I.T.O, Ward-1(1), Aligarh V. Sh. Rahul Amin, Aligarh

ITA 65/AGR/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94120 (ITAT-AGRA)
• Duration Of Justice: 4 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BELU SINHA
• Assessee Lawyers: SHRI
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SH RI G.C. GUPTA, VICE PRES ID ENT AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 65 / AG RA / 201 1 ASSESSMENT YEAR : 20 0 5 - 06 INCOME TAX OFFICER (AO), VS. RUHUL AMIN, WARD 1(1), ALIGARH. P ROP. M/S . STEEL TRADERS, SHAH JAMAL ROAD, ALIGARH (PAN A A OPA 7862 Q ) . (APPELLANT) (RESPONDENT) A PPELLANT BY : SMT. BELU SINHA, SR. D.R. RE SPONDENT BY : SHRI PANKAJ GARG, ADVOCATE DATE OF HE ARING : 20 .07. 201 5 DATE OF PRONOUNCEMENT : 12.08 . 2015 ORDER PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), GHAZIABAD DATED 06.12.2010 IN APPEAL NO.70/2007 - 08 / GZB - ALG FOR THE A.Y. 2 005 - 06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER OF THE LD. CIT(APPEAL) IS ERRONEOUS IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.25,35,500/ - SINCE THE CREDITORS WERE NOT VERIFIED AND REMAINED UNEXPLAINED. 2. THE L D. CIT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,82,855/ - ITA NO.65/AGRA/2011 A.Y. 2005 - 06 2 3. THE ORDER OF THE LD. CIT(APPEAL) BE SET ASIDE AND THE ORDER OF THE A.O. BE RESTORED. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE RESPONDENT ASSESSEE IS AN INDIV IDUAL. THE RETURN OF INCOME FOR THE A.Y. 2005 - 06 WAS FILED ON 11.11.2005 DISCLOSING INCOME OF RS.4,67,663/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF IRON SCRAP IN THE NAME OF AND S TYLE OF M/S. STEEL T RADER S . AGAINS T THE SAID RETURN OF INCO ME , THE ASSESSMENT WA S COMPLETED BY THE I . T . O ., WARD - 1 , ALIGARH VIDE ORDER DA T ED 24.12.2007 UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE RESP ONDENT ASSESSE E RECEIVED IN THE FORM OF GIFT S FROM THE FOLLOWING PERSONS FOR AN AMOUNT OF RS.25,35,500/ - ( I) SHRI ABDUL MATIN KHAN : RS.5,00,000/ - ( II) SHRI MOHAMMAD SAJID KHAN : RS.6,18,000/ - ( III) DR. MOHD. KHALID : RS.1,00,000/ - ( IV) SHRI SYED JAVED IQBAL : RS.7, 500/ - ( V) SHRI KHALID ALI : RS.15,000/ - ( VI) SMT. RUKSANA ARIF : RS.2,50,000/ - ( VII) SHRI AMIR MOHAMMAD : RS.7,50,000/ - ( VI I I) SHRI ZIAUL GHANI : RS.1,60,000/ - ( IX) SHRI SHAFIQUR RAHMAN : RS.1,00,000/ - ( X) SHRI MARGHOOB ALI : RS.35,000/ - - ----------------- TOTAL : RS.25,35,500/ - ------------------ 4. THE RESPONDENT ASSESSEE HAD FILED THE CONFIRMATION LETTERS AND THE AFFIDAVITS IN SUPPORT OF THE ABOVE GIFTS. THE A SSESSING OFFICER DISBELIEVED TH ESE GIFT S AND BROUGHT ITA NO.65/AGRA/2011 A.Y. 2005 - 06 3 TO TAX AS UN EXPLAINED AMOUNT. THE A SSESSING OFFICER FURTHER MADE DISALLOWANCE OUT OF EXPENDITURE OF RS.3,00,855/ - . BEING AGGRIEVED APPEAL WAS FILED BEFORE THE CIT ( A ) WHO , VIDE PARA GRAPH NO. 7 OF HIS ORDER , DELETED THE ADDITION MADE ON ACCOUNT OF RECEIPT OF GIFT S AND AS REGARDS TO THE DISALLOWANCE OF RS.3,00,855 OUT OF EXPENDITURE , DELETED THE ADDITION VIDE PARA 7.2 WHICH READ AS UNDER : - 7. I HAVE CAREFULLY CONSIDERED APPELLANT S SUBMISSIONS, HIS REJOINDER AND ALSO THE EVIDENCES/MATERIAL BROUGHT ON RECORD. I HAVE ALSO CONSIDERED THE FACTS BROUGHT BY THE AO IN THE ASSESSMENT ORDER AND ALSO IN THE REMAND REPORT. AFTER HAVING CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS MY CONCLUSIONS/OBSERVATIONS ON THE ISSUES TAKEN IN APPEAL ARE AS UNDER : 7.1 IN RESPECT OF GIFT FRO M SHRI ABDUL MATIN KHAN, I FIND THAT HIS ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 WAS FINALISED U/S 143(3). IAN THE RETURN FILED, SHRI ABDUL MATIN KHAN HAD DECLARED TAXABLE INCOME OF RS.7,56,060/ - . THE VRS COMPENSATION OF RS.5,90,490/ - RECEIVED BY SHRI ABD UL MATIN KHAN HAD BEEN DULY SHOWN IN FORM NO.10E. THUS, I HOLD THAT CREDITWORTHINESS OF SHRI ABDUL MATIN KHAN IS SUFFICIENCY ESTABLISHED. HOWEVER, THE AO CAN STILL, IF HE SO DEEMS FIT, CAUSE REMEDIAL ACTION OF ENQUIRY IN THE HANDS OF CREDITOR. BUT, AS FA R AS ASSESSEE IS CONCERNED; I HOLD THAT ASSESSEE HAS DISCHARGED HIS ONUS AS PER SECTION 68. 7.1(A) REGARDING THE OTHER NR DONORS; ALL OF THEM HAVE GIVEN CERTIFICATES/DOCUMENTS ESTABLISHING THAT THEY ARE WELL PLACED IN FOREIGN COUNTRIES EARNING VERY HANDS OME AMOUNT OF INCOME PER YEAR. ALL OF THEM HAVE MADE THE GIFTS THROUGH NRE ACCOUNTS AT ALIGARH (INDIA) WHERE NO CASH DEPOSITS CAN BE MADE IN RUPEE TERMS. ALL OF THEM HAVE SUBMITTED AFFIDAVITS EITHER THROUGH THE EMBASSIES OR COURT AFFIDAVITS WHEN THEY WERE IN INDIA CONFIRMING THAT THEY HAD FAMILY RELATION (BASICALLY ALL WERE THE RESIDENTS OF THE SAME LOCALITY) AND THAT THEY HAD GIVEN GIFTS TO THE ASSESSEE ON ACCOUNT OF LOVE AND AFFECTION. ITA NO.65/AGRA/2011 A.Y. 2005 - 06 4 7 .1 (B) IN THE LIGHT OF ABOVE, I FIND THAT PREPONDERANCE OF PROBAB ILITY IS IN FAVOUR OF THE APPELLANT. AO'S VIEW THAT IT IS UNUSUAL FOR SO MANY PERSONS MAKING SUBSTANTIAL GIFTS TO ONE PERSON AND THAT IT LOOKS IMPROBABLE, IS APPRECIATED. BUT, AT THE SAME TIME, CASES OF GIFTS, FOR BEING DECIDED AS GENUINE OR CONCOCTED, HAV E TO BE SEEN AND CONSIDERED IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES AND EVIDENCES ON RECORD . IN THIS CASE, ALL THE DONORS HAVE SUFFICIENT CREDITWORTHINESS, IF WE VIEW THEIR FINANCIAL DOCUMENTS. THEY HAVE ELABORATELY CONFIRMED THAT THEY HAVE MADE THESE G IFTS TO THE ASSESSEE. IT IS ALSO NOT A CASE WHERE DONORS ACCOUNTS ARE CREDITED WITH UNEXPLAINED CASH DEPOSITS IN THEIR BANK ACCOUNTS IMMEDIATELY BEFORE THE GIFT CHEQUES ARE ISSUED. THUS, IN ALL FAIRNESS, EVEN IF THE INSTANCE OF SO - MANY GIFTS BEING RECEIVED BY THE ASSESSEE LOOKS UNUSUAL; THIS IS A CASE WHERE THE ASSESSEE HAS DISCHARGED HIS ONUS, AS PLACED ON HIM, IN TERMS OF SECTION 68 OF THE ACT. THE PERSONS MAKING THE GIFTS ARE IDENTIFIABLE; GIFT TRANSACTIONS ARE THROUGH VALID BANKING CHANNEL AND THESE GIF TS ARE DULY CONFIRMED; AND ALL THESE PERSONS HAVE SUBMITTED ENOUGH DOCUMENTS SO AS TO ESTABLISH THEIR CREDITWORTHINESS FOR MAKING THE RESPECTIVE AMOUNT OF GIFTS. 7.1 (C) IN FACE OF SUCH CLINCHING EVIDENCES IN FAVOUR OF THE APPELLANT; THE AO S ARGUMENT TH AT NR DONORS WERE NOT PRODUCED LOSES ITS SHEEN ON ACCOUNT OF PRACTICABILITY, BECAUSE IT WILL NOT BE PRACTICABLE FOR THE ASSESSEE TO PRODUCE THESE NR DONORS. ALTHOUGH THESE NR DONORS WERE NOT PHYSICALLY PRESENT BEFORE THE AO; BUT THEY HAVE TAKEN ALL POSSIBL E MEASURES TO SUPPORT ASSESSEE'S CONTENTION OF VALID GIFTS. THEIR AFFIDAVITS EITHER MADE IN INDIAN COURT/NOTARIES OR THROUGH RESPECTIVE EMBASSIES CARRY SUBSTANTIAL LEGAL FORCE. 7.1(D) REGARDING AO'S ASSERTION THAT CREDITWORTHINESS OF THESE NR DONORS HAS NOT BEEN ESTABLISHED; I FIND THAT ALL OF THESE DONORS ARE EARNING HUGE AMOUNT OF SALARY/ REMUNERATION IN INDIAN RUPEES TERMS. IF THESE PERSONS CHOSE TO GIVE GIFTS TO THE ASSESSEE, THESE ARE TO BE GRACEFULLY ACCEPTED BECAUSE MERE DOUBTS REGARDING SOME EXTR ANEOUS CONSIDERATION OR MANIPULATION WOULD NOT BE ENOUGH TO MAKE OUT A FULL PROOF CASE OF ADDITION ON ACCOUNT OF BOGUS GIFTS. 7.1(E) IN VIEW OF ABOVE DISCUSSION, I TREAT ALL THESE GIFTS AS EXPLAINED IN HANDS OF ASSESSEE. ACCORDINGLY, THE ADDITION OF RS.2 5,35,500/ - MADE ON THIS ACCOUNT IS DELETED. ITA NO.65/AGRA/2011 A.Y. 2005 - 06 5 7.2 REGARDING DISALLOWANCE OF RS.3,00,855/ - ; I FIND THAT AO HAS BEEN HARSH IN MAKING DISALLOWANCE ON MERE PRESUMPTION. INCURRING OF EXPENSES IN CASH IS NO DEFAULT/CRIME. THE AO HAS ALSO NOT ESTABLISHED AS TO H OW THESE EXPENSES CAN BE SAID TO BE EXCESSIVE. THE AO HAS DISALLOWED, ON AD HOC BASIS, EVEN THOSE EXPENSES WHICH ARE PURELY OF BUSINESS AND WHERE NO PERSONAL ELEMENT CAN BE ASCRIBED. THE FREIGHT OUTWARD IS SUPPORTED BY SALE INVOICES AND RELEVANT GRS OF AL L TRANSACTIONS. SIMILARLY, VOUCHERS AND REGISTERS ARE MAINTAINED IN RESPECT OF WAGES. VOUCHERS IN RESPECT OF CONVEYANCE ARE ALL AVAILABLE. THESE DO NOT WARRANT ANY DISALLOWANCE. 5. WE FIND FROM THE ORDER OF CIT(A) THAT THE CIT(A) HAD CONSIDERED RELEVANT MATERIAL AND CAME TO THE CONCLUSION THAT THE GIFTS ARE GENUINE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THE ISSUE. SIMILARLY, IN THE CASE OF DELETION OF RS.3,00,855/ - , WE DO NOT WANT TO INTERFERE WITH THE ORDER OF CIT(A). LD . SR. DEPARTMENTAL REPRESENTATIVE HAD NOT CONTROVERTED ANY OF HIS FINDING, THEREFORE, WE HAVE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THESE GROUNDS OF APPEAL FILED BY THE REVENUE AND, THEREFORE, GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DI SMISSED. 6. IN THE RESULT, APPEAL FILED BY THE R EVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 2.08.2015) SD / - SD/ - ( G.C. GUPTA ) ( INTURI RAMA RAO ) VICE PRESIDENT ACC OUNTANT MEMBER DATE: 1 2 TH AUGUST, 201 5 P BN/* ITA NO.65/AGRA/2011 A.Y. 2005 - 06 6 COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, AGRA BE NCH, AGRA