SHRI CHANDRABHAN RAJPAL, Ujjain V. The DCIT 1(1), Ujjain

ITA 473/IND/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5703 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 23-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A.NO. 473/IND/2014 ASSTT. YEAR 2001-02 SHRI CHANDRABHAN RAJPAL PROPRIETOR MEDICAL AGENCY, KOTWALI ROAD, UJJAIN PAN NO. ABLPR 0054 P VS. DCIT 1(1) UJJAIN APPELLANT RESPONDENT APPELLANTS BY SHRI S. S. DESHPANDE, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR O R D E R PER O.P.MEENA , A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-UJJAIN [HEREIN AFTER REFERRED TO AS THE CIT(A)] DATED 26.03.2014 AND PER TAINS TO ASSESSMENT YEAR 2001-02 AS AGAINST APPEAL DECIDED I N ASSESSMENT ORDER U/S. 143(3) OF INCOME TAX ACT,1961 ( HEREIN DATE OF HEARING 26.07.2016 DATE OF PRONOUNCEMENT 26 .07.2016 SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 2 OF 7 2 AFTER REFERRED TO AS 'THE ACT) DATED27.11.2006 OF DCIT 1(1) UJJAIN [HEREINAFTER REFERRED TO AS THE AO]. 2. THE GROUNDS OF APPEAL AS TAKEN BY THE ASSESSEE IS AS UNDER: 1. BECAUSE THE ADDITION MADE OF RS. 5 LACS IN RESPE CT OF GIFT RECEIPT BY THE APPELLANT IS NOT CORRECT BOTH ON FACS AND IN LAW. 2. BECAUSE THE GIFT RECEIVED BY THE APPELLANT OF RS . 5 LACS IS WRONGLY CONFIRMED AS ALL THE FACTS HAVE BEEN PROPERLY EXPL AINED 3. THE APPELLANT CRAVE LEAVE TO ADD , AMEND, ALTER, MODIFY OR WITHDRAW ANY OF THE GROUNDS AT THE TIME OF HEARING. SINCE THE EFFECTIVE GROUND RELATES TO THE ADDITIO N OF RS.5 LACS MADE BY THE AO UNDER SECTION 68 BY REJECTING THE CLAIM O F GIFT TO THE ASSESSEE, HENCE, SAME IS BEING DEALT WITH AS UNDER : 3. THE FACTS OF THE CASE ARE THAT ASSESSMENT IN TH IS CASE WAS COMPLETED U/S143(3) ON 03.03.2004 DETERMINING TOTAL INCOME AT RS. 7,32,680/. THIS ASSESSMENT WAS CANCELLED BY CIT UJJ AIN U/S.263 VIDE ORDER DATED 31.01.2006. AS A RESULT OF WHICH FRESH IMPUGNED ASSESSMENT ORDER HAS BEEN MADE U/S 143(3)/263. DUR ING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS CREDITED RS. 5 LACS AS GIFT RECEIVED FROM SHRI CHET ANDAS RAJPAL , A NON RESIDENT OF DUBAI (UAE), ELDER BROTHER OF THE A SSESSEE BY DD NO. 6348705 DTD. 07.10.2000 DRAWN ON SBI UJJAIN. THE DD WAS ISSUED BY EMIRATES INDIA INTERNATIONAL EXCHANGE, DUBAI, UAE. THE AO REQUIRED SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 3 OF 7 3 THE ASSESSEE TO PRODUCE THE DONOR FOR CROSS EXAMINA TION SO AS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF GIFT. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE DONOR N OR FILE ANY DOCUMENTARY EVIDENCE TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF GIFT. THE ASSESSEE VIDE LETTER DATED 15.11.2006 STATED THAT THE DONOR COULD NOT BE PRODUCED AS HE IS OUT O F INDIA. IT WAS ALSO SUBMITTED THAT COPIES OF ASSESSMENT ORDER CANN OT BE PRODUCED AS THERE IS NO TAXATION IN DUBAI. THE A.O. WAS NOT SATISFIED WITH EXPLANATION AND OBSERVED THAT SUMMONS CAN BE ISSUED WITHIN LIMITED AREAS WHERE CORRECT ADDRESS IS FURNISHED. T HE ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS , THE BANKERS CAN NOT BE SUBSTITUTED FOR DONOR. THEREFORE , THE A.O. HELD TH AT THE MERE IDENTITY IS NOT SUFFICIENT TO PROVE THE CREDIT OF GIFT AND GIFT GIVEN THROUGH BANKING CHANNEL DOES NOT MEAN THAT IT IS GENUINE. I N SUPPORT OF HIS VIEW THE A.O. ALSO RELIED ON NUMBER OF CASE LAWS ME NTIONED AT PAGE 3 OF THE ASSESSMENT ORDER. BEFORE CIT(A) , TH E APPELLANT HAS MADE SIMILAR SUBMISSION WHICH ARE REPRODUCED IN THE APPELLATE ORDER . HOWEVER , SAME WERE REJECTED BY THE CIT(A) BY HOLDING THAT DD WAS SENT BY BROTHER WAS TAKEN IN CASH( DIRHAM) A ND NO PROOF WAS ADDUCED IN THE FORM OF BANK A/C OF THE BROTHER TO SHOW THE AMOUNT OF SUCH WITHDRAWAL WAS FROM BANK. THE CIT(A ) HAS OBSERVED THAT THE APPELLANT COULD NOT EXPLAINED AS TO WHY TH E DRAFT FOR GIFT WERE PURCHASED BY DONOR FROM CASH AND NOT FROM DEBI TING HIS BANK ACCOUNTS EVEN WHEN DONOR WAS HOLDING A BANK ACCOUNT . ACCORDINGLY, CIT(A) UPHELD THE TRANSACTION OF GIFT OF RS. 5 LAKH AS UNEXPLAINED U/S.68 OF THE ACT. SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 4 OF 7 4 4. BEFORE US, LD. AR FOR THE ASSESSEE SUBMITTED THA T THE GIFT WAS RECEIVED VIDE DD. THE ACIT 1(1) HAS RECORDED THE ST ATEMENT OF DONOR, SHRI CHETANDAS RAJPAL ON 03.12.2008, WHEN HE WAS IN INDIA , WHEREIN HE HAS ADMITTED OF HAVING GIVEN THE GIFT TO THE ASSESSEE. HE HAS ALSO STATED THAT HE IS HAVING FDR OF RS. 25 LAK H WHICH MEANS THAT HE IS A PERSON OF MEANS. THE DD WAS PAYABLE A T SBI WHICH WAS ENCASHED IN UCO BANK WHERE THE ASSESSEE WAS HAVIN G HIS BANK ACCOUNT. THE A.O. WAS ALSO SATISFIED WITH THIS EXP LANATION IN THE ORIGINAL ASSESSMENT SO MADE. THEREFORE, IT WAS CLAI MED THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE DONOR HAS BEEN PROVED, HENCE ADDITION SO MADE BE DELETED. 5. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F LOWER AUTHORITIES AND SUBMITTED THAT GENUINENESS OF THE GIFT IS NOT PROVED AS THE DD WAS MADE THROUGH CASH AND NOT THROUGH BANK ACCOUNT OF THE DONOR. NOR NAY BANK STATEMENT OF THE DONOR HAS BEE N FILED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE WITH THE ORDER OF LD. CIT(A). IT IS N OT IN DISPUTE THAT THE DONOR WAS HAVING HIS OWN BANK ACCOUNT IN HIS OWN NA ME IN DUBAI. HOWEVER, STILL THE GIFT DD WAS MADE BY PAYING DIRHA M(CASH) TO EMIRATES INDIA INTERNATIONAL EXCHANGE, DUBAI. NO EVIDENCE IS ADDUCED THAT THE CASH WAS WITHDRAWN FROM BANK ACCOU NT FOR MAKING DD. IT IS ALSO A MATTER OF CONCERN THAT SAME DONOR HAS MADE GIFT TO KUM SHILPA (DAUGHTER OF THE ASSESSEE) AND KUM. KANCHAN (NIECE OF THE ASSESSEE) ON 28.06.2003 AND RAJESH RAJPAL, (NEPHEW OF THE ASSESSEE) ON 7.10.2000 WITHOUT ANY O CCASION AND SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 5 OF 7 5 REASON IN SAME MANNER, FASHION AND ADOPTING SAME MO DUS OPERANDI. THE DD`S OF THESE GIFTS WERE ALSO PURCHAS ED IN CASH, INSPITE OF THE FACT THAT THE DONOR WAS HAVING BANK ACCOUNT. THE HON. APEX COURT IN CIT VS. P. MOHANKALIA 291 ITR 278 (SC) HELD THAT WHEREIN HUMAN PROBABILITY HAS BEEN EMPHASIZED IN TH E MATTER OF GIFT AND IT HAS BEEN HELD THAT PAYMENT THROUGH BANK ING TRANSACTION BY ITSELF IS OF NO CONSEQUENCE. THUS BEFORE US THE ASSESSEE HAS FAILED TO ESTABLISH AS TO WHY THE AMOUNT OF DD WAS MADE BY PAYING CASH AND WHY THE TRANSACTION WAS NOT CHANNELIZED THROUGH BANK EVEN BOTH DONOR AND DONEE WERE HAVING BANK ACCOUNTS. NO CREDIBLE EVIDENCE WAS ADDUCED IN SUPPORT OF GENUINENESS OF T HE GIFT. IT COULD HAPPEN ONLY IN INCOME-TAX WORLD WHERE CAPITAL AND SOURCE OF INCOME OF PERSONS OF UNKNOWN MEANS ARE TRANSFERRED TO RICH PERSONS WITH MULTIPLE SOURCE OF INCOME. THE FLIGHT OF CAPIT AL FROM RAGS TO RICHES IN THE FORM OF SUCH GIFTS CAN HAPPEN ONLY TO SAVE INCOME-TAX. THERE IS NOTHING IN THIS TRANSACTION WHICH INSPIRES CONFIDENCE ABOUT THE GENUINENESS. THE GIFT IS UNDOUBTEDLY BOGUS. IN THIS CONTEXT, IT WOULD BE PERTINENT TO REFER TO THE COMMENTS OF THE HON. MADRAS HIGH COURT IN ADDL. CIT VS. RANGANATHAN CHETTY (C.R .) (1985) 153 ITR 456 (PAGE 466)AS UNDER: 'LOOK OF THE WAY THE GIFTS WERE MADE. NOT ONLY WERE THEY MADE THE OTHER PEOPLE'S CHILDREN, BUT SOME OF THEM WERE MADE TO OTHER PEOPLE'S WIFES. IN ANY PLACE, EXCEPTING IN A TAX CO URT, GIFTS TO OTHER PEOPLE'S WIFES, EVEN IF THEY ARE WIVES OF CO-PARTNE RS, WOULD RAISE A HOST OF QUESTIONS AND NOT A FEW EYE-BROWS, EXCEPT W HEN THERE IS AN UNDERSTANDING NOD. AH, IT IS ALL FOR PURPOSES OF IN COME-TAX'. THE SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 6 OF 7 6 INCOME-TAX OFFICER SAW THE FACTS WITH A LAYMEN'S EY ES, WHICH WAS THE CORRECT WAY TO LOOK AT THEM. THE TRIBUNAL FOR T HEIR PART, HOWEVER, GOT INVOLVED IN THE CONVOLUTIONS OF THE MITAKSHARA LAW OF GIFTS AND BROUGHT TO BEAR A DRY AND UNREAL LEGALISTIC APPROAC H TO THE APPLICATION OF SECTION 64, WHICH THE PROVISION DOES NOT CALL FOR, IF WE UNDERSTAND KOTHARI'S CASE (1963) 49 ITR (SC) 107 AR IGHT.' 7. IN THE MATTER OF GIFTS, ASSESSEE IS REQUIRED TO DISCHARGE THE ONUS OF SUBMITTING COMPLETE DETAIL 'OF GIFTS BEFORE THE AO. HE SHOULD HAVE ESTABLISHED (I) THE IDENTITY OF THE DONOR; (II) CRE DIT WORTHINESS OF THE DONOR; (III) GENUINENESS OF THE TRANSACTION; (IV) O CCASION: (V) RELATIONSHIP OF THE DONOR AND DONEE; (VI) EVIDENCE OF NATURAL LOVE AND AFFECTIONS. THE HUMAN PROBABILITY HAS TO BE CON SIDERED AS TO WHY DONOR IS PROMPTED TO GIVE GIFT TO THE ASSESSEE. THIS QUESTION IS REQUIRED TO BE ANSWERED BECAUSE AS CONTRARY TO LOAN , IN THE CASE OF GIFT, DONOR LOSES HIS HARD EARNED CAPITAL IN FAVOUR OF THE DONEE FOR EVER WHEREAS IN THE CASE OF LOAN THE CREDITOR RETAI NS THE RIGHT TO RECOVER THE MONEY FROM THE ASSESSEE. THEREFORE, ONU S IS HEAVIER ON THE ASSESSEE IN A CASE OF GIFT AS COMPARED TO THE C ASE OF CREDIT. IN CASE OF CREDIT, IF IDENTITY OF THE CREDITOR IS KNOW N AND CREDITWORTHINESS OF THE CREDITOR IS ESTABLISHED THE N ONUS IS SHIFTED TO THE REVENUE TO SHOW THAT CREDIT IS NOT GENUINE. BUT IN THE CASE OF GIFT ALL THE THREE INGREDIENTS ARE NECESSARY TO BE ESTABLISHED BY THE ASSESSES AND MERELY BY GIVING EVIDENCE OF IDENTITY AND CREDIT WORTHINESS OF DONOR, GENUINENESS CANNOT BE TAKEN TO BE ESTABLISHED AUTOMATICALLY, 'THEREFORE, TEST OF HUMAN PROBABILIT Y ASSUMES SHRI CHANDRABHAN RAJPAL:ITA NO. 473/IND/2014 A.Y. 01-02 PAGE 7 OF 7 7 IMPORTANCE SO AS TO SHOW THAT THERE WERE REASONS WH ICH PROMPTED THE DONOR TO FORGO HIS HARD EARNED CAPITAL IN FAVOU R OF THE DONEE. 8. IN VIEW OF THE ABOVE WE HOLD THAT ASSESSEE HAS F AILED TO PROVE THAT GIFT IS GENUINE. ACCORDINGLY, WE CONFIRM THE A DDITION AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 26.07.201 6. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED: 26TH JULY,2016. COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH