The ITO, 5(1), V. Shri Harpal Singh Sachdev,

ITA 479/IND/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2731 (ITAT-INDORE)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-04-2010
• Assessment Year: misc
• Appeal Filed On: 28-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S N AGARWAL
• Keywords: Unexplained cash credit; Gift; Block assessment
• Section: 68; 69

Judgement Text

PAGE 1 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AKQPS0062E I.T.A.NO. 535/IND/2006 A.Y. : 2002-03 SHRI HARPAL SINGH SACHDEV, INCOME-TAX OFFICER, PROP. OF M/S. MAHESH TRADERS, VS WARD 5(1), 45/2, BAIRATHI COLONY, INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : AKQPS0062E I.T.A.NO. 479/IND/2006 A.Y. : 2002-03 INCOME-TAX OFFICER, SHRI HARPAL SINGH SACHDEV, WARD 5(1), VS PROP. OF M/S. MAHESH TRADERS, INDORE. 45/2, BAIRATHI COLONY, INDORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI S.N.AGARWAL, C. A. DEPARTMENT BY : SHRI P.K.MITRA, SR. DR DATE OF HEARING : 24.06.2010 O R D E R PER V.K. GUPTA, A.M. THESE CROSS APPEALS ARISE OUT OF THE ORDER OF LD.CI T(A)-II, INDORE, DATED 18.4.20069, FOR THE ASSESSMENT YEAR 2002-03. PAGE 2 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST, WE SHALL TAKE UP ASSESSEES APPEAL IN I.T.A. NO. 535/IND/2006, WHEREIN THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN UPHOLDING THE DISALLOWANCE OF RS. 3,71 ,000/- MADE BY THE ASSESSING OFFICER IN RESPECT OF TRANSPORTATION EXPE NSES INCURRED BY THE ASSESSEE. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED TO HAVE PAID A SUM OF RS. 3,71,000/- TO M/S. SONA ROADLINES BY DEM AND DRAFT THROUGH ITS DEBTORS ON ACCOUNT OF FREIGHT. ON AN ENQUIRY B Y THE ASSESSING OFFICER, M/S. SONA ROADLINES STATED THAT IT HAD CARRIED OUT TRANSPORTATION OF GOODS OF M/S. MAHESH TRADERS, THE ASSESSEE, HOWEVER, THE PAYMENT HAD BEEN RECEIVED IN CASH AT THE TIME OF TRANSPORTATION. IT WAS ALSO STATED THAT THE PAYMENT RECEIVED THROUGH DD FROM THE ASSESSEE WAS R ETURNED BY ISSUE OF CHEQUE OF SIMILAR AMOUNT TO THE FIRM OF THE ASSESSE ES FATHER. THIS RESULTED INTO A VIEW THAT THE ASSESSEE HAD ACTUALLY PAID THE FREIGHT IN CASH FROM TIME TO TIME AND THE PAYMENT OF SUCH FREIGHT T HROUGH DD WAS FICTITIOUS. THE AO, ACCORDINGLY, DISALLOWED PAYMEN T MADE BY DD, HOWEVER, HE DID NOT MAKE ANY SEPARATE ADDITION FOR THE AMOUNT PAID IN CASH FROM TIME TO TIME. AGGRIEVED BY THIS, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO ALSO CONFIRMED TH E DIRECTION OF THE AO PAGE 3 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. CONCURRING WITH THE FINDINGS OF THE AO. STILL AGGRI EVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD.COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AND SUBMITTED THAT AS FAR AS THE FACT OF RENDERING OF SERVICES WA S CONCERNED, THERE WAS NO DISPUTE. SIMILARLY, THERE WAS NO DISPUTE THAT PA YMENT OF FREIGHT WAS REASONABLE. THE LD. COUNSEL FURTHER CONTENDED THAT ONLY REASON WAS THAT THE ASSESSEE SHOWED THE PAYMENT MADE THROUGH DD WHE REAS THE RECIPIENT OF THE FREIGHT STATED TO HAVE RECEIVED THE PAYMENT FROM THE ASSESSEE IN CASH FROM TIME TO TIME, WHEREAS THE REAL SITUATION WAS THAT THIS PARTY WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND THE ASSESS EE HAD NOT CLAIMED THE EXPENDITURE TWICE I.E. ONE ON CASH PAYMENT BASI S AND ANOTHER ON PAYMENT MADE BY DD. HENCE, ANY ACTION WAS TO BE TAK EN IN THE HANDS OF THE RECIPIENT AND NOT IN THE HANDS OF THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT IT WAS ALSO NOT IN DISPUTE THAT THE AMOUNT PAID THROUGH DD HAD BEEN ADVANCED AS LOAN TO THE CONCERN OF THE ASS ESSEES FATHER. IT WAS ALSO CONTENDED THAT THERE WAS SUFFICIENT CASH IN TH E BOOKS OF ACCOUNT. HENCE, THERE WAS NO REASON FOR NOT DEBITING THE SAI D AMOUNT OF FREIGHT FROM TIME TO TIME, IF THE SAME WOULD HAVE PAID IN C ASH. 6. THE LD. SENIOR D.R. ,ON THE OTHER HAND, PLACED STRO NG RELIANCE ON THE ORDER OF THE LD.CIT(A). PAGE 4 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT THE FACT OF RENDERING OF SERVICES BY SAID PARTY TO THE ASSESSEE IS NOT IN DISPUTE NOR THE REASONABLENE SS OF THE QUANTUM OF FREIGHT IS DISPUTED. IT IS ALSO NOTEWORTHY THAT THE OTHER PARTY IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED FREIGHT ONLY ONCE I.E. ON PAYM ENT THROUGH DD AND NOT ON CASH BASIS AS ALLEGED BY THE REVENUE AUTHORI TIES. THERE IS SUFFICIENT CASH BALANCE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THUS, IF VIEWED FROM ANY ANGLE, IN OUR OPINION, THERE IS NO BASIS FOR NOT ALLOWING THE PAYMENT AS EXPENDITURE IN THE HANDS OF THE ASSE SSEE, HENCE, IT CAN NOT BE SAID THAT PAYMENT, IF MADE IN CASH COULD NOT BE RECORDED IN THE BOOKS OF ACCOUNT. MERELY, ON THE BASIS OF THE STATEMENT O F THE THIRD PARTY, WHO IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. FURTHER, IF T HE PAYMENT ASSUMED TO HAVE BEEN MADE ANY CASH, THE ONLY IMPACT COULD HAVE BEEN TO REDUCE THE CASH BALANCE IN THE HANDS OF THE ASSESSEE. WE FURTH ER ADD THAT THE LOAN TRANSACTION CANNOT ALTER THE CHARACTER OF FREIGHT T RANSACTION I.E. THE SAME CANNOT MAKE IT BOGUS OR DEVICE BECAUSE THE FACT OF RENDERING OF SERVICES AS STATED EARLIER IS NOT IN DISPUTE. ACCORDINGLY, W E ACCEPT THIS GROUND OF THE ASSESSEE AND DIRECT THE AO TO ALLOW THE CLAIM O F THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. PAGE 5 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 10. NOW, WE SHALL TAKE UP THE REVENUES APPEAL IN I.T.A .NO. 479/IND/2006. 11. IN GROUND NO.1, THE REVENUE IS AGGRIEVED BY THE DE CISION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS. 15,04 ,786/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDER ESTIMATION OF SALE PRICE. 12. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAG ED IN TRADING IN BIDI LEAVES. THE AO FOUND THAT THE ASSESSEE HAD SOL D TENDU LEAVES BETWEEN RS. 25/- TO RS. 38/- PER KG. HOWEVER, 9 SA LE TRANSACTIONS WERE EFFECTED AT MUCH LESSER RATE I.E. AROUND RS. 12/-PE R KG., RS. 6.06 PER KG. RS. 10/- PER KG. AND RS. 4.68 PER KG. THE ASSESSEE SUBMITTED THAT IT PURCHASED TENDU PATTA FROM M.P. MINOR FOREST PRODUC E FEDERATION LIMITED IN BULK QUANTITY, WHICH WAS SORTED OUT AND GRADED AND INFERIOR QUALITY TENDU LEAVES WERE SOLD AT LESSER PRICE. THE AO EXAMINED THE EXPENSES AS REGARD TO PROCESSING AND GRADING. HOWEV ER, NO SEPARATE EXPENSES WERE FOUND TO HAVE BEEN CLAIMED BY THE ASS ESSEE IN THIS REGARD. THE ASSESSEE SUBMITTED THAT THE SALARY EXPENSES INC LUDED EXPENSES INCURRED BY THE ASSESSEE ON SORTING AND GRADING. TH E AO, HOWEVER, TREATED THE ASSESSEES CLAIM AS UNSUBSTANTIATED AND AFTER GIVING 5% CREDIT OF THE TOTAL STOCK ON ACCOUNT OF WASTAGE/SUB-STANDA RD MATERIAL WORKED OUT UNDER STATEMENT OF THE SALE PRICE OF IMPUGNED INVOI CES AT RS. 15,04,786/- AND TREATED THE SAME AS INCOME OF THE ASSESSEE. AGG RIEVED BY THIS, THE PAGE 6 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN THE ASSESSEE MADE DETAILED SUBMISSIONS REGARDING MODUS OPERANDI OF ITS PURCHASES, SORTING PROCESS. IT WAS ALSO CONTENDED THAT A TRADI NG RESULTS WERE BETTER THAN THE EARLIER YEAR. HENCE, FOR THAT REASON ALSO, THERE WAS NO JUSTIFICATION TO MAKE THE IMPUGNED ADDITION AND SUC H ACTION OF THE AO RESULTED INTO GROSS PROFIT RATE OF 21.10 %, WHICH GAVE ABSURD RESULTS. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANCES MADE BY THE ASSESSING OFFICER. THE RE LEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER :- I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND DO NOT FIND ANY MERIT IN THE ACTION OF THE AO. THE APPELLANT IS MAINTAINING REGULAR BOOKS OF ACCOUNT WHICH ARE DULY AUDITED. THE AO HAS NOT BEEN ABLE TO POINT OUT ANY DEFECT THEREIN. THE GROSS PROFIT RAT E AS DISCLOSED DURING THE YEAR CORRESPONDS BETTER WITH T HAT OF THE PRECEDING ASSESSMENT YEAR. IT APPEARS THAT N O EFFORT WAS MADE BY THE ASSESSING OFFICER TO EXAMINE THE TRANSACTIONS MADE WITH THE NINE PARTY WISE AS NARRATED ABOVE SO AS TO FIND OUT SUPPRESSION OF THE CONSIDERATION AMOUNT. IT MAY BE MENTIONED HERE DURING THE COURSE OF APPEAL PROCEEDINGS, THE WRITTE N PAGE 7 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. SUBMISSION MADE ALONGWITH RELEVANT ANNEXURES FILED WERE DULY FORWARDED TO THE AO UNDER RULE 46A. THE APPELLANT HAD FURNISHED COPIES OF PURCHASES BILLS SHOWING MOST OF THE PURCHASES MADE FROM STATE GOVERNMENT UNDERTAKING, LETTERS OF CERTAIN DEALERS IN SUPPORT OF THE CONTENTION REGARDING GOODS RECEIVED IN BAGS ON PURCHASES HAVING SOME ELEMENT OF THROWAWAY CONTENTS AND ALSO THE CONFIRMATIONS OF THE NINE PAR TIES REGARDING THE PURCHASES MADE BY THEM AT LOW COST. HOWEVER, DESPITE SEVERAL REMINDERS ISSUED FROM TIME TO TIME, NO PARAWISE COMMENTS WERE OFFERED IN THIS REGARD WHICH IMPLIES THAT HE HAS NOTHING ADVERSE TO REPORT. NOTHING HAS BEEN BROUGHT ON RECORD THAT THE TRANSACTIONS WERE BOGUS OR THE SALE PRICE SHOWN WAS UNDERSTATED. ALL PURCHASES AND SALES HAVE BEEN ACCEPTED WITHOUT POINTING ANY DISCREPANCY WHATSOEVER. IN THE LIGHT OF SUCH FACTS, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION AS ABOVE WHICH IS DELETED. 13. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFOR E US. PAGE 8 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 14. THE LD. SENIOR D.R. NARRATED THE FACTS AND PLAC ED STRONG RELIANCE ON THE ORDER OF THE AO, WHEREAS THE LD.COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD.CIT(A ) BESIDES PLACING RELIANCE ON THE ORDER OF THE LD.CIT(A). 15. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 16. IT IS NOTED THAT THE ASSESSEE IS PURCHASING TENDU L EAVES FROM THE GOVERNMENT BODY IN BULK QUANTITY, WHICH IS SORTED O UT AND GRADED. THIS PROCESS IS CARRIED OUT YEAR AFTER YEAR AND SAME MOD US OPERANDI IS IN OPERATION IN THE YEAR UNDER CONSIDERATION. THE TRAD ING RESULTS ARE ALSO BETTER. IT IS ALSO NOTED THAT THE LD.CIT(A) HAS ALS O CALLED REMAND REPORT/COMMENTS OF THE AO ON THE ADDITIONAL EVIDENC E SUBMITTED BY THE ASSESSEE BEFORE THE LD.CIT(A). HOWEVER, NO COMMENTS HAVE BEEN OFFERED BY THE ASSESSING OFFICER DESPITE SEVERAL REMINDERS BY THE CIT(A), WHICH FACT ALSO GOES TO SHOW THAT SUCH EVIDENCES SUBSTANT IATED THE CLAIM OF THE ASSESSEE. IN THE BACKGROUND OF THESE FACTS, WE CONF IRM THE FINDINGS OF THE LD.CIT(A) AS REPRODUCED HEREINBEFORE. THUS, THIS GR OUND OF THE REVENUE IS DISMISSED. 17. IN GROUND NO.2, THE REVENUE IS AGGRIEVED BY THE DE CISION OF THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER ON ACCOUNT OF BOGUS GIFTS RECEIVED TO THE TUNE OF RS. 6.50 LAKHS. PAGE 9 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 18. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED GIFT WORTH RS. 6.50 LAKHS FROM SHRI PURSHO TTAM PALWANI, N.R.I. AND SINDHI. THE PHOTOCOPIES OF TWO GIFT DEEDS WERE FILED. THE DETAILS OF BANK ACCOUNTS OF THE DONOR WERE ALSO FILED. THE REL ATIONSHIP BETWEEN THE ASSESSEE AND THE DONOR WAS STATED AS TO BE COUSIN-I N-LAW. THE DONOR ALSO APPEARED BEFORE THE AO, WHEREIN IT WAS FOUND THAT T HE ASSESSEE HAD GIFTED THE AMOUNT OF OVER RS. 1 CRORE AS GIFTS TO VARIOUS PERSONS OF HIS COMMUNITY IN GENERAL PUBLIC INTEREST AND TO SERVE H UMANITY. THE AO, HOWEVER, FOUND THAT EXISTENCE OF NATURAL LOVE AND A FFECTION WAS NOT THERE NOR ANY OCCASION WAS THERE TO MAKE SUCH GIFTS. THE AO ALSO FOUND THAT THE SAID DONOR HAD NOT GIVEN ANY GIFT TO POOR PERSO NS OF HIS COMMUNITY. HENCE, ITS CONTENTION OF SERVICE TO COMMUNITY WAS A LSO NOT CORRECT. THE AO THEREAFTER RELYING ON THE DECISION OF THE TRIBUN AL IN THE CASE OF ITO VS. ASHOK KUMAR, I.T.A.NO. 156/IND/1999 HELD THAT I N THE PRESENT CASE ALSO, THE DONOR WAS IN THE HABIT OF ACCOMMODATING D IFFERENT ASSESSEES AS HE HAD GIVEN HUGE GIFTS OF RS. 56 LAKHS TO THE DONE E AND HIS FAMILY MEMBERS IN THE YEARS FROM 2001 TO 2004 AND, THEREFO RE, IT WAS A CASE OF ASSESSEES OWN MONEY FROM UNDISCLOSED SOURCES ROUTE D IN THE GARB OF GIFTS. THUS, THE AO ADDED THE SAME AS INCOME FROM U NDISCLOSED SOURCES U/S 68 OF THE ACT. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THA T THE FACT OF GIFT HAD PAGE 10 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. DULY BEEN SUPPORTED BY THE RELEVANT DOCUMENTARY EV IDENCES. THE DONOR HAD ALSO CONFIRMED THE SAME BY APPEARING IN PERSON BEFORE THE AO. THE ASSESSEE ALSO SUBMITTED THAT EXISTENCE OF LOVE AND AFFECTION WAS A FACT, WHICH COULD NOT BE ESTABLISHED IN THE MANNER AS THE AO WANTED. HOWEVER, THE SAME DID NOT MEAN THAT THERE COULD NOT BE ANY LOVE AND AFFECTION BETWEEN THE RELATIVES/DISTANT RELATIVES. IT WAS ALSO CONTENDED THAT IT WAS NOT NECESSARY IN LAW THAT THERE MUST EX IST A BLOOD RELATIONSHIP BETWEEN THE DONOR AND DONEE. THE ASSESSEE PLACED RE LIANCE ON VARIOUS JUDICIAL DECISIONS OF HIGH COURTS AS WELL AS OF TR IBUNAL IN SUPPORT OF ITS CLAIM, WHEREIN IT HAD BEEN HELD THAT WHERE THE CAPA CITY OF THE DONOR HAD BEEN ESTABLISHED, IDENTITY WAS NOT IN DISPUTE THEN THE GENUINENESS OF GIFTS RECEIVED FROM NRI COULD NOT BE DOUBTED. THE ASSESSE E ALSO PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CAS E OF SMT. BHAGWATI DEVI VS. ITO AS REPORTED IN 47 ITD 58, WHEREIN AFTER TAK ING INTO CONSIDERATION THE PROVISIONS OF SECTION 122 OF THE TRANSFER OF PR OPERTY ACT, 1882, IT HAD BEEN HELD THAT THE MOMENT GIFT WAS COMPLETE IN RESP ECT OF EXISTING MOVABLE PROPERTY, AS PER THE REQUIREMENTS OF LAW, T HEN IT WAS NOT OPEN FOR CHALLENGE IN WHICH THE SAME WAS PROVED TO THE CONTR ARY TO COGENT/STRONG EVIDENCE, WHICH IN THE INSTANT CASE WAS NOT DONE BY THE AAC OR THE A.O. HENCE, THE GENUINENESS OF THE GIFT COULD NOT BE DOU BTED. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE AND THE FINDINGS PAGE 11 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. OF THE AO DELETED THE IMPUGNED ADDITION. THE RELEVA NT FINDINGS OF THE LD.CIT(A) ARE AS UNDER :- I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND FIN D SUFFICIENT FORCE IN THE CONTENTION OF THE APPELLANT . IN THE PRESENT CASE, THE APPELLANT HAS BEEN ABLE TO DISCHARGE THE INITIAL ONUS ON HIM WHICH IS EVIDENT FROM THE FACTS THAT THE DONOR HAS BEEN DULY EXAMINE D BY THE ASSESSING OFFICER HIMSELF. THE IDENTITY OF T HE PERSON IS ESTABLISHED BEYOND DOUBT. NOTHING HAS BEE N BROUGHT ON RECORD TO DOUBT HIS CREDITWORTHINESS EITHER. THE GENUINENESS OF THE TRANSACTION IS ALSO PROVED. IN SUCH A SITUATION, ALL THE INGREDIENTS FO R A GENUINE CASH CREDIT/GIFT HAVE BEEN ESTABLISHED AND THE ADDITION HAS BEEN MADE PURELY ON CONJECTURES AND SURMISES AS THERE IS NOT AN IOTA OF EVIDENCE TO SHO W THAT THE APPELLANT ROUTED HIS OWN UNACCOUNTED MONEY UNDER THE GARB OF GIFT. IT MAY BE MENTIONED HERE TH AT IN A RECENT DECISION OF HON'BLE I.T.A.T.IN THE CASE OF SANJAY KHATRI AND CO. VS. ITO, (2005) 4 ITJ 173, IT IS HELD THAT ONCE THE CREDITOR HAD CONFIRMED THE TRANSACTION, THE BURDEN OF THE ASSESSEE IS DISCHARG ED. PAGE 12 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. WHEN THE ASSESSEE HAS ESTABLISHED THAT THE AMOUNT H AS BEEN INVESTED BY A PARTICULAR PERSON ONUS IS DISCHARGED AS HAS BEEN HELD BY THE HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. METACHEM INDUSTRIES, (2000) 245 ITR 160 (MP) AND WHETHER THE PERSON IS INCOME TAX ASSESSEE OR NOT OR FROM WHERE HE BROUGHT THE MONEY ARE IMMATERIAL. IT IS FOR THE AO TO TAKE APPROPRIATE ACTION AGAINST THE CREDITOR U/S 69 FOR FAILURE TO EXPLAIN THE INVESTMENT. IT WAS HELD THAT THE SOURCE OF SOURCE CANNOT BE ENQUIRED INTO BY THE DEPARTMENT WAS OBSERVED THAT THE FACTS OF THE CASE WERE ALSO COVERED BY THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS. ORISSA CORPN. P.LTD., 159 ITR 78. IN THE CASE OF CIT VS. DAULAT RAM RAWAT MULL, (1973) 87 ITR 349, IN WHICH THE DECISION OF HON'BLE SUPREME COURT WAS RELIED UPON, IT WAS HELD THAT IN A CASE A PARTNER OF THE FIRM IS NOT ABLE TO EXPLAIN CERTAIN DEPOSITS IN HIS NAME INTRODUCED IN THE FIRM, IT CANNOT LEAD TO THE CONCLUSION THAT IT BELO NGED TO THE FIRM. THUS, ON THE BASIS OF THE DECISION OF THE SUPREME COURT IT CAN BE SAID THAT THE SOURCE OF THE PAGE 13 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. SOURCE CANNOT BE ENQUIRED BY THE DEPARTMENT. ALSO, IN THE CASE OF MOHAR SINGH VS. DCIT,(2002) 77 TTJ (AGRA) 218, IT WAS HELD THAT WHEN IDENTITY WAS ESTABLISHED AND THE CREDITOR HAD CONFIRMED THE LOAN , NO ADDITION TO BE MADE. IN THE CASE OF CIT VS. HEERALALA CHHAGANLAL, (2002) 257 ITR 281(RAJ), IT WAS HELD THAT ONCE THE ASSESSEE DISCHARGES THE PRIMARY ONUS BY FILING CONFIRMATIONS AND ALSO THE CREDITORS, NO ADDITION COULD BE MADE AS THE ASSESSE E CANNOT ASK THE CREDITORS THE SOURCE OF THE MONEY TAKEN. THE AO HAS MAINLY RELIED ON THE DECISION OF THE HON'BLE I.T.A.T. IN THE CASE OF ITO VS. ASHOK KUMAR (SUPRA). HOWEVER, THE RELIANCE IS MISPLACED ON THE GROUND THAT IN THE PRESENT CASE, THERE IS INDEED A FAMILY RELATIONSHIP OF THE APPELLANT WITH THE DONOR AND IT CANNOT BE SAID THAT BOTH ARE STRANGERS TO EACH O THER. NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO DISPROVE THE CLAIM OF THE APPELLANT. THE RELIANCE PLACED ON THE APPELLANT ,ON THE OTHER HAND , PAGE 14 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. ON VARIOUS DECISIONS OF TRIBUNALS AND COURTS FULLY SUPPORT HIS CASE. IN THE LIGHT OF ABOVE FACTS AND THE POSITION OF LAW, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN TR EATING THE GIFT AND NON GENUINE AND TREATING IT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE ADDI TION MADE IS, THEREFORE, DELETED. 19. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BE FORE US. 20. THE LD. SENIOR D.R. NARRATED THE FACT AND TOOK US T HROUGH THE RELEVANT FINDINGS OF THE AO BESIDES PLACING RELIANC E ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SHRI P.MOHANKA LA, AS REPORTED IN 291 ITR 278, AND ON THE DECISION OF THE HON'BLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF HARISH KUMAR SINGHAL VS. ACIT, AS REPORTED IN 276 ITR 355. 21. THE LD.COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT IT WAS A CASE WHERE ALL REQUIREMENTS OF SECTION 68 HAD BEEN FULFILLED. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE DONOR HAD ALSO BEEN EXAMINED, WHO ALSO CONFIRMED THE FACT OF GIFT AND T HE ASSESSEE EXPLAINED THE NATURE OF GIFTS IN A MOST SATISFACTORY MANNER. HENCE, THE AOS ACTION WAS NOTHING BUT A CASE OF PRESUMPTION/DOUBTS AND TH AT TOO WITHOUT ANY COGENT MATERIAL BEING BROUGHT ON RECORD. IT WAS FUR THER CONTENDED THAT THE PAGE 15 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. DONOR HAD ALSO DISCLOSED THE AMOUNTS OF GIFTS GIVEN BY HIM TO VARIOUS PERSONS DURING THE IMPUGNED PERIOD IN HIS RETURN AN D NO ACTION HAD BEEN TAKEN IN HIS HANDS BY THE DEPARTMENT. IN THIS REGA RD, HE SUBMITTED THE COPIES OF THE ACKNOWLEDGEMENT OF RETURNS, BALANCE S HEET FILED ALONGWITH THE RETURN, WHEREIN THE FACT OF GIFTS TO THE TUNE O F RS. 74 LAKHS HAD BEEN DISCLOSED IN THE CAPITAL ACCOUNT. THE LD. COUNSEL FURTHER PLACED RELIANCE ON THE SUBMISSIONS MADE BEFORE THE LD.CIT(A) AND IN ADDITION TO THAT ALSO PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. ISSARDAS B. TALREJA AS REPORTED IN 117 TTJ 117, SMT . KUSUM LATA BANSAL VS. DY. CIT, AS REPORTED IN 10 DTR 82 AND IN THE CA SE OF DCIT VS. VIJAY PRAKASH VS. HUF, 120 TTJ 429, WHOSE FACTS WERE SIMI LAR TO THE FACTS OF THE CASE BEFORE THE TRIBUNAL AND IN THOSE DECISIONS , THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF P.MOHANKALA AND O THERS (SUPRA) HAD ALSO BEEN CONSIDERED. THE LD. COUNSEL FURTHER CONTE NDED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF P.MOHAN KALA (SUPRA) WAS NOT APPLICABLE AS IN THAT CASE, THE ASSESSEE DID NOT OF FER PROPER, REASONABLE AND ACCEPTABLE EXPLANATION, WHEREAS IN THE PRESENT CASE, IT WAS NOT SO. IT WAS ALSO CONTENDED THAT IN THE CASE OF P.MOHANKALA, THE DONOR DID NOT REVEAL THE BANK ACCOUNT NOR HIS FINANCIAL STATUS WA S SUPPORTED BY PROPER EVIDENCE, WHEREAS IN THE PRESENT CASE, THE FINANCIA L STATUS OF THE DONOR WAS NOT IN DISPUTE AND SUCH DONOR HAS ALSO DISCLOSE D THE FACTS OF GIFT PAGE 16 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. GIVEN BY HIM TO THE PERSONS OF HIS COMMUNITY FROM T IME TO TIME WAS ALSO DISCLOSED IN HIS RETURN. THE LD. COUNSEL FURTHER SU BMITTED THAT THE SIMILAR DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARISH KUMAR SINGHAL WAS DISTINGUISHABLE ON FACTS THAT IT WAS A CASE OF BLOCK ASSESSMENT AND IN THE RETURN OF INCOME FILED IN THE REGULAR COURSE THE GIFTS RECEIVED BY THE ASSESSEE WERE NOT DISCLOSED. HENCE, THE SAME WAS TREATED AS UNDISCLOSED INCOME FOR THE PURPOSE OF BLOCK ASSE SSMENT U/S 158BC OF THE ACT. 22. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 23. IT IS NOTED THAT THE ASSESSEE HAS RECEIVED TWO GIFT S AGGREGATING TO RS. 6,50,000/- IN THE YEAR UNDER CONSIDERATION FROM ONE PERSON, WHO HAS MADE GIFTS TO VARIOUS PERSONS IN A SPAN OF FOUR YEA RS. AT THE FIRST INSTANCE, AN ADVERSE IMPRESSION OCCURS IN MIND. HOWEVER, WHEN THE FACT OF DISCLOSURE BY THE SAID PERSON OF THE GIFTS IN HIS R ETURN OF INCOME IS CONSIDERED ALONGWITH THE FACT THAT THE GIFTS HAVE B EEN MADE ONLY TO THE PERSONS OF HIS COMMUNITY, THE NECESSITY OF FURTHER ENQUIRY IS FELT. THIS PROCESS REVEALS THAT ALL THE DOCUMENTARY EVIDENCES TO MEET THE REQUIREMENTS OF LAW HAVE BEEN PUT ON RECORD AND THE DONOR HAS ALSO APPEARED BEFORE THE ASSESSING AUTHORITY, WHEREIN HE HAS CONFIRMED THE FACT OF GIVING GIFTS TO THE ASSESSEE. WE FURTHER FI ND THAT REQUIREMENTS OF PAGE 17 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. SECTION 68 HAVE ALSO BEEN MET. WE ALSO DO NOT FIND ANY CONDITION IN LAW AS REGARD TO EXISTENCE OF BLOOD RELATIONSHIP BETWEE N THE DONOR AND DONEE TO MAKE A VALID GIFT. HENCE, THE RELEVANT CONTENTIO N OF THE AO AS WELL AS REVENUE BEFORE US ARE WITHOUT ANY MERIT. AS REGARD TO RELIANCE OF THE REVENUES DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF P.MOHANKALA IS CONCERNED, WE FIND THAT IN THAT CASE NO SUITABLE EXPLANATION WAS OFFERED AND THE CAPACITY OF THE DON OR TO MAKE SUCH GIFT WAS ALSO NOT PROVED, WHEREAS IN THE PRESENT CASE, I T IS NOT SO, IN VIEW OF THE FACTS STATED EARLIER. HENCE, IN OUR OPINION, TH E RATIO OF THAT DECISION IS NOT APPLICABLE HERE. SIMILARLY, THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IS ALSO IN DIFFERENT CONTEXT I.E . THE GIFT NOT DISCLOSED IN THE REGULAR RETURN COULD BE CONSIDERED AS UNDISC LOSED INCOME UNDER THE BLOCK ASSESSMENT OR NOT AFTER EXAMINING THE GENUINE NESS THEREOF AND THAT IS NOT A DISPUTE BEFORE US. HENCE, THIS DECISION AL SO DOES NOT RENDER ANY ASSISTANCE TO THE CAUSE OF THE REVENUE. WE ALSO FIN D THAT VARIOUS JUDICIAL DECISIONS RELIED ON BY THE ASSESSEE BEFORE THE LD.C IT(A) AS WELL AS BEFORE US ALSO SUPPORT THE CLAIM OF THE ASSESSEE. THUS, TA KING INTO CONSIDERATION ENTIRE FACTS AS WELL AS SUCH JUDICIAL DECISIONS, W E HOLD THAT THERE IS NO MERIT IN THIS GROUND OF THE REVENUE. ACCORDINGLY, THIS GROUND OF THE REVENUE IS DISMISSED. 24. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PAGE 18 OF 18 -. I.T.A.NO. 535 & 479/IND/2006 SHRI HARPAL SINGH SACHDEV,INDORE. 25. TO SUM UP, THE ASSESSEES APPEAL IS ALLOWED AND REV ENUES APPEAL IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :29 TH JUNE, 2010. CPU* 24256