Subhash Hastimal Lodha, Pune V. Deputy Commissioner of Income-tax,

ITA 723/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1681 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-12-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 11-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Capital asset; Gift; Charitable institution; Additional evidence; Sham transactions
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 723/PN/2014 %' ( ')( / ASSESSMENT YEAR : 1999-2000 SHRI SUBHASH HASTIMAL LODHA, 417-18-19, MARKET YARD, PUNE 411037 PAN : AAQPL3064M ....... / APPELLANT ' / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE / RESPONDENT / ITA NO. 1358/PN/2014 %' ( ')( / ASSESSMENT YEAR : 1999-2000 DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE ....... / APPELLANT ' / V/S. SHRI SUBHASH HASTIMAL LODHA, 493/494, MARKET YARD, PUNE 411037 PAN : AAQPL3064M / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 26-04-2016 / DATE OF PRONOUNCEMENT : 27-06-2016 2 ITA NOS. 723 & 1358/PN/2014 * / ORDER PER VIKAS AWASTHY, JM : ITA NO. 723/PN/2014 HAS BEEN FILED BY THE ASSESSEE AGA INST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE D ATED 31-12-2013 FOR THE ASSESSMENT YEAR 1999-2000. THE RE VENUE HAS ALSO FILED CROSS APPEAL AGAINST THE AFORESAID ORDER OF COMMISSION ER OF INCOME TAX (APPEALS) IN ITA NO. 1358/PN/2014. THIS IS THE SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL FOR THE ASSESSMENT Y EAR 1999-2000. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE HAD RECEIVED SBI NRI BONDS HAVING FACE VALUE OF MORE THAN $ 1,25,000/- ( ` 1,36,03,954/- APPROX.) FROM VARIOUS NON-RESIDENT INDIANS WORKING IN GULF. THESE B ONDS WERE REDEEMED BY THE ASSESSEE DURING THE PERIOD 21-05-1998 TO 12-09-1998. THE PROCEEDS ARE AFTER REDEMPTION OF THE BONDS WERE DE POSITED BY THE ASSESSEE IN HIS SAVING BANK ACCOUNT NO. 132 WITH PUNE P EOPLES CO- OPERATIVE BANK. AS PER THE CONTENTIONS OF THE ASSESSE E THE BONDS WERE RECEIVED BY THE ASSESSEE AS GIFTS FOR THE PURPOSE OF CHA RITY AND NOT FOR HIS PERSONAL USE. DURING THE COURSE OF SCRUTINY ASSESSME NT PROCEEDINGS THE ASSESSING OFFICER VIDE ORDER DATED 28-03- 2002 DISBELIEVED THE ASSESSEES THEORY OF GIFT OF SBI NRI BONDS AND MADE ADDITION OF ` 1,36,03,954/- U/S. 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). TH E COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS OF THE CASE CONFIRMED THE ADDITION AND DISMISSED THE APPEAL O F THE ASSESSEE. THEREAFTER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE 3 ITA NOS. 723 & 1358/PN/2014 TRIBUNAL IN ITA NO. 477/PN/2003. BEFORE THE TRIBUNAL THE A SSESSEE FILED ADDITIONAL EVIDENCE AND ELABORATE EXPLANATIONS TO SUBST ANTIATE HIS PLEA. THE TRIBUNAL VIDE ORDER DATED 31-10-2007 RESTORE D THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE MATTER AFRESH IN THE LIGHT OF ADDITIONAL EVIDENCE AS WELL AS ELABORATE EXPLANATION OFFERED BY THE ASSESSEE. AN OPPORTUNITY WAS FURTHER GRANTED TO T HE ASSESSEE TO ADDUCE FURTHER EVIDENCE IN SUPPORT OF HIS CONTENTIONS BE FORE THE ASSESSING OFFICER. IN SECOND ROUND OF ASSESSMENT, THE ASSESSING OFFICER AGAIN REJECTED THE CONTENTIONS OF THE ASSESSEE AND MADE ADD ITION OF ` 1,36,03,954/- HOLDING GIFT OF SBI NRI BONDS FROM UNKNOWN PER SONS AS SHAM TRANSACTION. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-12-2008 P ASSED U/S. 143(3) R.W.S. 254 OF THE ACT, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF I NCOME TAX (APPEALS) ACCEPTED THE PROPOSITION OF ASSESSEE IN RES PECT OF SBI NRI BONDS RECEIVED AS GIFT. HOWEVER, THE COMMISSIONER OF INCO ME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE ONLY TO THE EXTE NT OF AMOUNT TRANSFERRED BY THE ASSESSEE TO CHARITABLE TRUST I.E. ` 57,65,500/- AND THE VALUE OF LAND I.E. ` 8,80,000/- TRANSFERRED BY THE ASSESSEE TO THE TRUST UNDER LEASE DEED DATED 15-05-2004. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 69,58,954/-. AGAINST THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) BOTH, THE ASSE SSEE AND THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE IN GROUNDS OF APPEAL HAS RAISED 6 GROUN DS. THE SOLITARY ISSUE RAISED IN THE APPEAL IS AGAINST THE ADDITION OF 4 ITA NOS. 723 & 1358/PN/2014 ` 69,58,954/- CONFIRMED BY THE COMMISSIONER OF INCOME TAX (AP PEALS). SIMILARLY, IN THE APPEAL FILED BY THE REVENUE THE GRIEVANCE O F THE REVENUE THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN DELETING THE ADDITION OF ` 66,45,000/- OUT OF TOTAL ADDITION OF ` 1,36,03,954/- AND ACCEPTING THE CONTENTIONS OF THE ASSESSEE IN RES PECT OF GIFTS. 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD RECEIVED SBI NRI BONDS FROM VAR IOUS NON- RESIDENTS IN THE FORM OF GIFT FOR CHARITABLE PURPOSE. THE BO NDS WERE REDEEMED DURING THE PERIOD 21-05-1998 TO 12-09-1998. DURING THE INTERVENING PERIOD A SEARCH OPERATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 05-08-1998. THE ASSESSEE DEPOSITED THE REDEEMED AMOUNT IN BANK ACCOUNT WITH PUNE PEOPLES CO- OPERATIVE BANK. DURING THE COURSE OF SEARCH, THE ASSESSEE HAD AD MITTED THAT ONE SHRI GURMEET SINGH M. RAJPAL HAD ARRANGED FOR THE GIFTS. S HRI GURMEET SINGH M. RAJPAL VIDE COMMUNICATION DATED 07-07-2011 HAD C ONFIRMED THAT THE GIFTS WERE MADE FOR THE PURPOSE OF CHARITY. TH E SAID CONFIRMATION IS AT PAGE 34 OF THE PAPER BOOK. THE LD. AR A LSO REFERRED TO THE CONFIRMATION GIVEN BY ANOTHER PERSON SHRI HARIDAS MOHANLAL BHATIA WHO HAD ALSO MADE GIFT OF SBI NRI BONDS. THE CONFIR MATION GIVEN BY SHRI HARIDAS MOHANLAL BHATIA IS AT PAGE 35 OF THE PAPER BOOK. THE LD. AR OF THE ASSESSEE FURTHER REFERRED TO THE BON DS RECEIVED BY THE ASSESSEE AS GIFT FOR THE PURPOSE OF CHARITY AT PAGES 107 TO 220 OF THE PAPER BOOK. THE LD. AR CONTENDED THAT THE ASSESSEE H AD RECEIVED SBI NRI BONDS FROM 22 PERSONS WHO WERE WORKING IN GULF. THE GIFTS WERE MADE BY THEM FOR THE PURPOSE OF CHARITY. THE VALUE OF B ONDS ON MATURITY WAS ` 1,36,03,954/-, OUT OF WHICH THE ASSESSEE HAS ALREADY TRANSFERRED AN AMOUNT OF ` 57,65,500/- AND HAS TRANSFERRED 11 ACRES OF 5 ITA NOS. 723 & 1358/PN/2014 PRIME LAND LOCATED AT LONIKAND, PUNE NAGAR HIGHWAY. THE V ALUE OF LAND AS OF NOW IS APPROXIMATELY ` 10 CRORES. THE LAND HAS BEEN TRANSFERRED TO A TRUST NAMELY SHRI KSHETRAPAL PRATHISTH AN TRUST. THE LAND IS USED FOR SETTING UP GAUSALA. THERE ARE ABOUT 20 00 COWS UNDER THE CARE OF TRUST. THE TRUST HAS CONSTRUCTED ABOUT 3 0 WELL EQUIPPED SHEDS FOR COWS, BHOJANSHALA, VETERINARY DISPENSARY ETC. T HERE ARE OTHER PERSONS WHO HAVE DONATED CRORES OF RUPEES FOR T HE TRUST. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS REFERRED TO THE INCOME AN D EXPENDITURE ACCOUNT AND BALANCE SHEET OF SHRI KSHETRAPA L PRATHISTHAN TRUST FOR THE PERIOD ENDING ON 31-03-2008. 4.1 THE LD. AR FURTHER SUBMITTED THAT THE COMMISSIONER OF I NCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF ` 69,58,954/- ON THE PRESUMPTION THAT THE ASSESSEE HAS NOT TRANSFERRED THE AMOUNT RECEIVED AS GIFTS FOR CHARITY IN THE FORM OF SBI NRI BONDS. THE COM MISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO TAKE INTO CONSIDERATION THAT THE LAND TRANSFERRED BY THE ASSESSEE TO THE TRUST IS OF MUCH MO RE VALUE THAN THE MATURITY VALUE OF BONDS. THE DEPARTMENT HAS NOT DISPUTE D THE CHARITABLE ACTIVITIES CARRIED OUT BY THE ASSESSEE. THE LAN D TRANSFERRED BY THE ASSESSEE WAS OWNED BY THE FAMILY CONCERN, M/S. V IKRAM FISCAL PVT. LTD. THE ASSESSEE AND HIS WIFE WERE THE ONLY SHARE HOLDERS AND THE DIRECTORS OF THE SAID COMPANY. THE BOOK VALUE OF LAND OWN ED BY THE COMPANY WAS ` 9,40,000/-. THE LAND WAS SOLD BY THE COMPANY TO SHRI SUBHASH HASTIMAL LODHA CHARITABLE TRUST BY TWO REGISTERE D SALE DEEDS DATED 29-04-2004 FOR THE TOTAL CONSIDERATION OF ` 8,80,000/-. THE SAID SALE DEEDS ARE PLACED ON RECORD AT PAGES 37 TO 80 OF T HE PAPER BOOK. THE ONLY DISPUTE RAISED BY THE DEPARTMENT IS THAT THE ASSESSEE HAS NOT TRANSFERRED THE ENTIRE MONEY RECEIVED ON REDEMPTION OF B ONDS TO THE 6 ITA NOS. 723 & 1358/PN/2014 TRUST. THE DEPARTMENT HAS OVERLOOKED THE FACT THAT TH E ASSESSEE HAS TRANSFERRED LAND HAVING MUCH MORE VALUE TO THE TRUST. 4.2 IN SO FAR AS THE DISPUTE RAISED BY THE DEPARTMENT O N THE VALIDITY OF GIFT IN THE FORM OF SBI NRI BONDS, THE LD. AR CONTENDED THAT THE SAID ISSUE HAS ALREADY BEEN LAID TO REST BY THE TRIBUNAL IN ITS ORDER DATED 31-10-2007 IN ITA NO. 477/PN/2003. 4.3 THE LD. AR MADE AN ALTERNATE SUBMISSION THAT DURING TH E COURSE OF SEARCH NO INCRIMINATING EVIDENCE WAS FOUND. THEREFORE, N O ADDITION CAN BE MADE U/S. 68 OF THE ACT. THE LD. AR IN SUPPORT OF HIS CONTENTIONS PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAMEER BALASAHEB LADKAT VS. ASSTT . COMMISSIONER OF INCOME TAX IN ITA NO. 974/PN/2010 FOR THE ASSESSMENT YEAR 2003-04 DECIDED ON 31-07-2012 AND TH E DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. R.S. SIBAL REPORT ED AS 269 ITR 429 (DEL). THE LD. AR CONTENDED THAT THE DECISION OF C O-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAMEER BALASAHEB LAD KAT VS. ASSTT. COMMISSIONER OF INCOME TAX (SUPRA) HAS BEEN AFFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN INCOME TAX APPEAL NO. 2 122 OF 2013 DECIDED ON 24-08-2015 REPORTED AS 2015-TIOL-2036-HC- MUM-IT. 5. ON THE OTHER HAND SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF ASSESS ING OFFICER IN MAKING ADDITION OF ` 1,36,03,954/- BY HOLDING SBI NRI BOND GIFTS AS SHAM TRANSACTIONS. THE LD. DR CONTENDED THAT THE ASSES SEE HAS NOT BEEN ABLE TO SHOW FROM THE RECORDS THAT THE GIFTS MADE BY THE PERSONS WERE KNOWN TO THE ASSESSEE. THE ASSESSEE HAS NOT BE EN ABLE TO ESTABLISH THE GENUINENESS OF THE GIFT. NONE OF THE PERSON S WHO HAD 7 ITA NOS. 723 & 1358/PN/2014 MADE GIFTS WERE EVER PRODUCED BY THE ASSESSEE BEFORE T HE ASSESSING OFFICER. THE LD. DR SUBMITTED THAT THE NATURE AND SERIES OF THE TRANSACTIONS WITH RESPECT TO SBI NRI BONDS RAISED SERIO US SHADOW OF DOUBT. ALL THE DONORS OF THE GIFTS ARE FROM DIFFERENT PARTS OF THE COUNTRY AND THERE IS NO SOCIAL INTERACTION BETWEEN THE ASSESSE E AND THE DONORS. ALL THE GIFTS ARE RECEIVED WITHIN A SHORT SPAN OF 3-4 MONTH S. THE POSSIBILITY OF DONORS GETTING BACK THE MONEY EQUIVALENT TO THE GIFTS OR OVER AND ABOVE THE FACE VALUE OF BONDS IN RETURN CANNOT BE RULED OUT. THE LD. DR FURTHER POINTED OUT THAT EVEN IF IT IS PRESUMED THAT THE BONDS WERE RECEIVED AS GIFT FOR CHARITABLE PURPOSE THE BO NDS WERE REDEEMED DURING THE PERIOD 21-05-1998 TO 12-09-1998. THE TOTAL VALUE OF THE BONDS REDEEMED WAS ` 1,36,03,954/- WHICH WAS DEPOSITED IN SAVING BANK ACCOUNT NO. 132 OF THE ASSESSEE MAINTAINED WITH PUNE PEOPLES CO-OPERATIVE BANK. TILL 31-11-2008 THE ASSESSEE TRANSFERRED ` 57,65,500/- ONLY TO SUBHASH HASTIMAL LODHA CHARITABLE TRU ST. THE LAND MEASURING 11 ACRES WHICH HAS BEEN ALLEGEDLY TRANSFER RED TO ANOTHER TRUST I.E. SHRI KSHETRAPAL PRATHISTHAN TRUST UNDE R LEASE WAS OWNED BY THE COMPANY M/S. VIKRAM FISCAL PVT. LTD. AND WA S NOT IN THE INDIVIDUAL NAME OF THE ASSESSEE. THE COMPANY IS A SEPARATE LEGAL ENT ITY AND THE PROPERTIES OWNED BY THE COMPANY ARE NOT PERS ONAL PROPERTIES OF THE ASSESSEE. THUS, THE ALLEGED TRANSFER OF LAND MADE B Y THE ASSESSEE TO THE TRUST FOR CHARITABLE PURPOSE CANNOT BE CONSIDERED AS APPLICATION OF FUNDS RECEIVED BY THE ASSESSEE IN THE FORM OF GIFTS. 5.1 THE LD. DR CONTENDED THAT A PERUSAL OF ORDER DATED 31-10-2007 PASSED BY THE TRIBUNAL IN FIRST ROUND WOULD SHOW THAT IT IS AN OPEN REMAND. THE TRIBUNAL HAD REMITTED THE MATTER BACK TO T HE FILE OF ASSESSING OFFICER FOR DECIDING THE MATTER AFRESH IN VIEW OF TH E ADDITIONAL EVIDENCES AND THE FACTS FURNISHED BY THE ASSESSEE. THE TRIBUNAL HAS 8 ITA NOS. 723 & 1358/PN/2014 NOT GIVEN ITS FINDING ACCEPTING OR REJECTING THE ALLEGED GIFTS IN THE FORM OF SBI NRI BONDS. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION RENDERED IN THE CASE OF S AMEER BALASAHEB LADKAT VS. ASSTT. COMMISSIONER OF INCOME TAX (SU PRA). THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE DEC ISION ON WHICH THE LD. AR HAS PLACED RELIANCE. IN THE SAID CASE THE DONO R AND DONEE WERE KNOWN TO EACH OTHER. WHEREAS, IN THE PRESENT CA SE THE DONORS AND DONEE ARE NOT KNOWN TO EACH OTHER. THEREFORE, TH E RATIO LAID DOWN BY THE HON'BLE HIGH COURT IN THE SAID CASE WOULD NOT AP PLY IN THE PRESENT CASE. 6. THE LD. AR CONTROVERTING THE SUBMISSIONS MADE ON BEHA LF OF THE DEPARTMENT SUBMITTED THAT THERE IS NO DIFFERENCE BETWEEN THE DONATIONS RECEIVED FROM KNOWN AND UNKNOWN PERSONS. THE REFORE, THE DECISION RENDERED IN THE CASE OF SAMEER BALASAHEB LADKAT VS. ASSTT. COMMISSIONER OF INCOME TAX (SUPRA) SUPPORT THE CASE OF TH E ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE SOURCE OF BONDS IS PROVED AND NO DOUBT HAS BEEN RAISED BY THE DEPARTMENT IN RESPECT OF CHARITABLE ACTIVITIES CARRIED OUT BY THE ASSESSEE. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ISSUE IN APPEALS ARE; WHETHER THE AMOUNT OF ` 1,36,03,954/- RECEIVED BY THE ASSESSEE ON REDEMPTION OF SBI NRI BONDS IS IN THE N ATURE OF GIFT TO BE UTILIZED FOR CHARITABLE PURPOSE?; AND WHETHER THE COMMIS SIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN RESTRICTING THE ADDITION T O ` 69,58,954/- AND DELETING THE REMAINING AMOUNT OF ` 66,45,000/- UTILIZED/TRANSFERRED FOR CHARITABLE PURPOSE? 9 ITA NOS. 723 & 1358/PN/2014 8. THE ASSESSEE RECEIVED SBI NRI BONDS FROM VARIOUS N ON-RESIDENT INDIANS IN THE YEAR 1998 AS GIFTS HAVING FACE VALUE OF MORE THAN $ 1,25,000/-. THESE BONDS WERE REDEEMED BY THE ASSESS EE DURING THE PERIOD 25-09-1998 TO 12-09-1998. THE PROCEEDS OF REDE MPTION WERE DEPOSITED BY THE ASSESSEE IN SAVING BANK ACCOUNT MAINTA INED WITH PUNE PEOPLES CO-OPERATIVE BANK. THE ASSESSEE OVER T HE PERIOD OF TEN YEARS (I.E. FROM 1998 TO 2008) TRANSFERRED ` 57,65,500/- TO SUBHASH HASTIMAL LODHA CHARITABLE TRUST. FURTHER, THE ASSESSEE T RANSFERRED LAND IN THE YEAR 2004 TO SHRI KSHETRAPAL PRATHISTHAN TRU ST. THE SAID LAND WAS PURCHASED BY SUBHASH HASTIMAL LODHA CHARITABLE TRUST FROM M/S. VIKRAM FISCAL PVT. LTD. FOR A CONSIDERATION OF ` 8,80,000/- BY TWO SEPARATE REGISTERED SALE DEEDS BOTH DATED 29-04-2004. THE LAND WAS THEREAFTER GIVEN ON LEASE FOR A PERIOD OF 41 YEARS VIDE LE ASE DATED 15-05-2004 BY SUBHASH HASTIMAL LODHA CHARITABLE TRUST T O SHRI KSHETRAPAL PRATHISTHAN TRUST. IT IS NOTEWORTHY TO MENT ION HERE THAT BOTH THE TRUSTS WERE REPRESENTED BY THE ASSESSEE BE ING TRUSTEE OF THE TRUSTS. 9. THE ASSESSING OFFICER MADE ADDITION OF ` 1,36,03,954/- BY DISBELIEVING THE THEORY OF GIFT AS WELL AS ON THE GROUND THA T THE ASSESSEE HAS NOT UTILIZED THE AMOUNT RECEIVED FROM THE DONORS OF S BI NRI BONDS FOR CHARITABLE PURPOSE. IN FIRST APPEAL, THE COMMISSIONER O F INCOME TAX (APPEALS) ACCEPTED THE CONTENTIONS OF THE ASSESSEE T HAT THE GIFTS WERE RECEIVED AS DONATIONS FOR CHARITABLE PURPOSE. THE C OMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE ASSESS EE HAS UTILIZED ONLY ` 66,45,000/- ( ` 57,65,500/- TRANSFERRED IN CASH + ` 8,80,000/- UTILIZED TOWARDS PURCHASE OF LAND TRANSFERRED TO TRUST ON LEASE) FOR CHARITABLE PURPOSE. THE COMMISSIONER OF INCOME TAX (APPEA LS) 10 ITA NOS. 723 & 1358/PN/2014 CONFIRMED THE ADDITION TO THE EXTENT OF UNUTILIZED AMOUNT FROM REDEMPTION OF BONDS I.E. ` 69,58,954/-. 10. A PERUSAL OF THE ORDER OF TRIBUNAL IN THE FIRST ROUND OF LITIGATION IN ITA NO. 477/PN/2003 WOULD SHOW THAT WHILE REMITTING THE MATTER BACK TO THE ASSESSING OFFICER TO CONSIDER THE FRESH EVIDENCE PLACED ON RECORD BY ASSESSEE, THE TRIBUNAL OBSERVED THAT THERE IS NO DOU BT THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS ON ACCOUNT OF ENCASH MENT OF BONDS. THE DISPUTE IS ONLY WITH REGARD TO THE GENUINENESS OF T HE ASSESSEES CONTENTIONS AS TO WHETHER THE ASSESSEE RECEIVED THE A MOUNT FOR THE PURPOSE OF UTILIZING THE SAME FOR CHARITY OR OTHERWISE AS GIFT. 11. THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER H AS GIVEN FINDING OF FACT THAT THE ASSESSEE HAS TRANSFERRED A SUM O F ` 57,65,500/- OVER THE PERIOD OF 10 YEARS I.E. FROM THE DATE OF REDEMPTIO N OF BONDS TILL 30-11-2008 TO SHRI SUBHASH HASTIMAL LODHA CHARITABLE TRU ST. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE. THEREAFTER, IN THE YEAR 2004 THE ASSESSEE HAS ALLEGEDLY TRANSFERRED LAND MEASUR ING 11 ACRES BY TWO SEPARATE SALE DEEDS DATED 29-04-2004 TO SUBHASH HASTIMAL LODHA CHARITABLE TRUST. A PERUSAL OF SALE DEEDS AT PAGES 37 TO 80 OF THE P APER BOOK SHOW THAT THE LAND WAS OWNED BY M/S. VIKRAM FISCAL PVT. LTD. THE SAID COMPANY WAS REPRESENTED BY SHRI SUBHASH HASTIMAL LODHA AS ONE OF ITS DIRECTOR. THE MARKET VALUE OF THE LAND FOR THE PURPOSE OF STAMP VALUATION WAS ` 1,84,680/- WHEREAS THE CONSIDERATION MENTIONED IN THE SALE DEED IS ` 4,40,000/-. SIMILARLY, IN THE SECOND SALE DEED OF EVEN DATE THE MARKET VALUE OF LAND IS ` 1,86,960/- AND THE CONSIDERATION FOR SALE OF LAND AS PER THE SALE DEED IS ` 4,40,000/-. THUS, IT IS EVIDENT THAT THE SALE CONSIDERATION OF LAND WAS OVER AND ABOVE T HE COLLECTOR RATE. EVEN IF IT IS PRESUMED THAT SUM OF ` 8,80,000/- IS PAID BY THE 11 ITA NOS. 723 & 1358/PN/2014 ASSESSEE ON BEHALF OF THE TRUST FOR THE PURCHASE OF LAND FROM M/S. VIKRAM FISCAL PVT. LTD., EVEN THEN THE TOTAL AMOUNT TRANS FERRED BY THE ASSESSEE FROM THE GIFTS RECEIVED FOR CHARITABLE PURPOSE IS ONLY ` 66,45,000/- I.E. THE AMOUNT TRANSFERRED IN CASH PLUS AMOUNT PAID FOR PURCHASE OF LAND. THE CONTENTION OF THE LD. AR OF THE ASSE SSEE THAT THE VALUE OF LAND TRANSFERRED AS ON TODAY IS MORE THAN ` 10 CRORES THEREFORE ENTIRE ADDITION HAS TO BE DELETED IS WITHOUT ANY MERIT. TH E ASSESSEE HAS UTILIZED ONLY ` 66,45,000/- OVER THE PERIOD OF 10 YEARS FOR THE CHARITABLE PURPOSE OUT OF TOTAL SUM OF ` 1,36,03,954/- RECEIVED IN THE YEAR 1998. THE ASSESSEE HAS NOT ACCOUNTED THE REMAIN ING UNUTILIZED AMOUNT RECEIVED FOR CHARITABLE PURPOSE. THEREFORE, THE CO MMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY MADE ADDITION OF THE RE MAINING AMOUNT. 12. THE LD. AR HAS MADE ALTERNATE SUBMISSION THAT THE A SSESSING OFFICER HAS MADE ADDITION U/S. 68. AS ALLEGED BY ASSESSING O FFICER, THE ASSESSEE HAS MADE INVESTMENT IN SBI NRI BONDS, NO ADDI TION CAN BE MADE U/S. 68 FOR SUCH INVESTMENTS. A PERUSAL OF ASSESSMENT ORDER DATED 29-12-2008 PASSED IN PURSUANCE TO THE REMAND BY TRIBUNAL WOULD SHOW THAT TH E ASSESSING OFFICER HAS MADE ADDITION PRIMARILY ON THE GROUND THAT THE ASSESSEE HAS NOT UTILIZED THE ENTIRE AMOUNT RECEIVED FOR CHARITABLE PURPOSE EVEN AFTER 10 YEARS FROM THE DATE OF RECEIPT. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE AMOUNT OF ` 1,36,03,954/- AS INCOME FROM OTHER SOURCES. THE RELEVANT EXTRACT OF THE FINDINGS OF ASSESSIN G OFFICER ARE AS UNDER : 07. HENCE IN VIEW OF THE ABOVE IT IS PROVED THAT A SSESSEE HAS NOT RECEIVED GIFT FROM THE OUTSIDE DONORS AND ALSO ASSE SSEE HAS NOT UTILIZED THE WHOLE AMOUNT FOR CHARITABLE PURPOSE. I AM OF TH E VIEW THAT CLAIM OF 12 ITA NOS. 723 & 1358/PN/2014 THE GIFT RECEIVED FROM OUTSIDE DONORS BY THE ASSESS EE IS NOT CORRECT. THEREFORE I CONSIDER THE AMOUNT CLAIMED BY THE ASSE SSEE AS A GIFT IS A SHAM TRANSACTION AND ACCORDINGLY A SUM OF RS.1,36,0 3,954/- IS ADDED INTO THE HANDS OF THE ASSESSEE AS HIS INCOME FROM O THER SOURCES . AS THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND FI LED INACCURATE PARTICULARS OF INCOME PENALTY PROCEEDINGS UNDER, SE CTION 271(1)(C) ARE INITIATED SEPARATELY. IN VIEW OF THE ABOVE FINDINGS OF ASSESSING OFFICER, THE ALTERN ATE SUBMISSION MADE BY LD. AR OF THE ASSESSEE FAILS AND HENCE, A RE REJECTED. 13. THUS, IN VIEW OF THE FACTS OF THE CASE WE DO NOT FIND AN Y MERIT IN THE GROUNDS RAISED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER. 14. THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) PRIMARILY ON TWO COUNTS : (I) DELETING TH E ADDITION OF ` 66,45,000/-; AND (II) CHALLENGING THE FINANCIAL CAPACITY OF THE DON ORS AND THEIR RELATIONSHIP WITH THE ASSESSEE TO TREAT THE AM OUNT OF ` 1,36,03,954/- AS GIFTS. IN SO FAR AS THE FIRST GROUND IS CONCERNED IT HAS COME ON RECORD THAT THE ASSESSEE HAS UTILIZED ` 66,45,000/- TOWARDS CHARITABLE PURPOSE. THEREFORE, THE FIRST GROUND OF APPEAL RAISED BY THE DEPARTMENT IS DISMISSED BEING DEVOID OF ANY MERIT. 15. IN SO FAR AS SECOND GROUND OF APPEAL IS CONCERNED, THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION IN ITA NO. 477/PN/2003 HAS OBS ERVED THAT THE BONDS WERE PURCHASED BY THE NRIS IN APRIL, 1991. T HEREFORE, THE SOURCE AS TO THE PRINCIPAL AMOUNT OF BONDS GOES BACK T O THE DATE OF PURCHASE I.E. 1 ST APRIL, 1991. THE AMOUNT RECEIVED BY THE ASSESSEE IS ON THE REDEMPTION OF BONDS. HENCE, THE SOURCE OF MONEY IS NOT IN DOUBT. IN VIEW OF THESE OBSERVATIONS MADE BY THE CO-OR DINATE BENCH OF THE TRIBUNAL, THE FINANCIAL CAPACITY OF THE DONORS CANNOT B E CHALLENGED. 13 ITA NOS. 723 & 1358/PN/2014 AS FAR AS THE RELATIONSHIP OF THE DONORS WITH THE ASSESSE E IS CONCERNED, IT IS NOT NECESSARY THAT THE DONORS HAVE TO BE RELATED OR KNOWN FOR MAKING ANY DONATIONS/GIFTS FOR CHARITABLE PURPOSE. THEREFOR E, THE SECOND GROUND RAISED BY THE REVENUE IN APPEAL IS ALSO DISMISSED. 16. THE IMPUGNED ORDER IS A WELL REASONED SPEAKING ORDE R. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, THE SAME IS UPHELD AND THE APPEAL OF THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED BEING DEVOID OF ANY MERIT. 17. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 27 TH DAY OF JUNE, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 27 TH JUNE, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE