ITO WD 19(3)3, MUMBAI V. PRAKASH K RAJANI, MUMBAI

ITA 4807/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56337 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHASARAHTY NAIK
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Unexplained cash credit; Gift; Additional evidence
• Section: 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 4807/MUM/2009 ASSESSMENT YEAR: 2005-06 INCOME-TAX OFFICER-19(3)3, APPELLANT ROOM NO.303, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. VS. LATE MR. PRAKASH K. RAJANI, RESPONDENT L/H MR. SURESH RAJANI 80, MORU MAHAL, DR. B.A. ROAD, BANDRA (W), MUMBAI 400 050. (PAN - AEPR3631G) ITA NO. 4808/MUM/2009 ASSESSMENT YEAR: 2005-06 INCOME-TAX OFFICER-19(3)3, APPELLANT ROOM NO.303, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. VS. MR. PAWAN S. RAJANI, RESPONDENT 802, MORU MAHAL, DR. B.A. ROAD, BANDRA (W), MUMBAI 400 050. (PAN - ADYPR3109G) APPELLANT BY : MR. PARTHASARAHTY NAIK RESPONDENT BY : MR. PRAKASH K. JOTWANI DATE OF HEARING : 28/12/2011 DATE OF PRONOUNCEMENT : 30/12/2011 ORDER PER V. DURGA RAO, J.M.: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE ORDERS OF CIT(A)-XIX, MUMBAI, FOR THE ASSESSMEN T YEAR 2005- 06. SINCE IDENTICAL ISSUE INVOLVED IN BOTH THESE AP PEALS PERTAINING TO RECEIPT OF NRE GIFT, THESE APPEALS WERE HEARD TO GETHER AND THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NOS. 4807 & 4808/MUM/09 MR. PRAKASH K. RAJANI MR. PAWAN S. RAJANI 2 2. IN THE APPEAL AGAINST MR. PRAKASH K. RAJANI FILE D BY THE REVENUE WAS MODIFIED TO INCLUDE THE LEGAL HEIR MR. SURESH RAJANI CONSEQUENT TO THE DEATH OF MR. PRAKASH K. RAJANI. T HE LEGAL HEIR WAS BROUGHT ON RECORD BY THE AO, THEREFORE, THE APP EAL ITA 4807 IS CONSIDERED ACCORDINGLY. 3. BRIEFLY STATED THE FACTS ARE THAT THE AO FOUND T HAT LATE SHRI PRAKASH K. RAJANI HAD RECEIVED NRE GIFT OF RS. 13,0 0,000/- FROM HIS BROTHER-IN-LAW MR. DILIP BULCHANDANI, RESIDENT OF DUBAI. SIMILARLY, THE AO ALSO NOTICED THAT MR. PAWAN S. RA JANI HAD ALSO RECEIVED A GIFT OF RS. 5,00,000/- FROM MR. DILIP BU LCHANDANI, WHO IS THE UNCLE OF THE ASSESSEE. IN ADDITION TO THE ABOVE RS. 5 LAKHS, MR. PAWAN S. RAJANI HAD ALSO RECEIVED US$20000 CONVERTE D TO RS. 9,20,479/- FROM MR. BHAGWAN PARSRAM KHEMCHANDANI, W HO IS THE RELATIVE OF THE ASSESSEE, DURING THE YEAR. THE AO R ECORDED STATEMENT OF MR. PAWAN S. RAJANI AND ASKED CONFIRMA TION OF THE GIFTS TO PROVE GENUINENESS OF THE GIFT. BEFORE THE AO THE ASSESSEES FURNISHED CONFIRMATION, FROM WHOM THE GIFTS WERE RE CEIVED AND PROVED THE IDENTITY OF THE DONORS. WITH REFERENCE T O THE CREDIT WORTHINESS, THE RESPECTIVE ASSESSEES SUBMITTED THE DETAILS OF BANK ACCOUNTS. THE AO ACCEPTED THE IDENTITY OF THE DONOR S AND GENUINENESS OF THE GIFTS BUT MADE THE ADDITION OF T HE RESPECTIVE AMOUNTS ON THE REASON THAT CREDITWORTHINESS HAS NOT BEEN PROVED. BEFORE THE CIT(A), THE ASSESSEE FILED FURTHER EVIDE NCES OBTAINED FROM THE RESPECTIVE DONORS TO PROVE CREDITWORTHINES S OF THE DONORS AND THE SAME WERE SENT TO THE AO. AFTER CONSIDERING THE EVIDENCES ON RECORD AND REPORT FROM THE AO, THE CIT(A) DELETE D THE ADDITIONS MADE BY THE AO. THE FINDINGS OF THE CIT(A) WERE SIM ILARLY WORDED IN BOTH THE APPEALS, AND THE SAME ARE REPRODUCED BELOW :- 2.10 I HAVE PERUSED THE FACTS OF THE CASE, THE EVI DENCE INCLUDING THE ADDITIONAL EVIDENCE, THE CONTENTS OF THE REMAND REPORT, THE APPELLANT'S SUBMISSIONS AND SUBSEQUENT SUBMISSIONS TO THE REMAND REPORT AND THE CASE LAWS AS CITED. UNDER SECTION 68 OF THE ACT, THE ASSESSEE IS REQUIR ED TO STATE BY CERTAIN CONDITION TO PROVE THAT THIS IS NOT A CA SH CREDIT BUT ITA NOS. 4807 & 4808/MUM/09 MR. PRAKASH K. RAJANI MR. PAWAN S. RAJANI 3 ONE OF FOREIGN GIFT. FOR THIS PURPOSE THE ONUS IS O N HIM TO ESTABLISH THE IDENTITY OF THE DONOR, CAPACITY AND G ENUINENESS OF THE TRANSACTION. IN THIS CASE THE IDENTITY OF THE DONOR IS NOT IN QU ESTION. THE AO HAS RAISED DOUBT ABOUT THAT CAPACITY OF THE DONOR A ND THE GENUINENESS OF THE TRANSACTION. THE APPELLANT HAS P RODUCED COPIES OF VISITING CARDS, BANKER'S LETTER CONFIRMIN G THE GIFT REMITTANCE, COPY OF TRADE LICENCE ISSUED BY THE UAE , EVIDENCE OF THE IMMOVABLE PROPERTY IN THE NAME OF THE NRI DO NOR AT DUBAI, UAE. THE APPELLANT ALSO PRODUCED EVIDENCES O F NRE FIXED DEPOSITS OF ABOUT RS. 20 LAKHS. THESE EVIDENC ES CUMULATIVELY TAKEN TOGETHER ADEQUATELY DISCHARGE IT ONUS ON ITS PART TO ESTABLISH THE CAPACITY OF THE DONOR AND GENUINENESS OF THE TRANSACTION. THE AO HAS NOT BEEN ABLE TO RE BUT THESE EVIDENCES. THERE HAS TO BE SOMETHING MORE THAN MERE SUSPICION TO MAKE THE ADDITION. 4. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REVEN UE IS IN APPEALS BEFORE US. 5. THE LEARNED DR REFERRING TO THE BANK STATEMENTS PLACED ON RECORD FROM MR. DILIP BHULCHANDANI SUBMITTED THAT T HE SAID PERSON HAS GIVEN GIFTS TO 5 PEOPLE, OUT OF WHICH ONLY TWO CONSIDERED BY THE AO, HENCE, GENUINENESS OF THE GIFT IS DOUBTED. HE RELIED ON THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME COURT IN THE CASE OF P. MOHANKALA AND ORS., 291 ITR 278 (SC) AND THE DEC ISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF SUBHASH CHAND VERMA VS. CIT, 311 ITR 239. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE AO HAS NOT DOUBTED THE GENUINENE SS OF THE GIFT BUT ONLY DOUBTED THE CREDITWORTHINESS OF THE DONORS . HE FURTHER SUBMITTED THAT BOTH THE PARTIES HAVE PROVED THEIR C REDITWORTHINESS AND SUBMITTED THAT THE REMITTANCES INTO THE NRE ACC OUNT IS FROM THEIR OWN SOURCES ABROAD. IT IS SUBMITTED THAT MR. DILIP BHULCHANDANI OWNS A HOUSE IN DUBAI AND TO THIS EFFE CT, EVIDENCES WERE PLACED BEFORE THE REVENUE AUTHORITIES. IT IS F URTHER SUBMITTED ITA NOS. 4807 & 4808/MUM/09 MR. PRAKASH K. RAJANI MR. PAWAN S. RAJANI 4 THAT WITH REFERENCE TO MR. BHAGWAN PARSURAM K. CHAN DANI SIMILAR FACTS ARE EXISTING AND SUBMITTED THAT MR. CHANDANI WAS HAVING BUSINESS IN SINGAPORE AND HIS NET WORTH IS MORE THA N 2.4 MILLION US DOLLARS AND TO THIS EFFECT EVIDENCES WERE FILED BEFORE THE REVENUE AUTHORITIES. IT IS SUBMITTED THAT THE CIT(A ) AFTER CONSIDERING THE FACTS ON RECORD ACCEPTED THE CREDIT WORTHINESS OF THE DONORS. THE LEARNED COUNSEL SUBMITTED THAT S INCE THE ISSUE IS NOT OF BOGUS GIFTS, THE CASE LAW RELIED UPON THE L EARNED DR ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE . 7. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE OR DERS OF THE AUTHORITIES. THE AO DID NOT DOUBT THE GENUINENESS O F THE GIFTS AND HAS NOT HELD THE GIFTS AS BOGUS. THE ONLY CONTENTIO N OF THE AO IS THAT EVEN THOUGH THE IDENTITY OF THE DONORS IS PROV ED BUT THE CREDITWORTHINESS IS NOT PROVED. THE ASSESSEE FURNIS HED FURTHER EVIDENCES IN THE FORM OF STATEMENTS AND PROPERTIES WHICH WERE REMANDED TO THE AO FOR EXAMINATION BY THE CIT(A) IN RESPECT OF THE CREDITWORTHINESS OF THE SAID DONORS. AS THERE IS NO ALLEGATION THAT THE GIFTS ARE BOGUS AND THE GIFTS RECEIVED FROM THE RELATIVES, WHICH IS ALSO NOT DISPUTED BY THE REVENUE AUTHORITIES WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A). THE ASSESSEE HAS DISCHARGED THE ONUS LIES ON HIM BY PROVING THE IDEN TITY, CREDITWORTHINESS AND GENUINENESS OF THE DONORS. THE REFORE, THERE IS NO REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A ). AS REGARDS THE DECISIONS RELIED UPON BY THE LEARNED DR IN THE CASE OF P. MOHANKALA AND ORS., AND THE DECISION OF HON'BLE HI GH COURT OF PUNJAB & HARYANA IN THE CASE OF SUBHASH CHAND VERM A VS. CIT (SUPRA) FOR THE PROPOSITION THAT EVEN THE MONIES WE RE RECEIVED FROM THE BANK THE GIFT CAN BE HELD AS NON-GENUINE, HOWEV ER, WE ARE OF THE VIEW THAT THE PRINCIPLES ESTABLISHED BY THE HON 'BLE SUPREME COURT AND PUNJAB & HARYANA HIGH COURT IN THE SAID C ASES DO NOT APPLY THE PRESENT CASE AS THE AO HAS NOT DISPUTED T HE GENUINENESS OF THE GIFTS AND HAS NOT DRAWN ANY INFERENCE THAT T HE GIFTS ARE ITA NOS. 4807 & 4808/MUM/09 MR. PRAKASH K. RAJANI MR. PAWAN S. RAJANI 5 BOGUS. THE ONLY REASON FOR TREATING THE AMOUNTS AS UNEXPLAINED CASH CREDITS DUE TO THE CREDITWORTHINESS NOT PROVE D BY THE ASSESSEE. SINCE CREDITWORTHINESS IS PROVED BEYOND D OUBT, THE CIT(A) DELETED THE ADDITIONS MADE BY THE AO IN THE CASE OF RESPECTIVE ASSESSEES. THEREFORE, WE UPHOLD THE ORDE RS OF THE CIT(A) IN BOTH THE CASES UNDER CONSIDERATION AND DISMISS T HE GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF DECEMBER, 2011. SD/- SD/- (B. RAMAKOTAIAH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATED: 30 TH DECEMBER, 2011. KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, C BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.