Anisha R.Dhanani, Baroda V. The Income tax Officer,Ward-1(3), Baroda

ITA 681/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5851 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Gift; Source of fund; Additional evidence; Non compliance; Revised return
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 17/06/2010 DRAFTED ON: 2 3/06/2010 ITA NO.681/AHD/2008 ASSESSMENT YEAR : ANISHA R.DHANANI A/3, VANDEMATRAM APARTMENT 2 ND FLOOR, 42, ARUNODYA SOCIETY ALKAPURI, BARODA VS. THE INCOME TAX OFFICER WARD-1(3) BARODA PAN/GIR NO. : ACTPD 3111 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SUNIL H.TALATI RESPONDENT BY: SHRI K.MADHUSUDAN, SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-I B ARODA DATED 16/11/2007 AND THE GROUNDS RAISED ARE AS FOLLOWS:- GROUND NO.1 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS- I) IS AGAINST LAW AND FACTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS- I) ERRED IN CONFIRMING ADDITION/DISALLOWANCE IN THE FOLLOWING M ATTER- ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 2 - A) IN CONSIDERING INCOME OF RS.4000/- TOWARDS 500 EQUITY SHARES OF M/S.LIBERTY PHOSPHATE LTD. TAKEN ON LOAN/ GIFT FROM HER HUSBAND MR.RAOOF R.DHANANI. AS PER BILLING OF SHARE BROKER TOTAL SHARE SOLD FOR EQ.NO.OF 21300 SHARES WHEREAS IT IS TRANSFERRED EQ.NO. OF 20 800 SHARES TO BROKER ACCOUNT FROM ASSESSEE DEMAT ACCOUN T AND REMAINING 500 FROM DEMAT ACCOUNT FROM HER HUSBA ND MR.RAOOF R.DHANANI. IT IS CLAIMED AT ONE PLACE WH ERE SALES IS MADE BY TREATED AS LOAN/GIFT FROM HER HUSB AND MR.RAOOF R.DHANANI. 2. AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SHRI SUNIL H. TALATI HAS CLEARLY DECLARED NOT TO PRESS THIS GROUND. THEREFORE, THIS GROUND IS DISMISSED BEING NOT PRESSED. GROUND NO.2 B) IN GIFT OF RS.14,55,389/- I.E. RS.480390 ON 29 .12.03 AND RS.534999/- ON 11.02.04 FROM ABDUL GUNNY SURFARAJ W HO IS NEPHEW OF ASSESSEE HUSBAND AND RS.440000 FROM ZAINA B FAZAL DARBESH WHO IS SISTER OF ASSESSEE. ASSESSEE IS IN INDIA AND SHE HAS TO DEPEND OF DONORS WHO ARE OUTSI DER EVENTHOUGH SHE HAS SUBMITTED RELEVANT DOCUMENTS WIT H PROPER JUSTIFICATION BUT IN REMAND REPORT A.O. SAYS THAT THESE EVIDENCE ARE NOT SUFFICIENT TO BE A COMPLIANC E TO THE FINAL SHOW CAUSE NOTICE WHEREAS ASSESSEE ARGUE IS T HAT WHATEVER BACK GROUND OF ASSESSEE AND FAMILY AND INC OME OF DONOR IS SUBMITTED WHICH ARE TREATED AS A NOT SUFFI CIENT. SO ASSESSEE HAS ASKED TO CIT(A) THAT WHATEVER SUBMITTE D IS NOT SUFFICIENT THEN WHAT IS PARAMETERS TO PROVIDE SUFFI CIENT. 3. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE HAS PINPOINTED AT THE BEGINNING ITSELF THAT A SHOW-CAUS E NOTICE WAS SERVED ON THE ASSESSEE ON 28/11/2006. THE APPELLANT WAS ASK ED TO COLLECT CERTAIN ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 3 - INFORMATIONS. AS PER LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE THOSE INFORMATIONS HAVE DULY BEEN COLLECTED BY THE ASSESSEE. HOWEVER, THE ASSESSMENT WAS MADE ON 04/12/2006 WITHOUT PROVI DING TIME TO THE ASSESSEE. IN SUPPORT OF THIS ALLEGATION, THE LEAR NED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS REFERRED PARAGRA PH NO.7 OF THE ASSESSING OFFICER AND ARGUED THAT THE SAID PARAGRAP H IS SELF-EXPLANATORY; REPRODUCED BELOW FOR READY REFERENCE:- 7. THE SHOW CAUSE WAS SERVED AT THE GIVEN ADDRESS ON 28/11/2006 IT ALSO REMAINS UNATTENDED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WENT ON PROMIS ING TO PROVIDE THE INFORMATION REGARDING THE SOURCE OF DON EE, BUT TILL DATE THE INFORMATION HAS NOT BEEN PROVIDED. UNDER THES E CIRCUMSTANCES, IT IS PRESUMED THAT ASSESSEE DOES NO T PROCESS ANY INFORMATION IN THIS REGARD, AND THEREFORE THIS NON COMPLIANCE. IN ABSENCE OF THE NECESSARY DETAILS, IT IS NOT POSSIBL E TO ARRIVE AT A CONCLUSION THAT THE CREDITWORTHINESS OF THE DONOR C OULD BE ESTABLISHED. UNDER THE CIRCUMSTANCES, NARRATED ABO VE, THE FOREIGN GIFT RECEIVED AND CREDITED TO HER ACCOUNT IS NOT PR OVED TO BE GENUINE AS PER EXPLANATION OF SECTION 68 OF THE I. T. ACT. HENCE, THE AMOUNTS CREDITED IN THE ACCOUNT OF ASSESSEE FRO M (1) SMT. ZAINAB FAZAL DARVESH RS.4,440,000/- (2) SHRI ABDUL GUNNY SURFRAJ RS.10,15,379/- ARE TREATED AS INCOME OF THE ASSESSEE AND SAME IS ADDED TO THE TOTAL INCOME, FROM UNDISCLOSED SOURCES U/S.68 OF THE I.T. ACT, 1961. 4. WHEN THE ISSUE WAS CARRIED BEFORE THE FIRST APPE LLATE AUTHORITY, THE EVIDENCES WHICH WERE GATHERED WERE FURNISHED. THE LEARNED CIT(APPEALS) HAS CALLED FOR A REMAND REPORT, HOWEVE R, THE ASSESSING OFFICER HAS OBJECTED THE FURNISHING OF FRESH EVIDE NCE AT THE STAGE OF APPEAL. THE LEARNED CIT(APPEALS) VIDE PARAGRAPH NO .7 HAS CONCLUDED THAT THE ADDITIONAL EVIDENCES PRODUCED DID NOT SATI SFY THE CONDITIONS ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 4 - PRESCRIBED UNDER THE RULE 46A OF THE I.T. RULES, 19 62. IN THE ABSENCE OF ENTERTAINING THOSE EVIDENCES IT WAS HELD THAT THE A PPELLANT HAD FAILED TO PROVE THE BONA FIDE OF THE GIFTS ALLEGEDLY RECEIVED BY THE ASSESSEE. THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED VIDE PARAGRAPH NO.7; REPRODUCED BELOW:- 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S OBSERVED THAT THE ASSESSING OFFICER CALLED FOR INFORMATION AND DE TAILS VIDE HIS SHOW CAUSE NOTICE DATED 8-11-2006 IN RESPECT OF ALL BANK ACCOUNTS IN THE NAME OF THE APPELLANT AND IN THE NAME OF ALL HER FAMILY MEMBERS, COPY OF WESTERN MONEY TRANSFER FOR THE PER IOD 1-4-2003 TO 31-3-2004 AND SOURCES OF INCOME IN RESPECT OF ZA INAB FAZAL AND ABDUL GANI SARFARAZ. THE APPELLANT HAS FURNISH ED INFORMATION / EVIDENCE IN RESPECT OF THE SOURCE OF INCOME OF THE TWO DONORS. THE OTHER DETAILS HAVE NOT BEEN FURNISHED. THE ASSESSING OFFICER IN THE REMAND REPORT HAS OBSERVED THAT THE SE EVIDENCES ARE NOT SUFFICIENT TO BE A COMPLIANCE TO THE FINAL SHOW CAUSE NOTICE... THE APPELLANT HAS NOT ARGUED THAT THES E ARE UNNECESSARY OR IRRELEVANT EVIDENCE AND, THEREFORE, SHE HAS CHOSEN NOT TO FILE THE SAME. IN FACT SHE HAS CLAIMED THA T SINCE THE TRANSACTIONS ARE THROUGH THE BANKING CHANNEL, THERE IS NO NEED TO FURNISH ANY CONFIRMATION/EVIDENCE. IN THIS BEHALF REFERENCE IS MADE TO THE OBSERVATIONS OF THE SUPREME COURT IN TH E CASE OF CIT V. P.MOHANAKALA & OTHERS, 291 ITR 278 (SC), THE TR ANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONES MAY B E THE MONEY CAME BY WAY OF BANK CHEQUES AND PAID THROUGH A PROC ESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQ UENCE... IT IS FURTHER OBSERVED THAT THE APPELLANT HAD BEEN GIVEN AMPLE TIME OF ABOUT A MONTH TO SUBMIT THE INFORMATION AND THE CON FIRMATION ETC. THE APPELLANT HAS CITED THE DELAY CUASED BY THE DON ORS IN SENDING THE INFORMATION AS SUFFICIENT CAUSE FROM PRODUCING THE SAME BEFORE THE ASSESSING OFFICER. IT IS OBSERVED THAT A MONTH S TIME WAS MORE THAN REASONABLE AND, THEREFORE, THIS PLEA BY THE AP PELLANT IS REJECTED. UNDER THE CIRCUMSTANCES, IT IS HELD THAT THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT DOES NOT SATISFY THE CONDITIONS UNDER RULE 46A OF THE IT RULES, 1962. THUS, IT IS HELD THAT THE APPELLANT HAS FAILED TO PROVE THE BONAFIDES OF THE GIFTS ALLEGEDLY ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 5 - RECEIVED BY THE APPELLANT. THE ADDITION MADE BY T HE ASSESSING OFFICER IS CONFIRMED. 5. ON HEARING THE RIVAL SUBMISSIONS AND AS SUGGESTE D BY THEM, IT IS OBVIOUS THAT THE CIRCUMSTANCES DEMAND TO RESTORE TH E ISSUE BACK TO THE STAGE OF LEARNED CIT(APPEALS) WHO HAS THROWN OUT AL L THOSE EVIDENCES AT THE VERY THRESHOLD WITHOUT TAKING ANY COGNIZANCE. SUCH AN APPROACH OR THE ACTION OF THE LEARNED CIT(APPEALS) DESERVES NOT TO BE APPROVED. IN THIS REGARD, RULES 46A IS EXPLICIT AND THERE IS NO AMBIGUITY THAT IF CERTAIN NEW EVIDENCES WERE FURNISHED AT THE STAGE OF FIRST APPEAL, THEN THE LEARNED CIT(APPEALS) SHALL NOT TAKE INTO ACCOUNT AN Y SUCH EVIDENCE UNLESS THE ASSESSING OFFICER BE ALLOWED A REASONABL E OPPORTUNITY. RULES 46A ALSO PRESCRIBES THAT, IN GENERAL, THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE ANY NEW EVIDENCE, ORAL OR DOCUMENTAL, OTHER THAN THE EVIDENCE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S, EXCEPT UNDER CERTAIN CIRCUMSTANCES, NAMELY, WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT THE EVIDENCE, WHICH OUGHT TO HAVE BEEN ADM ITTED OR WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM P RODUCING THE EVIDENCE. IN THE PRESENT CASE, THOUGH THE LEARNED CIT(APPEALS) HAS GRANTED OPPORTUNITY TO THE ASSESSING OFFICER ON REC EIVING THE IMPUGNED ADDITIONAL EVIDENCES BUT THROWN THEM OUT WITHOUT AD JUDICATED UPON THEM OR WITHOUT PRESCRIBING ANY COGENT REASON. AS FAR A S THE ASSESSEE IS CONCERNED, IT WAS DEMONSTRATED THAT DUE TO CERTAIN UNAVOIDABLE CIRCUMSTANCES AND INSUFFICIENT TIME THOSE EVIDENCES COULD NOT BE PRODUCED AT THE TIME OF ASSESSMENT. ALMOST ON IDE NTICAL SITUATION, THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SMT.MOH INDAR KAUR VS. CENTRAL GOVERNMENT & OTHERS REPORTED AS 104 ITR 12 0(ALLA.) HAS ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 6 - OPINED THAT WHERE ASSESSING OFFICER HAD MADE ADDIT IONS DUE TO NON- PRODUCTION OF CONFIRMATION LETTERS FROM THE CREDITO RS BY THE ASSESSEE, AND THE LEARNED CIT(APPEALS) REJECTED TO ADMIT THE LETT ERS PRODUCED BEFORE HIM AS ADDITIONAL EVIDENCE, THE TRIBUNAL WAS JUSTIF IED IN HOLDING THAT THE COMMISSIONER OUGHT NOT TO HAVE REJECTED THE ADDITIO NAL EVIDENCE BUT SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO CONSI DER THE CONFIRMATION LETTERS. FOLLOWING THIS JUDGMENT, WE ARE ALSO OF T HE VIEW THAT THOSE ADDITIONAL EVIDENCES WHICH WERE HAVING DIRECT BEARI NG ON THE ISSUE IN HAND, THEREFORE, OUGHT TO HAVE BEEN TAKEN INTO COGN IZANCE BUT ONLY AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSIN G OFFICER. ONCE THIS EXERCISE WAS DONE, THEN WITHOUT ASSIGNING ANY COGEN T REASON IT WAS UNFAIR ON THE PART OF THE LEARNED CIT(APPEALS) NOT TO ENTERTAIN THOSE EVIDENCES. WE, THEREFORE, REFER THIS GROUND BACK TO THE STAGE OF FIRST APPEAL TO BE DECIDED DE NOVO BUT ONLY AFTER TAKING INTO COGNIZANCE THE IMPUGNED ADDITIONAL EVIDENCES IF OTHERWISE HE FINDS THEM ELIGIBLE FOR CONSIDERATION. WE ORDER ACCORDINGLY. THIS GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED ONLY FOR STATISTICAL PURPOSES . GROUND NO.3 (C) BY CONSIDERING DIVIDEND INCOME OF RS.154734/- A ND ALLOWING DEDUCTION TO THE EXTENT OF RS.133202/- ASSESSEE IS AN INDIVIDUAL AND NOT MARINATING RECORD S OTHERWISE 100% EXEMPTION/DEDUCTION CANNOT BE HIDE O R PART CLAIMED. 6. THE ASSESSING OFFICER HAS NOTED THAT THE DIVIDEN D WAS DECLARED AT RS.1,33,202/-, HOWEVER ON VERIFICATION, IT WAS FOU ND THAT ACTUALLY THE AMOUNT RECEIVED BY THE ASSESSEE WAS RS.1,54,734/-. WITH THE RESULT, THE ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 7 - DIFFERENCE OF RS.21,542/- WAS TAXED. THE ONLY GR IEVANCE IS THAT INSTEAD OF TAXING THE SAME AS DIVIDEND INCOME, THE ASSESSIN G OFFICER HAS TREATED THE SAME AS INCOME FROM OTHER SOURCES AND NO EXEMPT ION WAS GRANTED. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY. 7. THE LEARNED CIT(APPEALS) HAS ALMOST IN IDENTICAL MANNER HAS HELD THAT IF CERTAIN MISTAKE WAS FOUND, THEN THE ASSESSE E WAS UNDER OBLIGATION TO FILE THE REVISED RETURN AND THROUGH REVISED RETU RN ONLY COULD CLAIM THE EXEMPTION. FOR THIS LEGAL PROPOSITION, HE HAS PLA CED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GO ETZE (INDIA) LTD. VS. CIT REPORTED AS 284 ITR 323 (SC). 8. ON HEARING RIVAL SUBMISSIONS, WE ARE OF THE VIE W THAT THIS ISSUE SHOULD ALSO HAVE BEEN DEALT WITH BY LEARNED CIT(APP EALS) INSTEAD OF BRUSH ASIDE THE SAME BY MERELY RELYING UPON THE DE CISION IN THE CASE OF GOETZE (INDIA) LTD.(SUPRA). THE SAID ORDER OF THE HON'BLE APEX COURT IS IN RESPECT OF A DIFFERENT CONTEXT AND LEARNED CI T(APPEALS) HAS WRONGLY PLACED RELIANCE ON THE SAID DECISION WHILE DISMISSING THE CLAIM OF THE ASSESSEE. THE ONLY QUESTION IS THAT IF THE MISTAKE WAS DETECTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THEN THE MISTAKE DESERVES TO BE RECTIFIED AND IT IS EXPE CTED FROM ASSESSING OFFICER TO ASSESS THE CORRECT INCOME IN THE HANDS O F THE ASSESSEE. HE HAS TO SEE THE NATURE AND THE SOURCE OF THE INCOME AND IF THE SAME IS ALSO DERIVED FROM THE SHARES OR IN THE NATURE OF DIVIDEN D INCOME, THEN HE IS UNDER STRICT OBLIGATION TO COMPUTE THE TAXABLE INCO ME AS PER THE PROVISIONS OF LAW. ON ONE HAND, THE ASSESSING OFFI CER HAS NOT PROCEEDED AS PER THE LAW LAID DOWN BY SEVERAL COURTS, HOWEVER , ON THE OTHER HAND, ITA NO . 681/AHD/2008 ANISH R.DHANANI VS. ITO ASST.YEAR 2004-05 - 8 - THE LEARNED CIT(APPEALS) HAS ALSO NOT PROCEEDED COR RECTLY. WE DEEM IT PROPER TO RESTORE THIS GROUND AS WELL BACK TO THE S TAGE OF FIRST APPEAL TO BE DECIDED DE NOVO AFTER PROVIDING REASONABLE OPPORTU NITIES OF BEING HEARD TO BOTH THE SIDES, SO THAT THE CORRECT DIVIDEND INC OME SHOULD BE DIRECTED TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. THER EFORE, THIS GROUND IS ALSO ALLOWED BUT FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED ONLY FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/ 06 /2010. SD/- SD/- ( N.S. SAINI ) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 06 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD