Shri Nirmal Kumar Toshniwal, Siliguri V. I.T.O., Ward-1(2), Siliguri, Siliguri

ITA 468/KOL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6650 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: S K TULSIYAN
• Keywords: Gift
• Section: 131; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : KOLKATA ( ) . . , , , , ) [BEFORE HONBLE SRI B.R. MITTAL, J.M. & HONBLE SRI AKBER BASHA, A.M.] ! ! ! ! / I.T.A NO. 468/KOL/2010 '# $% / ASSESSMENT YEAR : 2004-2005 SRI NIRMAL KUMAR TOSHNIWAL, SILIGURI -VS.- I NCOME TAX OFFICER, WARD-1(2), SILIGURI (PAN : ABNPT 4111 F) ( &' /APPELLANT ) ( ()&' / RESPONDENT ) FOR THE APPELLANT : SHRI S.K. TULSIYAN, A.R. FOR THE RESPONDENT : SHRI PIYUSH KOLHE, SR. D.R . / ORDER PER SHRI B. R. MITTAL, JUDICIAL MEMBER/ . . , : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2004-05 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), SILIGURI DATE D 23.12.2009 ON THE FOLLOWING GROUNDS :- (1)(A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A.) ERRED IN CONFIRMING THE ADDITION OF RS.9,50,000/- M ADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 68 OF THE I.T. ACT, 1961. (B) THAT THE LD. CIT(A.) ERRED IN NOT APPRECIATING THE EXPLANATION AND SUBMISSIONS FILED BY THE APPELLANT DURING THE COURS E OF APPEAL AND THEREBY CONFIRMING THE ADDITION MADE BY THE ASSESSI NG OFFICER. (2) FOR THAT THE DISALLOWING OF CLAIMS UNDER SECTIO N. 80D AND 80GG IS QUITE UNJUSTIFIED. (3) THAT THE ORDERS OF THE LD. AO AND THE CIT(A.) S HOULD, ACCORDINGLY, BE SET ASIDE AND YOUR APPELLANT BE GIVEN SUCH RELIE F(S) AS PRAYED FOR. ITA NO. 468/KOL./2010 2 2. AT THE TIME OF HEARING, LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE SUBMITTED THAT THE GROUND NO. 2 OF THE APPEAL IS NOT PRESSED FOR. THER EFORE, GROUND NO. 2 OF THE APPEAL IS DISMISSED. 3. NOW THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE AUTHORITIES BELOW HAVE ERRED IN CONFIRMING THE ADDITION OF RS.9,50,00 0/- BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ON THE FACTS AND CIRCUMSTANCE S OF THE CASE. 4. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT THE ASSESSEE FILED THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOWING TOTAL I NCOME OF RS.1,16,780/-. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE CLAIMED TO HAV E RECEIVED GIFTS FROM EIGHT PERSONS AGGREGATING RS.9,50,000/-, THE DETAILS OF WHICH ARE AS UNDER :- 1. SRI MADANLAL SHARMA RS.1,50,000/- 2. SRI PAWAN KR. BHOWSINGHKA RS.1,00,000/- 3. SRI SURESH KR. MUNDHRA RS.1,00,000/- 4. SRI ANAND KR. AGARWAL RS.1,00,000/- 5. SRI RANJIT KR. AGARWAL RS.1,00,000/- 6. SRI DEOKINANDAN KANDOI RS.1,00,000/- 7. SRI KANHAIYALAL CHOUDHURY RS.1,50,000/- 8. SMT. VINITA AGARWALA RS.1,50,000/- TOTAL RS.9,50,000/- 5. IN ORDER TO VERIFY THE GENUINENESS OF THE GIFTS AND CREDITWORTHINESS OF THE DONORS, THE ASSESSING OFFICER RECORDED STATEMENT OF FIVE DONORS , BUT THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE REMAINING THREE DONORS BEFORE THE ASSES SING OFFICER. HOWEVER, THE ASSESSEE FILED COPIES OF RETURNS FILED, STATEMENT OF INCOME, BALAN CE-SHEET, CASH FLOW STATEMENTS OF THE DONORS ALONGWITH DECLARATIONS OF GIFTS. THE ASSESSING OFFI CER HAS STATED THAT THE DONORS ARE NOT RELATED TO THE ASSESSEE. THAT ALL THE GIFTS ARE GIVEN IN CA SH AND NONE OF THE DONORS HAD DOCUMENTARY EVIDENCES REGARDING THEIR SOURCE OF INCOME AND ALL OF THEM HAD POOR CAPITAL BASE, AS REFLECTED FROM THEIR STATEMENT OF FACTS. THE ASSESSING OFFICE R HAS STATED THAT ONLY THE FACT THAT DONORS HAVE PERMANENT ACCOUNT NOS. IN THEIR NAMES AND ARE INCOME-TAX ASSESSEES, DO NOT PROVE THE GENUINENESS OF THE GIFTS. THEREFORE, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE GENUINENESS OF THE GIFTS AND TREATED THE GIFTS AMOU NT AGGREGATING RS.9,50,000/- AS INCOME OF THE ITA NO. 468/KOL./2010 3 ASSESSEE FROM UNEXPLAINED SOURCES AND ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. BEING AGGRIEVED, THE ASSESSEE F ILED APPEAL BEFORE LD. CIT(APPEALS). 6. LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIO N OF THE ASSESSEE HAS STATED THAT THE ASSESSING OFFICER HAS RIGHTLY OBSERVED THAT ALL THE ALLEGED DONORS WERE MEN OF VERY SMALL MEANS, THEIR INCOME WAS MEAGER AND DRAWINGS WERE VE RY POOR. THAT THEIR SOURCE OF INCOME WAS NOT VERIFIABLE. HE HAS ALSO STATED THAT THE ASSESSE E COULD NOT PRODUCE ALL THE DONORS BEFORE THE ASSESSING OFFICER AND CONSIDERING THE ABOVE FACTS A ND AFTER OBSERVING THAT MERELY ESTABLISHING THE IDENTITY OF THE DONORS IS NOT ENOUGH, HAS HELD THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE DONORS AND GENUINENESS OF T HE TRANSACTIONS. ACCORDINGLY, THE LD. CIT(APPEALS) HAS CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. DURING THE COURSE OF HEARING, LD. A.R. MADE HIS DETAILED SUBMISSIONS AND ALSO FILED A WRITTEN SUBMISSION DATED 5.5.2011. LD. A.R. STATED THAT ALL THE GIFTS WERE DULY REFLECTED IN THE BALANCE-SHEET FILED ALONGWITH INCOME TAX RETURNS OF THE DONORS. HE FURTHER SUBMITTED THAT ALL THE DONORS WERE ASSESSED TO TAX AND ALSO FILED DECL ARATION OF GIFTS CONFIRMING THAT THEY HAD GIVEN THE GIFTS TO THE ASSESSEE, THE DETAILS OF WHI CH WE HAVE ALREADY MENTIONED HEREINABOVE. HE SUBMITTED THAT AS PER THE CAPITAL A/C. OF THE RESPE CTIVE DONORS, THEY HAD THE SUFFICIENT AMOUNT IN THEIR HANDS TO GIVE GIFTS TO THE ASSESSEE. TO SUBST ANTIATE HIS SUBMISSION, HE REFERRED PAGES 4 TO 40 OF THE PAPER BOOK, WHICH CONTAINED THE COPIES OF ACKNOWLEDGMENT OF INCOME-TAX RETURNS, COMPUTATION, CAPITAL ACCOUNT, CASH FLOW STATEMENT A ND DECLARATION OF GIFTS BY THE RESPECTIVE DONORS. THE LD. A.R. FURTHER REFERRED PAGES 51 TO 6 7 OF THE PAPER BOOK AND SUBMITTED THAT AS PER THE STATEMENT RECORDED BY THE ASSESSING OFFICER OF 3 DONORS UNDER SECTION 131 OF THE ACT, NAMELY SHRI MADANLAL SHARMA, SHRI PAWAN KR. BHOWSIN GHKA AND SHRI ANAND KUMAR AGARWAL, ALL OF THEM HAD CONFIRMED OF GIVING GIFTS TO THE AS SESSEE IN CASH. LD. A.R. SUBMITTED THAT THE MERE FACT THAT THE GIFTS WERE GIVEN IN CASH, IT COU LD NOT BE CONSIDERED THAT THE GIFTS WERE NOT GENUINE WHEN ALL THE DONORS HAD FILED THE DECLARATI ON CONFIRMING GIFTS GIVEN TO THE ASSESSEE AS ALSO THAT THEY HAD THE SUFFICIENT CASH BALANCE IN T HEIR HANDS. HE FURTHER SUBMITTED THAT THE AUTHORITIES BELOW WERE INFLUENCED BY THE FACT THAT THE DONORS WERE NOT HAVING BLOOD RELATION OR BUSINESS RELATION WITH THE ASSESSEE AND, THEREFORE, THE GIFTS HAVE NOT BEEN CONSIDERED AS GENUINE. LD. AR SUBMITTED THAT THE MERE FACT THAT T HE DONORS COULD NOT FILE ANY EVIDENCE TO PROVE THEIR SOURCE OF INCOME, IT COULD NOT BE A GRO UND TO HOLD THAT THE GIFTS WERE NOT GENUINE. ITA NO. 468/KOL./2010 4 LD. AR RELYING ON THE DECISION OF THE ITAT, HYDERAB AD BENCH IN THE CASE OF BHAGAWANDAS SHARDA VS.- ACIT [2004] 82 TTJ 982 SUBMITTED THAT WHEN THE ASSESSEE HAD DISCHARGED HIS ONUS BY PROVIDING ALL THE DETAILS IN RESPECT OF THE GIFTS RECEIVED INCLUDING IDENTITY AND CREDITWORTHINESS OF THE DONORS AS WELL AS THE GENUI NENESS OF THE TRANSACTION BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE GIFTS COULD NOT BE REJECTED BY CONSIDERING THEM AS BOGUS MERELY BECAUSE THE ASS ESSING OFFICER WAS NOT SATISFIED. HE SUBMITTED THAT THE AUTHORITIES BELOW WERE ALSO INFL UENCED THAT THE ASSESSEE FAILED TO PRODUCE THREE DONORS. HE SUBMITTED THAT THE INCOME TAX OFFI CER COULD ENFORCE ATTENDANCE WHEN THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THEM BE FORE THE ASSESSING OFFICER AS THEY WERE UNWILLING TO ACCOMPANY THE ASSESSEE TO THE ASSESSIN G OFFICER. THE LD. AR SUBMITTED THAT THE AUTHORITIES BELOW HAVE IGNORED THE DOCUMENTS FILED ON RECORD AND HAS DOUBTED THE GENUINENESS OF THE GIFTS WITHOUT ANY COGENT MATERIAL ON RECORD. LD. AR ALSO FILED COPIES OF THE ORDERS OF ITAT IN ITA NO. 387/KOL./2008 IN THE CASE OF SRI PR EM CHAND SHAW VS.- ITO, ITA NO. 86/KOL./2008 IN THE CASE OF ACIT VS.- RAJESH SINGH I, ITA NO. 675/KOL./2008 IN THE CASE OF BISWANATH DUTTA VS.- ITO AND ITAT, GAUHATI BENCH I N THE CASE OF SMT. AMITA DEVI SANGANERIA VS.- ACIT (2011) 53 DTR (GAU.)(TM) 214. HE SUBMITTED THAT THE ADDITION IS NOT JUSTIFIED. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE C OULD NOT PROVE THE CREDITWORTHINESS OF THE DONORS. HE FURTHER SUBMITTED THAT THE INCOME OF ALL THE DONORS IS MEAGER AND THEY COULD NOT GIVE GIFT TO THE AMOUNT RANGING FROM RS.1,00,000/- TO RS.1,50,000/- TO THE ASSESSEE PARTICULARLY WHEN THEY ARE NOT IN BLOOD RELATION. HE FURTHER SU BMITTED THAT THE SAID DONORS COULD NOT PRODUCE ANY EVIDENCE OF THE CAPITAL SHOWN BY THEM I N THEIR RETURNS AND MERELY BECAUSE THEY ARE ASSESSED TO TAX AND FILED THE RETURNS, DO NOT ESTAB LISH THE CREDITWORTHINESS OF THE DONORS. HE FURTHER SUBMITTED THAT THE SAID DONORS HAVE FILED T HE RETURNS ONLY WHEN THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 143(2) OF THE ACT. HE SUBMITTED THAT THE LD. CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ACTION OF TH E ASSESSING OFFICER TO TREAT THE GIFTS AGGREGATING RS.9,50,000/- AS BOGUS GIFTS. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW AND THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. WE HAVE ALS O GONE THROUGH THE RELEVANT PAGES OF THE PAPER ITA NO. 468/KOL./2010 5 BOOK PLACED ON RECORD AND ALSO WRITTEN SUBMISSION F ILED BY THE ASSESSEE. WE HAVE ALSO CONSIDERED THE CASES CITED (SUPRA) BEFORE US. 9. WE OBSERVE THAT THERE ARE EIGHT DONORS, WHO HAVE STATED TO HAVE GIVEN GIFTS TO THE ASSESSEE, THE DETAILS OF WHICH ARE MENTIONED HEREIN ABOVE. ON PERUSAL OF THE PAPER BOOK, WE OBSERVE THAT ALL THE DONORS ARE ASSESSED TO TAX AND FILED THE RETURNS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AS PER ACKNOWLEDGMENT OF THEIR INCOME-TAX RETURNS FILED PLACED ON RECORD. ON PERUSAL OF THE CASH FLOW STATEMENT AND/OR CAPITA L ACCOUNT, IT IS A FACT THAT ALL THE DONORS HAVE DISCLOSED THAT THEY HAD GIVEN GIFTS TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IN ORDER TO CONFIRM THE GIFTS, WE OBSERVE THAT ALL THE DONORS FILED THE DECLARATION AND/OR GIVEN AFFIDAVITS, THE COPIES OF WHICH ARE PLACED AT PAGE 4C OF THE PAPER BOOK IN THE CASE OF MADAN LAL SHARMA OF GIVING GIFT OF RS.1,50,000/-, AT PAGE 9 B Y SHRI PAWAN KUMAR BHOWSINGHKA OF GIVING GIFT OF RS.1,00,000/-, PAGE NO. 15 OF GIVING GIFT B Y SHRI SURESH KUMAR MUNDHRA OF RS.1,00,000/-, PAGE NO. 20 BY SHRI ANAND KUMAR AGAR WAL OF GIVING GIFT OF RS.1,00,000/-, PAGE NO. 25 BY SHRI RANJEET KUMAR AGARWAL OF GIVING GIFT OF RS.1,00,000/-, PAGE NO. 30 OF GIVING GIFT OF RS.1,00,000/- BY SHRI DEOKI NANDAN KANDOI, PAGE NO. 31 AN AFFIDAVIT BY SHRI KANHAIYALAL CHOWDHURY AND PAGE NO. 33 DECLARATION O F KANHAIYA LAL CHOWDHURY OF GIVING GIFTS OF RS.1,50,000/- TO THE ASSESSEE AND PAGE 36 AN AFFIDAVIT BY SMT. VINITA AGARWAL AND PAGE NO. 40 DECLARATION OF SMT. VINITA AGARWAL OF G IVING GIFT OF RS.1,50,000/- TO THE ASSESSEE. NOT ONLY THIS, WE OBSERVE THAT FIVE OF THE DONORS A PPEARED BEFORE THE ASSESSING OFFICER AND THEIR STATEMENTS UNDER SECTION 131 WERE RECORDED BY HIM AND ALL THE FIVE DONORS NAMELY SHRI MADANLAL SHARMA, SHRI PAWAN KR. BHOWSINGHKA, SHRI A NAND KUMAR AGARWAL, SHRI SURESH KR. MUNDHRA AND SHRI RANJEET KUMAR AGARWAL CONFIRMED OF GIVING GIFTS TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. WE OBSERVE THA T THE ASSESSEE HAS PLACED ON RECORD THE SUFFICIENT DOCUMENTARY EVIDENCE NOT ONLY TO PROVE T HE IDENTITY OF THE DONORS BUT ALSO TO PROVE THE GENUINENESS OF THE GIFT RECEIVED BY THE ASSESSE E FROM EACH OF THEM. FURTHER THE CAPITAL A/C. OF THE DONORS, PLACED ON THE PAPER BOOK ALSO PRIMA FACIE ESTABLISH THAT THEY HAD THE SUFFICIENT CAPITAL IN THEIR HANDS TO GIVE THE AMOUNT TO THE AS SESSEE AS STATED TO HAVE BEEN GIVEN BY THEM AS GIFT. CONSIDERING THE ABOVE FACTS, WE ARE OF THE CO NSIDERED VIEW THAT THE ASSESSEE HAD DISCHARGED HIS ONUS THAT LAY UPON HIM BY PLACING ON RECORD THE REQUISITE DOCUMENTS AND IN THE ABSENCE THEREOF, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED TO TREAT THE SAID GIFTS AS BOGUS AND TO TREAT THE INCO ME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. ITA NO. 468/KOL./2010 6 HENCE, WE DELETE THE SAID ADDITION OF RS.9,50,000/- MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) BY ALLOWING GROUN D NO. 1 OF THE APPEAL. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2011. SD/- SD/- [AKBER BASHA/ ] [ B.R. MITTAL / . . ] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 13/ 05/ 2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI NIRMAL KUMAR TOSHNIWAL, C/O. M/S. JIWANMAL RAM LAL & CO. MANGTURAM COMPOUND, SILIGURI-734 005 2 ITO, WARD-1(2), SILIGURI, 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , SILIGURI 4 CIT 5 . DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSIS TANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.