Mr. Varun Arora, New Delhi V. ITO, New Delhi

ITA 3913/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58938 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 28-02-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RENU JAUHRI
• Assessee Lawyers: ALOK MITTAL
• Keywords: Gift; Salary income; Principle of natural justice; Accommodation entries
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3913/DEL./2011 (ASSESSMENT YEAR : 2002-03) MR. VARUN ARORA, VS. ITO, WARD 46 (1), E 561, GREATER KAILASH II, NEW DELHI. NEW DELHI 110 048. (PAN : AEHPA2210F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ALOK MITTAL, CA REVENUE BY : SMT. RENU JAUHRI, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXX, NEW DELHI DATED 14.06.2011 FOR THE A SSESSMENT YEAR 2002- 03. 2. THE RETURN OF INCOME WAS FILED ON 30.07.2002 DEC LARING INCOME OF RS.7,12,090/-. THE ASSESSEE IS DERIVING INCOME FRO M BUSINESS AND PROFESSION AND INCOME FROM OTHER SOURCES DURING THAT YEAR. TH E ASSESSEE HAS SHOWN A RECEIPT OF GIFT OF RS.10 LACS DURING THE YEAR WHICH THE ASSESSING OFFICER ITA NO.3913/DEL./2011 2 ADDED TO THE INCOME OF THE ASSESSEE BY ISSUING NOTI CE U/S 148. THE CIT (A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER I N THIS REGARD. 3. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THE ORDER IS BAD IN LAW, AS IT HAS BEEN PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN ADDIN G AN AMOUNT OF RS.10,00,000/- IN THE INCOME OF THE ASSES SEE, IN THE GIVEN FACTS AND CIRCUMSTANCES. 3. THE APPELLANT MAY BE PERMITTED TO ADD, ALTER OR AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL. 4. IN THESE GROUNDS, THE ASSESSEE HAS PLEADED THAT THE ORDER IS BAD IN LAW AND HAS PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE ASSESSEE HAS ALSO PLEADED THAT THE ADDITION OF RS.10 LACS AS THE INCOME OF THE ASSESSEE IS NOT JUSTIFIED. 5. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOM E-TAX ACT. A NOTICE U/S 148 WAS ISSUED ON 28.03.2007 AFTER RECORDING TH E REASONS. THE ASSESSEE HAS SUBMITTED A RETURN IN RESPONSE TO THE NOTICE U/ S 148. THEREAFTER, THE ASSESSMENT PROCEEDINGS WERE INITIATED. THE NOTICE WAS ISSUED ON THE BASIS OF THE INFORMATION RECEIVED FROM DIT (INVESTIGATION), NEW DELHI. AS PER THE INFORMATION, THE ASSESSEE HAS INTRODUCED UNACCOUNTE D MONEY IN HIS BOOKS OF ACCOUNT THROUGH ACCOMMODATION ENTRIES. THE ASSESSE E HAS FILED AN APPEAL ITA NO.3913/DEL./2011 3 AGAINST THE ORDER OF THE ASSESSING OFFICER. THE CI T (A) HAS CONFIRMED THE ADDITION BY HOLDING AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E ASSESSEE, ASSESSMENT ORDER OF THE AO, GROUNDS OF APPEALS AND DISCUSSED THE MATTER WITH THE AR VERY CAREFULLY. THE APPELLANT HAD RECEI VED GIFT OF RS.10 LAKHS FROM A NON- RELATIVE DONOR. THE AR COULD PROD UCE THE CREDITWORTHINESS OF DONOR, HIS IDENTITY AND THE MON EY HAD COME THROUGH BANKING CHANNELS TO THE APPELLANT. THE AO DID NOT G IVE APPELLANT TO CROSS-EXAMINE THE DONOR, WHICH IS THE REQUIREMENT O F LAW AND PRINCIPLE OF NATURAL JUSTICE. THE INFORMATION HAD BEEN RECEIVED FROM INVESTIGATION WING OF DEPARTMENT, WHERE THE INVESTIGATION WING PA SSED AN THE INFORMATION WITHOUT PROPER ENQUIRY AT THEIR STAGE. HOWEVER CONSIDERING INDIAN ECONOMY AND SOCIETY AT LARGE, IT IS VERY VER Y REMOTE THAT ANYONE CAN RECEIVE A GIFT FROM NON-RELATIVE DONOR WITHOUT ANY CONSIDERATION GIVEN IN EXCHANGE TO THE DONOR. THE MONEY HAD COME TO APPELLANT(DONOR) THROUGH BANKING CHANNEL. HOWEVER, DEPARTMENT CANNOT PROVE THAT THERE UNDER HAND DEALING OF DONEE (APPELLANT) WITH DONOR TO REDUCE TAX BURDEN / ACCOMMODATE THE ENTRY FOR THE BENEFIT OF APPELLANT CONSIDERING THE OVERALL SITUATION AND FACTS OF THE CASE. I AM OF TH E OPINION THAT THE GIFT RECEIVED BY APPELLANT IS NOT GENUINE GIFT, IT APPEA RS THERE IS ACCOMMODATION ENTRY BY APPELLANT, AND HENCE THE ACT ION OF AO IS SUSTAINED. THE ADDITION OF RS.10,00,000/- LACK IS C ONFIRMED. THOUGH THE AR RELIED ON TWO HC DECISION OF DELHI & RAJASTHAN H C, THE CHANCE OF GIVING GIFT BY UNRELATED DONOR TO DONEE IS VERY REM OTE, WHERE THERE IS NO CONSIDERATION INVOLVED. IN THE RESULT, THE APPEAL IS DISMISSED. THE CIT (A) HAS HELD THAT THE DONOR WAS NOT RELATED TO THE ASSESSEE AND CONSIDERING THE INDIAN ECONOMY AND SOCIETY AT LARGE , IT IS VERY REMOTE THAT ANYONE CAN RECEIVE A GIFT FROM NON-RELATIVE WITHOUT ANY CONSIDERATION GIVEN IN EXCHANGE TO THE DONOR. CIT (A) HELD THAT THE GI FT SHOWN AS RECEIVED WAS NOT A GENUINE GIFT AND HELD TO BE AN ACCOMMODATION ENTRY. 6. BEFORE US, THE LEARNED AR SUBMITTED THAT THE ASS ESSING OFFICER ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF THE GIFT R ECEIVED FROM SHRI SATISH KUMAR DHINGRA WHO IS NOT A RELATIVE OF THE ASSESSEE . LD. AR PLEADED THAT ITA NO.3913/DEL./2011 4 THE ASSESSEE HAD SUBMITTED THE COPY OF HIS BANK STA TEMENT, COPY OF THE RETURN OF INCOME ALONG WITH COMPUTATION OF INCOME DEPICTIN G THE GIFT RECEIVED BY HIM, COPY OF INCOME-TAX RETURN OF THE DONOR SHRI SATISH KUMAR DHINGRA, CONFIRMATION, GIFT DEED IN HIS FAVOUR, BALANCE SHEE T OF SHRI SATISH KUMAR - DONOR AND COPY OF WEALTH-TAX RETURN OF SHRI SATISH KUMAR. THE ASSESSING OFFICER IGNORED ALL THE MATERIAL PRODUCED BEFORE HI M AND HELD THE GIFT AS ACCOMMODATION ENTRY. CIT IS NOT JUSTIFIED IN CONFI RMING THE SAME. THE ASSESSEE HAS ESTABLISHED THE CREDITWORTHINESS OF DO NOR AND GENUINENESS OF THE GIFT BY WAY OF FILING THE INCOME-TAX RETURN, CONFIR MATION, GIFT DEED, BALANCE SHEET AND WEALTH TAX RETURN OF THE DONOR. LD. AR F INALLY PLEADED TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. 7. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND PLEADED THAT THE ASSESSEE HAS FAILED TO P ROVE THE CREDITWORTHINESS OF DONOR AND GENUINENESS OF THE GIFT. THE ASSESSEE CLAIMS THAT HE HAS RECEIVED A GIFT OF RS.10 LACS FROM A NON-RELATIVE. THERE WA S EVEN NO OCCASION TO RECEIVE SUCH HEAVY GIFT. THE ASSESSEE HAS ALSO FAI LED TO PROVE THAT THE DONOR WAS A FRIEND OF THE ASSESSEE AS THE DONOR IS STATED TO BE NOT TRACEABLE BY THE ASSESSEE HIMSELF. IT IS VERY STRANGE HOW THE ASSES SEE HAS GOT RS.10 LACS GIFT FROM A PERSON WHOSE WHEREABOUTS ARE NOT KNOWN TO AS SESSEE. THE CREDIT ENTRIES IN THE BANK ACCOUNTS OF DONOR, JUST PRIOR T O THE CLEARANCE OF THE CHEQUE ISSUED IN FAVOUR OF THE ASSESSEE SHOWS THAT IT IS A MANAGED AFFAIR TO GIVE THE ITA NO.3913/DEL./2011 5 COLOUR OF THE GENUINENESS TO THE UNACCOUNTED MONEY OF THE ASSESSEE. THIS UNACCOUNTED MONEY IS BEING SHOWN AS GIFT RECEIVED. LD. DR FINALLY PLEADED TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND HA VE ALSO PERUSED THE DOCUMENTS AVAILABLE ON RECORD. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS AND PROFESSION AND INCOME FROM OTHER SOURCES. THE RETURN INCOME FOR THE YEAR UNDER CONSIDERATION WAS RS.1,79 ,140/-. PAGE 5 OF THE PAPER BOOK FILED BY THE ASSESSEE IS STATED TO BE A COPY OF GIFT DEED BY THE DONOR. THE GIFT DEED IS DATED 3 RD MAY, 2001. SHRI SATISH KUMAR HAS SIGNED AS DONOR. HOWEVER, THE SPACE PROVIDED FOR WITNESSES A ND DONEE ARE BLANK. THIS GIFT DEED EXECUTED ON STAMP PAPER OF RS.2/- ON 03.0 5.2001 CANNOT BE SAID TO BE A VALID GIFT DEED. CONTENTS OF THE DEED CANNOT B E RELIED UPON TO EXPLAIN THE GENUINENESS OF GIFT. THIS DEED DOES NOT PROVE THE GENUINENESS OF THE GIFT. A COPY OF AFFIDAVIT IS ALSO PLACED ON RECORD (PAGE 6 OF THE PAPER BOOK). THIS IS AN UNVERIFIED AFFIDAVIT. FURTHER THE DEPONENT - SH RI SATISH KUMAR DHINGRA WAS STATED TO BE NOT TRACEABLE AT THE RELEVANT TIME . THE ASSESSEE HAD NOT PRODUCED THE SAME TO CONFIRM THE GENUINENESS OF THE GIFT. COPY OF THE SARAL FORM OF INCOME-TAX RETURN OF SHRI SATISH KUMAR DHIN GRA PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE SHOWS THAT HE WAS DRAWIN G HIS INCOME FROM SALARY. THE ANNUAL SALARY INCOME SHOWN IS OF RS.72,000/- ON LY. THE INCOME FROM OTHER SOURCES WAS SHOWN AT RS.38,075/-. THE INCOME -TAX FORM I.T.S. 2D ITA NO.3913/DEL./2011 6 (SARAL) SHOWS THAT THE SAME WAS FILED WITH THE ITO , PSW-9 (6), NEW DELHI IN DECEMBER. THEY YEAR OF FILING AND THE DIARY NUMBER ARE MISSING. ASSESSEE HAD ALSO RELIED ON FILING OF WEALTH TAX RETURN BY D ONOR. THE ASSESSEE HAS FILED ONLY THE STATEMENT OF WEALTH. IN THE PAPER BOOK, T HE FORM IN WHICH THE WEALTH TAX RETURN STATED TO BE FILED WITH INCOME-TAX DEPAR TMENT IS NOT ON RECORD. THEREFORE, FILING OF WEALTH TAX RETURN BY DONOR CAN NOT BE TAKEN A GROUND TO EXPLAIN THE GIFT. EVEN IF WE CONSIDER THE STATEME NT OF WEALTH THE TOTAL NET WEALTH AS PER STATEMENT OF WEALTH IS RS.24,58,280/- . THE AMOUNT OF GIFT OF RS.10,00,000/- COMES TO THE MAJOR PART OF THE WEALT H WHICH IS UNLIKELY TO BE DONATED TO A NON-RELATIVE. THE COMPOSITION OF WEALT H ITSELF SHOWS THAT DONOR WAS NOT IN A SOUND FINANCIAL POSITION WHICH COULD E XPLAIN THE HUGE GIFT TO A NON-RELATIVE THAT TOO ON NO OCCASION. THIS STATEME NT OF WEALTH ALSO SHOWS THAT THE SO-CALLED DONOR - SHRI SATISH KUMAR DHINGRA WAS NOT OWNING ANY IMMOVABLE PROPERTY. THE ASSESSEE HAS ALSO NOT PROD UCED THE DONOR TO CONFIRM THE TRANSACTION AND TO EXPLAIN THE SOURCE. FURTHER, THE DONOR IS STATED TO BE NOT TRACEABLE. IN VIEW OF SECTION 68 OF INCO ME-TAX ACT, 1961, AMOUNT CREDITED IN BOOKS OF ASSESSEE AND ASSESSEE FAILS TO EXPLAIN THE GENUINE SOURCES OF THE SAME, THEN IT SHALL BE ASSESSED INCOME. IN THIS CASE ALSO, PRIMA FACIE THE EVIDENCES ARE AGAINST THE ASSESSEE. ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE SHOW THAT THE GIFT WAS NOT A GENUINE GIFT. THE ASSESSEE HAS FAILED TO PROVE THE EXISTENCE OF NATURAL LOVE AND AFFECTION. THE ASSESSEE HAS ALSO FAILED ITA NO.3913/DEL./2011 7 TO PROVE THE GENUINENESS OF THE GIFT TRANSACTION AN D THE CREDITWORTHINESS OF DONOR. IN VIEW OF THESE FACTS, WE FIND NO FAULT IN THE ORDER OF THE AUTHORITIES BELOW AND WE SUSTAIN THE SAME. WE DISMISS ALL THE GROUNDS OF ASSESSEES APPEAL. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF MARCH, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 23 RD DAY OF MARCH, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXX, NEW DELHI. 5.CIT(ITAT), NEW DELHI AR, ITAT NEW DELHI.