Mrs. Bharati rakesh Khemani, Nashik V. ACIT, Cent. Cir.-3, Nashik

ITA 748/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9893 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 30-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: LALIT S SANGALE
• Keywords: Gift; Search and seizure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. APPELLANTS NAME OF THE ASSESSEE ITA.NO. ASST. YEAR 1 MRS.BHARATI RAKESH KHEMANI [PAN: AMAPK1049A] 748/PN/2011 2001 - 02 2 MRS.PUSHPA MURLIDHAR KHEMANI [PAN: AMAPK1053D] 749/PN/2011 2000 - 01 3 MRS.MEENA BALRAM KHEMANI [PAN: AMAPK1052C] 750/PN/2011 2000 - 01 4 MRS.MEENA BALRAM KHEMANI [PAN: AMAPK1052C] 751/PN/2011 2001 - 02 5 MR.MURLIDHAR SADHURAM KHEMANI [PAN: AKWPK3427N] 752/PN/2011 2001 - 02 6 MR.BALRAM SADHURAM KHEMANI [PAN: AJUPK6065C] 753/PN/2011 2001 - 02 7 MR.DINESH MURLIDHAR KHEMANI [PAN: AKQPK1069E] 754/PN/2011 2000 - 01 8 MR.RAKESH MURLIDHAR KHEMANI [PAN: AMAPL1050A] 755/PN/2011 2000 - 01 9 MR.RAKESH MURLIDHAR KHEMANI [PAN: AMAPL1050A] 756/PN/2011 2001 - 02 VS. ACIT, CENTRAL CIRCLE-3, NASHIK. .. RESPONDENT ASSESSEES BY : SHRI LALIT S.SANGALE DEPARTMENT BY : SHRI S.K.SINGH DATE OF HEARING : 15.10.2012 DATE OF PRONOUNCEMENT : 18.10.2012 ORDER PER BENCH : ALL THE ABOVE APPEALS FILED BY THE RESPECTIVE ASSE SSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 25.03.20 11 OF THE CIT(A)-II, NASHIK. SINCE IDENTICAL ISSUES HAVE BEEN TAKEN BY THE RESPECTIVE ASSESSEES, THEREFORE, THESE WERE HEARD T OGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 ITA.NO.748/PN/2011 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH AND SEIZURE OPERATION U/S.132(1) OF THE INCOME TAX ACT, 1961, W AS CONDUCTED BY THE DEPARTMENT ON 9 TH OCTOBER, 2003 IN THE MURLIDHAR KHEMANI GROUP OF CASES AT SAVITRI VILLA, TIDKE COLONY, TRIM BAK ROAD, NASHIK. THE ASSESSEE IS ONE OF THE PERSONS COVERED U/S.132(1) OF THE ACT. IN RESPONSE TO THE NOTICE U/S.153A, THE A SSESSEE FILED HER RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR O N 30 TH APRIL, 2004 DECLARING INCOME FROM OTHER SOURCES AT RS.16,5 00/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, CERTA IN GIFT DEEDS WERE FOUND AND SEIZED AS PER ANNEXURE 1 & 5 WHICH S HOW THAT THE ASSESSEE RECEIVED GIFTS FROM THE FOLLOWING PERSONS: SR. NO. DATE NAME OF DONOR AMOUNT CHQ. NO. 1 5.7.2000 MRS. ANITA CHAVAN 25,000.00 001834 2 26.5.2000 MRS.MEENA BHATIJA 25,000.00 185797 3 20.5.2000 MR.SANJAY RATNA NI 30,000.00 017183 4 5.6.2000 MR.SANJAY RATNANI 16,500.00 5 10.5.2000 MR.RAMESH S PARIYANI 30,000.00 141939 TOTAL GIFTS RECEIVED 1,26,500/ - 3. THE ASSESSEE FURNISHED COPIES OF RETURNS FILED B Y THE ABOVE DONORS ALONGWITH THEIR BANK STATEMENTS, COMPUTATION OF P & L ACCOUNTS AND CAPITAL ACCOUNTS, ETC. THE ASSESSING OFFICER ISSUED REQUISITIONS TO ALL THE ABOVE DONORS WHICH WERE RET URNED UNSERVED BY THE POSTAL AUTHORITY WITH THE REMARK NOT KNOWN AND NO INTIMATION RECEIVED. THE ASSESSING OFFICER THEREF ORE ASKED THE ASSESSEE TO PRODUCE THE DONORS BEFORE HIM FOR HIS E XAMINATION ON OR BEFORE 07.03.2006. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE ABOVE DONORS BEFORE THE ASSESSING OFFICER BUT FILED A LETTER DATED 15 TH MARCH, 2006, OFFERING EXPLANATION REGARDING DETAIL S ABOUT THE DONORS. HOWEVER, THE ASSESSING OFFICER WAS NOT CON VINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND ASKED THE ASS ESSEE TO PRODUCE THE DONORS WITHIN TWO DAYS FROM THE RECEIPT OF THE LETTER. 3 SINCE THE ASSESSEE FAILED TO PRODUCE THE ABOVE DONO RS, THEREFORE, RELYING ON DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAMLAL AGRAWAL VS. CIT REPORTED IN 201 CTR (ALLAHAB AD) 44, THE ASSESSING OFFICER MADE AN ADDITION OF RS.1,10,000/- AS UNPROVED GIFTS OUT OF TOTAL GIFTS RECEIVED AT RS.1,26,500/-. IN OTHER WORDS, HE ACCEPTED THE GIFT OF RS.16,500/- RECEIVED FROM MR.S ANJAY RATNANI. THE ASSESSING OFFICER FURTHER MADE AN ADDITION OF R S.11,000/- BEING 10% OF THE EXPENDITURE INCURRED TO OBTAIN SUC H GIFTS. 3.1. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITI ON MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: 8. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORD ER, SUBMISSION OF THE APPELLANT, REMAND REPORT AND MATE RIAL AVAILABLE ON RECORD. THE APPELLANT DURING THE APPEL LATE PROCEEDINGS DID NOT PRODUCE ANY EVIDENCE BUT REITER ATE THE SUBMISSION THAT SHE HAD MADE BEFORE THE AO. NO DOCUMENTARY EVIDENCE IN SUPPORT OF GENUINENESS OF T HE GIFTS WAS PRODUCED BEFORE ME. THE HON'BLE ITAT AHMEDABAD BENCH D IN THE CASE OF ABHAY DEVILAL RATHOD VS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-3, SURAT, HAS HELD AS FOLLOWS: THE ASSESSEE WAS REQUIRED TO DISCHARGE THE ONUS OF SUBMITTING COMPLETE DETAILS OF GIFTS BEFORE THE AO. HE SHOULD HAVE ESTABLISHED (I) THE IDENTITY OF THE DON OR; (II) CREDITWORTHINESS OF THE DONOR; (III) GENUINENE SS OF THE TRANSACTION; (IV) OCCASION; (V) RELATIONSHIP OF THE DONOR AND DONEE; (VI) EVIDENCE OF NATURAL LOVE AND AFFECTION. MERELY BECAUSE MONEY WAS CLAIMED TO HAVE BEEN TRANSFERRED THROUGH BANKING CHANNEL, IT WAS NOT ENOUGH TO ESTABLISH THE GENUINENESS OF GIFT . THE HUMAN PROBABILITY HAS TO BE CONSIDERED AS TO WHY DONOR IS PROMPTED TO GIVE GIFT TO THE ASSESSEE. THE QUESTION IS REQUIRED TO BE ANSWERED BECAUSE AS CONTRARY TO LOAN, IN THE CASE OF GIFT, DONOR LOSES HIS HARD EARNED CAPITAL IN FAVOUR OF THE DONEE FOREVER WHEREAS IN THE CASE OF LOAN, THE CREDITOR RETAINS T HE RIGHT TO RECOVER THE MONEY FROM THE ASSESSEE. THEREFORE, ONUS IS HEAVIER UPON THE ASSESSEE IN A CASE OF GIFT AS COMPARED TO THE CASE OF CREDIT. IN CASE OF CREDIT, IF IDENTITY OF THE CREDITOR IS KNOWN AND CREDITWORTHINESS OF THE CREDITOR IS ESTABLISHED THE N ONUS IS SHIFTED TO THE REVENUE TO SHOW THAT CREDIT IS NOT GENUINE. BUT IN THE CASE OF GIFT ALL THE THREE INGREDIENTS ARE NECESSARY TO BE ESTABLISHED BY THE 4 ASSESSEE AND MERELY BY GIVING EVIDENCE OF IDENTITY AND CREDITWORTHINESS OF DONOR, GENUINENESS CANNOT BE TAKEN TO BE ESTABLISHED AUTOMATICALLY. THEREFORE , TEST OF HUMAN PROBABILITY ASSUMES IMPORTANCE SO AS TO SHOW THAT THERE WERE REASONS WHICH PROMPTED THE DONOR TO FOREGO HIS HARD EARNED CAPITAL IN FAVOUR O F THE DONEE. SUCH TESTS TO ESTABLISH HUMAN PROBABILIT Y ARE, OCCASIONS WHEN NOT ONLY THE DONOR BUT OTHERS ALSO CAME UP TO GIVE GIFTS TO THE ASSESSEE; THERE WERE CEREMONIES ORGANIZED BY THE ASSESSEE ON WHICH HE HAS SPENT MONEY; HE/SHE HAD INVITED PEOPLE AND SOME OF THOSE WHO WERE INVITED HAD DEEP BONDED RELATIONS WHICH PROMPTED THEM TO GIVE GIFTS TO THE ASSESSEE. THE BONDAGE BETWEEN THE DONOR AND THE DONEE SHOULD BE SHOWN BY FREQUENT VISITS TO EAC H OTHER; INVOLVEMENT OF EACH OTHER INTO EACH OTHER'S FAMILY AFFAIRS; STANDING FOR EACH OTHER IN THE HOUR OF NEED; DONEE ALSO GIVING GIFTS TO THE DONORS OR HIS FAMILY MEMBERS IN THE PAST OR ALSO IN FUTURE; THEY ARE SO CLOSELY RELATED THAT FORGOING HARD EARNED MONEY IS UNLIKELY TO PINCH THE DONOR; DONOR IS STANDING ON HIGHER PEDESTAL IN TERMS OF SOCIAL STATUS, IN RELATION OR IN FINANCIAL WORTH, OR IN AN Y OTHER RATIONAL CRITERIA, WHICH WOULD MAKE HIM FEEL TO PASS ON HIS HARD EARNED CAPITAL TO THE DONEE WHO STANDS ON LOWER PEDESTAL IN ANY OF THE ABOVE CRITERIA. IN THE INSTANT CASE, THE ASSESSEE HAD FAI LED TO SHOW THAT EVEN AFTER GIVING GIFTS TO THE ASSESSE E, 'S' AND 'M' HAD ENOUGH OF MONEY' LEFT WITH THEM. ON THE OTHER HAND, AS PER COPY OF ACCOUNT FURNISHED, ' S' WAS LEFT WITH 919 AND 'M' WAS LEFT WITH 1698. IT WAS NOT POSSIBLE TO BELIEVE THAT DONORS WOULD CHOOS E TO PRACTICALLY BECOME PAUPER AFTER GIVING GIFTS. TH ERE WAS NO EVIDENCE OF SUCH COMPULSION WHICH WOULD PROMPT THEM TO BECOME PAUPER. AS A RESULT, IT WAS T O BE HELD THAT FIRSTLY, THE ASSESSEE FAILED TO PRODUC E EVIDENCE BEFORE THE AO ABOUT THE IDENTITY AND CREDITWORTHINESS OF THE DONORS AND SECONDLY, THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE GIFTS. AS A RESULT, THE ORDER OF THE COMMISSIONER (APPEALS) WAS TO BE CONFIRMED AND THE APPEAL FILED BY THE ASSESSEE WAS TO BE DISMISSED'. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE FOLLOWIN G ADDITION: A. GIFTS RS.1,10,000/- B. EXPENSES RS. 11,000/- 5 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A. THE ADDITION ON ACCOUNT OF GIFT AND THE NOTIONAL EX PENSES THEREON WAS NOT JUSTIFIED IN THIS ASST. U/S.153A AS NO INCRIMINATING EVIDENCE WAS FOUND DURING THE SEARCH TO INDICATE THAT THE GIFTS WERE BOGUS. B. THE APPELLANT HAD PRODUCED ALL THE EVIDENCES REGARD ING THE IDENTITY OF THE DONORS, GENUINENESS OF THE GIFT S AND HENCE, THERE WAS NO REASON TO MAKE THIS ADDITION. C. JUST BECAUSE, THE APPELLANT WAS NOT ABLE TO PRODUCE THE DONORS, THE GIFTS COULD NOT BE CONSIDERED TO BE BOG US. D. THE DONORS HAD CHANGED THEIR ADDRESSES AND THEREFOR E, THE NOTICES SENT TO THEM WERE RETURNED BUT THAT DID NOT IMPLY THAT THE DONORS WERE BOGUS. E. AS IT WAS NOT WITHIN THE POWERS OF THE APPELLANT TO COMPEL THE DONORS TO ATTEND BEFORE THE A.O., THEY C OULD NOT BE PRODUCED BUT THE EVIDENCES PRODUCED CLEARLY INDICATED THAT THE GIFTS WERE GENUINE. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT ALL THE DONORS ARE REPUTED ASSESSEES AND ARE REGULARLY FILING THEIR RETURNS OF INCOME. SINCE TH E ASSESSING OFFICER HAD GIVEN ONLY TWO DAYS TIME TO PRODUCE THE DONORS WHO ARE STATIONED AT DIFFERENT PLACES, IT WAS NOT POSSIBLE ON THE PART OF THE ASSESSEE TO PRODUCE THEM BEFORE THE ASSESSING OFFIC ER. HE SUBMITTED THAT THE ASSESSEE HAD GIVEN FULL DETAILS LIKE PAN NUMBERS OF THE DONORS, COPIES OF THEIR RETURNS OF INCOME, D ETAILS OF THEIR BANK STATEMENTS, THEIR CONFIRMATIONS AND STATEMENT OF AC COUNT INCLUDING BALANCE SHEETS. THUS, THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS CAST ON HER. THE ONLY GRIEVANCE OF THE ASSESS ING OFFICER WAS THAT THE ASSESSEE COULD NOT PRODUCE THE DONORS FOR HIS EXAMINATION. SINCE THE ASSESSEE WAS GIVEN ONLY TWO DAYS TIME TO PRODUCE THE DONORS, IT WAS NOT POSSIBLE ON HER PART. HOWEVER, GIVEN AN OPPORTUNITY, THE ASSESSEE IS IN A POSITION TO PRODU CE ALL THE DONORS FOR THE EXAMINATION OF THE ASSESSING OFFICER AND TO PROVE THE IDENTIFY AND CAPACITY OF THE DONORS AND THE GENUINE NESS OF THE TRANSACTIONS. HE ALSO RELIED ON VARIOUS CASE DECIS IONS AND FILED VOLUMINOUS PAPER BOOK TO SUBSTANTIATE THE ALLOWABIL ITY OF THE GIFTS. 6 5.1. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND, WHILE SUPPORTING THE ORDER OF THE CIT(A), SUBMITTED THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF T HE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH 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. WE FIND IN THE INSTANT CASE THE ASSESSING OFFICER DISBELIEVED THE GIFTS RECEIVED BY THE ASSESSEE ON THE GROUND THAT THE REQUISITIONS IS SUED TO THE DONORS WERE RETURNED UNSERVED AND THE ASSESSEE DID NOT PRODUCE THE DONORS BEFORE HIM FOR HIS EXAMINATION DESPITE B EING ASKED TO DO SO. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT HE HAS FILED ALL THE DETAILS SUCH AS PAN NUMBER OF THE DONORS, COPIES OF THEIR RETURNS OF INCOME, DETAILS OF ASSESSMENTS, CONFIRMATIONS AND STATEMENT OF ACCOUNT OF THE DONORS INCLUDING TH EIR BALANCE SHEETS, COPIES OF BANK ACCOUNTS, DD/CHEQUE NOS., ET C. THE GIFT DEEDS WERE ALSO FOUND AND SEIZED DURING THE COURSE OF SEARCH. DUE TO THE SHORT TIME OF TWO DAYS GIVEN BY THE ASSESSIN G OFFICER, THE ASSESSEE WAS NOT ABLE TO PRODUCE THE DONORS FOR HIS EXAMINATION AND GIVEN AN OPPORTUNITY HE IS IN A POSITION TO PRO DUCE THOSE DONORS BEFORE THE ASSESSING OFFICER. FROM THE ASSE SSMENT ORDER WE FIND THE ASSESSING OFFICER HAD GIVEN ONLY TWO DAYS TIME TO THE ASSESSEE TO PRODUCE THE DONORS. WE THEREFORE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TIME GIVEN TO THE ASSESSEE TO PRODUCE THE ASSESSEE WAS VERY SH ORT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE DONORS AND SUBSTANTIATE THE GENUINENESS OF THE GIFTS TO THE SATISFACTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 7 7. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDING LY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.749 TO 756/PN/2011 8. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUND S RAISED IN THE APPEALS FILED BY THE ABOVE ASSESSEES ARE IDENTICAL TO GROUNDS IN ITA.NO.748/PN/2011 EXCEPT THE FIGURES. WE HAVE ALR EADY DECIDED THE ISSUE AND RESTORED THE MATTER TO THE FILE OF TH E ASSESSING OFFICER FOR FRESH ADJUDICATION. FOLLOWING THE SAME RATIO, W E RESTORE ALL THESE APPEALS TO THE FILE OF THE ASSESSING OFFICER FOR DE CIDING THE ISSUE AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN THEREIN . 9. OTHER ISSUES IN THESE APPEALS WERE NOT PRESSED B Y LD. AUTHORISED REPRESENTATIVE FOR ASSESSEES. SO SAME A RE DISMISSED AS NOT PRESSED. 10. IN THE RESULT, ALL APPEALS FILED BY THE ABOVE A SSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF OCTOBER, 2012. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 18 TH OCTOBER, 2012 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CENTRAL CIRCLE-3, NASHIK. 3. THE CIT(A)-II, NASHIK. 4. THE CIT(CENTRAL), NAGPUR. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.