ITO, Meerut V. Shri Gaurav Jaiswal, Meerut

ITA 4937/DEL/2011

• Counselvise Citation: 493720114 RSA 2011
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: O P SAPRA
• Keywords: Gift; Source of fund; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOU NTANT MEMBER ITA NO. 4937/DEL/2011 ASSESSMENT YEAR 2008-09 ITO VS. GAURAV JAISWAL WARD-1(2), 168A, ABU LANE, AAYAKAR BHAWAN MEERUT BHAINSALI GROUND, DELHI ROAD (PAN AAMPJ8966G) MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI SATPAL SINGH, SR. DR RESPONDENT BY : SHRI O.P. SAPRA, ADVOCATE ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS. 17,65,000/- MADE BY THE AO ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE FROM HIS FAMILY MEMBERS IN CASH IGNORING THE FACT THAT NONE OF THE DONORS H AD THE CREDIT WORTHINESS TO DONATE SUCH HUGE AMOUNTS WHICH ARE MO RE THAN THE RETURNED INCOME FOR THE YEAR IN MANY CASES. THE ON US ON THE ASSESSEE TO PROVE GIFTS REMAINED TOTALLY UNDISCHARG ED. 2. WHETHER IN THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACTS IN DELETING THE ADDITION OF RS. 5,00,000/- MADE BY THE AO ON ACCOUNT OF AGREEMENT TO SALE PROCEEDINGS OF PLOT NO . 62, KRISHNA GARDEN, MEERUT, IGNORING THE FACT THAT NO SALE DEED WAS FINALIZED TILL DECEMBER, 2010 (UPTO ASSESSMENT PROCEEDINGS) ITA NO. 4937/DEL/11 2 3. WHETHER IN THE FACTS AND CI RCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACTS IN DELETING THE ADDITION OF RS. 3,00,000/- MADE BY THE AO ON ACCOUNT OF SALE PROCEEDINGS OF SANTRO CAR (2000 MOD EL) IGNORING THE FACT THAT SALE CONSIDERATION WAS MUCH HIGHER TH AN THE MARKET RATE OF THE CAR. THE PRINCIPLE OF TEST OF HUMAN PR OBABILITIES AS OBSERVED BY THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF CIT VS. DURGA PRASAD MORYA IN 82 ITR 540 (1971) HAS ALS O BEEN IGNORED. 4. WHETHER IN THE FACTS AND CIRCUMS TANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS. 3,34,800/- MADE BY THE AO ON ACCOUNT OF FRESH CAPITAL INTRODUCED IN THE A/CS. O F THE ASSESSEE IGNORING THE FACT THAT NO EXPLANATION WAS OFFERED BY THE ASSESSEE IN RESPECT OF CASH ADDITION. 5. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N LAW AND FACTS IN DELETING THE ADDITION OF THE RS. 97,715/- MADE BY THE AO ON ACCOUNT OF ADDITION IN FORM OF PURCHASE OPENING STO CK OF DELHI CHUNGI IGNORING THE FACT THAT NO CLASSIFICATION OF THE ADDITION WAS FURNISHED BY THE ASSESSEE. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENT S ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT DURING THE R ELEVANT FINANCIAL YEAR THE ASSESSEE HAD STARTED PROPRIETORSHIP BUSINESS IN THE NAME OF M/S. JAISWAL ENTERPRISES WHICH WAS ENGAGED IN THE TRADING OF WINE AND BEER. BESIDES, ASSESSEE WAS HAVING RENTAL INCOME FROM PROPERTY NO. 168A, ABU LA NE MEERUT AND AN INCOME FROM BUSINESS AS PARTNER IN FIRM M/S. NARESH KUMAR ASHOK KUMAR, M/S. ARVIND JAISWAL & OTHERS, M/S. ADARSH ENTERPRISES AND M/S. R AJ & CO. THE RETURN FILED ITA NO. 4937/DEL/11 3 WAS PROCESSED U/S 143(1) OF THE ACT AND LATER ON IT WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT DURING THE RELEVANT FINANCIAL YEAR, THE ASSESSEE HAD INTRODUCE D RS. 30,97,215/- IN HIS CAPITAL ACCOUNT. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE EXPLAINED THE FOLLOWING SOURCE :- (A) AMOUNT OF GIFTS RECEIVED FROM FAMI LY MEMBERS, & CLOSE RELATIONS. RS. 17, 65,000/- (B) PART OF THE ALREADY DECLARED INCOM E FROM HOUSE PROPERTY RS. 15,000/- SALE PROCEEDS OF OLD SANTRO CAR RS. 3,00,000/- (D) AMOUNT OF ADVANCE AGAINST SALE OF PLOT RS. 5,00,000/- (E) PURCHASE COST OF OPENING STOCK OF DELHI CHUNGI RS. 97,715/- (F) AMOUNT OF CASH INTRODUCTION IN CA PITAL ACCOUNT RS. 3,34,800/- ________________ RS. 30,12,5 15/- _______________ _ 4. THE AO WAS NOT SATISFIED WITH THE ABOVE EXPLANATION AND MADE ADDITION OF RS. 30,12,515/- U/S 69A OF THE ACT AS UNEXPLAINE D INVESTMENT. LD. CIT(A) BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSE E, HAS HOWEVER DELETED THE ADDITION AGAINST WHICH REVENUE IS IN APPEAL. IN SU PPORT OF THE ABOVE GROUNDS THE LD. DR HAS BASICALLY PLACED RELIANCE ON THE ASS ESSMENT ORDER. HE HAS REFERRED THE RELEVANT CONTENTS OF THE ASSESSMENT OR DER IN SUPPORT OF EACH OF THE GROUNDS. THE LD. AR ON THE OTHER HAND TRIED TO JUST IFY THE FIRST APPELLATE ORDER ITA NO. 4937/DEL/11 4 AND HAS PLACED RELIANCE ON THE WRITTEN SYNOPSIS FIL ED BEFORE THE TRIBUNAL WITH COPY TO THE OTHER SIDE. GROUND NO. 1 5. THE AO MADE ADDITION OF RS. 17,65,000/- ON ACCOUNT OF GIFT RECEIVED BY THE ASSESSEE FROM FAMILY MEMBERS IN CASH. THE CONTE NTION OF THE LD. DR AGAINST THE ACTION OF LD. CIT(A) IN DELETING THIS ADDITION REMAINED THAT THE LD. CIT(A) HAS IGNORED THE FACTS THAT NONE OF THE DONORS HAD T HE CREDITWORTHINESS TO DONATE SUCH HUGE AMOUNT WHICH ARE MORE THAN THE RETURNED I NCOME FOR THE YEAR IN MANY CASES. THE ONUS ON THE ASSESSEE TO PROVE THE G ENUINENESS OF THE CLAIMED GIFT HAS REMAINED TOTALLY UNDISCHARGED. THE LD. AR SUBMITTED THAT BEFORE THE AO THE ASSESSEE HAD FILED DOCUMENTARY EVIDENCE IN SUPP ORT OF THE GIFTS FROM FAMILY MEMBERS AND STATEMENT OF AFFAIRS OF THE ASSESSEE A S ON 31.3.2007 AND 31.3.2008. IN SUPPORT IT HAS REFERRED PAGE NOS. 1 T O 69 OF THE PAPER BOOK. HE SUBMITTED THAT THE AO DID NOT CONTROVERT PROOF OF T HE DOCUMENTARY EVIDENCE AS FILED BEFORE HIM. ALL THE DONORS EXCEPT THE DONOR O F RS. 50,000/- NAMELY SHRI RAMAVTAR WALIA, FATHER-IN-LAW OF THE ASSESSEE, WERE ASSESSED TO TAX AND THEIR PANS WITH CONFIRMATION, POSITION OF FUNDS AND COP IES OF THEIR INCOME TAX RETURNS ETC. WERE ALSO FILED BEFORE THE LD. CIT(A) AND THE SAME WERE ENTERTAINED AFTER GIVING OPPORTUNITY TO THE AO. 6. ON GOING THROUGH THE ORDERS OF THE AUTHO RITIES BELOW IN THIS REGARD WE FIND THAT THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED FOLLOWING GIFTS FROM HIS FAMILY MEMBERS :- ITA NO. 4937/DEL/11 5 1. GIFT FROM FATHER SHRI ASHOK JAISWAL RS. 4,15 ,000/- 2. GIFT FROM BROTHER SHRI SAURABH JAISWAL RS. 7 ,50,000/- 3. GIFT FROM WIFE SMT. ANJALI JAISWAL RS. 3,00, 000/- 4. GIFT FROM SISTER IN LAW SMT PARUL JAISWAL R S. 1,00,000/- 5. GIFT FROM MOTHER SMT. VEENA JAISWAL RS. 1,5 0,000/- 6. GIFT FROM FATHER IN LAW SHRI RAMAVTAR WALIA RS. 50,000/- ________________ TOTAL RS. 17,55,000/- ________________ 7. THE AO DID NOT AGREE WITH THE EXPLANATI ON OF THE ASSESSEE MAINLY ON THE BASIS THAT ALL THE GIFTS HAVE BEEN MADE IN CASH . HE DOUBTED THE POSSIBILITY OF AVAILABILITY OF SUCH AMOUNT IN CASH WITH ASSESSEES FAMILY MEMBERS ESPECIALLY WHEN ALL THE FAMILY MEMBERS HAD THEIR RESPECTIVE BA NK ACCOUNTS. REGARDING GIFT OF RS. 4,15,000/- FROM HIS FATHER THE ASSESSEE HAD FURNISHED PAN OF HIS FATHER AS HE WAS ASSESSED TO TAX, CONFIRMATION OF GIFTS, HIS POSITION OF FUNDS AS ON 31.3.2007, 31.3.2008 SHOWING THE AVAILABILITY OF FU NDS FOR MAKING THE GIFTS , RETURN FILING PROOF, COPY OF CAPITAL ACCOUNT AND ST ATEMENT OF AFFAIRS AS ON 31.3.2008, HIS BANK ACCOUNT IN SUPPORT OF THE WITHD RAWAL FROM BANK. 8. IN SUPPORT OF CLAIMED GIFTS FROM BROTHER SH RI SAURABH JAISWAL RS. 7,50,000/-, THE ASSESSEE HAD FURNISHED HIS PAN AS HE ASSESSED TO TAX, CONFIRMATION OF GIFTS, RETURN FILING PROOF, POSITIO N OF FUNDS AS ON 31.3.2008, COPY OF BANK ACCOUNT SHOWING THE SOURCE OF FUNDS FOR MAK ING THE GIFTS. IT WAS ITA NO. 4937/DEL/11 6 SUBMITTED THAT THE ASSESSEE WAS HAVING JOINT BANK A CCOUNT WITH HIS BROTHER SHRI SAURABH JAISWAL WITH STATE BANK OF INDIA IN WHICH T HERE WAS A BALANCE OF RS. 12,64,130/- AS ON 31.3.2007 AND THE ASSESSEE HAD WI THDRAWN RS. 6 LAC ON HIS OWN ACCOUNT AND RS. 6 LAC WAS WITHDRAWN BY THE BROT HER FOR MAKING GIFTS TO THE ASSESSEE. 9. IN SUPPORT OF THE CLAIMED GIFT (RS. 3 LA C) FROM HIS WIFE SMT. ANJALI JAISWAL, THE ASSESEE HAD FURNISHED HER PAN AS SHE I S ASSESSED TO TAX, CONFIRMATION OF GIFT, RETURN FILING PROOF, COMPUTA TION OF TOTAL INCOME, POSITION OF FUNDS AS ON 31.3.2008 AND COPY OF HER BANK ACCOUNT. 10. IN SUPPORT OF THE CLAIMED GIFT RS. 1 LAC FROM HIS SISTER-IN-LAW SMT. PARUL JAISWAL, THE ASSESSEE HAS SUBMITTED HER PAN A S SHE IS ASSESSED TO TAX, COMPUTATION OF TOTAL INCOME, RETURN FILING PROOF, C ONFIRMATION OF INCOME, CAPITAL POSITION AS ON 31.3.08 ALLOWING THE SOURCE OF FUNDS TO THE EXTENT OF RS. 1,00,000/- FOR MAKING GIFT TO THE ASSESSEE. IN SUPP ORT OF THE CLAIMED GIFT OF RS.1,50,000/- FROM HIS MOTHER SMT. VEENA JAISWAL, T HE ASSESEE HAD SUBMITTED HER PAN AS SHE IS ASSESSED TO TAX, PHOTOCOPY OF PAR TICULARS OF HER ASSESSMENT, RETURN FILING PROOF, COMPUTATION OF TOTAL INCOME. 11. REGARDING THE CLAIMED GIFT OF RS. 50,000 /- FROM HIS FATHER IN LAW LATE SHRI RAM AVTAR WALIA, THE ASSESSEE HAD FURNISHED CO NFIRMATION OF GIFT WITH THIS ITA NO. 4937/DEL/11 7 SUBMISSION THAT HE WAS A RETIRED STATE GOVERNMENT U NDERTAKING EMPLOYEE ENGAGED IN OWN BUSINESS HAVING INCOME BELOW TAXABLE LIMITS AND HAD MADE A GIFT OF RS. 50,000/- OUT OF HIS ACCUMULATED SAVINGS . 12. CONSIDERING THE ABOVE SUBMISSIONS WITH T HIS OBSERVATION THAT THE AO WITHOUT INQUIRING INTO THE SOURCE OF THE DONORS AND THE FACT THAT FIVE DONORS MAKING TOTAL GIFT OF RS. 17,15,000/- WERE ASSESSED TO TAX AS WELL AS THAT ALL THE SIX DONORS WERE CLOSELY RELATED FAMILY MEMBERS BEIN G FATHER, MOTHER, BROTHER, WIFE, SISTER-IN-LAW (BROTHERS WIFE) AND FATHER-IN- LAW HAS MADE THE ADDITION ONLY ON THE BASIS THAT THE CASH GIFTS WERE UNBELIEVABLE, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 17,6 5,000/-. THE SAME IS UPHELD. GROUND NO. 1 IS ACCORDINGLY REJECTED. GROUND NO. 2 13. THE AO DID NOT AGREE WITH THE EXPLANATIO N OF THE ASSESSEE REGARDING THE SOURCE OF RS. 5 LAC STATED TO BE RECEIPT OF ADV ANCE AGAINST SALE OF PLOT. THE AO REACHED TO THE CONCLUSION THAT NO SALE DEED WAS FILED TILL DECEMBER, 2010 AND IF NO SALE DEED IS EXECUTED, THE SALE AGREEMENT BEC OMES INVALID. THE ASSESSEE CONTENDED THAT THE AO HAS NOT RAISED ANY DOUBT ABOU T AUTHENTICITY AND GENUINENESS OF THE NOTARIZED AGREEMENT TO SELL FILE D BY THE ASSESSEE NOR HAS IT MADE ANY FINDING AS TO HOW THE ADVANCE RECEIVED AGA INST AN AGREEMENT BECOMES TAXABLE, IF THE AGREEMENT BECOMES INVALID. THE AO DID NOT ENQUIRE THE ITA NO. 4937/DEL/11 8 CORRECTNESS OF THE EXPLANATION OF THE ASSESSEE NOR HAS HE EXAMINED THE PARTY TO THE AGREEMENT MAKING ADVANCE. IN ABSENCE OF REBUTTA L OF THE EXPLANATION OF THE ASSESSEE BY THE AO, WE ARE OF THE VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. THE SAME IS UPHELD. GROUND NO. 2 IS ACCO RDINGLY REJECTED. GROUND NO. 3 14. THE ACTION OF THE LD. CIT(A) IN DELETING T HE ADDITION OF RS. 3,00,000/- MADE BY THE AO ON ACCOUNT OF SALE PROCEEDINGS OF SA NTRO CAR (YEAR 2000 MODEL) HAS BEEN QUESTIONED. THE CONTENTION OF THE ASSESSEE BEFORE THE LD. CIT(A) REMAINED THAT THE AO HAS NOT DOUBTED THE SALE OF CA R BUT SHE HAS ONLY DOUBTED THE SALE VALUE OF RS. 3 LAC AS ACCORDING TO HER THE SAME WAS EXCESSIVE. IT WAS SUBMITTED THAT IN SUPPORT OF THE CLAIMED SALE VALUE THE ASSESSEE HAD FURNISHED DELIVERY RECEIPT FOR SALE OF CAR AND RECEIPT FROM P URCHASER. THE AO WITHOUT MAKING FURTHER ENQUIRIES AND EXAMINATION OF THE PUR CHASER BY SUMMONING HIM HAS DOUBTED THE VALUE AND MADE THE ADDITION. THE AL TERNATIVE SUBMISSION OF THE ASSESSEE REMAINED THAT THERE WAS AVAILABILITY OF SU RPLUS FUND OF RS. 2,65,200/- IN HIS HANDS WHICH WERE SUFFICIENT TO TAKE CARE OF SHO RT FALL, IF ANY, IN THE SALE PRICE. IN ABSENCE OF REBUTTAL OF THESE EXPLANATION OF THE ASSESSEE WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIO N. THE SAME IS UPHELD. GROUND NO, 3 IS ACCORDINGLY REJECTED. GROUND NO. 4 ITA NO. 4937/DEL/11 9 15. IT IS AGAINST THE DELETION OF ADDITION OF RS. 3,34,800/- MADE BY THE AO ON ACCOUNT OF FRESH CAPITAL INTRODUCED IN THE ACCOUNTS OF THE ASSESSEE. THE CONTENTION OF THE LD. DR REMAINED THAT LD. CIT(A) H AS IGNORED THE FACT THAT NO EXPLANATION WAS OFFERED BY THE ASSESSEE IN RESPECT OF THIS CASH ADDITION. THE EXPLANATION OF THE ASSESSEE BEFORE THE AO IN THIS R EGARD REMAINED THAT THE ASSESSEE HAD WITHDRAWN A SUM OF RS. 6,00,000/- FRO M HIS JOINT SAVING BANK ACCOUNT WITH HIS BROTHER SHRI SAURAV JAISWAL. IT WA S EXPLAINED BY THE ASSESSEE VIDE HIS LETTER DATED 27.12.2010 TO THE AO. THE CON TENTION OF THE ASSESSEE BEFORE THE LD. CIT(A) AGAINST THE ADDITION REMAINED THAT THE AO HAD NOT CONSIDERED THE WITHDRAWAL OF THIS AMOUNT OF RS. 6,0 0,000/- FROM THE ASSESSEES BANK. FUND FLOW STATEMENT OF THE ASSESEE WAS ALSO F ILED. CONSIDERING THESE UN- REBUTTED MATERIAL FACTS WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN QUESTION. THE SAME IS UPHELD. THE GROUND NO. 4 IS ACCORDINGLY REJECTED. GROUND NO. 5 16. THE REVENUE HAS QUESTIONED THE ACTION OF LD. CIT(A) IN DELEING THE ADDITION OF RS. 97,515/- MADE BY THE AO ON ACCOUNT OF ADDITION IN THE FORM OF PURCHASE OPENING STOCK OF DELHI CHUNGI, WITHOUT CON SIDERING THE FACTS THAT NO CLASSIFICATION OF THE ADDITION WAS FURNISHED BY THE ASSESSEE. STOCK VALUE AT RS. 97,715/- WAS CLAIMED TO HAVE BEEN TRANSFERRED FROM ANOTHER PARTNERSHIP FIRM M/S ARVIND KAISWAL AND OTHERS TO THE DEBIT OF ASSES SEES CAPITAL ACCOUNT. COPY OF ASSESSEES CAPITAL ACCOUNT IN THE SAID FIRM WAS FIL ED DURING THE ASSESSMENT ITA NO. 4937/DEL/11 10 PROCEEDINGS AS WELL AS BEFORE THE LD. CIT(A). THE A O FOUND THAT OPENING STOCK IN TRADING ACCOUNT FOR THE YEAR WAS SHOWN AS NIL. C ONSIDERING THESE MATERIAL ASPECT AND EXPLANATION OF THE ASSESSEE, THE LD. CIT (A) HAS HELD THAT THE PROPRIETARY BUSINESS COMMENCED DURING THE YEAR ITS ELF HENCE NO OPENING STOCK COULD HAVE BEEN THERE AND THE STOCK TRANSFERRED FRO M OTHER FIRM HAS RIGHTLY BEEN SHOWN IN PURCHASES. HE HAS ACCORDINGLY DELETED THE ADDITION WITH THIS FINDING THAT IT IS NOT ANY AFTER THOUGHT IN THE TRA NSACTION. IN ABSENCE OF REBUTTAL OF THESE OBSERVATIONS OF THE LD. CIT(A) WE DO NOT F IND REASON TO INTERFERE IN THE FIRST APPELLATE ORDER. THE SAME IS UPHELD. GROUND N O. 5 IS THUS REJECTED. IT IS REJECTED. 17. IN THE RESULT APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2013 SD/- SD/- (S.V. MEHROTRA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 14 TH NOVEMBER, 2013 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT