POPATLAL G. RUPARELL, MUMBAI V. ITO 12(1)(1), MUMBAI

ITA 7072/MUM/2011

• Counselvise Citation: 707219914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: GIRISH DAVE
• Keywords: Gift
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUD ICIAL MEMBER . / ITA NO. 7072 /MUM./2011 ( / ASSESSMENT YEAR : 2008 09 ) MR. POPATLAL G. RUPARELL 5, RAHIMTOOLA HOUSE 7, HOMJI STREET, FORT MUMBAI 400 001 .. / APPELLANT V/S INCOME TAX OFFIC ER, WARD 12(1)(1) AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAGPR4306N / ASSESSEE BY : MR. GIRISH DAVE / REVENUE BY : MR. S HRIKANT NAMDEO / DATE OF HEARING 11 .0 6 .201 4 / DATE OF ORDE R 18.06.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE ASSESSEE CHALLENGING T HE IMPUGNED ORDER DATED 4 TH AUGUST 2011, PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXIII, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143, OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 2008 09. MR. POPATLAL G. RUPARELL 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN LAW IN CONFIRMING THE ADDITION OF ` 21,16,265 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RECEIPT OF GIFTS OF THE SAME AMOUNT FROM THE SON OF YOUR APPELLANT. 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL AND A SENIOR CITIZEN HAVING INCOME MAINLY FROM INTEREST. THE ASSESSING OFFICER, IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, NOTED THAT THE ASSESSEE, IN HIS BALANCE SHEET, HAD SHOWN AMOUNT OF ` 21,16,265, AS GIFT RECEIVED FROM HI S SON , MR. ABHAY POPATLAL RUPARELL, WHO IS RESIDENT OF LONDON, U.K. THE ASSESSEE, IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, SUBMITTED TWO GIFT DEEDS DATED 2 ND OCTOBER 2007 AND 26 TH NOVEMBER 2007, SIGNED BY THE DONOR I.E., HIS SO N. THE ASSESSEE FURTHER SUBMITTED THAT THE AMOUNT OF GIFTS HAVE BEEN RECEIVED FROM THE BANK ACCOUNT IN LONDON AND ALSO FURNISHED THE COPY OF ASSESSEES BANK ACCOUNT WHEREIN THIS TRANSACTION HAS BEEN REFLECTED , THROUGH TRANSFER ENTRY . THE GIFT WAS SAID TO H AVE BEEN GIVEN BY A SON TO HIS FATHER OUT OF NATURAL LOVE AND AFFECTION. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT THERE WAS NO PARTICULAR OCCASION OR REASON FOR GIVING THE GIFT. BESIDES THIS, THE ASSESSEE HAS ALSO SHOWN E XPENDITURE UNDER THE HEAD HOUSE REPAIRS TO THE TUNE OF ` 19,26,414, FOR WHICH THE ASSESSEE COULD NOT GIVEN SATISFACTORY EXPLANATION PROBABLY TO COVER THESE EXPENDITURES, ASSESSEE MUST HAVE SHOWN THESE GIFTS . ON THESE GROUNDS, HE ADDED AMOUNT OF GIFT AS I NCOME OF THE ASSESSEE. 3 . IN THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT HE HAS DISCHARGED HI S PRIMARY ONUS OF ESTABLISHING THE IDENTITY, CAPACITY OF THE DONOR AND GENUINENESS OF THE TRANSACTION BY PRODUCING THE FOLLOWING EVIDENCE BEFORE THE ASSE SSING OFFICER: MR. POPATLAL G. RUPARELL 3 I ) DECLARATION OF THE FACTUM OF THE GIFT I.E., COPY OF THE GIFT DEEDS; II ) CONFIRMATION FROM BRITISH COMPANY (COMMERCE INTERNATIONAL G.B. LTD. ) , REMITTING THE SAME AMOUNT ON BEHALF OF MR. ABHAY POPATLAL RUPARELL, WHO WAS THE MANAGING DIRECTOR OF THE SAID COMPANY; III ) COPY OF THE CERTIFICATE FROM THE SAID COMPANY THAT UNDER THE INSTRUCTION OF MR. ABHAY POPATLAL RUPARELL, AN AMOUNT OF 11,375 POUNDS WAS REMITTED ON 28 TH SEPTEMBER 2007, TO THE ASSESSEE; IV ) CONFIRMATION FROM THE DONORS THAT GIFT HAS B EEN M ADE FROM THE JOINT ACCOUNT OF MR. BHARAT POPATLAL RUPARELL, AND MR. ABHAY POPATLAL RUPARELL FOR U.S. $ 29,993; V ) INWARD REMITTANCE CERTIFICATES ISSUED BY THE AXIS BANK ALONG WITH THE BANK STATEMENT OF THE AXIS BANK WHEREIN THE ASSESSEE HAD THE ACCOUNT; VI ) ADD RESS AND COPY OF PASSPORT OF MR. ABHAY POPATLAL RUPARELL; AND VII ) COPY OF RETURN OF INCOME ALONG WITH THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2008 09; 4 . IT WAS FURTHER SUBMITTED THAT MR. ABHA Y POPATLAL RUPARELL, HAD ALSO APPEARED BEFORE THE ASSESSING OFFICER AND IN HIS PRESENCE, HE HAS MR. POPATLAL G. RUPARELL 4 CONFIRMED THE SAID GIFT AND ALSO PUT HIS SIGNATURE SO THAT THE ASSESSING OFFICER CAN VERIFY THE GENUINENESS AND AUTHENTICITY OF THE TRANSACTIONS. ALL THESE FACTS HAVE NOT BEEN MENTIONED BY THE ASSESSING OFFICER IN HIS O RDER. BESIDES THIS, LEGAL SUBMISSIONS WERE ALSO MADE THAT THE GIFT CAN BE GIVEN EITHER BY WAY OF DECLARATORY DOCUMENT OR BY AN ORAL DELIVERY. THERE IS NOTHING IN THE LAW THAT THE SAID GIFT DEEDS NEED TO BE REGISTERED EITHER IN INDIA OR IN U.K. FROM WHERE THE GIFT DEED HAS BEEN SENT. REGARDING THE ASSESSING OFFICERS ALLEGATION THAT THE ASSESSEE COULD NOT GIVE THE EXPLANATION REGARDING THE EXPENDITURE INCURRED IN HOUSE REPAIRS TO HOLD THAT THE GIFTS HAVE BEEN SHOWN ONLY TO COVER SUCH EXPENDITURE IS WITHOUT ANY BASIS OR ANY NEXUS BETWEEN THE HOUSE REPAIR EXPENDITURE AND THE GIFT. 5 . THE LEARNED COMMISSIONER (APPEALS) HELD THAT DESPITE ADDUCING VARIOUS DOCUMENTS, THE CAPACITY OF MR. ABHAY POPATLAL RUPARELL, REMITTING THE MONEY HAS NOT BEEN PROVED. THE COPY OF AC KNOWLEDGEMENT OF THE RETURN OF INCOME WHICH HAS BEEN FILED IN CASE OF THE DONOR IS THE RETURN OF INCOME WHICH WAS FILED IN INDIA, WHEREIN A VERY MINOR INCOME OF ` 3,31,970 HAS BEEN SHOWN. BESIDES THIS, MR. ABHAY POPATLAL RUPARELL, HAS ALSO CLAIMED LONG TER M CAPITAL LOSS AGGREGATING TO ` 54,05,170. IN THE INDIAN RETURN OF INCOME, THERE IS NO MENTION ABOUT THE GIFTS MADE TO HIS FATHER. THE COPY OF RETURN OF INCOME FILED IN THE U.K. ALONG WITH THE PERSONAL BANK ACCOUNT OF THE DONOR IN U.K. HAS ALSO NOT BEEN FI LED. THUS, CAPACITY OF SON TO GIVE SUCH A GIFT IS NOT PROVED. THE LEARNED COMMISSIONER (APPEALS) ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT V/S ANIL KUMAR, [2008] 167 TAXMAN 143 (DEL.), WHEREIN IT HAS BEEN HELD THAT THE MOVEMENT O F AMOUNT THROUGH BANKING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT AND THE ONUS LIES ON THE DONEE TO MR. POPATLAL G. RUPARELL 5 ESTABLISH THE IDENTITY AND CAP A CITY OF THE DONOR. BESIDES THIS, RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE PUNJAB & HARY ANA HIGH COURT IN TIRATHRAM GUPTA V/S CIT, [2008] 304 ITR 145 (P&H). THE LEARNED COMMISSIONER (APPEALS) HAS REJECTED THE ASSESSEES RELIANCE ON THE PROVISO TO SECTION 56(2)(VI) AS THE SAID SECTION DOES NOT GIVE BLANKET EXEMPTION TO ALL THE RECEIPTS OF GIFT FROM RELATIVE. GENUINENESS OF THE TRANSACTIONS A ND THE SOURCE HAVE TO BE PROVED, WHICH HAS NOT BEEN DONE IN THIS CASE. 6 . BEFORE US, THE LEARNED COUNSEL, MR. GIRISH DAVE, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS MORE THAN 85 YEARS OLD AND T HE DONOR IS A SON WHO IS A MANAGING DIRECTOR IN A BRITISH COMPANY VIZ. COMMERCE INTERNATIONAL G.B. LTD., AND IS ALSO A PERMANENT RESIDENT OF U.K. HE HAS GIVEN THE GIFT TO HIS FATHER FOR SUMS AGGREGATING TO ` 21,16,265, WHICH HE HAS DULY CONFIRMED , FIRSTLY , BY WAY OF TWO GIFT DEEDS DATED 2 ND OCTOBER 2007 AND 26 TH NOVEMBER 2007, AND SECONDLY, BY APPEARING BEFORE THE ASSESSING OFFICER IN INDIA AND DULY DEPOSED BEFORE HIM ABOUT THE FACTUM OF THE GIFT. THE SOURCE OF THE GIFT HAS ALSO BEEN SHOWN PARTLY FROM JOINT BANK ACCOUNT OF MR. BHARAT POPATLAL RUPARELL (BROTHER OF THE DONOR) AND THE DONOR HIMSELF , AND PARTLY THROUGH THE REMITTANCE MADE BY THE COMPANY COMMERCIAL INTERNATIONAL G.B. LTD. , WHICH HAS REMITTED THE AMOUNT DIRECTLY IN THE BANK ACCOUNT OF THE ASSESSEE AS PER THE DIRECTIONS OF MR. ABHAY POPATLAL RUPARELL (DONOR) , WHO WAS THE MANAGING DIRECTOR OF THE COMPANY. ALL THESE TRANSACTIONS NOT ONLY GO TO PROVE THE SOURCE OF THE GIFT RECEIVED BY THE ASSESSEE BUT ALSO THE GENUINENESS OF THE TRANSACTION. HE ALSO DR EW OUR ATTENTION TO THE INWARD REMITTANCE TRANSACTION ADVISE ISSUED BY AXIS BANK WHICH GIVES THE DETAILS OF DRAWEE BANK IN LONDON NAMELY , BARCLAY BANK PLC, LONDON, AND J.P. MR. POPATLAL G. RUPARELL 6 MORGAN CHASE BANK, NEW YORK, AND ALSO THE AMOUNT REMITTED IN THE BANK ACCOUNT OF TH E ASSESSEE. HE ALSO DREW OUR ATTENTION TO THE COPY OF THE ASSESSEES BANK ACCOUNT WHEREIN THE SAID AMOUNT HAS BEEN CREDITED. BESIDES THIS, HE ALSO REFERRED TO THE OTHER DOCUMENTS , WHICH WAS FILED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED C OMMISSIONER (APPEALS). REGARDING THE LEARNED COMMISSIONER (APPEALS)S OBSERVATIONS ABOUT THE CAPACITY OF THE DONOR TO GIVE THE GIFT TO THE ASSESSEE, MR. GIRISH DAVE, SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) HAS TAKEN THE INCOME SHOWN IN THE INCOME TAX RETURN FILED BY THE DONEE IN INDIA WITHOUT CONSIDERING THE FACT THE SOURCE OF THE GIFT , IF AT ALL WOULD BE REFLECTED, IT WOULD BE IN THE INCOME TAX RETURN FILED IN THE U.K. THE INCOME WHICH HAS BEEN SHOWN IN INDIA, ARE THE ONLY INCOME WHICH HAS ARISEN OR ACCRUED IN INDIA. OTHERWISE ALSO, WHEN DIRECT SOURCE HAS BEEN EXPLAINED BY THE DON OR , THEN THE CAPACITY OF THE DON OR CANNOT BE DOUBTED. REGARDING THE ASSESSING OFFICERS ALLEGATION THAT THE GIFT DEEDS HAVE NOT BEEN MADE ON STAMP PAPER AND HAS NOT BEEN AUTHENTICATED BY THE LAWS OF LONDON, HE SUBMITTED THAT THERE IS NO SUCH LAW THAT THE GIFT DEEDS HAVE TO BE EXECUTED ON STAMP PAPER OR IT NEEDS TO BE AUTHENTICATED UNDER ANY LAW OF U.K. IT IS SUFFICIENT REQUIREMENT OF LAW, IF THE GIFT HAS BEEN GIVEN BY THE DONOR AND HAS BEEN ACCEPTED BY THE DONEE. THUS, HE CONCLUDED THAT THERE IS NO OTHER MATERIAL ON RECORD TO SHOW THAT THE GENUINENESS OF THE GIFT CAN BE DOUBTED. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE WAS REQ UIRED TO PROVE THE CAPACITY OF THE DONOR BY SHOWING HIS INCOME TAX RETURN REFLECTING SUCH FACTUM OF GIFT OUT OF THE SOURCE DISCLOSED IN THE BALANCE SHEET, OR BY HIS PERSONAL BANK ACCOUNT. IN THE ABSENCE OF THESE EVIDENCE S , IT IS DIFFICULT TO SHOW MR. POPATLAL G. RUPARELL 7 THAT THE DONOR HAD THE CREDITWORTHINESS OR THE CAPACITY. THUS, HE STRONGLY RELIED UPON THE REASONS GIVEN BY THE LEARNED COMMISSIONER (APPEALS). 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATER IAL AVAILABLE ON RECORD . IN SUCH CASES, LAW REQUIRES THAT IF A SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, THE NATURE AND SOURCE OF SUCH CREDIT HAS TO BE SATISFACTORILY EXPLAINED. IN THE PRESENT CASE, THE NATURE OF THE SUM SHOWN IN THE BALANCE SHEE T IS ON ACCOUNT OF GIFT RECEIVED BY FATHER FROM HIS SON. THE SOURCE CAN BE EXPLAINED BY PRIMA FACIE PROVING THE IDENTITY OF THE PERSON GIVING THE AMOUNT, GENUINENESS OF THE TRANSACTION AND ALSO THE CREDITWORTHINESS OF THE PERSON WHO HAS GIVEN THE SUM. IF T HE NATURE AND SOURCE IS PROVED, THEN THE ADDITION CANNOT BE MADE UNDER THE DEEMING PROVISION OF SECTION 68 , UNLESS SUCH EXPLANATION IS REBUTTED BY SOME COGENT MATERIAL ON RECORD . IN THE PRESENT CASE, T O ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAD FURNISHED, FIRSTLY, TWO GIFT DEEDS SIGNED BY THE DONOR GIVING THE ENTIRE DETAILS OF THE FACTUM O F GIFT; SECONDLY, CERTIFICATE OF THE BRITISH COMPANY COMMERCIAL INTERNATIONAL G.B. LTD., WHEREIN MR. A BHAY POPATLAL RUPARELL, THE DONOR HEREIN, IS THE MANAGING DIRECTOR OF THE SAID BRITISH COMPANY, CERTIFYING THAT THE AMOUNT OF 11,375 PONDS WAS REMITTED ON 28 TH SEPTEMBER 2007, TO THE ASSESSEE AND ALSO CERTIFICATE OF MR. BHARAT POPATLAL RUPARELL , AND MR. AB HAY POPATLAL RUPARELL, CONFIRMING THAT AN AMOUNT OF U.S. DOLLAR 29,993, WAS REMITTED ON 23 RD NOVEMBER 2007, TO THE ASSESSEE FROM THEIR JOINT BANK ACCOUNT; THIRDLY, THE INWARD REMITTANCE TRANSACTION ADVISE REFLECTS THAT THE SAID AMOUNTS HAVE BEEN ROUTED THR OUGH DRAWEE BANKS AT LONDON AND NEW YORK AND RECEIVED IN MR. POPATLAL G. RUPARELL 8 AXIS BANK IN INDIA , BELONGING TO THE ASSESSEE . BESIDES THIS, COPY OF BANK ACCOUNT OF THE ASSESSEE REFLECTING THE AMOUNT RECEIVED THROUGH REMITT A NCE FROM ABROAD. THESE DOCUMENTS ARE PRIMA FACIE SUFFIC IENT TO HOLD THE GENUINENESS OF THE TRANSACTIONS AND ALSO THE SOURCE OF THE CREDIT ENTRIES MADE IN THE ASSESSEES BOOK. THE CREDITWORTHINESS AND THE CAPACITY OF THE DONOR ALSO CANNOT BE DOUBTED ALSO FOR THE REASON THAT HE IS THE MANAGING DIRECTOR OF THE BR ITISH COMPANY THROUGH WHICH HE HAS REMITTED THE SUM AND HAS ALSO CONFIRMED THE SAME BEFORE THE ASSESSING OFFICER IN PERSON AND, SECONDLY, HIS BALANCE SHEET FILED IN INDIA SHOWS INVESTMENT OF MORE THAN ` 10.25 CRORES AS ON 31 ST MARCH 2008. ONCE ALL THESE DO CUMENTS AND EVIDENCES HAVE BEEN FURNISHED, THE PRIMARY ONUS OF THE ASSESSEE STANDS DISCHARGED AND THE ONUS SHIFTS UPON THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEES EXPLANATION AS WELL AS THE EVIDENCES ARE NOT TENABLE ON THE BASIS OF ANY MATERIAL COLL ECTED BY WAY OF ENQUIRY. SIMPLY BECAUSE SUCH A TRANSACTION OF GIFT HAS NOT BEEN MENTIONED IN THE INCOME TAX RETURN OF INCOME OF THE DONOR FILED IN INDIA, IT CANNOT LEAD TO ANY INFERENCE THAT HE DID NOT HAD THE CAPACITY . BEING A RESIDENT OF U.K., HE IS REQU IRED TO DISCLOSE THE SOURCE IN THE RETURN OF INCOME FILED IN THE U.K. BESIDES THIS, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO FILED A CERTIFICATE FROM THE BRITISH COMPANY COMMERCIAL INTERNATIONAL G.B. LTD. THAT THE AMOUNT WHICH WAS REMITTED AS PER THE D IRECTION OF MR. ABHAY POPALTLAL RUPARELL, IS STANDING IN HIS NAME IN THE BOOKS OF THE SAID BRITISH COMPANY. ON THESE FACTS AND ESPECIALLY, IN VIEW OF THE FACT THAT FACTUM OF GIFT TRANSACTION IS BETWEEN SON AND FATHER , WE DO NOT FIN D ANY REASON TO HOLD THA T SUCH A GIFT IS NOT GENUINE. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE ADDITION MADE ON ACCOUNT OF GIFT IN THE HANDS OF THE ASSESSEE. MR. POPATLAL G. RUPARELL 9 9 . 6 . IN T HE RESULT, ASSESSEES APPEAL IS ALLOWED . 18 TH JUNE 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 18 TH JUNE 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 18 TH JUNE 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI C ITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETAR Y / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI