ITO, New Delhi V. Smt. Nayana Gupta, New Delhi

ITA 6200/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2878 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Gift; Salary income; Accommodation entries; Sham transactions; Revised return
• Section: 143(3); 54F; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6200/DEL /2014 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER, WARD 30(2), NEW DELHI. VS S MT. NAYANA GUTPA, 4741/23, ANSARI ROAD, DARYA GANJ, NEW DELHI. (PAN: AAFG5083Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R. SENAPATI, SR. DR RESPONDENT BY : SHRI SALIL AGGARWAL, ADV. SHRI MADHUR AGARWAL, ADV. SHRI SHAILESH GUPTA. ADV. DATE OF HEARING : 31.01.2018 DATE OF PRONOUNCEMENT: 21.03.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL IS PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 1.8.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-XXV, NEW DELHI FOR ASSESSMENT YEAR 2010-11 WHEREIN, VIDE THE IMPUGNED ORDER, THE LD. COMMISSIONER OF INCOME TAX(A) HAS DELETED THE ADDITIONS PERTAINING RECEIPTS ON ACCOUN T OF ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 2 SALE OF JEWELLERY AND ALLEGED COMMISSION PAID ON ACCOMMODATION ENTRIES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM SALARY AS A DIRE CTOR IN M/S BONIA INDUSTRIES P. LTD. SHE WAS ALSO IN RE CEIPT OF INCOME FROM INTEREST AND CAPITAL GAINS ON ACCOUN T OF SALE OF JEWELLERY DURING THE RELEVANT ASSESSMENT YE AR. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS. 2,51,41,330/- INCLUDING CAPITAL GAINS OF RS. 2,88,93,000/- DERIVED FROM SALE OF JEWELLERY. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN DEC LARING TOTAL TAXABLE INCOME OF RS. 12,48,330/-. THE ASSES SEES CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAD EARNED TAXABLE LONG TERM CAPI TAL GAINS ON SALE OF JEWELLERY AMOUNTING TO RS. 3,08,98 ,000/- THE INDEXED COST OF WHICH WAS CLAIMED AT RS. 20,05, 000/- AND EXEMPTION U/S 54EC OF THE ACT AMOUNTING TO RS,. 50,00,000/- WAS CLAIMED THEREON. LATER ON, THE ASS ESSEE REALISED THAT THE EXEMPTION IN TERMS OF PROVISIONS OF SECTION 54F OF THE ACT WAS ALLOWABLE FOR AMOUNT INV ESTED ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 3 IN THE NEW RESIDENTIAL PROPERTY WHICH HAD NOT BEEN CLAIMED IN THE ORIGINAL RETURN OF INCOME. THE REVI SED RETURN WAS FILED CLAIMING SAID EXEMPTION AND DECLAR ING THE TAXABLE INCOME AT RS. 12,48,330/-. THE ASSESSI NG OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ASSESSING THE INCOME OF THE ASSESSEE AT RS. 3,27,64,290/- AFTER ADDING THE SALE PROCEEDS OF JEW ELLERY AS UNEXPLAINED INCOME OF THE ASSESSEE AND ALSO MAKI NG AN ADDITION OF RS. 6,17,960/- ON ACCOUNT OF COMMISS ION. IT WAS THE OPINION OF THE ASSESSING OFFICER THAT TH E ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY, GENU INENESS AND CREDITWORTHINESS OF THE PARTIES TO WHOM THE JEW ELLERY HAD BEEN SOLD LEADING TO THE CONCLUSION THAT TRANSA CTIONS OF SALE OF JEWELLERY WERE SHAM AND ENTERED INTO WIT H THE ACCOMMODATION ENTRY OPERATORS BY PAYING CASH AND THEREAFTER AVOIDING TAX. THE ASSESSING OFFICER LIS TED OUT AS MANY AS 35 REASONS IN THE ASSESSMENT ORDER FOR DISBELIEVING THE CLAIM OF THE ASSESSEE REGARDING SA LE OF JEWELLERY. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. COMMISSIONER OF INCOME TAX(A) WHO HELD THAT THE ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 4 ASSESSEE HAD SUCCESSFULLY DISCHARGED THE ONUS OF TH E PROOF OF RECEIPT OF RS. 3,08,98,000/- AND THAT THE ASSESSING OFFICER COULD NOT SUBSTANTIATE THE ALLEGA TION THAT THE ASSESSEE HAD PAID IN CASH IN LIEU OF THE PAYMENTS RECEIVED THROUGH THE NORMAL BANKING CHANNE LS. THE LD. CIT (A) PROCEEDED TO DELETE THE ADDITION OF RS. 3,08,98,000/- ALONG WITH THE ADDITION OF RS. 6,17,9 60/- ALLEGED TO HAVE BEEN MADE TOWARDS COMMISSION PAID @ 2% OF THE TRANSACTION VALUE. 2.3 NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHALLENGED BOTH THE DELETIONS BY THE LD. COMMISSIONER OF INCOME TAX (A). 3. THE LD. SR. DR READ OUT EXTENSIVELY FROM THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSEE HA D CLAIMED TO HAVE RECEIVED THE JEWELLERY AS HAVING BE EN GIFTED BY HER MOTHER-IN-LAW BUT EARLIER IT WAS SUBM ITTED BEFORE THE ASSESSING OFFICER THAT JEWELLERY HAD BEE N GIFTED BY HER MOTHER AND THUS THE STATEMENTS BEFORE THE ASSESSING OFFICER WERE CONTRADICTORY. IT WAS ALSO SUBMITTED THAT THE GIFT DEED OF THE JEWELLERY WAS E XECUTED ON PLAIN PAPER AND IT WAS UNREGISTERED. IT WAS ALS O ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 5 SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO SUBSTAN TIATE THE PURCHASE OF THE JEWELLERY BY THE DONOR I.E. THE MOTHER-IN-LAW. IT WAS FURTHER SUBMITTED THAT INSPE CTOR OF INCOME TAX WAS DEPUTED TO VISIT THE PREMISES OF THE BUYERS OF THE JEWELLERY NAMELY M/S SARTHAK ENTERPRI SES AND M/S P.C. ENTERPRISES WHO WERE NOT FOUND AT THE ADDRESS PROVIDED. THE LD. SR. DR ALSO SUBMITTED TH AT THE ASSESSING OFFICER HAD PROCEEDED TO GET THE SUMM ONS ISSUED U/S 131 OF THE ACT SERVED THROUGH THE POLICE STATION TO THE TWO ALLEGED PURCHASERS OF JEWELLERY BUT EVEN THE POLICE STATION REPORTED TO THE ASSESSING O FFICER THAT NO SUCH CONCERN/S EXISTED AT THE GIVEN ADDRESS . THE LD. SR. DR ALSO SUBMITTED THAT EVEN THOUGH NOTI CES COULD NOT BE SERVED ON THE PARTIES, THE ASSESSEE OB TAINED CONFIRMATION FROM THE PARTIES WHICH RAISED SERIOUS DOUBTS ON THE BONA FIDES OF THE ASSESSEE. THE LD. SR. DR ALSO HIGHLIGHTED THE FACT THAT THE ASSESSEE HAD FUR NISHED COPY OF VAT REGISTRATION CERTIFICATE OF THE PURCHAS ERS OF THE JEWELLERY WITHOUT HAVING OBTAINED THEM FROM THE VAT DEPARTMENT AND THIS ALSO HIGHLIGHTED THE FACT THAT THE ASSESSEE AND THE PURCHASERS HAD CONNIVED TO FURNISH ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 6 FABRICATED DOCUMENTS. THE LD. SR. DR VEHEMENTLY ARGUED THAT THE TRANSACTIONS ENTERED INTO BY THE AS SESSEE WERE SHAM TRANSACTIONS WITH THE ULTERIOR MOTIVE TO CONVERT ILL GOTTEN INCOME INTO GENUINE INVESTMENT. THE LD. SR. DR ALSO SUBMITTED THAT THE ASSESSEE COULD N OT SUBSTANTIATE THE EXCESSIVE PRICE AT WHICH THE JEWEL LERY WAS SOLD BY THE ASSESSEE. PLACING RELIANCE ON THE FINDINGS OF THE ASSESSING OFFICER, THE LD. SR. DR SUBMITTED THAT THE IMPUGNED ORDER SHOULD BE SET ASI DE AND ADDITIONS MADE BY THE ASSESSING OFFICER BE REST ORED. 4. IN RESPONSE, THE LD. AR SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE DULY PRODUCED BEFORE THE ASSESSING OF FICER AND THE ENTRIES PERTAINING TO SALE OF JEWELLERY WER E ROUTED THROUGH THE BANKING CHANNELS AND WERE ALSO ENTERED IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD NOT BROUGH T ON RECORD ANY MATERIAL TO ESTABLISH THAT THE ASSESSEE HAD ACTUALLY PAID ANY CASH TO THE BUYERS OF THE JEWELLE RY IN LIEU OF THE ALLEGED ACCOMMODATION ENTRIES AND THE CHEQUES DEPOSITED BY HER IN HER ACCOUNT AND CLAIMED BY HER AS SALE PROCEEDS OF JEWELLERY. IT WAS FURTHER ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 7 SUBMITTED THAT THE ASSESSEE HAD DISCHARGED THE INIT IAL ONUS BY SUBMITTING COPIES OF CORRESPONDENCE AND SUPPORTING DOCUMENTS BEFORE THE ASSESSING OFFICER A ND THEREAFTER THE ONUS HAD SHIFTED TO THE DEPARTMENT T O ESTABLISH, BY COGENT EVIDENCE, THAT THE TRANSACTION S WERE NOT GENUINE IF THE DEPARTMENT WAS MAKING SUCH A CLA IM. IT WAS ALSO SUBMITTED THAT THERE WERE NO CASH DEPOS ITS IN THE BANK ACCOUNT OF THE BUYERS OF JEWELLERY BEFORE MAKING ANY PAYMENT TO THE ASSESSEE. THE LD. AR ALS O SUBMITTED THAT THE INSPECTOR HAD MADE THE VISIT AT WRONG ADDRESSES WHICH WERE NOT THE ADDRESSES PROVIDED IN THE PURCHASE INVOICES ISSUED BY THE TWO PARTIES BUT THE ASSESSING OFFICER DREW AN ADVERSE INFERENCE AGAINST THE ASSESSEE ONLY ON THE BASIS OF THE WRONG REPORT OF T HE INSPECTOR. IT WAS ALSO SUBMITTED THAT AS PER PROVI SIONS OF SECTION 17 OF REGISTRATION ACT 1908, THERE WAS N O LEGAL REQUIREMENT TO REGISTER A GIFT DEED OF ANY MOVEABLE PROPERTY AND, THEREFORE, THE ADVERSE INFERENCE DRAW N BY THE ASSESSING OFFICER IN THIS REGARD WAS ALSO UNJUS TIFIED. IT WAS ALSO SUBMITTED THAT THE ITEMS OF JEWELLERY G IFTED BY THE MOTHER-IN-LAW OF THE ASSESSEE WERE DULY DISCLOS ED ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 8 AND DECLARED BY THE MOTHER-IN-LAW OF THE ASSESSEE S MT. KRISHNA DEVI IN HER WEALTH TAX RETURNS FILED IN THE REGULAR COURSE PRIOR TO THE MAKING OF GIFT TO THE A SSESSEE AND, THEREFORE, THE AVAILABILITY OF JEWELLERY ITEMS IN THE HANDS OF THE MOTHER-IN-LAW WAS AN UNDISPUTED FACT. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD DULY DISCHAR GED THE ONUS OF PROVING THE SOURCE OF CREDIT, THE GENUI NENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE JEWELLERY BUYING FIRMS WHICH HELD SUBSTANTIAL BALAN CES IN THEIR BANK ACCOUNTS. IT WAS ALSO SUBMITTED THAT SI NCE THE TRANSACTIONS OF SALE OF JEWELLERY WERE GENUINE, THE ADDITION ON ACCOUNT OF ALLEGED COMMISSION PAID FOR OBTAINING THE ALLEGED ACCOMMODATION ENTRY ALSO WOUL D NOT STAND. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FA CTS IN THE CASE ARE:- I) THE SOURCE OF ACQUISITION OF JEWELLERY IN THE HANDS OF SMT. KRISHNA DEVI, THE MOTHER-IN-LAW OF THE ASSESSEE, IS FULLY EXPLAINED AS THE JEWELLERY WAS FULLY DISCLOSED BY HER IN HER ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 9 WEALTH TAX RETURN PRIOR TO THE GIFT GIVEN BY HER TO THE ASSESSEE. II) THE TRANSACTIONS OF SALE OF JEWELLERY WAS MADE BETWEEN 16.09.2009 TO 28.09.2009 AND BOTH THE BUYERS NAMELY M/S SARTHAK ENTERPRISES AND M/S P.C. ENTERPRISES HAD TAKEN DELIVERY OF THE ITEMS OF JEWELLERY FROM THE ASSESSEE ONLY AFTER THE PAYMENTS GIVEN BY THEM IN CONSIDERATION OF THE JEWELLERY PURCHASES WERE DULY REALIZED IN THE BANK ACCOUNT OF THE ASSESSEE EITHER BY ACCOUNT PAYEE CHEQUE OR RTGS. III) THE SALE PROCEEDS OF THE JEWELLERY WERE RECEIVED BY THE ASSESSEE THROUGH NORMAL BANKING CHANNELS. IV) THERE IS NO FINDING OF ANY CASH HAVING BEEN DEPOSITED IN THE BANK ACCOUNT OF THE TWO BUYERS NAMELY M/S SARTHAK ENTERPRISES AND M/S P.C. ENTERPRISES PRIOR TO THE ISSUANCE OF ACCOUNT PAYEE CHEQUES OR RTGS TO THE ASSESSEE. V) CONFIRMATION LETTERS WERE FILED BY THE BUYERS AFTER THE COMPLETION OF THE TRANSACTIONS. ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 10 VI) THE BANK STATEMENT OF THE ASSESSEE DULY REFLECTS THE RECEIPT OF SALE PROCEEDS THROUGH THE ACCOUNT PAYEE CHEQUES/RTGS. VII) THE BANK STATEMENTS OF THE BUYER BEAR COMPLETE ADDRESSES OF THE JEWELLERY BUYING FIRMS AND THE ADDRESSES GIVEN ON THE BANK STATEMENTS ARE THE SAME AS THE ADDRESSES GIVEN BY BOTH THE PARTIES IN THEIR INVOICES AND CONFIRMATIONS. VIII) THE INSPECTORS OF INCOME TAX DEPUTED TO VISIT THE PREMISES OF THE BUYERS MADE THEIR VISITS AT ADDRESSES NOT GIVEN IN THE PURCHASE INVOICES ISSUED BY THE BUYING FIRMS. 5.1 HOWEVER, EVEN IN LIGHT OF THESE UNDISPUTED FACT S, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSE E OF HAVING EARNED INCOME FROM LONG TERM CAPITAL GAINS. A PERUSAL OF THE ORDER OF ASSESSMENT SHOWS THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFF ICER TO SHOW THAT THE ASSESSEE HAD ACTUALLY PAID ANY CAS H TO THE BUYERS OF THE JEWELLERY IN LIEU OF THE ALLEGED ACCOMMODATION ENTRY CHEQUES DEPOSITED BY HER IN HER BANK ACCOUNT AND CLAIMED BY HER AS SALE PROCEEDS OF THE ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 11 JEWELLERY SOLD BY HER. IT IS SETTLED LAW THAT ONCE THE PRIMARY ONUS HAS BEEN DISCHARGED BY THE ASSESSEE BY PROVIDING EVIDENCE IN SUPPORT OF A CLAIM, THE ONUS SHIFTS ON THE REVENUE TO DISPROVE THE SAME BY COGENT EVIDE NCE. THIS WAS NOT SO DONE BY THE ASSESSING OFFICER IN TH E PRESENT CASE AND THE ASSESSING OFFICER PROCEEDED TO DISBELIEVE THE CLAIM OF THE ASSESSEE MERELY ON THE BASIS OF SUSPICION AND SURMISES. IN THE PRESENT CASE, IT IS UNDISPUTED THAT THE JEWELLERY BELONGED TO THE ASSES SEES MOTHER-IN-LAW AS THE SAME WAS DULY DISCLOSED IN HER WEALTH TAX RETURNS AND THE ASSESSING OFFICER HAS NO T DOUBTED THE VERACITY OF THE WEALTH TAX RETURNS. TH E GIFT FROM THE MOTHER-IN-LAW TO THE ASSESSEE IS FULLY EVI DENCED BY A GIFT DEED BUT THE ASSESSING OFFICER HAS CHOSEN TO DISREGARD IT ONLY ON THE GROUND THAT THE GIFT DEED WAS NOT REGISTERED AND WAS NOT ON A NON-JUDICIAL STAMP PAPE R. WE AGREE WITH THE CONTENTIONS OF THE LD. AR IN THIS REGARD THAT SECTION 17 OF THE REGISTRATION ACT, 190 8 DOES NOT REQUIRE REGISTRATION OF GIFT DEED WITH RESPECT TO MOVEABLE PROPERTY AND, THEREFORE, THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN IGNORING THE GIFT DEED. FURTH ER, THE ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 12 SALE OF JEWELLERY BY THE ASSESSEE IS DULY ESTABLISH ED BY THE PURCHASE INVOICES AND THE CONFIRMATION OF THE BUYERS. THE SALE CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHANNELS AND THERE IS NO FINDING TH AT ANY CASH HAD BEEN DEPOSITED IN THE BANK ACCOUNT/S O F THE BUYER/S PRIOR TO THE ISSUANCE OF THE CHEQUES/RT GS TO THE ASSESSEE AS SALES CONSIDERATION. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ALSO NOTED THAT THE BANK ACCOUNTS OF BOTH THE BUYERS WERE RUNNING ACCOU NTS HAVING SUBSTANTIAL TRANSACTIONS AND SUBSTANTIAL BAN K BALANCES. THEREFORE, IN LIGHT OF THESE FACTS, WE A GREE WITH THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (A) THAT THE ASSESSEE HAD SUCCESSFULLY DISCHARGED T HE ONUS OF PROVING THE SOURCE OF RECEIPT OF RS. 3,08,98,000/- AND THERE WAS NO MATERIAL ON RECORD O N THE BASIS OF WHICH IT COULD BE SUGGESTED THAT THE ASSESSEE HAD PAID IN CASH IN VIEW OF RECEIVING THES E PAYMENTS THROUGH THE NORMAL BANKING CHANNELS. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH TH E FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (A) IN ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 13 THIS REGARD AND WE DISMISS GROUND NO. 1 RAISED BY T HE DEPARTMENT IN THIS REGARD. 5.2 GROUND NO. 2 CHALLENGES THE DELETION OF ADDITIO N OF RS. 6,17,960/- ON ACCOUNT OF ALLEGED COMMISSION PAI D ON THE ACCOMMODATION ENTRY. AS WE HAVE ALREADY UPHELD THE ADJUDICATION OF THE LD. COMMISSIONER OF INCOME TAX (A) THAT THE IMPUGNED TRANSACTION OF RS. 3,08,98,00 0/- WAS NOT AN ACCOMMODATION ENTRY, THIS ISSUE ALSO DOE S NOT SURVIVE AND WE DISMISS GROUND NO. 2 OF THE DEPARTMENTS APPEAL. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT STAN DS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.0 3.2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 21 ST MARCH, 2018 GS ITA NO. 6200/DEL/2014 ASSESSMENT YEAR 2010-11 14 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR