Bhim Singh Jain, New Delhi V. ITO, New Delhi

ITA 805/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98142 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 10-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: ADLAKHA
• Keywords: Gift; Source of fund; Question of law

Judgement Text

I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNT ANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO.805/DEL/2011 ASSESSMENT YEAR-2002-03 SHRI BHIM SINGH JAIN, RZ-A/59, GALI NO.4, MAHIPALPUR, NEW DELHI. (PAN: AAIPJ9707F) (APPELLANT) VS ITO, WARD 24(4), NEW DELHI. (RESPONDENT) APPELLANT BY SHRI ADLAKHA, ADV. RESPONDENT BY SHRI K.K. JAISWAL, DR ORDER PER C. M. GARG, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF THE LD. CIT(A)-XXII, NEW DELHI DATED 11/11/2010 PASSED IN APPEAL NO. 235/07-08 FOR ASSESSMENT YEAR 2002-03. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS:- 1. THAT THE CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS. 4,00,000/- MADE BY THE ASSESSING OF FICER. 2. THAT THE LEARNED CIT(A) ERRED AND ACTED ARBIT RARY IN PLACING RELIANCE ON IN ADMISSIBLE EVIDENCE IN THE S HAPE OF THE STATEMENT OF SHRI GIAN CHAND DONOR RECORDED AT THE DATE OF HEARING 15.10.2015 DATE OF PRONOUNCEMENT 09.12.2015 I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 2 BACK OF THE ASSESSE AND NOT PROVIDED TO THE ASSESSE E. THE APPELLANT WAS NOT PROVIDED AN OPPORTUNITY TO CROSS EXAMINE THE WITNESS OF THE REVENUE. 3. THAT THE CIT(A) WAS NOT JUSTIFIED IN IGNORING T HE VITAL EVIDENCE FILED BY THE ASSESSEE BEING CONFIRMATION I N THE SHAPE OF AFFIDAVIT, BANK STATEMENT SHOWING DEBIT EN TRY OF RS. 4,00,000/- COPY OF ITR, GIFT DEED ETC.. 4. THAT THE INITIAL AND PRIMARY ON-US WHICH LAY U PON THE APPELLANT WAS DISCHARGED BY FILING VITAL EVIDENCE A S MENTIONED IN GROUND NO. 3. 5. THAT THE CIT(A) FAILED TO CONSIDER THE JUDGEME NT OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. PADAM SI NGH CHAUHAN (2010) 214 TAXATION 792 (RAJASTHAN). 6. THAT THE ADDITION OF RS. 4,00,000/- HAD BEEN W RONGLY SUSTAINED BY THE CIT(A) . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. LEARNED COUNS EL OF THE ASSESSEE CONTENDED THAT THE CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION AND HE WAS NOT JUSTIFIED IN PLACING RELIANCE ON INADMISSIBLE EVIDE NCE I.E. THE SO-CALLED STATEMENT OF SHRI GIAN CHAND JAIN DONOR RECORDED ON THE BACK OF THE ASSESSEE AND COPY OF WHICH WAS NOT PROVIDED TO THE ASSESSEE AND THE APPE LLANT WAS ALSO NOT PROVIDED OPPORTUNITY TO CROSS-EXAMINE THE SAID WITNESS OF TH E REVENUE. LEARNED COUNSEL OF THE ASSESSEE TOOK US THROUGH ASSESSEE PAPER BOOK -I AND II WHICH CONTAIN 14 AND 8 PAGES AND SUBMITTED THAT THE ASSESSEE FILED C OPY OF GIFT DEED, AFFIDAVIT OF DONOR SHRI GIAN CHAND JAIN, CONFIRMATION, COPY OF D ONORS IT RETURN, COPY OF DONORS BANK STATEMENT ALONG WITH HIS PAN NUMBER AN D THE ASSESSEE ALSO SUBMITTED STATEMENT OF AFFAIRS OF DONOR AS ON 31.3. 2001 AND HENCE, THE ASSESSEE I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 3 DISCHARGED ITS ONUS TO ESTABLISH GENUINENESS OF THE TRANSACTION OF GIFT SUPPORTED BY IDENTITY, CAPABILITY AND CAPACITY TO DONATE OF T HE DONOR. PLACING RELIANCE ON THE RECENT ORDER OF HON'BLE JURISDICTIONAL HIGH COU RT OF DELHI DATED 11.4.2012 IN I.T.A. NO. 212/2012 IN THE CASE OF CIT VS GOEL S ONS GOLDEN ESTATE PVT. LTD., THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ON THE DETAILS, EVIDENCE AND EXPLANATION OF THE ASSESSEE IF THE ASSESSING OFFICE R DID NOT CONSEQUENT THERETO CONDUCT ANY INQUIRY AND CLOSED THE PROCEEDINGS AND THE ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY INQUIRY, VERIFICATION A ND DEAL WITH THE MATTER IN DEPTH SPECIALLY WHEN THE AFFIDAVIT, CONFIRMATION AN D OTHER RELEVANT DOCUMENTS AND EVIDENCE WERE FILED, THEN IN THE ABSENCE OF THI S INQUIRY, ADDITION CANNOT BE HELD AS SUSTAINABLE AND VALID. 4. LEARNED COUNSEL OF THE ASSESSEE ALSO PLACED RELI ANCE ON FOLLOWING ORDERS/JUDGMENTS OF HONBLE APEX COURT AND HON'BLE HIGH COURTS:- (I) C. VASANTLAL & CO. VS CIT 45 ITR 206(S.C.) (II) CIT VS ORISSA CEMENT CORPORATION 159 ITR 78 (S.C.) (III) CIT VS EASTERN COMMERCIAL ENTERPRISE 210 ITR 103 (C ALCUTTA) (IV) CIT VS SMC SHARE BROKERS LTD. 288 ITR 103 (CALCUTTA ) (V) CIT VS PADAM SINGH CHOUHAN (2010) 214 TAXATION 792 (RAJ) 5. LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E STAND AND ACTION OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE GENUIN ENESS OF THE TRANSACTION OF GIFT AND CAPACITY OF DONOR WAS NOT ESTABLISHED AND THE DONOR HIMSELF IN HIS I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 4 STATEMENT ADMITTED TO HAVE BEEN GIVEN BOGUS ENTRY O F GIFT TO THE ASSESSEE AND HENCE, ADDITION IS SUSTAINABLE. 6. ON CAREFUL CONSIDERATION OF ABOVE, AT THE VERY O UTSET, WE NOTE THAT THE SOLE BASIS OF ADDITION IS THE STATEMENT OF SHRI GIA N CHAND JAIN BEFORE INVESTIGATION WING THAT HE HAD GIVEN ACCOMMODATION ENTRY TO THE ASSESSEE. THE ASSESSEE SUBMITTED COPIES OF GIFT DEED, AFFIDAVIT, CONFIRMATION OF IT RETURN, PAN NO., BANK STATEMENT AND STATEMENT OF AFFAIR AS ON 31.3.2001 OF THE DONOR. THE ASSESSEE ALSO REQUESTED THE ASSESSING OFFICER V IDE LETTER DATED 28.10.2011 BUT THE SAME WAS NOT SUPPLIED TO HIM AND THIS FACT IS AMPLY CLEAR FROM NOTING OF INSPECTOR OF THE DEPARTMENT DATED 28.10.2010 (ASSES SEES PAPER BOOK II PAGE 1) AND THIS CROSS EXAMINATION ON SUCH WITNESS WAS ALSO NOT PROVIDED TO THE ASSESSEE. NOW, WE RESPECTFULLY TAKE NOTE OF DICTA LAID DOWN BY HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS SMC BROKERS LT D. (SUPRA) WHEREIN IT WAS HELD THAT IN ABSENCE OF THE WITNESS BEING MADE AVAI LABLE FOR CROSS-EXAMINATION FOR THE ASSESSEE, HIS STATEMENT COULD NOT BE RELIED . IN THE PRESENT CASE, EVEN COPY OF STATEMENT WAS NOT PROVIDED TO THE ASSESSEE, THE QUESTION OF CROSS- EXAMINATION COMES THEREAFTER. 7. WHEN WE ANALYSE THE ORDERS OF THE AUTHORITIES BE LOW, WE NOTE THAT THE CIT(A) UPHELD THE ADDITION BY CONCLUDING AS UNDER:- 6.2 THE APPELLANT HAS CONTENDED THAT TREATING GIF T OF RS.4,00,000/- FROM SHRI GIAN CHAND JAIN AS NON GENU INE WAS I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 5 'WRONG AND MISCONCEIVED SINCE THE GIFTS WERE DULY C ONFIRMED BY THE DONOR AND WERE RECEIVED THROUGH PROPER BANKING CHANNEL, THE APPELLANT HAS FURNISHED COPY OF GIRT DEED EXECU TED BETWEEN THE DONOR AND THE DONEE, COPY OF AFFIDAVIT CONFIRMI NG THE GIFT, COPY OF RETURN OF INCOME OF THE DONOR, COPY OF PAN CARD OF THE DONOR AND COPY OF BANK STATEMENT SHOWING DEBIT ENTR Y OF RS.4,00,000/- AGAINST GIFT CHEQUE NO. 496716 ON 21 .03.2002. HOWEVER, THE COURTS HAVE HELD THAT MERE IDENTIFICAT ION OF THE DONOR AND SHOWING THE MOVEMENT OF THE AMOUNT THROUG H BANKING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. THE ONUS LIES ON THE DONEE NOT ONLY TO ESTABLISH THE ID ENTITY OF THE DONOR, BUT ALSO THE DONOR'S CAPACITY TO MAKE SUCH A GIFT. WHERE THERE WAS NOTHING ON RECORD TO SHOW AS TO (I) WHAT WAS THE FINANCIAL CAPACITY OF THE DONORS, (II) WHAT WAS THE CREDITWORTHINESS OF THE DONORS, (III) WHAT WAS THE KIND OF RELATIONSHIP THE DONORS HAD WITH THE DONEE-APPELLAN T, (IV) WHAT ARE THE SOURCE OF FUNDS GIFTED TO THE APPELLANT, AN D (V) WHETHER THE DONORS HAD THE CAPACITY OF GIVING LARGE AMOUNT OF GIFT TO THE APPELLANT, IT WOULD NOT BE JUSTIFIED IN DELETING TH E ADDITIONS MADE BY THE ASSESSING OFFICER, ESPECIALLY WHEN THE APPEL LANT DID NOT APPEAR IN PERSON BEFORE THE ASSESSING OFFICER , DES PITE BEING ASKED TO DO SO - CIT V. ANIL KUMAR 120081 167 TAXMAN 143 ( DELHI). EVEN THOUGH MONEY HAD FLOWN THROUGH BANK AC COUNT, THE IDENTITY OF THE PERSON GIVING GIFTS WAS ESTABLISHED , THEIR CREDITWORTHINESS PROVED, THE TRANSACTION; FROM THE DONOR TO THE APPELLANT WAS UNUSUAL. THERE WAS NO RELATIONSHIP BE TWEEN THE DONOR AND DONEE AND THERE WAS NO OCCASION FOR MAKIN G THE GIFTS, I HAVE EXAMINED THE BANK, PASS BOOK OF THE DONOR, A ND OBSERVE THAT HE HAD ONLY RS.20,832/- AS BALANCE BEFORE ISSU ANCE OF THE CHEQUE TO THE DONE, A CREDIT OF RS. 3,85,000/- IMME DIATELY PRIOR TO MAKING THE GIFT AND RS.5,832/- AS BALANCE AFTER ISSUANCE OF CHEQUE. THE DONORS RETURN, OF INCOME FOR A.Y. 2001 -02 SHOWS TAXABLE INCOME OF ONLY RS.1,10,410/- WITH A TAX LIA BILITY OF RS.165/-. WHEREAS HE HAS GIFTED THE SUM OF RS. 4,0 0,000/-, NEARLY FOUR TIMES OF HIS ANNUAL INCOME. TO SEE THE GENUIN ENESS OF A GIFT I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 6 CANNOT BE ACCEPTED TO BE GENUINE, MERELY BECAUSE TH E AMOUNT HAS COME BY WAY OF A CHEQUE OR DRAFT THROUGH, BANKI NG CHANNEL, UNLESS THE IDENTITY OF THE DONOR, HIS CREDITWORTHIN ESS, RELATIONSHIP WITH THE DONEE AND THE OCCASION IS PROVED. UNLESS T HE RECIPIENT PROVES THE GENUINENESS THEREOF, THE SAME CAN VERY W ELL BE TREATED TO BE AN ACCOMMODATION ENTRY OF THE ASSESSEES OWN MONEY, WHICH IS NOT DISCLOSED FOR THE PURPOSE OF TAXATION. THE ABOVE CONSIDERATIONS FOR TESTING THE GENUINENESS OF A GIF T ARE NOT EXHAUSTIVE, AS THERE MAY BE OTHER REASONS ALSO WHIC H WOULD BE APPROPRIATE FOR CONSIDERING THE GENUINENESS OF A GI FT ARE NOT EXHAUSTIVE, AS THERE MAY BE OTHER REASONS ALSO WHIC H WOULD BE APPROPRIATE FOR CONSIDERING THE GENUINENESS OF A GI FT (TIURATH RAM GUPTA VS CIT (2008) 304 ITR 145 (PUN & HAR). R ELIANCE IS ALSO MADE TO THE JUDGMENT OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF SAJAN DASS AND SONS V CIT (2003) 264 ITR 43 5 WHEREIN THE HON'BLE COURT EXAMINING THE ISSUE HAS HELD AS U NDER:- A MERE IDENTIFICATION OF THE DONOR AND SHOWING T HE. MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL S IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SI NCE THE CLAIM IS MADE BY THE ASSCSSCE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE A GIFT AND THAT IT HAS ACTUALLY BEEN RECEIVED AS A GIFT FROM THE DONOR. IT HAS TO BE KEPT IN VIEW THAT A FAMILY, FRIEND W HO GIFTED RS.4.00,000/- TO THE APPELLANT OUT OF LOVE AND AFFE CTION COULD NOT BE PRODUCED BY THE APPELLANT. THE APPELLANT COULD N OT EVEN PROVIDE HIS CURRENT ADDRESS. IT IS EVIDENT THAT THE APPELLANT HAS FAILED TO DISCHARGE ITS ONUS. I HOLD THE VIEW THAT NO COGENT MATERIAL IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTION WAS PALCED BEFORE ASSESSING OFFICER OR BEFORE ME. TAKI NG STOCK OF FACTS AND CIRCUMSTANCES OF THE CASE, I CONFIRM THE ADDITION OF RS.4,00,000/- MADE BY THE ASSESSING OFFICER. 8. FROM THE ASSESSMENT ORDER, IT IS ALSO VIVID THAT THE ASSESSING OFFICER MADE ADDITION ONLY ON THE BASIS OF STATEMENT OF DON OR SHRI GIAN CHAN JAIN AND BY OBSERVING THAT THE SUMMON COULD NOT BE SERVED AS NO SUCH PERSON WAS EXISTING THERE AND THE ASSESSEE COULD NOT PRODUCE T HE DONOR. THERE IS NO I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 7 INQUIRY OR INVESTIGATION BY THE ASSESSING OFFICER A BOUT THE DOCUMENTS SUBMITTED BEFORE HIM TO SUPPORT THE GENUINENESS OF THE TRANSACTION AND IDENTITY, CREDITWORTHINESS AND CAPACITY OF THE DONOR. HENCE, ACTION AND STAND OF THE ASSESSING OFFICER COMES WITHIN THE TEETH OF THE ORD ER OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS GOEL SONS (SUPRA) WHERE IN THEIR LORDSHIPS HELD AS FOLLOWS:- 3. WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES, THEIR PAN NUMBER, COPY OF BANK STATEMENTS, AFFIDAVITS AND BALANCE SHEET. T HEREAFTER THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS/ PARTIES. ASSESSEE EXPRESSED ITS INABILIT Y TO PRODUCE THEM. THE ASSESSING OFFICER DID NOT CONSEQUENT THER ETO CONDUCT ANY INQUIRY AND CLOSED THE PROCEEDINGS. THIS IS A C ASE WHERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY I NQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPEC IALLY AFTER THE AFFIDAVIT/CONFIRMATION ALONG WITH THE BANK STATEMEN TS ETC. WERE FILED. IN CASE THE ASSESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NON- VERIFICATION OF THE DETAILS AT THE TIME OF ASS ESSMENT PROCEEDINGS, THE FACTUAL FINDINGS RECORDED BY THE A SSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED OR DER PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APP EAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES. 9. THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE AS IN THE SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE ASSESSI NG OFFICER MADE ADDITION WITHOUT ANY INQUIRY AND NON-VERIFICATION OF DETAILS SUBMITTED BY THE ASSESSEE I.T.A. NO. 805/DEL/2011 ASSESSMENT YEAR: 2002-03 8 DURING ASSESSMENT PROCEEDINGS AND THUS WE ARE INCLI NED TO HOLD THAT THE FACTUAL FINDING RECORDED BY THE ASSESSING OFFICER AND UPHEL D BY THE CIT(A) WERE INCOMPLETE AND SPARSE WHICH CANNOT BE MADE BASIS OF ANY VALID DISALLOWANCE OR ADDITION AND THE SAME CAN SAFELY BE TREATED AS PERV ERSE AND INFIRM AND THUS WE SET ASIDE THE SAME. THE ASSESSING OFFICER IS DIREC TED TO DELETE THE ADDITION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE ON SOLE I SSUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.12.2015. SD/- SD/- (S.V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 09TH DECEMBER 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR