING GIFTS TO VARIOUS PERSONS AND FOUND THAT THESE ARE A RRANGED AFFAIRS. THE DONOR IS NOT BLOOD RELATIVE OF THE DON E AND THERE WAS NO OCCASION FOR MAKING THE GIFT AND ASSESSEE FAI LED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND AD DITION U/S 689 WAS CONFIRMED. DURING THE COURSE OF HEARING OF T HE APPEAL, THE ASSESSEE WAS ASKED TO PROVE SUFFICIENCY OF FUND FOR MAKING THE GIFT. NO DOCUMENTARY EVIDENCE WAS PRODUC ED AT ANY STAGE. THEREFORE, THE TRIBUNAL HELD THAT THE AM OUNT RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. TH EREFORE, FROM THE DECISION OF THE TRIBUNAL, THE ASSESSEE COULD NO T PROVE THE SUFFICIENCY OF SOURCE OF INCOME WHICH THE DONOR HAS NO EVIDENCE TO PRODUCE AT ANY STAGE AND WHEN THE DONE I S NOT A CLOSE RELATIVE, THE TRANSACTION IS NOT GENUINE. THE REFORE, THE AO HAS LEVIED THE PENALTY. I AM OF THE VIEW THAT WHEN THE SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 21 21 ASSESSEE HAS GIVEN THE GIFTS TO VARIOUS PERSONS, TH EREFORE, THE PENALTY IS TO BE CONFIRMED. THEREFORE, I AM OF THE ,OPINION THAT THE AO AND LD. CIT(A) ARE JUSTIFIED IN THEIR ACTION . I ALSO HOLD THAT WHEN THE ASSESSMENT ORDER HAS BECOME FINAL, IT IS BINDING ON BOTH THE PARTIES. NEITHER PARTY CAN SEEK TO RE-O PEN, BUT IN THE PENALTY PROCEEDINGS AS HELD IN THE CASE OF S. S . RATANCHAND BHOLANATH VS. CIT, (1994) 210 ITR 682 ( M.P. ) AND BHARAT RICE MILLS, (2005) 278 ITR 599 (ALL). WH EN THE ASSESSEE FAILED TO EXPLAIN THE CASH CREDIT IN THE A SSESSMENT, THE ONUS SHIFT ON THE ASSESSEE IN PENALTY PROCEEDIN GS TO SHOW THAT THE AMOUNT WAS NOT CONCEALED INCOME AS HELD IN THE CASES OF CIT VS. W.J.WALKER AND COMPANY, (1979) 1 17 ITR 690 (CAL), CIT VS. PRATHI HARDWARE STORES, (1993) 2 03 ITR 641 (ORI), AND CIT VS. JAMNADAS AND CO., (1994) 210 ITR 218 (GUJ). SHRI NEMICHAND JAIN, INDORE VS. ITO,2(1), INDORE I.T.A.NO. 331/IND/2015 A.Y.2004-05 22 22 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 8 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 8 TH JUNE, 2016. CPU*