Smt. Nishaben H.Jariwala, Surat V. The Income tax Officer, Ward-5(3), Surat

ITA 761/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7735 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Keywords: Gift; Income from undisclosed sources; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) ITA.NO.761/AHD/2009 [ASSTT.YEAR : 2004-2005] NISHABEN H. JARIWALA 8/1771, DEPUTYNO KHANCHO GOPIPURA, SURAT. VS. ITO, WARD-5(3) SURAT. ASSESSEE BY : SHRI HARDIK VORA REVENUE BY : SHRI GOVIND SINGHAL O R D E R PER R.V.EASWAR, VICE-PRESIDENT : THE ASSESSEE IN THIS APPEAL IS AN INDIVIDUAL (RESIDENT). IN THE COURSE OF ASSESSM ENT PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, THE AO VERIFIED THE C APITAL ACCOUNT FILED ALONG WITH RETURN OF INCOME AND NOTICED THAT THE ASSESSEE HAD SHOWN RECEIPT OF GIFTS OF RS.1,47,207/- FROM SHRI KAMLESH RANA AND RS.44,0 00/- FROM SHRI ANIL RANA. HE CALLED UPON THE ASSESSEE TO FURNISH THE D ETAILS OF THE GIFTS SUCH AS NAMES AND ADDRESSES AND PAN NUMBERS OF THE DONORS, CONFIRMATIONS FROM THEM AND THE RETURNS OF INCOME FILED BY THEM FOR TH E A.Y.2004-2005. THE ASSESSEE SUBMITTED COPIES OF THE CONFIRMATION LETTE RS AND DRIVING LICENCE OF THE DONORS, THE AO THEREAFTER CALLED UPON THE ASSESSEE TO FURNISH EVIDENCE TO PROVE THE CREDIT-WORTHINESS OF THE DONORS AND THE GENUINE NESS OF THE GIFTS. THE ASSESSEE FURNISHED THE DETAILS UNDER COVER OF A LET TER DATED 25-9-2006 WHICH IS REPRODUCED IN PARA-4 OF THE ASSESSMENT ORDER. IN S HORT THE ASSESSEE FURNISHED THE CERTIFICATE ISSUED BY BANK OF BARODA CERTIFYING THE GIFT OF RS.1,47,207/- FROM KAMLESH RANA REPRESENTED THE PROCEEDS OF US DO LLARS 3192 REMITTED THROUGH THE INTERNATIONAL BUSINESS BRANCH, THE COPY OF THE SALARY SLIP OF KAMLESH RANA SHOWING HIS EARNINGS, COPY OF THE GIFT CHEQUES RECEIVED FROM KAMLESH RANA, THE OCCASION AND PURPOSE OF THE GIFTS ETC. AND CONTENDED THAT SINCE ALL THESE MATERIALS HAVE BEEN FURNISHED THE G ENUINENESS OF THE GIFTS STOOD PAGE - 2 ITA.NO.761/AHD/2009 -2- PROVED AND IT WAS NOT THE ONUS OF THE ASSESSEE TO P ROVE THE CREDIT-WORTHINESS OF THE DONORS. IN RESPECT OF THE GIFT FROM ANIL SHAR MA, THE AO HAS REMARKED THAT A SIMILAR REPLY HAS BEEN FURNISHED BY THE ASSESSEE. THESE REPLIES WERE NOT FOUND BY THE AO TO SATISFACTORILY EXPLAIN THE GIFTS . ACCORDING TO HIM THE ASSESSEE HAS TO DISCHARGE THE ONUS TO PROVE THE GEN UINENESS OF THE GIFTS AND THE CREDIT-WORTHINESS OF THE DONORS, THAT THE DONORS WE RE NOT THE FAMILY MEMBERS OF THE ASSESSEE, THAT THERE WAS NO RECIPROCAL GIFTS BY THE ASSESSEE, THAT THE ASSESSEE DID NOT FURNISH THE COPIES OF THE GIFT DEE DS AND THAT THE ASSESSEES EXPLANATION THAT THE GIFTS CHEQUES WERE ISSUED ON T HE OCCASION OF THE FIRST BIRTH DAY OF HER DAUGHTER WAS HARD TO BELIEVE ESPECIALLY WHEN THE ASSESSEES CLOSE RELATIVES DID NOT GIVE ANY GIFT ON THE OCCASION. I N THIS VIEW OF THE MATTER, HE TREATED THE AMOUNT OF RS.1,91,207/-, BEING THE AGGR EGATE OF TWO GIFTS, AS THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES INTRODUC ED IN HER BOOKS UNDER THE GARB OF GIFTS. 2. THE ASSESSEE CARRIED THE MATTER IN APPEAL TO THE CIT(A) BUT THE SAME WAS UNSUCCESSFUL AND THEREFORE A FURTHER WAS FILED BEFO RE THE TRIBUNAL IN ITA NO.2930/AHD/2007. BY ORDER DATED 12-9-2007, THE SMC OF THE TRIBUNAL CONFIRMED THE ADDITION AND DISMISSED THE APPEAL BY OBSERVING AS UNDER: 5. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED RECOR D. AS THE FACTS EMERGE, IT IS CLEAR THAT ASSESSEE EXCEPT FILING CON FIRMTORY LETTERS AND COPY OF CHEQUES HA SNOT BEEN FURNISHED ANY OTHER EVIDENCE T O ESTABLISH THAT THERE WAS SO-CALLED WARM RELATIONSHIP BETWEEN DONORS WHO ARE ERSTWHILE NEIGHBOURS OF THE ASSESSE. THERE WAS NO SOCIAL INTERACTION OR RE CIPROCATION OF GIFTS OR SOCIAL EVENTS, THEREFORE, THE PLEA THAT THERE WAS WARM REL ATIONSHIP HAS NOT BEEN ESTABLISHED BY THE ASSESSEE. COMING TO THE ASPECTS OF THE CAPACITY OF DONORS, THE PROOF IN RESPECT OF SHRI KAMLESH RANA PERTAINS TO SEPTEMBER, 2005 I.E. WELL BEYOND THE ACCOUNTING YEAR. NO CORROBORATING EVIDENCE ABOUT T HE CAPACITY OF THE DONORS DURING THE RELEVANT PERIOD HAS BEEN GIVEN. UNDER T HESE CIRCUMSTANCES, IT CANNOT BE HELD THAT THE ASSESSEE PROVED CAPACITY OF THE DONORS. IN CONSIDERATION OF ALL THESE FACTS AND CIRCUMSTANCES NARRATED ABOVE, I UPHOLD THAT THE FINDINGS OF THE AO AND CIT(A) HOLING THE G IFTED AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE WHICH HAS BEEN RIGHTLY ADDED IN HER INCOME. 6. IN THE RESULT, ASSESEES APPEAL IS DISMISSED. PAGE - 3 ITA.NO.761/AHD/2009 -3- 3. SUBSEQUENTLY PENALTY PROCEEDINGS WERE TAKEN BY T HE AO FOR CONCEALMENT OF INCOME. THE ASSESSEE FILED A DETAIL ED REPLY OBJECTING TO THE PROCEEDINGS AND CONTENDING THAT THE ASSESSEE HAD AD DUCED ALL THE EVIDENCE WHICH SHE HAD IN HER POSSESSION IN SUPPORT OF THE R ECEIPT OF GIFTS AND THAT MERELY BECAUSE THE EVIDENCE WAS NOT ACCEPTABLE, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED HERE INCOME. THE ASSESSEE ALSO CITED SEVERAL AUTHORITIES IN SUPPORT OF HER EXPLANATION. THE AO HOWEVER DID NO T ACCEPT THE EXPLANATION AND IMPOSED THE MINIMUM PENALTY OF RS.55,230/- UNDE R SECTION 271(1)(C). THE PENALTY HAVING BEEN CONFIRMED BY THE CIT(A), WH O RELIED ON THE ORDER OF THE TRIBUNAL CITED SUPRA, THE ASSESSEE IS IN FURTHE R APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE CONSIDERED THE FACTS AND THE RIVAL SUBMI SSIONS. IN OUR VIEW, THERE IS NO JUSTIFICATION FOR THE LEVY OF PENALTY. IT IS WELL SETTLED THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS, THOUGH CONSTIT UTE GOOD EVIDENCE, CANNOT BE CONCLUSIVE IN THE PENALTY PROCEEDINGS. IT IS AL SO WELL SETTLED THAT THE ENTIRE EVIDENCE IN THE CASE HAS TO UNDERGO A REAPPRAISAL I N THE COURSE OF THE PENALTY PROCEEDINGS IN ORDER TO ESTABLISH THE GUILT OF THE ASSESSEE AND THAT MERELY BECAUSE THE ADDITION HAS BEEN SUSTAINED BY THE TRIB UNAL IT DOES NOT AUTOMATICALLY FOLLOW THAT THE ASSESSEE CONCEALED HI S INCOME. IN THE PRESENT CASE, THE TRIBUNAL HAS OBSERVED THAT THE ASSESSEE W AS UNABLE TO ESTABLISH THE RELATIONSHIP BETWEEN HER AND THE DONORS AS ERSTWHIL E NEIGHBOURS AND THAT THERE WAS NO CORROBORATIVE EVIDENCE ABOUT THE CAPACITY OF THE DONORS. THESE ARE FINDINGS WHICH HAVE BEEN RENDERED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THEY CANNOT BE HELD TO BE CONCLUSIVE IN THE COU RSE OF THE PENALTY PROCEEDINGS. REFERENCE IN THIS CONNECTION MAY BE M ADE TO THE JUDGMENTS OF THE SUPREME COURT IN THE CASE OF KHODAY ESWARSA & S ONS, 83 ITR 369 AND ANANTRAM VEERASINGIAH & SONS, 123 ITR 457. THE INC OME-TAX AUTHORITIES HAVE NOT DISPROVED THE ASSESSEES CLAIM THAT THE MO NIES WERE RECEIVED BY HER FROM OVERSEAS THROUGH BANKING CHANNELS. THERE IS A LSO NO EVIDENCE TO SHOW PAGE - 4 ITA.NO.761/AHD/2009 -4- THAT THE MONIES WERE THE ASSESSEES OWN MONIES BROU GHT IN IN THE FORM OF GIFTS. IT MAY BE THAT THE RELATIONSHIP BETWEEN THE ASSESSE E AND THE DONORS AS NEIGHBOURS WAS NOT ACCEPTABLE TO THE DEPARTMENT; IT MAY ALSO BE THAT THE ASSESSEE WAS UNABLE TO ADDUCE EVIDENCE TO PROVE THE FINANCIAL CAPACITY OF THE DONORS. BUT THERE IS EVIDENCE TO SHOW THAT THE AM OUNTS CAME FROM ABROAD THROUGH BANKING CHANNELS AND THIS EVIDENCE HAS NOT BEEN IMPEACHED. THE FACT CANNOT ALSO BE IGNORED THAT IT WOULD BE EMBARRASSIN G FOR THE RECIPIENT OF THE GIFTS TO ASK THE DONORS TO PROVE THEIR FINANCIAL CA PACITY. THE ASSESSEE HAS ALSO ADDUCED THE CERTIFICATE ISSUED BY THE BANK OF BAROD A CONFIRMING THE RECEIPT OF MONIES FROM THEIR INTERNATIONAL BUSINESS BRANCH. U NDER THESE CIRCUMSTANCES, AND WITHOUT ANYTHING MORE, IT CANNOT BE SAID THAT T HE ASSESSEE ATTEMPTED TO CONCEAL HER INCOME. SHE HAD ADDUCED WHATEVER EVIDE NCE THAT WAS IN HER POSSESSION IN SUPPORT OF THE GIFTS. SHE WAS MEREL Y UNABLE TO PROVE THE GIFTS IN THE MANNER REQUIRED BY THE DEPARTMENT. ON THESE FA CTS, IT IS NOT POSSIBLE TO SAY THAT THE ASSESSEE CONCEALED HER INCOME. WE ARE THE REFORE INCLINED TO CANCEL THE PENALTY. WE DIRECT ACCORDINGLY AND ALLOW THE ASSES SEES APPEAL. ORDER PRONOUNCED IN THE OPEN COURT THIS 24 TH OF JULY, 2009. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 24-07-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD