Shri Haresh G. Madhyan, V. DCIT, Ahmednagar Circle, Ahmednagar,

ITA 935/PUN/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49829 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 10-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H C LEAVA
• Assessee Lawyers: L R BHOJWANI
• Keywords: Gift; Document seized; Opportunity of being heard; Principle of natural justice; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C.SUDHIR, JM AND SHRI D. KARUNAKARA RAO, AM ITA NO. 933/PN/2007 (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN TELIKHUNT, AHMEDNAGAR, PAN AAWPM0672N APPELLANT VS. DCIT, AHEMEDNAGAR CIRCLE, AHMEDNAGAR . RESPONDENT ITA NO. 934/PN/2007 (ASSTT. YEAR 1995-96) SHRI KAVITA G. MADHYAN TELIKHUNT, AHMEDNAGAR PAN ABBQP2997J APPELLANT VS. DCIT, AHEMEDNAGAR CIRCLE, AHMEDNAGAR . RESPONDENT ITA NO. 935/PN/2007 (ASSTT. YEAR 1995-96) SHRI HARESH G. MADHYAN TELIKHUNT, AHMEDNAGAR PAN AAWPM0674L APPELLANT VS. DCIT, AHEMEDNAGAR CIRCLE, AHMEDNAGAR . RESPONDENT APPELLANTS BY : SHRI L.R.BHOJWANI RESPONDENT BY : SHRI H.C. LEAVA ORDER PER I.C.SUDHIR, JM IN ALL THESE APPEALS THE ASSESSEES HAVE QUESTIONED COMMON FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITION ITA NO. 933 TO 935/PN/2007, (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN , SHRI KAVITA G. MADHYAN, SHRI HARESH G. MADHYAN , 2 DISBELIEVING CLAIMED GIFTS WITHOUT FOLLOWING THE DI RECTION OF TRIBUNAL IN ITA NOS. 631 TO 633/PN/02 VIDE ORDER DATED 12/11/20 03. 2. AT THE OUTSET OF HEARING LEARNED AR POINTED OUT THAT INITIALLY GIFTS WERE TAXED IN THE HANDS MR. G.R.MADHYAN WHOSE HOUSE AS WELL AS BUSINESS PREMISES WERE SEARCHED U/S.132. LEARNED C IT(A) WAS PLEASED TO DELETE THE ADDITION OF FOREIGN GIFTS AS THEY WERE NOT RECEIVED BY MR.G.R.MADHYAN BUT BY HIS SONS AND HIS WIFE (APPELLANTS BEFORE THE TRIBUNAL) AND DECLARED IN THEIR RESPECTI VE INCOME-TAX RETURNS. THE A.O. MADE FRESH ASSESSMENT IN THE CAS E OF PRESENT APPELLANTS BY ADDING THE GIFTS WITHOUT RECORDING TH E STATEMENTS OF THE DONEES, WITHOUT APPRECIATING EVIDENCES ON THE RECOR D THAT THE GIFTS HAVE BEEN PROPERLY DECLARED IN THE INCOME-TAX RETUR NS FILED BY THE RESPECTIVE DONEES GIVING DETAILS OF NAME OF DONER A MOUNTING TO FOREIGN CURRENCY, D.D. NOS., EQUAL TO INDIAN RS. ET C. LEARNED CIT(A) VIDE ITS ORDER DATED 12/02/2002 HAD CONFIRMED THE A DDITION. THE AGGRIEVED ASSESSEE CAME IN APPEAL BEFORE THE TRIBUN AL VIDE ITA NO. 632 TO 634/PN/2002. THE TRIBUNAL VIDE ORDER DATED 12/11/2003 THEREIN, HAS HELD THAT LEARNED CIT(A) HAS NOT DECID ED THE APPEALS OF THE ASSESSEES ON MERITS, THEREFORE ON THIS SHORT GR OUND ALONE THE MATTER WAS SET ASIDE TO THE FILES OF THE LEARNED CI T(A) WITH THE DIRECTION TO DECIDE THE GROUNDS OF APPEAL ON MERITS IN ACCORDANCE WITH LAW. THE LEARNED CIT(A) WAS ALSO DIRECTED TO DECI DE WHETHER THE ADDITION IN THE HANDS OF THE ASSESSEES ON ACCOUNT OF ALLEGED FOREIG N GIFTS WERE PROPER. THE LEARNED AR SUBMITTED THAT LEARNED CIT(A) HAS HOWEVER NOT FOLLOWED THE DIRECTIONS OF THE TRIBUNAL WHILE DECIDING THE ISSUE. HE HAS UPHELD THE ADDITION WITHOUT CONSIDER ING THE SEIZED MATERIAL NOR CONFRONTED THIS MATERIALS TO THE APPEL LANTS. LEARNED CIT(A) SIMPLY DISMISSED THE APPEALS WITHOUT FOLLOWI NG PRINCIPLE OF NATURAL JUSTICE. HE FAILED TO APPRECIATE THAT FOR EIGN GIFTS RECEIVED BY THE APPELLANTS HAVE PROPERLY BEEN DECLARED IN THE R ESPECTIVE STATEMENTS OF THE DONEES; DONER HAS CONFIRMED GIFT S BY LETTER ALONGWITH COPY OF BANK DRAFT IN US DOLLARS THAT IT IS OUT OF NATURAL LOVE AND AFFECTION; LEARNED CIT(A) DID NOT PUT ANY QUES TION TO THE ITA NO. 933 TO 935/PN/2007, (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN , SHRI KAVITA G. MADHYAN, SHRI HARESH G. MADHYAN , 3 APPELLANTS ABOUT THE FOREIGN GIFT AND HAS OBSERVED IN PARA 4.1 OF THE FIRST APPELLATE ORDER AT PAGE NO.7 THAT DONOR HAS N OT GIVEN ANY GIFT TO SONS OR DAUGHTERS OR CLOSE BLOOD RELATION OR ANY OF HIS RELATION, HENCE THESE ARE MANAGED GIFTS. LEARNED AR ACCORDINGLY PR AYED THAT ADDITION CONFIRMED BY LEARNED CIT(A) IS BASELESS, AND HENCE SAME MAY BE DELETED. 3. THE LEARNED AR ALSO SUBMITTED THAT SEIZED MATERI ALS WHICH WERE ORDERED TO FURNISH TO THE ASSESSEE HAVE BEEN SUPPLIED TO THE ASSESSEE BEFORE THE TRIBUNAL ONLY ON 08/12/2010. ASSESSEES HAVE FURNISHED THEIR SUBMISSION ON EACH PAGE OF THE SEIZED MATERIA L BEFORE THE TRIBUNAL ON EARLIER HEARING WHICH IS ALREADY ON REC ORD. LEARNED AR SUBMITTED THAT THESE PAPERS CANNOT BE CALLED AS IN CRIMINATING MATERIAL TO CONFIRM THE ADDITION ON ACCOUNT OF GIFTS AGAINST THE ASSESSEES. HE SUBMITTED THAT THESE DOCUMENTS ARE COPIES OF D.D. A ND SUBMISSION OF FOREIGN GIFTS, THE SAME DOCUMENTS ARE PERTAINING TO THE PERIOD OF 1991-92 OR 1992-93 AND HENCE NOT RELEVANT FOR FOREI GN GIFTS RECEIVED DURING F.Y. 1994-95 RELEVANT TO A.Y.1995-96 I.E. YE AR UNDER CONSIDERATION. 4. THE LEARNED AR ALSO PLACED RELIANCE ON THE FOLLO WING DECISIONS CIT VS. R.S.SIBBAL 269 ITR 429 (DEL.), MURLIDHAR LA HORIMAL VS.CIT, 280 ITR 512 (GUJ.), CIT V. P.K.NURJAHAN, 237 ITR 57 0 (SC), CIT V. KULWANT IND. 164 TAXMAN 512 (PUNJAB & HARYANA). 5. THE LEARNED DR ON THE OTHER HAND SUBMITTED THAT THE ORDER DATED 12/11/2003 OF THE TRIBUNAL IN ITA NO. 631 TO 633/PN/02 HAS BEEN FULLY COMPLIED WITH BY THE LEARNED CIT(A) WHIL E DECIDING THE ISSUE AFRESH. THE LEARNED CIT(A) HAS RIGHTLY HELD THAT SIMPLY DONORS ARE PERSONS OF MEANS, GIFTS COULD NOT BE TAKEN AS GENUINE AND HE HAS ALSO CONSIDERED THE ASPECT OF HUMAN PROBABILITY. I N THE PRESENT CASE SINCE THE APPELLANTS FAILED TO PROVE GENUINENESS OF GIFTS CLAIMED TO BE ITA NO. 933 TO 935/PN/2007, (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN , SHRI KAVITA G. MADHYAN, SHRI HARESH G. MADHYAN , 4 RECEIVED BY THEM, LEARNED CIT(A) HAS CORRECTLY UPH ELD THE ADDITION OF RS.12,51,000/- I.E. 3 GIFTS MADE TO THE PRESENT 3 A PPELLANTS. 6. CONSIDERING THE ABOVE SUBMISSIONS IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW WE FULLY AGREE WITH OBSERVATIONS OF THE LEARNED CIT(A) THAT ONLY BECAUSE OF IDENTITY OF DONOR, HIS CREDITWORTHINESS IS ACCEPTED, GENUINENESS OF THE CLAIMED GIFTS IS NOT E STABLISHED. BESIDES ESTABLISHING CREDITWORTHINESS AND IDENTITY OF THE D ONOR FOR ESTABLISHING GENUINENESS OF THE CLAIMED GIFTS IT IS ALSO NECESSA RY TO ESTABLISH THAT IT WAS MADE OUT OF LOVE AND AFFECTION WHICH CAN BE GAT HERED FROM THE SURROUNDING CIRCUMSTANCES. IN ANY WAY IT IS AN ADM ITTED FACT THAT SEIZED DOCUMENTS ON THE BASIS OF WHICH ADDITIONS ON ACCOUNT OF CLAIMED GIFTS HAVE BEEN MADE, HAVE BEEN SUPPLIED TO THE APPELLANTS BY THE REVENUE ONLY ON 08/12/2010 DURING THE PRESENT A PPELLATE PROCEEDINGS BEFORE THE TRIBUNAL. THE GRIEVANCE OF THE APPELLANTS IN THIS REGARD IS THAT THEY WERE HAVING NO OPPORTUNITY TO PRESENT THEIR SUBMISSION ON THE SEIZED MATERIALS BEFORE THE LEARN ED CIT(A) DURING THE SET ASIDE PROCEEDINGS. THE CONTENTION OF THE LEARNED AR REMAINED THAT THESE PAPERS CANNOT BE CALLED AS INCR IMINATING MATERIAL AS THESE DOCUMENTS ARE NOT RELEVANT TO THE GIFTS RE CEIVED DURING THE F.Y. 1994-95 RELEVANT TO THE A.YS. 1995-96 UNDER CO NSIDERATION. THE CONTENTION OF THE ASSESSEE ALSO REMAINED THAT THE D ONOR HAS GIVEN THE GIFTS AS CONFIRMED BY HIM OUT OF NATURAL LOVE AND A FFECTION. 7. UNDER THE ABOVE CIRCUMSTANCES, WE THUS TO MEET O UT THE PRINCIPLE OF NATURAL JUSTICE REMAND THE MATTER TO T HE FILE OF THE LEARNED CIT(A) TO DECIDE THE GENUINENESS OF THE CLAIMED GIF TS AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE PARTIES ESPECIALLY AFTER PROVING OPPORTUNITY TO THE ASSESSEES TO ADDRESS ON THE SEIZED DOCUMENTS OR ANY OTHER SEIZED DOCUMENTS OR ANY OTHE R ALREADY ON RECORDS AS WELL AS STATEMENTS IF ANY. ON THE BASI S OF WHICH ADDITIONS HAVE BEEN MADE AND SUSTAINED. ITA NO. 933 TO 935/PN/2007, (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN , SHRI KAVITA G. MADHYAN, SHRI HARESH G. MADHYAN , 5 THE GROUNDS INVOLVING THE ABOVE ISSUE ARE THUS ALLO WED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 31 ST DAY OF MAY, 2011. SD/- SD/- (D.KARUNAKARA RAO) (I .C.SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 31 ST MAY, 2011 ASHWINI COPY OF THE ORDER IS FORWARDED TO : 1. TWO ASSESSEES AS MENTIONED IN THE CAUSE TITLE 2. DCIT, AHEMEDNAGAR CIRCLE, AHMEDNAGAR 3. CIT (A)-I, PUNE. 4. ADDL.CIT , PUNE 5. D.R. ITAT B BENCH, PUNE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE ITA NO. 933 TO 935/PN/2007, (ASSTT. YEAR 1995-96) SHRI MAHESH G. MADHYAN , SHRI KAVITA G. MADHYAN, SHRI HARESH G. MADHYAN , 6