SHAHID MEHBOOB NANDOLIA, MUMBAI V. ITO 24(1)-2, MUMBAI

ITA 5308/MUM/2010

• Counselvise Citation: 530819914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 17-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: P M MAKHIJA AW MR S M MAKHIJA
• Keywords: Unexplained cash credit; Gift; Source of fund
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5308/MUM./2010 (ASSESSMENT YEAR : 2006-07 ) SHRI SHAHID MEHBOOB NANDOLIA A-401, MOHAMMED MANZIL CHS LTD. BEHRAM BAUG, JOGESHWARI (W) MUMBAI 400 102 PAN ABJPN3901H .. APPELLANT V/S INCOME TAX OFFICER, WARD-24(1)(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. P.M. MAKHIJA A/W MR. S.M. MAKHIJA REVENUE BY : MR. V.V. SHASTRI DATE OF HEARING 17.10.2011 DATE OF ORDER 21.10.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 26 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-XXXIV, MUMBAI, FOR ASSESSMENT YEAR 2006-0 7. 2. THE SOLE DISPUTE IN THIS APPEAL IS, WHETHER OR NOT THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF ` 8,75,000, MADE BY THE SHRI SHAHID MEHBOOB NANDOLIA ITA NO.5308/M/2010 2 ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TA X ACT, 1961 (FOR SHORT THE ACT ). 3. THE ASSESSEE IS AN EMPLOYEE, DRIVING INCOME FROM SA LARY FILED RETURN OF INCOME DECLARING TOTAL INCOME OF ` 1,37,930. THE ASSESSING OFFICER PASSED AN ORDER DATED 30 TH DECEMBER 2008, UNDER SECTION 143(3) OF THE ACT. IN SCRUTINY ASSESSMENT, THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAS DEPOSITED CASH OF ` 12,46,000 IN DEVELOPMENT CREDIT BANK LTD., FOR THE PURPOSE OF PURCHASE OF A HOUSE. ON BEING QUESTIONED , THE ASSESSEE SUBMITTED THAT HE HAS RECEIVED GIFTS FROM CLOSE REL ATIVES. CONFIRMATION LETTERS, AFFIDAVIT, SOURCE OF FUNDS, PROOF OF AGRIC ULTURAL HOLDINGS WERE FILED BEFORE THE ASSESSING OFFICER. ALL THE PARTIES WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THEIR STATEMENTS WERE RECORDE D ON OATH. THE ASSESSING OFFICER, VIDE PARA-5.2/PAGE-4 OF HIS ASSESSMENT ORD ER, HAS CONCLUDED AS FOLLOWS:- 5.2 THE IDENTITY OF THE ABOVE DONORS ARE PROVED. HO WEVER, THEIR WORTHINESS FOR GIVING GIFTS CANNOT BE PROVED IN VIE W OF THEIR SOURCE OF INCOME AS AGRICULTURE WHICH IS JUST REQUIRED FOR TH EIR LIVELIHOOD. THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F THE DONORS. THE ONUS OF PROVING THE CREDITWORTHINESS AND THEIR CAPA CITY TO GIVE SUCH HUGE AMOUNT AS GIFTS LIES ON THE ASSESSEE, WHICH HE HAS FAILED TO PROVE. NO PRUDENT PERSON EARNING AVERAGE ANNUAL INC OME BETWEEN ` 30,000 TO ` 90,000 CAN AFFORD TO GIVE SUCH HUGE AMOUNT OF GIFT S EVEN TO THE RELATIVES. THEREAFTER, HE MADE AN ADDITION AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E COMMISSIONER (APPEALS), BUT WITHOUT ANY SUCCESS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. LEARNED COUNSEL, MR. P.M. MAKHIJA, ON BEHALF OF THE ASSESSEE, SUBMITTED BEFORE US THAT THE ASSESSEE IS A SMALL TI ME EMPLOYEE OF A PRIVATE CONCERN AND WITH A VIEW TO PURCHASE A HOUSE, HAS RE CEIVED SOME GIFTS FROM VERY CLOSE RELATIVES. HE SUBMITTED PAPER BOOK CONSI STING OF 31 PAGES AND POINTED OUT THAT EACH OF THE DONORS HAVE FILED AFFI DAVIT, CONFIRMATION LETTERS, SHRI SHAHID MEHBOOB NANDOLIA ITA NO.5308/M/2010 3 PHOTOCOPY OF 7/12 EXTRACTS FROM REVENUE RECORDS TO PROVE AGRICULTURAL HOLDINGS. HE SUBMITTED THAT THE PARTIES APPEARED BE FORE THE ASSESSING OFFICER AND CONFIRMED THE FACT OF HAVING MADE A GIF T. HE PLEADED THAT NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. H E ALSO SUBMITTED THAT SECTION 56(V) DOES NOT AUTHORISE THE ADDITION IN QU ESTION. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. V.V. SHAST RI, ON BEHALF OF THE REVENUE, SUPPORTED THE ORDER OF THE ASSESSING O FFICER. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD, WE HOLD AS FOLLOWS:- 8. THE ASSESSEE IS A SMALL TIME EMPLOYEE. THE UNDISPUT ED FACT IS THAT, HE DOES NOT MAINTAIN BOOKS OF ACCOUNT. THE QUESTION BE FORE US IS, WHETHER THE ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT IN CASE WHERE THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNT. THE HON'BLE JUR ISDICTIONAL HIGH COURT IN CIT V/S BHAICHAND H. GANDHI, 141 ITR 67 (BOM.) HELD AS FOLLOWS:- WHEN MONEYS ARE DEPOSITED IN A BANK THE RELATIONSHI P THAT IS CONSTITUTED BETWEEN THE BANKER AND THE CUSTOMER IS ONE OF DEBTOR AND CREDITOR AND NOT OF TRUSTEE AND BENEFICIARY. THE PA SS BOOK SUPPLIED BY THE BANK TO ITS CONSTITUENT IS ONLY A COPY OF THE C ONSTITUENT'S ACCOUNT IN THE BOOKS MAINTAINED BY THE BANK. IT IS NOT AS I F THE PASS BOOK IS MAINTAINED BY THE BANK AS THE AGENT OF THE CONSTITU ENT NOR CAN IT BE SAID THAT THE PASS BOOK IS MAINTAINED BY THE BANK U NDER THE INSTRUCTIONS OF THE CONSTITUENT. HENCE, THE PASS BO OK SUPPLIED BY THE BANK TO THE ASSESSEE CANNOT BE REGARDED AS THE BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. THEREFORE, A CASH CREDIT FOR THE PREVIOUS YEAR SHOW N IN THE ASSESSEE'S BANK PASS BOOK BUT NOT SHOWN IN THE CASH BOOK MAINT AINED BY THE ASSESSEE FOR THAT YEAR, DOES NOT FALL WITHIN THE AM BIT OF SECTION 68 OF THE I.T. ACT, 1961, AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE TO TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIO US YEAR. 9. THUS, THE ADDITION UNDER SECTION 68, IS BAD-IN-LAW. EVEN OTHERWISE, PROVISIONS OF SECTION 56(V) ARE NOT APPLICABLE TO A NY SUM OF MONEY RECEIVED FROM A RELATIVE. THE GIFTS IN QUESTION ARE RECEIVED BY THE ASSESSEE FROM HIS FATHER, UNCLE, MATERNAL UNCLE, BROTHER, SISTER-IN-L AW AND WIFE. THUS, IN VIEW OF THIS PROVISO, THE AMOUNT IN QUESTION CANNOT BE B ROUGHT TO TAX. SHRI SHAHID MEHBOOB NANDOLIA ITA NO.5308/M/2010 4 CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSE D BY THE COMMISSIONER (APPEALS) AND DELETE THE ADDITION. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI