ITO 17(2)(3), MUMBAI V. RATI A DARUWALLA, MUMBAI

ITA 5054/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2398 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DARSI S RATNAM
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Gift; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5054/M/2012 ASSESSMENT YEAR: 2008-09 ITO 17(2)(3), MUMBAI VS. SMT. RATI A. DARUWALLA, 781, FLAT NO.11, 3 RD FLOOR, MANCHERJI JOSHI ROAD, PARSI COLONY, DADAR, MUMBAI 400 014 PAN: AKOPD 4444R (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : DR. K. SHIVARAM, A.R. REVENUE BY : SHRI DARSI S. RATNAM, D.R. DATE OF HEARING : 24.11.2015 DATE OF PRONOUNCEMENT : 24.11.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 09.05.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C1T(A) HAS ERRED IN ALLOWING AN OPENING CASH BALANCE OF RS.5,00,000/- ON THE MERE ASSUMPTION THAT THE ASSES SEE HAD INCOME OF RS.1,00,000/- PER YEAR DURING THE LAST FIVE YEARS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING GIFT OF RS.2,00,00 0/- AS GENUINE TRANSACTION WITHOUT ANY CONFIRMATORY EVIDENCE, IDEN TITY, CAPACITY AND CREDITWORTHINESS OF THE DONORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RS.1,80,000/- AS S AVING OUT OF CASH ITA NO.5054/M/2012 SMT. RATI A. DARUWALLA 2 RECEIVED FROM HER CHILDREN FOR HOUSEHOLD EXPENSES W ITHOUT VERIFYING THE GENUINENESS OF THE TRANSACTION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS. 2,50,248/- IGNORING THE FACT THAT THE INVESTIGATION OF THE DEPARTMENT CLEAR LY PROVES THAT THE EXPLANATION OFFERED REGARDING CASH RECEIVED FROM SA LE OF JEWELLERY IS BOGUS IN NATURE.' 3. THE ASSESSEE IN THIS CASE IS AN 83 YEAR OLD WIDO WED LADY. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (HEREI NAFTER REFERRED TO AS THE AO) NOTED THAT THE ASSESSEE HAD MADE CASH DEPOSITS IN SAVING ACCOUNT OF RS.8,40,000/- WITH CENTRAL BANK OF INDIA AND RS.1,9 5,000/- IN UNION BANK OF INDIA DURING THE RELEVANT FINANCIAL YEAR. SHE HAD ALSO MADE FIXED DEPOSITS OF RS.4,75,000/- IN CASH IN HDFC BANK. ON BEING ASKE D TO EXPLAIN, THE ASSESSEE SUBMITTED THAT THE CASH DEPOSITS IN SAVING BANK ACC OUNTS AND FIXED DEPOSITS IN HDFC BANK WERE BEING OUT OF CASH IN HAND OF RS.11,5 0,000/- AND OUT OF SAVINGS FROM HOUSEHOLD EXPENSES OF RS.35,000/- PER MONTH RECEIVED FROM CHILDREN, RS.3,20,000/- RECEIVED AS GIFTS ON VARIOU S OCCASIONS AND RS.2,50,248/- OUT OF JEWELLERY SOLD IN CASH. THE T OTAL OF ABOVE ITEMS COMES OUT AT RS.19,00,248/- OUT OF WHICH THE ASSESSEE HAD DEP OSITED CASH IN BANK OF RS.10,60,000/- AND FD IN HDFC BANK OF RS.4,75,000/- . THE ASSESSEE FURTHER EXPLAINED THE SOURCE OF CASH IN HAND THAT THE SAME HAD ACCUMULATED TO THE ASSESSEE OVER A NUMBER OF YEARS, THE SOURCE OF WHIC H WAS FROM TUITION FEES IN EARLIER YEARS, GIFT FROM FAMILY AND FRIENDS AND REL ATIVES AND SALE PROCEEDS OF JEWELLERY ETC. SINCE THE ASSESSEE WAS AN OLD AGED ILLITERATE LADY, HENCE SHE DID NOT MAINTAIN THE FORMAL RECORDS. IT WAS EXPLAINED THAT THE ASSESSEE WAS ACCUMULATING THE HOUSEHOLD MONEY SAVED OUT OF THE C ONTRIBUTIONS MADE BY HER CHILDREN AND THAT THE ASSESSEE HAD BARELY ANY PERSO NAL EXPENDITURE AND THEREFORE PREFERRED TO SAVE AND SECURE THE MONEY SO THAT THE SAME MAY BE USED IN TIME OF NEED. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE HELD THAT THE ASSESSEE COULD N OT PROVIDE THE DOCUMENTARY ITA NO.5054/M/2012 SMT. RATI A. DARUWALLA 3 EVIDENCES IN SUPPORT OF HER CLAIM AND ADDED THE ABO VE AMOUNTS INTO THE INCOME OF THE ASSESSEE MAKING A TOTAL ADDITION OF R S.17,82,776/-. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD. CIT(A). 4. THE LD. CIT(A), AFTER CONSIDERING THE OVERALL FA CTS AND CIRCUMSTANCES OF THE CASE, OBSERVED THAT IN THE INSTANT CASE, THE AO HAD IGNORED THE EVIDENCES FILED BY THE ASSESSEE SUCH AS RETURN OF INCOME, PAN OF THE CHILDREN ALONG WITH THEIR CONFIRMATION IN RESPECT OF THE HOUSEHOLD EXPE NDITURE/CONTRIBUTIONS PAID BY THEM TO THE ASSESSEE. HE NOTED THAT THE CHILDRE N OF THE ASSESSEE WERE SALARIED EMPLOYEES AND WERE ASSESSED TO INCOME TAX. THERE WAS NO DOUBT ABOUT THE CREDITWORTHINESS AND FINANCIAL STATUS OF THE CHILDREN TO PROVIDE RS.35,000/- PER MONTH TOWARDS HOUSEHOLD EXPENSES TO THE ASSESSEE. HE THEREFORE HELD THAT THE AMOUNT OF RS.35,000/- PER M ONTH RECEIVED BY THE ASSESSEE FROM CHILDREN HAS PASSED THE TEST OF HUMAN PROBABILITIES AND THE AO HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THE ABOVE CONTENTION OF THE ASSESSEE WAS NOT CORRECT. HE THEREFORE DELETED THE ADDITION OF RS.1,80,000/- IN RELATION TO DEPOSITS OUT OF SAVINGS FROM HOUSEHOLD. WITH RE GARD TO THE RECEIPT OF MONEY BY SALE OF JEWELLERY, THE LD. CIT(A) FOUND THAT THE ASSESSEE HAD PRODUCED THE COPIES OF THE PURCHASE BILL OF THE JEWELLERY, PAN O F MR. PRAVIN JAIN TO WHOM THE JEWELLERY WAS SOLD AND SALES TAX REGISTRATION D ETAILS OF THE SAID CONCERN. HE NOTED THAT THE ASSESSEE HAD DISCHARGED THE INITIAL BURDEN OF PROOF TO PROVE THE GENUINENESS OF THE TRANSACTION. ON THE OTHER HAND , THE AO HAS NOT PROVED OR BROUGHT ANY CONTRARY EVIDENCES ON RECORD THAT THE T RANSACTION WAS NOT GENUINE. HE, RELYING UPON THE VARIOUS CASE LAWS, HELD THAT M ERELY BECAUSE THE CREDITOR/PURCHASER OF THE JEWELLERY COULD NOT BE FO UND OR PRODUCED, IT WOULD NOT BE CORRECT TO INVOKE PROVISIONS OF SECTION 69A WHEN THE ASSESSEE, OTHERWISE, HAS PRODUCED THE RELEVANT DOCUMENTS ON T HE FILE SHOWING THE GENUINENESS OF THE TRANSACTION. HE, CONSIDERING TH E OVERALL FACTS AND ITA NO.5054/M/2012 SMT. RATI A. DARUWALLA 4 CIRCUMSTANCES OF THE CASE, OBSERVED THAT THE ASSESS EE HAD REASONABLY EXPLAINED THE RECEIPT OF MONEY OF RS.2,50,248/- ON SALE OF OL D GOLD ORNAMENTS AND DELETED THE ADDITION IN THIS RESPECT ALSO. 5. WITH REGARD TO THE GIFTS FROM RELATIVES, THE ASS ESSEE HAD SUBMITTED A LIST OF RELATIVES TO THE AO FROM WHOM THE ASSESSEE HAD R ECEIVED THE GIFTS OF SMALL AMOUNTS AGGREGATING RS.3,20,000/-. THE LD. CIT(A), CONSIDERING THE FACTS OF THE CASE AND CONSIDERING THE AGE OF THE ASSESSEE OF 83 YEARS, HELD THAT AN AMOUNT OF RS.2 LAKH CAN BE A REASONABLE AMOUNT WHIC H WOULD HAVE BEEN RECEIVED BY THE ASSESSEE FROM HER SON, DAUGHTER OR BROTHERS. HE HELD THAT IT WAS IMPROBABLE THAT THE REST OF THE SMALL AMOUNTS I N THE RANGE OF RS.15,000/- TO RS.20,000/- COULD HAVE BEEN GIVEN BY SO MANY REL ATIONS IN A PARTICULAR YEAR. HE, THEREFORE, CONSIDERING THE OVERALL CIRCUMSTANCE S, TREATED THE AMOUNT OF RS.2 LAKH AS EXPLAINED OUT OF THE TOTAL ADDITION OF RS.3,20,000/- AND THEREFORE CONFIRMED THE ADDITION OF RS.1,20,000/- AS UNEXPLAI NED INVESTMENT. WITH REGARD TO THE OPENING BALANCE OF RS.11,50,000/-, TH E LD. CIT(A) OBSERVED THAT TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIR CUMSTANCES, THE AGE AND WIDOWED STATUS OF THE ASSESSEE IT WOULD BE REASONAB LE TO ASSUME THAT SHE HAD AN INCOME OR RECEIPTS OF ABOUT ONE LAKH OF RUPEES A YEAR WHICH COULD BE BELOW TAXABLE LIMIT. HE THEREFORE TAKING AN AVERAGE OF 4 TO 5 FIVE YEARS HELD THAT A REASONABLE AMOUNT OF RS.5 LAKH COULD BE SAID TO BE EXPLAINED. HE THEREFORE CONFIRMED THE ADDITION OF RS.6,50,000/- OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS.11,50,000/- IN RELATION TO THE CASH IN HAN D/OPENING BALANCE. THE LD. CIT(A) FURTHER OBSERVED THAT SINCE THE OPENING BALA NCE OF RS.5 LAKH WAS TREATED AS EXPLAINED, HENCE THE INVESTMENT IN FIXED DEPOSITS TO THE TUNE OF RS.4,75,000/- WILL REMAIN EXPLAINED. 6. SO FAR AS THE INTEREST INCOME OF RS.2,47,776/- W AS CONCERNED, THE ASSESSEE HAD EXPLAINED THAT THE TAX WAS DEDUCTED AT SOURCE BY THE BANK OF ITA NO.5054/M/2012 SMT. RATI A. DARUWALLA 5 RS.10,112/- WITH RESPECT TO INTEREST INCOME EARNED AND THAT THERE WAS NO LOSS OF REVENUE TO THE DEPARTMENT AND THUS THE SAID INTERES T INCOME WAS NOT TAXABLE INCOME. THE SAID INCOME COULD NOT BE SAID TO BE A CONCEALED INCOME OF THE ASSESSEE. THE LD. CIT(A) THEREFORE HELD THAT OUT O F TOTAL DISALLOWANCE OF RS.15,35,000/- (10,60,000/- + RS.4,75,000/-) AN AMO UNT OF RS.11,30,248/- IS HELD AS EXPLAINED AND CONFIRMED THE REMAINING DISAL LOWANCE MADE BY THE AO. THE REVENUE, THUS, HAS AGITATED THE DELETION OF THE REMAINING DISALLOWANCE BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND TH AT THE LD. CIT(A) HAS GIVEN A DETAILED REASONING AFTER PROPERLY APPRECIAT ING THE EXPLANATION AND EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE HIM. EV EN OTHERWISE THE ASSESSEE COULD NOT BE SUPPOSED TO BE WITHOUT ANY CASH OR DEP OSITS AT THE AGE OF 83 YEARS AND HENCE, THE ENTIRE AMOUNT FOUND DEPOSITED/CASH I N HAND WITH THE ASSESSEE CANNOT BE SAID TO BE AS UNEXPLAINED. THE LD. CIT(A ) HAS DULY CONSIDERED THE SOURCE OF THE INCOME OF THE ASSESSEE, THE FINANCIAL STATUS OF HER CHILDREN, THE AGE OF THE ASSESSEE AND HAS MADE A REASONABLE ESTIM ATE OF THE APPROXIMATE MONEY WHICH THE ASSESSEE WAS SUPPOSED TO POSSESS AN D TREATED THE SAME AS EXPLAINED. WE DO NOT FIND ANY INFIRMITY IN THE ABO VE WELL REASONED ORDER OF THE LD. CIT(A) AND THE SAME IS THEREFORE UPHELD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS THER EFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.11.2015. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.11.2015. * KISHORE, SR. P.S. ITA NO.5054/M/2012 SMT. RATI A. DARUWALLA 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.