Smt. Gangaben A. Navani, GANDHIDHAM V. The Deputy Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITA 880/RJT/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0864 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LD BHARTI
• Keywords: Gift; Validity of assessment; Block assessment
• Section: 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.880/RJT/2010 (ASSESSMENT YEAR 2004-05) SMT. GANGABEN A NAVANI VS DY.CIT, CENT.CIR.1 PLOT NO.406-407, WD.2B CENT.CIR.I, RAJKOT ADIPUR, GANDHIDHAM PAN : AATPN1652R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL DESAI RESPONDENT BY: SHRI LD BHARTI O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-IV, AHMEDABAD DATED 02-02-2010 AND PERTAINS TO ASSESSME NT YEAR 2004-05. 3. IN THE FIRST GROUND OF APPEAL THE ASSESSEE CHALL ENGES THE VALIDITY OF ASSESSMENT FRAMED U/S 153C OF THE ACT. 4. THE LD.REPRESENTATIVE SUBMITTED THAT FOR THE PUR POSE OF MAKING ADDITION IN THE BLOCK ASSESSMENT, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY ON THE MATERIAL SEIZED DURING THE COURSE OF SEARCH. ACCOR DING TO THE LD. REPRESENTATIVE, SINCE NO MATERIAL WAS FOUND DURING THE COURSE OF SE ARCH OPERATION IN RESPECT OF GIFT, THERE CANNOT BE ANY ADDITION IN THE BLOCK ASS ESSMENT AS UNDISCLOSED INCOME PERTAINING TO THE SAME. THE LD.REPRESENTATIVE PLAC ED HIS RELIANCE ON THE DECISION OF THE KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE O F LMJ INTERNATIONAL LTD V DCIT 119 TTJ 14 (KOL) AS ALSO ON THE DECISION OF THE DEL HI BENCH B IN THE CASE OF SHRI ANIL KUMAR BHATIA & ORS IN ITA NOS 2660 TO 266 5/DEL/2009 & ORS AND ITA NO.880/RJT/2010 2 SUBMITTED THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE SEIZED MATERIAL FOR THE PURPOSE OF MAKING BLOCK ASSESSMENT . SINCE NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF GIF T, ACCORDING TO THE LD.REPRESENTATIVE, THERE CANNOT BE ANY ADDITION IN THE BLOCK ASSESSMENT. 5. ON THE CONTRARY, SHRI LD BHARTI, THE LD.DR PLACE D HIS RELIANCE ON THE OBSERVATIONS MADE BY THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE HAS RAISED A LEGAL GROUND TO THE EFFECT THAT THERE CANNOT BE ANY ASSES SMENT AS UNDISCLOSED INCOME IN THE ABSENCE OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. ADMITTEDLY, THE SEARCH TOOK PLACE ON 11-10-2006 AND THE ASSESSMENT WAS COMPLETED U/S 153C R.W.S. 153A OF THE ACT. IN THIS CASE THE ASSESSEE WAS NOT SUBJECTED TO SEARCH. HOWEVER DURING THE SEARCH OPE RATION IN THE PREMISES OF SHRI ATMARAM J NAVANI, CASH BELONGING TO THE ASSESS EE WAS FOUND AND SEIZED. MOREOVER, LARGE INVESTMENT IN THE CONSTRUCTION OF H OUSE PROPERTY WAS FOUND TO BE SUPPRESSED. THEREFORE, A PROCEEDING WAS INITIATED TO ASSESS THE INCOME OF THE ASSESSEE U/S 153C R.W.S. 153A OF THE ACT. IT IS NO T IN DISPUTE THAT THE INCOME OF THE ASSESSEE HAS TO BE COMPUTED AS PER THE PROCEDUR E PRESCRIBED U/S 153A EVEN THOUGH THE ASSESSEE WAS NOT SUBJECTED TO SEARC H. ONCE THE MATERIAL IS FOUND AND SEIZED SUCH AS CASH, SUPPRESSION OF COST OF CONSTRUCTION, IT IS OPEN TO THE ASSESSING OFFICER TO ASSESS ALL OTHER INCOME IN CLUDING THE GIFT WHICH COMES TO HIS KNOWLEDGE DURING THE COURSE OF ASSESSMENT PROCE EDINGS U/S 153A OF THE ACT. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 153C OF THE ACT. THE LEGISLATURE, BY FINANCE ACT, 2003, WITH EFFECT FROM 01-06-2003 HAS INTRODUCED A NEW METHOD FOR COMPUTING THE UNDISCLOSED INCOME VID E SECTION 153A OF THE ACT. AS PER THE NEW METHOD INTRODUCED BY FINANCE ACT, 20 03, THE ASSESSING OFFICER HAS TO ASSESS OR RE-ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS IN WHICH THE SEARCH WAS CONDUCTED. UNLIKE THE EARLIER METHOD, THE ASSESSIN G OFFICER HAS TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE OR RE-ASSESS THE SAME IN RESPECT OF EACH ITA NO.880/RJT/2010 3 ASSESSMENT YEAR SEPARATELY FALLING WITHIN THE SIX A SSESSMENT YEARS. IT WAS ALSO SPECIFICALLY PROVIDED THAT THE ASSESSMENT OR RE-ASS ESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO, IF PENDING ON THE DATE OF INITIATION OF SEARCH OPERATI ON, SHALL ABATE. THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN SECTION 153A DOES NO T SAY THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE SEARCH M ATERIAL. THE LEGISLATURE IN PLAIN AND CLEAR LANGUAGE SAYS THAT THE PENDING ASSESSMENT PROCEEDINGS SHALL ABATE AND THE ASSESSING OFFICER SHALL ASSESSEE OR RE-ASSE SS THE INCOME FOR THE SIX ASSESSMENT YEAR SEPARATELY. 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIO NS OF SECTION 158BB(1) OF THE ACT. THE LEGISLATURE PRESCRIBED SEPARATE METHO D IN RESPECT OF SEARCH WHICH WAS INITIATED BEFORE 31-05-2003. IN RESPECT OF SEA RCH INITIATED BEFORE 31-05- 2003, THE PROVISIONS OF SECTION 158BB(1) WOULD APPL Y. AS PER SECTION 158BB(1), THE ASSESSING OFFICER HAS TO NECESSARILY CONFINE HI MSELF ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION OR THE INFORM ATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THIS IS BECAUSE, THE LANGUAGE EMPLOYED BY THE LEGISLATURE SAYS SO. IN O RDER TO DEPART FROM THE EARLIER METHOD, THE LEGISLATURE INTRODUCED NEW METHOD UNDER SECTION 153A WHICH DOES NOT SAY THAT THE ACTION WOULD BE CONFINED ONLY TO T HE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THIS LEGAL DISTINCTION WAS EXAMINED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VISH NU AGARWAL. THE HYDERABAD BENCH OF THIS TRIBUNAL FOUND THAT FOR THE PURPOSE O F COMPUTING UNDISCLOSED INCOME U/S 153A IT IS NOT NECESSARY TO CONFINE ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE ASSESSING OFFI CER IS WELL WITHIN HIS LIMIT TO CONSIDER ALL THE MATERIAL AVAILABLE ON RECORD INCLU DING THE SEARCH MATERIAL FOR THE PURPOSE OF COMPUTING UNDISCLOSED INCOME. THIS LEGI SLATURE CHANGE WAS NOT CONSIDERED BY THE KOLKATTA BENCH OF THIS TRIBUNAL I N THE CASE OF LMJ INTERNATIONAL LTD (SUPRA) AND DELHI BENCH IN SHRI ANIL KUMAR BHAT IA (SUPRA) AND THIS BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.8 79/RJT/2010 DATED 25-10- 2010. THEREFORE, IT CANNOT BE OF ANY ASSISTANCE TO THE ASSESSEE. A SIMILAR VIEW ITA NO.880/RJT/2010 4 WAS TAKEN BY THIS TRIBUNAL IN THE ASSESSEES OWN CA SE IN ITA NO.606/RJT/2010 AND IT(SS)A. 05/RJT/2010 DTD 21-07-2011. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO CONF IRMATION OF ADDITION OF RS.4,50,000 U/S 68 OF THE ACT IN RESPECT OF GIFTS S AID TO HAVE BEEN RECEIVED FROM SMT. KOMAL SAMBHWANI OF RS. 1,50,000 AND SHRI DEVRA J NARAIN OF RS. 3 LAKHS FROM THE NRE ACCOUNT. IT IS FOR THE ASSESSEE TO PR OVE THE IDENTITY OF THE DONORS, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE DONORS. THOUGH THE ASSESSEE HAS FILED THE CONFIRMATIONS, THE ASSESSING OFFICER COULD NOT VERIFY THE SAME SINCE, ACCORDING TO THE ASSESSING OFFICER, THE DONORS WERE NOT PRODUCED BEFORE HIM. IF THE ASSESSING OFFICER HAS ANY DOUBT ABOUT THE CONFIRMATION IT IS FOR THE ASSESSING OFFICER TO SUMMON THE DONORS FOR EXAM INATION. THEREFORE, THE ASSESSING OFFICER CANNOT FIND FAULT WITH THE ASSESS EE FOR NON PRODUCTION OF DONORS FOR EXAMINATION. SINCE THE ASSESSEE CLAIMS THAT TH E DONORS ARE CLOSE RELATIVES, THE ASSESSEE CAN ALSO FACILITATE THE APPEARANCE OF THE DONORS, IF A REQUEST IS MADE BY THE ASSESSING OFFICER TO THAT EFFECT. IT A PPEARS FROM THE RECORD THAT SMT. KOMAL SAMBHWANI HAS DONATED LARGE AMOUNTS TO VARIOU S INDIVIDUALS. EVERYONE IS CLAIMING THE SAID SMT. KOMAL SAMBHWANI, A CLOSE RELATIVE. THEREFORE, THE REAL FACT NEEDS TO BE EXAMINED AND BROUGHT ON RECORD. I T IS ALSO NECESSARY TO BRING ON RECORD THE CAPACITY OF THE DONOR TO GIVE SUCH LA RGE AMOUNT AS GIFTS. THE CIT(A) FOUND THAT THE CONFIRMATION SAID TO BE FILED BY THE ASSESSEE IS NOT CLEAR. THE CONFIRMATION DOES NOT SHOW WHETHER THE AMOUNT W AS PAID IN CASH OR BY DD / CHEQUE. IT DOES NOT DISCLOSE FROM WHICH BANK ACCOU NT THE GIFT WAS GIVEN. EXCEPT THE FACT THAT THE DONOR WAS SISTER OF THE ASSESSEE, NO OTHER DETAILS WERE FORTHCOMING FROM THE SO-CALLED CONFIRMATION LETTER SAID TO BE FILED BY THE ASSESSEE. BEFORE US, THE ASSESSEE HAS RELIED UPON THE EARLIER DECISION OF SMC BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A Y 2001-02 IN ITA NO.879/RJT/2010 ORDER DATED 25-10-2010, WHICH, IN O UR OPINION, IS OF NO HELP TO THE ASSESSEE, AS IN THAT DECISION, THE LEGISLATIVE AMENDMENT WAS NOT CONSIDERED BY THE TRIBUNAL. THEREFORE, IN THE INTEREST OF JUS TICE, IN OUR OPINION, THE MATTER NEEDS TO BE CONSIDERED AFRESH BY THE ASSESSING OFFI CER. THE ASSESSING OFFICER ITA NO.880/RJT/2010 5 SHALL EXAMINE THE CONFIRMATION LETTER AND IF NECESS ARY IT IS OPEN TO THE ASSESSING OFFICER TO SUMMON THE DONOR FOR EXAMINATION. BY SA YING SO, WE ARE NOT SHIFTING THE BURDEN ON THE SHOULDER OF THE ASSESSING OFFICER . THE INITIAL BURDEN OF PROVING THE IDENTITY, GENUINENESS OF THE TRANSACTION AND TH E CREDITWORTHINESS OF THE DONOR ALWAYS LIES ON THE SHOULDER OF THE ASSESSEE. IT IS FOR THE ASSESSEE TO FILE ALL THE RELEVANT MATERIAL WITH THE ASSESSING OFFICER. IF T HE ASSESSING OFFICER FEELS THAT THE DONOR HAS TO BE EXAMINED, HE CAN DO SO BY REQUESTIN G ASSESSEE TO PRODUCE THE DONOR OR BY ISSUING SUMMONS TO THE DONOR FOR PERSON AL APPEARANCE. ACCORDINGLY WE SET ASIDE THE ORDER OF LOWER AUTHORITY AND REMAN D THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DEC IDE THE ISSUE AFRESH IN THE LIGHT OF JUDGMENT OF THE HONBLE APEX COURT IN THE CASE O F CIT VS P MOHANA KALA (2007) 291 ITR 278 (SC) AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29-07-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 29 TH JULY, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, AHMEDABAD 4. THE CIT, CENTRAL-II, AHMEDABAD 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT