Ranjit LALCHAND JAIN, MUMBAI V. ITO WARD -17(3) (1) , `MUMBAI

MA 268/MUM/2023

AI Insights

The case revolves around a dispute concerning the assessment of income tax for the year 2010-11, where the ITO had added a substantial amount of cash on hand as income. The assessee, Ranjit Lalchand Jain, contested this addition, arguing that the cash was from legitimate gift sources and had been properly recorded in his financial statements. The ITAT initially dismissed the appeal but later recalled its decision upon the assessee's filing of a Miscellaneous Application, which pointed out the oversight of crucial evidence and arguments in the initial hearing. The ITAT's decision to allow the appeal was based on the reassessment of the evidence, which showed that the cash was indeed from gifts and had been properly accounted for in the assessee's books.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300209 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-06-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2023
• Other Referred Cases: ITO VS Resma devi (Smt.) 2005 94 TTJ 761 (Jodhpur Tribunal), CIT VS Padam singh chouhan (2008) 215 CTR 303/315 ITR 433/3 DTR 190 (Rajasthan HC), ITO VS. M.S. Advance (P) Ltd. (2005) 93 TTJ Asr 778 (Amritsar Tribunal), Umesh Electricals Vs ACIT (2011) 131 ITD 127 60DTR 385 141 TTJ 288TM (Agra Tribunal)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 148; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JM & SHRI GAGAN GOYAL, AM M. A. No. 2 68/ M u m / 2023 (Ar i s i n g o u t o f I . T . A. No . 1 55 3/ M u m /2022) ( As s e s s m e n t Y e a r : 2010-11) Ranjit Lalchand Jain, Zohra Manzil, 35 Memonwada Road, Mumbai-400 003 बनाम/ V s . ITO Wd-17(3)(1), Mumbai-400 020 स्थायीलेखासं./जीआइआरसं./P A N N o . AEUPJ4255Q (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अऩीराथी की ओय से / Appellant by : Shri Vimal Jain, Ld. AR प्रत्मथी की ओय से/Respondent by : Shri Manish Ajudiya, Ld. DR स ु नवाई की तायीख / D a t e o f He a r i n g : 16/06/2023 घोषणा की तायीख / D a t e o f P r o n o u n c em e n t : 26/06/2023 आदेश / O R D E R Per Gagan Goyal, Accountant Member: The present Miscellaneous Application (MA) has been filed by the assessee for rectification of mistake alleged to be apparent in the order dated 06.01.2023 passed in ITA No. 1553/Mum/ 2022. 2 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain 2. Before us, Ld. AR appearing on behalf of the assessee brought our attention to the application dated 29 th March 2023 in the following manner:- 1. The above appeal was disposed of by the Tribunal by its order dated 06-01-2023. The appellant above named beg to present this application for rectification of certain mistakes which are apparent from record in the said order. 2. Fact of ITR filed has not been considered for AY 2010-11: the learned ITO, CIT (A), and ITAT, has not considered this fact and has stated that ITR is not filed before issuing notice u / s. 148. ITR was very much filed on 27-7-2010, vide Machine no.1314000439, with ITO Ward 13(1) (4) under PAN No. AADPJ4913C, old PAN, on which assessee is filing all his ITRS for the last about 20 years. Further, this fact of filing return was also informed to ITO, for the first time on 03-9-2013 and second time 28-4-2017, by letters (pg 60, 61 and 63 of paper book). Inadvertently, the assessee was allotted new PAN No. AEUPJ4255Q, under which notice u / s. 148 was issued. Later, ITO forced to file another return on new PAN for AY 2010- 11. Acknowledgement for ITR filed for AY 2010-11, under old PAN, was also filed in Additional Paper Book(page 3). The learned CIT(A) has not noted any of these, without proper serious reading, the order was hurriedly passed ad hoc, without considering facts of the case. The learned ITAT, has considered the fact that when on 24-8-2022, first hearing took place before SMC bench (Shri P.K. Gadale and Shri B.R. Baskaran), who could notice that ITR was filed on 27 - 7 - 2010 but since acknowledgement was not found in Paper Book and therefore they adjourned the matter to 10-10-2022 asking for acknowledgement to be brought 10- 10 - 2022. Therefore, two years AY 2009-10 and 2010-11 acknowledgements with Balance Sheets are filed on 10-10-2022 in Additional Paper Book, although Balance sheets were already given to ITO, who is fully aware of the facts, along with covering letters dt.11-9-2017 and 6-11- 2017(page 68 and 69 of Paper Book). 3. Source of cash: in this case, Gift Deeds dt. 10-12-2004 for Rs. 7.50 lacs from Father Shri Lalchand S. Jain, Gift deed dt.28-7-2005 for Rs.4 lacs from Mother Shri Hanjabai Lalchand Jain and Gift deed dt. 4/8 / 2005 for Rs. 2 Lacs from his wife Mrs. Varsha R. Jain totaling to Rs.13.50 lacs is received by assessee and are filed with ITAT but not considered by ITAT (pgs. 80 to 85 of Paper Book). Therefore, the source of cash is gift received by assessee. The ITRS are filed for A.Y. 2005-06- & 2006-07, copies of acknowledgement, computation of total income and capital A/c, are filed with ITAT (pgs.76-79) which was duly verified and accepted by ITO. So it is not an event of 2010. Further, ITO was well informed the gifts were received in the Assessment year 2005-06 and 2006-07 and duly credited in the capital A / c in the respective years. 3 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain Further Gift received from blood relative and is exempt u/s. 56 of the Income Tax Act 1961, Also, various Courts Tribunals, High Courts, etc in India have held that it is customary to give gift in India to blood relative, children and others at various festive occasions, marriage and therefore, gifts are prevalent in our society from years. 4. The Authorised representative of the appellant relied on the decision of the various Jurisdictional High Court and Jurisdictional Tribunals. However, the Hon'ble members have not referred the aforesaid judgments in the order. Four Case laws on which reliance is made were provided in the paper book (pg. 35-57) i. In the case of ITO VS Resma devi (Smt.) 2005 94 TTJ 761 (Jodhpur Tribunal), where assessee had accumulated certain amount as opening capital and explained that she had received gifts at the time of marriage which she had deposited and received interest thereon. This addition of amount of opening capital was not justified. The assessee relied on the above case since the facts are similar to his case. ii. Further, in the case of CIT VS Padam singh chouhan (2008) 215 CTR 303/315 ITR 433/3 DTR 190 (Rajasthan HC), where the assessee has produced the copies of the gift deeds, in the absence of anything to show, that the act of the assessee in claiming gift, was an act by way of money laundering, simply because he happens to receive gifts, it cannot be said that, that is required to be added in his income. iii. Further, in the case of ITO VS. M.S. Advance (P) Ltd. (2005) 93 TTJ Asr 778 (Amritsar Tribunal), where affidavits and confirmations of creditors were produced and their capacity to advance loans had been established, addition of cash credits was not justified and it was immaterial that amounts were kept at home by creditor and deposited in bank just before issuing cheques. Similarly, in our case AO has said that the cash is deposited just before the cheques are issued which is immaterial. iv. Further, in the case of Umesh Electricals Vs ACIT (2011) 131 ITD 127 60DTR 385 141 TTJ 288TM (Agra Tribunal), where Assessing Officer without looking into the facts and bringing any evidence to the contrary rejected the explanation of the assessee. Section 68 nowhere empowers the Assessing Officer to reject each and every explanation of the assessee. The Assessing Officer is a quasi-judicial authority and he should form his opinion judiciously, not in an arbitrary manner. Similarly, in our case, even after submitting all relevant documents and explanations, the assessing officer is rejecting each and every document and explanations without forming an opinion judiciously. 5. Law abiding: The assessee is a lay man but a law-abiding man. He has right from the early stage has been a regular I.T. return filer and despite being a business man never ever failed to file return or filed late returns, from the beginning. He also had got gift 4 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain deeds made (immediately when received) on stamp paper, so he took legal care by taking advice according to his prudence. This fact also, is not being considered. 6. Hearing on 24-8-2022: In this appeal, first hearing was on 24-8-2022, when SMC bench Members, demanded copies of acknowledgement of ITRS filed for AY 2009- 10 and AY 2010-11 alongwith Balance Sheets and matter was adjourned to 10-10- 2022. Therefore, two Balance Sheets are filed with Acknowledgements in Additional Paper Book, on 10-10-2022., although these Balance Sheets were already given to the learned ITO, along with covering letter dt.11-9-2017 and 6- 11-2017(Page 68 and 69 of Paper Book) 7. Documents not considered: Apart from above, various other documents, three gift deeds along with ITRS for AY 2005-06 and AY 2006-07, filed with Computation and Capital A/c, wherein, it is clearly seen that gifts are received from Father, Mother and wife, with the amount duly credited in Capital A / c of respective years, and house purchase agreement, stamp duty receipt and registration receipt, are also filed, along with Bank Certificates dt.Nov.2009. Gifts given to assessee by his parents was their life time earnings and parents have not allowed the assessee to deposit cash in bank for all these years fearing that the amount of gift may be used by assessee for any other purpose once it is deposited in bank A/c but, now the assessee was reluctant to give cash to the builder and therefore he deposited cash in bank and cheque of Rs.5 Lakh was issued by assessee for house purchase for rest amount assessee purchased FDs with companies and further demanded cheque from his father (Lalchand Jain) for Rs.5lakhs and from brother (H.L. Jain) for Rs.1 lakh, which is shown as Loan in Balance sheet as at 31-3-2010 8. The learned ITO and CIT (A) have passed the order on various assumption and presumption without any material fact or evidence on record. Gift deed, being a legal document between donor and donee and therefore binding on both. So, as per sec. 56 gifts can be received in cash, and can be deployed at any place at the will of the assessee. So, it needs to be considered. 9. Therefore, in the light of above, It is respectfully submitted that the Tribunal may be pleased to suitably amend its order to rectify the aforesaid mistake, which is apparent from the record. The Hon'ble ITAT is requested to consider the Appeal on merits, allow the Appeal, and oblige. 3. We have gone through the submissions of the assessee and find that the contentions raised by the assessee are factually correct. In view of this it’s a 5 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain mistake apparent from record while deciding the issue and requires appropriate corrections in the order, hence order earlier passed vide ITA No. 1533/Mum/2022 dated 01.06.2023 is liable to be recalled for fresh consideration in the light of evidences not considered earlier in advertently. 4. In the result, MA 268/Mum/2023 filed by assessee is allowed. I . T . A. No . 155 3/ M u m / 2022 1. Now we are taking the aforesaid appeal filed by the assessee on the following grounds:- 1. On the facts and circumstances of the case and in law, the Learned CIT(A), erred in confirming the order of I.T.O., wherein I.T.O. treated Balance sheet item of cash on hand of Rs. 12,75,600/- as on 31.3.09 as revenue income of Rs. 11,64,700/- for the year ended 31.3.10. And accordingly levied tax and interest for the year ended 31.3.10, after adding Rs.11,64,700/- in income of Rs.89,160/- for which return was filed on 27.7.10 when both Balance Sheets as at 31.3.09 & 31.3.10 were given to learned I.T.O. cash on hand of 12,75,600/- was clearly shown in the Balance Sheet as at 31.3.09. 2. on the facts & circumstance of the case and in law, the learned CIT (A), erred in not appreciating the averment of assessee that the amount of Rs.12, 75,600/- cash on hand as at 31.3.09, was kept separate for buying the house. The search for the house was going on for 5 to 6 years but purchase of house was materialized only in November 2009 for Rs.11,66,000/- pertaining to AY 2010-11 and therefore cash was not deposited in bank, so cash on hand was maintained for few years right from December 2004 onwards. 3. On the facts and circumstances of the case and in law, the learned CIT erred in not appreciating that cash on hand as on 31.3.09 of Rs.12,75,600/- was carried forward out of earlier cash on hand. These cash balance was arising out of gifts given by parents and wife in earlier years and all gift deed and ITR are filed with the learned CIT (A). 6 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain 4. On the facts and circumstances of the case and in law, the learned CIT (A) erred in stating that no ITR was filed for AY 2010-11, thereby alleging the assessee, and not appreciated that assessee on the contrary was filing ITR's right from 1993 onwards for more than 20 years regularly and not a single year is lapsed without filing the return. Even when there was no tax payable the return was filed. The learned ITO erred in stating that no ITR was filed for AY 2010-2011, whereas two specific letters were written to Learned ITO only for informing that all ITR are filed. 5. Cash on hand cannot be doubted where full accounts are shown and capital account and balance sheet are provided along with ITR's filed to the learned CIT (A) irrespective of the amount. Once income statement along with bank summary, capital account and ITR filed are available on record, cash on hand in Balance sheet cannot be doubted irrespective of the amount. Therefore Learned CIT (A) has erred in not appreciating the above without providing any material on record and rejecting outright all records of assessee. 6. The Appellant craves leave to add, alter, amend, classify, reclassify or delete any of above ground of appeal and requests to consider each of above grounds without prejudice to one another. RELIEF CLAIMED: The arbitrary addition of Rs. 11, 64,700/- in income for the year ended 31.3.10 done by the Learned ITO be deleted and accordingly tax and interest levied on above be deleted. Penalty if any levied be deleted. 2. The appeal of the assessee was rejected on a basic premise of not maintaining and able to substantiate cash in hand properly alongwith ITR’s filed for relevant years. Now as observed (supra) in the order of recalling the matter and allowing the MA of the assessee, we found that assessee was regular in maintaining cash book and the same has been filed alongwith relevant ITRs. 3. In the light of above, considering the relevant facts which were not considered in the earlier order, we are of the considered view that amount of 7 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain cash deposit by the assessee is duly proved to the satisfaction of the Act. Assessee being a lower middle class family, it cannot be presumed that once amount of gifts settled in favour of assessee and categorically shown in the capital account of the assessee (filed alongwith balance sheet and ITRs for respective years) his old parents may agreed to hand over the cash only on the occasion of finalization of purchase of property and not before that, as happened in this case. 4. Once the transaction of purchase is finally materialized up to the satisfaction of parents and family members they handed over the cash to the assessee for deposit in bank account so that appropriate banking transactions can be completed with the builder /seller. Maintenance of books of accounts, reflection of cash balance in balance sheet, reflection of gift received in capital account and regular filing of ITRs by the assessee are not under challenge. In none of the order of authorities below there is no negative comments on the contents of capital account, gift deed and regular ITR filed, hence probability of preponderance certainly goes in favour of assessee notwithstanding the above facts it is nowhere emanated from record that assessee could have earned any other income other than but he shown in his regular ITRs. 8 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain 5. Authorities below function as quasi judicial authorities and by no way of authority /obligation they are forced to take a contrary view upon the documents and explanations filed by the assessee. Once we have gone through the capital accounts of the previous year’s along with balance sheets, gift deeds and ITRs probability of preponderance certainly is in favour of assessee. 6. In these circumstances, we do not find any anomaly in the contentions raised by the assessee looking at amount involved and other documents available on record. In view of above, we allow the appeal of the assessee and direct the AO to delete the addition with consequential relief in terms of charging of interest and penalty charged, if any. 7. In these terms, ITA No. 1533/Mum/2022 filed by assessee is allowed. Order pronounced in the open court on 26.06.2023. Sd/- Sd/- (Sandeep Singh Karhail) (Gagan Goyal) (Judicial Member) Accountant Member Mumbai; ददनाांक Dated: 26.06.2023 Sr.PS Dhananjay. आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : 1. अऩीराथी / The Appellant 2. प्रत्मथी / The Respondent 3. आमकय आम ु क्त(अऩीर) / The CIT(A) 9 M . A . N o . 1 5 5 3 / M u m / 2 0 2 2 Ranjit Lalchndji Jain 4. आमकय आम ु क्त / CIT - concerned 5. ववबागीम प्रतततनधध, आमकय अऩीरीम अधधकयण, भ ु ांफई / DR, ITAT, Mumbai 6. गार्ड पाईर / Guard File आदेशान ु सार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, भ ु ांफई / ITAT, Mumbai