REEMA DEVEN SHETH, MUMBAI V. ITO WD 17(2)(3), MUMBAI

ITA 5895/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3876 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2011
• Court: TRIBUNAL
• Department Lawyers: R M MADHAVI
• Keywords: Gift; Opportunity of being heard; Principle of natural justice
• Section: 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO.5895/M/2011 (ASSESSMENT YEAR: 2008 - 2009 ) C.O. NO.175/M/2012 (ARISING OUT OF ITA NO.6707/M/11) (AY 2008 - 2009 ) SMT. REEMA DEVA N SHETH, 5/578 - A, JAME JAMSHED ROAD, MATUNGA, MUMBAI - 400 019. / VS. INCOME TAX OFFICER, WARD - 17(2)(3), 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. ./ PAN : AAJPS2199F ( / APPELLANT) .. ( / RESPONDENT ) ITA NO.6707/M/11 (AY 2008 - 2009 ) INCOME TAX OFFICER, WARD - 17(2)(3), 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. / VS. SMT. REEMA DEVEN SHETH, 5/578 - A, JAME JAMSHED ROAD, MATUNGA, MUMBAI - 400 019. ./ PAN : AAJPS2199F ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI RAKESH JOSHI / REVENUE BY : SHRI R.M. MADHAVI, DR / DATE OF HEARING : 14.01.2016 / DATE OF PRONOUNCEMENT : 17 .02.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS AND ONE CROSS OBJECTION (CO) UNDER CONSIDERATION FOR THE AY 2008 - 2009. OUT OF THEM, APPEAL ITA NO.5895/M/2011 AND C.O. NO.175/M/2012 ARE FILED BY THE ASSESSEE AND ITA NO.6707/M/2011 IS FILED BY THE REVENUE. SINCE, THE ISSUES RAISED IN ALL THE APPEALS ARE INTER - CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN 2 THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. AT THE OUTSET, SHR I RAKESH JOSHI, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE C.O. NO.175/M/2012 FILED BY THE ASSESSEE AND SUBMITTED THAT THE SAME IS NOT PRESSED. ACCORDINGLY, THE SAID CO IS DISMISSED AS NOT PRESSED . CROSS APPEALS FOR THE AY 2008 - 2009 I. ITA NO.5895/M/2011 (BY ASSESSEE) 3. THIS APPEAL FILED BY THE ASSESSEE ON 23.8.2011 IS AGAINST THE ORDER OF THE CIT (A) - 29, MUMBAI DATED 14.7.2011 FOR THE ASSESSMENT YEAR 2008 - 09. 4. IN THIS APPEAL, ASSESSEE IS AGGRIEVED AGAINST THE ADDITION OF RS. 9 LAKHS C ONFIRMED BY THE CIT (A) IN THE FIRST APPELLATE PROCEEDINGS. GIVING BRIEF FACTS OF THIS ISSUE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A TENANT IN A PROPERTY. IN THIS CONNECTION, ASSESSEE PAID SECURITY DEPOSIT OF RS. 29 LAKHS TO THE LAN D LORD. THE PAYMENT DETAILS ARE MENTIONED IN PARAS 5.4 AND 5.5 OF THE IMPUGNED ORDER. OTHERWISE, IT IS AN UNDISPUTED FACT THA T THE SAID DEPOSITS ARE GIVEN B Y THE ASSESSEE ON 19.5.200; 01.6.2000 AND 05.03.2002 AMOUNTING TO RS. 17 LAKHS. SUBSEQUENTLY, A SU M OF RS. 12 LAKHS WAS ALSO PAID TO THE LAND LORD ON 31.3.2008. TOTAL OF SUCH DEPOSITS AMOUNT TO RS. 29 LAKHS. OUT OF THE SAID AMOUNT OF RS. 29 LAKHS, ASSESSEE RECEIVED THE REFUND OF THE SAID DEPOSIT TOTALLING TO RS. 9 LAKHS ON TWO DIFFERENT DATES IE RS. 5 LAKHS WAS RECEIVED ON 4.7.2005 AND RS. 4 LAKHS WAS RECEIVED ON 5.5.2004. THE CONTENTS OF PAGES 30, 45 AND 46 OF THE PAPER BOOK ARE RELEVANT IN THIS REGARD. FURTHER, IT IS MENTIONED THAT THE REVISED BALANCE SHEET FILED BY THE ASSESSEE PLACED AT PAGE 39 OF THE PAPER BOOK SHOWS THE NET RECEIVABLE OF RS. 20 LAKHS FROM THE LAND LORD IE SHRI MILIND A SHAH . HE ALSO MENTIONED THAT CONSIDERING THE DATES OF THE RECEIPTS OF THE AMOUNT OF RS. 9 LAKHS, THE SAID AMOUNT SHOULD HAVE BEEN TAXED IN THE AY 2005 - 06 AND N OT IN THE AY 2009 - 2010 UNDER CONSIDERATION. BRINGING OUR ATTENTION TO THE ORDER OF THE CIT (A) ON THIS ISSUE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS. 9 LAKHS IN THE YEAR UNDER 3 CONSIDERATION IS NOT SUSTAINABLE. THEREFORE, ORDER OF T HE CIT (A) ON THIS ISSUE REQUIRES TO BE SET ASIDE. ALTERNATIVELY, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION CONSIDERING THE ALLEGATION THAT THE SAID AMOUNT CONSTITUTES RENTAL SECURIT Y DEPOSITS AND ALSO THE STATEMENT GIVEN BY SHRI MILIND A SHAH IN THE FIRST ROUND OF THE ASSESSMENT PROCEEDINGS. LD COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE CROSS EXAMINATION OF SHRI MILIND A SHAH WAS NOT PROVIDED BY THE REVENUE BEFORE USING THE SA ME AGAINST THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND, THE MATTER REQUIRES DEEP ANALYSIS OF THE FACTS. THE RE IS NO DISPUTE ON THE FACT THAT SUM OF RS. 29 LAKHS WAS PAID BY THE ASSESSEE TO SHRI MILIND A SHAH AND A SUM OF RS. 9 LAKHS WAS REFUNDED BY MR. MILIND A SHAH TO THE ASSESSEE. WE DO NOT UNDERSTAND AS TO HOW THE SAID RS. 9 LAKHS WAS REFUNDED WHILE THE ASS ESSEE CONTINUES TO BE THE TENANT OF MR. MILIND A SHAH. USUALLY, THE SECURITY DEPOSITS ARE REFUNDED AT THE EXPIRY OF THE TENANCY OR AT THE TIME OF VACATION OF THE PROPERTY. AO IS REQUIRED TO LOOK INTO ALL THESE ASPECTS DURING THE SET ASIDE PROCEEDINGS. A CCORDINGLY, AO IS DIRECTED TO EXAMINE T H E A B O V E A N D T H E Y E A R O F A S S E S S I N G T H E S A I D R E C E I P T S AND ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATIST ICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.6707/M/2011 (BY REVENUE) 7. THIS APPEAL FILED BY THE REVENUE ON 5.10.2011 IS AGAINST THE ORDER OF THE CIT (A) - 29, MUMBAI DATED 14.7.2011. 8. IN THIS APPEAL, REVENUE RAISED A GROUND ORIGINALLY STATING THAT THE PROVISIONS OF SECTION 56(2)(VI) OF THE ACT PROVIDE IMMUNITY FROM TAXING THE GIFT GIVEN BY MR. PRABODH KIRTILAL MEHTA, THE ASSESSEES MOTHERS SISTERS HUSBAND. BEFORE US, O N 4 FINDING THE M ISTAKE IN THE GROUND, LD DR STATED THAT THE REVENUE IS GOING TO FILE AN ADDITIONAL GROUND RECTIFYING THE MISTAKE CREPT IN THE ORIGINAL GROUND. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RECEIVED A GIFT OF US $ 225,000 FROM SHRI CHETAN PRABODH MEHTA S/O. PRABHOD K MEHTA, WHO IS THE HUSBAND OF ASSESSEES MOTHERS SISTER. BRINGING OUR ATTENTION TO PAGES 1, 2 AND 3 OF THE PAPER BOOK, LD DR MENTIONED THAT THE DONOR IS SHRI CHETAN PRABODH MEHTA AND NOT MR. PRABHOD K MEHTA, THE FATHER OF MR. CHETAN PRABODH MEHTA. IN THIS REGARD, BRINGING OUR ATTENTION TO PAGE 3 OF THE PAPER BOOK (MEMORANDUM OF GIFT), LD DR READ THE FOLLOWING: - WHEREAS THE SAID CHETAN WAS THE ABSOLUTE OWNER, INTER ALIA OF AN AMOUNT OF US DOLLAR 2,25,000 (TWO LACS TWEN TY FIVE THOUSAND) WHICH IS HIS SELF ACQUIRED PROPERTY. 9. FURTHER, READING THE CONTENTS OF THE SAID MEMORANDUM OF GIFT, LD DR MENTIONED THAT IT IS THE CHETAN PRABODH MEHTA, WHO GAVE A GIFT TO THE ASSESSEE OUT OF LOVE AND AFFECTION. REFERRING TO THE RO LE OF MR. PRABHOD K MEHTA, LD DR MENTIONED THAT HIS ROLE IS RESTRICTED TO THE DECLARATION / CONFIRMATION OF THE GIFT GIVEN HIS SON MR. CHETAN PRABODH MEHTA. ON THESE FACTS, LD DR CONCLUDED THAT MR. CHETAN PRABODH MEHTA IS THE DONOR AND NOT MR. PRABHOD K M EHTA. IN THIS CASE, MR. CHETAN PRABODH MEHTA IS OUTSIDE THE DEFINITION OF THE EXPRESSION RELATIVES AS EXPLAINED BY THE STATUTE IN THE EXPLANATION TO CLAUSE (VI) TO SECTION 56(2) OF THE ACT. BRINGING OUR ATTENTION TO ITEM NOS. (VI) AND (VII), LD DR SUBMI TTED THAT ONLY THE SPOUSE OF THE ASSESSEES SISTER IS ALONE COVERED AND NOT THE BROTHER OF MR. PRABHOD K MEHTA IN THIS CASE. HOWEVER, THE CASE OF THE REVENUE IS THAT MR. PRABHOD K MEHTA IS THE DONOR OF THE GIFT. FOR THIS PROPOSITION, HE RELIED ON THE CON TENTS OF PAGE 1 (DECLARATION OF MR. PRABODH K MEHTA) AND PAGE 2 (AFFIDAVIT CUM DECLARATION) OF THE PAPER BOOK. IT IS ALSO ARGUED BY THE LD COUNSEL FOR THE ASSESSEE THAT THE REVENUE CANNOT RAISE ANY ADDITIONAL GROUND AT THIS POINT OF TIME. 10. AFTER HEARI NG BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, WE FIND, THE REVENUE DID NOT FILE ANY ADDITIONAL GROUND AS STATED BEFORE US BY THE LD DR IN THIS REGARD. 5 AFTER CONSIDERING THE F ACTUAL MATRIX OF THE CASE AS WELL AS OUR ADJUDICATION GIVEN ON THE ASSESSEES APPEAL IN THE ABOVE PARAGRAPHS OF THIS ORDER, WHEREIN WE REMAND THE MATTER TO THE FILE OF THE AO AND ALSO KEEPING IN VIEW THE REVENUES FAILURE TO FILE ADDITIONAL GROUND, WE REM AND THE MATTER TO THE FILE OF THE AO TO EXAMINE AND ADJUDICATE THE ISSUE AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLE OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR ST ATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 12. CONCLUSIVELY, BOTH THE CROSS APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES AND THE CO RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 T H FEBRUARY, 2016. S D / - S D / - ( SANDEEP GOSAIN ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 7 .2.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI