ACIT CEN CIR -14, MUMBAI V. SURENDRA S. BARMEDCHA, GUJRAT

ITA 4064/MUM/2009

• Counselvise Citation: 406419914 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 23-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 01-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHA SARATHI NAIK
• Assessee Lawyers: B V JHAVERI
• Keywords: Gift; Corroborative evidences; Onus to prove
• Section: 142(1); 147; 12; 10; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI B. RAMAKOTAI AH (AM) I.T.A. NO.3978/MUM/2009 (A.Y. 2001-02) SHRI SURENDRA S. BARMECHA, 7C, RATAN MILAN APARTMENT, GHOD DOD ROAD, SURAT, GUJARAT. PAN: AAAPB6520A. VS. ASSTT. COMMR. OF INCOME-TAX, CENTRAL CIRCLE 14, CGO BLDG. ANNEX, R.NO.1102, 11 TH FLOOR, M.K. ROAD, MUMBAI-400 020. APPELLANT RESPONDENT I.T.A. NO.4064/MUM/2009 (A.Y. 2001-02) ASSTT. COMMR. OF INCOME-TAX, CENTRAL CIRCLE 14, CGO BLDG. ANNEX, R.NO.1102, 11 TH FLOOR, M.K. ROAD, MUMBAI-400 020. VS. SHRI SURENDRA S. BARMECHA, 7C, RATAN MILAN APARTMENT, GHOD DOD ROAD, SURAT, GUJARAT. PAN: AAAPB6520A. APPELLANT RESPONDENT ASSESSEE BY SHRI B.V. JHAVERI DEPARTMENT BY SHRI P ARTHASARATHI NAIK. DATE OF HEARING 23-11-2011 DATE OF PRONOUNCEMENT 30-11-2011 O R D E R PER D.K. AGARWAL, JM : THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER DATED 18-05-2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2001-02. ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THI S CASE SEARCH & SEIZURE ACTION U/S.132 OF THE INCOME-TAX ACT, 1961 (THE ACT), WAS CONDUCTED ON 05-10-2007 ON THE ASSESSEE AND HIS GROUP ENTITIES ARE ENGAGED IN THE BUSINESS OF DIAMOND TRADING AND MONEY LENDING BUSINESS. THE A.O. OBSERVED THAT DURI NG THE COURSE OF ENQUIRY BY THE INVESTIGATION WING, A STATEMENT WAS RECORDED U/S.13 1 OF THE ACT ON 12-10-2007, WHEREIN THE ASSESSEE HAS GIVEN HIS WRITTEN SUBMISSI ONS, THE RELEVANT EXTRACT OF THE SAME IS REPRODUCED AS UNDER : THERE WERE CERTAIN GIFTS RECEIVED FROM MY FAMILY MEMBERS, THEY ROUGHLY AMOUNT TO RS.1.51 CRORES. I W OULD LIKE TO DISCLOSE MY GIFTS BUT AFTER GOING THROUGH MY ACC OUNTS. THE DETAILED YEAR WISE AND FAMILY MEMBER WISE BIFURCATI ON SHALL BE PROVIDED AFTER I GO THROUGH THE SEIZED PAPERS. AFTER GOING THROUGH THE SEIZED MATERIALS I MAY BE GIVEN A CHANCE TO INCREASE MY DISCLOSURE TO FULLY COVER M Y DISCLOSED INCOME FOR THE BLOCK PERIOD FOR WHICH I AM UNAWARE OF AS OF DATE. THE AO FURTHER OBSERVED THAT AS PER THE INCRIMINAT ING DOCUMENTS AND OATH RECORDED U/S.131 OF THE I.T. ACT, 1961, AT THE RESI DENTIAL PREMISES OF THE ASSESSEE, I.E. B-2, 13 TH FLOOR, MATRU AASHISH, NEPEAN SEA ROAD, MUMBAI, ON 12.10.2007, THE ANNEXURE A-3, REVEALS THAT THE ASSESSEE HAS RECEIVE D GIFTS FROM AS PER DETAILS GIVEN BELOW FOR THE FY 2000-01: SR.NO. GIFT MADE BY GIFT MADE TO AMOUNT (RS.) DATE OF GIFT 1 SUBHAKARAN BARMECHA SURENDRA BARMECHA 14,00,000 7-4-2000 & 30-3-2001 2 SUBHAKARAN BARMECHA MASTER SUMIT S. BARMECHA 10,00,000 7-4-2000 ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 3 3 SUBHAKARAN BARMECHA MASTER SUMIT S. BARMECHA 11,00,000 20-12-2000 TOTAL 35,00,000 ` HE FURTHER NOTED THAT MASTER SUMIT S. BARMECHA IS A SON OF SURENDRA BARMECHA AND AS SUMIT S. BARMECHA IS MINOR, THE INCOME HAS TO BE INCLUDED IN THE HANDS OF SURENDRA BARMECHA AS PER THE PROVISION U/S.64(1A) O F THE IT ACT 1961. HE FURTHER OBSERVED THAT SINCE THE ASSESSEE FAILED TO FILE TH E REQUISITE RETURN OF INCOME AS PER STATEMENT GIVEN BY THE ASSESSEE, THE AO ISSUED NOTI CE U/S.148 DATED 26-03-2008 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONS E, IT WAS SUBMITTED BY THE ASSESSEE THAT HE HAS HIS BUSINESS IN SURAT AND AS T HE PREVIOUS RETURNS OF INCOME WERE FILED IN MUMBAI, BUT AS OF NOW HE HAS SHIFTED HIS PAN TO CIT, SURAT, AND REQUESTED TO TRANSFER THE CASE TO SURAT. THEREAFTER , NOTICE UNDER SECTIONS 143(2) AND 142(1) DATED 05-09-2008 ALONG WITH DETAILED QUE STIONARE WERE ISSUED FIXING THE HEARING FOR 16-09-2008. IN THE ABSENCE OF ANY COMPLIANCE, AGAIN, A NOTICE U/S. 142(1) WAS ISSUED FIXING THE HEARING ON 13-10-2008 WHICH WAS AGAIN NOT COMPLIED WITH. ON 04-11-2008, THE ASSESSEE SUBMITTED THAT NO REASONS FOR RE-OPENING WERE FURNISHED SO AS TO KNOW THE NATURE AND AMOUNT OF IN COME WHICH HAS ESCAPED ASSESSMENT. VIDE LETTER DATED 24-11-2008, THE ASSES SEE WAS REQUESTED TO ATTEND TO THE OFFICE PERSONALLY FOR THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT. THE ASSESSEE DID NOT ATTEND BUT SENT ANOTHER LETTER STATING THAT REASONS FOR RE- OPENING COULD HAVE BEEN SENT BY POST. THE AO HELD T HAT THE ASSESSEE HAS DELIBERATELY FAILED TO ATTEND AND AVOIDED MAKING CO MPLIANCE TO VARIOUS NOTICES. THEREFORE, THE ASSESSMENT WAS FRAMED U/S.144 OF THE ACT BASED ON THE MATERIAL AVAILABLE ON RECORD. AS THE ASSESSEE FAILED TO FILE THE RETURN OF INCOME, THE AO TREATED THE RETURNED INCOME FOR THE ASSESSMENT YEAR 2002-03 OF RS.3,09,280/- AS ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 4 INCOME FOR THE YEAR UNDER CONSIDERATION, AND IN THE ABSENCE OF ANY EXPLANATION ABOUT THE SOURCES OF GIFTS AND LOANS, THE AO ADDED THE UNEXPLAINED GIFTS OF RS.35,00,000/- AND UNEXPLAINED LOAN CREDITS OF RS.2 4,93,358/- TO THE INCOME OF THE ASSESSEE AND THEREBY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.63,02,638/- VIDE ORDER DATED 19-12-2008 PASSED U/S.144 READ WIT H SEC. 147 OF THE ACT. ON APPEAL, THE LD. CIT(A), WHILE UPHOLDING THE ACTION OF THE AO IN COMPLETING THE ASSESSMENT U/S.144, SUSTAINED THE ADDITION OF GIFT OF RS.10,00,000/- AND DELETED THE BALANCE ADDITION OF GIFTS TO THE EXTENT OF RS.2 5,00,000/- AND ALSO DELETED THE ADDITION OF UNEXPLAINED LOAN CREDITS OF RS.24,93,35 8/-. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE US. ITA NO.3978/MUM/2009 (ASSESSEES APPEAL) : 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS GROUND NOS.1, 2, 4 AND 7, WHICH W AS NOT OBJECTED TO BY THE LD. D.R. 5. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPOR TING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, GROUND NOS.1, 2, 4 AND 7 TAKEN BY THE ASSESSEE ARE, THEREFORE, REJECTED BEING NOT PRESSE D. 6. GROUND NOS.3 & 6 ARE AGAINST THE SUSTENANCE OF A DDITION OF GIFT OF RS.10 LAKHS. 7. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO N OTED THAT THE ASSESSEE HAS RECEIVED GIFTS OF RS.35,00,000/-. IN THE ABSENCE OF ANY EXPLANATION BY THE ASSESSEE TO SHOW THE SOURCES AND GENUINENESS OF THE ABOVE GI FTS, THE AO TREATED THE ENTIRE ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 5 AMOUNT OF GIFTS OF RS.35,00,000/- AS UNEXPLAINED GI FTS. BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING THE CO PIES OF RETURNS AND BALANCE-SHEET OF THE DONOR, DONEE AND THE ASSESSEE AND SUBMITTED THAT THE GIFTS RECEIVED BY THE ASSESSEE ARE GENUINE AND SHOULD BE ACCEPTED. THE LD . CIT(A) SENT THE ASSESSEES SUBMISSIONS ALONG WITH EVIDENCE TO THE AO FOR HIS C OMMENTS. THE LD. CIT(A), AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND THE REMA ND REPORT OF THE AO, HELD THAT THE GIFT OF RS.11,00,000/- ALLEGED TO HAVE BEEN REC EIVED BY MASTER SUMIT S. BARMECHA DOES NOT PERTAIN TO THE SUBJECT YEAR UNDER CONSIDERATION AS THE ACTUAL DATE OF GIFT IS 20-12-2002. THEREFORE, IRRESPECTIVE OF THE NATURE OF THIS AMOUNT, THE AMOUNT OF RS.11,00,000/- WAS NOT INCLUDIBLE IN THE ASSESSEES HANDS FOR ASSESSMENT YEAR 2001-02. ANOTHER GIFT OF RS.14,00,000/- DATED 07-04-2000 WAS MADE TO SHRI SURENDRA BARMECHA (HUF) WHO IS A SEPARATE TAXABLE ENTITY, THEREFORE, THE AMOUNT OF RS.14,00,000/- ON ACCOUNT OF THAT GIFT CAN ALSO NOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE. THUS, ONLY ONE GIFT OF RS.10,00,000/- DATED 07-04-2000 GIVEN TO MASTER SUMIT S. BARMECHA, BEING MINOR SON, IS LIABL E TO BE CONSIDERED IN THE HANDS OF THE ASSESSEE. HE FURTHER OBSERVED THAT SINCE THE ASSESSEE HAS FAILED TO GIVE SUPPORTING EVIDENCE WITH REGARD TO THE GENUINENESS OF THE GIFT AT THE TIME OF ASSESSMENT, THEREFORE, THE ASSESSEE HAS FAILED TO D ISCHARGE THE ONUS AND HENCE HE CONFIRMED THE ADDITION OF RS.10,00,000/- IN THE HAN DS OF THE ASSESSEE. 8. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, AFTER REFERRING TO THE VARIOUS PAPERS OF THE ASSESSEES PAPER BOOK CONTAIN ING COPY OF ACKNOWLEDGEMENT OF THE RETURN FOR ASSESSMENT YEAR 2001-02, COMPUTAT ION OF INCOME, BALANCE-SHEET, CAPITAL ACCOUNT, PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31-3-2001, TAX AUDIT REPORT, BALANCE-SHEET AS AT 31-3-2001 OF MASTER SUM IT S. BARMECHA AND MS. SHRISTI S. BARMECHA, GIFT DECLARATION OF SHRI SUBHKARAN BAR MECHA, THE DONOR, WHEREIN HE ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 6 HAS CONFIRMED THAT THE GIFT OF RS.10,00,000/-WAS GI VEN TO MASTER SUMIT S. BARMECHA VIDE CHEQUE NO.685693 DATED 07-04-2000, WHICH WAS ALSO FOUND DURING THE COURSE OF SEARCH, LETTER TO THE CIT(A) DATED 24-02-2009 AL ONG WITH ACKNOWLEDGEMENT OF THE RETURN, COMPUTATION OF INCOME, BALANCE-SHEET, C APITAL ACCOUNT AND P & L ACCOUNT FOR ASSESSMENT YEAR 2001-02 OF SHRI SUBHKAR AN BARMECHA, THE DONOR, SURENDRA S. BARMECHA (HUF) AND MASTER SUMIT S. BARM ECHA, THE DONEES, COPY OF BANK ACCOUNT OF DENA BANK OF SHRI SUBHKARAN BARMECH A, THE DONOR, AND COPY BANK PASS BOOK OF MASTER SUMIT S. BARMECHA, THE DONEE, FOR THE RELEVANT YEAR, COPY OF ACKNOWLEDGEMENT OF RETURN, COMPUTATION OF INCOME, B ALANCE-SHEET, CAPITAL ACCOUNT, PROFIT & LOSS ACCOUNT AND OTHER DETAILS OF SHRI SUR ENDRA S. BARMECHA, THE DONEE, FOR ASSESSMENT YEAR 2002-03 APPEARING AT PAGES 1 TO 48 OF ASSESSEES PAPER BOOK, SUBMITS THAT IN VIEW OF THE ABOVE EVIDENCE, THE GIF T OF RS.10,00,000/- BY SHRI SUBHKARAN BARMECHA TO THE ASSESSEES MINOR SON, MAS TER SUMIT S. BARMECHA, WHO IS THE GRANDSON OF THE DONOR, IS GENUINE AND THE AS SESSEE HAS DISCHARGED HIS ONUS TO PROVE THAT THE DONOR, SHRI SUBHKARAN BARMECHA, HAS GIVEN A GIFT OF RS.10,00,000/- TO THE DONEE MASTER, SUMIT S. BARMECHA, ON 07-04-20 00 BY ACCOUNT PAYEE CHEQUE. HE, THEREFORE, SUBMITS THAT THE ADDITION MADE BY TH E AO AND SUSTAINED BY THE CIT(A) BE DELETED. 9. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING O N THE ORDER OF THE AO, SUBMITS THAT SINCE THE ASSESSEE HAS NOT FILED THE RETURN AN D HAS MADE NO COMPLIANCE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO TO EXAMINE THE SAME AFRESH. 10. IN THE REJOINDER, THE LD. COUNSEL FOR THE ASSES SEE, WHILE REFERRING TO PAGE NOS.49-51 OF THE ASSESSEES PAPER BOOK, SUBMITS TH AT DESPITE THE REQUEST MADE BY ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 7 THE ASSESSEE THE AO HAS NOT FURNISHED THE REASONS F OR RE-OPENING OF THE ASSESSMENT, WHICH WERE FURNISHED BY THE AO ON 25-3-2010 I.E. M UCH AFTER THE ASSESSMENT, THEREFORE, THERE IS NO DEFAULT ON THE PART OF THE A SSESSEE AND, THEREFORE, THE ASSESSMENT SHOULD NOT BE SET ASIDE TO THE FILE OF THE AO. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT FILED THE RELEVANT DETAILS TO PROVE THE GENUINENESS OF THE GIFTS. HOWEVER, BEFORE THE CIT(A), THE ASSESSEE HAS FILED COMPLETE DETAILS ALONG WITH COPIES OF ACCOUNT S TO PROVE THE GIFT OF RS.10,00,000/- RECEIVED BY THE ASSESSEES MINOR SON FROM HIS GRAND-FATHER, SHRI SUBHKARAN BARMECHA. THE LD. CIT(A) FORWARDED THE AS SESSEES SUBMISSIONS ALONG WITH SUPPORTING EVIDENCE TO THE AO FOR HIS COMMENTS . IN REPLY, THE AO, WHILE ACCEPTING THAT THE GIFT OF RS.11,00,000/- WAS RECEI VED BY MASTER SUMIT S. BARMECHA, SON OF THE ASSESSEE, ON 20-12-2002, PERTAINING TO T HE ASSESSMENT YEAR 2003-04, OBSERVED WITH REGARD TO THE OTHER GIFTS THAT THE ASSESSEE HAS FAILED TO FILE SUPPORTING MATERIAL WITH DOCUMENTARY EVIDENCE DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, THE ASSESSEE HAS NOT DISCHA RGED HIS BURDEN. WE FURTHER FIND THAT THE LD. CIT(A), WHILE DELETING THE ADDITION OF GIFT OF RS.14,00,000/- ON THE GROUND THAT IT WAS MADE TO SURENDRA BARMECHA HUF, A SEPARATE TAXABLE ENTITY, AND AND RS.11,00,000/- PERTAINING TO THE ASSESSMENT YEA R 2003-04 AND NOT FOR THE YEAR UNDER CONSIDERATION, CONFIRMED THE ADDITION OF GIFT OF RS.10,00,000/- FOR THE REASON THAT THE ASSESSEE HAS FAILED TO DISCHARGE H IS BURDEN. HOWEVER, WE FIND FROM THE COPY OF CAPITAL ACCOUNT OF SHRI SUBHKARAN BARME CHA, THE DONOR, APPEARING AT PAGE 28 OF THE ASSESSEES PAPER BOOK, FILED ALONG W ITH THE RETURN AND BALANCE-SHEET ETC. ON 28-06-2001, THAT THE DONOR WAS HAVING OPEN ING BALANCE OF RS.1,19,40,138/- ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 8 , CURRENT INCOME OF RS.35,89,628/- AND OTHER RECEIP TS RS.2,937/- AND HAS GIVEN TWO GIFTS DURING THE YEAR BY DEBITING HIS CAPITAL ACCOU NT BY RS.10,00,000/- TO MASTER SUMIT S. BARMECHA, GRANDSON, AND BY RS.14,00,000/- TO SHRI SURENDRA S. BARMECHA (HUF). IN SUPPORT, THE ASSESSEE HAS ALSO FILED GIFT DECLARATION OF THE GIFT OF RS.10,00,000/- DATED 7-4-2000 AND COPY OF BANK STAT EMENT OF THE DONOR, SHRI SUBHKARAN BARMECHA, TO SHOW THAT THE AMOUNT OF RS.1 0,00,000/- WAS DEBITED IN HIS DENA BANK ACCOUNT ON 07-04-2000 WHICH WAS ALSO CRE DITED IN THE DENA BANK ACCOUNT OF THE DONEE, MASTER SUMIT S. BARMECHA, ON THE SAME DATE I.E. 07-04-2000 BY TRANSFER ENTRY. WE FURTHER FIND THAT THE ASSESSE E IN HIS RETURN FOR THE YEAR UNDER CONSIDERATION I.E. 2001-02, WHICH WAS FILED ON 28-0 6-2001, HAS NOT ONLY ENCLOSED COPY OF HIS BALANCE-SHEET, CAPITAL ACCOUNT, P & L A CCOUNT AND AUDIT REPORT BUT ALSO ENCLOSED COPIES OF BALANCE-SHEETS OF MASTER SUMIT S. BARMECHA SHOWING THE CREDIT OF THE ABOVE GIFT OF RS.10,00,000/-AND COPY OF BAL ANCE-SHEET OF MS. SHRISTI S. BARMECHA, HIS MINOR CHILDREN, AND HAS CLUBBED THEI R INCOME IN VIEW OF THE PROVISIONS OF SEC. 64(1A) OF THE ACT. THUS, THE ASS ESSEE HAS FULLY DISCHARGED NOT ONLY HIS ONUS BUT ALSO THE BURDEN CAST ON HIM BY PROVIN G THE IDENTITY OF THE DONOR AND HIS CREDIT-WORTHINESS AS WELL AS THE GENUINENESS OF THE GIFTS. MERELY BECAUSE THE ASSESSEE HAS MADE A STATEMENT RECORDED U/S.131 OF T HE ACT ON 12-10-2007 THAT HE WOULD LIKE TO DISCLOSE HIS GIFTS BUT AFTER GOING TH ROUGH THE ACCOUNTS, DOES NOT MEAN THAT THE IMPUGNED GIFT OF RS.10,00,000/- RECEIVED B Y THE ASSESSEES MINOR SON, MASTER SUMIT S. BARMECHA, IS NOT GENUINE WHEN THE R EVENUE EVEN AT THIS STAGE HAS NOT POINTED OUT THAT THE ENTRIES APPEARING IN THE A BOVE FINANCIAL STATEMENTS INCLUDING THE BANK ACCOUNT OF SHRI SURENDRA S. BAR MECHA, DONOR, AND MASTER SUMIT S. BARMECHA, DONEE, ARE BOGUS OR FOUND TO BE FALSE OR UNTRUE. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THE ADDITION OF GIF T OF RS.10,00,000/- SUSTAINED BY ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 9 THE LD. CIT(A) IS NOT SUSTAINABLE IN LAW AND ACCORD INGLY THE SAME IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOW ED. 12. GROUND NO. 5 IS AGAINST NON-ADJUDICATION OF GRO UND OF APPEAL NOS. 6 & 7 RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN RES PECT OF RETURNED INCOME OF RS.3,09,280/- TAKEN BY THE AO. 13. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AO, WHILE COMPUTING THE INCOME OF THE ASSESSEE, HAS TAK EN THE ASSESSEES INCOME AT RS.3,09,280/- AS AGAINST THE ASSESSEES INCOME AT R S.2,56,507/-. IN FACT, THE SAID INCOME OF RS.3,09,280/- PERTAINS TO THE ASSESSMENT YEAR 2002-03. HE FURTHER SUBMITS THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAS TAKEN GROUND NO. 7 IN THIS REGARD. HOWEVER, THE LD. CIT(A) HAS NOT ADJUDICATED THE SAME. HE FURTHER SUBMITS THAT SINCE THE MATTER REQUIRES VERIFICATION AT THE END OF THE AO, THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO, WHICH WAS NOT OBJECTED TO BY THE LD. D.R. 14. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO, IN THE ABSENCE OF ANY RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION I.E. 2001-02, HAS TAKEN THE RETURNED INCOME FOR THE ASSESSMENT YEAR 2002-03 RS. 3,09,280/- AS ASSESSEES INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, W E FIND THAT THE ASSESSEE HAS FILED THE RETURN FOR THE YEAR UNDER CONSIDERATION AT AN INCOME OF RS.2,56,510/- ON 28-6-2001 AS PER COPY OF ACKNOWLEDGEMENT OF THE RET URN APPEARING AT PAGE 1 OF THE ASSESSEES PAPER BOOK. THIS BEING SO AND KEEPING IN VIEW THAT SINCE THE MATTER REQUIRES VERIFICATION AT THE END OF THE AO, THERE FORE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD GO BACK TO T HE FILE OF THE AO AND ACCORDINGLY ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 10 WE, INSTEAD OF REMANDING BACK THE MATTER TO THE FIL E OF THE LD. CIT(A) TO ADJUDICATE THE GROUNDS TAKEN BY THE ASSESSEE, RESTORE THE MAT TER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HE REINABOVE AND ACCORDING TO LAW AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.4064/MUM/2009 (REVENUES APPEAL): 15. THE GROUND TAKEN BY THE REVENUE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LTD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25,00,000/- AND RS.24,93,358/- BEING THE GIFTS R ECEIVED FROM RELATIVES AND UNEXPLAINED LOAN CREDIT RESPECTI VELY WITHOUT APPRECIATING THAT (I) THE ASSESSEE FAILED TO ATTEND AND EXPLAIN THE SOUR CES OF GIFTS AND ALSO FAILED TO FURNISH SUPPORTING EVID ENCES IN SUPPORT OF THE MONEY RECEIVED FROM HIS RELATIVES . (II) THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER AS PROMISED IN THE STATEMENT RECORDED U/S. 132(4) 16. BRIEF FACTS OF THE ISSUE PERTAINING TO THE AD DITION OF GIFTS HAVE ALREADY BEEN MENTIONED IN THE ASSESSEES APPEAL HEREINABOVE. TH EREFORE, WE DO NOT CONSIDER IT NECESSARY TO REPEAT THE SAME. AS REGARDS THE ADDITI ON OF UNEXPLAINED LOAN CREDITS OF RS.24,93,358/-, THE AO, IN THE ABSENCE OF RETURN FOR THE YEAR UNDER CONSIDERATION, HAS OBSERVED THAT ON PERUSAL OF THE BALANCE-SHEET ENDED ON 31-3-2002 IT REVEALS THAT THE ASSESSEE IS HAVING CREDIT BALANCES AS ON 3 1-3-2001 IN THE ACCOUNTS OF SURENDRA BARMECHA RS.24,134/-, SURENDRA BARMECHA HU F RS.4,78,435/-, RUKMANI S. BARMECHA RS.5,59,814/-, SAURABH BARMECHA RS.11,9 3,756/- AND SANGEETA BARMECHA RS.2,37,219/- AGGREGATING TO RS.24,93,358/ -. IN THE ABSENCE OF ANY LOAN ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 11 CONFIRMATIONS, THE AO ADDED THE SAME TO THE TOTAL I NCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A), WHILE OBSERVING THAT ALL TH E LOAN ACCOUNTS WERE CONTINUING FROM THE EARLIER YEAR AND THERE WERE FURTHER ADDITI ONS/OUTGOINGS IN THESE LOAN ACCOUNTS DURING THE YEAR AND THE ITEM OF UNSECURED LOANS WAS NOT IN THE REASONS RECORDED U/S.148, DELETED THE ADDITION MADE BY THE AO. 17. AT THE TIME OF HEARING, THE LD. D.R., WHILE R ELYING ON THE ORDER OF THE AO, SUBMITS THAT IN VIEW OF HIS EARLIER SUBMISSIONS IN ASSESSEES APPEAL, THE ISSUES MAY BE SET ASIDE TO THE FILE OF THE AO. 18. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE RELIED ON THE ORDER OF THE LD. CIT(A). 19. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND F ROM THE CHART OF THE GIFTS RECEIVED AS PER TABLE GIVEN IN PARA 2 OF THIS ORD ER THAT THE FIRST GIFT OF RS.14,00,000/-DATED 07-04-2000 AND 30-3-2001 WAS RE CEIVED BY SHRI SURENBDRA S. BARMECHA (HUF) AND NOT BY THE ASSESSEE. WE FURTHER FIND THAT THE DONOR, SHRI SUBHKARAN BARMECHA, HAS DULY DISCLOSED THE ABOVE G IFT IN HIS CAPITAL ACCOUNT AS DISCUSSED IN THE ASSESSEES APPEAL HEREINABOVE. WE FURTHER FIND THAT SHRI SURENDRA S. BARMECHA (HUF), THE DONEE, IS SEPARATELY ASSESSE D TO TAX AND HAS FILED HIS RETURN DISCLOSING RECEIPT OF THE ABOVE GIFT APPEARING AT P AGES 29 TO 31 OF THE ASSESSEES PAPER BOOK. WE FURTHER FIND THAT THE OTHER GIFT OF RS.11,00,000/- RECEIVED FROM SHRI SUBHKRAN BARMECHA BY THE ASSESSEES MINOR SON, MASTER SUMIT S. BARMECHA, ON 20-12-2002 PERTAINS TO THE FINANCIAL YEAR 2002-0 3 RELEVANT TO ASSESSMENT YEAR 2003-04 AND THE AO IN THE LAST PARA OF HIS REMAND R EPORT HAS DULY ACCEPTED THIS FACT THAT THE GIFT OF RS.11,00,000/- WAS RECEIVED B Y MASTER SUMIT S. BARMECHA, SON ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 12 OF THE ASSESSEE, ON 20-12-2002, THEREFORE, THE SAME PERTAINS TO THE ASSESSMENT YEAR 2003-04. THIS BEING SO, AND IN THE ABSENCE OF ANY C ONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE AGAINST THE ABOVE FACTUAL MAT RIX OF THE CASE, WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITI ON OF THE ABOVE GIFTS OF RS.14,00,000/- AND RS.11,00,000/- AGGREGATING TO RS .25,00,000/- TO THE INCOME OF THE ASSESSEE AND THE LD. CIT(A) HAS RIGHTLY DELETED THE SAME. 20. AS REGARDS THE DELETION OF ADDITION OF UNEXPLAI NED LOAN CREDITS RS.24,93,358/-, WE FIND THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAS FILED THE FOLLOWING DETAILS ALONG WITH CONFIRMATIONS : SR.NO. NAME OF THE PERSONS LOANS AS ON 31-03-2001 LOANS ON 31-03- 2000 1. SHARASTI BARMECHA 7570.00 72078.00 2. SURENDRA BARMECHA HUF 458956.00 155000.00 (DR.) 3. RUKMANI S.BARMECHA 33421.00 442235.00 4. SAURABH BARMECHA 576738.00 57000.00 5. SANGEETA BARMECHA 691931.00 150000.00 THE LD. CIT(A), AFTER CONSIDERING THE SAME, HAS HEL D VIDE PARA 5.4 OF HIS ORDER AS UNDER : 5.4 I HAVE CAREFULLY CONSIDERED THE FACTS AND SUBM ISSIONS AND FIND FORCE IN THE ARS CONTENTION. ON PERUSAL O F THE DETAILS, I FIND MERIT IN THE ARS CONTENTION THAT A O HAD WRONGLY TAKEN THE FIGURES OF LOANS FROM THE BALANCE SHEET FOR 31.03.2002 AND THE FIGURES OF UNSECURED LOANS T AKEN AT RS.24,93,358/- WERE INCORRECT. FROM THE DETAILS OF THE UNSECURED LOANS AS ON 31.03.2000 AND 31,03.2001, IT WAS EVIDENT THAT ALL THE LOAN ACCOUNTS WERE CONTINUING FROM THE EARLIER YEARS AND THERE WERE FURTHER ADDITIONS/OUTG OINGS IN THESE LOANS ACCOUNTS DURING THE YEAR. THUS THE IDEN TITY OF THE CREDITORS WAS ESTABLISHED AND LOANS STOOD SHOWN IN THE RETURNS OF INCOME OF THE RESPECTIVE FAMILY MEMBER. IN THE STATEMENT GIVEN BY THE APPELLANT DURING THE COURSE OF SEARCH, THERE WAS ADMISSION REGARDING THE BOGUS NAT URE OF ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 13 GIFTS AND CONSEQUENT PROMISE TO MAKE DISCLOSURE BUT NO SUCH ADMISSION WAS MADE WITH REGARD TO THE LOANS/CREDITS FROM FAMILY MEMBERS. THE AO HAD BROUGHT NO MATERIAL ON R ECORD TO SUPPORT HIS FINDING THAT THE UNSECURED LOANS/CRE DITS FROM THE FAMILY MEMBERS WERE BOGUS. NEITHER THE AO HAD INCLUDED THE AMOUNT OF UNSECURED LOANS AS ONE OF TH E ITEMS OF ESCAPED INCOME IN THE REASONS RECORDED FOR ISSUA NCE OF NOTICE U/S.148. THEREFORE, THERE WAS NO COGENT BASI S FOR THE ADDITION MADE AT RS.24,93,358/- WHICH WAS NEITHER F ACTUALLY CORRECT NOR LEGALLY SUSTAINABLE IN PRINCIPLE. ACCOR DINGLY, THE ADDITION MADE AT RS.24,93,358/- IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON R ECORD BY THE REVENUE AGAINST THE FINDING OF THE LD. CIT(A) AND KEEPING IN VIEW THAT THE ADDITIO N WAS MADE BASED ON THE BALANCE-SHEET FOR THE SUBSEQUENT ASSESSMENT YEAR, WHICH IS NOT VALID IN LAW, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE SAME. THE GROU NDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 21. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30TH D AY OF NOVEMBER, 2011. SD/- SD/- (B. RAMAKOTAIAH) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 30TH NOVEMBER , 2011. NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A), CENTRAL-III,MUMBAI. 4 CIT, CENTRAL-I,MUMBAI. 5.DR,J BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 14 BY ORDER, ASST. REGISTRA R, ITAT, MUMBAI. ITA NOS.3978 & 4064/M/2009 SURENDRA S. BARMECHA 15 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 24-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 25-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 . DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER