ASHWIN M. SAVANI, MUMBAI V. ITO-11(1)(1), MUMBAI

ITA 4448/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 04-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: Y P TRIVEDI
• Keywords: Gift
• Section: 56(2); 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI . . , . BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 4448/MUM/2011 / ASSESSMENT YEAR 2006-07 SHRI ASHWIN M. SAVANI, 5-B, FELTHAM HOUSE, J.N. HEREDIA ROAD, BELLARD ESTATE, MUMBAI 400 001 PAN: AAFPS 4656 P VS. INCOME TAX OFFICER 11(1)(1), MUMBAI . ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI Y.P. TRIVEDI & MS. USHA DALAL ! # ' / RESPONDENT BY : SHRI RAJARSHI DWIVEDY # $%& / DATE OF HEARING : 04 -09-2012 '( # $%& / DATE OF PRONOUNCEMENT : 26 -09-2012 )* / O R D E R PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY TH E APPELLANT AGAINST THE ORDER DATED 29-03-2011 OF THE CIT(A)-3, MUMBAI : 1.ON FACTS OF THE CASE AND IN LAW THE LEARNED CIT(A ) ERRED IN MAKING AN ADDITION OF RS. 2,28,269/- BEING INTEREST ON CUMULATIVE FD/TERM DEPOSIT WITH INDUSIND BANK FOR THE PERIOD 01-01-2006 TO 31-03-2006. ITA NO. 4448/MUM/2011 ASHWIN M. SAVANI 2 2.ON FACTS OF THE CASE AND IN LAW THE LEARNED CIT( A) ERRED IN MAKING AN ADDITION OF RS. 34,33,189/- (IE USD 50,000/- PLUS INTEREST THER EON) UNDER SECTION 69/69A OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED GIFT OF INDIA M ILLENNIUM DEPOSITS. 3.THE LEARNED CIT(A) HAS FURTHER ERRED IN ADDING A SUM OF RS. 34,33,189 (IE. USD 50,000/- PLUS INTEREST THEREON) ON THE GROUND THAT EVIDENCE IN THE FORM OF LETTER FROM STATE BANK OF INDIA DATED 13-01-2011 FURNISHED ON 1 6-03-2011 STATING THAT IMD OF US 50,000/- WAS TRANSFERRED TO APPELLANT IS FRESH E VIDENCE. IT IS ACCORDINGLY NOT ADMITTED. HOWEVER, THE LEARNED CIT(A) FAILED TO APP RECIATE THAT THIS IS NOT NEW EVIDENCE BUT A CONFIRMATION OF A PAST TRANSACTION D ETAILS OF WHICH HAVE BEEN SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDING S. 4.ON FACT OF THE CASE AND IN LAW THE LEARNED CIT(A ) ERRED IN CONFIRMING AN ADDITION OF RS. 90,02,000/- (IE. USD 2,00,000/-) UNDER SECTI ON 69/69A OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED GIFT OF INDIA MILLENNIUM DEPOSI TS (IMDS). 5.THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE R EMAND REPORT OBTAINED FROM THE ASSESSING OFFICER AND ALSO ERRED IN NOT RECOGNIZING THE DOCUMENTARY EVIDENCE REGARDING THE IDENTITY AND CAPACITY OF THE DONOR. 6. THE LEARNED CIT(A) OUGHT NOT TO HAVE MADE THE AD DITION UNDER SECTION 69 AND 69A OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED GIFT AS THE IMD WERE PROPERLY GIFTED AND THE PROCEEDS ARE RECEIVED THRU PROPER BANKING CHANN EL ALONG WITH NAME OF THE DONOR AND DONE AND THE SAME IS ACCOUNTED IN THE BOOKS OF ACCOUNTS IN THE PREVIOUS YEAR RELEVANT TO AY 2007-08. 7.THE LEARNED CIT(A) HAS ERRED IN MAKING ADDITION O N THE GROUNDS THAT GIFT IS TAXABLE UNDER SECTION 56(2) (V). THE SECTION 56(2)(V) IS N OT APPLICABLE TO THE TRANSFER OF IMDS FROM DONOR TO DONE AS HAD BEEN CLEARLY STATED IN TH E SCHEME. 8.THE LEARNED CIT(A) HAS ERRED IN CONSTRUING THE TE RMS AND CONDITIONS OF THE ISSUE OF IMD, THE TAX IMPLICATIONS AND THE INDEMNITY AND WAR RANTY AS LAID DOWN BY STATE BANK OF INDIA IN CONJUGATION WITH THE GOVERNMENT OF INDI A AND THE RESERVE BANK OF INDIA. 9.THE APPELLANT PRAYS THAT ON THE FACTS OF THE CASE AND IN LAW THE ABOVE ADDITION MADE BE DELETED AND NECESSARY RELIEF MAY PLEASE BE GRANTED TO THE ASSESSEE. 10.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE WAS NOT INTERESTED IN PRESSING GROUND NO.1. HENCE, SAME STA NDS DISMISSED. 2. ASSESSEE, AN INDIVIDUAL HAS ENGAGED IN THE BUSINESS OF EXPORT OF READY-MADE GARMENTS FILED HIS RETURN OF INCOME ON31.10.2006 DE CLARING TOTAL LOSS AT RS.7,72,367/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (ACT). LATER ON, NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE AND H EARING WAS FIXED FROM TIME TO TIME. AS PER THE ASSESSING OFFICER (AO), THERE WAS NO COM PLIANCE FROM THE SIDE OF THE ASSESSEE, SO HE COMPLETED THE ASSESSMENT U/S. 143(3 ) R.W.S. 144 OF THE ACT ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. HE MADE CERTAI N DIS-ALLOWANCES AND ASSESSMENT WAS FINALISED AT RS. 1,82,52,297/- VIDE ORDER DT. 2 4-12-2008. ITA NO. 4448/MUM/2011 ASHWIN M. SAVANI 3 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA) FOR THE DIS-ALLOWANCE/ADDITIONS MADE BY THE AO. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, FAA ALLOWED THE APPEAL FILED BY TH E ASSESSEE. 2.2. GROUND NOS. 2 TO 8 ARE RELATED WITH ADDITIONS MAD E U/S. 69/69A OF THE ACT AS UN-EXPLAINED GIFT OF INDIA MILLENNIUM DEPOSITS (IMD ). DURING THE COURSE OF APPELLATE PROCEEDINGS, FAA NOTICED THAT ASSESSEE HA D RECEIVED SOME GIFTS. HE HELD THAT THE GIFTS IN QUESTION WERE SOURCED BY IMD, THA T GIFTS WERE NOT GENUINE, THAT, FOR THE REASONS DISCUSSED IN DETAILS, THE INCOME OF THE APPELLANT FOR THE AY.2006-07 WAS TO BE ENHANCED. AFTER ISSUING A SHOW CAUSE NOTICE, FOLLOWING ADDITIONS WERE MADE BY THE FAA FOR THE AY UNDER CONSIDERATION: I) CONCEALED INTEREST INCOME FROM TERM DEPOSIT AND TDS AMOUNTING TO RS. 2,28,269/- (REFERENCE WAS MADE TO PARA 2.3.1 OF THE APPELLATE ORDER FOR AY.2007-08) II) IMD GIFT AND INTEREST THEREON AMOUNTING TO RS. 34,3 3,189/- U/S. 69/69A OF THE ACT (WITH REFERENCE TO PARA 2.3.4 OF THE ORD ER FOR THE A.Y. 2007- 08) III) ANOTHER GIFT OF IMD AMOUNTING TO RS. 90,02,000/- U/ S.69/69A/56(2)(V) OF THE ACT (FAA REFERRED TO PARA 2.3.8 OF THE APPEL LATE ORDER FOR THE A.Y. 2007-08). 2.3. FACTS RELATING TO THE ADDITIONS AT PARAGRAPH 2.3 AR E AS UNDER- DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD RE CEIVED TWO GIFTS AMOUNTING TO US $ 50,000 AND US $ 2,00,000. FAA MA DE AN ADDITIONS OF RS. 34,33,189/- ($ 50,000 + INTEREST THEREON)ON THE BAS IS THAT THE EVIDENCE PRODUCED BY THE ASSESSEE; IN THE FORM OF LETTER FROM STATE BANK OF INDIA DT.13.1.2011; WAS A FRESH PIECE OF EVIDENCE. FAA DID NOT ADMIT THE SAME WHIL E DECIDING THE ISSUE. SIMILARLY, CLAIM MADE BY THE ASSESSEE, FOR THE OTHER GIFT AMOU NTING TO RS.90.02 LAKHS, WAS ALSO REJECTED BY THE FAA AND IT RESULTED IN ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 2.4. BEFORE US, AR SUBMITTED THAT FOR THE GIFT OF RS.US $ 50,000 NO NEW EVIDENCE WAS PRODUCED, THAT IT WAS A MERE CONFIRMATION OF PA ST TRANSACTION, THAT DETAILS OF THE TRANSACTION IN QUESTION HAD BEEN SUBMITTED DURING T HE COURSE OF APPELLATE PROCEEDINGS. WITH REGARD TO ADDITION OF RS. 90.02 LAKHS, AR SUBM ITTED THAT FAA HAD NOT CONSIDERED THE REMAND REPORT OBTAINED FROM THE AO, THAT FAA DID NOT CONSIDER DOCUMENTARY EVIDENCES PRODUCED REGARDING THE IDENTI TY AND CAPACITY OF THE DONOR, THAT ADDITIONS U/S. 69/69A OF THE ACT WERE NOT PROP ER, THAT IMD WERE PROPERLY GIFTED, THAT THE PROCEEDS OF THE SAID GIFTS WERE RECEIVED T HROUGH PROPER BANKING CHANNELS, THAT THE NAMES OF THE DONOR AND THE DONEE WERE AVAILABLE IN THE BOOKS OF ACCOUNTS, THAT THE ADDITIONS MADE U/S.56(2)(V) OF THE ACT WERE AGA INST THE PROVISIONS OF LAW, THAT SAID SECTION WAS NOT APPLICABLE TO THE TRANSFER OF IMDS FROM DONOR TO DONEE. AR RELIED UPON THE CASES OF ANUJ AGARWAL (130 TTJ 49); HARRES H N.MEHTA ITA NO. 6804/M/2010 ORDER DT. 31-01- 2012 AY.2006-07; DR. P RABHU SANTOSH KAMLESH, IT APPEAL NO. 2725/09, BOMBAY HIGH COURT DT. 07-06-201 0; SMT. USHA OMER (338 ITR 448); KANCHAN SINGH (174 TAXMANN 383). ITA NO. 4448/MUM/2011 ASHWIN M. SAVANI 4 DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT B EFORE MAKING ADDITIONS, FAA HAD ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE, THAT AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE DIS-ALLOWANCE WAS MADE, THAT ASSESSEE HAD NOT PRODUCED THE EVIDENCE ABOUT GENUINENESS OF THE TRANSACTIONS, THAT SECTION 69/69A R.W.S. 56(2)(V) WAS APPLICABLE IN THE CASE UNDER CONSIDERA TION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. IT IS FOUND THAT THE MAIN ORDER IN THE CASE OF THE ASSESS EE WAS PASSED BY THE FAA FOR THE ASSESSMENT YEAR 2007-08. IN THE PRESENT CASE, FAA HAS PASSED A VERY SMALL ORDER GIVING REFERENCE TO THE ORDER FOR A.Y 2007-08. ON ENQUIRY BY THE BENCH, IT WAS STATED BY THE AR THAT FOR THE AY 2007-08, ADDITIONS MADE W ERE DELETED AND NO APPEAL WAS FILED AGAINST THE SAID ORDER. THUS, THE ORIGINAL O RDER ON THE BASIS OF WHICH FAA HAS MADE ADDITIONS IS NOT BEFORE US. IN OUR CONSIDERED OPINION, IT WILL NOT BE PROPER TO ADJUDICATE THE ISSUE FOR WHICH FULL FACTS ARE NOT A VAILABLE. IN THE INTERESTS OF JUSTICE, WE WANT TO REMIT BACK THE MATTER TO THE FILE OF THE FA A TO PASS A REASONED ORDER IN DETAIL FOR THE ASSESSMENT YEAR 2006-07 WITH REGARD TO ADDI TIONS MADE DURING APPELLATE PROCEEDINGS. AS STATED EARLIER, THERE IS NO APPEAL WITH REFERENCE TO ASSESSMENT YEAR 2007-08. FOR AN UN-BIASED AND JUDICIAL OPINION A SELF-CONTAINED REASONED ORDER IS THE FIRST PREREQUISITE. IN THE CASE UNDER CONSIDERATION BOTH THE INGREDIENTS ARE MISSING. HENCE, THE MATTER IS BEING RESTORED TO THE FILE OF THE FAA. ASSESSEE IS AT LIBERTY TO PRODUCE THE EVIDENCES WHI CH HE DEEMS FIT DURING THE FRESH APPELLATE PROCEEDINGS TO BE HELD BEFORE THE F AA. FAA IS REQUESTED TO PASS AN ORDER BASED ON THE BASIS OF MATERIAL PRODUCED BEFOR E HIM. APPEAL FILED BY THE ASSESSEE STANDS DISPOSED-OFF FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2012. SD/- SD/- ( . . / B.R. MITTAL ) ( / RAJENDRA ) )+ / JUDICIAL MEMBER & )+ / ACCOUNTANT MEMBER MUMBAI, ,) DATE: 26 TH SEPTEMBER, 2012 TNMM ITA NO. 4448/MUM/2011 ASHWIN M. SAVANI 5 )* )* )* )* # ## # $- $- $- $- .-$ .-$ .-$ .-$ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE !-$ $ //TRUE COPY// )* )* )* )* / BY ORDER, / // / / 0 0 0 0 DY./ASSTT. REGISTRAR , / ITAT, MUMBAI