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IN THE INCOME TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (AM) AND RAMLAL NEGI, (JM)
./I.T.A. No.3745/Mum/2009
( / Assessment Year :2003-04)
Shri N Rajgopal, / Additional Commissioner of Income
302, Shanti Apartments, Tax Officer-Range 23(3),
Vs.
Jain Temple Road, Mumbai.
Mulund (W),
Mumbai-400080
( /Appellant) .. ( / Respondent)
./I.T.A. No.3977/Mum/2009
( / Assessment Year :2004-05)
Shri N Rajgopal, / Joint Commissioner of Income Tax
302, Shanti Apartments, Officer-Range 23(3),
Vs.
Jain Temple Road, Mumbai.
Mulund (W),
Mumbai-400080
( /Appellant) .. ( / Respondent)
./ ./PAN :AACPN9861E
/ Appellant by Shri Nishit Gandhi
/Rspondent by Shri Chandip Singh
/ Date of Hearing : 13.10.2015
/Date of Pronouncement : 18.11.2015
/ O R D E R
PER B.R. BASKARAN (AM)
The assessee has filed these two appeals challenging the separate
orders passed by Ld CIT(A)-23, Mumbai for assessment years 2003-04 and
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2004-05. Both these appeals were heard together and hence they are
being disposed of by this common order, for the sake of convenience.
2. Both the appeals filed by the assessee are barred by limitation. The
assessee has moved a petition explaining the reasons for the delay in filing
the present appeals. We heard the parties on this preliminary issue. We
notice from the affidavits filed by the assessee along with evidences that
the assessee was suffering from various kind of health problems, which
claim is supported by the certificates given by the doctors. Hence, having
regard to the submissions made in the affidavits, we condone the delay
and admit both the appeals for hearing.
3. We shall first take up the appeal filed for AY 2003-04. The only
issue urged in this appeal relates to the assessment of Rs.25,90,343/-,
being the gifts received by the assessee by way of India Resurgent bonds.
The assessee had credited the above said amount in his capital account.
On examination, it was noticed that the assessee has claimed to have
received "India Resurgent Bonds" as gits from various persons and their
equivalent rupee value was credited in the capital account. The assessee
merely submitted copies of Bonds along with copies of transfer forms to
show that the bonds have been transferred to the assessee's name.
Before the AO, the assessee could not furnish confirmation letters from the
concerned donors. Since the assessee did not furnish evidences to prove
the identity and credit worthiness of the donors and the genuineness of
the transactions, the assessing officer assessed the gift amount cited
above as income of the assessee. The Ld CIT(A) also confirmed the same.
4. The Ld A.R submitted that the assessee has received India
Resurgent bonds as gifts from various persons. He further submitted that
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the donee of the bonds is also entitled to all the tax benefits given to the
original subscribers of the bond. He further submitted that the
genuineness of the receipt of gifts is established by the fact that the said
bonds have been transferred to the name of the assessee upon the signing
of the transfer deeds by the concerned donors. He further submitted that
the donors had subscribed the bonds in the year 1998 and they have been
given as gifts to the assessee in the year 2002. He submitted that the
very fact that the donors have held the bonds since 1998 would show that
they were having the capacity to subscribe to the bonds and the same
proves their credit worthiness. He further submitted that the assessee has
furnished copies of passport of all the donors and hence the identity of the
donors has also been proved. The very fact that these bonds have been
transferred to the name of the assessee proves the genuineness of the
transactions. Accordingly, he contended that the assessee has discharged
the initial burden placed upon him under sec. 68 of the Act and
accordingly contended that that order of Ld CIT(A) should be set aside.
The Ld A.R also placed reliance on the following case law in support of his
contentions:-
(a) ITO Vs. Mahendra P Mehta (2011)(9 taxmann.com 34)
(Mum Trib)
(b) CIT Vs. Shri Gautam Balasaheb Ladkar & Others
(ITA No.1438 of 2013 & others dated 24.08.2015)(Bom HC)
5. On the contrary, the Ld D.R submitted that the assessee could not
prove his relationship with the donors, the occasion for making gifts.
Further, the assessee could not obtain any confirmation letters from the
concerned donors and, in fact, has expressed his inability to obtain the
relevant details. Accordingly the Ld D.R submitted that, the assessee has
failed to prove that the bonds were received as gifts.
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6. We have heard rival contentions and perused the record. A perusal
of the various documents furnished by the assessee shows that the donors
of the bonds have furnished a copy of their respective passports and also
they have signed the transfer deeds given along with the bond certificates
at the time of allotment of the bonds. In the said transfer deed, all the
bond holders have stated that they have gifted the bonds to the assessee.
Hence, the assessee is placing heavy reliance on these documents to
contend that the gifts were genuine.
7. However we notice from the assessment order that the assessee has
admitted before the assessing officer that the donors were "third parties"
and hence it would not be possible for him to collect the details that were
called for by the assessing officer. There should not be any doubt that the
"Gifts" are given out of natural love and affection, that too without
consideration. Hence, in respect of claim of gifts, it is imperative to show
that there existed a relationship between the donor and donee. It is
further required to be shown that there was an occasion or reason, which
prompted the donor to give gifts to the donee. It is also required to be
shown that the gifts were given out of natural love and affection. In the
instant case, admittedly the assessee has failed to prove the nature of
relationship between him and the concerned donors and also failed to
furnish any explanation with regard to the reason/occasion which
prompted the donor to give gifts to the assessee. In fact, the assessee
himself has admitted before the assessing officer that the alleged donors
are third parties. When the donors are unrelated third parties, it would be
hard to believe that they have given gifts to the assessee, who is not
known to any of the donors. In that kind of situation, we are unable to
comprehend as to how the donors could give the gifts out of "n atural love
and affection". Hence, in our view, the tax authorities are justified in
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holding that the assessee has failed to prove the claim of receipt of gifts.
This is further fortified by the fact that the assessee has failed to furnish
any of the details that were called for by the AO. With regard to the case
laws relied upon by the assessee, we notice that the facts prevailing in
those cases are different, i.e., in the case of Shri Gautam Balasaheb
Ladkar (supra), the donors have given affidavits confirming the fact of
giving of gifts and in the case of Mahendra P Mehta (supra), the assessee
therein received gifts from his brother in law (wife's brother). However in
the instant case, the assessee has not received gifts from close relatives,
but he has received the alleged gifts from unrelated third parties. Further,
the assessee himself has admitted that he could not obtain confirmation
letters from the concerned donors. Under these set of facts, we are of the
view that the Ld CIT(A) was justified in confirming the assessment of gift
amounts as income of the assessee. However, the Ld A.R pointed out
that the gifts from Raju Jham and Patel Dhanlaxmiben Arvindbhai have
been received in the earlier years and hence the same cannot be assessed
in AY 2003-04. We are of the view that this claim of the assessee requires
verification, since it is made for the first time before us. Accordingly, we
modify the order of Ld CIT(A) and restore the matter relating to the gifts
received from the above said two parties to the file of the AO with the
direction to examine the claim of the assessee afresh. The order of Ld
CIT(A) with regard to the remaining amounts is confirmed.
8. We shall now take up the appeal filed for AY 2004-05, wherein
following issues are urged before us:-
(a) Computation of capital gains on sale of flats by rejecting the
claim of purcahse FY 1996-97 and also rejecting the claim for
deduction of
(i) the amount payable to the daughters.
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(ii) the claim of expenses on transfer
(b) Assessment of gifts received by way of India millennium bonds
amounting to Rs.12,13,630/-.
(c) Assessment of interest income of Rs.2,16,088/-
9. The first issue relates to the computation of Long term capital gains
on sale of four flats. It is stated that the assessee and his wife had
purchased these properties jointly. They have three daughters. The
spouse of the assessee expired intestate in the year 2000. Hence, prior
to the sale of the properties, the assessee and his three daughters entered
into a Memorandum of Understanding (MOU), as per which the daughters
agreed to take 18% of the sale consideration towards their right over the
share of their mother in the properties. Accordingly, the assessee
deducted 18% of the sale consideration from the total sale consideration
and computed capital gain upon the remaining 82%. The AO did not
agree with the submissions of the assessee for the reason that the capital
gains is required to be computed on "full value of consideration" as per
sec. 48 of the Act. The AO also observed that the assessee has failed to
show that the daughters have paid tax on their respective share.
Accordingly, the AO did not allow deduction of 18% of sale consideration,
being the share of daughters of the assessee. The Ld CIT(A) also
confirmed the same.
10. We heard the parties on this issue. We notice that the facts relating
to this issue have not been properly brought on record, i.e., whether the
spouse of the assessee has also contributed her own money at the time of
purchase of properties or her name was included for name sake only. If
the spouse of the assessee had contributed her own money, then the
daughters shall have right over her properties, since the spouse of the
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assessee has claimed to have died intestate. In that case, the MOU
entered between the assessee and her daughters have to be examined
and a proper decision is required to be taken. In this regard, the Ld A.R
invited our attention to the provision of Hindu Succession Act. We notice
that the assessing officer has simply rejected the claim of the assessee
without examining the rights of the daughters of the assessee over the
properties of the assessee's spouse. Hence, in our view, this issue
requires fresh examination at the end of the assessing officer.
Accordingly, we set aside the order of Ld CIT(A) on this issue and restore
the same to the file of the AO for fresh consideration.
11. The next issue relates to the rejection of claim for deduction of
expenses incurred in respect of two flats located in Chennai. The AO
rejected the claim, since there was difference in the amount of expenses
claimed in the original computation of income and in the revised
computation of income. Further, the assessee has also failed to
substantiate that the expenses were incurred in connection with the
transfer of flats located in Chennai. Before Ld CIT(A) also, the assessee
did not furnish any other evidence and hence the first appellate authority
confirmed the rejection of the claim. Before us also, no evidence was
furnished to prove the claim of the assessee that the expenses were
incurred in connection with the transfer of flats located in Chennai.
Further, the assessee has also failed to furnish any explanation with regard
to the difference in the expenditure claim. Under these set of facts, we
are of the view that the Ld CIT(A) was justified in confirming the rejection
of expenditure claim.
12. The next issue relates to the claim of date of purchase of flat
located at Punit Tower, Mumbai. The assessee claimed that he has
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purchased this flat on 19-12-1997 and accordingly claimed indexation
benefit from FY 1997-98. However, the AO noticed that the possession
was obtained only on 03-09-1998 and accordingly allowed indexation
benefit from FY 1998-99. The Ld CIT(A) upheld the view of the AO and
hence the assessee is contesting this decision of Ld CIT(A). Before us, the
Ld A.R placed his reliance on the agreement dated 19-12-1997 and
contended that the indexation benefit should be given from FY 1997-98.
However, the Ld A.R could not contradict the finding of the Ld CIT(A) that
the assessee obtained actual possession of the property only on 03-09-
1998. Even otherwise, the assessee has failed to establish as to how he
would be entitled to indexation benefit from FY 1997-98 merely on the
basis of sale agreement. Hence, we do not find any infirmity in the
decision of Ld CIT(A) on this issue.
13. The next issue relates to the assessment of gifts received by the
assessee by way of India millennium Deposits. Since the assessee failed
to furnish the details that were called for by the AO, the assessing officer
assessed the gifts as income of the assessee. The Ld CIT(A) also
confirmed the same. In the immediately preceding year, the assessee had
received gifts by way of India Resurgent bonds and the same was
assessed as his income. While adjudicating the said issue, we have
noticed that the assessee has received gifts from unrelated parties and has
also failed to obtain confirmation letters from the concerned donors.
Further, it was noticed that the assessee has also failed to furnish any
explanation with regard to the occasion/reason which prompted the donor
to give gifts to the assessee. We notice that the facts prevailing in the
instant year in respect of India millennium deposits are identical in nature.
Hence, consistent with the view taken by us in respect of India Resurgent
bonds, we uphold the order of the Ld CIT(A) in confirming the assessment
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of gifts received by way of India millennium bonds as income of the
assessee.
14. The last issue relates to the assessment of interest income to the
tune of Rs.2,16,088/-. The AO noticed that the interest income shown in
the TDS certificates was more than that offered by the assessee and hence
assessed the difference amount as interest income of the assessee. The
Ld CIT(A) also confirmed the same. Before us, the Ld A.R submitted that
the assessee had offered the difference amount in the earlier year on
accrual basis. If the assessee had already offered the different amount in
the earlier year, the same cannot be assessed again in the current year,
since double assessment of same income is not permissible. However, the
claim of the assessee requires verification. Accordingly, we set aside the
order of Ld CIT(A) on this issue and restore the same to the file of the AO
with the direction to examine the claim of the assessee and take
appropriate decision in accordance with the law.
15. In the result, both the appeals of the assessee are treated as partly
allowed for statistical purposes.
Pronounced accordingly on 18th Nov, 2015.
18th Nov, 2015
Sd sd
(RAMLAL NEGI) ( B.R. BASKARAN)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai: 18th Nov, 2015.
.../ SRL , Sr. PS
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/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
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