Shri Nitinkumar Ramanlal Patel, Surat V. The Income tax Officer,Ward-8(3), Surat

ITA 4131/AHD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50522 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: R N VEPARI
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D.AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER I.T.A. NO.4131/AHD/2008 (ASSESSMENT YEAR : 2005-06) SHRI NITIN KUMAR RAMANLAL PATEL PROP. NITIN FABRICS P-443, NEW GIDC KATARGAM, SURAT VS. THE ITO WARD-8(3) SURAT PAN/GIR NO. : ABCPP 0659 H ( APPELLANT ) .. ( RESPONDENT ) A PPELLANT BY : SHRI R.N. VEPARI, A.R. RESPONDENT BY: SHRI B.L. YADAV, D.R. DATE OF HEARING : 24/08/ 2011 DATE OF PRONOUNCEMENT : 26/08/2011 O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-V, SURAT DATED 20/11/2008 PASSED FOR ASSESSMENT YEAR 2005-06 AND THE GROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS. 2. GROUND NO.(I) READS AS UNDER:- (I) ADDITION OF ALLEGED BOGUS GIFTS :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN CONFIRMING ADDITION OF ALLEGED BOGUS GIFTS WHEN NECESSARY EVIDENCE REGARDING GENUINENESS AND RELATED ASPECTS WERE FURNISHED. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ADDITION IS REQUIRED TO BE DELETED. ITA NO. 4131/AHD/2008 SHRI NITINKUMAR RAMANLAL PATEL VS. ITO ASST.YEAR - 2005-06 - 2 - 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT DATED 28/12/2007 WERE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S.NITIN TEXTILE AND IN THE BUSINESS OF MANUFACTURING OF ART SILK GREY CLOTH. IT WAS NO TED BY THE AO THAT THE ASSESSEE HAS RECEIVED GIFTS FROM THE FOLLOWING THRE E PARTIES:- SR.NO. NAME DATE AMOUNT 1 ISHVARLAL K. DHOLIYA 25.05.2004 1,00,000/- 2 DEVRAJBHAI DHANJIBHAI BORDA 30.06.2004 1,00,000/- 3 R.K. SINGH 08.07.2004 1,00,000/- TOTAL 3,00,000/- 2.2. THE AO HAS MADE A DETAILED INVESTIGATION IN RE SPECT OF THE ALLEGED DONORS AND THEREAFTER HE HAS GIVEN A CATEGORICAL FI NDING THAT THE ASSESSEE WAS UNABLE TO ESTABLISH THEIR CREDITWORTHINESS AS A LSO THE GENUINENESS OF THE TRANSACTION. THE SAID AMOUNT OF RS.3 LACS W AS TAXED BY INVOKING THE PROVISIONS OF SECTION 68 OF THE I.T. ACT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS ALSO GIVEN DUE CONSIDERATION O F THE ASSESSEES PLEADINGS AND THEREAFTER REJECTED THE SAME IN THE F OLLOWING MANNER:- I HAVE CAREFULLY GONE THROUGH THE CONTENTION OF TH E A.O. AS WELL AS A.O. THE FACT OF THE MATTER IS THAT RECEIPT OF GIFTS ARE NOT EVERYDAY AFFAIR THAT THE APPELLANT CAN CLAIM TO FOR GET. THESE ARE ALSO NOT ROUTINE BUSINESS TRANSACTION THAT ARE COND UCTED IN MULTIPLE AND REPETITIVE MANNER WHICH CAN BE EASILY FORGOTTEN. AS ITA NO. 4131/AHD/2008 SHRI NITINKUMAR RAMANLAL PATEL VS. ITO ASST.YEAR - 2005-06 - 3 - REPORTED WHEREABOUT OF ONE DONER SH. R.K. SINGH WER E NOT KNOWN TO THE ASSESSEE. THE APPELLANT WAS EXAMINED AND HE COULD NOT GIVE THE DETAILS TO THE ADEQUATE SATISFACTION OF THE APP ELLANT. THE ENTIRE ARGUMENT IS ONLY ARE EYE WASH ON THE PART OF THE AP PELLANT. IT IS NOT LIKELY THAT RECIPIENT OF A GENUINE GIFT W ILL FORGET THE DETAILS SO EASILY. SECONDLY EACH GIFT BEING OF RS.1,00,000 /- ALSO INDICATE THAT THESE WORD MANAGED. EVEN THE EARNING CAPACITI ES OF DONORS WAS FAR TOO LESS TO HAVE MADE THESE GIFTS AS MENTIO NED BY THE A.O. I HAVE NO DOUBT IN MY MIND THAT ALL THESE 3 GIFTS W ERE NOT GENUINE. AND THEREFORE THERE REPRESENTED APPELLANTS UNDISCL OSED INCOME ONLY. THIS GROUND OF APPEAL THEREFORE FAILS AND A. O.S ACTION IS UPHELD. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE NOTED T HAT THE AO HAS ELABORATELY DISCUSSED THE ISSUE OF BOGUS GIFTS AND THEREAFTER INVOKED THE PROVISIONS OF THE SECTION 68 OF THE I.T. ACT. IN RESPECT OF GIFT FROM SHRI R.K. SINGH, THE ASSESSEE WAS ASKED TO FURNISH THE F ULL NAME AND THE ADDRESS AS ALSO THE OCCUPATION OF THE SAID PERSON. ON VERIFICATION AND CROSS EXAMINATION, THE ASSESSEE WAS UNABLE TO FURNI SH THE REQUISITE DETAILS IN RESPECT OF THE SAID PERSON. THE AO HAS ALSO M ADE SOME CERTAIN ATTEMPTS TO ENQUIRE ABOUT THE SAID MR.SINGH BY DEPU TING THE INSPECTOR OF IT DEPARTMENT BUT THE ALLEGED DONOR COULD NOT BE TR ACED. HE HAS, THEREFORE, HELD THAT THE GIFT WAS NOT GENUINE. L IKEWISE, ALLEGED GIFT OF RS.1 LAC CLAIMED TO HAVE BEEN RECEIVED FROM MR.ISHW ARBHAI KALUBHAI DHOLIYA, BUT THAT TOO WAS NOT ESTABLISHED BY THE A SSESSEE. THE AO HAS ISSUED SUMMON U/S.131 BUT NO ONE RESPONDED. SINCE THE GENUINENESS OF THE TRANSACTION REMAINED UNEXPLAINED HENCE TAXED BY THE AO. THE SAME WAS THE POSITION IN RESPECT OF ALLEGED GIFT OF RS.1 LAC CLAIMED TO HAVE ITA NO. 4131/AHD/2008 SHRI NITINKUMAR RAMANLAL PATEL VS. ITO ASST.YEAR - 2005-06 - 4 - BEEN RECEIVED FROM SHRI DEVRAJBHAI BORDA. A SUMMON U/S.131 OF THE I.T.ACT WAS NOT RESPONDED AND THE ASSESSEE WAS UNA BLE TO FURNISH THE REQUISITE DETAILS AS PRESCRIBED U/S.68 OF THE I.T. ACT. 5. EVEN BEFORE US, THE APPELLANT HAS NOT IMPROVED H IS CASE, THEREFORE, CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF TH E CASE AND SEVERAL CASE LAWS AS DISCUSSED BY THE AO, WE HEREBY CONFIRM THE ADDITION. THIS GROUND OF THE ASSESSEE IS DISMISSED . 6. GROUND NO.II READS AS UNDER:- (II) DISALLOWANCE OUT OF EXPENSES :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN SUSTAINING DISALLOWANCE OF RS.15,000/- OUT OF DISALLOWANCE OF RS.23,661/- MADE BY THE ASSESSING OFFICER. (2) THE APPELLANT SUBMITS THAT THE ENTIRE EXPENDI TURE HAVING BEEN MADE FOR THE PURPOSE OF THE BUSINESS, T HE ENTIRE EXPENDITURE OUGHT TO HAVE BEEN ALLOWED. 6.1. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAS C LAIMED VEHICLE EXPENSES OF RS.51,906/-, MOBILE EXPENSES OF RS.45,4 20/- AND TELEPHONE EXPENSES OF RS.20,982/-. AS PER AO, THERE SHOULD BE SOME PERSONAL USAGE OF VEHICLE, TELEPHONE, ETC. THUS THE AO HAS DISALLOWED 1/5 TH OF THE SAID AMOUNT AMOUNTING TO RS.23,661/-. THE LD.CIT( A) HAS RESTRICTED THE SAID DISALLOWANCE TO RS.15,000/-. ITA NO. 4131/AHD/2008 SHRI NITINKUMAR RAMANLAL PATEL VS. ITO ASST.YEAR - 2005-06 - 5 - 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS IS THE CASE OF AN INDIVIDUAL, THEREFORE, SOME ELEMENT OF PERSONAL USAGE SHOULD NOT BE RULED OUT BUT CONSIDERING THE H UGE TURNOVER OF THE ASSESSEE OF RS.2,79,74,553/-, WE HEREBY RESTRICT TH E DISALLOWANCE TO RS.5,000/- ONLY. IN THIS MANNER, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 8. GROUND NO.III READS AS UNDER:- (III) MISCELLANEOUS :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT DEALING WITH GROUND REGARDING RS.50,00 0/- BEING PRINTING ERROR. (2) THE APPELLANT SUBMITS THAT INTEREST U/S.234A IS REQ UIRED TO BE DELETED. (3) THE APPELLANT SUBMITS THAT INTEREST U/S.234B IS REQ UIRED TO BE DELETED. (4) THE APPELLANT SUBMITS THAT INTEREST U/S.234C IS REQ UIRED TO BE DELETED. (5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY AN Y OF THE GROUNDS OF APPEAL. 8.1 THIS GROUND APPEARS TO BE ACADEMIC IN NATURE BE CAUSE NO SUCH ADDITION WAS MADE BY THE AO WHILE COMPUTING THE TOT AL TAXABLE INCOME OF THE ASSESSEE. ASSESSEE SHOULD NOT HAVE ANY GRI EVANCE IN RESPECT OF AN ERROR WHICH WAS ADMITTEDLY A PRINTING ERROR OF THE AO, BUT NOT EFFECTING THE TAX LIABILITY. ADMITTEDLY DUE TO THAT ERROR TH ERE WAS NO INCIDENCE OF TAX ON THE ASSESSEE. SINCE NO PREJUDICE WAS CAUSED , THEREFORE, THIS ITA NO. 4131/AHD/2008 SHRI NITINKUMAR RAMANLAL PATEL VS. ITO ASST.YEAR - 2005-06 - 6 - GROUND HAS NO SUBSTANCE, HENCE DISMISSED. REST OF THE GROUNDS ARE IN RESPECT OF COMPUTATION OF INTEREST WHICH ARE CONSEQ UENTIAL IN NATURE, HENCE NEED NO INDEPENDENT ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26 / 08 /2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 26 / 8 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED. 4. THE LD. C IT(APPEALS)-V, SURAT 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..24/08/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24/08/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S26/8/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26/8/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER