VINOD CHATRUBHUJ VALECHA, MUMBAI V. ITO WD 19(1)(2), MUMBAI

ITA 8065/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6528 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 20-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 01-12-2011
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 133(6); 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K ** ,Q U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI JH TH + ,L + IUUW] YS[KK LNL; ,OA JH VFER KQDYK] U;KF;D LNL; DS LE{KA BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER VK;DJ VIHY LA[;K@ ITA NO 8065 /MUM/201 1 ( FU/KKZJ.K OKZ / ASSESSMENT YEAR: - 2005 - 06 ) SHRI VINOD CHATURBHUJ VALECHA FLAT NO. 301, 3 RD FLOOR, SAI MALHAR BUILDING, 12 TH ROAD, KHAR (WEST) MUMBAI - 400 052. VS.` THE INCOME TAX OFFICER, WARD - 9 (1)(2) MUMBAI. LFKK;H YS[KK LA[;K@TH VKB VKJ LA[;K@ PAN/GIR NO. ACAPV7652B APPELLANT RESPONDENT ORDER PER G.S. PANNU, AM THE CAPTIONED APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) [ HEREINAFTER REFERRED TO AS THE CIT(A) ] DATED 09.09.2011 , WHICH IN - TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961( FU/KKZFJFR FD VKSJ LS @ ASSESSEE BY SHRI VIMAL PUNMIYA JKTLO FD VKSJ LS @ REVENUE BY SHRI PAWAN KUMAR BEERLA LQUOKBZ FD RKJH[K @ DATE OF HEARING 06.05.2015 ?KKSK.KK FD RKJH[K@ DATE OF PRONOUNCEMENT 15 .05.2015 . 2 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 2 OF 8 HE REINAFTER REFERRED TO AS THE ACT) DATED 07.12.2007 PERTAINING TO ASSESSMENT YEAR 2005 - 06 . IN THIS APPEAL, THE ASSESEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING AND TREATING THE AMOUNT OF RS . 15,00,000/ - AS GIFT RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961 AND ADDED THE SAME AS INCOME OF THE ASSESSEE. 2. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE CHARGING INTEREST U/S. 234A , 234B, 234C & 234D OF THE INCOME TAX ACT, 1961. 3. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF INCOME TAX ACT, 1961. 2. IN THIS APPEAL, THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE CIT(A) IN SUSTAINING AN ADDITION OF RS. 15,00,000/ - MADE BY ASSESSING OFFICER BY INVOKING SECTION 68 OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06 DECLARING TOTAL INCOME OF RS. 1,43,875/ - . THE ASSESSEE DERIVES INCOME FROM MONEY LENDING & INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE CLAIMED TO HAVE RECEIVED GIFTS FROM SEVEN PERSONS T OTALING TO RS. 15,00,000/ - AS DETAILED IN PARA 5 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE SAID GIFTS BE NOT TREATED AS NON GENUINE. THE SHOW CAUSE ISSUED BY THE ASSESSING OFFICER WAS PRECEDED BY A VERIFICATION EXERCISE CARRIED OUT BY HIM WHICH REVEALED THAT ALL THE DONORS WERE RE - SELLERS OF CLOTH AND THEIR ANNUAL INCOME WAS IN THE BRACKET 3 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 3 OF 8 OF RS. 1,00,000 TO 1,60,000. THE ASSESSING OFFICER ALSO BROUGHT TO THE NOTICE OF THE ASSESSEE THAT NOTICES ISSUED U/S 133(6) OF THE ACT TO THE DONORS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITY. THE ASSESSING OFFICER ALSO BROUGHT TO THE NOTICE OF THE ASSESSEE THAT THE INFORMATION CALLED FOR U/S 133(6) FROM THE BANKS SHOWED THAT IN THE CASE OF THREE DONORS NAMELY DHARMESH PUN WANI, SURESH GULANIT AND KISHORE BATHIJA, NO BANK ACCOUNTS WER E MAINTAINED IN THEIR NAME. FURTHER, ASSESSING OFFICER ALSO STATED THAT IN THE CASE OF ONE OF THE DONORS , MAHESH PRATAP HINGORANI, THE GIFT TRANSACTION WAS NOT REFLECTED IN HIS BANK ACCOUNT. 4. HOWEVER, THE ASSESSEE DEFENDED THE GENUINENESS OF THE GIFTS AND SUBMITTED THAT GIFTS WERE RECEIVED BY HIM ON THE OCCASION OF HIS THREAD CEREMONY AND THAT THE DONORS WERE HIS COUSINS AND FAMILY FRIENDS. A XEROX COPY OF THE INVITATION CARD OF THE THREAD C EREMONY WAS ALSO FURNISHED BEFORE THE ASSESSING OFFICER. WITH REGARD TO THE ENQUIRIES FROM THE BANK, ASSESSEE SUBMITTED THAT THE DONORS HAVE GIVEN GIFTS BY ISSUING CHEQUES FROM THEIR RESPECTIVE BUSINESS ACCOUNTS AND NOT FROM THE PERSONAL BANK ACCOUNTS AND, THEREFORE, THE INFORMATION FROM THE BANK WAS MISUNDERSTOOD BY THE ASSESSING OFFICER . IT WAS ALSO EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE BANK ACCOUNT OF THE ASSESSEE SHOWED THAT THE AMOUNTS HAVE BEEN CREDITED AFTER THE CHEQUES ISSUED BY DIFFERENT DONORS HAVE BEEN CLEARED, WHICH SHOWED THAT THE GIFTS HAVE BEEN RECEIVED THROUGH BANKING CHANNELS . IN THE CASE OF MAHESH PRATAP HINGORANI, ASSESSEE EXPLAINED THAT THE GIFT AMOUNT WAS RECEIVED THROUGH BANK ACCOUNT OF HIS PROPRIETOR Y BUSINESS CONCERN AND THAT IT WOULD NOT BE REFLECTED IN THE PERSONAL BANK ACCOUNT, WHERE THE ASSESSING OFFICER HAD MADE THE ENQUIRIES. THE ASSESSEE ALSO FURNISHED CONFIRMATIONS DULY SIGNED BY 4 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 4 OF 8 THE DONORS INCLUDING THE G IFT DEED / GIFT D ECLARATIONS. IN THE CONFIRMATION S FURNISHE D, APART FROM OTHER DETAILS THE DONORS HAD DISCLOSED THEIR INCOME TAX PAN PARTICULARS. 5. ON THE BASIS OF THE INFORMATION AND MATERIAL BEFORE HIM, ASSESSING OFFICER ACCEPTED THAT THE IDENTITY OF THE DONORS ST OOD PROVED , BUT ACCORDING TO HIM , THE CREDI TWORTHINESS OF THE DONORS AS WELL AS THEIR RELATIONSHIP WITH THE ASSESSE COULD NOT BE ESTABLISHED AND, THEREFORE, HE HELD THAT THE SO - CALLED GIFT TRANSACTIONS OF RS. 15,00,000/ - DECLARED BY THE ASSESSEE W ERE NOT GENUINE , AND ACCORDINGLY THE IMPUGNED CASH CREDITS WERE TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT. 6. IN THE APPEAL BEFORE THE CIT(A), ASSESSEE REITERATED HIS STAND THAT THE GIFTS WERE GENUINE BUT THE CIT(A) HAS AFFIRMED THE FINDING OF ASSESSING OFFICER THAT NEITHER THE CREDITWORTHINESS OF THE DONORS WAS PROVED AND NOR THE GENUINENESS OF THE TRANSACTIONS WAS ESTABLISHED BY THE ASSESSEE . T HE CIT(A) , IN PARTICULAR , NOTED THAT THE ASSESSEE HAD FAILED TO PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER WHICH ALSO SHOWED T HAT THERE WAS NO CLOSE RELATION BETWEEN THEM BECAUSE OTHERWISE IT WOULD NOT HAVE BEEN DIFFICULT FOR ASSESSEE TO PRODUC E THE DONORS BEFORE THE ASSESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 7. IN THIS B ACKGROUND OF THE MATTER, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT CONFIRMATIONS FURNISHED BY ALL THE SEVEN DONORS CLEARLY ESTABLISH THAT THE GIFTS WERE RECEIVED THROUGH ACCOUT PAYEE CHEQUES AND THAT THE DONORS WERE REGULAR INCOME TAX PAYERS I NASMUCH AS THEIR RESPECTIVE PAN S 5 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 5 OF 8 WERE ALSO FURNISHED. THE LD. REPRESENTATIVE REFERRED TO THE PAPERS PLACED IN THE PAPER BOOK TO SAY THAT IN THE CASE OF SIX DONORS OUT OF SEVEN, COPIES OF THEIR BANK ACCOUNTS REVEAL FLOW OF MONEY TO THE BANK ACCOUNT OF THE ASSESSEE. IN SO FAR AS THE SEVENTH DONOR I.E. PANJUMAL SEWAKRAMANI IS CONCERNED, THE SAID DONOR HAD SINCE DIED EVEN BEFORE THE ASSESSMENT PROCEEDINGS WERE INITIATED AND, THEREFORE, THE RELEVANT BANK ACCOUNT RECORD COULD NOT BE PRODUCED. IN ANY CASE, IT WAS POINTED OUT THAT THE INCOME TAX PAN PARTICULARS OF THE SAID DONOR WAS FURNISHED ALONG WITH THE G IF T DEED/D ECLARATION S BEFORE THE ASSESSING OFFICER . REGARDING THE OBSERVATION OF THE ASSESSING OFFICER THAT IN THE CASE OF FOUR DONORS, NO BANK ACCOUNTS WERE MAINTAINED, IT WAS POINTED OUT THAT THE CHEQUES FOR THE SAID GIFTS WERE ISSUED BY THE SAID DONORS FROM THEIR BUSINESS ACCOUNTS AS CAN BE SEEN FROM THE COPIES OF THE CHEQUES ISSUED BY THE DONORS, WHICH HAVE BEEN P LACED IN THE PAPER BOOK AT PAGES 31 TO 34. THUS THE OBSERVATION OF THE ASSESSING OFFICER WAS WRONG AND THAT SUBSEQUENTLY ASSESSEE WAS ABLE TO FURNISH THE COPIES OF THE CONCERNED BANK ACCOUNTS OF THE DONORS WHICH CLEARLY ESTABLISHE D FLOW OF THE MONEY TO THE ASSESSEE. THE LD. REPRESENTATIVE FURTHER POINTED OUT THAT THE DONORS WERE CLOSELY RELATED TO THE ASSESSEE AS THEY WERE ASSESSES COUSINS. IN NUTSHELL, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THAT ASSESSEE HAS DISCHARGED THE ONUS CAST U/S 68 OF THE ACT AND, THEREFORE, THE IMPUGNED CREDITS CANNOT BE TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT. 8. ON THE OTHER HAND, THE LD. DR APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE LOWER AUTHORITIES BY REITERATING TH E ARGUMENTS CONTAINED 6 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 6 OF 8 THEREIN WHICH WE HAVE ALREADY NOTED IN THE EARLIER PARAS AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY, SECTION 68 OF THE ACT CASTS AN OBLIGATION ON THE ASSESSE E TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF ANY SUM FOUND CREDITED IN THE A CCOUNT B OOKS. IT IS QUITE WELL SETTLED THAT THE ONUS CAST ON THE ASSESSEE U/S 68 CAN BE SAID TO HAVE BEEN DISCHARGED IN A GIVEN CASE, WHERE ASSESSEE IS ABLE TO SATISFACTORILY EXPLAIN THE IDENTITY OF THE CREDITOR , CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION . IN THE PRESENT CASE, THE PLEA OF THE ASSESSEE IS THAT THE IMPUGNED CREDITS FROM SEVEN PERSONS ARE IN THE NATURE OF GIFTS TOTALING TO RS. 15,00,000/ - , AS PER THE DETAILS ENUMERATED IN PARA 5 OF THE ASSESSMENT ORD ER. THE ASSESSEE FURNISHED THE GIFT DEED/D ECLARATION S DULY AVERRED BY THE DONORS IN SUPPORT OF THE NATURE OF CREDITS. ASSESSEE ALSO FURNISHED HIS OWN BANK ACCOUNT WHICH EVIDE NCED RECEIPT OF MONEY THROUGH BANKING CHANNEL S. I N THE PAPER BOOK FILED, ASSESSEE HAS DRAWN OUR ATTENTION TO THE BANK ACCOUNT OF SIX OF THE SEVEN DONORS FROM WHERE THE MONIES HAD FLOWED TO THE BANK ACCOUNT OF THE ASSESSEE. ASSESSEE HAS ALSO ADDUCED COPIES OF THE CHEQUES ISSUED BY THE DONORS BEFORE THE LOWER AUTHORITIES, THE SAME HAVE ALSO BEEN PLACED IN THE PAPER BOOK FILED BEFORE US . T HE DONORS HAVE INDEED CONFIRMED THE FACT OF GIVING GIFTS TO THE ASSESSEE IN THEIR CONFIRMATIONS WHICH , INTER - ALIA , INCLUDED THE PARTICULARS OF INCOME TAX PAN NUMBERS . THE OCCASION FOR GIVING THE GIFT WAS ALSO EXPLAINED BY THE ASSESSEE TO BE HIS THREAD CEREMONY AND IN SUPPORT XEROX COPY OF THE INVITATION CARD WAS ADDUCED BEFORE THE LOWER AUTHORITIES. IN THE FAC E OF THE AFORESAI D MATERIAL, THE POINT TO BE DECIDED IS AS TO WHETHER THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED HIS INITIAL BURDEN CAST U/S 68 OF THE 7 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 7 OF 8 ACT. AS PER THE REVENUE , THE DONORS WERE NOT ME N OF MEANS AS THEIR ANNUAL INCOME WAS AROUND RS. ONE LAC TO RS. ONE LAC SIXTY THOUSAND; AND , THEREFORE, THEY COULD NOT BE EXPECTED TO GIVE GIFTS RANGING FROM RS. 2 LAKH TO 2.5 LAKH TO THE ASSESSEE. IN OUR CONSIDERED OPINION, THE AFORESAID OBSERVATION OF THE ASSESSING OFFICER IS QUITE SUBJECTIVE AND DEVOID OF ANY OBJECTIVE MER ITS . MOREOVER, THE OBJECTION OF THE ASSESSING OFFICER THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DONORS WAS NOT ESTABLISHED IS ALSO BASED ON SURMISES AND CONJECTURES . I N THIS CONTEXT IT IS TO BE NOTED THAT THOUGH ASSESSEE HAD FAILED TO PRODUCE THE PARTIES , BUT THE SAID FACTOR WAS EXPLAINED BY THE APPELLANT. ACCORDING, TO THE APPELLANT H IS FATHER PASSED AWAY AFTER THE SAID EVENT AND SUBSEQUENTLY , IT WAS DIFFICULT FOR HIM TO PERSUADE THE DONORS TO PHYSICALLY PRESENT THEM SELVES BEFORE THE INCOME TAX AU THORITIES. ON THE CONTRARY, COPIES OF THE RESPECTIVE BANK ACCOUNTS INCLUDING THEIR CONFIRMATIONS, PAN ETC., WERE PRODUCED AND IN OUR VIEW IT LEND S CREDENCE TO THE ASSERTIONS OF THE ASSESSEE THAT THE DONORS ARE NOT STRANGERS TO THE ASSESSEE . THEREFORE, IN O UR VIEW, THE STAND OF THE ASSESSING OFFICER AS ALSO OF THE CIT(A) IS BASED ON MERE DOUBTS AND SUSPICION, WHICH CANNOT TAKE THE PLACE OF EVIDENCE. THE MATERIAL ON RECORD SUGGEST S THAT ASSESSEE HAS DULY ESTABLISHED THAT THE SOURCE OF MONIES ARE THE SEVEN PERSON S AND THE NATURE OF CREDIT ALSO STO OD ESTABLISHED IN TERMS OF THE G IFT D EED S /D ECLARATION S FURNISHED BY ASSESSEE. IT IS ALSO PERTINENT TO NOTE THAT IF AT ALL THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSERTIONS OF THE ASSESSE, IT WAS OPEN TO HIM TO MAKE NECESSARY ENQUIRIES FROM THE INCOME TAX RECORDS OF THE DONORS, WHOSE PARTICULARS WERE MADE AVAILABLE TO HIM. NO SUCH EFFORT HAS BEEN MADE BUT THE MATERIAL FURNISHED BY THE ASSESSEE IS SOUGHT TO BE DISBELIEVED. AS A CONSEQUENCE AND AF TER CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND PROPER TO HOLD THAT 8 ITA NO 8065/MUM/2011 ASSESSMENT YEAR: - 2005 - 06 PAGE 8 OF 8 ASSESSEE HAS SUCCEEDED IN ESTABLISHING THE NATURE AND SOURCE OF IMPUGNED CREDITS , BEING GIFT S RECEIVED FROM THE SEVEN PERSONS , AS DETAILED IN PA RA 5 OF THE ASSESSMENT ORDER ; AND ACCORDINGLY THE INGREDIENTS OF SECTION 68 OF THE ACT STAND FULFILLED. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT ( A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 15,00,000/ - MADE U/S 68 OF THE ACT. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF MAY 2015. SD/ - SD/ - (AMIT SHUKLA) (G.S. PANNU) (JUDICIAL MEMBER/ U;KF;D LNL; ) (ACCOUNTANT MEMBER/ YS[KK LNL; ) MUMBAI DATED 15 - 05 - 2015 SKS SR. P.S, COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI