Valjibhai Narshibhai Kantaria, RAJKOT-GUJARAT V. The Deputy Commissiner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 92/RJT/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76401 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J B JHAVERI D R
• Assessee Lawyers: DM RINDANI
• Keywords: Unexplained cash credit; Gift; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO. 92/RJT/2013 ASSESSMENT YEAR 2005-06. SHRI VALJIBHAI NARSHIBHAI KANTARIA, SHRI HARIKUNJ, 2, RAMDHAM SOCIETY, RAJKOT. PAN- AOLPK0451G ( APPELLANT V/S THE D.C.I.T., CIRCLE-1, RAJKOT. RESPONDENT ! ' # / ASSESSEE BY SHRI D.M. RINDANI. % ! ' # / REVENUE BY SHRI J.B. JHAVERI, D.R. # & ' ! ( / DATE OF HEARING 09/01/2014 ) ! ( / DATE OF PRONOUNCEMENT 09/01/2014 / ORDER PER B.R. JAIN, A.M.: THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 01/3/2013 OF DR. RAJEEV RANADE, LD. COMMISSIONER OF INCOME TAX ( APPEALS)-I, RAJKOT, RAISES THE SOLITARY GROUND AS UNDER:- THE LEARNED CIT(APPEALS)-I, RAJKOT HAS ERRED IN CO NFIRMING THE ORDER OF ASSESSING OFFICER LEVYING PENALTY OF R S. 61,200/- U/S 271(1)(C) OF THE I.T. ACT, 1961. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE HAS DECL ARED RECEIPT OF GIFTS OF RS. FIVE LACS DURING THE YEAR UNDER CONSIDERATION. THESE GIFTS ARE CLAIMED TO HAVE BEEN RECEIVED FROM SHRI MANSUKHLAL KANTARIA , SON OF THE APPELLANT RESIDING AT UNITED KINGDOM (UK). THE ASSESSEES SON , WHO IS THE DONOR, HAS ALSO GIVEN CONFIRMATION OF HAVING MADE GIFTS TO HIS FATHER. CERTIFICATE OF ACCOUNTANT SHOWING SALARY OF 18,000/- POUNDS PER AN NUM AND RENTAL INCOME OF 10,000/- POUNDS PER ANNUM OF THE APPELLAN TS SON, WAS ALSO LAID ON RECORD TO JUSTIFY THAT HE IS A MAN OF RESOURCES. DURING THE ASSESSMENT ITA 92/RJT/2013 2 PROCEEDINGS, THE ASSESSEE COULD RECONCILE THE CORRE SPONDING BANK ENTRIES FROM HIS SONS BANK ACCOUNT TO THE EXTENT OF RS. 3 LACS ONLY AND THE RECEIPTS FOR BALANCE OF RS. TWO LACS WERE NOT GOT V ERIFIED FROM HIS SONS BANK ACCOUNT. THE ASSESSING OFFICER ADDED THE SAME AS UNEXPLAINED CREDIT. THE ADDITION STOOD CONFIRMED IN APPEAL. DUR ING THE PENALTY PROCEEDINGS, THE ASSESSEE FURNISHED REPLY WHICH IS REPRODUCED AT PARA 4 OF THE PENALTY ORDER AS UNDER:- THE ONLY QUESTION THAT REMAINS IN RESPECT OF THE I MPUGNED NOTICE WITH REGARD TO CREDIT ENTRIES AGGREGATING TO RS. 2 LAKHS IN THE BANK ACCOUNT OF THE ASSESSEE. IT HAS BEEN CONSISTENT STA ND OF THE ASSESSEE THAT THESE SMALL AMOUNTS ARE RECEIVED FROM SON MR. MANSUKHBHAI. IT IS SHOWN IN THE BANK STATEMENTS THA T THESE AMOUNTS ARE NOT CASH DEPOSITS. CONFIRMATION FROM THE SON HA S BEEN SUBMITTED DURING ASSESSMENT PROCEEDINGS. THE SON IS A TAX PAYER IN UNITED KINGDOM AND DETAILS OF HIS CAPACITY TO SEND MONIES TO HIS FATHER HAVE BEEN SUBMITTED. IT IS ONLY THAT THE EXP LANATION OF THE ASSESSEE WITH REGARD TO CAPACITY ONLY THAT HAS BEEN REJECTED. THE IDENTITY AND THE FACT OF HAVING RECEIVED GIFTS IS N OT IN DOUBT. IN VIEW OF THE ABOVE, IT IS SUBMITTED WITH RESPECT THAT EVE N IF THE CREDIT ENTRIES HAVE BEEN HELD TO BE INCLUDIBLE AS INCOME O F THE ASSESSEE U/S 68, IT DOES NOT MEAN THAT THE ASSESSEE HAS CONC EALED HIS INCOME. IN VIEW OF THE ABOVE WELL ACCEPTED PROPOSITION OF L AW, THE PENALTY PROCEEDINGS MAY KINDLY BE DROPPED. 3. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION AND TOOK IT MERELY A SHAM ARRANGEMENT AS THE DONOR HAD NO CAPACITY TO MAKE THIS GIFT. BY PLACING RELIANCE ON THE JUDGMENT BY T HE HONBLE SUPREME COURT OF INDIA IN THE CASE OF UNION OF INDIA & OTHE RS VS. DHARMENDRA TEXTILES PROCESSORS & ORS. (2009) 306 ITR 277 (SC), HE HELD THAT THE ASSESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF RS. TWO LACS AND THEREBY FURNISHED INACCURATE PARTICULARS OF HIS INC OME. ACCORDINGLY, PENALTY OF RS. 61,200/- EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED, STOOD IMPOSED BY ORDER DATED 23/8/2010. 4. THE LD. CIT(A) FOUND THAT IN THIS CASE, THE APP ELLANT HAS NOT DISCHARGED HIS ONUS PROPERLY AND HAS FAILED TO PROV IDE BONAFIDE ITA 92/RJT/2013 3 EXPLANATION. THE ASSESSEE HAS ALSO NOT PLACED ALL T HE NECESSARY FACTS TO PROVE THE CAPACITY OF THE DONOR. HE, THEREFORE, CON FIRMED THE PENALTY. 5. IN APPEAL, THE ASSESSEES COUNSEL FILED PAPER BO OK RUNNING INTO 26 PAGES. IT HAS BEEN CONTENDED THAT THE ASSESSEE HAS FILED CONFIRMATION TO SHOW THAT THE RECEIPTS AGGREGATING TO RS. TWO LACS CREDITED IN HIS BANK ACCOUNT ARE THE AMOUNT OF GIFTS RECEIVED FROM HIS S ON. THE RECEIPTS FROM HIS SON HAVE DULY BEEN ACCEPTED. HIS CAPACITY ONLY HAS BEEN DOUBTED. THE AMOUNT UNDER REFERENCE IS AN INWARD REMITTANCE FROM HIS SON, WHO HAS OSTENSIBLE SOURCES OF INCOME. THE ASSESSEE HAD ALSO FILED CONFIRMATION OF RECEIPT OF THE GIFT AND ASSESSING OFFICER INDEPENDE NTLY DID NOT EMBARK ANY ENQUIRY THEREON, EVEN THOUGH THE DONOR WAS ASSESSED WITH THE SAME ASSESSING OFFICER. THE ASSESSEE, THUS, HAD DISCHARG ED THE ONUS THAT LAY UPON HIM. ONCE THE ONUS HAS BEEN DISCHARGED THEN WI THOUT BRINGING ANY ADVERSE EVIDENCE ON RECORD, PENALTY CANNOT BE IMPOS ED. RELIANCE WAS PLACED ON THE JUDGMENT BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIMAL VS. CIT 280 ITR 512 (GUJ). REL IANCE HAS ALSO BEEN PLACED ON ANOTHER JUDGMENT BY THE HONBLE GUJARAT H IGH COURT IN THE CASE OF NATIONAL TEXTILE VS. CIT (2001) 249 ITR 125 (GUJ .). 6. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE FIN DINGS AND CONCLUSION REACHED BY THE AUTHORITIES BELOW AND CONTENDS THAT THE ASSESSEE TENDERED NO ACCEPTABLE EXPLANATION ABOUT CREDITS OF RS. TWO LACS CLAIMED TO HAVE BEEN RECEIVED AS GIFT FROM HIS SON AND AS SUCH PENA LTY LEVIED NEEDS NO INTERFERENCE. 7. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO OUR NOTICE. ADMITTEDLY, THE APPELLA NT HAD LAID ON RECORD THE CONFIRMATION FROM HIS SON SHOWING THAT THE REMITTAN CES MADE BY HIM TO HIS FATHER ARE ON ACCOUNT OF GIFTS MADE TO HIM. THE SAI D GIFT WAS STATED TO HAVE BEEN MADE OUT OF HIS OWN CAPITAL AND HIS ASSESSMENT PARTICULARS WERE ALSO GIVEN IN THE CONFIRMATION LAID BEFORE THE ASSESSING AUTHORITY. THE ITA 92/RJT/2013 4 ASSESSING OFFICER BROUGHT NO POSITIVE MATERIAL ON R ECORD TO SHOW THAT THE EXPLANATION TENDERED BY THE ASSESSEE IS FALSE. KEEP ING IN VIEW THE APPELLANTS RELATION WITH THE DONOR AND THE FACT TH AT THE AMOUNTS IN FACT, HAVE BEEN RECEIVED FROM HIS OWN SON, IT WAS SUFFICI ENT ENOUGH TO DISCHARGE THE ONUS ABOUT THE CASH CREDIT THAT LAY U PON THE ASSESSEE. MERELY BECAUSE, THE CORRESPONDING WITHDRAWALS FROM HIS SONS ACCOUNT WERE NOT BROUGHT ON RECORD DOES NOT GO TO HOLD THAT THE DONOR DOES NOT HAVE A CAPACITY TO MAKE GIFT TO HIS FATHER IN PARTI CULAR WHEN THE GIFTS AGGREGATING TO RS. 25,44,508/- RECEIVED DURING THI S YEAR AS WELL AS IN THE EARLIER YEARS, STOOD ADMITTED BY THE DEPARTMENT AN D THE DONOR HAS OSTENSIBLE SOURCE OF INCOME. IN THIS VIEW OF THE MA TTER, THE TRANSACTION BEING GENUINE AND CONSIDERING THE PECULIAR FACT THA T NO POSITIVE EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE A.O. TO HOLD THAT THE EXPLANATION TENDERED WAS FALSE OR THAT THE AMOUNT OF CASH CREDI T CONSTITUTED INCOME OF THE ASSESSEE, THE EXPLANATION HAS TO BE TAKEN AS BO NAFIDE. HAVING REGARD TO THE JUDGMENT RENDERED BY THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF NATIONAL TEXTILE VS. CIT (2001) 249 ITR 125 (GUJ), PENALTY IN THIS CASE IS LIABLE TO BE CANCELLED. ACCORDINGLY, CANCEL LING THE PENALTY, WE ALLOW THE GROUND RAISED IN APPEAL BY THE ASSESSEE. 8. IN THE RESULT, APPEAL BY ASSESSEE STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 09/01/2014. SD/- SD/- ( T. K. SHARMA ) ( B. R. JAIN ) #*% /JUDICIAL MEMBER (#*% / ACCOUNTANT MEMBER *+,*- ORDER DATE 09/01/2014 /RAJKOT *RANJAN / COPY OF ORDER FORWARDED TO:- ./ /APPELLANT- SHRI VALJIBHAI NARSHIBHAI KANTARIA, RA JKOT. 0/ /RESPONDENT- THE D.C.I.T., CIRCLE-1, RAJKOT. ITA 92/RJT/2013 5 1/#-2- & 3 / CIT-I, RAJKOT. 4/ & 3 5 / CIT (A)- I, RAJKOT. 6/789 / DR, ITAT, RAJKOT :/9;<= / GUARD FILE. *+# / BY ORDER TRUE COPY PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, RAJKOT.