The ACIT, 2 (1), V. Shri Balkishan Agrawal,

ITA 434/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2993 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: P D NAGAR
• Keywords: Gift; Charitable institution
• Section: 69B; 201; 68

Judgement Text

PAGE 1 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.434/IND/2008 A.Y. : 2004-05 ACIT, SHRI BAL KISHAN AGARWAL, 2(1), VS 45-A, GULMOHAR COLONY, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN, SR.DR RESPONDENT BY : SHRI P. D. NAGAR, C. A. DATE OF HEARING : 12.04.2010 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-II, INDORE, DATED 09.05.2008, FOR THE ASSESS MENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NOS. 1 & 2 READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADD ITION OF RS. 46,87,383/- U/S 68 OF THE INCOME-TAX ACT, 1961. PAGE 2 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADD ITION OF RS. 68,000/- U/S 68 WITHOUT APPRECIATING THE FACT T HAT THE AMOUNT ON MATURITY OF RBI BONDS WAS ACTUALLY CREDIT ED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE PREVIOU S YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05. 4. THE FACTS, IN BRIEF, ARE THAT IN THE CAPITAL ACCOUN T OF THE ASSESSEE, THERE WAS A CREDIT ENTRY OF RS. 46,87,382.70, WHICH WAS ON ACCOUNT OF ENCASHMENT OF RESURGENT INDIA BOND ON ITS MATURITY. THE A.O. REQUIRED THE ASSESSEE TO EXPLAIN SOURCE OF RECEIPT OF RESURG ENT INDIA BOND, WHICH REVEALED THAT SUCH BONDS HAVE BEEN RECEIVED BY THE ASSESSEE AS THE GIFTS FROM SHRI TRIBHOVAN JAIN AND SHRI ANIL R. JAIN ON 2 7.1.2003 & 24.03.2003, WHICH GOT MATURED ON 1.10.2003. THE ASS ESSEE ALSO SUBMITTED THE GIFT DEEDS AND OTHER DETAILS TO PROVE THE GENUINENESS OF THE GIFTS. IT WAS ALSO SUBMITTED THAT THE DONORS WERE O LD FAMILY FRIENDS AND SINCE THE ASSESSEES FORE-FATHERS HAD OBLIGED THE D ONORS FAMILY IN THE PAST, THE DONORS WANTED TO GIFT THE BONDS TO THE TR UST. HOWEVER, THEY GAVE THE GIFTS TO THE ASSESSEE ON THE CONDITION THAT MON EY WOULD BE ULTIMATELY TRANSFERRED TO THE TRUST. THE A.O., THEREAFTER, MAD E FURTHER ENQUIRIES, WHICH WERE REPLIED BY THE ASSESSEE IN DETAIL. THE A .O. RECORDED THE STATEMENT OF THE ASSESSEE U/S 131, WHEREIN IT EMERG ED THAT THE ASSESSEE PAGE 3 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. WAS NOT AWARE ABOUT THE COMPLETE ADDRESS OF THE DON ORS. THEREAFTER, THE A.O. ALSO EXAMINED THE ASPECT OF CAPACITY AS WELL A S GENUINENESS OF THE TRANSACTION. THE A.O., ACCORDINGLY, REACHED TO THE FOLLOWING CONCLUSION :- THUS IN THE LIGHT OF THE ABOVE FINDINGS IT IS CRYS TAL CLEAR THAT THE THEORY OF GIFT CANNOT BE ACCEPTED BECAUSE:- (I) THE DONORS ARE UNRELATED TO THE ASSESSEE. (II) CREDITWORTHINESS OF THE DONOR HAS NOT BEEN ESTABLISHED. (III) THERE IS ABSOLUTELY NO EXPLANATION WHEN THERE IS A SEPARATE BANK ACCOUNT FOR THE TRUST, WHY THE MATURI TY AMOUNT TRANSFERRED TO ASSESSEES OWN BANK ACCOUNT. (IV) THE ASSESSEE NEITHER MAINTAINING ANY CONTRACT WITH THE DONORS NOR AWARE OF THE FAMILY MEMBERS OF THE DONORS NOR HAD GIVEN ANY GIFT TO THE DONORS IN THE PAST. IT GOES AGAINST THE NORMAL HUMAN PROBABILITIES TEST ED BY THE RATIO OF HON'BLE SUPREME COURTS DECISION I N THE CASE OF DURGA PD. MORE ( 82 ITR 540/AND ALSO OF SUMATI DAYAL VS. CIT, 201 ITR 801). (V) THE ALLEGED GIFTS ARE AN ARRANGED AFFAIR. (VI) THE CREDIT IN THE CAPITAL ACCOUNT BY RS. 46,87,382. 70 ON ACCOUNT OF ALLEGED NRI GIFT IS NOTHING BUT THE PAGE 4 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. ASSESSEES OWN UNACCOUNTED MONEY ROUTED BACK TO CAPITAL A/C IN THE GARB OF GIFT. 5. THE A.O., THUS, TREATED THE IMPUGNED SUM AS UNDISCL OSED INCOME OF THE ASSESSEE AND ADDED THE SAME TO THE TO TAL INCOME OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT, 1961. 6. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHO FOUND THAT RBI BOND WERE ACTUALLY RECEIVED IN FINANCIAL YEAR 2002-03, RELEVANT TO ASSESSMENT Y EAR UNDER CONSIDERATION 2003-04, HENCE, COULD NOT BE CONSIDERED IN THE YEAR UNDER CONSIDERATION . ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE AS SESSING OFFICER. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE AS UNDER :- 3.2 THE ISSUE IS CONSIDERED. THE UNDISPUTED FACTS ARE THAT THE GIFT OF THE RIB BONDS WAS RECEIVED IN THE FINAN CIAL YEAR 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04. THE A. OS CLAIM IS THAT THE APPELLANT ACQUIRED THESE BONDS FR OM HIS UNACCOUNTED MONEY. IF THAT BE SO, THEN APPROPRIATE YEAR OF TAXATION OF SUCH AMOUNT WOULD BE THE ASSESSMENT YEA R RELEVANT TO THE FINANCIAL YEAR IN WHICH SUCH BONDS WERE ACQUIRED/RECEIVED. SO ALSO, THE EXPENSES FOR ACQUIR ING THESE BONDS BY WAY OF PREMIUM MONEY, WOULD ALSO HAVE BEEN INCURRED DURING THAT FINANCIAL YEAR ONLY AND NOT IN THE YEAR PAGE 5 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. UNDER CONSIDERATION . THUS, THE A.OS ACTION BRINGI NG TO TAX THE AMOUNT OF RS. 4687382/- BESIDES THE PREMIUM OF RS. 105466/- U/S 68 OF THE ACT IN THE YEAR UNDER CONSID ERATION I.E. ASSESSMENT YEAR 2004-05 CANNOT BE SUSTAINED. ACCORDINGLY, BOTH THESE ADDITIONS ARE HEREBY DIRECT ED TO BE DELETED. 3.3 HAVING HELD THAT THE AMOUNT ADDED BY THE ASSESS ING OFFICER IS NOT TAXABLE IN THE YEAR UNDER CONSIDERAT ION, THE GROUND OF APPEAL 1 TO 3 ARE ACCORDINGLY DECIDED. FU RTHER, NO ADJUDICATION IS CONSIDERED NECESSARY WITH REFERENCE TO THE APPLICATION OF THE APPELLANT FOR ENTERTAINING THE A DDITIONAL EVIDENCES. 7. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 9. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BEDSIDES RELYING ON THE ORDER OF THE LD. CIT(A) ALS O SUBMITTED THAT EVEN ON MERITS, THE CAPACITY AND CREDITWORTHINESS OF THE DONORS WAS PROVED BEYOND DOUBT AND AS SUCH BONDS WERE RECEIVED BY THE ASSESSEE FOR ITS ONWARD DONATION TO TRUST FOR CHARITABLE PURPOSE ONL Y AS THE ASSESSEE WAS TRUSTEE OF MORE THAN 15 CHARITABLE TRUSTS ENGAGED I N THE CHARITIES FOR PAGE 6 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. BENEFIT OF PUBLIC AT LARGE. IT WAS ALSO EMPHASIZED THAT THE ASSESSEE, IN FACT, TRANSFERRED ENTIRE RECEIPTS AS RESURGENT BOND TO A CHARITABLE TRUST AS PER THE DESIRE OF THE DONOR. THE LEARNED COUNSEL FURTHE R SUBMITTED THAT SUCH RESURGENT INDIA BONDS WERE IMMUNED FROM TAX AND SUC H BENEFITS WERE ALSO AVAILABLE TO THE DONEES. HENCE, REALIZATION OF MONEYS ON THE MATURITY OF SUCH BONDS COULD NOT BE TAXED IN INDIA. IN THE A SSESSMENT YEAR 2003-04 BY WAY OF GIFT AND COPIES OF GIFT DEEDS WITH TRANSF ER LETTERS WERE ALSO ANNEXED ALONGWITH THE RETURN OF INCOME FILED FOR TH E SAID ASSESSMENT YEAR. 10. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 11. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS RECE IVED SUCH RESURGENT INDIA BONDS BY WAY OF GIFT IN FINANCIAL Y EAR 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04. THE ASSESSEE HAS ALSO G IVEN A NOTE IN THE RETURN OF INCOME OF THAT ASSESSMENT YEAR TO THIS EF FECT ALONGWITH DOCUMENTARY EVIDENCES. THUS, THIS ACTION OF THE ASS ESSEE SHOWS THE TRANSPARENT CONDUCT OF THE ASSESSEE AND NOTHING PRE VENTED THE A.O. TO LOOK INTO THE MATTER IN THAT YEAR AT THAT TIME. HOW EVER, AS PER THE PROVISIONS OF THE LAW, THE RECEIPTS OF SUCH BONDS O N MATURITY CANNOT BE TAXED U/S 68 OF THE ACT IN ASSESSMENT YEAR 2004-05 AS SOURCE OF SUCH RECEIPTS LIES IN THE EARLIER ASSESSMENT YEAR. IT IS FURTHER NOTED THAT THE SAID PAGE 7 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. AMOUNT HAS BEEN GIFTED TO THE ASSESSEE FOR UTILIZAT ION THEREOF IN CHARITABLE ACTIVITIES THROUGH TRUST WHERE THE ASSESSEE IS A TR USTEE AND, IN FACT, SUBSEQUENTLY, THE MONEYS SO RECEIVED HAVE BEEN UTIL IZED AS DESIRED BY THE DONORS. THOUGH THE LD. CIT(A) HAS NOT DECIDED THE I SSUE ON MERIT, HOWEVER, FROM THE MATERIAL ON RECORD, WE FIND SUFFI CIENT FORCE IN THE CLAIMS OF THE ASSESSEE ON MERITS. HOWEVER, WE REFRA IN OURSELVES FROM GIVING DETAILED FINDINGS ON THIS ASPECT AS ON THE P RELIMINARY CONDITION ONLY THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE . THUS, WE DO NOT FIND ANY MERIT IN BOTH THESE GROUNDS OF THE REVENUE. THE SAME ARE, THEREFORE, DISMISSED. 12. GROUND NO. 3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE EXPENDI TURE OF RS. 1,05,466/- INCURRED FOR PROCURING THE RBI BONDS. 13. IT IS OF CONSEQUENTIAL NATURE AS THE IMPUGNED AMOUN T HAD BEEN ADDED BY THE ASSESSING OFFICER U/S 69B ON ACCOUNT O F EXPENDITURE INVOLVED TO PURCHASE SUCH RESURGENT INDIA BONDS. SI NCE THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF THE GIF TS HAS BEEN DELETED, HENCE, THERE REMAINS NO MERIT IN THIS ADDITION ALSO . CONSEQUENTLY, THIS IS ALSO DELETED. THUS, THIS GROUND OF THE REVENUE IS A LSO DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. PAGE 8 OF 8 - I.T.A.NO. 434/IND/2008 SHRI BALKISHAN AGARWAL, INDORE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :_16 TH APRIL, 2010. CPU* 13154