SHRI GYARSI LAL SHARMA, Jaipur V. DCIT, Jaipur

ITA 759/JPR/2014

• Counselvise Citation: 75923114 RSA 2014
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL DHK
• Assessee Lawyers: JAVED KHAN; O P AGARWAL MANISH AGARWAL
• Keywords: Unexplained expenditure; Gift; Income from undisclosed sources
• Section: 143(3); 56(2); 153A; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 759/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 SHRI GYARSI LAL SHARMA 40, NEAR GLASS FACTORY, PRATAP NAGAR , TONK ROAD JAIPUR CUKE VS. THE DCIT CENTRAL CIRCLE- 1 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ASUPS 7114 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : S/SHRI O.P. AGARWAL, MANISH AGARWAL, C.A. & JAVED KHAN, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLEE AGARWAL, CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/04/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 5/06/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)- CENTRAL, JAIPUR DATED 15-09-2014 FOR THE ASSESSMENT YEAR 20 10-11 RAISING ONE ISSUE BY FOLLOWING GROUNDS OF APPEAL: ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 29,09,667/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE TOWARDS EDUCATIO N FEES OF HIS SON ON WHIMS AND FANCIES AND WITHOUT APPRECIATING T HE EVIDENCES SUBMITTED BY ASSESSEE IN THE SHAPE OF AFFIDAVIT OF THE PAYEE TO PROVE THE GENUINENESS OF THE TRANSACTION, THUS THE ADDITIONS MADE ON SUCH IMPROPER APPRECIATION OF THE FACTS AND EVID ENCES, DESERVES TO BE DELETED IN TOTO. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN TREATI NG THE AFORESAID AMOUNT OF RS. 29,09,667/- AS THE INCOME U/S 56(2) O F THE INCOME TAX ACT, 1961 BEING RECEIVED FROM A NON-RELATIVE PE RSON WITHOUT APPRECIATING THE REAL NATURE THEREOF AND WITHOUT CO NSIDERING THAT NO SUBSTANTIAL ENQUIRY WAS CONDUCTED BY LD. AO FROM THE PAYEE, THUS THE ADDITION MADE DESERVES TO BE DELETED. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN OBSERV ING THAT THE FACT OF PAYMENT OF INTEREST FREE LOAN TO ASSESSEE WAS NO T BORNE OUT BY THE AFFIDAVIT OF THE PAYEE, WHILE IN FACT THE PAYEE HAS CATEGORICALLY AND IN CLEAR TERMS DEPOSED IN THE AFF IDAVIT THAT HE HAS UNDERTAKEN TO BEAR ALL THE EXPENDITURE FOR EDUC ATION OF ASSESSEES SON AND IN FURTHERANCE OF WHICH HE SUBSE QUENTLY EXTENDED THE INTEREST FREE LOAN TO ASSESSEE. THEREF ORE, THE ADDITION OF RS. 29,09,667/- DESERVES TO BE DELETED. 2.1 BRIEFLY STATED THE FACTS ARE - SEARCH OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT ASSESSEES RESIDEN TIAL PREMISES ON 08.06.2011. IN RESPONSE TO NOTICE U/S 153A, RETURN OF INCOME WAS FILED ON 27.12.2012 DECLARING TOTAL INCOME AT RS. 31,83,400/ - WHICH WAS REVISED TO RS. 79,35,199/-. THE ASSESSMENT WAS COMPLETED U/ S 143(3) R.W.S. 153A ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 3 OF THE INCOME-TAX ACT, 1961 AT A TOTAL INCOME OF RS . 1,09,99,870/-, WHICH INCLUDED ADDITION OF RS. 29,09,667/- HELD AS INCOME FROM UNDISCLOSED SOURCES IN RESPECT OF SPONSORSHIP OF HI S SONS ENROLMENT FOR MEDICAL COURSE BY NRI FRIEND SHRI RAJESH JAIN. DURI NG THE COURSE OF SEARCH, PHOTOCOPY OF RECEIPT WAS FOUND AT ASSESSE ES RESIDENCE REFLECTING THAT SHRI RAJESH JAIN HAS SPONSORED THE FEE FOR MED ICAL EDUCATION OF THE ASSESSEES SON FROM NRI QUOTA. NO QUESTION DURING T HE COURSE OF SURVEY WAS ASKED IN THIS BEHALF HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO RAISED QUERIES IN THIS BEHALF. ASSES SEE GAVE DETAILED EXPLANATION ALONG WITH AFFIDAVIT OF SHRI JAIN AND C LAIMED IT AS AN INTEREST FREE LOAN ARRANGEMENT. ASSESSEE VIDE HIS LETTER DAT ED 18.03.2014 EXPLAINED THAT PIYUSH JOSHI, ASSESSEES MAJOR SON A T THE TIME (BORN ON 21.02.1990) WAS ENROLLED FOR MBBS COURSE IN JHALAWA R HOSPITAL AND MEDICAL COLLEGE ON NRI SEAT ON THE SPONSORSHIP OF S H. RAJESH JAIN NRI. HE IS ASSESSEES CLOSE FAMILY FRIEND, AND ON REQUES T AGREED TO PAY THE REQUISITE SPONSORSHIP FEE OF RS. 29,09,667/- THROUG H 3 DDS OF USD 20,000/- IN THE MONTH OF AUGUST, 2009 FROM HIS NRI A/C. MR. JAIN FULFILLED THE RELEVANT STATUTORY REQUIREMENTS IN TH IS BEHALF INCLUDING FILING OF AFFIDAVIT IN DESIRED PROFORMA. IT WAS AGREED BET WEEN ASSESSEE AND SH. ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 4 RAJESH JAIN THAT THIS AMOUNT WAS TO BE TREATED AS A N INTEREST FREE UNSECURED LOAN. ASSESSEE THUS FILED NECESSARY EVID ENCE TO ESTABLISH THE GENUINENESS OF TRANSACTION, IDENTITY AND CREDITWORT HINESS ALONG WITH THE AFFIDAVIT OF SHRI RAJESH JAIN CONFIRMING THE FACT T HAT THE SPONSORSHIP FEE WAS PAID FROM HIS NRI A/C. LD. AO HOWEVER HELD THAT ASSESSEE MUST HAVE PAID THIS AMOUNT BY EQUIVALENT CASH TO NRI SHRI RAJ ESH JAIN FROM UNDISCLOSED SOURCES 2.2 IN FIRST APPEAL LD. CIT(A) CONFIRMED THE ORDER OF AO AND FURTHER HELD IN PARA 5(V) OF HIS ORDER THAT THE INTEREST FR EE LOAN WAS TAKEN TO AVOID TAXABILITY OF GIFT U/S 56(2). 2.3 LD COUNSEL CONTENDS THAT THE ENTIRE EDIFICE OF THE ADDITION IS BASED ON SURMISES, IFS AND BUTS, SAME ARE COUNTERED BY FO LLOWING CONTENTIONS:- A. THE FACT ABOUT SH. RAJESH JAIN BEING A CLOSE FAMILY FRIEND IS NOT IN DISPUTE THE OBJECTION IS ON WHY HE HAS UNDERTAKEN T HE RESPONSIBILITY OF MEDICAL EDUCATION OF ASSESSEES SON. IT IS PLEADED THAT RELEVANT RULES FOR MEDICAL ADMI SSION IN NRI QUOTA PERMIT ANY RESIDENT TO BE CONSIDERED PROVIDED HIS ADMISSION IS SPONSORED AS A DEPENDENT BY AN NRI, THIS DECLARA TION SHOULD BE SUPPORTED BY AN AFFIDAVIT IN PRESCRIBED FORMAT. THE WORD DEPENDENT FINDS MENTION IN THE AFFIDAVIT BECAUSE OF THIS REQU IREMENT FOR ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 5 ADMISSION. BESIDES MEDICAL COLLEGES ALLOW NRI QUOTA ENROLMENT AFTER DUE VERIFICATION. REVENUE HAS READ TOO MUCH I NTO BASED ON ITS SURMISES AND ASSUMPTIONS WHICH CANNOT BE A BASIS FO R HOLDING IT AS ASSESSEES UNDISCLOSED INCOME. B. BOTH THE PARTIES I.E THE PERSON MAKING PAYMENT AS W ELL AS ASSESSEE HAVE CONFIRMED THESE FACTS, THE BURDEN OF OFFERING A REASONABLE EXPLANATION IS DULY DISCHARGED. THEREAFTER, IN ORDE R TO PROVE APPARENT IS NOT CORRECT, SOLE BURDEN LIES ON REVENU E TO PROVE OTHERWISE WHICH CANNOT BE DISCHARGED BY PRESUMPTION OR DRAWING CONJECTURES. C. FOR NRI QUOTA ENROLEMENT MEDICAL COUNCIL DO NOT RE QUIRE DEPENDENT TO BE OF BLOOD RELATIONONLY. SINCE THE ME DICAL COLLEGE ADMISSION WAS NECESSARY AND ASSESSEE HAD NO NRI REL ATION ABROAD, A REQUEST WAS MADE TO FAMILY FRIEND MR. JAIN FOR HE LP IN THIS MATTER WHO WILLINGLY AGREED AND FULFILLED NECESSARY FORMAL ITIES INCLUDING THE PRESCRIBED AFFIDAVIT ACCEPTABLE TO MEDICAL COLL EGE. D. THE AFFIDAVIT IS PRESCRIBED BY MEDICAL COLLEGE WHIC H BINDS THE NRI FOR COMMITMENT OF MEDICAL COURSE FEE IN FOREIGN EXC HANGE FROM NRI A/C. THE AMOUNT IN QUESTION WAS AGREED TO BE AN INTEREST FREE LOAN BY SHRI RAJESH JAIN TO ASSESSEE. THIS NORMAL C OURSE OF ACTION HAS BEEN ASSUMED BY THE DEPARTMENT TO BE DIFFICULT TO EXIST IN HUMAN RELATIONS. E. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL TO SUG GEST CASH PAYMENT OF THIS AMOUNT TO MR. RAJESH JAIN, THE FACT OF PAYMENT CANNOT BE ASSUMED IGNORING THE FACTS AND EVIDENCE O N RECORD. THERE IS NOTHING TO EVEN REMOTELY SUGGEST THAT ASSE SSEE PAID THIS ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 6 AMOUNT IN CASH OR IN KIND AT ANY TIME AND PARTICULA RLY IN THE YEAR IN QUESTION. IN THE SEARCH OPERATION NO INCRIMINATING MATERIAL WAS FOUND TO EVEN REMOTELY SUGGEST ANY CASH PAYMENT TO MR. RAJESH JAIN. F. AS HELD BY LD. CIT(A), THIS SPONSORSHIP IS TREATED AS A GIFT THEN THE SAME BEING MADE TO MAJOR SON PIYUSH, IT CANNOT BE A DDED IN THE HANDS OF THE ASSESSEE U/S 56(2). IT IS VEHEMENTLY CONTENDED THAT THE ALLEGATIONS OF UNDISCLOSED INCOME OR IMPLIED GIFT LEVELED BY LOWER AUTHORITIES ARE FIGMENT OF IMAGINATIONS AND AN ATTEMPT TO WILLY NILLY MAKE THE ADDITION. IT HAS NO LEGS TO STAND, THEREFORE, ADDITION MAY BE DELETED. 2.4 LD. CIT(DR) SUPPORTED THE ORDERS OF LOWER AUTHO RITIES. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE THE TRANSA CTION OF SPONSORSHIP HAS NOT BEEN DOUBTED, BESIDES IDENTITY AND CREDITWO RTHINESS OF SHRI RAJESH JAIN IS NOT IN QUESTION. TO SUM UP ADVERSE I NFERENCES DRAWN BY REVENUE AND COUNTERED BY ASSESSEE ARE AS UNDER: (I) WHY SHRI RAJESH JAIN HAS GIVEN THE SPONSORSHIP ASSESSEE COUNTERS BY EXPLANATION THAT HE IS A CLOSE FAMILY FRIEND, ASSESSEE HAD NO NRI RELATIVE AND REQUESTED HIS NRI FRIEND TO HELP IN THE MATTER WHO AGREED TO DO SO. (II)THE AFFIDAVIT REFERS PIYUSH AS DEPENDENT OF MR . JAIN, WHEREAS HE IS NOT ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 7 THERE IS PRESCRIBED FORMAT OF AFFIDAVIT ISSUED BY MEDICAL COLLEGE, IT REQUIRES THE USE OF THIS WORD. (III)ASSESSEE HAD SUFFICIENT INCOME HE SHOULD HAVE PAID MR. JAIN IN INDIAN RUPEES - ASSESSEE WAS SHORT OF LIQUID FUN DS AT THAT TIME SO THEY AGREED FOR AN INTEREST FREE LOAN. (IV)THE AMOUNT IS A GIFT U/S 56(2) IF ITS GIFT THAN THE RECIPIENT IS PIYUSH AND NOT ASSESSEE, THEREFORE, IT CANNOT BE ADDED IN THE INCOME. (V)THE AMOUNT HAS BEEN PAID OUT OF UNDISCLOSED INC OME. DESPITE SEARCH OPERATIONS NOT A S CRAP OF EVIDENCE HAS BEEN FOUND ABOUT PAYMENT. THERE IS NEITHER ANY FACT NOR EVIDENCE ON RECORD TO SUGGEST THAT IMPUGNED AMOUNT WAS PAID IN ANY YEAR AND PARTICULARLY IN THIS YEAR. THEREFORE, IT CANNOT E HELD AS PAYMENT OUT OF ASSESSEES UNDISCLOSED INCOME. 2.6 IN OUR CONSIDERED VIEW IN THE ABSENCE OF ANY IN CRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR INQUIRIES THER EAFTER, THE ADDITION CANNOT BE SUSTAINED AS PAYMENT OUT OF UNDISCLOSED I NCOME OF THIS YEAR. 2.7 APROPOS THE ALLEGATION OF GIFT U/S 56(2), THE D ONE RECIPIENT BEING THE ASSESSEES MAJOR SON PIYUSH THE ADDITION ON THI S COUNT ALSO CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THUS IN THE ENTI RETY OF FACTS AND CIRCUMSTANCES OF THE CASE MENTIONED ABOVE, THE IM PUGNED ADDITION IS DELETED. ITA NO. 759/JP/2014 GYARSI LAL SHARMA VS. DCIT ,CENTRAL CIRCLE- 1, JAI PUR 8 3.0 IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5/06 /2015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5 /06/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI GYARSI LAL SHARMA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE- 1, JAIPU R 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.759/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR