The ITO, Ward-9(2), Ahmedabad V. Shri Pruthviraj P.Chudasma, Ahmedabad

ITA 4412/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0186 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 13-12-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU S JHA
• Assessee Lawyers: J M TRIVEDI
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Set aside
• Section: 264; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.4412/AHD/2007 ASSESSMENT YEAR:2004-05 DATE OF HEARING:29.7.10 DRAFTED:29.7.10 INCOME TAX OFFICER, WARD-9(21), AHMEDABAD V/S . PRUTHVIRAJSINGH P CHUDASMA, PROP. M/S. J.B. CONSTRUCTION, AHMEDABAD PAN NO.ADXPC2258E (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SUDHANSHU S JHA, DR RESPONDENT BY:- SHRI J.M. TRIVEDI, AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD IN APPEAL NO. CI T(A)-XV/9(2)/220/06-07 DATED 13-11-2007. THE ASSESSMENT WAS FRAMED BY ITO, WARD-9(2), AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 22-12-2006 FOR ASSESSMENT YEAR 2004-05. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY ASSESSING OFFICER U/S .68 OF THE ACT ON ACCOUNT OF GIFTS RECEIVED FROM THE EIGHT PERSONS. FOR THIS, REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND :- 1. THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION U/S.68 OF THE I.T. ACT IN RESPECT OF ADDITIONAL CAPITAL INTRODUCED BY THE ASSESSEE OF RS .9,00,000/-. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE HAS RECEIVED GIFTS DURING THE YEAR UNDER CONSIDERATION FROM FOLL OWING 8 PERSONS:- NAME LAND HOLDING AMOUNT OF GIFT PRAHLADSINH DEVUBHA CHUDASMA 45 VIGHA 1,00,000 PRATAPSANG MOHBATSANG PARMAR 15 VIGHA 1,00,000 ITA NO.4412/AHD/2007 A.Y. 2004-05 ITO, WD-9(2) ABD V. PRUTHVIRAJSINGH P CHUDASMA PAGE 2 HEMANTSANG MOHBATSANG 30 VIGHA 1,00,000 BHIKHABHAI PAARBATBHAI DANGASIA 35 VIGHA 50,000 GOVUBHAI HARIBHAI PARMAR 65 VIGHA 2,00,000 RAVJIBHAI MAVJIBHAI PATEL 65 VIGHA 1,00,000 JITENDRABHAI PRAVATBHAI KUNJADIA 35 VIGHA 50,000 LABHUBHAI DAHAYABHAI 32 VIGHA 1,00,000 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPL AIN THE CASH CREDIT BUT THE ASSESSEE FILED ONLY THE DETAILS OF LAND HOLDING BEF ORE THE AO AND THE PARTIES WERE NOT PRODUCED FOR VERIFICATION FOR EXPLAINING THE SOURCE OF CREDITS AND EVEN THE ASSESSEE HAS NOT FILED ANY DETAIL OF THIS AGRICULTURAL LAND, WHETHER THESE DONORS HAVE CULTIVATED THE AGRICULTURAL LAND RESULTING IN THE AGRICULTURAL PRODUCE, WHICH WAS NOT AVAILABLE WITH THESE DONORS. EVEN THE SALE BILL OR THAT THE A GRICULTURE PRODUCE SOLD BY THESE DONORS, THE EVIDENCE IN RESPECT OF THE SAME HAVE NO T BEEN PRODUCED AND IN THE ABSENCE OF THESE DETAILS, THE AO MADE ADDITION BY G IVING FOLLOWING FINDING IN PARA-6 & 7 OF HIS ASSESSMENT ORDER:- 6. FROM THE REPLY SUBMITTED BY THE ASSESSEE, THE F OLLOWING CONCLUSIONS EMERGE:- (I) THE ASSESSEES CONTENTION THAT HE IS TRYING TO GET THE GIFT DECLARATION ON THE STAMP PAPER ITSELF PROVES THAT TILL THIS DATE, NO SUCH DECLARATION IS MADE AND NOW, AS AN AFTERTHOUGHT, TO PROVE THAT THE GIFTS ARE GENUINE, THE ASSESSEE IS MAKING EFFORTS TO GET A GIFT DECLAR ATION FROM RESPECTIVE PARTIES. THE ASSESSEE AT THE SAME TIME, OF HIS OWN, HAS PREDICTED THAT HE WOUNT BE ABLE TO SUBMIT THE DETAILS TILL 31/12/ 2006. INSTEAD OF DISCHARGING HIS ONUS OF PROVING THE GENUINENESS OF GIFTS RECEIVED, THE ASSESSEE IS INDIRECTLY STATING THAT THE ASSESSMENT GESTS TIME BARRED ON 31/12/2006 AND HE WONT BE ABLE TO PRODUCE THE PART IES BEFORE THAT DATE. SUCH A CONTENTION FROM THE ASSESSEE IS UNCALL ED FOR AND HAS NO RELEVANCE TO THE DETAILS CALLED FOR AND NOR CAN SER VE AS AN EXCUSE FOR NOT PRODUCING THE PARTIES. (II) THE ASSESSEE HAS TAKEN GIFTS IN FORM OF CASH A GGREGATING TO RS.9,00,000/- FROM 8 DIFFERENT PARTIES. STRANGELY, THE ASSESSEE COULD NOT PRODUCE EVEN A SINGLE PARTY TO PROVE THE GENUIN ENESS OF GI9FT RECEIVED. IT IS HARD TO BELIEVE THAT ALL THE 8 PART IES WERE BUSY AND COULD NOT BE PRODUCED ON ANY DATE BEFORE 31/12/2006 AS ST ATED BY THE ASSESSEE. (III) HAD THE ASSESSEE SUBMITTED ANY VALID REASON F OR NOT PRODUCING ALL THE PARTIES OR ANY OF THEM AND ASKED FOR ONE MORE OPPOR TUNITY, THE SAME COULD HAVE BEEN CONSIDERED IF DEEMED PROPER. THE AS SESSEE HAS INSTEAD DECLARED THAT HE WONT BE ABLE TO COMPLY WI TH THE REQUIREMENTS BEFORE 31/12/2006. ITA NO.4412/AHD/2007 A.Y. 2004-05 ITO, WD-9(2) ABD V. PRUTHVIRAJSINGH P CHUDASMA PAGE 3 (IV) DESPITE REPEATED REMINDERS, THE ASSESSEE HAS F AILED TO SUBMIT WRITTEN CONFIRMATION FROM THE PARTIES FROM WHOM HE HAS RECE IVED CASH AGGREGATING TO RS.9,00,000/- AS GIFT. IT MAY BE REC ALLED THAT VIDE ANNEXURE TO NOTICE U/S.142(1) DATED 11/10/2005, LET TER DATED 4/12/2006, ORDER SHEET ENTRY DATED 6/11/2006, ORDER SHEET ENTRY DATED 8/12/2006 AND ORDER SHEET ENTRY DATED 15/12/2006, T HE ASSESSEE WAS ASKED TO SUBMIT CONFIRMATIONS FROM THE PARTIES WHO HAVE GIVEN THE GIFT. THE ASSESSEE HAS FAILED TO COMPLY WITH THE SAME DES PITE SO MANY OPPORTUNITIES GIVEN TO HIM. 7. AFTER CAREFUL CONSIDERATION OF THE CONTENTIONS S UBMITTED BY THE ASSESSEE, HIS CLAIM THAT THE ADDITIONAL CAPITAL OF RS.9,00,00 0/- INTRODUCED IN THE CAPITAL ACCOUNT WAS FUNDED BY GIFTS RECEIVED FROM FRIENDS A ND RELATIVES IS NOT ACCEPTABLE. THE ASSESSEE HAS FAILED TO DISCHARGE HI S ONUS OF PROVING THAT THE TRANSACTIONS WERE GENUINE ONES. IN VIEW OF THE SAME , THE ADDITIONAL CAPITAL OF RS.9,00,000/- INTRODUCED BY CASH DEPOSITS IN THE CA PITAL ACCOUNT IS TREATED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT AND IS TH EREFORE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. BEFORE CIT(A) ASSESSEE FURNISHED THE CONFIRMATIO N FROM THE DONORS AND FILED LAND HOLDING DETAILS AND ON THIS BASIS, CIT(A) REQU IRED THE ASSESSING OFFICER TO ISSUE SUMMONS TO ALL THE DEPOSITORS AND SENT REMAND REPOT IN RESPECT OF THESE DONORS. THE AO SUBMITTED THE REMAND REPORT VIDE DATED 12-06 -2007 AND THE RELEVANT PORTION OF THE REMAND REPORT AS REPRODUCED IN THE ORDER OF CIT(A), IS BEING RE-PRODUCED AGAIN FOR THE SAKE OF CLARITY:- 3. AS DIRECTED BY YOUR HONOUR, SUMMONS SUNDER SECT ION 131 OF THE ACT WERE ISSUED TO THE DONORS AND THEIR STATEMENTS WERE RECO RDED ON 5/6/2007 AND 6/6/2007. IT WAS FOUND AT THE TIME OF RECORDING THE STATEMENTS OF THE DONORS THAT NONE HAS BANK ACCOUNT. THE DONORS ARE HOLDING AGRICULTURAL LANDS APPROXIMATELY 15 TO 65 VIGHA. IN THE RURAL AREA OF AHMEDABAD DISTRICT. HOWEVER THE DONORS ARE FAILED TO PRODUCE ANY DETAIL S REGARDING THEIR AGRICULTURAL INCOME AND EXPENSES PROOF LIKE SALE BI LL OF AGRICULTURAL PRODUCE, BILLS OF EXPENSES FOR PRODUCTION OF THE AGRICULTURA L PRODUCE ETC. 4. IT IS ALSO FOUND THAT THE SUBMISSION OF THE GIFT DEED BEFORE YOUR HONNOUR IS ONLY AN AFTER THOUGHT DECISION OF THE ASSESSEE AS T HE SAME WERE NOT PRODUCED AT THE TIME OF THE ASSESSMENT DESPITE OF S EVERAL AND SUFFICIENT OPPORTUNITIES GIVEN TO THE ASSESSEE. IT IS ALSO WOR TH WHILE TO MENTION HERE THAT ANY OF THE DONORS DOES NOT HAVE ANY CLOSE RELATION WITH THE ASSESSEE. 5. DURING THE COURSE OF THE RECORDING OF THE STATEM ENT, IT IS NOTICED THAT ALL THE DONORS HAVE ADMITTED THAT THEY HAVE NO OTHER SOURCE OF INCOME OTHER THAN AGRICULTURAL INCOME. THE CREDITWORTHINESS OF THEE D ONORS ARE DOUBTFUL LOOKING TO THEIR LAND HOLDINGS AND FERTILITY OF THE AREA OF THE LAND. ITA NO.4412/AHD/2007 A.Y. 2004-05 ITO, WD-9(2) ABD V. PRUTHVIRAJSINGH P CHUDASMA PAGE 4 5. THE CIT(A) IN VIEW OF THE ABOVE, DELETED THE ADD ITION BY GIVING FOLLOWING FINDING IN HIS APPELLATE ORDER IN PAGE-5 & 6 :- I HAVE GONE THROUGH RIVAL SUBMISSIONS AND FIND THA T THE APPELLANT HAD DISCHARGED HIS DUTY OF ESTABLISHING THE IDENTITY OF THE DONORS. DONORS APPEARED IN PERSONS AND WERE EXAMINED BY THE ASSESS ING OFFICER. THEIR LAND HOLDING IS NOT DISPUTED BY THE ASSESSING OFFICER AN D NEITHER THE FACT THAT THEY ARE AGRICULTURALISTS. NO EVIDENCE HAS BEEN COLLECTE D BY THE ASSESSING OFFICER TO SHOW THAT THE AGRICULTURISTS WHO ARE RELATIVES A ND CLOSE FRIENDS OF THE APPELLANT, DID NOT HAVE THE SOURCES TO MAKE THE GIF TS, SO WHATEVER EVIDENCE IS ON RECORD, GOES TO MAKE THE CASE OF THE APPELLANT S TRONG. FURTHER THE DECISIONS CITED BY THE AUTHORIZED REPRESENTATIVE TH AT IS 280 ITR 512 (GUJ), 278 ITR 170 (GUL), 159 ITR 78 (SC), 264 ITR 254 (GU J) AND 256 ITR 360 (GUJ) ARE APPLICABLE IN HIS CASE. THEREFORE, RELYIN G ON THE AFOREMENTIONED DECISIONS AND MATERIAL PLACED ON RECORD I.E. 7/12 L AND HOLDING PROOFS WHICH SHOW THAT THE DONORS HAD OWNED 15 BIGHA TO 65 BIGHA S OF LAND, INCOME PROOF CERTIFICATES FROM GRAM PANCHAYAT CONFIRMING AGRIC ULTURAL INCOME, GIFT DECLARATION DEEDS AND STATEMENTS RECORDED U/S.1`3Q1 BY THE ASSESSING OFFICER IN WHICH NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE GIFTS WERE NOT GENUINE, THE ADDITION MADE BY THE ASSESSIN G OFFICER IS DIRECTED TO BE DELETED. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE RELIE D ON THE ORDER OF CIT(A) AND ALSO FILED A LIST OF CASE LAWS AS UNDER:- 1. CIT V. LEVELY EXPORTS (P) LTD. (2008) 216 CTR 1 95 (SC) 2. DCIT V. VIJAY PRAKASH HUF (2009) 120 TTJ 429 ( ASR) 3. MURLIDHAR LAHORIMAL V. CIT (2006) 280 ITR 512 ( GUJ) 4 .MURLIDHAR LAHAORIMAL V. CIT 280 ITR 512 (GUJ) 5. CIT V. PRAGATI CO.OP. BANK LTD 276 ITR 170 (GUJ) 6. NEMICHAND KOTHARI V CIT 264 ITR 254 (GUJ) 5. ROHINI BUILDERS V. DCIT (2002) 256 ITR 360 (GUJ) 7. ON THE OTHERS HAND, LD. DR, SHRI SUDHANSHU S JHA STATED THAT NO DOUBT THE ASSESSEE HAS PRODUCED THESE DONORS BEFORE THE ASSES SING OFFICER DURING THE REMAND PROCEEDINGS AND IDENTITY OF THESE DONORS ARE ESTABLISHED. BUT HE STATED THAT, TO PROVE THE CASH CREDIT, THE ASSESSEE HAS TO ESTAB LISH THREE INGREDIENTS I.E. IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. HE STATED THAT THE ASSESSEE IS UNABLE TO PROVE THAT THESE DONORS HAVE CULTIVATED LAND AS ADMITTED DURING THE REMAND PROCEEDINGS BEFORE THE AO. THE AO HAS GIVEN A CATEGORICAL REPORT THAT THE DONORS FAILED TO PRODUCE ANY DETAIL REGARDING THEIR AGRICULTURAL INCOME AND ALSO FAILED TO EXPLAIN, SUCH AS, SALE BILL OF A GRICULTURAL PRODUCE, BILL OF EXPENDITURE FOR PRODUCTION OF AGRICULTURAL PRODUCE AND ACCORDIN GLY THE AO CATEGORICALLY HELD THAT THE CREDITWORTHINESS OF DONORS ARE DOUBTFUL LOOKING TO THEIR LAND HOLDING AND FERTILITY OF ITA NO.4412/AHD/2007 A.Y. 2004-05 ITO, WD-9(2) ABD V. PRUTHVIRAJSINGH P CHUDASMA PAGE 5 THE AREA OF LAND. LD. DR STATED THAT IN VIEW OF TH ESE FACTS, IT IS NOT ESTABLISHED THAT THIS AGRICULTURAL LAND WERE CULTIVATED BY THESE DON ORS AND IN THE ABSENCE OF SAME, ASSESSEE IS FAILED TO DISCHARGE ITS ONUS OF ESTABLI SH THE CREDITWORTHINESS OF THESE DONORS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN THE REMA ND REPORT OF THE ASSESSING OFFICER IT IS CLEARLY NOTED THAT THE DONORS HAVE FAILED TO PRODUCE ANY DETAILS OF THEIR AGRICULTURAL INCOME, SUCH AS SALE BILLS OR ANY PROO F OF SALE OF AGRICULTURAL PRODUCE, EXPENSES BILLS, OR EVEN THE REVENUE RECORDS WHICH P ROVES THAT THE ASSESSEE HAS CULTIVATED WHICH CROP AND SOLD WHICH CROP. IN THE A BSENCE OF THESE DETAILS, THE CIT(A) HAS ERRED IN HOLDING THAT THE GIFTS ARE GENU INE. HOWEVER, IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY BE GIVEN TO THE ASSES SEE TO PRODUCE THESE DETAILS OF AGRICULTURE PRODUCE BEFORE THE ASSESSING OFFICER, S O THAT HE CAN VERIFY THE CREDITWORTHINESS OF THESE DONORS. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRAMING FRESH ASSESSMENT ONLY QUA THIS ISSUE, AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 9. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 06/08/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 06/08/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD