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Shri Bhim Singh Jain, RZ-A/59, Gali No.4, Mahipalpur, New Delhi. Vs. ITO, Ward 24(4), New Delhi.
December, 10th 2015
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

              IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCH: `A' NEW DELHI

            BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
                                AND
             SHRI C. M. GARG, JUDICIAL MEMBER

                            I.T.A .No.805/DEL/2011
                           ASSESSMENT YEAR-2002-03


      Shri Bhim Singh Jain,             ITO,
      RZ-A/59, Gali No.4,               Ward 24(4),
      Mahipalpur, New Delhi.         vs New Delhi.
      (PAN: AAIPJ9707F)
       (APPELLANT)                          (RESPONDENT)

              Appellant by      Shri Adlakha, Adv.
              Respondent by     Shri K.K. Jaiswal, DR

            Date of Hearing                   15.10.2015
            Date of Pronouncement              09.12.2015



                                ORDER
PER C. M. GARG, JM


       This appeal by the assessee has been directed against the order of the Ld.

CIT(A)-XXII, New Delhi dated 11/11/2010 passed in Appeal No. 235/07-08

for assessment year 2002-03.


2.     The grounds raised by the assessee read as follows:-

           "1. That the CIT(A) was unjustified in confirming the
           addition of Rs. 4,00,000/- made by the Assessing officer.
             2. That the learned CIT(A) erred and acted arbitrary in
           placing reliance on in admissible evidence in the shape of
           the statement of Shri Gian Chand Donor recorded at the




                                        1
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

           back of the assesse and not provided to the assessee. The
           appellant was not provided an opportunity to cross examine
           the witness of the revenue.
           3. That the CIT(A) was not justified in ignoring the vital
           evidence filed by the assessee being confirmation in the
           shape of affidavit, bank statement showing debit entry of Rs.
           4,00,000/- copy of ITR, GIFT Deed etc..
           4. That the initial and primary on-us which lay upon the
          appellant was discharged by filing vital evidence as
          mentioned in Ground No. 3.
           5. That the CIT(A) failed to consider the Judgement of the
          Rajasthan High Court in the case of CIT v. Padam Singh
          Chauhan (2010) 214 Taxation 792 (Rajasthan).
           6. That the addition of Rs. 4,00,000/- had been wrongly
          sustained by the CIT(A)" .

3.     We have heard the rival submissions and carefully perused the relevant

material placed on record before us. Learned counsel of the assessee contended

that the CIT(A) has grossly erred in confirming the addition and he was not

justified in placing reliance on inadmissible evidence i.e. the so-called statement

of Shri Gian Chand Jain donor recorded on the back of the assessee and copy of

which was not provided to the assessee and the appellant was also not provided

opportunity to cross-examine the said witness of the revenue. Learned counsel

of the assessee took us through assessee paper book-I and II which contain 14

and 8 pages and submitted that the assessee filed copy of gift deed, affidavit of

donor Shri Gian Chand Jain, confirmation, copy of donor's IT Return, copy of

donor's bank statement along with his PAN Number and the assessee also

submitted statement of affairs of donor as on 31.3.2001 and hence, the assessee

                                        2
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

discharged its onus to establish genuineness of the transaction of gift supported

by identity, capability and capacity to donate of the donor. Placing reliance on

the recent order of Hon'ble Jurisdictional High Court of Delhi dated 11.4.2012

in I.T.A. No. 212/2012 in the case of CIT vs Goel Sons Golden Estate Pvt. Ltd.,

the learned counsel of the assessee submitted that on the details, evidence and

explanation of the assessee if the Assessing Officer did not consequent thereto

conduct any inquiry and closed the proceedings and the Assessing Officer has

failed to conduct necessary inquiry, verification and deal with the matter in

depth specially when the affidavit, confirmation and other relevant documents

and evidence were filed, then in the absence of this inquiry, addition cannot be

held as sustainable and valid.


4.          Learned counsel of the assessee also placed reliance on following

orders/judgments of Hon'ble Apex Court and Hon'ble High Courts:-


     (i)       C. Vasantlal & Co. Vs CIT 45 ITR 206(S.C.)

     (ii)     CIT vs Orissa Cement Corporation 159 ITR 78 (S.C.)

     (iii)    CIT vs Eastern Commercial Enterprise 210 ITR 103 (Calcutta)

     (iv)     CIT vs SMC Share Brokers Ltd. 288 ITR 103 (Calcutta)

     (v)      CIT vs Padam Singh Chouhan (2010) 214 Taxation 792 (Raj)


5.          Learned Departmental Representative supported the stand and action of

the authorities below and submitted that the genuineness of the transaction of

gift and capacity of donor was not established and the donor himself in his
                                           3
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

statement admitted to have been given bogus entry of gift to the assessee and

hence, addition is sustainable.


6.     On careful consideration of above, at the very outset, we note that the

sole basis of addition is the statement of Shri Gian Chand Jain before

Investigation Wing that he had given accommodation entry to the assessee. The

assessee submitted copies of gift deed, affidavit, confirmation of IT Return,

PAN No., bank statement and statement of affair as on 31.3.2001 of the donor.

The assessee also requested the Assessing Officer vide letter dated 28.10.2011

but the same was not supplied to him and this fact is amply clear from noting of

Inspector of the department dated 28.10.2010 (assessee's paper book II page 1)

and this cross examination on such witness was also not provided to the

assessee. Now, we respectfully take note of dicta laid down by Hon'ble High

Court of Delhi in the case of CIT vs SMC Brokers Ltd. (supra) wherein it was

held that in absence of the witness being made available for cross-examination

for the assessee, his statement could not be relied. In the present case, even

copy of statement was not provided to the assessee, the question of cross-

examination comes thereafter.


7.     When we analyse the orders of the authorities below, we note that the

CIT(A) upheld the addition by concluding as under:-


        " 6.2 The appellant has contended that treating gift of
       Rs.4,00,000/- from Shri Gian Chand Jain as non genuine was

                                       4
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

       'wrong and misconceived since the gifts were duly confirmed by
       the donor and were received through proper banking channel,
       the appellant has furnished copy of girt deed executed between
       the donor and the donee, copy of affidavit confirming the gift,
       copy of return of income of the donor, copy of PAN Card of the
       donor and copy of bank statement showing debit entry of
       Rs.4,00,000/- against gift cheque no. 496716 on 21 .03.2002.
       However, the courts have held that mere identification of the
       donor and showing the movement of the amount through banking
       channels is not sufficient to prove the genuineness of the gift. The
       onus lies on the donee not only to establish the identity of the
       donor, but also the donor's capacity to make such a gift. Where
       there was nothing on record to show as to (i) what was the
       financial capacity of the donors, (ii) what was the
       creditworthiness of the donors, (iii) what was the kind of
       relationship the donors had with the donee-appellant, (iv) what
       are the source of funds gifted to the appellant, and (v) whether
       the donors had the capacity of giving large amount of gift to the
       appellant, it would not be justified in deleting the additions made
       by the Assessing Officer, especially when the appellant did not
       appear in person before the Assessing Officer , despite being
       asked to do so - CIT v. Anil Kumar 120081 167 Taxman 143 (
       Delhi). Even though money had flown through bank account, the
       identity of the person giving gifts was established, their
       creditworthiness proved, the transaction; from the donor to the
       appellant was unusual. There was no relationship between the
       donor and donee and there was no occasion for making the gifts,
       I have examined the bank, pass book of the donor, and observe
       that he had only Rs.20,832/- as balance before issuance of the
       cheque to the done, a credit of Rs. 3,85,000/- immediately prior
       to making the gift and Rs.5,832/- as balance after issuance of
       cheque. The donor's return, of income for A.Y. 2001-02 shows
       taxable income of only Rs.1,10,410/- with a tax liability of
       Rs.165/-. Whereas he has gifted the sum of Rs. 4,00,000/-, nearly
       four times of his annual income. To see the genuineness of a gift




                                         5
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

       cannot be accepted to be genuine, merely because the amount
       has come by way of a cheque or draft through, banking channel,
       unless the identity of the donor, his creditworthiness, relationship
       with the donee and the occasion is proved. Unless the recipient
       proves the genuineness thereof, the same can very well be treated
       to be an accommodation entry of the assessee's own money,
       which is not disclosed for the purpose of taxation. The above
       considerations for testing the genuineness of a gift are not
       exhaustive, as there may be other reasons also which would be
       appropriate for considering the genuineness of a gift are not
       exhaustive, as there may be other reasons also which would be
       appropriate for considering the genuineness of a gift (Tiurath
       Ram Gupta vs CIT (2008) 304 ITR 145 (Pun & Har). Reliance is
       also made to the judgment of the jurisdictional High Court in the
       case of Sajan Dass and Sons v CIT (2003) 264 ITR 435 wherein
       the Hon'ble Court examining the issue has held as under:-


              "A mere identification of the donor and showing the.
       movement of the gift amount through banking channels is not
       sufficient to prove the genuineness of the gift. Since the claim is
       made by the asscssce, the onus lies on him not only to establish
       the identity of the person making the gift but also his capacity to
       make a gift and that it has actually been received as a gift from
       the donor."
             It has to be kept in view that a `family, friend' who gifted
       Rs.4.00,000/- to the appellant out of love and affection could not
       be produced by the appellant. The appellant could not even
       provide his current address. It is evident that the appellant has
       failed to discharge its onus. I hold the view that no cogent
       material in support of the genuineness of the transaction was
       palced before Assessing Officer or before me. Taking stock of
       facts and circumstances of the case, I confirm the addition of
       Rs.4,00,000/- made by the Assessing Officer."
 8.    From the assessment order, it is also vivid that the Assessing Officer

 made addition only on the basis of statement of donor Shri Gian Chan Jain and

 by observing that the summon could not be served as no such person was

 existing there and the assessee could not produce the donor. There is no
                                         6
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

 inquiry or investigation by the Assessing Officer about the documents

 submitted before him to support the genuineness of the transaction and identity,

 creditworthiness and capacity of the donor. Hence, action and stand of the

 Assessing Officer comes within the teeth of the order of Hon'ble High Court of

 Delhi in the case of CIT vs Goel Sons (supra) wherein their lordships held as

 follows:-


      " 3. We have examined the said contention and find that the
      assessee during the course of assessment proceedings has filed
      confirmation letters from the companies, their PAN number, copy
      of bank statements, affidavits and balance sheet. Thereafter the
      Assessing Officer had asked the assessee to produce the said
      Directors/ parties. Assessee expressed its inability to produce
      them. The Assessing Officer did not consequent thereto conduct
      any inquiry and closed the proceedings. This is a case where the
      Assessing Officer has failed to conduct necessary inquiry,
      verification and deal with the matter in depth specially after the
      affidavit/confirmation along with the bank statements etc. were
      filed. In case the Assessing Officer had conducted the said
      enquiries and investigation probably the challenge made by the
      Revenue would be justified. In the absence of these inquiries and
      non- verification of the details at the time of assessment
      proceedings, the factual findings recorded by the Assessing
      Officer were incomplete and sparse. The impugned order passed
      cannot be treated and regarded as perverse. The appeal is
      dismissed as no substantial question of law arises."

 9.    The present case is squarely covered in favour of the assessee as in the

 similar set of facts and circumstances, the Assessing Officer made addition

 without any inquiry and non-verification of details submitted by the assessee


                                        7
I.T.A. No. 805/Del/2011
Assessment year: 2002-03

 during assessment proceedings and thus we are inclined to hold that the factual

 finding recorded by the Assessing Officer and upheld by the CIT(A) were

 incomplete and sparse which cannot be made basis of any valid disallowance or

 addition and the same can safely be treated as perverse and infirm and thus we

 set aside the same. The Assessing Officer is directed to delete the addition.


10.        In the result, appeal of the assessee on sole issue is allowed.

           Order pronounced in the open court on 09.12.2015.

       Sd/-                                                      Sd/-

(S.V. MEHROTRA)                                         (CHANDRAMOHAN GARG)
ACCOUNTANT MEMBER                                      JUDICIAL MEMBER

DT. 09th DECEMBER 2015
`GS'

Copy forwarded to:-

      1.   Appellant
      2.   Respondent
      3.   C.I.T.(A)
      4.   C.I.T. 5. DR                                   By Order

                                                          Asstt.Registrar




                                              8

 
 
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