Income Tax Appellate Tribunal - Chennai
K.Navaskani, Chennai vs Assessee on 8 July, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNA
BEFORE Dr. O.K.NARAYANAN, VICE-PRESIDENT AND
SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
ITA No.788(Mds)/2013
Assessment Year : 2009-10
Shri K.Sirajudeen, The Assistant Commissioner
199, Harriyan Street, Vs. of Income-tax,
Pallavaram Cantonment, Circle II(4),
Chennai-600 043. Chennai.
PAN AWVPS4952J.
(Appellant) (Respondent)
AND
ITA Nos.789 to 794(Mds)/2013
Assessment Years : 2004-05 to 2009-10
Shri K.Navaskani, The Income-tax Officer,
199, Harriyan Street, Vs. Ward I(4),
Pallavaram Cantonment, Tambaram,
Chennai - 600 043. Chennai.
PAN ACAPN5411A.
Appellants by : Shri B.Ramakrishnan, FCA
Respondent by : Shri Sailendra Mamidi, IRS, CIT
Date of Hearing : 8th July, 2013
Date of Pronouncement :16th July, 2013
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ORDER
PER Dr.O.K.NARAYANAN, VICE-PRESIDENT This is a bunch of seven appeals. The appeal filed by Shri K.Sirajudeen in ITA No.788(Mds)/2013 relates to the assessment year 2009-10. The six appeals filed by Shri K.Navaskani relate to the six assessment years 2004-05 to 2009-10. These appeals are directed against the individual orders passed by the Commissioner of Income-tax(Appeals)-IX at Chennai, on 28-3-2013. These appeals arise out of the assessments completed under section 143(3) of the Income-tax Act, 1961.
2. The assessees Shri K.Sirajudeen and Shri K.Navaskani are brothers. They are carrying on business in Chennai. Shri K.Sirajudeen is the proprietor of M/s.S.T.Travels and partner in M/s.S.T.Couriers and M/s.N.R.Associates. Shri K.Navaskani is also carrying on business in the same field. Their brother Shri K.Ansari is a non resident Indian carrying on business activities in the Kingdom of Saudi Arabia (KSA) and other Arabian countries. He is designated as the General
-3- ITA 788 to 794 of 2013 Manager of M/s.S.T.Cargo S.P.C. in Bahrain at Manama. He is also associated with M/s. Supreme Worldwide Cargo Express, M/s.Skyline International Cargo Agency, operating in KSA, Kuwait and Dubai and other Arabian countries. The main business carried on by M/s. S.T.Cargo SPC, Bahrain is providing forwarding and stevedoring services. M/s.Skyline International Cargo Agency is engaged in cargo movements and logistics. The other business interest is that of international courier services.
3. Shri K.Ansari, as per the accounts and details produced by the assessees, has remitted funds from abroad in favour of the assessees, who are his brothers. In the previous year relevant to the assessment year 2009-10 Shri K.Ansari had remitted ` 35,14,579/- into the account of Shri K.Sirajudeen. In the previous years relevant to the assessment years 2004-05 to 2009-10 Shri K.Ansari had remitted a total amount of ` 11,51,52,323/- into the account of Shri K.Navaskani. These amounts remitted by their brother have been brought by the assessees into their business accounts. These amounts have
-4- ITA 788 to 794 of 2013 been brought into the business accounts through the capital accounts of the assessees.
4. The yearwise details of the remittances, as discussed by the Commissioner of Income-tax(Appeals) in his orders are as follows:-
Shri K.Sirajudeen A.Y. 2009-10 .... ` 35,14,579/-
-------------------
Shri Navaskani A.Y. 2004-05 ` 19,97,655/-
A.Y. 2005-06 ` 16,61,300/-
A.Y. 2006-07 ` 1,47,64,954/-
A.Y. 2007-08 ` 4,01,50,168/-
A.Y. 2008-09 ` 2,63,25,000/-
A.Y. 2009-10 ` 3,02,53,246/-
------------------
` 11,51,52,323/-
-----------------------
The total amount thus remitted by Shri Ansari and reflected in the capital accounts of the assessees, thus comes to ` 11,86,66,902/-.
5. In the course of the assessment proceedings, the Assessing Officer proposed to treat all the above foreign
-5- ITA 788 to 794 of 2013 remittances as unexplained cash credits under section 68 of the Act, for the reason that the assessees have failed to adduce evidences to prove that these amounts were remitted by Shri K.Ansari from his foreign accounts. The assessees tried to explain before the Assessing Officer with various details that these amounts have been remitted by Shri K.Ansari from abroad and Shri K.Ansari had sufficient sources to make such remittances in their favour. They furnished the bank statements before the Assessing Officer to show that all the remittances have been made through banking channels. The statements were obtained from Standard Chartered Bank, with which the assessees are maintaining regular accounts. The bank has certified that all these remittances have been received from foreign bank accounts. The assessees have also produced copies of authorization for fund transfer from abroad to the Indian bank accounts. These advices were issued by Exchange companies like Bahrain Exchange Company WLL (BEC Exchange), Al Mulla International Exchange Company WLL, etc. In support of the bonafides of the financial transactions and remittances made by Shri K.Ansari, the assessees have
-6- ITA 788 to 794 of 2013 produced certificates issued by Chairman of M/s.Skyline International Cargo Agency at Dammam, KSA, and Managing Director, M/s.Supreme Worldwide Cargo Express, Kuwait. The assessees have also produced certificates from HDFC Bank, Citi Bank and ICICI Bank to confirm that Shri K.Ansari is holding NRE Accounts with them. The assessees have also produced confirmations issued by Shri K.Ansari, wherein he has confirmed that he had remitted a total amount of ` 11,51,52,323/- to Shri K.Navaskani and ` 35,14,579/- to Shri K.Sirajudeen.
6. In spite of the above stated details, the Assessing Officer held that the remittances remained unexplained for the following reasons:-
(i) The assessees have not produced any evidence including Foreign Inward Remittance Certificate (FIRC) to support the remittance of funds from abroad.
(ii) The remittances have not been proved to have been made directly debiting the foreign bank account of Shri K.Ansari.
-7- ITA 788 to 794 of 2013
7. Accordingly, he confirmed his proposal to treat the foreign remittances as unexplained cash credits under section 68 of the Act. Thus the Assessing Officer has made an addition of ` 35,14,579/- in the case of Shri K.Sirajudeen for the assessment year 2009-10. He has made a total addition of ` 11,51,52,323/-
in the case of Shri Navaskani for the six assessment years 2004- 05 to 2009-10.
8. In first appeals, the Commissioner of Income- tax(Appeals) confirmed the additions made by the Assessing Officer on the following grounds, endorsing the findings of the assessing authority:-
(i) No evidences including FIRC was produced.
(ii) No bank statement of Shri K.Ansari was produced to show his creditworthiness to advance amounts to the extent of more than ` 11 crores.
(iii) The assessees have not proved the exact relationship with the donor Shri K.Ansari.
(iv) The assessees have not explained the occasions on which the gifts were made by way of remittances.
-8- ITA 788 to 794 of 2013
(v) Shri K.Ansari, the donor is only an ordinary employee and he could not have that much resourcefulness to remit large amounts to the extent of more than ` 11 crores to the assessees.
9. Having the Assessing Officer made the above stated additions under section 68 and the Commissioner of Income-tax(Appeals) confirmed these additions, the assessees have come in appeals before us praying for the deletion of the above additions on the ground that the lower authorities have come to an unsustainable finding in the light of the speaking evidences produced before them. The only issue raised in all these appeals, therefore, is the question of addition made by the assessing authority under section 68 in these files. The facts are similar; the grounds are the same and the issue is the same. Therefore, all these appeals are disposed of by this common order.
10. We heard Shri B.Ramakrishnan, the learned chartered accountant appearing for the assessees. The learned chartered accountant has submitted that the assessees have
-9- ITA 788 to 794 of 2013 produced all the essential and necessary evidences before the lower authorities to prove that the disputed amounts were remitted by Shri K.Ansari from abroad in favour of the assessees. The learned chartered accountant explained that the identity of the donor is established, the means of transfer of funds are proved, the creditworthiness of the donor is proved and the ultimate utilization of the funds in India is also proved. In these circumstances the lower authorities ought to have treated the disputed amounts as foreign remittances received by the assessees from their NRI brother working in Arabian countries and they have grossly erred in disbelieving the evidences and arguments advanced by the assessees on flimsy grounds, assumptions and presumptions. In support of his arguments, the learned chartered accountant has relied on the following decisions:-
1. DCIT vs. Vijay Parkash(HUF), 120 TTJ (Asr) 429.
2. ITO vs. Issardas V.Talreja, 117 TTJ (Mumbai) 117.
3. ITO vs. Sanjay Kumar Goel, 108 TTJ (Del) 823.
4. Suraj Bhan Bajaj vs. ITO, 102 TTJ (Del) 665.
-10- ITA 788 to 794 of 2013
5. CIT vs. S.K. Jain, 31 Taxmann.com 390
(Allahabad).
11. The ratios reflected in the above decisions relied on by the learned chartered accountant are:-
(i) Where no contrary evidence has been brought on record by the Assessing Officer against the affidavit from the donor, copy of NRI account in the name of donor, certificate affirming gross salary of the donor and copy of the official cheque in the name of the assessee, invoking the provisions of section 68 to make additions is not justified.
(ii) The genuineness of gift is established when the assessee files all the relevant documentary evidences and donor gives confirmatory letters.
(iii) Where the assessee has filed gift deeds and affidavits of all the donors and the donors were examined by the Income-tax authorities and where the amounts have been received through banking
-11- ITA 788 to 794 of 2013 channels, there is no ground to disbelieve the genuineness of the gift accounted by the assessee.
(iv) Where the identity and creditworthiness of the donors are proved and the transactions were established as genuine, there is no ground to invoke section 68 to make additions.
12. Shri Sailendra Mamidi, the learned Commissioner of Income-tax, appeared for the Revenue and defended the orders of the lower authorities. He has relied on the following judicial pronouncements to support his argument that the foreign remittances claimed by the assessees have not been proved by them:-
1. Tirath Ram Gupta vs. CIT, 304 ITR 145 (P&H).
2. Swami Premanandha vs. DCIT, 180 Taxmann 368 (Mad).
3. CIT vs. Anil Kumar, 167 Taxmann 143 (Del).
13. In the above cases the Hon'ble courts have held that mere identification of the donor and showing the movement
-12- ITA 788 to 794 of 2013 of the amounts through banking channels is not sufficient to prove the genuineness of gifts. There must be some occasion to make a gift either to a relative or a friend and flow of funds cannot be a regular feature. The burden in respect of a gift is somewhat heavier than the burden of a loan, as the gift is a gratis payment and involves consideration of human conduct.
14. The learned Commissioner of Income-tax has also heavily relied on the judgment of the Hon'ble Supreme Court rendered in the case of CIT vs. P.Mohanakala, 291 ITR 278. In the said judgment the Hon'ble Supreme Court has examined the various segments of the statute stated in section 68 whereby an addition made under section 68 is justified or not justified. Section 68 provides that an addition may be made when the assessee offers no explanation about the nature and source of such credits found in the books, or the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. The court held that the expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The
-13- ITA 788 to 794 of 2013 court further held that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory, is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion. The Hon'ble court held that the burden is on the assessee to prove that the amounts found credited in the books of accounts are explained before the lower authorities on the basis of materials and details.
15. We heard both sides in detail. The learned chartered accountant appearing for the assessee has placed before us a paper-book containing 94 pages, certified as available on record before the Assessing Officer as well as before the Commissioner of Income-tax(Appeals). There is also no objection from the Revenue that these materials were not available before the lower authorities.
16. On a perusal of the facts and circumstances of these appeals explained in the above paragraphs, it is very
-14- ITA 788 to 794 of 2013 apparent that the assessees have placed before the lower authorities a number of materials in the form of evidences in support of the claim. This is not a case where the assessees have not placed evidences before the income-tax authorities. We proceed to examine the cases in the light of the judicial pronouncements cited before us and especially the ratios in the judgment of the Hon'ble Supreme Court in the case of CIT vs. P.Mohanakala, 291 ITR 278 and in the decision of the Hon'ble Madras High Court in the case of Swami Premanandhs vs. DCIT, 180 Taxmann 368 (Mad.) and that of the order of the Income-tax Appellate Tribunal, Delhi in the case of ITO vs. Smt. Usha Aggarwal, 38 SOT 191.
17. The principles laid down by the Hon'ble Supreme Court in the case of CIT vs. P.Mohanakala, 291 ITR 278, are as follows:-
1. Section 68 may be invoked in a case where the assessee offers no explanation about the nature of sources of credits found in the books of accounts or the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory.
-15- ITA 788 to 794 of 2013
2. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
3. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee.
4. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record.
Application of mind is the sine qua non for forming the opinion.
-16- ITA 788 to 794 of 2013
5. In case where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory, there is, prima facie, evidence against the assessee.
6. The burden is on the assessee to rebut the prima facie evidence and if he fails to rebut it, it can be held against the assessee and it was a receipt of income nature.
18. The observation made by the Hon'ble Madras High Court in the case of Swami Premanandha vs. DCIT, 180 Taxmann 368, is that mere identification of the donor and showing the movement of gift amount through banking channels is not sufficient to prove the genuineness of gift.
19. One of the observations made by the Income-tax Appellate Tribunal, Delhi, in the case of ITO vs. Smt. Usha Aggarwal, 38 SOT 191 is that the burden in respect of a gift is somewhat heavier than the burden of a loan, as the gift is a gratis payment and involves consideration of human conduct.
-17- ITA 788 to 794 of 2013 The mere establishment of the identity and movement of gift through banking channels were not enough.
20. The first objection of the Assessing Officer is that the assessees have not produced any evidence including Foreign Inward Remittance Certificate (FIRC) to support the remittance of funds from abroad. This statement of the Assessing Officer is against the facts of the case. The assessees have produced copies of Foreign Remittance Advices issued by Exchange Houses, namely, Bahrain Exchange Company WLL and Al Mulla International Exchange Co. WLL in Bahrain and Kuwait. Every foreign remittance is supported by such transfer advices issued by foreign exchange agencies. Those advices are specifically issued in favour of either Shri K.Sirajuddin or Shri K.Navaskani. All those remittance advices have been credited to the bank accounts of the assessees in India. The remittances of funds from abroad into the accounts of the assessees are proved beyond doubt. The payment advices, issued by exchange companies, really serve the purpose of Foreign Inward Remittance Certificate. Without such an authority, it is not possible for Indian banks to credit the
-18- ITA 788 to 794 of 2013 corresponding amounts into the accounts of the assessees. It is futile to argue that foreign remittances are not supported by documentary evidence. The assessees have produced foreign transfer advices and particulars of amounts credited in Indian banks, which fully support the origin of funds from foreign sources and transmission of those funds into the accounts maintained in India. All those amounts have been specifically sent in favour of the assessees and credited in their personal accounts maintained in banks in India. Therefore, the first objection of the Assessing Officer is not factually supported.
21. The second objection of the Assessing Officer is that the remittances have not been proved to have been made directly by Shri K.Ansari by debiting his accounts maintained in foreign countries. As already stated, all the payment advices issued by the foreign exchange agencies are in the name of the assessees. The necessary payments were made through Bahrain Exchange Company WLL and Al Mulla International Exchange Co. Ltd. by persons like M/s. A.A.Siddiq, Hassan, M.Mohamed Ismail, Abbas, Mohd. Hassan and A.A.Siddiq. In many cases it is not Shri K.Ansari who has directly remitted
-19- ITA 788 to 794 of 2013 funds through exchange companies for issuing payment advices in favour of the assessees. But, the question is whether the mere fact that the amounts were remitted by other persons through the exchange companies will lead to a finding that such funds did not belong to the donor Shri K.Ansari? Shri K.Ansari is holding a senior position of General Manager in the company by name M/s. S.T.Cargo SPC at Manama in Bahrain. His full name in foreign records as per his passport is Ansari Kader Meera Gani. As already stated, he is associated with other businesses in KSA, Kuwait, etc. It is the name of Shri K.Ansari that is given in the Director's Report of S.T.Cargo SPC, available at page 68 of the paper-book. This responsible position held by Shri K.Ansari supports the argument of the assessees that Shri K.Ansari did not personally carry cash to the exchange offices and the cash was remitted by the employees of the concern with which Shri K.Ansari is related. A person holding such a high post and preoccupied heavily with his business, may not be able to physically go to exchange offices and make remittances for transferring the funds to India. Usually he may entrust such works to his office. This position is supported by the
-20- ITA 788 to 794 of 2013 confirmation letters issued by Shri K.Ansari, which are available on record. The employees who have actually carried the cash and remitted through the exchange offices are having their telephone numbers, Civil ID numbers endorsed in the remittance advices alongwith their residential addresses. Those employees are clearly identified. Above all, in many remittance advices it is further mentioned that the amounts were sent on the basis of the direction from M/s. Supreme Cargo. This is in addition to the names of the individuals who carried the cash to the exchange offices. This is available in the copies of remittance advices issued by Bahrain Exchange Company, available at pages 55, 56, 57 and 58 of the paper-book. It is clearly stated therein that funds are released by Supreme Cargo for the purpose of remitting them into Indian accounts. M/s.Supreme Cargo has issued a certificate, which is available at page 81 of the paper- book. The certificate states that Shri Kader Meeran Gani Ansari was paid a total amount of 8,27,226 Kuwaiti Dinar as remuneration for seven years from 2004 to 2010. It is the same M/s. Supreme Cargo, which is remitting money through exchange office for transferring to India, as directed by Shri
-21- ITA 788 to 794 of 2013 K.Ansari. Therefore, the second objection raised by the Assessing Officer is very frivolous and technical.
22. We find that except the above discussed two technical objections, the Assessing Officer has no case that the assessees have not produced any documents in support of their explanations.
23. The Commissioner of Income-tax(Appeals) in his order has made further objections against the assessees in addition to the objections pointed out by the Assessing Officer. The first two objections reiterated by the Commissioner of Income-tax(Appeals) are the same as pointed out by the Assessing Officer that there is no evidence like FIRC and no direct remittance by Shri K.Ansari. One of the additional objections raised by the Commissioner of Income-tax(Appeals) is that the assessees have not proved the exact relationship with the donor Shri K.Ansari. Even the Assessing Officer has no such case. Throughout the proceedings before the lower authorities the assessees have produced evidences wherein the names of Shri Ansari as well as the assessees are intermingled and Shri Ansari had filed confirmations before the Assessing
-22- ITA 788 to 794 of 2013 Officer to state that he has remitted funds in favour of his brothers, who are the assessees in these cases. We do not understand as to what provoked the Commissioner of Income- tax(Appeals) to raise such an unexpected objection that the assessees have not proved the exact relationship with the donor Shri K.Ansari. It is writ large on the materials available on record that Shri K.Ansari and the assessees are brothers.
24. The next additional objection raised by the Commissioner of Income-tax(Appeals) is that the assessees have not explained the occasions on which the gifts were made by way of remittances. It is to be seen that Shri K.Ansari has not made the gifts on any particular occasion. The assessees, who are brothers of Shri K.Ansari, are carrying on different businesses in Chennai. They need a lot of capital for carrying on and developing their businesses. The businesses are carried on by the assessees and Shri K.Ansari keeping their common interest as brothers. It is in these circumstances that Shri K.Ansari had remitted the funds to the assessees to supplement their capital base. These are all practical family endeavors and family efforts. There need not be any special occasion for a
-23- ITA 788 to 794 of 2013 brother to send money to his brothers in India for the purpose of carrying on business. This is a general conduct usually found in all families in our country. Brothers are going abroad to work and earn money and they remit back the money to their brothers and other relatives in India and they engage the money in business for the benefit and development of the entire family. Therefore, there is no reason to insist that there must be a particular occasion for Shri K.Ansari to send money to his brothers in India who are doing business. The most important aspect to be taken into consideration at this point of time is that the entire money remitted by Shri Ansari to the assessees has been brought into the businesses carried on by them. The money has not been used for the personal consumption of the assessees. Therefore it is very clear that Shri K.Ansari had remitted the funds for the purpose of the businesses carried on by the assessees in India.
25. The next additional objection raised by the Commissioner of Income-tax(Appeals) is that Shri K.Ansari is only an ordinary employee and he could not have had that much funds to remit a huge sum of more than ` 11 crores to his
-24- ITA 788 to 794 of 2013 brothers in India. At page 80 of the paper-book, a copy of the certificate issued by the Chairman of M/s.Skyline International Cargo Agency, KSA, is provided. The said certificate speaks about the total remuneration paid to Shri K.Ansari for a period of 18 years from 1993 to 2010. The remuneration paid to Shri Kader Meeran Ghani Ansari comprised of basic pay per month plus sales commission per month. The total remuneration paid to Shri Ansari by M/s.Skyline International Cargo Agency in 1993 was 12,383 Saudi Riyals. In 2010 the total remuneration was 62,378 Saudi Riyals. At page 81 of the paper-book there is another certificate issued by the Managing Director of M/s.Supreme Cargo Express. This certificate shows that within a period of seven years, i.e. from 2004 to 2010, Shri Ansari was paid a total remuneration of 8,27,226 Kuwati Dinars as remuneration. This is equivalent to a sum of 12,92,21,170/- Indian Rupees. Therefore, there is no factual support to the finding of the Commissioner of Income-tax(Appeals) that Shri K.Ansari had no resources to remit large sums to the extent of more than ` 11 crores to his brothers in India. Taking the remunerations from M/s.Skyline International Cargo Agency and
-25- ITA 788 to 794 of 2013 M/s.Supreme Cargo Express together, the income of Shri K.Ansari during the relevant period was more than ` 13 crores.
26. It is also necessary to see that the Commissioner of Income-tax(Appeals) has called for a remand report from the assessing authority regarding the nature of gifts received by the assessees from Shri K.Ansari. In the remand report submitted by the Assessing Officer, the relevant contentions raised by the assessees have been found to be correct on the basis of re- examination of the records made by him. It is stated in the remand report that all the foreign remittances were directly credited in the bank accounts of the assessees on the basis of the transfer advices issued by foreign exchange houses situated abroad. All the credits reflected in the accounts of the assessees by way of foreign gifts are supported by advice copies submitted by the parties to the foreign banks, at the time of transferring the funds to India. Those parties have further confirmed that the amounts were remitted on behalf of Shri K.Ansari, as advised by him. The remand report thus completely supports the documentary framework explained by the assessees in support of the gifts received by them.
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27. Thus, it is seen that the lower authorities have come to the conclusions against the facts of the case. The assessees have produced all the relevant details and evidences before them to show that Shri K.Ansari, brother of the assessees, has remitted funds from abroad and he had sufficient resources with him and in such circumstances the credits are explained and they cannot be brought under section 68 of the Act.
28. The Income-tax Appellate Tribunal, Delhi Bench, in the case of ITO vs. Smt. Usha Aggarwal, 38 SOT 191, has held that the burden in respect of a gift is somewhat heavier than the burden of a loan, as the gift is a gratis payment and involves consideration of human conduct. The most important aspect to be examined is the question of "human conduct". The human conduct explained in the present case between Shri K.Ansari and his brothers is so natural that there is no need to presume anything against the explanations offered by the assessees. The Hon'ble Madras High Court in the case of Swami Premanandha vs. DCIT, 180 Taxmann 368, has held that mere identification of the donor and showing the movement of gift amount through banking channels is not sufficient to prove the genuineness of
-27- ITA 788 to 794 of 2013 gift. In the present case, the assessees have identified the donor as well as shown that the gifts were routed through banking channels. In addition to the above, the assessees have proved the resources available in the hands of the donor as well as the instructions of the foreign agencies advising Indian banks to credit funds against the assessees in consideration of the foreign exchange transferred by the donor. The source has been explained. The assessees have further proved that the remittances so received from abroad have been deployed in the business carried on by them. The relationship between the assessees and the donor has been explained. Therefore, the full circle of the events has come to a logical conclusion, whereby there is no ground to disbelieve the explanations offered by the assessees. It is not a case where the assessees have established only the identity of the donor and the mode of transfer of funds. The assessees have proved all the necessary ingredients of the claim made by them.
29. The Hon'ble Supreme Court in the case of CIT vs. P.Mohanakala, 291 ITR 278, among other things, has held that "the opinion of the Assessing Officer for not accepting the
-28- ITA 788 to 794 of 2013 explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion." In the present case, the finding of the Assessing Officer has been arrived at without adhering to any of the observations made by the Hon'ble Supreme Court. When the assessees have produced all the credible evidences to support the transfer of funds from abroad, the Assessing Officer is rhetorically insisting on production of Foreign Inward Remittance Certificate. He is also concerned as to how the cash was taken to the office of the Exchange Agencies situated in foreign counties. He has not applied his mind at all. This is the same case in respect of the Commissioner of Income-tax(Appeals) also. He is going to more reasons not even discussed by the Assessing Officer. He is even doubtful about the relationship between Shri K.Ansari and the assessees. All these things show that the lower authorities have not made any proper appreciation of materials placed
-29- ITA 788 to 794 of 2013 before them and they have not applied their mind. Therefore, the findings arrived at by the lower authorities are not only against the facts of the case but also against the principles of law.
30. Now, coming to the conclusion, we find that the assessees have established that their brother Shri K.Ansari had remitted funds in their favour from abroad and those funds were routed through banking channels and all such remittances have been proved and those funds are deployed in the business carried on by them. They also placed materials before the lower authorities to show that Shri K.Ansari had sufficient resources with him to give large amounts of gifts to his brothers and all such gifts were remitted through proper remittance advices issued by the licenced exchange houses in Bahrain. Shri K.Ansari has followed lawful means to transfer the funds originating from the companies in which he is employed.
31. In these circumstances, we find that the additions made by the Assessing Officer under section 68 in these files are not justified. We accordingly delete all such additions made by
-30- ITA 788 to 794 of 2013 the Assessing Officer against the foreign remittances shown by the assessees as gifts in their accounts.
32. In result, these appeals filed by the assessees are allowed.
Orders pronounced on Tuesday, the 16th of July, 2013 at Chennai.
Sd/- Sd/-
(Challa Nagendra Prasad) (Dr. O.K.Narayanan)
Judicial Member Vice-President
Chennai,
Dated, the 16th July, 2013.
V.A.P.
Copy to: 1. Appellants
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. GF.