M/s. Sunil Dyeing & Printing Mills, Surat V. The Income tax Officer,Ward-9(4), Surat

ITA 942/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5995 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 12-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: A K PAREKH
• Keywords: Gift; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 942/AHD./2008 ASSESSMENT YEAR : 2004-2005 M/S. SUNIL DYEING & PRINTING MILLS, SURAT -VS.- INCOME TAX OFFICER, WARD-9(4), SURAT (PAN : AAJFS 9043 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. PAREKH RESPONDENT BY : SMT. JYOTI LAXMI, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 28.11.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT FOR TH E ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS :- (1) THE LD. CIT(A.) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.3,85,000/- ON ACCOUNT OF FRESH CAPITAL INTRODUCED BY PARTNERS IN THE FIRM OUT OF GIFT RECE IVED FROM 3 RELATIVES IN THE PERSONAL ACCOUNT OF PARTNERS. THE ADDITION OF RS.3,85,000/- SHOULD BE DELETED. (2) THE LD. CIT(A.) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.3,40,000/- INTRODUCED BY PARTNERS AS CAPITAL IN THE FIRM OUT OF CASH WITHDRAWN FROM THEI R BANK WITHDRAWALS OUT OF THEIR PERSONAL BUSINESS. THE ADD ITION OF RS.3,40,000/- SHOULD BE DELETED. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PA RTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF ART SILK CLOTH. DURING THE Y EAR UNDER CONSIDERATION, THE PARTNERS OF THE FIRM INTRODUCED NEW CAPITAL IN CASH AS UNDER :- (1) SHRI SUNIL KANTILAL LUNGIWALA RS.6,20,000/- (2) SHRI HITESH KANTILAL LUNGIWALA RS.3,65,000/- 2 ITA NO. 942/AHD/2008 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTI CED THAT BOTH THE PARTNERS, NAMELY SHRI SUNIL KANTILAL LUNGIWALA AND SHRI HITESH KANTILAL LUNGIWA LA SHOWN TO HAVE RECEIVED GIFTS IN CASH AMOUNTING TO RS.4,25,000/- IN THE CASE OF SHRI SUNI L KANTILAL LUNGIWALA AND RS.2,20,000/- IN THE CASE OF SHRI HITESH KANTILAL LUNGIWALA. BEFORE THE ASSESSING OFFICER, IT WAS CLAIMED THAT BOTH THE PARTNERS INTRODUCED CAPITAL IN THE FIRM OUT OF THESE SOURCES. IN SUPPORT OF THIS, BEFORE THE ASSESSING OFFICER, THE ASSESSEE FILED THE COPY OF C APITAL ACCOUNTS OF THE ALLEGED DONORS. HOWEVER, NO OTHER DETAILS SUCH AS CONFIRMATION, GIF T DEED, INCOME TAX DETAILS OF THE DONORS ETC. WERE FILED. ON THIS BASIS, THE ASSESSING OFFICER T OOK THE VIEW THAT IDENTITY AND CREDITWORTHINESS OF THE SO-CALLED DONORS AND GENUINENESS OF THE SO-C ALLED GIFTS REMAINED UNVERIFIABLE. FURTHER, THE SOURCES OF THE BALANCE OF CASH AVAILABLE WITH THE P ARTNERS FOR CAPITAL INTRODUCTION IN THE FIRM ALSO REMAINED UNEXPLAINED. THE ASSESSING OFFICER ACCORDI NGLY TOOK THE VIEW THAT THE SOURCES OF THE CAPITAL INTRODUCTION IN CASH BY THE PARTNERS HAVE N OT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE. HE ACCORDINGLY TREATED THE ENTIRE AMOUNT OF RS.9,85 ,000/- ALLEGED TO BE INTRODUCED BY BOTH THE PARTNERS AS UNEXPLAINED AND ADDED THE SAME TO THE T OTAL INCOME OF THE ASSESSEE. FOR MAKING THIS ADDITION, THE ASSESSING OFFICER RELIED ON THE FOLLO WING DECISIONS :- (1) CIT VS.- KISHORILAL SANTOSHILAL [1995] 216 ITR 9 ( RAJ.); (2) CIT VS.- SHIVSHAKTI TIMBERS [1996] 229 ITR 505 (MP ); (3) CIT VS.- KAPOOR BROTHERS [118 ITR 741] (ALLAH.); (4) HARDWARMAL OMKARMAL VS.- CIT [1976]102 ITR 779 (PA T.); 3. ON APPEAL, BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS), THE ASSESSEE PRODUCED THE DETAILED FRESH EVIDENCES. THESE WERE S ENT TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER VIDE HIS REMAND REPORT DATED 23.1 1.2007 HAS MENTIONED THAT THOUGH THE IDENTITY AND CREDITWORTHINESS OF THE PARTNERS GIVIN G THE GIFTS WERE PROVED THE GENUINENESS OF THE SAME, WAS NOT PROVED. THE ASSESSING OFFICER ALSO PO INTED OUT THAT TWO DONORS HAVE NOT MADE ANY GIFT TO ANYBODY ELSE BUT TO THE PARTNERS SHRI SUNIL LUNGIWALA AND SHRI HITESH LUNGIWALA. COPY OF THE REMAND REPORT WAS GIVEN TO THE ASSESSEE ON 4.12 .2007. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), NOTHING HAS BEEN HEARD BY WAY OF REJOINDER OR COUNTER COMMENTS FROM THE ASSESSEE. ON THIS BASIS, THE LEARNED COMMISSION ER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER. HOWEVER, BENEFIT O F DOUBT WAS GIVEN IN THE CASE OF GIFTS RECEIVED 3 ITA NO. 942/AHD/2008 FROM SHRI DANSUKHBHAI G. GHEEWALA, WHO HAS PASSED A WAY ON 11.7.2007 AND SHRI KANTILAL HIRALAL LUNGIWALA, WHO IS REPORTED TO BE SICK AND B ED-RIDDEN AND COULD NOT BE EXAMINED. THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) DIRECTED THE ASSESSING OFFICER TO ACCEPT THE GIFTS FROM LATE SHRI DANSUKHBHAI G. GHEE WALA AND SHRI KANTILALA HIRALAL LUNGIWALA AND RE-WORK OUT THE ADDITION BY ADDING NON-GENUINE GIFTS FROM DEVIKABEN CHRISTMABEN AND VAISHALIBEN. APART FROM THIS, THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF ASSESSING OFFICER IN NOT ACCEPTING THE AV AILABILITY OF CASH OF RS.3,40,000/- [RS.1,95,000/- + RS.1,45,000/-] FROM BANK WITHDRAWA LS. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI A.K. PAREKH APPEARED AND FILED A PAPER BOOK CONTAINING 104 PAGES, WHICH, INT ER ALIA, INCLUDE THE COPY OF GIFT DEED, COMPUTATION OF INCOME, INCOME TAX RETURN ACKNOWLEDG EMENT, BALANCE-SHEET AND CASH BOOK OF THE DONORS, NAMELY (I) VAISHALI K. FASWALA, (II) CHRIST MA H. LUNGIWALA AND (III) DEVIKA SUNIL LUNGIWALA. FURTHER IN THE PAPER BOOK, LD; COUNSEL O F THE ASSESSEE SUBMITTED CONTAINING THE COPY OF COMPUTATION OF INCOME, INCOME TAX RETURN ACKNOWL EDGMENT, BALANCE SHEET, CONFIRMATION A/C. AND CASH BOOK OF THE TWO PARTNERS, NAMELY SHRI HITE SH KANTILAL LUNGIWALA AND (II) SHRI SUNIL KANTILAL LUNGIWALA. 4.1. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT CONFIRMATION / GIFT DEEDS OF ALL THE DONORS WERE FILED EITHER BEFORE THE ASSESSING OFFICER IN R EMAND PROCEEDINGS AND BEFORE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). NO ADDITIONAL EVIDENCE IS PLACED BEFORE THE BENCH. THE LD. COUNSEL OF THE ASSESSEE ALSO PRODUCED A COPY OF THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER TO LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) AND POINTED OUT THAT IN THIS REMAND REPORT, THE ASSESSING OFFICER HAS MENTIONED AS UNDE R :- IN THE INSTANT CASE, IDENTITY AND CREDITWORTHINESS OF THE PERSON GIVING GIFT ARE PROVED BUT THE GENUINENESS OF THE SAME IS NOT P ROVED. ON THE BASIS OF THE AFORESAID OBSERVATION OF ASSESS ING OFFICER, THE LD. COUNSEL SUBMITTED THAT NO ADDITION CAN BE MADE IN RESPECT OF CAPITAL INTRODUC ED BY THE PARTNERS OF THE FIRM. IN SUPPORT OF THIS, RELIANCE WAS PLACED ON THE FOLLOWING DECISION S :- 4 ITA NO. 942/AHD/2008 (I) CIT VS.- PANKAJ DYESTUFF INDUSTRIES [INCOME TAX RE FERENCE NO. 241 OF 1993- GUJARAT HIGH COURT]; (II) M/S. AKSHAR GEMS VS.- ACIT IN ITA NO. 3500/AHD/200 8 [ITAT, AHMEDABAD]; (III) VISION BUILDERS VS.- ACIT IN ITA NO. 3829/AHD/2008 [ITAT, AHMEDABAD]. WITH REGARD TO AVAILABILITY OF CASH, THE LD. COUNSE L OF THE ASSESSEE SUBMITTED THAT COPY OF CASH BOOK WAS FILED IN REMAND PROCEEDINGS. 5. ON THE OTHER HAND, SMT. JYOTI LAXMI, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW . THE LD. D.R. SUBMITTED THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED T HE REQUIRED DETAILS. UNDER SECTION 68 OF THE INCOME TAX ACT, 1961, THE ASSESSING OFFICER IS FREE TO MAKE ANY ENQUIRY. THE ASSESSEE-FIRM HAS NOT COOPERATED WITH THE ASSESSING OFFICER, WHICH IS EVIDENT FROM THE FACT THAT VARIOUS DETAILS CALLED BY THE ASSESSING OFFICER WERE FURNISHED BY W AY OF FRESH EVIDENCES BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) CALLED THE REMAND REPORT AND HANDED OVER THE SAME T O THE ASSESSEE FOR ITS COMMENTS. NO COMMENTS WERE FURNISHED BEFORE THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS). IN THESE CIRCUMSTANCES, THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) WAS HAVING NO OPTION BUT TO UPHOLD THE ACTION OF ASSESSING OFFICER IN RESPECT O F GIFTS RECEIVED FROM DEVIKABEN CHRISTMABEN AND VAISHALIBEN AS WELL CASH ALLEGED TO DEPOSITED B Y BOTH PARTNERS. THE LD. D.R. ACCORDINGLY SUBMITTED THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS AS LAID DOWN IN SECTION 68 OF THE INCOME TAX ACT, 1961, THEREFORE, THE VIEW TAKEN BY THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE HON'BLE SUPREME COURT IN THE CASE OF ROS HAN DI HATTI VS.- CIT [1977] 107 ITR 938 (SC) AND KALE KHAN MOHAMMAD HANIF VS. CIT [1963] 50 ITR PAGE 1 (SC) HELD THAT BURDEN IS ON ASSESSEE TO PROVE SOURCE OF RECEIPT. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS.- KISHORILAL SANTOSHILAL [1995] 216 ITR 9 (RAJ.) HELD THAT SIMPLY BECAUSE THE AMOUNT IS CREITED IN THE BOOKS OF THE FIRM IN THE PARTNERS CAPITAL A CCOUNT, IT CANNOT BE SAID THAT IT IS NOT THE UNDISCLOSED INCOME OF THE FIRM AND THAT IN ALL CASE S, IT HAS TO BE ASSESSED AS AN UNDISCLOSED 5 ITA NO. 942/AHD/2008 INCOME OF THE PARTNER ALONE. THEREFORE, IN THE CASE BEFORE US, ONUS IS ON THE ASSESSEE TO PROVE THAT AMOUNT IN QUESTION WAS RECEIVED BY THE ASSESSE E FROM THE PARTNERS. PRIMA FACIE, IT APPEARS THAT FOR THIS PURPOSE, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS STATED THAT GENUINENESS OF THE SAME IS NOT PROVED. THE CASH BOOK OF THE PAR TNERS WAS NEVER PRODUCED BEFORE THE ASSESSING OFFICER. IT IS TRUE THAT NO ADDITION CAN BE MADE IN RESPECT OF CAPITAL INTRODUCED BY THE PARTNERS IN THE ASSESSEE-FIRM. AT THE SAME TIME, UN DER SECTION 68, THE ASSESSING OFFICER IS FREE TO MAKE ANY ENQUIRIES. THE ASSESSING OFFICER ASKED CER TAIN DETAILS FROM THE ASSESSEE, AND THESE WERE FURNISHED BEFORE THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) BY WAY OF FRESH EVIDENCES. THE COUNTER COMMENTS ON THE REMAND REPOR T ASKED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FROM THE ASSESSEE WERE NOT FURN ISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). KEEPING IN VIEW THESE PECULIAR FACTS, WE SET ASIDE THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND RESTORE THE ISSUE OF ADDITION TO THE EXTENT OF RS.3,85,000/- AND RS.3,40,000/- CONFIRMED BY THE LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) TO THE FILE OF ASSESSING OFFICER, WHO WILL RE-EXAMINE THE VARIOUS DETAILS INCLUDING CASH BOOKS OF PARTNERS SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND RE-ADJUDICATE THE ADDITION OF RS.3,85,000/- AND RS. 3,40,000/- AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE MAY CLARIFY THAT THE ASSESSEE SHALL FURNISH THE COMMENTS ON REMAND REPORT AND CAS H BOOK OF BOTH THE PARTNERS BEFORE ASSESSING OFFICER FOR EXAMINATION, ETC. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 11.06.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 / 06 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.