ITO WD 21(1)(1), MUMBAI V. AMITA AJAY CHAUHAN, MUMBAI

ITA 954/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84107 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBE
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 56(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A.NO. 954/M/2013 (AY: 2009 - 2010 ) ITO, WARD - 21(1)(1), R.NO.603, 6 TH FLOOR, C - 10, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. VS. SMT. AMITA AJAY CHAUHAN, 353, KANILA, SWAMI VEVEKANAND ROAD, VILE PARLE (W), MUMBAI 400 056. PAN: AAEPC2394P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SACHIDANAND DUBE RESPONDENT BY : SHRI GIRISH DAVE DATE OF HEARING: 3.11.2014 DATE OF ORDER: 12 .11.2014 O R D E R PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY THE REVENUE ON 4.2.2013 IS AGAINST THE ORDER OF THE CIT (A) - 32, MUMBAI DATED 19.11.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.20,00,000/ - BY NOT CONSIDERING THAT THE SOURCE OF GIFT FROM THE MINOR CHILD WAS NOT EXPLAINED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT ANY SUM TRANSFERRED FROM MINOR CHILDREN WOULD FALL WITH IN THE SWEEP OF SECTION 56(2) (VI) BY NOT CONSIDERING THE INDIAN CONTRACTS ACT RELIED ON BY THE AO AS PER WHICH AGREEMENT MADE WITH MINOR IS ALTOGETHER VOID. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 1,19,040/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF RS. 21,19,040/ - . IN THE ASSESSMENT AO MAD E ADDITION OF RS. 20 LAKHS INVOKING THE PROVISIONS OF SECTION 56(2)(VI) OF THE ACT. THIS AMOUNT OF RS. 20 LAKHS WAS RECEIVED BY THE ASSESSEE FROM HIS MINOR SON. IN THIS REGARD, ASSESSEE SUBMITTED THAT THESE 2 TRANSACTIONS SHALL NOT ATTRACT THE SAID PROVISI ONS OF SECTION 56(2)(VI) CONSIDERING THE FACT THAT THE MINOR SON IS DESCENDENT OF THE ASSESSEE . T HE ASCENDANTS AND DESCENDENTS ARE OUTSIDE THE SCOPE OF SECTION 56(2)(VI) OF THE ACT. AO REJECTED THE SAID EXPLANATION OF THE ASSESSEE AND MADE ADDITION. AG GRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE PROCEEDINGS, ASSESSEE SUBMITTED THAT THE MINOR SON CANNOT ENTER INTO TRANSACTIONS DEPENDENTLY. FURTHER, IT IS THE S UBMISSION OF THE ASSESSEE THAT THE IMPUGNED TRANSACTION OF GIFT OF RS. 20 LAKHS IS OUTSIDE THE SCOPE OF THE SAID PROVISIONS OF SECTION 56(2)(VI) OF THE ACT. CIT (A) CONSIDERED THE SAID SUBMISSIONS OF THE ASSESSEE AND GRANTED RELIEF AS PER THE DISCUSSION G IVEN IN PARA 3.3 OF THE IMPUGNED ORDER. AGGRIEVED WITH THE SAME, REVENUE IS IN APPEAL BEFORE US. 5. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE READ OUT THE CONTENTS OF PARA 3.3 OF THE CIT (A)S ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHO RITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL AND PARA 3.3 IN PARTICULAR, WE FIND, THE SAME IS RELEVANT IN THIS REGARD. CONSIDERING THE IMPORTANCE OF THE SAID PARA 3.3, THE SAME IS EXTRACTED WHICH R EAD AS UNDER: 3.3. I HAVE CONSIDERED THE ARGUMENTS OF THE LD AR AND PERUSED THE ASSESSMENT ORDER. THE AO HAS NOT AT ALL DISPUTED THE SOURCE MONEY OF RS. 20 LAKHS IN THE HANDS OF THE MINOR CHILDREN. IT IS NOT THE CASE OF THE AO THAT THE SUM OF RS. 20 LAKHS IS UNEXPLAINED CASH CREDIT IN HANDS OF APPELLANT OR MINOR SONS. ONCE THE SOURCE OF THE MONEY IS EXPLAINED IN THE HANDS OF MINOR CHILDREN, THEN IF SAID AMOUNT IS TRANSFERRED FROM THE MINOR CHILDREN TO THE ASSESSEES BANK ACCOUNT, THE SAME CANNOT BE A N INCOME U/S 68 IN THE HANDS OF ASSESSEE. IT IS ALSO NOT THE CASE OF THE AO THAT MINOR CHILDREN ARE NOT COVERED WITHIN THE MEANING OF RELATIVE OF SECTION 56(2)(VI). AS PER THE AO, THE AMOUNTS TRANSFERRED FROM THE MINOR CHILDREN TO THE ASSESSEES BANK ACC OUNT DOES NOT FALL U/S 56(2)(VI) ONLY BECAUSE MINOR CHILDREN WHO ARE NOT CAPABLE OF GIVING GIFT ON THEIR OWN. THE PLA I N READING OF SECTION CLEARLY SUGGEST THAT IT IS APPLICABLE IN RESPECT OF ANY SUM RECEIVED WITHOUT CONSIDERATION AND IT NEED NOT BE IN T HE NATURE OF GIFT ONLY. THUS, EVEN IF MINOR CHILDREN WERE NOT CAPABLE OF MAKING GIFT BUT ANY SUM TRANSFERRED FROM THE MINOR CHILDREN WOULD FALL WITHIN SWEEP OF 3 SECTION 56(2)(VI), WHETHER IT IS TERMED AS GIFT OR OTHERWISE. ONCE SUCH SUM IS RECEIVED FROM A RELATIVE (SON) BEING LINEAL DESCENDENT OF ASSESSEE, THE SAME GETS EXCLUDED UNDER THE EXCEPTION IN PROVISO TO SECTION 56(2)(VI). THE PROVISO TO SECTION 56(2)(VI) INCLUDES THE LINEAL ASCENDANT OR DESCENDANT OF THE ASSESSEE WITHOUT DIFFERENTIATING BETWEEN A MINOR ASCENDANT OR DESCENDANT OR MAJOR DESCENDENT. HENCE, THE CONTENTION OF THE AO THAT 56(2)(VI) IS NOT APPLICABLE FOR GIFTS RECEIVED FROM MINORS IS NOT CORRECT. EVEN IF THE CONTENTION OF THE AO THAT 56(2)(VI) IS NOT APPLICABLE AT ALL IS TAKEN AS CORRE CT THEN THE AMOUNTS RECEIVED CANNOT BE SAID TO BE IN NATURE OF INCOME U/S 2(24) AND AT THE SAME TIME SINCE THE SOURCE HAS NOT BEEN AS UNEX PLAINED, THE SAME CANNOT BE ADD ED U/S 68 ALSO. THEREFORE, THE ADDITION OF RS. 20 LAKHS MADE BY THE AO IS DIRECTED TO BE DELETED. 8. ON PERUSAL OF THE ABOVE, WE FIND THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER CONSIDERATION IN ACCORDANCE WITH THE PROVISIONS OF THE SAID SECTION 56(2)(VI) AND RIGHTLY DELETED THE ADDITION MADE BY THE AO. THE PROVISIONS OF SEC TION 56(2)(VI) OF THE ACT PROVIDES FOR CERTAIN EXCLUSIONS AND IT ALSO DEFINES THE EXPRESSION RELATIVES. CLAUSES (V) TO (VII) OF THE EXPLANATION TO SECTION 56(2)(VI) PROVIDE THAT THE LINEAL ASCENDANT OR DESCENDENT OF THE ASSESSEE ARE NOT COVERED BY THE PROVISIONS OF SECTION 56(2)(VI) IN VIEW OF CLAUSE (A) OF THE PROVISO TO SECTION 56(2)(V) OF THE ACT. CONSIDERING THE SAME, IN OUR OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GR OUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 1 2 T H NOVEMBER, 2014. S D / - S D / - (H.L. KARWA) (D. KARUNAKARA RAO) PRESIDENT ACCOUNTANT MEMBER DATE: 1 2 .11.2014. AT :MUMBAI OKK COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT, MUMBAI. 6. GUARD FILE. 4 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI