Shri Phoolchand Agrawal, Indore V. The Assistant Commissioner of Income Tax 3(1), Indore

ITA 372/IND/2010

• Counselvise Citation: 37222714 RSA 2010
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 11-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Gift; Depreciation; Additional evidence
• Section: 68; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABPTA5595Q I.T.A.NO S. 372 / IND /20 06 A.Y S . : 2004 - 05 SHRI PHOOLCHAND AGRAWAL, ACIT, 3(1), DEWAS NAKA, A.B.ROAD, VS I NDORE. INDORE. APPELLANT RESPONDENT I.T.A.NOS. 381/IND/2006 A.YS. : 2004 - 05 ACIT, 3(1), SHRI PHOOLCHAND AGRAWAL, INDORE. VS DEWAS NAKA, A.B.ROAD, INDORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI SUBHASH CHAND JAIN, C. A. RESPO NDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 20.03 .2011 DATE OF PRONOUNCEMENT : 26 . 03 .201 2 O R D E R PER R. C. SHARMA, A.M. -: 2: - 2 THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND REVENUE AGAINST THE ORDER OF CIT(A) DATED 12.3.201 0 FOR THE ASSESSMENT YEAR 2004-05. 2. GROUNDS TAKEN BY THE ASSESSEE IN I.T.A.NO. 372/IND/2010 READS AS UNDER : 1. ON THE BASIS OF FACT & RECORDS LD. CIT(A) INDORE HA S ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 2,45,191/- OF TRUCK PLYING LOSS ARISES BY VIRTUE OF TRUCK DEPRECIATION WHICH WAS EXCLUSIVELY RELATED TO ASSESSEE BUSINESS. MOREOVER, LD. CIT(A) WAS NOT ASKED TO FILE DETAIL AND ADVERSE OBSERVATION BY CIT(A) IS ALSO NOT BASED ON FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) INDORE HAS ERRED IN CONFIRMING THE DISALLOWANCE OF TELEPHONE EXPENSES, VEHICLE RUNNING AND MAINTENANCE EXPENSES AND TRAVELLING EXPENSES WHICH WERE INCURRED FOR THE PURPOSE OF BUSINESS AND SAME WERE JUSTIFIED KEEPING IN VIEW OF REASONABLENESS AND BUSINESS EXIGENCY OF THE ASSESSEE. -: 3: - 3 3. GROUNDS TAKEN BY THE REVENUE IN I.T.A.NO. 381/IND/2010 READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADDITION MADE U/S 68 OF THE INCOME-TAX ACT, 1961, IN RESPECT OF GIFT CLAIMED TO HAVE BEEN RECEIVED IN THE FORM OF RIB BONDS FROM AN NRI WITHOUT APPRECIATING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT, (214 ITR 801) AND CIT VS. P. MOHAN KALA & OTHERS, (291 ITR 278) THAT APPARENT IS NOT ALWAYS REAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADDITION MADE U/S 68 OF THE INCOME-TAX ACT, 1961, IN RESPECT OF THE CREDIT SHOWN IN THE NAME OF M/S. RANJEET SECURITIES LIMITED. WITHOUT APPRECIATING TH E FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN THE ORDER. -: 4: - 4 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS OF THE CASE ARE THAT THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF TRANSPORTATION THROUGH HIS OWN T RUCKS AND TRUCKS ARRANGED FROM MARKET AND FILED RETURN OF INC OME DECLARING TOTAL INCOME AT RS. 5,53,820/- ON 1.11.04 . THE RETURN WAS TAKEN UNDER SCRUTINY ASSESSMENT. AN ADDI TION OF RS. 13,39,252/- WAS MADE IN RESPECT OF GIFT RECEIVE D BY THE ASSESSEE THROUGH RESURGENT INDIA BOND OF US $ 10,00 0 EACH. THE SAID BOUNDS WERE GIFTED BY SHRI HARISH BATRA SO N OF ASSESSEES FATHERS FRIEND. THESE BONDS WERE ISSUED BY S.B.I. TO SHRI HARISH BATRA ON 31.10.1998 IN TERMS OF US $ AN D THE SAME WERE GIFTED TO THE ASSESSEE ON 6.6.2003. THE A MOUNT SO RECEIVED WAS CREDITED BY THE ASSESSEE IN ITS BALANC E SHEET. THE ASSESSING OFFICER DID NOT ACCEPT THE GENUINENESS OF THE GIFT TRANSACTIONS ON THE PLEA THAT THE ASSESSEE IS NOT R ELATED TO THE DONOR AND THAT THE ASSESSEE DOES NOT HAVE ANY DOCUM ENTARY EVIDENCE TO PROVE LOVE AND AFFECTION WITH THE DONOR . AS PER THE DISCUSSION MADE AT PAGE 2 & 3 OF ASSESSMENT ORDER, THE ASSESSING OFFICER DISBELIEVED GENUINENESS OF GIFT A ND ADDED THE -: 5: - 5 SAME IN ASSESSEES INCOME. BY THE IMPUGNED ORDER, T HE CIT(A) DELETED THE ADDITION AFTER CALLING FOR THE REMAND R EPORT. FOLLOWING WAS THE PRECISE OBSERVATION OF THE CIT(A) ON THIS ISSUE :- 4.1 COMING TO THE MAIN ISSUE RAISED IN RESPECT OF WHICH THE APPELLANT HAS RAISED GROUND NO.L TO 4 AND THE ADDITIONAL GROUNDS, TAXABILITY OF GIFT RECEIVED BY WAY OF RIB WITH US $ 20,000, IN LIEU OF REDEMPTION THEREOF THE APPELLANT RECEIVED AN AMOUNT OF RS.13,39,252/- WHICH WAS CREDITED TO CAPITAL ACCOUNT AS FRESH CAPITAL. THE AO HAS DISCUSSED THIS ISSUE ON PAGE 2 TO 8 OF THE ASSESSMENT ORDER, WHEREIN THE AO HAS RECORDED HIS FINDINGS AS TO WHY SUCH GIFT WAS NOT A GENUINE GIFT. THE CRUX OF THE FINDINGS ARE THAT THE APPELLANT WAS NOT RELATED TO THE DONOR AND NEVER RECEIVED SUCH HUGE SUM IN GIFTS NOR GAVE SUCH A SUM IN GIFT TO HIS CLOSE RELATIVES AND THE APPELLANT DID NOT HAVE ANY DOCUMENTARY EVIDENCES IN HIS POSSESSION TO PROVE LOVE AND AFFECTION WITH THE DONOR AND VICE VERSA. THE AO -: 6: - 6 FURTHER HELD THAT THOUGH THE DONOR WAS CLAIMED TO BE THE SON OF SHRI MANUBHAI, A FRIEND OF LATE FATHER OF THE APPELLANT, WITH WHOM THE APPELLANT HAD ONLY ONCE MET IN HIS LIFE AND THERE WERE NO DOCUMENTARY EVIDENCES TO SUPPORT THE EXISTENCE OF SHRI MANUBHAI I.E, FATHER OF THE DONOR SHRI HARISH BATRA. THE AO HAS FURTHER NOTED THAT THE APPELLANT WAS NOT AWARE OF THE CURRENT ADDRESS AND PHONE NUMBER AND MOTHER'S NAME OF THE DONOR AS WELL THE ADDRESS OF THE RELATIVE OF THE DONOR PRESENTLY RESIDING IN INDIA AND THE APPELLANT WAS NOT EVEN HAVING THE PROOF OF RECEIPT OF RIB THROUGH POST. THE AO ALSO LASTLY HELD THAT THE APPELLANT COULD NOT ESTABLISH THE CLAIM OF OLD OBLIGATIONS OF HIS FATHER ON THE DONOR SHRI MANUBHAI. THE ASSESSING OFFICER HAS THEN DISCUSSED THE ISSUE OF WIDESPREAD MALICE OF HAVALA TRANSACTIONS CONVERTING BLACK MONEY INTO WHITE MONEY AND REFERRING TO THE AMENDMENT MADE IN PROVISION OF SECTION 56 OF FINANCE ACT NO.(2), ACT 2006, HON'BLE FINANCE MINISTERS -: 7: - 7 SPEECH AND JUDICIAL DECISIONS AS REFERRED ON PAGE 8 CONCLUDED THAT THE AMOUNT OF RS. 14 LAKH WAS LIABLE TO BE ADDED AS UNEXPLAINED U/S 68 OF THE INCOME-TAX ACT. 4.1.1 THE AO IN HIS REPORT DATED 22.2.10 HAS BROADLY REITERATED THE STAND TAKEN IN THE ASSESSMENT ORDER AND HAS BRIEFLY NARRATED THE ASSERTIONS MADE IN THE AFFIDAVIT FILED BY THE DONOR AND HAS FURTHER STATED THAT THE AFFIDAVIT DOES NOT ESTABLISH THAT THE TRANSACTION OF GIFT WAS GENUINE AND HE HAS FURTHER STATED THAT IN THE AFFIDAVIT, THE DONOR HAS MERELY CLAIMED THAT THE APPELLANT WAS KNOWN TO HIM AND GIFT WAS GIVEN TO HIM WITHOUT FURNISHING DETAILS I EVIDENCES TO ESTABLISH HIS (DONOR) CREDIT WORTHINESS TO BE GIVEN TO THE APPELLANT. THE ADDL.CIT IN THE FORWARDING REPORT HAS MAINTAINED THAT THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH GUPTA V, CUT 221 CTR 456 (ALL.) WAS DISTINGUISHABLE FROM THE CASE OF THE APPELLANT AS -: 8: - 8 IN THAT CASE, THE INDIAN ADDRESS OF THE NRI WAS PROVIDED WHEREAS IN THE PRESENT CASE, INDIAN ADDRESS OF THE NRI HAS NOT BEEN PROVIDED. IT HAS BEEN FURTHER STATED THAT THE AO MAY BE AUTHORIZED TO VERIFY THE VERACITY OF THE AFFIDAVIT FILED BY THE APPELLANT AND ALSO SOURCE AND CREDIT WORTHINESS OF THE DONOR. THEN, THE ADDL.CIT HAS PROCEEDED FURTHER TO REFER TO THE VARIOUS JUDICIAL DECISIONS IN RESPECT OF NRI GIFTS AND HAS INCORPORATED EXTRACTS FROM JUDGEMENTS TO RE- INFORCE THE AO'S STAND ON THE ISSUE. 4.1.2 THE APPELLANT IN DETAILED WRITTEN SUBMISSIONS FILED HAS EMPHASIZED THAT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE DONOR HAS BEEN ESTABLISHED AND EVEN THE DOUBT ON THE GIFTS AND RIB WAS ILLEGAL. HERE, IT WILL BE APPROPRIATE TO EXTRACT THE RELEVANT PORTION OF WRITTEN SUBMISSIONS EVEN AT THE COST OF REPETITION. 7. I WOULD ALSO LIKE TO STATE THAT I HAVE ALSO DREW TH E -: 9: - 9 ATTENTION OF THE LEARNED AO TO THE TERMS AND CONDIT ION OF BONDS ON WHICH BONDS WAS OFFERED BY THE STATE BANK OF INDIA TO NON RESIDENT INDIANS AND APPROVED THE TAX TREATMENT READ AS UNDER: 'TAX TREATMENT' 'INCOME ON THE RIBS WILL BE EXEMPT IN THE HANDS OF THE SUBSCRIBER FROM INDIAN INCOME TAX. THE RIBS WILL A LSO BE FREE FROM WEALTH AX AND GIFT TAX IN ID. THE TAX CONCESSION WILL BE AVAILABLE TO THE DONEES AND THE TRANSFEREE ALSO. THE TAX CONCESSION WILL BE AVAILA BLE TILL THE MATURITY OF RIB TO NRI HOLDERS/DONEES/TRANSFER EES IF THEY RETURN TO INDIA BEFORE THE MATURITY OF RIBS AN D ALSO TO RESIDENT DONEES. IN CASE OF PREMATURE ENCASHME NT OF RIBS IN MON-REPATRIABLE INDIAN REPATRIABLE INDIAN RUPEES BY HOLDERS/DONEES/SURVIVORS, THE PROCEEDS IN THE HANDS OF THE HOLDERS/DONEES/SURVIVORS WILL BE FREE FROM ANY TAX IN INDIA.' 8. FURTHER ALSO CLARIFIED THAT LEARNED AD HAS MADE -: 10: - 10 THE ADDITION &14.00 LAC ON ACCOUNT OF UNGENUINE GIF T OF RIB BOND BUT RS 14.00 LAC. WAS NOT RECEIVED AS RIB GIFT TO THE ASSESSEE IN DURING THE YEAR OF APPE AL ASSESSMENT YEAR. IN FACT ASSESSEE HAD INTRODUCED &.14.00 LAC AS CAPITAL IN HIS PROPRIETARY CONCERN O UT OF &.133925.01- RECEIVED FROM MATURITY OF RIB BOND ( WHICH HE ACQUIRE IN GIFT FROM SHRI HARISH BATRA AND SAME WERE CREDITED IN THE PERSONAL BANK SAVING ACCOUNT AND &.607501- INTRODUCED OUT OF INCOME TAX REFUND WHICH WERE ALSO LYING IN THE PERSONAL SAVIN G BANK ACCOUNT OF EARLIER YEAR THE SAID BANK BALANCE WAS ALSO DULY SHOWN IN THE BALANCE SHEET ENCLOSED WITH RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003- 2004 & 2004-2005. HOWEVER SAME FACT CAN ALSO VERIFIED FROM THE ALREADY SUBMITTED COPY OF SAVING BANK PASS BOOK & RETURN OF INCOME FILED WITH INCOME TAX RETURN. THUS AS PER ABOVE DISCUSSION KINDLY BE CONSIDERED AMOUNT OF GIFT OF RIB &.13392501- IN PLACE OF &.14.00 LAC. 9. MOREOVER, DONOR WAS ALSO VISITED IN INDIA -: 11: - 11 BUT DUE TO HIS SHORT VISIT HE LEFT INDIA AFTER EXECUTING ONE AFFIDAVIT ON 02/01/2009 BEFORE NOTARY PUBLIC MUMBAI REGARDING CONFIRMATION OF GIFT MADE TO APPELLANT AND THE SAID AFFIDAVIT WAS REMITTED TO ASSESSEE FROM USA WHICH RECEIVED TO APPELLANT ON 20/01/2009 BY AIRMAIL, FOR SAID PROOF I AM ENCLOSING THE PHYSICAL COPY OF ENVELOP, EXECUTED AFFIDAVIT ALONG WITH COPY OF PASSPORT FOR YOUR READY REFERENCE. 10. I HEREBY FURTHER STATED THAT THE APPELLANT HAS ESTABLISHED THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE DONOR EVEN THEN DOUBT ON THE GIFTS OF RIB IS ILLEGAL. THUS BY VIRTUE FOLLOWING REASONS BE ACCEPTED DECLARED THE GENUINE GIFT OF THE ASSESSEE. IX) TWO RESURGENT INDIA BONDS OF 10,000 US DOLLARS EACH WERE PURCHASED ON 31ST OCTOBER 1998 ON THE APPLICATION OF SHRI: HARISH BATRA, WHICH IS ESTABLISHED FROM THE RIB CERTIFICATES ISSUED BY THE CHAIRMAN AND -: 12: - 12 MANAGING DIRECTOR, SBI, NRI BRANCH, MUMBAI. X) 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. XI) THE BONDS REVEAL THAT THEY TRANSFERABLE AND, ACCORDINGLY THEY WERE TRANSFERRED IN FAVOUR OF THE ASSESSEE BY SHRI HARISH BATRA XII) AS A RESULT OF TRANSFER OF SUCH BONDS IN FAVOUR OF THE ASSESSEE THE ASSESSEE RECEIVED THE MATURITY AMOUNT FROM THE SBI AND CREDITED IN HIS ACCOUNT. LETTER OF THE CHIEF MANAGER, SBI, NRI BRANCH, MUMBAI DATED 27'/. JUNE-2003 CONFIRMS THE TRANSFER BY WAY OF GIFT TO THE ASSESSEE BY HARISH BATRA IS ALREADY FILED IN EARLIER -: 13: - 13 HEARING. XIII) UNDISPUTEDLY, IN PURCHASING THE TWO BONDS THE INVESTMENTS WERE MADE ON 31ST OCTOBER , 1998 AND NOT IN THE YEAR UNDER CONSIDERATION AND IN THE YEAR UNDER CONSIDERATION. NAMELY IN THE ASSESSMENT YEAR 2004-2005 ONLY THE MATURITY AMOUNTS OF THE BOND WERE RECEIVED. XIV) THUS SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED, THE SOURCE AND NATURE OF DEPOSIT ARE FU LLY ESTABLISHED AND THE QUERY WITH REGARD TO THE INVESTMENTS MADE IN PURCHASING THE BONDS COULD BE MADE ONLY IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE ASSESSMENT YEAR 1999-2000 AND NOT IN THE YEAR UNDER CONSIDERATION. XV) AFTER AMENDMENT IN S.5(IIIE) OF THE GT ACT BY THE FINANCE (NO.2) ACT OF 1991, GIFT COULD BE MADE TO THE PERSON OTHER THAN RELEVANT ALSO. THE OMISSION OF TH E -: 14: - 14 WORD RELATIVE IN THE SECTION SHOWS THAT THE AMENDMENT WAS MADE TO PROMOTE THE GIFT BY NRI TO THE PERSONS OTHER THAN RELATIVES TO ENCOURAGE INFLO W OF FOREIGN MONEY IN INDIA THROUGH GIFTS. XVI) SHRI HARISH BATRA BY CONFIRMATORY LETTER DATED 6/ H JUNE, 2003 DULY CONFIRMED THE DECLARATION OF GIFT O F RIB AND HE ALSO FURTHER CONFIRM ON AFFIDAVITS WHICH IS NOTARIZED BY NOTARY PUBLIC OF MUMBAI (INDIA) REGARDING OF TWO SUCH BONDS. SHRI HARISH BATRA HAS VISITED TO INDIA BUT HE COULD NOT COME IN YOUR OFFI CE DUE TO HIS URGENT WORK IN USA, HENCE HE EXECUTED ON E AFFIDAVIT IN MUMBAI BUT AND SAME WAS SENT FROM USA DUE TO RETURN BACK TO USA BAY HIS URGENT WORK. XVII) THE RIB CERTIFICATE ISSUED BY SBI IN THE NAME OF SH RI HARISH BATRA AGAINST US DOLLARS IS BY ITSELF AN EVIDENCE TO PROOF THE IDENTITY OF SHRI HARISH BATRA . 11. BY VIRTUE OF ABOVE FACTS THERE IS NO ROOM OF DOUBT REGARDING NON GENUINENESS OF THE GIFT MADE BY SHRI HARISH BATRA TO THE ASSESSEE. IN ANY VIEW OF THE -: 15: - 15 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 WAS THE MATURITY OF THE TWO BONDS WHICH WERE PURCHASED BY SHRI HARISH BATRA ON 31 ST OCTOBER, 1998. THEREFORE SO FAR AS YEAR UNDER CONSIDERATION IS CONCERNED THE NATURE AND SOURCE ARE FULLY ESTABLISHED. THERE IS NO EVIDENCE BROUGHT OUT BY THE AD WHICH SHOW THAT THE DEPOSIT IN THE BANK ACCOUNT IS INCOME OF THE ASSESSEE. HENCE IT IS REQUESTED THAT KINDLY BE DELETED WHOLE ADDITION OF THE ASSESSEE ON ACCOUNT OF TWO RIB BOND YOUR APPELLANT IS RELIED ON THE UNDER NOTED JUDGMENT H KANCHAN SINGH V/S CIT (2009) 221 CTR 456(ALL). ' 8. 4.1.3 FURTHER STILL, IN THE REJOINDER TO THE AC!'S REPORT ON ADDITIONAL EVIDENCES, APART FROM REITERATING THE EARLIER SUBMISSION, THE APPELLANT -: 16: - 16 HAS EXTENSIVELY EXTRACTED THE ORDER OF CIT(A)-I IN THE CASE OF SHRI DARPAN ANAND IN IT NO.660/06-07 DATED 20.2.09 WHEREIN THE SAME ISSUE OF GIFT OF RIB WAS EXAMINED AND FINDINGS WERE RECORDED AS UNDER : 'IN VIEW OF THE AVAILABLE PASSPORT AND THE FACT THAT STATE BANK OF INDIA HAD ALLOTTED RESURGENT INDIA BONDS TO SHRI HARISH WADHWA IN THE -YEAR 1998 AGAINST THE FOREIGN CURRENCY, THE EXISTENCE AND THE CREDIT WORTHINESS OF SHRI HARISH WADHWA CANNOT BE DOUBTED. THE LOVE AND AFFECTION FOR GIVING THE GIFT NEED NOT EMANATE FROM THE FRIENDSHIP OR RELATIONSHIP ONLY. PRIOR TO AMENDMENT BY FINANCE ACT (NO.2) OF 1991, NRI COULD MAKE GIFT OF BOND ONLY TO RELATIVES BUT BY THE FINANCE ACT (NO.2) OF 1991, THIS RESTRICTION HAS BEEN TAKEN AWAY. THE OMISSION OF THE WORD 'RELATIVE' IN THE SECTION 5(IIIE) OF THE G T ACT SHOWS THAT THE -: 17: - 17 AMENDMENT WAS MADE TO PROMOTE THE GIFT BY NRI TO THE PERSON OTHER THAN RELATIVES TO ENCOURAGE IN FLOW OF FOREIGN MONEY IN INDIA THROUGH GIFT. THUS IT WAS NOT NECESSARY THAT NRI COULD MAKE GIFT OF BONDS TO THE RELATIVES ONLY. THERE IS NO EVIDENCE TO SUPPORT THE AO'S VIEW THAT EQUIVALENT AMOUNT HAD PASSED ON ASSESSEE TO SHRI HARISH WADHWA. HAVING CONSIDERED THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DIRECT DECISION AVAILABLE ON THE ISSUE IN THE CASE OF KANCHAN SINGH V. CIT (2009) 221 CTR (ALL) 456, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN TREATING THE MATURITY AMOUNT OF RS. 65,14,276/ - OF THE TWO RESURGENT INDIA BONDS AS AN INCOME OF THE APPELLANT FROM OTHER SOURCES. ACCORDINGLY THE ADDITION OF RS. 65,14,276/- ON THIS ISSUE IS DELETED.' -: 18: - 18 4.1.4 THE CASE MADE OUT BY THE AO AT THE ASSESSMENT STAGE OR IN THE REMAND REPORT THAT CREDIT WORTHINESS OF THE DONOR WAS NOT ESTABLISHED IS FOUND TO BE DEVOID OF ANY MERIT WHATSOEVER. THE VERY FACT THAT THE DONOR ACQUIRED SUCH RIB BONDS IN OWN NAME IN 1998 WHICH WERE SUBJECT MATTER OF THE GIFT TO THE APPELLANT AMPLY ESTABLISHES THE IDENTITY AND CREDIT WORTHINESS OF THE DONOR. SO ALSO, IN THE FACE OF NOTARIZED AFFIDAVIT AND OTHER SUPPORTING DOCUMENTS BEING PHOTOCOPY OF PASSPORT ETC THERE IS ABSOLUTELY NO REASON TO DOUBT THE VERACITY OF THE AFFIDAVIT FILED BY THE APPELLANT BY WAY OF ADDITIONAL EVIDENCES. FURTHER STILL, THE CONTENTION OF ADDL. CIT THAT THE APPELLANT'S CASE WAS DISTINGUISHABLE TO THE FACTS OF THE CASE BEFORE HON'BLE ALLAHABAD HIGH COURT IN AS MUCH AS ADDRESS OF NRI IN INDIA WAS AVAILABLE AND WAS NOT SO PROVIDED IN CASE OF THE APPELLANT ALSO DO NOT HOLD GOOD AS THE INDIAN ADDRESS OF THE DONOR AT MUMBAI IS VERY MUCH INDICATED IN THE AFFIDAVIT FILED WHICH IS NOW FURNISHED. FURTHER, SUCH BONDS WERE ACQUIRED AS STATED BY THE DEPONENT DONOR FROM SBI, NARIMAN -: 19: - 19 POINT BRANCH, MUMBAI ONLY. THE OTHER ASSERTIONS MADE IN AFFIDAVIT ALSO IN THE LEAST PRIMA-FACIE ESTABLISH THE CONTINUED RELATIONSHIP BETWEEN THE DONOR AND THE APPELLANT. THUS, IN THESE FACTS NEITHER THE IDENTITY OF THE DONOR CAN BE DOUBTED NOR HIS CREDITWORTHINESS. ONLY ISSUE WHICH REMAINS TO BE EXAMINED IS THE GENUINENESS OF SUCH GIFT TRANSACTION. HON'BLE ALLAHABAD HIGH COURT N THE CASE OF KANCHAN SINGH (SUPRA) HAS CATEGORICALLY HELD IN PARA 22 OF ITS ORDER THE REASONS FOR DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE SMT. KANCHAN SINGH AS HAS BEEN EXTRACTED BY THE APPELLANT IN HIS WRITTEN SUBMISSIONS AND HENCE THE FACTS BEING MATERIALLY THE SAME AS NOTICED IN THE CASE OF THE AFORESAID JUDGMENT BEFORE HON'BLE ALLAHABAD HIGH COURT, THERE IS NO ESCAPE FROM THE CONCLUSIONS THAT THE SAID DECISION BEING THE ONLY AVAILABLE DECISION ON THE ISSUE OF GIFT OF RIB HAS TO BE GIVEN DUE RESPECT WHICH IT DESERVES. HENCE FOLLOWING THE SAID JUDGEMENT AND ON CONSIDERATION OF OTHER AVAILABLE FACTS ON RECORD, THE ADDITION MADE BY ASSESSING OFFICER AT RS. 14 LAKHS CANNOT BE SUSTAINED AND IS ACCORDINGLY DIRECTED TO BE DELETED. -: 20: - 20 5. AGAINST THE ABOVE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT AS PER THE TERMS OF ISSUE OF RESUR GENT BOND, THE SAME IS EXEMPT IN THE HANDS OF THE SUB SCRIBER OF INDIAN INCOME TAX ACT. IT IS ALSO FREE FROM WEALTH TAX AND GIFT TAX ACT. TAX CONCESSION IS ALSO AVAILABLE TO THE DONEES AND THE TRANSFEREES ALSO TILL MATURITY OF RBI TO NRI HOLDERS/DONEES/TRANSFEREES IF THEY RETURN THE INDIA N BEFORE MATURITY OF RBI BOND AND ALSO TO, RESIDENT DONATION S. AS PER THE FINDINGS RECORDED BY THE LD.CIT(A) AS NARRATED ABOVE, IDENTITY AND GENUINENESS AND CREDITWORTHINESS OF TH E DONOR WAS ESTABLISHED AS PER THE MATERIALS PLACED ON RECO RD. THE FINDINGS SO RECORDED BY THE LD.CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD. SENIOR DR BY BRINING ANY PO SITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 8. IN THE APPEAL FILED BY THE ASSESSEE, DISALLOWANCE O F RS. 2,45,191/- ON TRUCK PLYING LOSS WAS CONTESTED. -: 21: - 21 9. WE FOUND THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF TRUCK PLYING. AS PER THE ACCOUNT PLACED ON RECOR D, THERE WAS LOSS OF RS. 2,45,191/- ON ACCOUNT OF TRUCK PLYING B USINESS. THE MAJOR EXPENDITURE CLAIMED PERTAINS TO DEPRECIAT ION AMOUNTING TO RS. 2,60,454/- AND TRUCK RUNNING EXPEN DITURE OF RS. 1,06,265/-. HOWEVER, ON THE OTHER HAND, EARN ING FROM TRUCK WAS RS. 1,65,575/-, THE ASSESSING OFFICER HAS DECLINED TO ACCEPT LOSS STATING THAT IN THE ABSENCE OF BOOKS OF ACCOUNT, IT IS NOT POSSIBLE TO ACCEPT LOSS ON TRUCK PLYING. HOWEVER, FROM THE ASSESSMENT ORDER OF THE ASSESSING OFFICER, WE F OUND THAT THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT. AT PAGE 11 OF THE ASSESSMENT ORDER, WHILE DISALLOWING TELEPHONE AND T RUNK-CALL EXPENSES, THE ASSESSING OFFICER HAS STATED THAT ON VERIFICATION OF BOOKS OF ACCOUNT, IT IS FOUND THAT THE ASSESSEE DOES NOT MAINTAIN ANY CALL REGISTER OR OTHER MECHANISM TO CO NTROL THE TELEPHONE EXPENSES. THEREFORE, THE AMOUNT EQUAL TO 1/5 TH OF ON ACCOUNT OF TELEPHONE AND TRUNK CALL WAS DISALLOW ED. IT PROVES THAT THE ASSESSEE HAS MAINTAINED BOOKS OF AC COUNT. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTA NCES, WE DIRECT THE ASSESSING OFFICER TO RESTRICT DISALLOWAN CE OF -: 22: - 22 EXPENDITURE CLAIMED UNDER THE HEAD VEHICLE RUNNING EXPENSE TO THE EXTENT OF 1/3 RD OF EXPENSES, CLAIM OF DEPRECIATION IS TO BE ALLOWED IN FULL AS PER LAW. LOSS FROM TRUCK PLYI NG IS TO BE RECOMPUTED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED IN PA RT. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2012. SD/ - SD/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDIC IAL MEMBER ACCOUNTANT MEMBER DATED :26 TH MARCH, 2011. CPU* 2126