Sh. Rajinder Mohan Lal, Chandigarh V. DCIT, Chandigarh

ITA 578/CHANDI/2011

• Counselvise Citation: 57821514 RSA 2011
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: VINEET KRISHAN
• Keywords: Gift
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 578/CHD/2011 ASSESSMENT YEAR: 2007-08 SHRI RAJINDER MOHAN LAL, V DCIT, CIRCLE 1(1), H.NO. 570, SECTOR 10A, CHANDIGARH. CHANDIGARH. PAN: AAXPL-9228N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI N.K.SAINI DATE OF HEARING : 21.12.2011 DATE OF PRONOUNCEMENT : 04.01.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 19.01.2011 PASSED BY THE LD . CIT(A) U/S 250 OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT') . 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED U/S 250(6) BY THE LD. CIT (A) CHANDIGARH IN APPEAL NO.386/P/09-10 DATED 19.01.201 1 IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GRAVELY ERRED IN SUSTAINING THE ADDITION OF RS.21,07,513/- WHICH REPRESENTED THE AMOUNT RECEIVE D AS SHOGUNS ON BEHALF OF HIS DAUGHTER MS. RADHIKA LAL A T THE TIME OF HER MARRIAGE. 2 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GRAVELY ERRED IN SUSTAINING THE ADDITION OF RS.5,50,000/- ON ACCOUNT OF FOREIGN TRAVELING EXPEN SES FOR ALLEGED PERSONAL USE OF THE ASSESSEE. NO SUCH EXPEN SES WERE INCURRED BY THE ASSESSEE. 4. THAT WITHOUT PREJUDICE TO THE ABOVE, THE ADDITIO N IS HIGHLY EXCESSIVE. 5. ANY OTHER GROUND THAT MAY BE TAKEN UP AT THE TIM E OF HEARING WITH THE PERMISSION OF THE HON'BLE ITAT CHANDIGARH. 3. GROUND NOS. 1 & 5 RAISED BY THE ASSESSEE ARE GEN ERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. 4. IN GROUND NO.2, THE ASSESSEE CHALLENGED THE CONF IRMATION OF ADDITION OF RS. 21,07,513/- BY THE CIT(A) REPRES ENTING THE AMOUNT RECEIVED AS SHAGUNS ON BEHALF OF THE ASSES SEE'S DAUGHTER MS. RADHIKA, AT THE TIME OF HER MARRIAGE. THE LD. 'AR' CONTENDED THAT THE PROVISIONS OF SECTION 56 CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE AS THE GIFTS WERE REC EIVED ON THE OCCASION OF MARRIAGE OF DAUGHTER OF THE ASSESSEE. HE REFERRED TO VARIOUS PAGES OF THE PAPER BOOK DEMONSTRATING THE D ATE OF MARRIAGE OF THE ASSESSEE'S DAUGHTER AS ALSO THE REC EIPT OF GIFTS FROM SOME NRI FRIENDS AND RELATIVES. 5. LD. 'DR', ON THE OTHER HAND, DEFENDED THE ORDERS OF THE LOWER AUTHORITIES AND CATEGORICALLY STATED THAT THE PROVISION OF SECTION 56(2)(VI) OF THE ACT ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND FOUND THAT THE AO MADE AN ADDITION OF RS.21,07,513/- ON ACCOUNT OF GIFTS RECEIVED FROM NR I RELATIVES AND FRIENDS ON THE OCCASION OF THE MARRIAGE OF ASSE SSEE'S 3 DAUGHTER. THE AO AFFORDED OPPORTUNITY TO THE ASSES SEE TO SHOW CAUSE AS TO WHY THE PROVISIONS OF SECTION 56(2)(VI) OF THE ACT MAY NOT BE INVOKED IN THE PRESENT CASE AS THE GIFTS HAVE BEEN RECEIVED BY THE ASSESSEE AND NOT BY THE DAUGHTER OF THE ASSESSEE. 7. IN PARA 2.3 OF THE ASSESSMENT ORDER, THE AO RECO RDED HIS CATEGORICAL FINDINGS ON THE ISSUE, WHICH ARE REPROD UCED HEREUNDER : 2.3 IN THE SUBMISSION THE COUNSEL HAS SUBMITTED TH AT THE GIFTS ON ACCOUNT OF DAUGHTERS MARRIAGE ARE NOT TO BE TREATED AS INCOME FROM OTHER SOURCES. AS PER SECTION MENTIO NED ABOVE, ANY SUM OF MONEY RECEIVED ON THE OCCASION OF THE MARRIAGE OF THE INDIVIDUAL IS NOT TO BE INCLUDED IN INCOME FROM OTHER SOURCES. HOWEVER, THIS AMOUNT HAS BEEN RECEIVED ON THE OCCASION OF ASSESSEE'S DAUGHTER MAR RIAGE AND NOT ON THE MARRIAGE OF THE ASSESSEE, THEREFORE IT IS TO BE TREATED AS INCOME FROM OTHER SOURCES OF THE ASSE SSEE. ALL THESE PAYMENTS HAVE BEEN RECEIVED THROUGH CHEQU ES AND CREDITED IN ASSESSEE'S ACCOUNT. THEREFORE THE AGGRE GATE GIFTS EXCEEDING RS.50,000/- ARE TO BE TREATED AS IN COME FROM OTHER SOURCES. HENCE RS.21,07,513/- IS ADDED T O THE RETURNED INCOME OF THE ASSESSEE. AS THE ASSESSEE HA S CONCEALED HIS INCOME, PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE INCOME-TAX ACT,1961 ARE ALSO BEING INITIATED. 8. A PERUSAL OF THE FINDINGS RECORDED BY THE AO CLE ARLY REVEALS THAT THE GIFTS HAVE BEEN RECEIVED BY THE AS SESSEE AND UTILIZED BY THE ASSESSEE. CONSEQUENTLY, LD. AO WAS OF THE OPINION THAT SUCH GIFTS WERE RECEIVED THROUGH CHEQU E AND CREDITED IN ASSESSEE'S ACCOUNT AND CONSEQUENTLY, TH E AGGREGATE GIFTS EXCEEDING RS.50,000/- WERE TREATED AS INCOME FROM OTHER SOURCES BY THE AO U/S 56 OF THE ACT. SUCH FINDINGS OF THE AO WERE UPHELD BY THE CIT(A). THE CIT(A) RECORDED THE FINDINGS 4 THAT THE CHEQUES WERE ISSUED IN THE NAME OF THE ASS ESSEE AND NOT IN FAVOUR OF THE INDIVIDUAL I.E. DAUGHTER OF TH E ASSESSEE, WHOSE MARRIAGE WAS SOLEMNIZED. THE LD. CIT(A) AFFO RDED FURTHER OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE TO E STABLISH HIS CASE TO THE EFFECT THAT THE DONORS WERE HAVING CRED IT WORTHINESS AND RELATIONS EXISTED BETWEEN THE DONOR AND DONEE. LD. CIT(A) FURTHER RECORDED THAT THE SUBMISSION MADE BY THE AS SESSEE IN THE MATTER IS PURELY STEREO TYPE AND DOES NOT PROVE HIS CASE. IT WAS FURTHER HIGHLIGHTED BY THE LD. CIT(A) THAT THE MONEY WAS NEVER TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE'S DAUGHTER. THE FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREU NDER : 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND MA TERIAL ON RECORD AND I AM INCLINED TO AGREE WITH THE LD. A O SINCE NONE OF THE CHEQUES ARE IN THE NAME OF THE DAUGHTER OF THE APPELLANT SMT.RADHIKA UPPAL. THE COUNSEL ARGUED TH AT THE SHOGUNS ARE NEVER GIVEN TO THE BRIDE BUT TO HER PAR ENTS TO WHICH I AGREE TO SOME EXTENT BUT THAT IS NORMALLY W HEN ONE ATTENDS A WEDDING, THE SHOGUNS ARE GIVEN TO THE PAR ENTS WHO RECEIVE THE GUESTS. BUT IF SOMEONE SENDS A CHEQ UE FOR THE BRIDE, LOGICALLY IT SHOULD BE IN HER NAME. 8. SECONDLY, I ASKED THE COUNSEL TO PRODUCE SOME SU CH EVIDENCE WHICH COULD CLINCH THE ISSUE IN HIS FAVOUR , FOR INSTANCE BANK ENTRIES/TRANSFER WHEREBY THE MONEY CR EDITED TO APPELLANTS BANK ACCOUNT WAS TRANSFERRED TO DAUGHTER/SPENT ON HER WEDDING-BASICALY I NEEDED THE UTILIZATION OF THESE AMOUNTS RECEIVED AND SECONDLY I HAD ASKED HIM TO GIVE A PROFILE OF THE APPELLANT, HIS L EVEL AND STATUS AND HIS RELATIONSHIP WITH THE DONORS. FOR EX AMPLE, HOW IS NANDINI CHOPRA RELATED TO THE APPELLANT WHO GIFTED 5100 USD. THE APPELLANT WAS ASKED TO PROVE THE SAME IN CASE OF THE FOLLOWING PERSONS : ORU BOSE 3100 USD BALDEV LAKHANPAL 3100 USD 5 AMAR J.KOHLI 2100 USD SUKH & BANI FARUKH 5100 USD MOHAN KRISHAN BAZAZ 3100 USD SARIN & NIMMI 5100 USD RAHUL MALHOTRA 5100 USD 9. THE APPELLANT WAS ASKED TO ELABORATE THE RELATIO NSHIP AND GIVE THE COPIES OF THEIR BANK ACCOUNTS FOR VERI FYING CREDIT WORTHINESS ETC., SINCE THE LETTERS FROM THE DONORS ARE STEREOTYPED REVEALING ONLY THE NAMES AND NOTHING EL SE REGARDING THE DONORS. 10. SINCE NO INFORMATION WAS GIVEN IN RESPONSE TO T HE QUERIES, I AM UNABLE TO ACCEPT THESE LETTERS-AN EXT RACT OF ONE OF WHICH READS AS UNDER : THANK YOU VERY MUCH FOR THE INVITATION FOR THE FOR THCOMING MARRIAGE OF YOUR DAUGHTER DEAR RADHIKA. IT IS OUR S TRONG DESIRE TO COME TO INDIA AND PERSONALLY ATTEND THE F UNCTION BUT SOME BUSINESS COMPULSIONS HOLD US BACK. PLEASE ACCEPT OUR HEARTIEST CONGRATULATIONS ON THIS EVENT AND OUR BEST WISHES FOR THE COUPLE. SINCE I AM NOT SURE OF RADHIKA HAVING A BANK ACCOUNT, I AM ENCLOSING A CAS HIERS CHECK FOR USD 5100/-(NO.012104) DATED 03.04.2006 IN YOUR NAME, THE AMOUNT OF WHICH YOU MAY KINDLY PASS ON TO HER. 11. IN VIEW OF THE ABOVE, I AGREE WITH THE FINDING OF THE AO THAT THE AMOUNTS ARE COVERED U/S 56 AND HAVE TO BE TREATED IN THE HANDS OF THE APPELLANT AS SUCH, THE ADDITION SO MADE IS THEREFORE, CONFIRMED, DISMISSING THIS GROUND OF APPELLANT. 9. A PERUSAL OF THE PROVISIONS OF SECTION 56(1) SUB -CLAUSE (VI) READ WITH SECOND PROVISO TO SECTION 56(1) SUB-CLAUS E (VII) CLEARLY REVEALS THAT THE PROVISIONS OF SECTION 56(1) SHALL NOT APPLY TO ANY SUM OF MONEY OR ANY PROPERTY RECEIVED (B) ON THE OCCASION OF THE MARRIAGE OF THE INDIVIDUAL. SUB-CL AUSE (B) OF THE SAID PROVISO CLEARLY CONTEMPLATES THE SUM OF MONEY OR ANY 6 PROPERTY RECEIVED BY THE INDIVIDUAL ON THE OCCASION OF HIS OR HER MARRIAGE. THE LANGUAGE OF THE EXPRESSION IS VERY SI MPLE AND CLEAR AND NO OTHER MEANING CAN BE ASSIGNED TO THE W ORD INDIVIDUAL APPEARING THEREIN. LD. 'AR' PLACED REL IANCE ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT V SHRI KRISHNA BHANDAR TRUST FOR THE PURPOSE OF MEANING OF THE WORD INDIVIDUAL. WE ARE OF THE CONSIDERED OPINION THA T THE RATIO OF THE HON'BLE CALCUTTA HIGH COURT IS NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE. THE HON'BLE HIGH COURT DEFINED T HE WORD INDIVIDUAL IN THE CONTEXT OF STATUS-INDIVIDUAL OR AOP IN THE CONTEXT OF PROVISIONS OF SECTION 2(31) & 164 OF THE ACT. THE WORD INDIVIDUAL USED BY THE LEGISLATURE UNDER CLA USE (B) OF THE SECOND PROVISO TO SECTION 56(1) OF THE ACT IS IN TH E SPECIFIC CONTEXT OF MARRIAGE OF THE INDIVIDUAL. THEREFORE, THE WORD INDIVIDUAL IN THE CONTEXT OF MARRIAGE CAN ONLY BE THE BRIDE OR THE BRIDEGROOM AND CANNOT INCLUDE GROUP OF INDIVIDU ALS. THE LEGISLATIVE INTENT CAN BE CLEARLY DISCERNIBLE FROM THE CONTEXT IN WHICH THE WORD INDIVIDUAL IS USED IN SUCH CLAUSE B. THUS, THE LEGISLATIVE INTENT IS CLEAR AND WORD INDIVIDUAL I NCLUDES ONLY THE INDIVIDUALS, WHOSE MARRIAGE IS SOLEMNIZED. THE LEG ISLATURE CONSCIOUSLY EMPLOYED DEFINITE ARTICLE THE AND NOT INDEFINITE ARTICLE A BEFORE THE WORD INDIVIDUAL IN CLAUSE B OF THE SAID PROVISO, WHICH MEANS THE SPECIFIC INDIVIDUAL. TH US, THE LEGISLATIVE INTENT IS CLEAR IN MEANING, CONTENT AND TEXT OF THE WORD INDIVIDUAL. IT IS SETTLED LAW OF INTERPRETAT ION OF STATUTE THAT PRIMACY IS TO BE GIVEN TO THE TEXT IN WHICH TH E INTENTION OF THE LAW-GIVER HAS BEEN EXPRESSED. IN VIEW OF THIS, THE CASE LAW RELIED UPON BY THE LD. 'AR' DOES NOT SUPPORT HIS C ONTENTION. 7 THE ASSESSEE HAS FAILED TO DEMONSTRATE NON-APPLICAB ILITY OF THE PROVISION OF SECTION 56(1)(VI) READ WITH SECOND PRO VISO THEREUNDER. FURTHER, ROUTING TRANSACTION THROUGH BA NKING CHANNEL REPRESENTS MERELY MOVEMENT OF FUNDS AND NOT THE GENUINENESS OF TRANSACTIONS, AS HELD BY THE APEX CO URT IN VARIOUS DECISIONS. IT IS ALSO UNDISPUTED FACT, AS R ECORDED BY THE AO, WHICH REMAINED UNREBUTTED THAT THE IMPUGNED GIF TS CHEQUES WERE IN THE NAME OF THE ASSESSEE AND NOT IN THE NAME OF THE ASSESSEE'S DAUGHTER, WHOSE MARRIAGE WAS SOLE MNIZED AND THE QUANTUM OF SUCH GIFTS WERE CREDITED BY THE ASSE SSEE TO HIS BANK ACCOUNT. IT IS ALSO A FACT THAT THE SUM OF MO NEY RECEIVED BY THE ASSESSEE WERE NOT TRANSFERRED TO THE BANK AC COUNT OF HIS DAUGHTER, WHOSE MARRIAGE WAS SOLEMNIZED. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSIONS AND CLEAR FINDINGS OF THE LOWER AUTHORITIES, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE CIT(A) AND, HENCE, THE SAME ARE UPHELD. THIS GROUN D OF APPEAL OF THE ASSESSEE IS DISMISSED. 10. IN GROUND NO.2, THE ASSESSEE CONTENDED THAT CIT (A) GRAVELY ERRED IN SUSTAINING THE ADDITION OF RS.5,50 ,000/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES, ATTRIBUTED T O THE PERSONAL ELEMENT EMBEDDED THEREIN. THE AO ESTIMATED FOREIGN TRAVEL EXPENSES, AT RS.50,000/-, PER TRIP AND ACCORDINGLY, FOR 11 TRIPS, SUCH EXPENDITURE WAS COMPUTED AT RS.5,50,000/-. TH E AO MADE AN ADDITION OF SUCH FOREIGN TRAVEL EXPENSES AT TRIBUTING THE SAME FOR PERSONAL USE BY THE ASSESSEE. LD. CIT(A) UPHELD THE FINDINGS OF THE AO. 11. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND FOUND THAT REVENUE HAS FAILED TO BRING ANY RELEVANT 8 AND COGENT MATERIAL ON RECORD INDICATING PERSONAL E LEMENT IN THE EXPENSES INCURRED BY THE ASSESSEE ON FOREIGN TR AVEL. THE AO MERELY PROCEEDED ON THE BASIS OF ASSUMPTIONS AND MA DE AN ESTIMATE WITHOUT FOUNDATION OF ANY MATERIAL BROUGHT ON RECORD. IN VIEW OF THIS, SUCH FINDINGS OF THE AO AS CONFIRM ED BY THE CIT(A), CANNOT BE UPHELD. THEREFORE, THE ASSESSEE SUCCEEDS IN THIS GROUND OF APPEAL. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JAN.,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 TH JAN.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH