The ITO, Ward 2(2), JAMNAGAR V. Shri Vivek Maheshbhai Mehta, JAMNAGAR

ITA 703/RJT/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62782 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA
• Keywords: Unexplained cash credit; Gift
• Section: 68; 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO. 703/RJT/2010 / ASSESSMENT YEAR 2005-06 INCOME-TAX OFFICER V. SHRI VIVEK MAHESHBHAI M EHTA WARD-2 (2), JAMNAGAAR. PROP OF FREVI INDUSTRIES PLOT NO.9, GIDC PHASE-II DARED, JAMNAGAR. PAN: AGAPM2503Q. DATE OF HEARING : 24-04-2012. DATE OF PRONOUNCEMENT : 30-04-2012. REVENUE BY: SHRI M. K. SINGH, D.R ASSESSEE BY: SHRI J. C. RANPURA, C.A. / // / ORDER . .. . . . . . / D. K. SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 23-12-2009 DELETING THE ADDITION OF RS.10,00,000/- MADE BY THE AO U/S.68 OF THE INC OME-TAX ACT, WITH THE FOLLOWING OBSERVATIONS: 9. I HAVE CAREFULLY CONSIDERED THE FINDING OF THE ASSESSING OFFICER AND THE SUBMISSION OF THE AR OF THE APPELLANT. THE FAC TS IN BRIEF ARE THAT THE APPELLANT RECEIVED GIFTS FROM TWO INDIVIDUALS DURIN G THE YEARS UNDER REFERENCE. THE ALLEGATION OF THE AO IS THAT THE GI FTS GIVEN ARE BOGUS. HE RELIED UPON VARIOUS DECISIONS RELATED TO THE PROVIS IONS OF SECTION 68 AND STATED THAT THE SAME ARE APPLICABLE TO THE GIFT TRA NSACTIONS ALSO. IN THE ASSESSMENT PROCEEDINGS THE AO CALLED FOR THE DONEE AND HIS FATHER AND RECORDED THEIR STATEMENT WHEREIN GIFT IS CONFIRMED BUT PERSONAL DETAILS OF THE DONOR WAS NOT KNOWN. THE AO HAS ALSO ENQUIRED U/S.1 33(6) AND EACH DONOR HAS CONFIRMED THE GIFT TRANSACTION. HOWEVER, THE A O STATED THAT THE DONOR HAD CERTAIN DISCREPANCY IN THE ACCOUNT. THE AO HAS NOT FURTHER ENQUIRED THE CAUSE OF MISTAKE DIRECTLY OR THROUGH OFFICE AT MUMB AI AND HAS SAID THAT THE APPELLANT FAILED TO PROVE THE INGREDIENTS OF SECTIO N 68. IT APPEARS FROM THE RECORD THAT, SO FAR AS IDENTITY AND GENUINENESS OF TRANSACTIONS IS CONCERNED, THE DONORS RESPONDED THE ENQUIRY U/S.133(6) AND HAS CONFIRMED THE GIFT AND FRIENDSHIP WITH THE FATHER OF THE DONEE AND HAS CLE ARLY CONFIRMED THE GIFT AND ALSO STATED THAT, THEY ARE REGULARLY ASSESSED TO TA X AND TRANSACTIONS ERE ROUTED THROUGH THE BANKING CHANNEL; THEREFORE THESE TWO CONDITIONS HAVE BEEN FULFILLED. REGARDING THE DOUBT ABOUT CREDITWO RTHINESS OF ALL THE DONORS, THE AO COLLECTED RESPECTIVE BANK ACCOUNT, COPIES OF CAPITAL ACCOUNTS AND OTHER FINANCIAL DATA, BANK STATEMENTS ETC. IT IS A LSO SEEN THAT BEFORE GIVING THE GIFT, DONOR HAS RECOVERED THE BOOKS DEBTS AND I T IS NOT SO THAT CASH HAS BEEN DEPOSITED BY THE DONOR. ITA 703/2010. 2 10. AS AGAINST THIS, THE AR OF THE APPELLANT CONTEN DED THAT TO SUBSTANTIATE THE GENUINENESS OF GIFTS, ALL THE REQUISITE INFORMA TION / DETAILS WERE FURNISHED TO THE AO WHICH CONTAINED INTER ALIA THE COPIES OF RELEVANT ACCOUNTS, AFFIDAVITS OF THE DONORS, DIRECT RESPONSE OF THE EN QUIRY UNDER SECTION 133(6) OF DONORS BEFORE THE AO AND THEIR CONFIRMATIONS ABO UT GIFTS. THESE PROVED BEYOND DOUBTS THAT THE GIFTS ARE GENUINE AND NOT TH E UNEXPLAINED CREDITS UNDER SECTION 68 OF THE ACT. IT IS ALSO CONTENDED THAT THE AO HAS STRETCHED THE ISSUE BEYOND LIMITS AND MADE THE ADDITION MEREL Y ON THE GROUND OF SUSPICIONS. THE AO TOTALLY IGNORED THE FACT THAT T HE APPELLANTS FATHER HAD OBLIGED THE DONOR TO SETTLE IN BOMBAY. 11. DOUBTING THE GENUINENESS OF GIFT DUE TO ABSENCE OF BLOOD RELATIONS IS NOT PLAUSIBLE IN THE APPELLANTS CASE NON DOUBT TH E DONORS ARE NOT BLOOD RELATIVES BUT ARE ASSOCIATES IN THE LINE OF BUSINES S AND WHERE UNDER MORAL OBLIGATION. THE ABSENCE OF BLOOD RELATIONSHIP BETW EEN THE DONOR AND DONEE IN ITSELF DOES NOT MAKE GIFT INVALID OR DOUBTFUL. IN THIS REGARD OBSERVATION OF THE CHANDIGARH BENCH OF ITAT IN THE CASE OF R. K. S YAL VS. ACIT 66 TTJ 656 ITAT IS WORTH MENTIONED HEREIN IT IS HELD THAT: HOWEVER, IT CANNOT BE IGNORED THAT THESE ELEMENTS OF CLOSE RELATIONSHIP AND OCCASION ARE NOT LEGALLY NECESSARY, THOUGH THEY LEN D CREDENCE TO THE GIFTS MADE BY THE DONORS. IT MAY ALSO BE NOT OUT OF PLAC E TO MENTION THAT HUMAN NATURE IS FULL OF COMPLEXITIES. IT IS QUITE POSSIB LE THAT A PERSON MAY BE AT DAGGERS DRAWN WITH HIS CLOSE RELATIONS AND MAY NOT LIKE TO PART WITH ANYTHING IN THEIR FAVOUR BUT AT THE SAME TIME A PERSON MAY DEVELOP FANCY FOR A FRIEND OR A NEIGHBOUR FOR THE REASONS WHICH APPEAL TO HIM, HOWEVER REDUNDANT SUCH REASONS MAY APPEAR TO OTHERS. LOOKED AT FROM THIS ANGLE, A PERSON MAY DEVELOP LOVE AND AFFECTION SPONTANEOUSLY FOR ANY PE RSON OR FOR ANY CAUSE AND MAY LIKE PART WITH BULK OF HIS SOURCES IN THE F ORM OF MONEY AND MAKE A GIFT. IN SUCH CIRCUMSTANCES, THE PERSON MAKING THE GIFT CANNOT BE FOUND FAULT WITH AND THE GIFT CANNOT BE TREATED AS IN GENUINE O NLY ON THE BASIS THAT THE DONOR IS NOT RELATED TO THE DONEE AND THERE IS NO O CCASION FOR MAKING THE GIFT. 12. ON FACTS AVAILABLE ON RECORD, IT IS SEEN THAT T HE APPELLANT HAS ESTABLISHED IDENTIFY AND GENUINENESS OF TRANSACTION S BEYOND DOUBT. SO FAR AS CREDITWORTHINESS IS CONCERNED THE APPELLANT HAD FILED COPIES OF BALANCE SHEETS, CAPITAL ACCOUNT AND ACKNOWLEDGEMENTS OF RET URNS OF INCOME IN THE CASE OF DONORS. THE AO HAS NOT MADE ANY FURTHER EN QUIRIES, EVEN THOUGH THERE WAS NO EVIDENCE OF DEPOSIT OF ANY CASH THE AC COUNT OF THE DONORS. MERELY BECAUSE ASSESSEE OR HIS FATHER DID NOT KNOW THE NAME OF GRANDPARENTS OF THE DONOR DOES NOT MEAN THAT THEY A RE UNKNOWN TO EACH OTHER. ITA 703/2010. 3 13. THE CRUX OF THE ISSUE IS TO DECIDE THE ELEMENT OF CLOSE RELATIONSHIP OR OCCASION FOR MAKING THE GIFT. AS PER THE DEFINITIO N OF GIFT (GIVEN INS. 2(XII) OF THE GIFT-TAX ACT, WHICH HAS BEEN ABOLISHED), THE ON LY CONDITIONS THAT HAVE BEEN LAID ARE THAT THERE SHOULD BE TRANSFER BY ONE PERSON TO ANOTHER OF ANY EXISTING MOVABLE OR IMMOVABLE PROPERTY, THE TRANSFE R SHOULD BE VOLUNTARY AND IT SHOULD BE MADE WITHOUT CONSIDERATION OF ANY MONE Y OR MONEYS WORTH. THUS, THE ELEMENTS OF CLOSE RELATIONSHIP AND OCCASI ON RELATE TO THE REALM OF HUMAN PROBABILITIES AND ARE IN THE NATURE OF CIRCUM STANTIAL EVIDENCE WHICH MAY HAVE TO BE LOOKED INTO IF THE DIRECT EVIDENCE R ELATING TO MAKING OF GIFT IS FOUND WANTING. IT HAS BEEN HELD BY RAJASTHAN HIGH C OURT IN THE CASE OF CIT VS. RAM DEV KUMAR CHITLANGIA REPORTED IN 315 ITR PA GE 435 THAT WHERE THE DONOR HAS NECESSARY RESOURCES AND THE FACTUM OF GIF T WAS ESTABLISHED, WITH THE DONORS HAVING CONFIRMED THE GIFT, IT COULD NOT BE TREATED AS INCOME MERELY BECAUSE THE GIFT WAS RECEIVED FROM A NON RELATIVE. SIMILAR VIE HAS BEEN TAKEN BY ITAT, RAJKOT BENCH IN THE CASE OF ITO VS. SMT. K UNJBALA VADILAL RANPARA IN ITA NO.182/RJT/2009. AS CASE OF ASSESSEE IS IDE NTICAL AND FACTUM OF GIFT STANDS PROVED, ADDITION OF RS.10,00,000/- MADE U/S. 68 IS DELETED. 2. WE HAVE HEARD BOTH THE PARTIES. AT THE TIME OF H EARING, THE LD. DEPARTMENTAL REPRESENTATIVE COULD NEITHER REBUT THE FINDINGS REC ORDED BY THE CIT(A) NOR SHOW AS TO HOW THE FINDING RECORDED BY THE CIT(A) WAS UNREA SONABLE OR IRRATIONAL OR INCONSISTENT WITH LAW. IN THIS VIEW OF THE MATTER, THE FINDING RECORDED BY THE CIT(A) IS CONFIRMED. APPEAL FILED BY THE DEPARTMENT IS DISMIS SED. ) + 30-04-2012 . ) THIS ORDER PRONOUNCED IN OPEN COURT ON 30-04-2012. SD/- SD/- ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ DATE 30 -04-2012. /RAJKOT ) )) ) 12 12 12 12 32 32 32 32 / COPY OF ORDER FORWARDED TO:- 1. 6 / APPELLANT-THE ITO, WARD-2(2),JAMNAGAR. 2. 186 / RESPONDENT-SHRI VIVEK MAHESHBHAI MEHTA, JAMNAGAR .. 3. ; / CONCERNED CIT, JAMNAGAR... 4. ;- / CIT (A), JAMNAGAR.. 5. 2 1, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR/ , / ITAT, RAJKOT