Shri Sureshchand Hiralal Gupta, Indore V. The ITO 4(2), Indore

ITA 446/IND/2010

• Counselvise Citation: 44622714 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 05-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: KAMLESH JAIN
• Keywords: Gift; Income from undisclosed sources; Question of law

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.446/IND/2010 A.Y. 2001-02 SHRI SURESHCHAND HIRALAL GUPTA INDORE PAN ACPKG-1876A :: APPELLANT VS INCOME TAX OFFICER 4(2), INDORE :: RESPONDENT APPELLANT BY : SHRI KAMLESH JAIN RESPONDENT BY : SHRI ARUN DEWAN DATE OF HEARING : 30.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 O R D E R PER JOGINDER SINGH THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 31.3.2010. THE LEARNE D COUNSEL FOR THE ASSESSEE DID NOT PRESS PART (A) AND (C) OF THE IMPU GNED GROUND NO.1 AND ONLY PRESSED THE GROUND 1(B) RELATING TO GIFT O F RS.2 LACS BY CLAIMING THE SAME TO BE GENUINE. 2. DURING HEARING, THE LEARNED COUNSEL FOR THE ASS ESSEE, SHRI KAMLESH JAIN, SUBMITTED THAT THE ASSESSEE DERIVES I NCOME FROM 2 BUSINESS IN NAMKEEN AND SWEETS ALONG WITH INCOME FR OM PROPERTY AND MUTUAL FUNDS, ETC. THE GIFT OF RS. 1 LAC WAS CLAIM ED TO HAVE BEEN RECEIVED FROM SMT. VIJAY DARAK WIFE OF A CLOSE FRIE ND, SHRI SHARAD DARAK. THE DONOR WAS CLAIMED TO BE PRODUCED BEFORE THE ASS ESSING OFFICER WHEREIN SHE CONFIRMED THE GIFT. ANOTHER GIFT OF RS. 1 LAC WAS ALSO ARGUED TO BE RECEIVED FROM SMT. RAMJANKI RATHI THROUGH CHE QUE. THE DONEE ALSO APPEARED BEFORE THE ASSESSING OFFICER WHERE HE R STATEMENT WAS RECORDED CONFIRMING THE GIFT, THEREFORE, IT WAS SUB MITTED THAT THE GIFT IS GENUINE. ON THE OTHER HAND, THE LEARNED SR. DR, S HRI ARUN DEWAN, DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE DONEES ARE NOT THE RELATIVES OF THE ASSESSEE AND THERE WAS NO OCCASION TO GIVE THE GIFT. IT WAS ALSO ARGUED THAT THE PLACE OF GIFT WAS NOT CORR ECTLY STATED BY THE DONEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE. UNDER THE AFOREMENTIONE D FACTS, IT IS AN UNDISPUTED FACT THAT BOTH THE LADIES I.E. DONEES GA VE THE GIFT TO THE ASSESSEE THROUGH CHEQUES AND THEIR STATEMENTS WERE RECORDED WHEREIN THEY HAVE CATEGORICALLY TENDERED THAT THEY HAD GIVE N THE GIFT TO THE ASSESSEE. THE SUSPICION OF THE ASSESSING OFFICER T HAT OWN MONEY OF THE ASSESSEE WAS INTRODUCED IN THE GUISE OF GIFT IS NOT SUBSTANTIATED WITH ANY PROOF ESPECIALLY WHEN THE ASSESSING OFFICER HAS NOT PIN-POINTED ANY 3 UNDISCLOSED SOURCE OF INCOME THAT TOO WITHOUT BRING ING ANY EVIDENCE ON RECORD TO SHOW THAT IN FACT THE CASH FLOWED FROM TH E ASSESSEE TO THE ACCOUNTS OF THE DONEES WHICH WAS RECEIVED BACK IN T HE FORM OF GIFT CHEQUES. ANOTHER POINT FOR DISALLOWANCE STATED BY THE REVENUE IS THAT THERE WAS NO RELATIONSHIP BETWEEN THE DONOR AND THE DONEES. WE ARE NOT AGREEING WITH SUCH OBSERVATION BECAUSE FOR MAKI NG A GIFT, IT IS ALWAYS NOT NECESSARY TO BE A CLOSE RELATIVE. OUR V IEW IS SUPPORTED BY THE DECISION FROM HON'BLE DELHI HIGH COURT IN THE C ASE OF CIT V. R.S. SIBBAL (2004) 269 ITR 429 WHEREIN IT WAS HELD AS UN DER :- HELD, DISMISSING THE APPEAL, THAT THE ONLY GROUND ON WHICH THE GENUINENESS OF THE GIFTS HAS BEEN DOUBTED WAS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH RELATIONSHIP BETWEEN THE DONOR AND THE DONEE. BOTH THE LOWER APPELLATE AUTHORITIES HAS RECORDED A CATEGORICAL FINDING THAT BY PRODUCING THE DOCUMENTS, THE ASSESSEE HAS DISCHARGED THE ONUS WHICH LAY ON HIM WITH REGARD TO THE GENUINENESS OF THE GIFTS. THE INTERFERENCE DRAWN BY THE APPELLATE AUTHORITIES ON THE APPRECIATION OF EVIDENCE WASA FACTUAL, GIVING RISE TO NO QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW. IN ANOTHER CASE OF SAJANDAS & SONS VS. CIT; 264 ITR 435 THE HONBLE DELHI HIGH COURT HELD AS UNDER :- THAT A MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF GIFT W AS MADE BY THE ASSESSEE, THE ONUS LAY ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING 4 THE GIFT BUT ALSO HIS CAPACITY TO MAKE A GIFT AND T HAT IT HAD ACTUALLY BEEN RECEIVED AS A GIFT FROM THE DONOR. HAVING REGARD TO THE INQUIRIES CONDUCTED BY THE ASSESSING OFFICER FROM THE BANK, WITH WHICH THE ASSESSEE WAS ADMITTEDLY CONFRONTED AND BEARING IN MIND THE FACT THAT ADMITTEDLY THE DONOR WAS NOT RELATED TO THE ASSESSEE, THE FINDINGS RECORDED BY THE TRIBUNAL WERE PURE FINDINGS OF FACT WARRANTING NO INTERFERENCE. IN THESE TWO DECISIONS, THE HONBLE HIGH COURT HAS CATEGORICALLY HELD THAT THE ASSESSEE HAS TO DISCHARGE THE ONUS ABOUT T HE GENUINENESS OF THE GIFTS. UNDER THE FACTS STATED ABOVE, IT IS VERY MUCH CLEAR THAT THE IDENTITY OF THE DONEE AS WELL AS GENUINENESS OF THE GIFTS IS NOT IN DOUBT AND ONCE THE ONUS IS DISCHARGED BY THE ASSESSEE, NO ADDITION IS REQUIRED TO BE MADE. THE CASE OF THE ASSESSEE IS FU RTHER FORTIFIED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN MURLI DHAR LAHORIMAL VS. CIT (2006) 280 ITR 512 WHEREIN IT WAS HELD AS UNDER :- THAT THE TRIBUNAL FAILED TO NOTE THE FACT THAT THE IDENTITY OF THE DONOR WAS ESTABLISHED, THE DONOR HAVING APPEARED IN PERSON BEFORE THE A.O. GENUINENESS OF THE TRANSACTION WAS ESTABLISHED, NOT ONLY BY THE RECEIPT OF THE BANK DRAFT, BUT ALSO BY THE FACT OF THE TRANSACTION HAVING BORN GIFT TA X ONCE THE ASSESSMENT WASA FRAMED. THE PRIMARY ONUS WHICH RESTED WITH THE ASSESSEE THUS STOOD DISCHARGED. THEREAFTER, IF THE REVENUE WAS NOT SATISFIED WITH THE SOURCE OF THE FUNDS IN THE HANDS OF THE DONOR, IT WAS UPTO THE REVENUE TO TAKE APPROPRIATE ACTION. THE TRIBUNAL CONSIDERED THE MOTIVATION FOR MAKING THE GIFT WHICH WAS NOT RELEVANT. THE ADDITION OF RS. 50,000/- WAS BOT JUSTIFIED. 5 WHILE COMING TO THE AFORESAID DECISION, THE HONBLE COURT CONSIDERED THE FOLLOWING DECISIONS ALSO :- (I) CIT V. PRAGATI CO.OP.BANK LTD.; 278 IOTR 170 (G UJ) (II) CIT V. NOORJAHAN (PK)(SMT.); 237 ITR 570 (SC) (III) CWT V. SHANMUGHASUNDARAM (K.N.); 232 ITR 354 (SC) (IV) JAISWAL (S.P.) VS. CIT; 224 ITR 619 (SC) THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT V. METACHEM INDUSTRIES; 245 ITR 160 OBSERVED AS UNDER :- ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON BE HE A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WHETHER THAT PERSON IS AN INCOME TAX PAYER OR NOT AND WHERE HE HAD BROUGHT THIS SATISFACTORY EXPLANATION AND PRODUCES THE PERSON WHO HAS DEPOSITED THE AMOUNT THEN THE BURDEN OF THE FIRM IS DISCHARGED AND IN THAT CASE CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE FIRM FOR THE PURPOSE OF INCOME TAX. THE HONBLE APEX COURT IN THE CASE OF P.MOHANKALA; (291 ITR 278) OBSERVED AS UNDER :- THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. 4. IF THE AFORESAID DECISIONS ARE ANALYSED UNDER TH E FACTS OF THE PRESENT APPEAL, IT IS CLEARLY ESTABLISHED THAT THE ONUS CAST UPON THE 6 ASSESSEE HAS BEEN DULY DISCHARGED ESPECIALLY WHEN T HE IDENTITY OF THE DONEE AND GENUINENESS OF THE TRANSACTION HAVE BEEN PROVED. SO FAR AS THE OBSERVATION MADE IN PARA 4.4 OF THE IMPUGNED OR DER THAT BOTH THE DONORS WERE NOT FINANCIALLY CAPABLE OF ADVANCING GI FTS TO THE ASSESSEE IS CONCERNED, THE SAME WAS STRONGLY OBJECTED BY THE LE ARNED COUNSEL FOR THE ASSESSEE. WE ARE SATISFIED WITH THE CONTENTION OF THE ASSESSEE THAT NO CONTRARY MATERIAL WAS BROUGHT ON RECORD BY THE R EVENUE TO SUBSTANTIATE ITS CLAIM RATHER SUSPICION OF THE LEAR NED ASSESSING OFFICER REGARDING FINANCIAL CAPACITY OF THE DONORS IS BASED ON PRESUMPTION ONLY. IF THE AFORESAID OBSERVATIONS FROM HON'BLE COURTS A RE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, UNDISPUTEDLY BOTH THE DONEES PRESENTED THEMSELVES BEFORE THE ASSESSING OF FICER AND WHILE TENDERING THEIR STATEMENTS, CATEGORICALLY CONFIRMED GIVING THE GIFTS TO THE ASSESSEE. THE GIFT DEED WAS ALSO PRODUCED BEFORE TH E ASSESSING OFFICER, THEREFORE, THERE IS NO JUSTIFICATION IN DO UBTING THE GENUINENESS OF THE GIFT. WE ARE OF THE VIEW THAT PRESUMPTION CANN OT TAKE THE SHAPE OF EVIDENCE HOWSOEVER STRONG IT MAY BE UNTIL AND UNLES S IT IS CORROBORATED WITH EVIDENCE. THE GIFT HAS BEEN MADE THROUGH BANK ING CHANNEL. CONSEQUENTLY, ON THIS ISSUE WE REVERSE THE STAND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ESPECIALLY WHE N THE ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED. THE HON'BLE APEX COURT (SUPRA) HAS CLEARLY HELD THAT THE APPRECIATION OF F ACTS BY THE LEARNED 7 ASSESSING OFFICER SHOULD BE CONSIDERED OBJECTIVELY, THEREFORE, SUCH CONCLUSION SHOULD NOT BE BASED ON SUBJECTIVE APPROA CH OF THE ASSESSING OFFICER AND IT SHOULD WITHSTAND THE TOUCH STONE OF JUDICIAL SCRUTINY. 5. IN THE ASSESSMENT ORDER, THE LEARNED ASSESSING O FFICER HAS SUSPECTED THAT ASSESSEE WAS GENERATING INCOME FROM UNDISCLOSED SOURCES WHICH WAS INTRODUCED IN THE CAPITAL ACCOUNT IN THE FORM OF ARRANGED GIFT. WE FIND THAT NO EVIDENCE HAS BEEN B ROUGHT ON RECORD BY THE ASSESSING OFFICER IN SUPPORT OF SUCH SUSPICION. THERE ARE TWO SITUATIONS ONE IS THE SUSPICION OF THE ASSESSING OF FICER AND ANOTHER IS THE DOCUMENTARY EVIDENCE LIKE GIFT DEED THROUGH BAN KING CHANNEL, STATEMENT OF THE DONORS CLAIMING OF MAKING THE GIFT AND RELATION OF THE DONORS WITH THE DONEE (HUSBANDS FRIEND), MEANING T HEREBY THE SECOND SITUATION IS SUPPORTED BY EVIDENCE. THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE AS SESSEE, AS NOT SATISFACTORY, IS REQUIRED TO BE BASED UPON PROPER A PPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECO RD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJE CTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. APPLICATION OF MIND IS T HE SINE QUA NON FOR FORMING THE OPINION. THIS VIEW OF OURS IS SUPPORTED BY THE OBJECTION MADE BY THE HON'BLE APEX COURT IN CIT V. MOHAN KALA ; 291 ITR 278. 8 THE PREPONDERANCE OF PROBABILITIES AND NORMAL COURS E OF HUMAN CONDUCT IS ALSO TO BE KEPT IN MIND WHILE CONSIDERIN G THE NATURE OF ANY TRANSACTION. WE, THEREFORE, ALLOW THIS GROUND OF TH E ASSESSEE. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 11.2011. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.11.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE