SHAILESH G. SHETH, MUMBAI V. ACIT 13(2), MUMBAI

ITA 377/MUM/2009

• Counselvise Citation: 37719914 RSA 2009
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 16-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 377 /MUM/2009 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2005-06) SHRI SHAILESH G. SHETH, 424, GIRIRAJ BUILDING, S.T. ROAD, IRON MARKET, MUMBAI 400 002. ) ) ) ) / VS. ADD. COMMISSIONER OF INCOME-TAX- RANGE 13(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. #+ !./ PAN : ADFPS2137N ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) +, / 0 ! / APPELLANT BY : SHRI MADHUR AGARWAL -.+, / 0 ! / RESPONDENT BY : SHRI JAVED AKHTAR !)$ / / // / DATE OF HEARING : 07-08-2013 12* / / DATE OF PRONOUNCEMENT : 06-09-2013 '3 / O R D E R PER P.M. JAGTAP, A.M . : .. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) XIII, MUMBAI DTD. 29-10-2008 FOR A.Y. 2005 -06. 2. GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APP EAL IS GENERAL IN NATURE SEEKING NO SPECIFIC ADJUDICATION. ITA 377/MUM/2009 2 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 4 RAISED IN THE APPEAL OF TH E ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 4. GROUND NO. 2 & 3 OF THE ASSESSEES APPEAL INVOLV E A COMMON ISSUE RELATING TO THE ADDITION OF RS. 1.10 CRORES MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF GIFTS CLAIMED TO BE RE CEIVED BY THE ASSESSEE FROM THREE DONORS TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF DEALING IN IRON AND STEEL AND OTHER ALL IED ITEMS UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S SHAILESHKU MAR AND BROTHERS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY HIM ON 31-10- 2005 DECLARING TOTAL INCOME OF RS. 62,78,406/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS RECEIVED THREE GIFTS OF RS. 15 LACS, RS. 30 LACS AN D RS. 65 LACS FROM SHRI KETAN J. SHAH, SHRI MANOJ DESAI AND SHRI M.R. SHAH RESPEC TIVELY AND THE AMOUNT OF SUCH GIFTS AGGREGATING TO RS. 1,10,00,000/- IS C REDITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE WITH HIS PROPRIETARY CONCER N. ALTHOUGH THE CONFIRMATION LETTERS FROM ALL THESE THREE NRO DONOR S WERE FILED BY THE ASSESSEE, INDEPENDENT ENQUIRIES MADE BY THE A.O. DI RECTLY FROM ING VYSA BANK REVEALED THAT THE AMOUNTS WERE DEPOSITED AND W ITHDRAWN BY THE TWO DONORS BY SHRI KETAN J. SHAH AND SHRI MANOJ DESAI F ROM NRI ACCOUNTS MAINTAINED BY THEM IN RUPEE TERMS OUT OF WHICH GIFT S WERE SHOWN TO BE GIVEN TO THE ASSESSEE. THE ASSESSEE THEREFORE WAS CALLED UPON BY THE A.O. TO ESTABLISH THE CREDITWORTHINESS OF THE CONCERNED DON ORS AND ALSO THE GENUINENESS OF THE RELEVANT GIFT TRANSACTIONS. IN THIS REGARD, THE ASSESSEE FILED A SALARY CERTIFICATE OF SHRI KETAN J. SHAH AS WELL AS THE DOCUMENTS RELATING TO PROPERTY OWNED BY SHRI KETAN J. SHAH IN USA. FROM THE PERUSAL OF THE RELEVANT BANK STATEMENT, THE A.O., HOWEVER, FOUND THAT PRIOR TO GIVING GIFT OF RS. 15 LACS TO THE ASSESSEE, VARIOUS CREDIT S IN RUPEE AMOUNTS HAD BEEN ITA 377/MUM/2009 3 APPEARING IN THE NRO BANK ACCOUNT OF SHRI KETAN J. SHAH AND THE SAID CREDITS REPRESENTING SOURCE OF THE GIFT AMOUNT GIVE N TO THE ASSESSEE WERE NOT EXPLAINED. HE ALSO NOTED THAT FROM THE SAME ACCOUN T, SHRI KETAN J. SHAH HAD GIVEN NUMEROUS AMOUNTS TO THE FAMILY MEMBERS OF THE ASSESSEE AND THE SAID AMOUNTS WERE SUBSEQUENTLY INTRODUCED IN THE PR OPRIETARY CONCERN OF THE ASSESSEE AS UNSECURED LOANS WITHIN A PERIOD OF ONE OR TWO DAYS. AS FURTHER NOTED BY THE A.O., THE DONORS WERE NOT RELATED TO T HE ASSESSEE AND EVEN OCCASION FOR MAKING SUCH HUGE GIFTS WAS NOT EXPLAIN ED BY THE ASSESSEE. HE THEREFORE TREATED THE GIFTS SHOWN TO BE RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDITS AND THE AMOUNT OF THESE GI FTS AGGREGATING TO RS. 1.10 CRORES WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 28-12-2007. 6. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHA LLENGING INTER ALIA THE ADDITION MADE BY THE A.O. ON ACCOUNT OF GIFTS TREAT ING THE SAME AS UNEXPLAINED CASH CREDITS. BEFORE THE LD. CIT(A), I T WAS SUBMITTED THAT THE YEAR UNDER CONSIDERATION BEING THE SILVER JUBILEE Y EAR OF ASSESSEES MARRIAGE, HE HAD RECEIVED SOME GIFTS FROM HIS NRI FAMILY FRIE ND NAMELY SHRI KETAN J. SHAH AND SHRI MANOJ DESAI. IT WAS SUBMITTED THAT F AMILIES OF THESE NRIS AND ASSESSEE WERE ORIGINALLY FROM GUJARAT AND THEY WERE KNOWN TO EACH OTHER FOR THE LAST MANY YEARS. IT WAS SUBMITTED THAT THE ASS ESSEES PARENTS USED TO HELP MANY OF THEIR FRIENDS IN GOOD OLD DAYS AND WH EN THESE FRIENDS WENT ABROAD AND MADE FORTUNE, THERE WANTED TO SHARE THEI R FORTUNE AND ENJOY WITH OLD FAMILY FRIENDS LIKE THE ASSESSEE. IT WAS CONTEN DED THAT THE GIFTS IN QUESTION THUS WERE GIVEN BY THE NRI FRIENDS TO THE ASSESSEE FROM THEIR NRO BANK ACCOUNT OUT OF NATURAL LOVE AND AFFECTION ON THE OC CASION OF SILVER JUBILEE YEAR OF HIS MARRIAGE AND THE GENUINENESS OF THE SAID GIF TS WAS DOUBTED BY THE A.O. MERELY ON THE BASIS OF SUSPICION WITHOUT THERE BEIN G ANY DIRECT EVIDENCE OR MATERIAL PROOF. IN SUPPORT OF THIS CONTENTION, REL IANCE WAS PLACE ON BEHALF OF ITA 377/MUM/2009 4 THE ASSESSEE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNITA VACHANI (184 ITR 121). 7. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISS IONS MADE ON BEHALF OF THE ASSESSEE AND REJECTING THE SAME, HE CONFIRMED T HE ADDITION MADE BY THE A.O. ON ACCOUNT OF GIFS SHOWN TO BE RECEIVED BY THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDITS FOR THE FOLLOWING REASONS GIVEN IN PARA 3.3 OF HIS IMPUGNED ORDER: 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE. IT IS AN ADMITTED FACT THAT THE GIFTS HAVE BEEN RECEIVED BY THE ASSES SEE THROUGH NORMAL BANKING CHANNEL AND THE PASSPORTS OF NRI DONORS HAV E ALSO BEEN FILED. THE AO HAS ACCEPTED THE IDENTITY OF THE DONORS. HOW EVER, THE AO WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE DONO RS AND THE GENUINENESS OF THE GIFTS SINCE, NO DOCUMENTARY EVID ENCE TO THAT EFFECT WERE PRODUCED BY THE APPELLANT. I AM IN COMPLETE AG REEMENT WITH THE FINDINGS OF THE AC THAT THOUGH THE IDENTITY HAS BEE N ESTABLISHED BUT THE CREDIT WORTHINESS OF THE DONORS AND THE GENUINENESS OF THE GIFTS HAVE NOT BEEN ESTABLISHED BY THE APPELLANT. IN CASE OF P . MOHANKALA & OTHERS REPORTED IN 210 CTR 20(SC), IT HAS BEEN HELD THAT THE SUM CREDITED IN THE BOOKS OF ACCOUNTS CAN STILL BE CHAR GED TO INCOME U/S.68 EVEN IF THE GIFT FROM NRI DONORS WERE RECEIVED THRO UGH. CHEQUES AND THE EXPLANATION OFFERED BY THE ASSESSEE REGARDING THE N ATURE AND THE SOURCE OF SUCH CREDITS ARE NOT SATISFACTORY. THE HO NBLE DELHI HIGH COURT IN (2008)[167 TAXMAN-143 (DEL.) HAS ALSO HELD SO. THEREFORE, THOUGH THE GIFTS HAVE BEEN RECEIVED THROUGH NORMAL BANKING CHANNEL EVEN THEN THE SAME ARE TO BE CONSIDERED AS CREDITS IN THE BOOKS OF ACCOUNTS. SINCE THESE ARE CREDITS IN THE BOOKS OF A CCOUNTS, THE APPELLANT HAS TO PROVE THE IDENTITY, CREDIT WORTHIN ESS AND THE GENUINENESS OF THE CREDITS IN THE BOOKS OF ACCOUNTS . IN CASE OF SATYANARAYAN AGARWAL CASE REPORTED IN (2008) [24 SO T 12] JODHPUR BENCH OF THE ITAT HAS HELD THAT THE ASSESSEE IS DUT Y BOUND TO PROVE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF TRAN SACTION APPEARING AS CREDIT IN THE BOOKS OF ACCOUNTS. IN CASE OF AC1T VS . RAJEEV TANDON REPORTED IN (2007) [108 ITD 560] THE DELHI BENCH OF THE ITAT HELD THAT FOR ACCEPTING GIFT AMOUNTS RECEIVED BY ASSESSEE TO BE GENUINENESS, INGREDIENTS REQUIRED TO BE TAKEN INTO CONSIDERATION ARE THAT ASSESSEE MUST ESTABLISH IDENTITY OF DONOR, HIS FINANCIAL CAP ACITY TO MAKE SUCH GIFTS AS WELL AS GENUINENESS OF GIFT TRANSACTION AN D IN CASE ASSESSEE FAILS TO ESTABLISH ANY ONE OF THE INGREDIENTS, GIFT AMOUNT RECEIVED BY HIM CAN BE TREATED AS ASSESSEES UNDISCLOSED INCOME REPRESENTING ASSESSEES OWN MONEY WHICH WAS INTRODUCED IN THE GA RB OF GIFT. UNLESS BANK STATEMENTS ARE SUPPORTED BY ANY OTHER CORROBOR ATIVE EVIDENCE TO ESTABLISH FINANCIAL CAPACITY OF DONORS, BANK STATEM ENT DID NOT PROVE ITA 377/MUM/2009 5 CREDIT WORTHINESS OF THE DONOR. THIS DECISION OF IT AT DELHI WAS CONFIRMED BY HONBLE DELHI HIGH COURT REPORTED IN [ 294 ITR 488] BY HOLDING THAT IF DONORS ARE NOT RELATED TO ASSESSED, AND THE GIFTS WERE GIVEN NOT FOR ANY PARTICULAR REASON EXCEPT THAT THE ASSESSEE NEEDED MONEY TO PURCHASE HOUSE AND DONORS WANTED TO HELP H IM THE COURT HELD THAT GIFTS WERE NOT ONLY UNUSUAL BUT ALSO UNNA TURAL AND GIFT COULD NOT BE SAID TO BE GENUINE. IN THE CASE OF SMT. NAUS HABA REHMAN REPORTED IN (2007) [109 ITD 288 DELHI BENCH OF TRIB UNAL HELD THAT CIRCUMSTANCES LIKE ABSENCE OF RELATION, ABSENCE OF OCCASION, NO COUNTER GIFT, GIFT FROM PERSONS OF NO MEANS TO THE SO CALLE D WEALTHY AND INFLUENTIAL PERSON ETC, ALL PUT TOGETHER LEADS TO O NE AND ONLY ONE CONCLUSION THAT GIFT WERE NOT GENUINE. IN THE CASE OF SANDEEP KUMAR (HUF) REPORTED IN [293 1TR 294], THE HONBLE DELHI HIGH COURT HELD THAT MERE IDENTIFICATION AND SHOWING INCOME THROUGH BANKING CHALLANS IS NOT SUFFICIENT. FAILURE TO ESTABLISH THAT GIFT W AS GENUINE, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ADDITION. IN CASE O F ASHOK MAHENDRA & SONS(HUF) VS CIT(DEL.) REPORTED IN (2008) 173-TAXMA N 178(DEL.). THE HONBLE DELHI COURT HELD THAT ASSESSEE-HUF, CARRYI NG ON BUSINESS OF FINANCIAL COMPANY, FILED ITS RETURN SHOWING THAT A SWISS NATIONAL HAD GIFTED CHEQUES TO VARIOUS MEMBERS OF FAMILY. AUTHOR ITIES BELOW TOOK A VIEW THAT ASSESSEE HAD NOT BEEN ABLE TO EXPLAIN CIR CUMSTANCES IN WHICH GIFTS WERE RECEIVED - ACCORDINGLY, AUTHORITIES BELO W MADE ADDITION AS UNEXPLAINED INCOME OF ASSESSEE IN RESPECT OF AMOUNT REPRESENTING GIFTS RECEIVED FROM SWISS NATIONAL. WHETHER SINCE THERE W AS NO APPARENT REASON FOR ASSESSEE BEING SHOWERED WITH GIFTS BY A PERSON WHO WAS STATED TO BE ONLY A FAMILY FRIEND AND THAT SOME FAM ILY FRIEND HAD SHOWERED GIFTS OF ENORMOUS AMOUNTS ON SEVERAL OTHER - PERSONS AS WELL, THERE WAS NO PERVERSITY IN CONCLUSION ARRIVED AT BY AUTHORITIES BELOW- HELD YES. 3.3. (I) IN VIEW OF ABOVE DECISIONS, IN MY CONSIDER ED OPINION THE AO HAS CORRECTLY COME TO THE CONCLUSION THAT THE APPEL LANT HAS NOT ESTABLISHED CREDIT WORTHINESS OF THE DONORS AND THE GENUINENESS OF THE GIFTS. IN CASE OF ONE OF THE DONORS I.E. SHRI KETAN SHAH, THE APPELLANT HAS FURNISHED LETTER FROM DONORS EMPLOYER STATING T HAT THE DONORS ANNUAL SALARY WAS AT US $ 1,41,107. IN CASE OF DONO RS, SHRI KETAN J. SHAH, THE DEEDS OF PROPERTY HOLDINGS HAVE ALSO BEEN FURNISHED BY THE APPELLANT. HOWEVER, THESE DOCUMENTS ARE NOT SUFFICI ENT TO PROVE THE CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIO N. MOREOVER, IN CASE OF OTHER DONORS NO DOCUMENTARY EVIDENCES HAVE BEEN FILED. THE APPELLANT SHOULD HAVE ESTABLISHED THE CREDIT WORTHI NESS OF THE DONORS IN THE SENSE THAT THE DONATION OF SUCH AMOUNTS SHOU LD HAVE BEEN A PETTY THING FOR THE DONORS AND THE DONORS WERE IN P OSSESSION OF SUCH WEALTH COMMENSURATING TO THE DONATIONS MADE. THE AP PELLANT HAS ALSO NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION I.E. GIFTS RECEIVED FROM NRI DONORS. THOUGH THE APPELLANT HAS CLAIMED T HAT BOTH THE APPELLANT AND THE DONORS ARE ORIGINALLY FROM GUJARA T BUT THAT IS NOT SUFFICIENT. NO EVIDENCES HAS BEEN FURNISHED THAT TH E APPELLANT AND THE DONORS FAMILIES WERE INTIMATE FRIENDS TO SUCH AN EX TENT THAT THE DONORS ITA 377/MUM/2009 6 CAN SHELVE GIFTS OF SUCH AMOUNTS FOR DONATING TO TH E APPELLANT. THE DONORS ARE NOT RELATIVE OF THE APPELLANT. THOUGH IT IS CLAIMED THAT BOTH THE APPELLANT AND DONORS ARE ORIGINALLY FROM GUJARA T BUT IT HAS NOT BEEN CLAIMED THAT BOTH THE FAMILIES WERE FROM SAME VILLAGE. THE APPELLANT HAS CLAIMED THAT THE GIFTS WERE RECEIVED ON THE OCCASION OF SILVER JUBILEE YEAR OF HIS MARRIED LIFE. BUT IT IS STRANGE TO NOTE THAT THESE DONORS NEVER BEFORE GIFTED ANY GIFT TO THE APPELLAN T ON SO MANY OTHER OCCASIONS INCLUDING APPELLANTS OWN MARRIAGE, BIRTH DAYS OF CHILDREN OR ANY OTHER MARRIAGE OCCASION IN THE BIGGER FAMILY. T HOUGH INTIMACIES BETWEEN THE APPELLANT & DONORS HAVE BEEN CLAIMED BU T THE APPELLANT ALSO THOUGH THE DONORS ARE CLAIMED AS INTIMATED FAM ILY CONCERNS, BUT IT HAS ALSO NOT BEEN PLEADED THAT WHENEVER THESE NR I FAMILY FRIENDS COMES TO INDIA THEY USED TO STAY WITH THE APPELLANT AND THE APPELLANT USED TO TAKE CARE OF THEIR VISITS AND OTHER NEEDS. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES, I AM OF THE CONSIDER ED OPINION THAT THE CREDIT WORTHINESS OF THE DONORS AND THE GENUINENESS OF THE GIFTS HAVE NOT BEEN ESTABLISHED BY THE APPELLANT. 3.3. (II) THE APPELLANT HAS RELIED ON THE DECISION OF DELHI HIGH COURT IN CIT VS. MRS. SUNITA VACHANI REPORTED IN [184 ITR 121]. HOWEVER, THE FACTS OF THAT CASE ARE DIFFERENT FROM THAT OF APPEL LANT. IN THE CASE RELIED UPON BY THE APPELLANT, THE TRIBUNAL WENT INTO THE F ACTS, SAW THE BALANCE SHEET OF THE DONORS AND THE OTHER EVIDENCES PRODUCED BEFORE AO, AND THEN CAME TO CONCLUSION THAT THE GIFTS WERE GENUINE. IN THAT CASE ALSO THE GIFTS AMOUNTS WERE RECEIVED BY FAMILY IN INDIA FROM STRANGERS FROM ABROAD, BUT THE CREDIT WORTHINESS AN D GENUINENESS OF THE TRANSACTION WAS ESTABLISHED BY ASSESSEE, IN THE FORM OF FILING BALANCE SHEET OF THE DONORS AND OTHER EVIDENCES. IN THE CASE OF APPELLANT, THE GIFTS HAVE ALSO BEEN RECEIVED FROM N RI DONORS BUT NOTHING HAS BEEN FILED BY THE APPELLANT, TO PROVE T HE CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. 3.3. (III) IN VIEW OF ABOVE DISCUSSION, I AM OF THE OPINION THAT CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS I.E. GIFTS HAVE NOT BEEN ESTABLISHED BY THE APPELLANT AND THEREFORE, TH E AO HAS CORRECTLY TREATED THE SAME AS APPELLANTS UNEXPLAINED CASH CR EDITS. THE A.O.S ACTION ON THIS ISSUE IS CONFIRMED. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFOR E US THAT THE IDENTITY OF ALL THE THREE DONORS WAS DULY ESTABLISHED BY THE AS SESSEE BY FILING THEIR CONFIRMATIONS AS WELL AS THE COPIES OF THEIR PASS P ORTS AND NO DISPUTE ABOUT THE SAME WAS RAISED BY THE AUTHORITIES BELOW. HE SU BMITTED THAT THE GIFTS RECEIVED FROM THE SAID DONORS, HOWEVER, WERE TREATE D AS UNEXPLAINED BY THE AUTHORITIES BELOW ON THE GROUND THAT THE FINANCIAL CAPACITY OF THE CONCERNED DONORS AND GENUINENESS OF THE RELEVANT TRANSACTION WAS NOT ESTABLISHED. HE ITA 377/MUM/2009 7 SUBMITTED THAT THE CONFIRMATIONS FROM ALL THE DONOR S WERE FILED BY THE ASSESSEE WHICH BY ITSELF WAS SUFFICIENT TO ESTABLIS H THE GENUINENESS OF THE GIFTS. HE SUBMITTED THAT ALL THE GIFTS WERE GIVEN B Y THE DONORS FROM THEIR NRO ACCOUNTS THROUGH BANKING CHANNEL AND THERE WAS THUS NO REASON FOR THE AUTHORITIES BELOW TO DISPUTE THE CAPACITY OF THE CO NCERNED DONORS AS THE GENUINENESS OF THE RELEVANT GIFT TRANSACTION. IN S UPPORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH CO URT IN THE CASE OF CIT VS. PADAM SINGH CHOUHAN REPORTED IN (2008) 215 CTR 303 (RAJ.). AS REGARDS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. P. MOHANAKALA (2007) 291 ITR 278 (SC) RELIED UPON BY THE LD. CIT( A) IN HIS IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME IS DISTINGUISHABLE ON FACT. HE ALSO CONTENDED THAT THE GIFTS IN QUESTION HAVE BEEN TREATED BY THE AUTHORITIES BELOW AS UNEXPLAINED CASH CREDITS FOR T HE FAILURE OF THE ASSESSEE TO ESTABLISH THE SOURCE OF SOURCE WHICH IS NOT PERMISS IBLE. HE SUBMITTED THAT THE PROVISIONS OF SECTION 94A(4) INSERTED IN THE ST ATUTE SUBSEQUENTLY SUPPORTS THE CASE OF THE ASSESSEE AS THE SAME PROVIDE SPECIF ICALLY THAT THE SOURCE OF SOURCE IS REQUIRED TO BE ESTABLISHED ONLY IN CASES OF PERSONS FROM THE NOTIFIED AREA. HE ALSO RELIED ON THE DECISION OF THE DELHI BENCH OF ITAT IN THE CASE OF MS. MAYAVATI VS. DCIT (2008) 113 TTJ 178 IN SUPPORT OF THE ASSESSEES CASE THAT THE GIFTS IN QUESTION WERE DULY EXPLAINED IN T ERMS OF SECTION 68 OF THE ACT. HE ALSO RAISED AN ALTERNATIVE CONTENTION THAT THE ADVERSE FINDINGS/OBSERVATIONS HAVING BEEN RECORDED BY THE A UTHORITIES BELOW ONLY IN RESPECT OF GIFTS RECEIVED FROM TWO DONORS, THE ADDI TION MADE IN RESPECT OF THE GIFT RECEIVED FROM THE THIRD DONOR SHOULD BE DELETE D IN THE ABSENCE OF ANY SPECIFIC ADVERSE FINDINGS/OBSERVATIONS RECORDED BY THE AUTHORITIES BELOW. 9. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE THAT THE GIFTS IN QUESTION ARE LIABLE TO BE TREATED AS UNEXPLAINED CASH CREDIT S U/S 68 OF THE ACT AS A RESULT OF THE FAILURE OF THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED ITA 377/MUM/2009 8 DONORS AS WELL AS THE GENUINENESS OF THE RELEVANT G IFT TRANSACTION BY PRODUCING THE RELEVANT DOCUMENTARY EVIDENCE. HE SUB MITTED THAT EVEN THE SO CALLED CONFIRMATIONS ISSUED BY THE DONORS ABROAD WE RE NOT A RELIABLE EVIDENCE AS THE SAME WERE NOT GOT NOTARIZED IN THE FOREIGN C OUNTRY. HE SUBMITTED THAT ALTHOUGH THE GIFTS IN QUESTION WERE GIVEN BY THE CO NCERNED DONORS FROM THEIR NRO ACCOUNTS MAINTAINED IN THE BANK, THE CREDITS AP PEARING IN THE SAID ACCOUNTS IN RUPEE TERMS BEFORE GIVING THE GIFTS TO THE ASSESSEE WERE NOT EXPLAINED SATISFACTORILY. HE SUBMITTED THAT IN THE ABSENCE OF ANY RELATION BETWEEN THE DONORS AND THE ASSESSEE, ANY OCCASION T O GIVE SUCH GIFTS AS WELL AS ANY INSTANCE OF RECIPROCAL OF THE GIFTS, THE GIF TS WERE RIGHTLY TREATED BY THE AUTHORITIES BELOW AS NOT GENUINE. HE CONTENDED THAT THE CAPACITY OF THE CONCERNED DONORS TO GIVE THE GIFTS TO THE ASSESSEE AS WELL AS THE GENUINENESS OF THE RELEVANT GIFT TRANSACTION THUS WAS NOT ESTAB LISHED AND THE ADDITION MADE BY THE A.O. ON ACCOUNT OF THE GIFT AMOUNT WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) TREATING THE SAME AS UNEXPLAINED CASH CR EDITS U/S 68 OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE AMOUNT OF IMPUGNED GIFTS ADDED BY THE A.O. TO THE TOTAL INCOME OF THE ASSESS EE HAS BEEN CONFIRMED BY THE LD. CIT(A) BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. IT IS WELL SETTLED THAT THE PRIMARY ONUS TO E XPLAIN SATISFACTORILY THE CASH CREDITS APPEARING IN HIS BOOKS OF ACCOUNT IS ON THE ASSESSEE AND THE SAME HAS TO BE DISCHARGED BY HIM BY ESTABLISHING THE IDENTIT Y AND CAPACITY OF THE CONCERNED CREDITORS AND THE GENUINENESS OF THE RELE VANT TRANSACTIONS. IN THE PRESENT CASE, ALTHOUGH THE IDENTITY OF THE CONCERNE D DONORS WAS ESTABLISHED BY THE ASSESSEE BY FILING THE CONFIRMATIONS FROM TH E CONCERNED NRI DONORS AS WELL AS THE COPIES OF THEIR PASS PORTS, THE GIFTS R ECEIVED FROM THE SAID DONORS WERE TREATED AS UNEXPLAINED CASH CREDITS FOR THE FA ILURE OF THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE CONCERNED DONORS TO G IVE THE GIFTS TO THE ASSESSEE AS WELL AS THE GENUINENESS OF THE RELEVANT GIFT TRA NSACTION. A PERUSAL OF THE ITA 377/MUM/2009 9 CONFIRMATIONS FILED BY THE ASSESSEE FROM THE CONCER NED DONORS SHOWS THAT NEITHER THE SOURCE OF THEIR INCOME NOR ANY OTHER DE TAILS SHOWING THEIR CAPACITY TO GIVE THE GIFTS TO THE ASSESSEE WERE GIV EN IN THE SAID CONFIRMATIONS. ALTHOUGH THE ASSESSEE FILED A SALARY CERTIFICATE OF SHRI KETAN J. SHAH, ONE OF THE DONORS AS WELL AS THE DOCUMENTARY EVIDENCE SHOW ING THE PROPERTY HELD BY HIM, THE SAME WAS FOUND TO BE NOT SUFFICIENT TO PRO VE THE CREDITWORTHINESS OF THE SAID DONOR TO GIVE GIFT TO THE ASSESSEE. 11. IT IS OBSERVED THAT ALTHOUGH ALL THE GIFTS BY T HE CONCERNED THREE DONORS WERE GIVEN TO THE ASSESSEE FROM THEIR NRO ACCOUNTS, NO SATISFACTORY EXPLANATION WAS OFFERED BY THE ASSESSEE IN RESPECT OF THE CREDITS APPEARING IN THE SAID ACCOUNT IN RUPEE TERMS PRIOR TO THE PAYMEN T OF GIFT AMOUNTS TO THE ASSESSEE. ADMITTEDLY, THERE WAS NO BLOOD RELATIONSH IP BETWEEN THE ASSESSEE AND THE CONCERNED DONORS AND ALTHOUGH IT WAS CLAIME D BY THE ASSESSEE THAT THEY WERE FAMILY FRIENDS STAYING TOGETHER IN THE PA ST IN SOME PART OF GUJARAT, THERE WAS NO EVIDENCE PRODUCED BY THE ASSESSEE TO S UPPORT AND SUBSTANTIATE THE SAID CLAIM. THERE WAS ALSO NO INSTANCE POINTED OUT BY THE ASSESSEE OF ANY GIFT GIVEN TO THE SAID DONORS OR THEIR FAMILY MEMBE RS WHO WERE CLAIMED TO BE THE FAMILY FRIENDS OF THE ASSESSEE. ALTHOUGH THE A SSESSEE CLAIMED AT LATER STAGE THAT THE GIFTS WERE RECEIVED IN THE SILVER JU BILEE YEAR OF HIS MARRIAGE, THERE WAS NO SUCH MENTION/INDICATION IN THE CONFIRM ATIONS GIVEN BY THE CONCERNED DONORS. EVEN THE GIFTS WERE RECEIVED BY THE ASSESSEE ON DIFFERENT DATES OVER A PERIOD OF ABOUT 4 MONTHS. HAVING REGA RD TO ALL THE FACTS OF THE CASE, WE ARE INCLINED TO AGREE WITH THE AUTHORITIES BELOW THAT THE ASSESSEE HAVING FAILED TO ESTABLISH THE CAPACITY OF THE CONC ERNED DONORS TO GIVE THE GIFTS AS WELL AS GENUINENESS OF THE RELEVANT GIFT TRANSAC TION, THE AMOUNT OF GIFT IS LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE PRIMARY ONUS THAT LAY ON THE ASSESSEE TO EXPLAIN THE GIFTS IN QUESTION IN TERMS OF SECTION 68 OF THE ACT THUS WAS NOT SATISFACTORILY ITA 377/MUM/2009 10 DISCHARGED AND THE SAID PROVISION WAS RIGHTLY INVOK ED TO TREAT THE SAID GIFTS AS UNEXPLAINED CASH CREDIT LIABLE TO BE ADDED TO THE T OTAL INCOME OF THE ASSESSEE. 12. AS REGARDS THE CASE LAWS CITED BY THE LD. COUNS EL FOR THE ASSESSEE IN SUPPORT OF THE ASSESSEES CASE, IT IS OBSERVED THAT THE SAME ARE DISTINGUISHABLE ON FACTS AND CANNOT BE OF ANY HELP TO SUPPORT THE ASSESSEES CASE. FOR INSTANCE, IN THE CASE OF PADAM SINGH CHO UHAN (SUPRA), THE AMOUNT OF GIFT WAS FOUND VERY MEAGER LOOKING TO THE STATUS OF THE DONOR AND ACCORDINGLY THE ADDITION MADE ON ACCOUNT OF THE SAI D GIFT TREATING THE SAME AS NOT GENUINE WAS HELD TO BE NOT SUSTAINABLE BY THE H ONBLE RAJASTHAN HIGH COURT HOLDING THAT TO RECOGNIZE THE GIFT TO BE GENU INE, THERE IS NO ASSUMPTION THAT THERE SHOULD BE ANY BLOOD RELATIONSHIP OR ANY CLOSE RELATIONSHIP WITH THE DONOR AND THE DONEE. IN THE CASE OF MS. MAYAWATI ( SUPRA), THE IDENTITY AND CAPACITY OF THE DONORS AS WELL AS GENUINENESS OF TH E RELEVANT GIFT TRANSACTIONS WERE FOUND TO BE DULY ESTABLISHED BY THE ASSESSEE O N EVIDENCE AND THEREFORE THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION M ADE BY THE A.O. U/S 68 OF THE ACT WAS UPHELD BY THE TRIBUNAL. IN HIS IMPUGNE D ORDER, THE LD. CIT(A) HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANAKALA (2007) 291 ITR 278 (SC) WHEREIN THE ADD ITION MADE ON ACCOUNT OF GIFTS RECEIVED FROM NRI AFTER HAVING FOUND THE S AME TO BE NOT REAL AND GENUINE WAS HELD TO BE SUSTAINABLE BY THE HONBLE S UPREME COURT OBSERVING THAT THE FACT THAT MONEY CAME BY WAY OF BANK CHEQUE S AND PAID THROUGH THE PROCESS OF BANKING TRANSACTIONS BY ITSELF WAS OF NO CONSEQUENCE. KEEPING IN VIEW THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF P. MOHANAKALA (SUPRA) AND HAVING REGARD TO THE FACTS OF THE CASE AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE A.O. ON A CCOUNT OF GIFTS CLAIMED TO BE RECEIVED BY THE ASSESSEE IS RIGHTLY CONFIRMED BY THE LD. CIT(A) TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT A ND UPHOLDING HIS IMPUGNED ORDER ON THIS ISSUE, WE DISMISS GROUND NO. 2 & 3 OF THIS APPEAL. ITA 377/MUM/2009 11 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED 4 5 &) %4 / 4 / 67 ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER, 2013. . '3 / 12* 8')5 06-09-2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 8') DATED 06-09-2013 $.&).!./ RK , SR. PS '3 / -&9: ;:* '3 / -&9: ;:* '3 / -&9: ;:* '3 / -&9: ;:*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. < () / THE CIT(A)- XIII, MUMBAI 4. < / CIT 13 MUMBAI 5. :$? -&&) , , / DR, ITAT, MUMBAI E BENCH 6. @% A / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER, !.: -& //TRUE COPY// B B B B/ // /!6 !6 !6 !6 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI