Jharkhand High Court
Mukesh Shaw vs Income Tax Officer, Ward Ii(4) on 23 September, 2011
Equivalent citations: 2012 (1) AIR JHAR R 49, (2012) 1 JCR 230 (JHA)
Author: Prakash Tatia
Bench: P.P. Bhatt, Prakash Tatia
IN THE HIGH COURT OF JHARKHAND, RANCHI.
Tax Appeal No. 52 of 2010
Mukesh Shaw................. .......................... Appellant
Versus
Income Tax Officer... ............................ Respondent
CORAM :- THE HON'BLE THE CHIEF JUSTICE
HON'BLE MR JUSTICE P.P. BHATT
For the Appellant : M/s. B. Poddar, Sr. Adv,
Deepak Sinha, Adv.
Piyush Poddar
For the Respondent : M/s. Deepak Roshan, Sr. S. C.I.Tax
Amit Kumar, Adv.
Reportable Dated 23rd September, 2011
Prakash Tatia, C.J. Heard learned counsel for the parties.
2. This appeal is directed against the order dated 20.5.2010 passed by Income Tax Appellate Tribunal, Circuit Bench, Ranchi, (hereinafter referred to as ITAT) in I.T.A. No. 29/Ran/2009 for the assessment year 2005-06, by which ITAT has partly allowed the appeal vide order dated 20th May, 2010. The A. O. in the assessment order has made addition of Rs. 8 lakhs in the income of the assessee, for which contention of the assessee was that the said amount was received in cash by the assessee as gift from his father-in-law, B. N. Sahu. His contention is that he received the amount in cash in the following manner:
(i) 10th April, 2004 : Rs. 2,00,000/-
(ii) 8th May, 2004 : Rs. 1,00,000/-
(iii) 6th August, 2004 : Rs. 2,00,000/-
(iv) 10th October, 2004 : Rs. 3,00,000/-.
The A.O summoned the donor and recorded his statement and after examining the affidavit filed by the donor father-in-law of the assessee, the A. O rejected the contention of the assessee and refused to accept the fact that the said amount was gifted by his father-in-law and plea of gift was declared to be bogus. However, CIT(A) vide order dated 12th November, 2008 set aside the addition of Rs. 8.00 Lakhs by observing that since the donor has at no stage disowned or denied having made the gifts to his son-in-law rather he has admitted that he gifted the amount and, therefore, there was no scope of the investigation by the A.O. The C.I.T.(A) also observed that whatever inconsistency has been pointed out by the A.O. in the stand taken by the donor pertains to the source of funds in his hands. But the donor has no stage disowned or denied having made gifts to his son-in-law. CIT(A) also held that source of gift in the hands of appellant stands explained, although the source of funds in the hands of the donor may not be satisfactorily explained.
3. The Tribunal again considered the reasons given by the A.O. in details and -2- thereafter held that because of the several reasons, the genuineness of the transaction is not proved and therefore, the gift cannot be recognized and the gift in fact has not been taken into effect.
4 Learned counsel for the appellant vehemently submitted that it is a settled law that the assessee can give the details of the donors for identifying him and give particulars so as to put the same before the Assessing Officer, which he did. It is none of the obligation and duty of the assessee to prove to the sources of the funds of the donor and search out from where he got the money. In this case the donor was a retired employee from a Company having bank accounts and he produced copy of the pass-book. He was also an assessee at the income tax and though he may not be assessee at the relevant time, but at the same time he filed an affidavit again admitting that he gifted said amount to the assessee. It is also submitted that the Assessing officer as well as the Tribunal proceeded to draw adverse inference as against the assessee on the basis of some materials, which in the opinion of the A.O. and the Tribunal could have been produced but were not produced. While drawing such adverse inference the A.O and the Tribunal ignored the important fact that assessee and his father-in-law-the donor were even not made aware that the Assessing Officer will inquire into further source of the income of the donor or on the fact that under what circumstances he kept money in his house in cash and how he was bearing his house-hold expenses. Learned counsel further vehemently submitted that if those facts would have been disclosed by the Assessing Officer, the assessee would have made efforts also to draw attention of the Assessing Officer and the Tribunal that such inquiry is against the scope of inquiry. It is vehemently submitted that because of relation of father-in-law and son-in-law, in all probability, for construction of house of son-in-law, father-in-law would gift money particularly, when he was in position to gift the money.
5. We consider the submission of the learned counsel for the appellant and perused the impugned order. It is a question of fact whether a person is creditworthy or not? and after considering the facts of the case we are of considered opinion that the Tribunal has not committed even error fact or error of law. The Assessing Officer has carefully examined the evidence produced by the assessee as well as his father-in-law, who appeared in response to the summoning of the Assessing Officer and who also submitted the documentary evidence as well the affidavit. After submission of the documentary evidence and affidavit, the Assessing Officer was supposed to decide the case according to the evidence available on record to find out the genuineness in the claim of the assessee, whether it is a gift or not as well was required to find out whether there is creditworthiness of the donor or not? Much has been stressed that the donor has admitted that he has gifted the amount to the assessee and that should have been accepted. We are unable to agree with this proposition because of the fact that we do not hold that in a case where the assessee claims that he received certain money from someone in cash and the other party admits the same had been given by him and the material on record clearly disclosed -3- that the donor had no creditworthiness so as to give the amount, then in that situation the admission contrary to the trustworthy evidence cannot be accepted as binding upon the Assessing Officer. Furthermore, in a case where one claims that he received certain amounts from ex-person and ex-person admits the availability of funds in the bank and it's withdrawal from bank, produces the such bank document in respect of his creditworthiness and from such documentary evidence itself, it is proved, as a matter of fact, that the transaction could not have happened than the admission of the donor is required to be rejected. If the plea as raised by learned counsel for the assessee is accepted than that means admission of such person (donor in this case) is binding upon the Assessing Officer even if such admission (which is also only an evidence and may be evidence of an interested person) has such high evidentiary value which can reject even trustworthy documentary and other evidence produced by the assessee himself or such donor himself. If so is held as argued by the learned counsel than it will ultimately lead to holding that after admission of the such person (donor in this case) no inquiry with respect to creditworthiness of the donor could have been conducted by the Assessing Officer. In a case where there is reasonable reason even of prima facie nature that there is possibility that the donor or the creditor had creditworthiness and he has given certain amount to the assessee, then, in that situation the burden of the assessee stands discharged. In that situation the assessee cannot be asked to explain or prove the source of the creditor from where and how he got the money. Enquiry about creditworthiness of a person and creditors source for such credit are entirely different matters. Once credit in the hands of creditor is proved, it's source cannot be enquired by the Assessing Officer in the assessing proceedings of (debtor) assessee. Argument of learned counsel for the appellant that once identity of a creditor is disclosed, the burden of the assessee to explain the money in his hand stand discharged cannot be accepted if the Assessing Officer is satisfied that creditor has no creditworthiness. Here there should not be confusion in knowing the difference between creditworthiness of the creditor and his source for the such credit. If such creditor says that he had paid certain amount to the assessee and produces evidence of availability of fund with him than further enquiry about the fact that from where he got the money is not permissible in the assessment proceedings of the assessee. In proper cases, where money in the hands of such creditor at relevant time is proved even a separate proceeding can be initiated against such person, who admits that he has paid or given money to the assessee. It is settled law, as settled by number of cases reference of which is not necessary as now it is well established by those pronouncements, that in the case of any assessee for any credit entry, it is explained by the assessee by disclosing identity of person than thereafter, he need not required to prove the source of the credit of the creditor. But this proposition can apply only when it is proved that the such creditor has creditworthiness, that in fact he has money to give it to the assessee. Suppose if one creditor admits that he has given money to the assessee from his bank account and -4- also submits statement of his bank account wherein there was no money, than whether in that situation the admission of such creditor given on even oath is binding upon the Assessing Officer? The answer would be no. The admission binds the author of admission and operate as estoppel against him but is not binding upon any other persons or authority.
6. Here, in this case the facts clearly indicates that the assessee was the son- in- law of the alleged donor and the donor was in employment and was getting salary and claimed that on different times of donation he was having cash, in total to the tune of Rs. 8.00 lakhs. His contention has been recorded by the Tribunal in para 9 that he gave this gift from the money received on his retirement and from provident fund and gratuity amount. The donor's contention further is that he kept all those money in his bank account and in support of his contention he produced the pass- book of his two bank accounts, one of S.B.I, Asansol and another S.B.I. Nirsa. Asansol bank account was opened in the month of December, 2001 and from this account total withdrawal was Rs. 24,95,880/-, out of which Rs. 21,93,380/ is either transferred entries or Demand draft entry and only Rs. 3,02,500/- was withdrawn in cash. In another account of the S.B.I. the total amount found withdrawn in cash to be, Rs. 4,48,400/-, resulting into the total cash withdrawal from 1998 to 2004, which comes to Rs. 7,50,900/- as cash withdrawal in about six years. It was not the case of the assessee or his father -in- law, who got opportunity to adduce evidence that donor gave this amount from any other sources, other than the retirement benefits and gratuity amount. Therefore, the Tribunal and A.O rightly observe that in a case where total cash withdrawal is only Rs.7, 50,900/- since 1998-2004 from two bank accounts than it cannot be believed that he had kept the said amount with him, so as to give it to his daughter and son in law in the year 2004. Learned counsel vehemently submitted that A. O. and the Tribunal proceeded on presumption and observed that, if all cash withdrawals were gifted by the donor than how he met his household expenses? The assessee and the donor were not asked to explain this position and also this could not have been subject inquiry in the assessee's proceedings. The argument may look attractive but having no substance. Since the case of the donor himself was that he paid this amount out of retirement benefit which he deposited in the bank and he produced the evidence in support of the said account and took his own specific stand is that he paid the amount out of funds of the gratuity, than even if the donor had other source of income and met with his household and other expenses from that other income than also that plea cannot help the assessee as fact in issue is that whether it can be believed that the donor went on withdrawing the cash from bank and kept the money with him for assessee for five years. From the facts, his donation to assessee from his retirement benefit and gratuity is not proved rather say, contradicted by his bank account itself.
7. Much stress has been given that in a number of judgments, it has been held that once identity of a donor or a creditor is disclosed by the assessee, then the -5- Income Tax Officer can only proceed to register proceedings against such creditor and can give proper notice to such creditor to explain his income or the source from which he has given money to the assessee. Such plea do not applies in the facts of the case where from trustworthy evidence the Assessing Officer reaches to conclusion that the transaction itself is not genuine so as to have any doubt that the payment has been made by third person to assessee then issuing notice to a third party after taking stand that third party has not given the amount to the assessee will be nothing, but futile and unnecessary exercise.
8. In view of the above reasons, this appeal is dismissed.
(Prakash Tatia,C.J) (P.P.Bhatt,J) SD/JK