(Smt) Shaila Agarwal, Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 352/LKW/2013

• Counselvise Citation: 35223714 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 16-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 143(3); 153A; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.352/LKW/2013 ASSESSMENT YEAR: 2002-03 SMT. SHAILA AGARWAL, 7/130, SWAROOP NAGAR, KANPUR. PAN:AANPA8364Q VS. A.C.I.T., CENTRAL CIRCLE-VI, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.387/LKW/2013 ASSESSMENT YEAR: 2002-03 A.C.I.T., CENTRAL CIRCLE-VI, KANPUR. VS. SMT. SHAILA AGARWAL, 7/130, SWAROOP NAGAR, KANPUR. PAN:AANPA8364Q (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I, KANPUR DATED 28/02/2013 FOR ASSESSMENT YEAR 2002-03. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONS OF RS.99,00,000/- & RS.4,95,000/- BY ASSESSEE BY SHRI P. K. KAPOOR, C. A. REVENUE BY DR. A. K. SINGH, CIT, D. R. DATE OF HEARING 06/10/2015 DATE OF PRONOUNCEMENT 1 7 /11 /2015 2 HOLDING THAT SUCH ADDITIONS WOULD NOT SURVIVE IN LI MINE WITHOUT APPRECIATING THE FACT AS PER PROVISIONS OF SECTION 153A, THE A.O. WAS REQUIRED TO DETERMINE THE TOTAL INCOME WHICH WOULD INCLUDE UNDISCLOSED INCOME IN TH E FORM OF GIFTS. 2. THAT THE CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN REDUCING THE EXPENSES INCURRED FOR PROCURING THE GIFTS FROM 10% TO 7% OF THE GIFTS RECEIVED WITHOUT APPRECIATING THE DETAILED FACTS AS MENTIONED IN THE ASSESSMENT ORDER AND WITHOUT ASSIGNING ANY LOGICAL REASONS. 3. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDE R OF THE A.O. BE RESTORED. 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED A. R. OF THE ASS ESSEE THAT RELIEF WAS ALLOWED BY LEARNED CIT(A) ON THIS BASIS THAT THE AD DITION OF RS.99 LAC AND RS.4.95 LAC CANNOT BE MADE IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT BECAUSE IN THE ASSESSEES OWN CASE, IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT NEITHER THE ORIGINAL ASSESSMENT FRA MED U/S 143(3) NOR THE APPEAL BEFORE THE TRIBUNAL IN THIS CONNECTION COULD ABATE AND THEREFORE, AS A CONSEQUENCE, ALL THE ADDITIONS/DISALLOWANCES MADE IN THE ASSESSMENT ORDER FRAMED U/S 143(3) WOULD SURVIVE AND HAVE TO B E DECIDED IN THE APPEAL IN THE PROCEEDINGS U/S 143(3) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN T HE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE. FIRST, WE REPRODUCE THE RELEVANT PARA OF THE ORDER OF CIT(A) I.E. PARA 7.2.1 FOR THE SAKE OF REA DY REFERENCE: 7.2.1 THIS ORDER WAS SUBJECTED TO APPEAL BEFORE TH E LD.CIT(A), WHO DISMISSED THE APPEAL VIDE HIS ORDER DATED 22.05 .2006. THE ASSESSEE CARRIED THE MATTER TO THE HON'BLE ITAT, WH O ALLOWED THE APPEAL OF THE ASSESSEE VIDE THEIR ORDER DATED 3 1.07.2007 BY 3 OBSERVING THAT THE ASSTT. ORDER U/S 143(3) HAD BEEN SUBSUMED UNDER THE FRESH ASSTT. ORDER FRAMED U/S 153A. THE DEPARTMENT DID NOT ACCEPT THE SAID VERDICT OF THE HON'BLE ITAT AND IT FILED AN APPEAL BEFORE THE HON'BLE ALLAHABAD HIGH COURT U /S 260 A OF THE I.T.ACT. THE HON'BLE ALLAHABAD HIGH COURT VIDE ITS ORDER DATED 25.11.2011 SET-ASIDE THE SAID ORDER OF THE HO N'BLE TRIBUNAL AND DIRECTED IT TO DECIDE THE ISSUE ON MER ITS. ACCORDINGLY, IT WAS ARGUED THAT THE ADDITIONS WHICH HAD BEEN HITHERTO MADE IN THE ASSTT, ORDER FRAMED U/S 143(3) COULD NOT ONCE AGAIN BE MADE IN THE ORDER FRAMED U/S 153A. HE ALSO SUBMITTED THAT THE FATE OF THESE ADDITIONS COULD BE DECIDED SOLELY IN THE APPEAL FILED AGAINST 143(3) ORDER AND NOT IN THE INSTANT APPEAL. 5. FROM THE ABOVE PARA FROM THE ORDER OF LEARNED CI T(A), IT IS SEEN THAT AS PER THE JUDGMENT DATED 25/11/2011, HON'BLE ALLAH ABAD HIGH COURT HAS SET ASIDE THE TRIBUNAL ORDER IN 143(3) PROCEEDINGS AND DIRECTED THE TRIBUNAL TO DECIDE THE ISSUE ON MERIT. BOTH THESE ADDITIONS OF RS.99 LAC AND RS.4.95 LAC WERE MADE IN THE PROCEEDINGS U/S 143(3) ALSO AND THEREFORE, THESE ADDITIONS CANNOT BE MADE IN THE PRESENT PROCE EDINGS U/S 153A OF THE ACT AND THEREFORE, ON THIS ISSUE, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE I.E. I.T.A. NO.352/LKW/2013. GROUND NO. 1 & 2 ARE AS UNDER: 1. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, PARTICULARLY THAT (A) THE APPELLANT COULD NOT HAVE BEEN TREATED T O BE THE PERSON SUBJECTED TO SEARCH UNDER SECTION 132(1 ); AND (B) IN ANY CASE, THE APPELLANT STOOD ASSESSED FOR THE ASSESSMENT YEAR 2002-03 AND THERE BEING NO ASSESSME NT RELATED PROCEEDINGS PENDING FOR THE SAID ASSESSMENT YEAR, THE ASSESSMENT MADE EARLIER COULD NOT BE TREA TED TO HAVE ABATED; 4 THE ASSESSING OFFICER WAS NOT VALIDLY VESTED WITH T HE JURISDICTION TO ISSUE NOTICE UNDER SECTION 153A AND MAKE SECOND ASSESSMENT IN PURSUANCE THEREOF. 2. BECAUSE VIEW WHICH IS CONTRARY TO THE PLEADING A S ABOVE, AS HAS BEEN TAKEN BY 'CIT(A)' IS WHOLLY ERRO NEOUS AND ILLEGAL TOO. 8. IT WAS SUBMITTED BY LEARNED A. R. OF THE ASSESSE E THAT THESE GROUNDS ARE NOT PRESSED. ACCORDINGLY, THESE GROUND S ARE REJECTED AS NOT PRESSED. 9. GROUND NO. 3 & 4 ARE INTER-CONNECTED, WHICH READ AS UNDER: 3. BECAUSE ON A DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT (A) THE APPELLANT HAD DULY FILED THE 'RETURN', BY STATI NG THAT THE 'RETURN' FILED EARLIER BE TREATED TO BE THE 'RE TURN' FILED IN COMPLIANCE WITH THE NOTICE UNDER SECTION 1 53A; (B) THE 'RETURN' FILED IN THE SAID MANNER, EVEN IF, THE SAME WAS BELATED, CONSTITUTED 'RETURN FILED' IN COMPLIAN CE WITH THE NOTICE UNDER SECTION 153A; (C) THE 'RETURN' SO FILED BY THE APPELLANT, HAD DULY BE EN TAKEN COGNIZANCE OF BY THE ASSESSING OFFICER; (D) AFTER THE 'RETURN' HAD BEEN FILED IN THE AFORESAID MANNER, THE APPELLANT WAS NOT SERVED WITH ANY QUESTIONNAIRE NOR ANY NOTICE UNDER SECTION 143(2); THE 'CIT(A)' SHOULD HAVE HELD THAT ACIT HAD LOST JU RISDICTION TO MAKE ASSESSMENT IN PURSUANCE OF NOTICE UNDER SECTIO N 153A AND ACCORDINGLY THE ASSESSMENT ORDER DATED 31/12/20 08 WAS VOID ABINITIO. 4. BECAUSE VARIOUS CASE LAWS AS HAVE BEEN REFERRED TO AND RELIED UPON BY THE 'C1T(A)' IN NEGATING THE APPELLA NT'S CONTENTION AS HAS BEEN REITERATED IN GROUND NO.2 HE AREINFORE ARE DISTINGUISHABLE ON FACTS, HAVING NO APPLICATION IN THE INSTANT CASE. 5 10. IT WAS SUBMITTED BY LEARNED A. R. OF THE ASSESS EE THAT PARA 8 TO 18 OF THE SYNOPSIS SUBMITTED BY HIM ARE RELEVANT FOR T HIS ISSUE AND SAME SHOULD BE CONSIDERED. AT THIS JUNCTURE, IT WAS POI NTED OUT BY THE BENCH THAT IN THESE PARAS OF SYNOPSIS, RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CAS E OF CIT VS. RAJEEV SHARMA [2011] 336 ITR 678 AND IT IS ALSO NOTED THAT THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASHOK CHADD HA VS. CIT [2011] 337 ITR 399 IS AGAINST THE ASSESSEE BUT BY THIS VERY BE NCH OF THE TRIBUNAL IN A CASE, ARGUED BY THE SAME A.R., IT WAS HELD THAT THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASHOK CHADDHA (SUPR A) IS TO BE FOLLOWED BECAUSE IT IS IN THE CONTEXT OF SECTION 153A WHEREA S THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE O F RAJEEV SHARMA (SUPRA) IS IN THE CONTEXT OF ASSESSMENT U/S 147 OF THE ACT. THEN WHY NOT THE SAME VIEW SHOULD BE TAKEN IN THE PRESENT CASE A LSO. IN REPLY, LEARNED A. R. OF THE ASSESSEE HAD NOTHING TO SAY. 11. LEARNED D. R. OF THE REVENUE SUBMITTED THAT THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASHOK CHADD HA (SUPRA) SHOULD BE FOLLOWED IN PREFERENCE TO THE JUDGMENT OF HON'BLE A LLAHABAD HIGH COURT IN THE CASE OF RAJEEV SHARMA (SUPRA) BECAUSE THE JUDGM ENT OF HON'BLE DELHI HIGH COURT IS IN THE CONTEXT OF SECTION 153A WHEREA S THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IS IN THE CONTEXT OF S ECTION 147 OF THE ACT. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF RAJEEV SHARMA (SUPRA) IS IN THE CONTEXT OF ASSESSMENT U/S 147 WHE REAS THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF ASHOK CHADDHA (SUPR A) IS IN THE CONTEXT OF ASSESSMENT U/S 153A AND IN THIS JUDGMENT, IT WAS HE LD THAT THE REQUIREMENT OF ISSUE AND SERVICE OF NOTICE U/S 143( 2) IS NOT APPLICABLE IN THE ASSESSMENT MADE IN COMPLIANCE TO NOTICE U/S 153 A. WE ALSO FIND THAT 6 IN THE CASE OF RAJEEV SHARMA (SUPRA), THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IS IN FAVOUR OF THE ASSESSEE BUT THE SAM E IS IN THE CONTEXT OF SECTION 147 OF THE ACT. WE HAVE ALREADY CONSIDERED THIS JUDGMENT IN A CASE AND HAVE DECIDED THE ISSUE AGAINST THE ASSESSE E BY FOLLOWING THE JUDGMENT OF HON'BLE DELHI HIGH COURT AND THE JUDGME NT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAJEEV SHARMA W AS NOT FOLLOWED BECAUSE THIS JUDGMENT IS IN THE CONTEXT OF SECTION 148 ASSESSMENT AND NOT ASSESSMENT U/S 153A. NO OTHER JUDGMENT HAS BEEN BR OUGHT TO OUR NOTICE BY LEARNED A. R. OF THE ASSESSEE WHICH IS IN THE FA VOUR OF THE ASSESSEE AND IS IN THE CONTEXT OF ASSESSMENT U/S 153A OF THE ACT . THEREFORE, IN THE PRESENT CASE ALSO, WE FOLLOW THE JUDGMENT OF HON'BL E DELHI HIGH COURT AND DECIDE THE ISSUE AGAINST THE ASSESSEE. ACCORDINGLY , GROUND NO. 3 & 4 OF THE ASSESSEE ARE REJECTED. 13. GROUND NO. 5 IS AS UNDER: 5. BECAUSE IN ANY CASE, NO INCRIMINATING MATERIAL H AVING BEEN FOUND DURING THE COURSE OF SEARCH & SEIZURE AC TION UNDER SECTION 132(1) THAT TOOK PLACE ON 17 TH OCTOBER, 2006, AS PER PARTICULARS GIVEN HEREIN BELOW : S L . NO. PLACES SUBJECTED TO SEARCH WARRANTS IN THE NAMES OF (I) M/S. BANARSI MISHTHAN BHANDAR (P) LTD., 26/72, BIRHANA ROAD, KANPUR 'M/S. BANARASI MISTHAN BHANDAR (P) LTD., S/SHRJ JEEVAN KUMAR AGARWAL, SMT. LALMANI AGARWAL & RAJEEV AGARWAL' (II) M/S. GRS JEWELLERS, 59/44, BIRHANA ROAD, KANPUR 'M/S. GRS JEWELLERS, JEEVAN KUMAR AGARWAL, SMT. SHAILA AGARWAL, RAJEEV AGARWAL & SANJEEV AGARWAL.' (III) 7/130, SWAROOP NAGAR, KANPUR 'M/S. BANARASI MISHTHAN BHANDAR (P) LTD., M/S. GRS JEWELLERS, JIWAN KUMAR AGARWAL, SMT. LALMANI AGARWAL, RAJEEV AGARWAL & SANJEEV AGARWAL.' 7 VARIOUS ADDITIONS AS HAVE BEEN MADE IN THE ASSESSME NT ORDER DATED 31.12.2008 (AS HAVE BEEN SUSTAINED IN TERMS O F THE APPELLATE ORDER DATED 25.02.2013 UNDER APPEAL) WERE LIABLE TO BE DELETED. 14. LEARNED A. R. OF THE ASSESSEE REITERATED THE SA ME CONTENTIONS WHICH WERE RAISED BEFORE THE CIT(A). AT THIS JUNCTURE, I T WAS POINTED OUT BY THE BENCH THAT THIS ISSUE IS COVERED AGAINST THE ASSESS EE BY THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE O F RAJ KUMAR ARORA IN INCOME TAX APPEAL NO. 156 DATED 01/07/2014. IN REP LY, LEARNED A. R. OF THE ASSESSEE HAD NOTHING TO SAY. 15. LEARNED D. R. OF THE REVENUE SUBMITTED THAT THI S ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE ALL AHABAD HIGH COURT RENDERED IN THE CASE OF RAJ KUMAR ARORA IN INCOME T AX APPEAL NO. 156 DATED 01/07/2014. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IT WAS HELD BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAJ KUMAR ARORA (SUPRA) THAT THE REASONS GIVEN BY THE TRIBUNAL THAT NO MATE RIAL WAS FOUND DURING SEARCH, CANNOT BE SUSTAINED. IT IS HELD BY HON'BLE ALLAHABAD HIGH COURT THAT THE ASSESSING OFFICER HAS THE POWER TO REASSESS THE RETURNS OF THE ASSESSEE NOT ONLY FOR THE UNDISCLOSED INCOME WHICH WAS FOUND DURING SEARCH BUT ALSO WITH REGARD TO THE MATERIAL THAT WAS AVAILABLE AT T HE TIME OF ORIGINAL ASSESSMENT. RESPECTFULLY FOLLOWING THIS JUDGMENT O F HON'BLE ALLAHABAD HIGH COURT, WE HOLD THAT THERE IS NO MERIT IN GROUN D NO. 5 AND THE SAME IS REJECTED. 17. GROUND NOS. 6 TO 9 ARE INTER-CONNECTED, WHICH R EAD AS UNDER: 6. BECAUSE THE AUTHORITIES BELOW HAVE ERR ED IN LAW AND ON FACTS IN MAKING/SUSTAINING ADDITION OF RS .26,22,482/- MADE UP OF (A) VALUE OF INDIAN MILLENNIUM DEPOSIT 8 (IMD) OF 50,000 US$ (AS WORKED OUT BY THE A.O. ON 19.06.2001 WHICH IS THE DATE OF ENDORSEMENT ON 'IMD' AND DELIVERED BY STATE BANK OF INDIA. 24,50,918 (B) UNDISCLOSED EXPENDITURE AS WORKED OUT AT THE RATE OF 7% OF ABOVE. 1 ,71,564 26,22,482 TO THE INCOME OF THE APPELLANT, ON THE GROUND THAT IDENTITY OF THE DONOR AS ALSO THE CIRCUMSTANCES IN WHICH GIFT H AVE BEEN MADE, REMAINED UNPROVED. 7. BECAUSE THE GIFT OF 'IMD' HAD BEEN EXECUTED BY THE DONOR, THROUGH STATE BANK OF INDIA, A NOMINATED AGE NCY UNDER THE SCHEME FORMULATED BY THE GOVERNMENT OF INDIA AN D THE ISSUES RAISED BY THE AUTHORITIES BELOW, WERE WHOLLY EXTRANEOUS TO THE SAID SCHEME. 8. BECAUSE THE APPELLANT ENJOYED IMMUNITY FROM ALL SUCH ENQUIRIES AS HAVE BEEN REFERRED TO BY THE AUTHORITI ES BELOW AND THE ADDITION MADE/ SUSTAINED BY THEM BEING BASED ON A WHOLLY ILLEGAL PREMISE, IS NOT SUSTAINABLE. 9. BECAUSE THE CASE LAWS AS HAVE BEEN REFERRED TO A ND RELIED UPON BY THE 'CIT(A)' IN UPHOLDING THE ADDITI ON FOR SUMS AGGREGATING RS.26,22,482/- ARE NOT APPLICABLE ON TH E FACTS OF THE PRESENT CASE AND ACCORDINGLY THE VIEW TAKEN BY HIM IS WHOLLY VITIATED. 18. IT WAS SUBMITTED BY LEARNED A. R. OF THE ASSESS EE THAT PARA 24 & 25 OF THE SYNOPSIS ARE RELEVANT FOR THIS ISSUE. HE AL SO SUBMITTED THAT AS PER THESE PARAS OF SYNOPSIS, THIS ISSUE IS COVERED IN F AVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDER ED IN THE CASE OF KANCHAN SINGH VS. CIT [2009] 221 CTR 456. 19. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 9 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRS T WE REPRODUCE PARA 24 & 25 OF THE SYNOPSIS FILED BY THE LEARNED AR OF THE ASSESSEE AS UNDER: 24. WHILE DEALING WITH ALMOST SIMILAR SCHEME EARLI ER LAUNCHED BY STATE BANK OF INDIA, WHICH WAS NAMED AS RESURGENT INDIA BOND, 'RIB' FOR SHORT THE HON'BLE A LLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS. CIT REP ORTED IN (2009] 221 CTR 0456 HELD THAT IN VIEW OF THE FACT T HAT SUCH BONDS COULD BE PURCHASED ONLY BY NRLS AGAINST THE F OREIGN CURRENCY, (AS IS THE CASE HERE) THE SOURCE OF MONEY FOR THE PURCHASE OF THE BOND BEING US $, IS OUTSIDE INDIA. THE BONDS BEING TRANSFERABLE WERE TRANSFERRED IN FAVOUR OF TH E ASSESSEE BY NON-RESIDENT. THEREFORE, NO ADDITION COULD BE MA DE IN THE HANDS OF THE DONNEE. A COPY OF THE SAID JUDGMENT IS ENCLOSED AND KIND ATTENTION OF YOUR HONOUS IS INVITED TO PAR AS 22 AND 23 THEREOF, WHICH ARE REPRODUCED HEREUNDER:- '22. THE REASONS FOR ARRIVING AT A CONCLUSION ARE A S FOLLOWS: 1. FOUR RESURGENT INDIA BONDS OF 10,000 US DOLLARS EACH WERE PURCHASED ON 1ST OCT., 2003 ON THE APPLICATION OF SRI K.C. KAPADIA, WHICH IS ESTABLISH ED FROM THE APPLICATION SENT BY THE CHIEF MANAGER, SBI , NRI BRANCH, MUMBAI. 2. SUCH BONDS COULD BE PURCHASED ONLY BY NRI AGAINST THE FOREIGN CURRENCY. ADMITTEDLY, THE BONDS WERE PURCHASED AGAINST US DOLLARS. THUS, THE SOURCE OF THE MONEY FOR THE PURCHASE OF THE BOND, BEING US DOLLARS IS OUTSIDE INDIA. 3. THE BONDS REVEAL THAT THEY WERE TRANSFERABLE AND, ACCORDINGLY, THEY WERE TRANSFERRED IN FAVOUR OF THE ASSESSEE BY SRI K.C. KAPADIA. 4. AS A RESULT OF TRANSFERS OF SUCH BONDS IN FAVOUR OF THE ASSESSEE, THE ASSESSEE RECEIVED THE MATURITY AMOUNT FROM THE SBI AND CREDITED IN HER ACCOUNT. LETTER OF THE CHIEF MANAGER, SBI, NRI BRANCH, MUMBAI, DT. 28TH FEB., 2006 CONFIRMS THE TRANSFERS BY WAY OF GIFT TO THE ASSESSEE BY SRI K.C. KAPADIA. 10 5. UNDISPUTEDLY, IN PURCHASING THE FOUR BONDS THE INVESTMENTS WERE MADE ON 1ST OCT., 1998 AND NOT IN THE YEAR UNDER CONSIDERATION AND IN THE YEAR UNDER CONSIDERATION, NAMELY, IN THE ASST. YR. 2004-05 ONL Y THE MATURITY AMOUNTS OF THE BOND WERE RECEIVED. 6. THUS, SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED, THE SOURCE AND NATURE OF DEPOSIT ARE FUL LY ESTABLISHED AND THE QUERY WITH REGARD TO THE INVESTMENT MADE IN PURCHASING THE BONDS COULD BE MADE ONLY IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE ASST. YR. 1999-2000 AND NOT IN THE YEAR UNDER CONSIDERATION. 7. AFTER THE AMENDMENT IN SECTION 5(IIIE) OF THE GT AC T BY THE FINANCE (NO.2) ACT OF 1991, GIFT COULD BE MADE TO THE PERSON OTHER THAN RELATIVES ALSO. THE OMISSION OF THE WORD 'RELATIVE' IN THE SECTION SHOW S THAT THE AMENDMENT WAS MADE TO PROMOTE THE GIFT BY NRI TO THE PERSONS OTHER THAN RELATIVES TO ENCOURAGE INFLOW OF FOREIGN MONEY IN INDIA THROUGH GIFTS. 8. SRI K.C. KAPADIA, BY CONFIRMATORY LETTER DT. 8TH FE B., 2006 DULY NOTARIZED BY NOTARY PUBLIC OF NEW JERSEY, HAS CONFIRMED THE GIFT OF FOUR SUCH BONDS. THE LETTERS WRITTEN BY THE ASSESSING AUTHORITY WERE RETURNED UNSERVED WITH THE REMARK 'NOT DELIVERABLE AS ADDRESSED UNABLE TO FORWARD' DOES NOT MEAN THAT SRI K.C. KAPADIA, WAS NOT TRACEABLE AND WAS NOT IN EXISTENCE. THERE MAY BE SO MANY REASONS THAT THE LETTER COULD NOT BE DELIVERED. MERELY BECAUSE THE ASSESSEE COULD NOT TELL ANY OTHER ADDRESS OF SRI K. C. KAPADIA, IT CANNOT BE INFERRED THAT SRI K.C. KAPADI A WAS/IS NOT IN EXISTENCE AND HIS IDENTITY IS DOUBTFU L. 9. THE APPLICATION MOVED BY SRI K.C. KAPADIA FOR THE PURCHASE OF FOUR BONDS WITH THE SBI, THE ISSUE OF T HE BONDS IN THE NAME OF SRI K.C. KAPADIA AGAINST US DOLLARS IS BY ITSELF AN EVIDENCE TO PROOF THE IDENT ITY OF SRI K.C. KAPADIA. 23.IN THE FACTS AND CIRCUMSTANCES AND THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW THAT THERE IS NO 11 REASON TO DOUBT THE GENUINENESS OF THE GIFT BY SRI K.C. KAPADIA TO THE ASSESSEE. IN ANY VIEW OF THE MATTER, THE ASSESSEE WAS ABLE TO ESTABLISH THE NATURE AND SOURCE OF THE MONEY. THE NATURE AND SOURCE OF THE MONEY FOUND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WERE THE MATURITY AMOUNTS OF THE FOUR BONDS WHICH WERE PURCHASED BY SRI K.C. KAPADIA ON 1ST OCT., 1998. THEREFORE, SO FAR AS YEA R UNDER CONSIDERATION IS CONCERNED, THE NATURE AND SOURCE ARE FULLY ESTABLISHED. THERE IS NO EVIDENCE TO SHOW THAT THE DEPOSIT IN THE BANK ACCOUNT WAS THE INCOME FROM OTHER SOURCES OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION.' COPY OF SAID JUDGMENT IS ENCLOSED AND MARKED AS ANN EXURE- II HERETO. 25. FROM A PERUSAL OF THE SAID CASE LAW, IT WILL BE SEEN THAT CASE THERE IS A STRIKING SIMILARITY OF FACTS AS HAV E BEEN DISCUSSED IN PARA 21, 22 & 23 ABOVE. 21 AS PER THE ABOVE PARAS, IT IS SEEN THAT THIS ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE ALLAHABA D HIGH COURT RENDERED IN THE CASE OF KANCHAN SINGH (SUPRA). IN THAT CASE ALSO, THE ISSUE IN DISPUTE BEFORE THE HIGH COURT WAS REGARDING RESURGE NT INDIA BOND OF 10,000 US$ EACH WHICH WERE PURCHASED BY SHRI K. C. KAPADIA ON 1 ST OCTOBER, 1998 AND WERE GIFTED BY HIM TO THE ASSESSE E KANCHAN SINGH ON 28/02/2006. THE ASSESSMENT YEAR INVOLVED BEFORE HO N'BLE ALLAHABAD HIGH COURT WAS 2004-05. UNDER THESE FACTS, IT WAS HELD BY HON'BLE ALLAHABAD HIGH COURT THAT THERE IS NO REASON TO DOUBT THE GEN UINENESS OF GIFT BY SHRI K. C. KAPADIA TO THE ASSESSEE AND THEREFORE, THE AS SESSEE WAS ABLE TO ESTABLISH THE NATURE AND SOURCE OF THE MONEY BECAUS E THE SAME WERE THE MATURITY PROCEEDS OF FOUR BONDS PURCHASED BY SHRI K . C. KAPADIA ON 1 ST OCTOBER 1998 AND THEREFORE, NO ADDITION CAN BE MADE IN ASSESSMENT YEAR 2004-05. IN THE PRESENT CASE ALSO, INDIA MILLENNIU M BOND OF US$ 50,000 WERE GIFTED BY JAYESH ARVIND BHAI PATEL OF DUBAI TO THE ASSESSEE AS GIFT LETTER DATED 18/06/2001. THIS IMD BOND CERTIFICATE WAS ISSUED BY SBI ON 12 05/01/2001 IN US$. THIS DATE FALLS IN PREVIOUS YEA R 2000-2001 RELEVANT TO ASSESSMENT YEAR 2001-02 AND THEREFORE, AS PER THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT CITED BY LEARNED A. R. OF THE ASSESSEE, NO ADDITION CAN BE MADE IN THE PRESENT ASSESSMENT YEAR BEING AS SESSMENT YEAR 2002- 03. HENCE, RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, THIS ADDITION REGARDING INDIA MILLENNIUM BON D IS DELETED AND AS A RESULT THE SECOND ADDITION OF RS.17,564/- BEING ALL EGED UNDISCLOSED EXPENDITURE OF 7% IN RESPECT OF INDIA MILLENNIUM B OND OF 50,000 US$ EQUAL TO RS.24,50,918/- IS ALSO DELETED. ACCORDING LY GROUND NO. 6 TO 9 ARE ALLOWED. 22. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:17/11/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR