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

ITA 474/IND/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5699 (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: 2004-2005
• 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. 474/IND/2014 ASSTT. YEAR 2004-05 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 2004-05 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 CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 PAGE 2 OF 7 2 AFTER REFERRED TO AS 'THE ACT) DATED 21.12.2006 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. 3 LACS FOR ALLE GED CREDIT IN THE ACCOUNT OF KUM. SHILPA RAJPAL IS BAD IN LAW AND IN CONSISTENT WITH FACTS OF THE CASE. 2. BECAUSE THE CLAIM OF REIMBURSEMENT OF RS.11,224/ - IS FULLY EXPLAINED AND HENCE OUGHT TO HAVE BEEN ALLOWED. 3. RELATES TO THE ADDITION OF RS.3 LACS MADE BY THE AO UNDER SECTION 68 BY REJECTING THE CLAIM OF GIFT TO THE ASSESSEE, 3. GROUND NO. 1 RELATES TO THE ADDITION OF RS.3 L ACS MADE BY THE AO UNDER SECTION 68 BY REJECTING THE CLAIM OF GIFT TO THE KUM. SHILPA , DAUGHTER OF THE ASSESSEE. BRIEF FACTS APROPOS OF THE ISSUE ARE THAT ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM W HOLE SALE BUSINESS OF MEDICAL AGENCIES. THE RETURN OF INCOME ON 27.10.2004 SHOWING TOTAL INCOME OF RS. 8,02,540/- WHICH WAS AS SESSED U/S.143(3) ON 21.12.2006 DETERMINING TOTAL INCOME AT RS.14,45, 690/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED TH AT ASSESSEE HAS TAKEN FRESH LOANS AMOUNTING TO RS. 6,00,000/- I N THE ACCOUNT OF KUM. SHILPA RAJPAL AND KUM. KANCHAN RAJPAL OF RS. 3 ,00,000/- EACH. THE ADDITION LIN THE LOANS WERE ON ACCOUNT OF GIFT RECEIVED FROM SHRI CHETANDAS RAJPAL , A NON RESIDENT OF DUBAI (UAE), ELDER BROTHER OF THE ASSESSEE BY DD DTD. 18.06.2003 DRAWN ON CENTRA L BANK OF INDIA UJJAIN. THE DD`S WERE ISSUED BY HABIT EXCHANGE LIC SHERJAH (UAE). CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 PAGE 3 OF 7 3 THE AO REQUIRED THE ASSESSEE TO PRODUCE THE DONOR F OR CROSS EXAMINATION SO AS TO PROVE THE IDENTITY, CREDITWOR THINESS AND GENUINENESS OF GIFT. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE DONOR NOR FILE ANY DOCUMENTARY EVIDENCE TO PROVE TH E CREDITWORTHINESS AND GENUINENESS OF GIFT. THE ASSES SEE VIDE LETTER DATED 15.11.2006 STATED THAT THE DONOR COULD NOT BE PRODUCED AS HE IS OUT OF INDIA. IT WAS ALSO SUBMITTED THAT COPI ES OF ASSESSMENT ORDER CANNOT BE PRODUCED AS THERE IS NO TAXATION IN DUBAI. THE A.O. WAS NOT SATISFIED WITH EXPLANATION AND OBSERVED THA T SUMMONS CAN BE ISSUED WITHIN LIMITED AREAS WHERE CORRECT ADDRES S IS FURNISHED. THE ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS , THE BANKERS CANNOT BE SUBSTITUTED FOR DONOR. THEREFORE , THE A. O. HELD THAT 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. IN SUPPORT OF HIS VIEW THE A.O. ALSO RELIED ON NUMBER OF CASE LAWS MENTIONED AT PAGE 3 OF THE ASSESSMENT ORDER. BEFORE CIT(A) , THE APPELLANT HAS MADE SIMILAR SUBMISSION WHICH ARE REP RODUCED IN THE APPELLATE ORDER . HOWEVER , SAME WERE REJECTED BY T HE CIT(A) BY HOLDING THAT DD WAS SENT BY BROTHER WAS TAKEN IN CA SH( DIRHAM) AND 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 THE DRAFT FOR GIFT WERE PURCHASED BY DONOR FROM CASH AN D NOT FROM DEBITING HIS BANK ACCOUNTS EVEN WHEN DONOR WAS HOLD ING A BANK ACCOUNT. ACCORDINGLY, CIT(A) UPHELD THE TRANSACTIO N OF GIFT OF RS.3 LAKH AS UNEXPLAINED U/S.68 OF THE ACT. CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 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 ASSESSEE ON 7.10.2000, KUM. KANCHAN (N IECE OF THE ASSESSEE)ON 18.06.2003 AND RAJESH RAJPAL, (NEPHEW O F THE ASSESSEE) ON 7.10.2000 WITHOUT ANY OCCASION AND REASON IN SAM E MANNER, CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 PAGE 5 OF 7 5 FASHION AND ADOPTING SAME MODUS OPERANDI. THE DD`S OF THESE GIFTS WERE ALSO PURCHASED IN CASH, INSPITE OF THE FACT TH AT THE DONOR WAS HAVING BANK ACCOUNT. THE HON. APEX COURT IN CIT VS. P. MOHANKALIA 291 ITR 278 (SC) HELD THAT WHEREIN HUMAN PROBABILIT Y HAS BEEN EMPHASIZED IN THE MATTER OF GIFT AND IT HAS BE EN HELD THAT PAYMENT THROUGH BANKING 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 EV IDENCE WAS ADDUCED IN SUPPORT OF GENUINENESS OF THE GIFT. IT C OULD HAPPEN ONLY IN INCOME-TAX WORLD WHERE CAPITAL AND SOURCE OF INC OME OF PERSONS OF UNKNOWN MEANS ARE TRANSFERRED TO RICH PERSONS WI TH MULTIPLE SOURCE OF INCOME. THE FLIGHT OF CAPITAL FROM RAGS T O RICHES IN THE FORM OF SUCH GIFTS CAN HAPPEN ONLY TO SAVE INCOME-TAX. T HERE IS NOTHING IN THIS TRANSACTION WHICH INSPIRES CONFIDENCE ABOUT TH E GENUINENESS. THE GIFT IS UNDOUBTEDLY BOGUS. IN THIS CONTEXT, IT WOULD BE PERTINENT TO REFER TO THE COMMENTS OF THE HON. MADRAS HIGH CO URT 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 CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 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 CHANDRABHAN RAJPAL:I.T.A.NO.474/IND/2014 A.Y.04-05 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. GROUND NO. 2 RELATES CONFIRMATION OF REIMBURSEME NT OF EXPENSE OF RS. 11,224/- WE HAVE CONSIDERED THE FACTS AND MATER IAL AVAILABLE ON RECORD REVEALS THAT THE ASSESSEE HAS RECEIVED A CRE DIT NOTE FOR RS. 11,224/- ON ACCOUNT OF DAMAGED GOODS . HOWEVER , TH E SAID CREDIT NOTE HAS NOT BEEN DISCLOSED THAT PROFIT AND LOSS AC COUNT NOR IN PURCHASE ACCOUNT. NO PROOF BEFORE CIT(A) WAS ALSO FILED HENCE SAME WAS REJECTED. IN VIEW OF THESE FACTS WE DISMIS S THIS GROUND OF APPEAL. 10. 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