M/S. HARISH DOLATRAI GANDHI, MUMBAI V. THE ITO 11(2)(3), MUMBAI

ITA 6911/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1542 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 19-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Unexplained cash credit; Gift; Onus to prove; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R.K. PANDA, AM & SMT. ASHA VIJAYARAGHAV AN, JM I.T.A. NO. 6911/MUM/2007 (ASSESSMENT YEAR 2003-04) MR. HARISH DOLATRAI GANDHI SHOP NO. 3, GOMTI SMRUTI, JAMBLI GALLY, BORIVALI (WEST), MUMBAI-400 092 PAN: AACPG8188K VS. I.T.O. 11(2)(3) AAYAKAR BHAVAN, MUMBAI APPELLANT RESPONDENT APPELLANT BY: MR. SATISH R. MODY RESPONDENT BY: MR. SANDEEP DAHIYA O R D E R DATE OF HEARING: 26.05.2010 DATE OF ORDER: 04.06.2010 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 19 TH SEPTEMBER, 2007 OF THE CIT(A)-XI, MUMBAI RELATING TO ASSESSMENT YEAR 2003-04. 4. THE ASSESSEE IN ITS GROUNDS OF APPEAL HAS CHALLENGE D THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.2,85,00 0 MADE BY THE ASSESSING OFFICER U/S. 68 OF THE INCOME-TAX ACT, 19 61 (THE ACT). 5. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF THE CAPITAL ACCOUNT OF THE ASSESSEE NOTED THAT THE ASSESSEE HAS RECEIVED A GIF T OF RS.2,85,000 FROM ONE MR. H.R. PATIL. ON BEING QUESTIONED BY THE ASS ESSING OFFICER TO FILE THE COMPLETE DETAILS OF THE DONOR INCLUDING PAN AND ADD RESS, THE ASSESSEE FILED A GIFT DECLARATION DATED 3 RD FEBRUARY, 2003 FROM ONE MR. SATISCHANDRA R. PATEL AN NRI. IT WAS SUBMITTED THA T THE GIFT AMOUNT WAS I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 2 PAID BY CHEQUE OUT OF HIS NRE ACCOUNT NO. 532 WITH STATE BANK OF INDIA, BORIVALI (WEST) BRANCH, MUMBAI. IT WAS FURTHER STA TED BY THE ASSESSEES REPRESENTATIVE VIDE HIS LETTER DATED 8 TH DECEMBER, 2005 THAT THE DONOR WAS MR. SATISCHANDRA R. PATEL AND THE NAME OF MR. H .R. PATIL WAS WRONGLY CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE WHO IS, IN FACT, A WITNESS TO THE GIFT. THE ASSESSEE ALSO FURNISHED A COPY OF TH E NRE ACCOUNT OF THE DONOR WITH STATE BANK OF INDIA, BORIVALI (WEST) BRA NCH, MUMBAI. 6. THE ASSESSING OFFICER NOTED FROM THE COPY OF THE NR E ACCOUNT THAT FROM 13.3.1999 TILL 29.11.2002 THE BALANCE IN THE A CCOUNT HAS NEVER GONE ABOVE RS.13,000. FURTHER THE QUANTUM OF TRANSACTI ON HAS BEEN MEAGRE, MOSTLY RANGING FROM RS.200 TO RS.3000. THE ONLY SI ZEABLE AMOUNT WHICH WAS INTRODUCED WAS THAT OF US$ 6000 ON 21 ST JANUARY, 2003 WHICH WHEN CONVERTED AMOUNTS TO RS.2,84,050. THE DATE OF WITH DRAWAL IS 29 TH JANUARY, 2003 SHOWING A WITHDRAWAL OF RS.2,85,000 W HICH HAPPENS TO BE THE GIFT RECEIVED BY THE ASSESSEE. THE ASSESSING O FFICER THUS WAS OF THE OPINION THAT THERE IS NO CREDITWORTHINESS OF THE DO NOR AND THE AMOUNT GIFTED BY THE DONOR WAS NOTHING BUT THE ASSESSEES OWN MONEY INTRODUCED BY WAY OF GIFT. WHEN THIS WAS CONFRONTED TO THE AS SESSEE IT WAS SUBMITTED THAT THE GIFT WAS RECEIVED FROM MR. SATISCHANDRA R. PATEL, NRI, WHO IS A FRIEND AND NEIGHBOUR TO THE ASSESSEE. IT WAS SUBMI TTED THAT THE DONOR IS VERY MUCH CAPABLE OF GIVING GIFT OF RS.2,85,000. I T WAS FURTHER SUBMITTED THAT SINCE THE DONOR WAS NOT SATISFIED WITH THE SER VICES OF STATE BANK OF INDIA, BORIVALI (WEST) BRANCH, THEREFORE, HE IS ALS O HAVING OTHER ACCOUNTS IN BANK OF INDIA, BORIVALI (WEST) BRANCH WITH SAVIN G A/C. NOS. 29810 AND 29811 WHERE HE HAS ALSO REMITTED FOREIGN FUNDS. TH E DONOR WAS ALSO HAVING ACCOUNT WITH CANARA BANK, BORIVALI (WEST) BR ANCH HAVING NRO A/C. NO. 22955 AND 22956. 6.1 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED FROM T HE BANK ACCOUNTS SUBMITTED BEFORE HIM THAT THE TRANSACTIONS IN THOSE ACCOUNTS MOSTLY PERTAIN TO DEPOSITS OF LARGE AMOUNTS AND SUBSEQUENT WITHDRAWALS OF I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 3 APPROXIMATELY THE SAME AMOUNT WHICH HAS BEEN DEPOSI TED EARLIER. THEREFORE, IT IS HARD TO BELIEVE THAT THE SO CALLED GIFT GIVEN TO THE ASSESSEE WAS IN FACT A GIFT OR MERE TRANSACTION TO REFLECT I T AS A GENUINE GIFT. HE ACCORDINGLY TREATED THE GIFT OF RS.2,85,000 RECEIVE D BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT U /S. 68 OF THE ACT AND ADD ED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 7. IN APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER: 3.2 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIALS ON RECORD. THE APPELLANTS CONTENTION HAS SOME SER IOUS WEAKNESS. TO START WITH, THE NAME OF THE DONOR WAS APPARENTLY WRONGLY MENTIONED. A MONETARY GIFT OF S UCH A LARGE AMOUNT DOES NOT OCCUR QUITE OFTEN TO ANY PERS ON. IT IS, THUS, SURPRISING THAT THE APPELLANT MIXED UP THE NA ME OF THE DONOR WITH THAT OF THE WITNESS. SECONDLY, THE ACCO UNT FROM WHICH THE SO CALLED GIFT WAS GIVEN DOES NOT SHOW AN Y TRANSACTION WORTHWHILE OTHER THAN THE RECEIPT AND WITHDRAWAL OF WHICH THE WITHDRAWAL IS FOR THE PURPO SE OF THE GIFT. THE APPELLANTS STORY OF NOT BEING SATISFIED WITH THE SERVICES OF THE BANK DOES NOT APPEAR TO BE REASONAB LE BECAUSE IF IT WERE SO THE APPELLANT WOULD NOT HAVE ROUTED T HE SO CALLED GIFT FROM THE SAID BANK. THE CLAIM OF GIFT WAS MAD E BY THE APPELLANT AND HENCE THE ONUS WAS ON THE APPELLANT T O EXPLAIN TO THE SATISFACTION OF THE AO THE GENUINENESS OF SU CH TRANSACTION. UNDER THE FACTS AND CIRCUMSTANCES , I FIND MYSELF IN AGREEMENT WITH THE AOS CONTENTION IN THIS REGAR D THAT THE APPELLANT HAS FAILED TO ESTABLISH THAT IT WAS A GEN UINE GIFT. THEREFORE, THE ADDITION WITH REGARD TO GIFT IS UPHE LD. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DOLLARS HAVE BEEN BROUGHT FROM US AND THERE IS NO ALLEGATION THA T CASH HAS BEEN DEPOSITED. THERE IS ALSO NO DISPUTE TO THE FACT TH AT THE DONOR IS AN NRI AND THERE IS NO EVIDENCE WITH THE ASSESSING OFFICER THAT THE ASSESSEE HAS GIVEN HIS OWN CASH AND GOT THE MONEY FROM THE DONOR . HE SUBMITTED THAT THE COPY OF THE PASSPORT OF THE DONOR WAS PROVIDED TO THE ASSESSING OFFICER AND THEREFORE, THE IDENTITY WAS PROVED. TH E ASSESSEE HAS ALSO I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 4 PROVED THE CREDITWORTHINESS OF THE DONOR BY PROVIDI NG ALL THE BANK ACCOUNTS OF THE DONOR. HE SUBMITTED THAT MERE MENT ION OF THE WRONG NAME, WHICH IS AN INADVERTENT ERROR, CANNOT BE DETR IMENTAL TO THE GENUINENESS OF THE GIFT. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. R.S. SIBAL REPORTED IN 269 ITR 429, HE SUBMITTED THAT RELATIONSHIP IS NOT IMPORTANT FOR AC CEPTING THE GENUINENESS OF THE GIFT. REFERRING TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIMAL VS. C IT REPORTED IN 288 ITR 512, HE SUBMITTED THAT WHEN THE GIFT WAS MADE BY BA NK DRAFT AND THE DONOR ACCEPTED THE GIFT THE INITIAL BURDEN OF PROOF IS DISCHARGED BY THE ASSESSEE. WHEN THERE WAS NO PROOF THAT THE TRANSAC TION WAS NOT GENUINE THE ADDITION U/S. 68 CANNOT BE MADE. HE ACCORDINGL Y SUBMITTED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE ADDITION U /S. 68 BE DELETED. 10. THE LEARNED DR, ON THE OTHER HAND, WHILE SUPPORTING THE ORDER OF THE CIT(A), SUBMITTED THAT THE BURDEN OF PROOF FOR ACCEPTING THE GIFT AS GENUINE SQUARELY LIES ON THE ASSESSEE. HE SUBMITTE D THAT THERE WAS NO OCCASION ON THE PART OF THE DONOR TO MAKE SUCH A SU BSTANTIAL AMOUNT OF GIFT WHICH IS AGAINST THE HUMAN PROBABILITY. FURTH ER THE NAME OF THE DONOR AT VARIOUS PLACES ALSO DIFFERS. RELYING ON T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. P. MOHANAKALA R EPORTED IN 291 ITR 278, HE SUBMITTED THAT THE ORDER OF THE CIT(A) BE U PHELD. 11. THE LEARNED COUNSEL FOR THE ASSESSEE, IN HIS REJOIN DER, SUBMITTED THAT WRONG MENTIONING OF THE NAME IS NOT MATERIAL S INCE IT IS QUITE POSSIBLE THAT SOME INADVERTENT TYPOGRAPHICAL ERRORS MAY BE THERE. THE ASSESSING OFFICER HAS ALSO NEVER DOUBTED ABOUT THE ADDRESS OF THE DONOR. REFERRING TO THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIMAL (SUPRA) HE SUBMITTED THAT MOTIVE FOR GIVI NG THE GIFT IS NOT IMPORTANT. REFERRING TO THE DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF R.S. SIBAL (SUPRA), HE SUBMITTED THAT OCCAS ION FOR MAKING THE GIFT IS ALSO NOT MATERIAL. DISTINGUISHING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF P. MOHANAKALA (SUPRA) HE SUBMITTED T HAT THE SAID DECISION IS I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 5 NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SIN CE IN THAT CASE RECIPROCATION WAS PROVED WHEREAS IN THE INSTANT CAS E THERE IS NO SUCH RECIPROCATION. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE IMPUGNED APPEAL IS REGARDING THE ALLOWABILITY OF THE CLAIM OF GIFT OF RS.2,85,000 AS GENUINE OR NOT. WE FIND THE ASSESSEE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS HAS FILED A COPY OF THE PASSPORT OF THE DONOR AND T HE DECLARATION OF THE GIFT ALONG WITH BANK ACCOUNTS OF THE DONOR MAINTAINED WI TH SBI, BANK OF INDIA AND CANARA BANK. WE FIND THE ASSESSING OFFICER DOU BTED THE GENUINENESS OF THE GIFT ON THE GROUND THAT THERE IS ONLY ONE BI G TRANSACTION IN THE ACCOUNT MAINTAINED WITH SBI, BORIVALI (WEST) BRANCH FROM WHERE THE SO CALLED GIFT HAS BEEN MADE AND THE TRANSACTION IN TH E OTHER TWO BANK ACCOUNTS PERTAINED TO DEPOSITS OF LARGE AMOUNTS AND SUBSEQUENT WITHDRAWAL OF APPROXIMATELY THE SAME AMOUNT. HE AC CORDINGLY DISBELIEVED THE GIFT HOLDING THAT IT IS A MERE TRAN SACTION TO REFLECT IT AS A GENUINE GIFT. WE FIND THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT NAME OF THE DONOR WAS WRONGLY ME NTIONED AND THE ACCOUNT FROM WHICH THE GIFT WAS GIVEN DOES NOT SHOW ANY TRANSACTION WORTHWHILE OTHER THAN THE RECEIPT AND WITHDRAWAL OF THE GIFT AMOUNT. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT HE HAS PROVED THE IDENTIFY OF THE DONOR, THE CAPACITY OF THE DONO R AND THE GENUINENESS OF THE TRANSACTION. HOWEVER, WE DO NOT FIND MERIT IN THE ABOVE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS TH E SETTLED PROPOSITION OF LAW THAT FOR ACCEPTING ANY GIFT AS GENUINE THE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE IDENTITY AND CREDITWORTHINESS OF THE DONOR AND THE GENUINENE SS OF THE TRANSACTION. IN THE INSTANT CASE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN CAST ON HIM. THE ASSESSING O FFICER HAS GIVEN A FINDING THAT THERE IS ONLY ONE BIG TRANSACTION IN T HE BANK ACCOUNT FROM I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 6 WHICH THE GIFT HAS BEEN GIVEN AND THAT IS THE GIFT AMOUNT. SIMILARLY THERE ARE DEPOSITS AND EQUIVALENT WITHDRAWALS OF SAME AMO UNTS IN THE OTHER BANK ACCOUNTS. THUS, THE SOURCE OF THE DONOR WAS N OWHERE EXPLAINED. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE C ASE OF P. MOHANAKALA (SUPRA) THAT IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN THE BOOKS IS NOT SATISFACTORY, THERE IS, PRIMA FACIE EVIDENCE AGAINS T THE ASSESSEE I.E., THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME AND IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE AS SESSEE THAT IT WAS A RECEIPT OF AN INCOME NATURE. THE HONBLE SUPREME COURT IN THE SAID DECISION HAS FURTHER HELD THAT MERELY BECAUSE THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSAC TION WAS NOT BY ITSELF OF ANY CONSEQUENCE. 13. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATIS FACTION REGARDING THE CAPACITY OF THE DONOR AND THE GENUINENESS OF THE TR ANSACTION. THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER LAW. WE HOLD AND DIREC T ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 4 TH JUNE, 2010. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 4 TH JUNE, 2010 I.T.A. NO. 6911/MUM/2007 MR. HARISH DOLATRAI GANDHI ================== 7 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-VIII, MUMBAI, (4) THE CIT-VIII, MUMBAI, (5) THE DR, H BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO