Mrs. Aditi Aggarwal, New Delhi V. ITO, New Delhi

ITA 5199/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58524 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 23-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISRA
• Assessee Lawyers: ASHWANI TANEJA; DR RAKESH GUPTA
• Keywords: Unexplained cash credit; Gift; Onus to prove; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 5199/DEL/2010 ASSTT. YR: 2002-03 MRS. ADITI AGGARWAL VS. INCOME-TAX OFFICER, 74, RAM VIHAR, NEW DELHI. WARD 35-(4), NEW DELHI. PAN/GIR NO. AAJPA9616P (APPELLANT) ( RESPONDENT ) APPELLANT BY : DR. RAKESH GUPTA ADV. & SHRI ASHWANI TANEJA ADV. RESPONDENT BY : SHRI SALIL MISRA SR. DR O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER DA TED 28-7-2010, RELATING TO A.Y. 2002-03. FOLLOWING GROUNDS ARE RAI SED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS INCORRECT AND UNJUSTIFIED I N SUSTAINING THE ADDITION OF RS. 5 LAKHS INCORRECTLY AND UNJUSTI FIABLY MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS INCORRECT AND UNJUSTIFIED I N HOLDING THAT REOPENING OF THE ASSESSMENT WAS VALID IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS INCORRECT AND UNJUSTIFIED I N CONFIRMING THE ADDITION OF RS. 5 LAKHS MADE BY THE AO. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS INCORRECT AND UNJUSTIFIED I N CONFIRMING THE ADDITION OF RS. 20,000/- INCORRECTLY MADE BY TH E AO. 2 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS INCORRECT AND UNJUSTIFIED I N HOLDING THAT THE GROUND RELATING TO RS. 20,000/- WAS NOT PR ESSED DURING HEARING. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND ALTERNATIVELY THE ADDITION OF RS. 20,000/- WILL AUTOMATICALLY GO IF THE ADDITION OF RS. 5 LAKHS IS DELETED. 2. BRIEF FACTS ARE: THE AO RECEIVED A CD FROM INVES TIGATION WING OF THE INCOME-TAX DEPARTMENT; INFORMATION THEREIN WAS TO THE EFFECT THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY OF RS. 5 LAKHS ON 5-7-2001, FROM ONE SHRI DEEPAK GUPTA. AO WAS OF THE VIEW THAT THIS TRANSACTION WAS AN ACCOMMODATION ENTRY TAKEN BY THE ASSESSEE FOR WH ICH SHE MUST HAVE GIVEN UNACCOUNTED MONEY AND ALSO PAID CERTAIN AMOU NT OF COMMISSION FOR THE ABOVE ENTRY. AO HAD REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AMOUNTING TO RS. 5 LAKHS AND AMOUNT OF COMMISSION H AD ESCAPED ASSESSMENT AND THEREFORE NOTICE U/S 148 WAS ISSUED AND THE ASSESSMENT WAS REOPENED. 2.1. DURING THE COURSE OF REASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED RELEVANT DETAILS IN RESPECT OF THIS GIFT. AO IN THE ABSENCE OF PERSONAL ATTENDANCE OF SHRI DEEPAK GUPTA, AND THE FACT THAT HE HAD NO RELATION WITH THE ASSESSEE, DREW ADVERSE INFERENCE. IT WAS FURTHE R ALLEGED THAT SHRI DEEPAK GUPTA WAS AN ENTRY OPERATOR AND THUS ADDED THIS AMO UNT AS UNEXPLAINED CASH CREDIT. IN ADDITION, AO HELD THAT ASSESSEE MUST HAV E PAID SOME COMMISSION FOR PROCURING THIS ACCOMMODATION ENTRY AND MADE AN ADDITION OF RS. 20,000/- ON THIS ACCOUNT ALSO. IT MAY BE MENTIONED THAT ONE MORE ADDITION OF RS. 5 LAKHS WAS MADE BY AO, WHICH IS NOT A GROUND B EFORE US. 3 2.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHE RE THE OTHER ADITOIN OF RS. 5 LAKHS WAS DELETED BY CIT(A), WHICH IS NOT IN APPEAL. ABOUT THE ALLEGED GIFT, THE CIT(A) OBSERVED THAT THOUGH SHRI DEEPAK G UPTA WAS AN INCOME TAX ASSESSEE, IT WAS IMPROBABLE FOR HIM TO DONATE A HUG E AMOUNT OF RS. 5 LAKHS BY WAY OF GIFT TO ASSESSEE OUT OF NATURAL LOVE AND AFFECTION. NO RELATION BETWEEN DONOR AND ASSESSEE HAS BEEN EXPLAINED AND F URTHER HELD THAT THE ASSESSEE HAS DEVISED A COLOURFUL DEVICE TO BRING U NEXPLAINED CASH BY WAY OF THIS GIFT. ASSESSEES APPEAL ON THE ISSUE WAS DISMI SSED. 3. LEARNED COUNSEL FOR THE ASSESSEE ASSAILS THE REO PENING OF ASSESSMENT IN QUESTION ON THE GROUND THAT: (1) THERE WAS NO COGENT MATERIAL BEFORE AO TO FORM A BE LIEF THAT INCOME HAD ESCAPED ASSESSMENT AS THE INFORMATION SUPPLIED BY INVESTIGATION WING WAS ON A CD GIVING VAGUE DETAILS ABOUT THE GIF T. (2) AO DID NOT APPLY HIS MIND AND RECORDED HIS SATISFAC TION AND ON THE BASIS OF SOME UNVERIFIED INFORMATION FROM THE INVES TIGATION WING A BORROWED SATISFACTION HAS BEEN RECORDED BY THE AO, THEREFORE, THE REASSESSMENT WAS BAD IN LAW. RELIANCE IS PLACED ON - SIGNATURE HOTELS (P) LTD. VS. ITO & ANOTHER DATED 2 1-7-2011 IN W.P. (CIVIL) 8067/2010 (DEL.); - CIT VS. INDIAN SUGAR & GENERAL INDUSTRY EXPORT IMPO RT CORPN. LTD. (2008) 170 TAXMAN 229 (DEL.); - CIT VS. SMT. PARAMJIT KAUR (2008) 311 ITR 38 (P&H) - CENTRAL INDIA ELECTRIC SUPPLY CO. LTD. VS. ITO & AN R. (2011) 333 ITR 237 (DEL.); - CHHUGAMAL RAJPAL VS. S.P. CHALIHA & ORS. (1971) 79 ITR 603 (SC); - CIT VS. ATUL JAIN (2008) 299 ITR 383 (DEL.); - UNITED ELECTRICAL CO. (P) LTD. VS. CIT & ORS. (2002 ) 258 ITR 317 (DEL.). - JOSE KURUVINAKKUNNEL VS. ITO (2007) 14 SOT 462 (COC H.). 4 (3) THE ADDITIONAL CIT ALSO HAS GIVEN MECHANICAL SATISF ACTION BY RECORDING THE WORDS I AM SATISFIED AND ON THIS SC ORE ALSO THE REASSESSMENT IS INVALID. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: - LAKHMANI MEWAL DAS VS. ITO (1975) 99 ITR 296 (CAL.) (FB) - RAMKUMAR RAMDEV VS. ITO (1979) 8 TTJ 353 (CAL.) - GERMAN REMEDIES LTD. VS. DCIT (2006) 287 ITR 494 (B OM.) - JOHRI LAL (HUF) VS. CIT 88 ITR 439 (SC) - CIT VS. SMT. ATTARI DEVI 276 ITR 532 (P&H). 3.1. IT IS PLEADED THAT REASONS BEING VAGUE; AOS B ELIEF BEING MECHANICAL AND BORROWED; AND APPROVAL OF ADDL. CIT BEING MECHA NICAL, THE REOPENING WAS BAD IN LAW 3.2. COMING TO MERITS, LEARNED COUNSEL VEHEMENTLY A RGUES THAT THE ADDITION HAS BEEN MADE ONLY ON SUSPICION RAISED BY UNSUBSTAN TIATED INTIMATION OF THE INVESTIGATION WING THAT THE GIFT IN QUESTION AMOUNT ED TO AN ACCOMMODATION ENTRY. EXCEPT THE RECORDING OF REASONS, THERE IS NO OTHER MATERIAL ON THE RECORD TO IN ANY WAY SUGGEST THAT THE GIFT WAS NOT GENUINE. LEARNED COUNSEL THEN CONTENDS THAT THE ASSESSEE FILED FOLLOWING DOC UMENTS TO SUBSTANTIATE THE GIFT: (I) COPY OF GIFT DEED PB 23 (II) COPY OF AFFIDAVIT OF THE PB 25 DONOR SH. DEEPAK GUPTA (III) COPY OF THE 143(1) ORDER PB 26 OF THE DONOR. (IV) COPY OF BANK PASS BOOK PB 22 OF THE DONOR, DEMONSTRATING THAT OUT OF A SUM OF RS. 5,18,890/- THE AMOUNT OF GIFT WAS MADE. 5 (V) ASSESSEES A/C SHOWING PB 27 RECEIPT OF THE GIFT. 3.3. THUS, THE ASSESSEE DISCHARGED ITS BURDEN BY DE MONSTRATING THE IDENTITY OF THE DONOR BY WAY OF PAN AND INCOME-TAX ORDER OF SH. DEEPAK GUPTA. THE GENUINENESS OF THE TRANSACTION IS DEMONSTRATED BY THE A/C PAYEE CHEQUE SUPPORTED BY THE COPY OF THE BANK PASS BOOK OF THE DONOR AND RECEIPT IN THE ACCOUNT OF THE ASSESSEE. CREDITWORTHINESS OF THE DO NOR IS DEMONSTRATED BY COPY OF HIS BANK PASS BOOK HAVING CREDIT BALANCE OF RS. 5,18,890/- TO HIS CREDIT, OUT OF WHICH THE GIFT IS MADE. THEREFORE, T HE ASSESSEES BURDEN IS DISCHARGED IN TERMS OF SEC. 68. 3.4. SINCE THE ASSESSEE WAS NOT ABLE TO PRODUCE THE DONOR, HE MADE A REQUEST TO AO TO ISSUE SUMMONS U/S 131 TO THE DONOR SH. DEEPAK GUPTA. COPY OF THE APPLICATION IS AVAILABLE ON PAGE 31 OF THE PAPER BOOK. IT WILL BE PERTINENT TO BE OBSERVED THAT NO NOTICE U/S 131 WAS ISSUED, THEREFORE, THERE IS NO REBUTTAL OF THE ASSESSEES CONTENTION. 3.5. ADDITION WAS MADE BY THE AO NOT ON ANY POSITIV E MATERIAL OR EVIDENCE , BUT ON THE OBSERVATION THAT IT IS ALLEGE D BY THE INVESTIGATION WING THAT SH. DEEPAK GUPTA WAS AN ENTRY OPERATOR. THERE IS NO REFERENCE TO ANY PROCEEDINGS WHICH THE DEPARTMENT HAS TAKEN AGAINST SH. DEEPAK GUPTA OR ANY STATEMENT RECORDED FROM HIM; OR ANY ADDITION IN HIS ASSESSMENT WHICH IS EVIDENT FROM THE FOLLOWING FINDINGS OF THE AO IN H IS ASSESSMENT ORDER: 3.5. IT IS WELL SETTLED LAW THAT UNLESS THE DEPONE NT IS PRODUCED FOR PERSONAL DEPOSITION, THE CONTENTS OF AN AFFIDAV IT CANNOT BE RELIED UPON. KEEPING IN VIEW THESE FACTS IT IS CLEA R THAT THE 6 ASSESSEE HAS ARRANGED AN ACCOMMODATION ENTRY IN LIE U OF GIFT FROM SHRI DEEPAK GUPTA. THIS PERSON, SHRI DEEPAK GUPTA IS ALLEGED TO BE EN TRY PROVIDER AS PER THE INVESTIGATIONS DONE BY THE INVE STIGATION WING. IT IS CLEAR THAT THE ASSESSEE HAS GIVEN ITS U NACCOUNTED CASH TO THE ENTRY PROVIDER AND THE SAME HAS BEEN RE CEIVED BACK BY THE ASSESSEE THROUGH CHEUQE. THE ASSESSEE HAS N OT COME FORWARD TO PROVE THE GENUINENESS OF THE GIFT WHICH CAN ONLY BE PROVED BY PRODUCING THE DONOR I.E. SH. DEEPAK GUPTA . ALSO THE CREDITWORTHINESS OF SH. DEEPAK GUPTA HAS NOT BEEN E STABLISHED. THE ONUS TO PROVE THE GENUINENESS OF THE GIFT AND CREDITWORTHINESS OF THE DONOR LIES ON THE ASSESSEE AND THE ASSESSEE HAS NOT DISCHARGED HER ONUS. UNDER THESE CIRCUMSTANCES I AM LEFT WITH NO OTHER ALTERNATIVE B UT TO TREAT THE AMOUNT OF RS. 5,00,000/- AS THE UNEXPLAINED CREDIT AS PER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT. THE PROVI SIONS OF SECTION 68 OF THE I.T. ACT, 1961, ARE CLEAR AND UNA MBIGUOUS WHEREIN IT IS CONTAINED THAT ANY SUM IS FOUND CRE DITED IN THE BOOKS OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXP LANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANAT ION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFF ICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS INCOME OF THE ASSESSEE. THE LEGISLATURE HA USED THE TERM ANY SUM, THEREFORE, THE NATURE OF THE SUM BE IT REVENU E OR CAPITAL, DOES NOT MATTER. HERE THE AMOUNT OF RS. 5,00,000/- HAS BEEN CREDITED INTO THE BANK ACCOUNT OF THE ASSESSEE AND THE GENUINENESS OF THE GIFT AND CREDITWORTHINESS OF THE PERSON GIVING GIFT HAS NOT BEEN PROVED.(ADDITION: RS. 5,00 ,000/0). REPRODUCE C PARA 3.5 OF AOS ORDER 3.6. LEARNED COUNSEL CONTENDS THAT THE PREMISE OF M AKING ADDITION IS BASED ONLY ON AN ALLEGATION AGAINST SH. DEEPAK GUPT A BEING ENTRY PROVIDER. THE FINDING THAT ASSESSEE WAS UNDER OBLIGATION TO P RODUCE THE DONOR TO PROVE HIS CREDITWORTHINESS, IS UNTENABLE AS AO DID NOT BOTHER TO ISSUE SUMMONS U/S 131. THE AO HAS GIVEN A FINDING THAT T HE ASSESSEE HAS GIVEN UNACCOUNTED CASH TO ENTRY OPERATOR AND THUS THE AMO UNT OF RS. 5 LAKHS 7 BELONGED TO ASSESSEE. THIS FINDING HAS BEEN RECORDE D PURELY ON SURMISE AND CONJECTURES. 3.7. THE GIFT OF MOVABLE PROPERTY IS EFFECTED ON D ELIVERY OF THE PROPERTY I.E. THE GIFT AMOUNT, WHICH IN THIS CASE IS COMPLET E. IT IS A TRITE LAW THAT WHAT IS APPARENT IS TRUE UNLESS THE CONTRARY IS PROVED B Y THE DEPARTMENT. THE ASSESSEE HAS GIVEN NECESSARY AND RELEVANT EVIDENCE TO ESTABLISH THE GENUINENESS OF THE GIFT. THE ENTIRE MATERIAL HAS B EEN DISCARDED WITHOUT CONTROVERTING THE SAME, ONLY BY RAISING AN ALLEGATI ON OF THE INVESTIGATION DEPARTMENT WHICH IS NOT SUBSTANTIATED BY AO. UNDER THESE CIRCUMSTANCES, THIS ADDITION CANNOT BE SUSTAINED AND THE CONSEQUEN T ADDITION DESERVES TO BE DELETED. RELIANCE IS PLACED ON FOLLOWING JUDGMENTS: - CIT VS. KUSUM GUPTA ITA 831 OF 2010 DATED 16-7-2010 (DEL.) - UJJAGAR SINGH OBEROI ITA 621 OF 2009 DATED 4-9-2009 (DEL.) - CIT VS. JEETA KHAN 160 TAXMAN 373 (P&H) - CIT VS. MANOJ KUMAR SEKHRI 214 CTR 141 (P&H) - NEK KUMAR VS. ACIT 274 ITR 575 - CIT VS. SUNITA VACHANI 184 121 (DEL.) 4. LEARNED DR SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF AOS AND CIT(A)S ORDERS, IT EMERGES THAT THE MAIN BASIS OF THE ADDITION HAS BEEN ATTRIBUTED TO THE AL LEGATION LEVELLED BY THE INVESTIGATING WING BY INFORMING THAT SH. DEEPAK GU PTA WAS AN ENTRY OPERATOR. THE DEPARTMENT HAS NOT BEEN ABLE TO PRODU CE ANY FURTHER MATERIAL EXCEPT THIS INFORMATION, RAISING AN ALLEGATION. THE RE IS NO REFERENCE TO ANY STATEMENT GIVEN BY SH. DEEPAK GUPTA OR ANY ASSESSME NT PROCEEDINGS AGAINST HOLDING HIM AS AN ENTRY OPERATOR. LEARNED COUNSEL FOR THE ASSESSEE HAS 8 DEMONSTRATED THAT THE RELEVANT DOCUMENTS IN RESPECT OF THE GIFT I.E. CONFIRMATION, AFFIDAVIT AND BANK ACCOUNT WAS FILED TOGETHER WITH THE INCOME- TAX ORDER OF THE DONOR, COPY OF HIS BANK PASS BOOK, INDICATING HIS CREDITWORTHINESS HAS ALSO BEEN FILED. IN OUR VIEW, SEC. 68 CASTS A PRIMA FACIE BURDEN ON THE ASSESSEE WHICH HAS BEEN DISCHARGED. T HE NATURE OF PRIMA FACIE BURDEN CANNOT BE EXTENDED TO MAKE IT ABSOLUTE OR DE MONSTRATIVE IN INFALLIBLE TERMS. THE ASSESSEE FILED AN APPLICATION BEFORE AO TO CALL THE DONOR BY SUMMONS U/S 131, THEREBY INDICATING HER INABILITY T O PRODUCE HIM. NO ACTION HAS BEEN TAKEN BY AO ON SUCH REQUEST. THEREFORE, IT CANNOT BE HELD THAT THE ASSESSEE DEFAULTED IN DISCHARGING HER BURDEN. THE E NTIRE SET OF EVIDENCE OF THE ASSESSEE WAS BRUSHED ASIDE ONLY ON THE BASIS TH AT AN INFORMATION ALLEGING THAT SH. DEEPAK GUPTA WAS ACCOMMODATION ENTRY PROVI DER, A CHARGE WHICH, IN OUR VIEW, IS NOT SUBSTANTIATED. THE AO IN ORDER TO CONTROVERT THE EVIDENCE SHOULD HAVE BROUGHT ENOUGH MATERIAL TO SUBSTANTIATE HIS FINDINGS. IN THE ABSENCE OF SUCH CORROBORATING MATERIAL, WE SEE NO J USTIFICATION FOR THIS ADDITION, WHICH IS DELETED. 5.1. SINCE WE HAVE DELETED THIS ADDITION, THE OTHER ADDITION OF ESTIMATED COMMISSION OF RS. 20,000/- IS ALSO DELETED. 5.2. COMING TO THE ISSUE OF VALIDITY OF REASSESSMEN T PROCEEDINGS, WE MAY INDICATE THAT THE ASSESSEES ORIGINAL ASSESSMENT WA S COMPLETED U/S 143(1), WHICH IS A SUMMARY ASSESSMENT AND IF THE DEPARTMEN T HAS RECEIVED SOME INFORMATION, THERE BEING NO \TIME TO ISSUE NOTICE U /S 143(2), REVENUE IS LEFT WITH NO CHOICE BUT TO ISSUE NOTICE U/S 148. CONSEQU ENTLY, WE ARE UNABLE TO HOLD THAT PROPER REASONS HAVE NOT BEEN RECORDED. BE SIDES, THE ADDITIONAL COMMISSIONER HAS ACTED ON A PROPERLY FILLED UP PROF ORMA AND INSCRIBED I 9 AM SATISFIED. LOOKING AT THE ENTIRETY OF FACTS, WE ARE UNABLE TO HOLD THAT THE APPROVAL CAN BE TERMED AS MECHANICAL. CONSEQUENTLY, THIS GROUND OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 25-01-2012. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25-01-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 10