Heenaben Hitendrabhai Nanavati, Surat V. The ACIT, Circle-6 , Surat

ITA 629/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1993 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 09-02-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Gift; Onus to prove; Set aside
• Section: 143(3); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI MAHAVIR SINGH, JM AND A. N. PAHUJA, AM) ITA NO. 629/AHD/2007 A. Y.: 2001-02 HEENABEN HITENBHAI NANAVATI, PROP. M/S. SURAT TYRES. PUSJP JYOT SHOPPING CENTRE, N. H. NO.8, KADODRA CHAR RASTA, SURAT PA NO. -- VS THE A. C. I. T., CIRCLE-6 ROOM NO.218, AAYAKAR BHAVAN, OPP. NEW CIVIL HOSPITAL, MAJURA GATE, SURAT 395 001 (APPELLANT) (RESPONDENT) ITA NO. 630/AHD/2007 A.Y. 2001-02 SONADLBEN DIPAKBHAI NANAVATI, PROP. KADODARA TYRES SALES & SERVICES, LAKDAWALA SHOPPING CENTRE, N. H. NO.8, KADODRA CHAR RASTA, SURAT PA NO. -- VS THE A. C. I. T., CIRCLE-6 ROOM NO.218, AAYAKAR BHAVAN, OPP. NEW CIVIL HOSPITAL, MAJURA GATE, SURAT 395 001 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. J. SHAH, AR RESPONDENT BY SMT. NEETA SHAH, DR DATE OF ORDER RESERVED:10/12/2009 O R D E R PER MAHAVIR SINGH: THESE TWO APPEALS BY DIFFERENT ASSESSEES ARE ARISING OUT OF THE ORDERS OF THE LEARNED CIT(A)-IV, SURAT IN APPEAL NOS.CAS- IV/251-252/2005-06 OF EVEN DATE 20-11-2006. THE ASS ESSMENT WAS FRAMED BY THE ACIT, CIRCLE-6, SURAT U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 2 (HEREINAFTER REFERRED TO AS THE ACT.) FOR BOTH TH E CASES FOR ASSESSMENT YEAR 2001-02. 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF THE A SSESSEE IS AS REGARDS JURISDICTION I.E. THAT NO NOTICE U/S 143(2) OF THE ACT WAS SERVED WITHIN THE STIPULATED PERIOD OF 12 MONTHS AND IT WAS SERVED BE YOND 12 MONTHS. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE HAS NO T PRESSED THIS ISSUE IN BOTH THE APPEALS. HENCE, THE SAME IS DISMISSED AS NOT PR ESSED. 3. THE NEXT COMMON ISSUE IN THESE APPEALS OF THE AS SESSEE IS AS REGARDS TO THE ORDER OF THE CIT(A) CONFIRMING THE ADDITION OF GIFTS RECEIVED ON THE GROUND OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND THE A MOUNT IS COMMON I.E. RS.4.5 LACS IN EACH. AT THE OUTSET, THE LEARNED COUNSEL FO R THE ASSESSEE FILED COPIES OF THE ITAT ORDERS IN ASSESSEES GROUP CASES IN ITA NO.3103/AHD/2004 FOR AY 2001-02 DATED 05-09-2008 AND IN ITA NO.2479/AHD/2004 FOR AY 2001-02 DATED 21-08-2009 WHERE EXACTLY FROM THE SAME PERSONS I.E . SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G. AHIR GIFTS WERE RECEIVED. HERE, IN THE PRESENT CASE ALSO THE ASSESSEE HAS RECEIVED GIFTS OF RS.2 LAKHS FROM SHRI DAYALBHAI AHIR AND RS.2.50 LAKHS FROM SHRI HARISHBHAI G. AHIR IN EACH OF THE A SSESSEES. WE FIND THAT THE CIT(A) RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. ILABEN NANAVATI HAS CONFIRMED THE GIFTS AND HE HAS DISCUSSED THE FA CTS FROM THE GROUP CASES IN THE CASE OF SHRI HITENDRA AMRUTLAL NANAVATI AND SMT . ILABEN NANAVATI IN ITA NOS. 3103/AHD/2004 AND 2479/AHD/2004 . WE FIND THAT EXACTLY UNDER SIMILAR FACTS, THE TRIBUNAL HAS DELETED THE ADDITION BY GIV ING THE FOLLOWING FINDINGS IN PARA 4 TO 9 OF ITS ORDER. 4. GROUND NO.2 RELATES TO THE ADDITION MADE IN RESPECT OF GIFTS RECEIVED BY THE ASSESSEE. THE FAC TS RELATING TO THIS GROUND ARE THAT THE ASSESSEE CREDI TED TO HER CAPITAL ACCOUNT THE GIFT OF RS.2,00,000/- FROM SHRI DAYALBHAI AHIR AND RS.2,50,000/- FROM SHRI HARISHBH AI G AHIR. WHEN THE AO ASKED TO PROVE THESE GIFTS, THE ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 3 ASSESSEE SUBMITTED THE EVIDENCE REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF TH E ASSESSEE. WHEN THE MATTER WENT IN APPEAL BEFORE TH E CIT(A) WHO ALSO CONFIRMED THE ADDITION. 5. BEFORE US THE LEARNED AR BY REFERRING TO THE PAP ER BOOK POINTED OUT THAT THE ASSESSEE HAS RECEIVED THE GIFTS FROM SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G AHIR . THE ASSESSEE SUBMITTED THE CONFIRMATION ALONG WITH THE PASSBOOK OF THE NRI ACCOUNT OF EACH PARTY. THE AFFIDAVITS OF SHRI DAYALBHAI AHIR AND SHRI HARISHBH AI G AHIR WERE ALSO FILED. THE ASSESSEE HAS ALSO SUBMIT TED THE COPIES OF PASSPORTS OF SHRI DAYALBHAI AHIR AND SHRI HARISHBHAI G AHIR. OUR ATTENTION WAS DRAWN TOWARDS THE CONFIRMATIONS AS WELL AS THE COPIES OF PASSBOOKS TO POINT OUT THAT THE FUND HAS COME IN THE BANK ACCOUNT OF S HRI DAYALBHAI AHIR TO THE EXTENT OF RS.20 LACS WHICH PR OVES THE CREDITWORTHINESS OF SHRI DAYALBHAI. SIMILARLY, THE FUND HAS COME IN THE BANK ACCOUNT OF SHRI HARISHBHA I G AHIR TO THE EXTENT OF RS.25 LACS. FOR THIS OUR ATT ENTION WAS DRAWN TOWARDS PAGES 65, 66 AND 109 OF THE PAPER BOOK. IT WAS POINTED OUT THAT SHRI DAYALBHAI HAS M ADE HUGE DONATION AND THE FACT OF MAKING DONATION WAS PUBLISHED IN THE GUJARATI DAILY GUJARAT MITRA DAT ED 19- 5-2004. HE HAS EVEN DONATED RS.25,000/- TOWARDS CONSTRUCTION OF TEMPLE OF SHREE SIKOTAR MATAJI. HE HAS ENTERED INTO TENANCY CONTRACT FOR ONE SHOP OF DN. 4 2,000 EQUAL TO RS.5,25,000/- AND ONE SHOP FOR DN. 1,70,00 0 EQUAL TO RS.8,75,000/-. THUS, IT WAS CONTENDED THAT THE CREDITWORTHINESS OF SHRI DAYALBHAI CANNOT BE DOUBTE D. THE AO WITHOUT BRINGING ANY EVIDENCE ON RECORD HAS MERELY OBSERVED THAT SHRI DAYALBHAI WAS NOT HAVING THE CREDITWORTHINESS AND MAY BE A SMALL TYPE FARMER. WH EN WORKING IN INDIA HE MAY BE WORKING AS CLASS-IV BUT HE WENT OUT OF INDIA, HE WENT TO DUBAI, HE WAS WELL SE TTLED AND WAS HAVING HANDSOME INCOME. THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DOUBTED AS THE FUND HA D BEEN SENT THROUGH BANK ACCOUNT. THUS, IT WAS CONTEN DED THAT THE ASSESSEE HAS PROVED ALL THE INGREDIENTS LA ID DOWN U/S 68 OF THE ACT. THE AO HAS MERELY MADE THE ADDITION BECAUSE THE DONORS WERE HAILING FROM THE ORDINARY BACKGROUND WHEN THEY WERE IN INDIA. THE LEARNED AR ALSO RELIED ON THE DECISION OF THE AHMED ABAD BENCH-D OF THE TRIBUNAL IN THE CASE OF SMT. KUSUMLA TA ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 4 BANSAL V DCIT (2008) 10 DTR (AHD) (TRIB) 82. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THAT THERE WAS NO BLOOD RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONORS. EVEN THE ASSESSEE SHOULD ALSO EXPLAIN THE OCCASION FOR GIVING THE GIFTS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. THIS IS AN ADMITTED FACT TH AT BOTH THE PERSONS WHO GIFTED THE AMOUNTS TO THE ASSESSEE ARE THE NON-RESIDENTS AND THEY ARE WORKING OUTSIDE INDI A. THEY HAVE SENT THE MONEY THROUGH THE PROPER BANKING CHANNEL. THE FUND HAS COME TO THE BANK. COPY OF THE PASSPORT ALONG WITH THEIR AFFIDAVITS WAS DULY FILED . THEIR IDENTITY IS NOT UNDER DISPUTE. THE ASSESSEE SUBMITT ED THE COPY OF THE PASSBOOK IN WHICH THE FUND TO THE EXTEN T OF RS.40 LACS HAS COME IN THE ACCOUNT OF SHRI DAYALBHA I AHIR AND RS.25 LACS HAS COME IN THE ACCOUNT OF SHRI HARISHBHAI G AHIR. THIS ITSELF PROVES THAT BOTH THE PERSONS WHO HAVE GIFTED THE AMOUNTS TO THE ASSESSEE WERE HAVING THE CAPACITY TO GIFT THE AMOUNT. THEIR CREDITWORTHINESS WAS THERE. NO EVIDENCE OR MATERIAL WAS FURNISHED BEFORE US BY THE LEARNED DR WHICH MAY PRO VE THAT THE FUNDS RECEIVED BY THESE PARTIES WERE NOT GENUINE. THEREFORE, IN OUR OPINION, SHRI DAYALBHAI AHIR AND SHRI HARISHBBAI AHIR BOTH WERE HAVING THE CREDITWORTHINESS AND THEIR CREDITWORTHINESS CANNOT BE DOUBTED. THE GENUINENESS OF THE TRANSACTIONS CAN AL SO NOT BE REJECTED IN VIEW OF THE FACT THAT THE ASSESS EE HAS RECEIVED THE GIFTS THROUGH ACCOUNT PAYEE CHEQUES AN D THERE IS NO EVIDENCE TO THE CONTRARY BEING BROUGHT ON RECORD THAT THE ASSESSEE HAS ACTUALLY NOT RECEIVED THE FUNDS OR HAS PASSED OVER THE FUNDS IN THE FORM OF C ASH TO THE DONORS. THE AO HAS NOT ALLEGED SO. THE AO MEREL Y HAS OBSERVED ABOUT THE FAMILY STATUS OF SHRI DAYALB HAI THAT HE WAS A SMALL TYPE OF FARMER. THAT MAY BE A P AST HISTORY AND FAMILY BACKGROUND AND THAT IS ALSO ON T HE BASIS OF HEAR-SAY WITHOUT BRINGING ANY CONCRETE EVI DENCE ON RECORD. RATHER THE AO HIMSELF HAS ACCEPTED THAT HE HAS GONE OUT OF INDIA I.E. DUBAI AND IS WELL SETTLE D AND WAS HAVING HANDSOME INCOME. THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF 280-ITR-5 12 IS FULLY APPLICABLE IN THE CASE OF THE ASSESSEE. THE I DENTITY OF THE DONORS IS PROVED. EVEN THE SOURCE OF THE AMO UNTS GIFTED WAS ALSO ACCEPTED BY THE AO. THE ASSESSEE HA S ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 5 ADDUCED THE EVIDENCE TO PROVE THE GENUINENESS OF TH E TRANSACTIONS THAT THE GIFTS WERE RECEIVED THROUGH B ANKING CHANNEL. THE AFFIDAVITS OF THE DONORS WERE ALSO FUR NISHED WHICH WERE NOT REJECTED BY THE REVENUE. COPIES OF T HE AFFIDAVITS ARE ALSO AVAILABLE BEFORE US IN THE PAPE R BOOK. THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH MAY PROVE THAT THE TRANSACTIONS ARE NOT GENUI NE EXCEPT THE OBSERVATIONS MADE BY THE AO. WE ARE OF T HE OPINION THAT THE ASSESSEE HAS DULY DISCHARGED THE BURDEN OF PROOF AND BY PRODUCING THE EVIDENCE, THE BURDEN GETS SHIFTED ON THE REVENUE. THE GIFTS HAVE BEEN TREATED TO BE NON-GENUINE MERELY ON THE BASIS OF IMAGINATION, SURMISES AND CONJECTURES. SECTION 68 L AYS DOWN THE RULE OF EVIDENCE. THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE CREDITOR. WHERE THE ASSESSEE HAS DISCHARGED HIS BURDEN OF PROOF, THE BURDEN GETS SHIFTED ON THE REV ENUE. WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SMT. KUSUMLATA BANSAL V DCIT (2008) 10 DTR (AHD) (TRIB) 82. THIS DECISION ALSO, IN OUR OPINION, SUPP ORTS THE CASE OF THE ASSESSEE. IN THIS CASE THE BENCH HAS DISCUSSED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V P MOHANKALA (2007) 291 ITR 278 (S C) AND UNDER PARA-16 HAS HELD AS UNDER: 16. IN THE CASE OF P MOHANKALA (SUPRA), THE SUPREM E COURT DEALT WITH A CASE OF FOREIGN GIFTS AND THERE WAS EVIDENCE ON RECORD WHICH INDICATED THAT THE DONOR R ECEIVED SUITABLE COMPENSATION FROM THE ASSESSEE AND ON THE BASIS OF THIS MATERIAL, THE AO HELD THAT THE GIFTS, THOUG H APPARENT, WERE NOT REAL AND, ACCORDINGLY, TREATED ALL THOSE A MOUNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASS ESSEE AS HIS INCOME UNDER S. 68 OF THE ACT. IT WAS SPECIFICA LLY NOTED BY THE SUPREME COURT THAT THE ASSESSEE DID NOT CONTEND THAT EVEN IF THAT EXPLANATION WAS NOT SATISFACTORY, THE AMOUNTS WERE NOT OF THE NATURE OF INCOME AND IN VIEW OF THE CONCURRENT FINDING OF THE AO, THE CIT(A) AND THE TR IBUNAL, THE SUPREME COURT HELD THAT THE HIGH COURT WAS NOT JUSTIFIED IN REVERSING THE SAME AND BY OBSERVING THAT THE MER E FACT THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THIS IS A CLEAR CASE OF UNREAL GIFT AND WAS A RECEIPT OF COMPENSATION TO THE ASSESSEE IN TH E GUISE OF GIFT AND IN THESE CIRCUMSTANCES THE SUPREME COUR T UPHELD ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 6 THE ASSESSMENT OF GIFT. NO SUCH POSITION IS EMERGIN G IN THIS CASE. THERE IS NO ALLEGATION OF ANY SORT BY REVENUE FOR THE DONORS WERE TO BE COMPENSATED BY THE ASSESSEE FOR A SERVICE RENDERED BY THEM OR OTHERWISE TO THE ASSESS EE. THIS DECISION WOULD ALSO, THEREFORE, BE OF NO HELP TO TH E REVENUE. WE DO AGREE WITH THE DECISION OF THE COORDINATE BEN CH AND, THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A ) AND DELETE THE ADDITION MADE U/S 68 OF THE ACT. THUS, T HIS GROUND STANDS ALLOWED. 7. GROUND NO.3 RELATES TO LOW HOUSEHOLD WITHDRAWAL AMOUNTING TO RS.20,000/-. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE HAS SHOWN HOUSEHOLD EXPENSES AT RS.24,000/- WHICH WAS CONSIDERED TO BE VERY LOW BY THE AO AND ACCORDINGLY HE MADE THE ADDI TION OF RS.20,000/-. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE ASSESSEES FAMILY CONSISTS OF TWO PERSONS, HUSBAND AND WIFE. BOTH ARE THE SENIOR CITIZENS AND SONS ARE RESIDING SEPARATELY WI TH THEIR FAMILIES. IN ADDITION TO THE WITHDRAWAL OF TH E ASSESSEE, THE HUSBAND OF THE ASSESSEE HAS ALSO WITHDRAWN RS.36,000/-. THUS, THE TOTAL WITHDRAWAL O F BOTH THE PERSONS WAS RS.60,000/-. THE CIT(A) CONFIRMED T HE ACTION OF THE AO. 8. THE LEARNED DR RELIED ON THE ORDER OF THE AO WHI LE THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFO RE THE CIT(A). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD. WE FIND THAT T HE ADDITION HAS BEEN MADE MERELY ON ESTIMATE BASIS. TH E ASSESSEE HAS CONTENDED THAT THERE ARE TWO PERSONS I N THE FAMILY CONSISTING OF THE ASSESSEE AND HER HUSBA ND AND THE TOTAL WITHDRAWAL OF THE FAMILY WERE AROUND RS.60,000/-. THE AO HAS MERELY OBSERVED THAT SINCE BOTH THE WIFE AND THE HUSBAND ARE EARNING GOOD INCO ME, THEREFORE, IT HAS TO BE ASSUMED THAT THEY MIGHT HAV E INCURRED MORE MONEY FOR THEIR LIVELIHOOD AND COMFOR TS. IN OUR OPINION, ONCE THE ASSESSEE HAS SUBMITTED THE EXPLANATION AND IF THE AO IS NOT SATISFIED WITH THE EXPLANATION, HE MUST GIVE THE REASONS FOR REJECTING THE EXPLANATION AND BRING THE EVIDENCE ON RECORD THAT T HE ITA NOS.629 AND 630/AHD/200 HEENABEN HITENDRABHAI NANAVATI AND SONALBEN DEEPAKBHAI NANAVATI 7 ASSESSEE HAS ACTUALLY INCURRED THE EXPENDITURE MORE THAN WHAT HAS BEEN SHOWN BY THE ASSESSEE. THE ONUS TO PROVE THE CONTRARY GETS SHIFTED ON THE REVENUE. IN THIS CASE WE NOTED THAT THE AO DID NOT DISCHARGE HIS ONU S BUT ONLY PRESUMED THAT THE ASSESSEE WOULD HAVE INCURRED MUCH EXPENDITURE THAN WHAT HAS BEEN SHOWN BY THE ASSESSEE. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE MERELY ON PRESUMPTIONS. WE ACCORDINGLY DELETE THE ADDITION. 4. WE FIND THAT THE FACTS ARE EXACTLY IDENTICAL IN THE PRESENT CASE, WHAT WERE IN THE CASE OF SHRI HITENDRA AMRUTLAL NANAVATI AND SMT. ILABEN NANAVATI (SUPRA) AND EVEN THE REVENUE HAS NOT DISPUTED THE FACTS RAT HER THE FACTS ARE ADMITTED. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE AND THE TRIBUNAL HAS ALREADY TAKEN A VIEW, TAKING A CONSISTENT VIEW, WE DELETED THE ADDITION. THIS COMMON ISSUE OF BOTH THE ASSESSEES APPEALS IS ALLOWED. 5. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY A LLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23-1 2-2009 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (MAHAVIR SINGH) JUDICIAL MEMBER DATE : 23 -12-2009 LAKSHMIKANT/DKP* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE /TRUE COPY/ BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD