The Incomet-ax Officer, Dasuya V. Shri Subhash Chawla Prop. M/s. Chawla Forex and, Hoshiarpur

ITA 8/ASR/2014

• Counselvise Citation: 820914 RSA 2014
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVISH SOOD
• Keywords: Gift; Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO.08 (ASR)/2014 ASSESSMENT YEAR: 2005-06 PAN: ACWPC7564M INCOME-TAX OFFICER, VS. SHRI SUBHASH CHAWLA, DASUYA. PROP. M/S. CHAWLA FOREX AND M/S. NEW CHAWLA JEANS HOUSE, GANDHI CHOWK, URMARHIARPUR (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RATINDER KAUR, DR RESPONDENT BY : SHRI RAVISH SOOD, ADVOCATE DATE OF HEARING : 20.01.2015 DATE OF PRONOUNCEMENT : 27.01.2015 ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2005-06 AGAINST THE ORDER DATED 21.10.2013 PASSED BY LEARNED CIT(A) , JALANDHAR, CHALLENGING THE ACTION OF THE LD. CIT(A) IN DELETIN G THE ADDITION OF RS.13,74,467/- AS AGAINST TOTAL ADDITION OF RS.16,5 6,176/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED INCOME OF THE ASSE SSEE U/S. 68 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS PROPRIETOR OF M/S. CHAWLA FOREX AND NEW CHAWLA JEAN HOUSE. HE FILED HIS RETURN OF INCOME FO R THE YEAR UNDER ITA NO.08(ASR)/2014 2 CONSIDERATION, DECLARING INCOME OF RS.2,85,100/-. V IDE ASSESSMENT ORDER DATED 31.12.2007, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.19,83,470/-. WHILE DOING SO, THE AO, INTER ALIA, MADE ADDITION OF RS.16,56,176/- U/S. 68 OF THE ACT. WHILE DOING SO, THE AO OBSERVED THAT IN THE CAPITAL ACCOUNT OF THE ASSESSEE, APPEAR ING IN THE BOOKS OF ACCOUNT OF M/S. CHAWLA FOREX, THERE WERE FOUR CR EDITS TOTALING TO RS.16,56,176/-;THAT ON QUERY,THE ASSESSEE SUBMITTED THAT THESE CREDITS WERE ON ACCOUNT OF GIFTS MADE BY HIS BROTHE R, WHO WAS SETTLED IN ITALY; THAT THE ASSESSEE WAS ASKED TO PR OVE THE IDENTITY AND CREDITWORTHINESS OF THE DONOR; THAT THE ASSESSE E PRODUCED A FEW DOCUMENTS WRITTEN IN THE ITALIAN LANGUAGE; THAT THE SE WERE CLAIMED TO BE BANK STATEMENTS OF THE DONOR; THAT THE ASSESS EE WAS ASKED TO FILE THE TRANSLATED VERSION OF THESE DOCUMENTS; THA T A CERTIFICATE FROM CANARA BANK, TANDA WAS FILED, WHICH DOCUMENT, WHILE GIVING DD NUMBER, CERTIFIED THAT THE SAID CREDITS IN ASSESSEE S BANK ACCOUNT WERE ON ACCOUNT OF FOREIGN DRAFTS; THAT THE NAME AN D ADDRESS OF THE SENDER OR EVEN THE COUNTRY OF ORIGIN WAS NOT SPECIF IED; THAT THE ASSESSEE ALSO FILED PHOTOCOPIES OF TWO BANK DRAFTS ISSUED BY THE FOREIGN BANK IN THE NAME OF THE ASSESSEE; THAT THE TRANSLATED VERSION OF THE BANK ACCOUNT SHOWED THAT THE ACCOUNT WAS IN THE NAME OF ONE SHRI ROHAN CHAWLA, WHEREAS THE NAME OF THE ASSESSEES BROTHER, AS PER COPY OF HIS PASSPORT, WAS RAM CHAND ER CHAWLA; THAT ITA NO.08(ASR)/2014 3 TO THIS, THE ASSESSEE EXPLAINED THAT HIS BROTHER HA D CHANGED HIS NAME IN 2003, FOR WHICH, NOTICE IN THE NEWSPAPER HA D BEEN GIVEN; THAT THE PHOTOCOPY OF NEWSPAPER DATED 16.03.2003 HA D BEEN FILED AS EVIDENCE IN THIS REGARD; THAT THERE WAS NO EVIDENCE WITH THE ASSESSEE REGARDING IDENTITY OF THE DONOR, HIS CREDI TWORTHINESS, OR THE CONFIRMATION OF THE TRANSACTION, OR THE OCCASIO N ON WHICH THE ALLEGED DONATION WAS GIVEN BY THE DONOR. IT WAS ON THESE FACTS, THAT THE AO MADE ADDITION OF THE AMOUNT UNDER CONSIDERAT ION, I.E., RS.16,56,176/-, TO THE INCOME OF THE ASSESSEE. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS.16,56,176/-, TO THE EXTENT OF RS.13, 72,467/-. WHILE DOING SO, THE LD. CIT(A) OBSERVED AS FOLLOWS : 6.8. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AS MADE IN THE ASSESSMENT ORDER A S WELL AS IN VARIOUS REMAND REPORTS SUBMITTED FROM TI ME TO TIME. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSION S OF THE ASSESSEE AS WELL AS HIS COUNTER COMMENTS ON VAR IOUS REPORTS OF THE ASSESSING OFFICER. I HAVE FURTHER CO NSIDERED THE OTHER MATERIAL BROUGHT ON RECORD. ON CAREFUL CONSIDERATION OF THE MATERIAL BROUGHT ON RECORD, IT HAS BEEN NOTICED THAT THE ASSESSING OFFICER HAS ACCEPTE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2009-10 THAT SHRI RAM CHANDER CHAWALA ALIAS ROHAN CHAWLA IS THE REAL BROTHER OF THE ASSESSEE WHO IS S TATED TO BE A PERMANENT RESIDENT OF ITALY. NOT ONLY THIS, THE ASSESSING OFFICER HAS ALSO ACCEPTED TWO GIFTS OF RS.66,575/- & RS.5,26,862/- TOTALING TO RS.5,93,437 /- FROM SHRI ROHAN CHAWLA TO THE ASSESSEE DURING A.Y. 2009- 10 AS GENUINE GIFT. THE EVIDENCES IN THE FORM OF CO PY OF ITA NO.08(ASR)/2014 4 PASSPORT AND COPY OF BANK STATEMENT WHICH HAVE BEEN PRODUCED BY THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF SHRI RAM CHANDER CHAWLA ALIAS S HRI ROHAN CHAWLA, THE REAL BROTHER OF ASSESSEE HAVE BEE N ACCEPTED IN THE A.Y. 2009-10 WHEREAS THE SIMILAR EVIDENCES ARE BEING OBJECTED TO BY THE ASSESSING OF FICER FOR THE A.Y. 2006-07 TIME AND AGAIN. IN MY OPINION, THE ASSESSING OFFICER SHOULD ADOPT UNIFORM APPROACH IN ACCEPTING OR REJECTING ANY EVIDENCE PRODUCED BEFORE HIM. MOREOVER, IN MY CONSIDERED OPINION, THE ASSESSEE HA S PROVED BEYOND DOUBT THE IDENTITY AND CREDITWORTHINE SS OF SHRI ROHAN CHAWLA WHO IS A PERMANENT RESIDENT OF IT ALY WITH DOCUMENTARY EVIDENCES WHICH HAS ALREADY BEEN PROVED AND ADMITTED DURING ASSESSMENT PROCEEDINGS F OR THE A.Y. 2009-10. 6.9. IN THESE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, I AM OF THE OPINION THAT THE ASSESSEE HAS SATISFACTORILY PROVED THE IDENTITY OF SHRI ROHAN CH AWLA AS WELL AS HIS CREDITWORTHINESS. THE TRANSACTIONS ARE ALSO THROUGH BANKING CHANNELS WHICH ALSO CANNOT BE DOUBT ED. I, THEREFORE, TREAT THE GIFT OF RS.13,72,467/- AS A GENUINE GIFT WHICH HAS BEEN RECEIVED BY THE ASSESSEE FROM H IS REAL BROTHER SHRI RAM CHANDER CHAWLA ALIAS ROHAN CHAWLA AND DELETE THE ADDITION OF RS.13,72,467/- OU T OF TOTAL ADDITION OF RS.16,56,176/-. HOWEVER, THE ASSE SSEE COULD NOT PROVE THE SOURCE OF BALANCE GIFT OF RS.2,83,709/- AS HIS BROTHER HAS GIVEN GIFT OF RS.13,72,467/- ONLY WHICH HAS ONLY BEEN ADMITTED. T HE STAND OF THE ASSESSEE DURING ASSESSMENT PROCEEDINGS WAS THAT WHOLE OF THE AMOUNT OF RS.16,56,176/- HAS BEEN RECEIVED AS GIFT FROM HIS REAL BROTHER SHRI ROHAN C HAWLA WHO IS A RESIDENT OF ITALY WHEREAS THE CONFIRMATION FROM ROHAN CHAWLA HAS BEEN FURNISHED ONLY FOR AN AMOUNT OF RS.13,74,467/-. I, THEREFORE, TREAT THE BALANCE CRE DIT OF RS.2,83,176/- IN THE CAPITAL ACCOUNT OF ASSESSEE AS UNEXPLAINED AND CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER TO THIS EXTENT. IN THE RESULT, GR OUND OF APPEAL NO. 2 TAKEN BY THE ASSESSEE IS, THEREFORE, P ARTLY ALLOWED. 4. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US . 5. CHALLENGING THE IMPUGNED ORDER, THE LD. DR CONTE NDED THAT THE ITA NO.08(ASR)/2014 5 LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .13,74,467/- AS AGAINST TOTAL ADDITION OF RS.16,56,176/-, CORRECTLY MADE BY THE AO TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. IT H AS BEEN CONTENDED THAT WHILE WRONGLY DELETING THE ADDITION CORRECTLY MADE BY THE AO, THE LD. CIT(A) HAS FAILED TO TAKE INTO CONSIDERATIO N THE FACT THAT THE CREDITS IN THE ASSESSEES CAPITAL ACCOUNT WERE ON A CCOUNT OF FOREIGN DRAFTS, FOR WHICH THERE WAS NO EVIDENCE WITH THE AS SESSEE REGARDING THE IDENTITY OF THE SENDER OR HIS CREDITWORTHINESS, CONFIRMATION OF TRANSACTION, OR THE OCCASION ON WHICH THE ALLEGED G IFTS WERE MADE BY THE DONOR. IT HAS BEEN CONTENDED THAT THE AOS OBSE RVATIONS IN THIS REGARD HAVE NOT BEEN APPRECIATED BY THE LD. CIT(A). 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT IT IS PATENT ON RECORD THAT UNDER SIMILAR FACTS AND CI RCUMSTANCES, IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2009-10 , THE AO HAD ACCEPTED THAT SHRI RAM CHANDER CHAWLA ALIAS ROHAN C HAWLA WAS THE REAL BROTHER OF THE ASSESSEE; THAT HE WAS A PERMANE NT RESIDENT OF ITALY; THAT THE AO HAD HIMSELF, FOR ASSESSMENT YEAR 2009-10, ACCEPTED AS GENUINE, GIFTS OF RS.66,575/- AND RS.5, 26,862/-, TOTAL AMOUNTING TO RS.5,93,437/- FROM THE SAID SHRI RAHAN CHAWLA, BROTHER OF ASSESSEE, TO THE ASSESSEE; THAT COMPLETE DOCUMENTARY ITA NO.08(ASR)/2014 6 EVIDENCE IN THIS REGARD WAS FURNISHED BEFORE THE AO ; THAT THIS DOCUMENTARY EVIDENCE COMPRISED OF PASSPORT AND BANK STATEMENT OF ROHAN CHAWLA ALIAS RAM CHANDER CHAWLA, AS ALSO CONF IRMATION FROM SHRI ROHAN CHAWLA; THAT ALL THESE DOCUMENTARY EVIDE NCES WERE NOT TAKEN INTO CONSIDERATION BY THE AO; THAT THE AO REM AINED OBLIVIOUS TO CONSIDER THESE DOCUMENTARY EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE; AND THAT, ON THE OTHER HAND, THE CIT(A) H AS DULY TAKEN INTO CONSIDERATION THESE DOCUMENTARY EVIDENCES AND HAS R IGHTLY DELETED THE ADDITION WRONGLY MADE. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS IN THE L IGHT OF THE MATERIAL PLACED ON RECORD, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). WE FIND THAT HE HAS DELETED THE ADD ITION OF RS.13,72,467/ OUT OF TOTAL ADDITION OF RS.16,56,176 /-. WHILE MAKING THIS DELETION, THE LD. CIT(A) HAS RECORDED CATEGORI CAL FACTUAL FINDINGS, WHICH THE DEPARTMENT HAS NOT BEEN ABLE TO SPECIFICALLY REBUT BEFORE US. IT HAS BEEN DULY TAKEN INTO CONSID ERATION THAT FOR THE ASSESSMENT YEAR 2009-10, IN THE CASE OF ASSESSE E, UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE AO HAD HIMSELF ACCEPTE D GIFTS AMOUNTING TO RS.5,93,437/- FROM SHRI ROHAN CHAWLA A LIAS RAM CHANDER CHAWLA, THE BROTHER OF THE ASSESSEE, TO THE ASSESSEE AS GENUINE GIFTS. MOREOVER, THE EVIDENCE IN THE SHAPE OF PASSPORT OF ITA NO.08(ASR)/2014 7 SHRI RAM CHANDER CHAWLA AND COPY OF BANK STATEMENT, AS PRODUCED BY THE ASSESSEE, HAVING RECEIVED THEM FROM ITALY, H AVE NOT FOUND ANY WORTHWHILE REBUTTAL AT THE HANDS OF THE DEPARTM ENT. IT IS PERTINENT TO MENTION HERE THAT IT WAS THIS VERY DOC UMENTARY EVIDENCE, WHICH PROMPTED THE AO TO THE ACCEPT AFORE SAID GIFTS AMOUNTING TO RS.5,93,437/- AS GENUINE GIFTS FROM AS SESSEES BROTHER SHRI ROHAN CHAWLA IN THE ASSESSEES CASE FOR THE AS SESSMENT YEAR 2009-10 AND NO ADDITION IN THIS REGARD WAS MADE. NO T ONLY THIS, THE ASSESSEE ALSO FURNISHED CONFIRMATION FROM SHRI ROHA N CHAWLA. THE LD. CIT(A) ALSO DULY TOOK THIS CONFIRMATION INTO CO NSIDERATION AND IT WAS OBSERVED THAT THIS CONFIRMATION, RATHER THAN BE ING FOR THE AMOUNT OF THE CLAIMED GIFT FOR RS.16,56,176/-, WAS FOR A GIFT OF RS.13,72,467/-. IT WAS AS SUCH, THAT THE LD. CIT(A) OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF THE BALANCE GIFT OF RS.2,83,709/-. THE ADDITION TO THIS EXTENT WAS MAIN TAINED BY THE LD. CIT(A), DELETING THE ADDITION TO THE EXTENT OF RS.1 3,72,467/-.WE MAY ALSO BRING ON RECORD THAT THE SAID CONFIRMATION, CO PY WHEREOF IN ENGLISH TRANSLATION, ORIGINAL IN ITALIAN LANGUAGE, HAS BEEN FILED BEFORE US ALSO, IN THE SHAPE OF AFFIDAVIT, READS AS FOLLOWS : AFFIDAVIT I, RAM CHANDER ALIAS ROHAN CHAWLA S/O INDERJIT CHAWLA, AGED ABOUT 31 YEARS RESIDENT OF VIA DORANDO PIETRI NO. 1 TNT 26, 41012 CARPI (MO), ITALY DECLAR ES ITA NO.08(ASR)/2014 8 SOLEMNLY AFFIRM AND DECLARE AS UNDER : 1. I AM A PERMANENT RESIDENT OF ITALY FOR THE LAST MORE THAN 12 YEARS, AND AS ON DATE IS IN PERMANENT OCCUPATION AND IT CREATES INCOME EQUIVALENT OF R. 17 LAKES (LAC SEVENTEEN RUPEES APPROXIMATELY) OF RUPEE S ANNUALLY. 2. THAT MY REAL ELDER BROTHER SH. SUBHASH CHAWLA HA D ALWAYS ACTED AS A FATHER FIGURE TO ME IN LIFE AND IN IT WAS WHEN I WAS UNEMPLOYED AND UNSETTLED IN INDIA, T HAT HE, DESPITE HIS LIMITED FINANCIAL RESOURCES AND FAM ILY RESPONSIBILITIES AND LIABILITIES, INCLUDING ME HELP ED ME FINANCIALLY AND MORALLY TO GET SETTLED DOWN ABROAD. 3. WHAT IF THE MORAL FINANCIAL AND GIVE TO ME BY MY BROTHER CAN NOT BE EQUATED IN MONETARY TERMS BUT I PURELY OUT OF LOVE AND AFFECTION AND BY WAY OF GRAT ITUDE TO MY BROTHER IT MOST WILLINGLY TO LISTENING TO MY CONSCIOUS THEREIN GIFT AN EQUIVALENT AMOUNT OF RUPE ES RS.13,72,467/- DURING THE PERIOD FALLING BETWEEN 01/04/2004 TO 31/03/2005, AS THE FOLLOWING: S.NO. DATE CHEQUE/DRAFT NO. AMOUNT (IN EUROS) AMOUNT (IN RUPEES) 1. 13.09.2004 NO.52-02.041.950 01 DRAWN ON BANK POPILARE DELL EMILIA ROMAGNA, CARPI (MO) 9000 5,07,550- 00 2. 29.12.2004 NO.51-51176567 04 DRAWN ON BANKPOPILARE DELL EMILIA ROMAGNA, CARPI (MO) 5000 2,85,918- 00 3. 29.12.2004 NO. 51-51340321-10 DRAWN ON BANKPOPILARE DELL EMILIA ROMAGNA, CARPI (MO) 4000 4. 02.03.2005 NO. 52-02.74.386 02 DRAWN ON BANKPOPILARE DELL EMILIA ROMAGNA, CARPI (MO) 6000 5,78,999- 00 WHICH AMOUNT OF GIFTS WAS SUBSEQUENTLY AGREED TO MY ITA NO.08(ASR)/2014 9 BROTHER SH. SUBHASH CHAWALA. 4. THE CHEQUES AT SR. NO. 1 AND 3 TO 5 WERE MADE BY ME OUT OF MY BANK ACCOUNT, WHILE THE CHEQUES MADE N O. 2 WERE PURCHASED BY ME FROM THE BANK. DEPONENT VERIFICATION I, RAM CHANDER ALIAS ROHAN CHAWLA, THE ABOVE NAMED DEPONENT DO HERE TO CHECK IF WHAT IS SAID ABOVE AND CORRECT TO THE BEST MY KNOWLEDGE AND BELIEF AND NOT HING HAS BEEN CONCEALED IN IT. DEPONENT VERIFIED DATE 8. FOR THE ABOVE DISCUSSION, WE HEREBY CONFIRM THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), REJECTING THE GROUN DS TAKEN BY THE DEPARTMENT AS SHORN OF MERIT. 9. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JANU ARY, 2015. SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27TH JANUARY, 2015 *AKS/- COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE : 2. ASSESSING OFFICER 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T.,AMRITSAR TRUE COPY BY ORDER