Income Tax Appellate Tribunal - Agra
Prem Chand Mohnani, Agra vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND
SHRI P.K. BANSAL, ACCOUNTANT MEMBER
ITA No.20/Agr/2009
Asst. Year: 1999-2000
Income-tax Officer-4(3), Vs. Shri Prem Chand Mohnani,
Agra. D-148, Kamla Nagar, Agra.
(PAN : AEQPM 5322 P)
C.O. No.14/Agr/2009
(In ITA No.20/Agr/2009)
Asst. Year: 1999-2000
Shri Prem Chand Mohnani, Vs. Income-tax Officer-4(3),
D-148, Kamla Nagar, Agra. Agra.
(PAN : AEQPM 5322 P)
ITA No.21/Agr/2009
Asst. Year: 1999-2000
Income-tax Officer-4(3), Vs. Smt. Radha Mohnani,
Agra. D-148, Kamla Nagar, Agra.
(PAN : AFHPM 3034 L).
C.O. No.13/Agr/2009
(In ITA No.21/Agr/2009)
Asst. Year: 1999-2000
Smt. Radha Mohnani, Vs. Income-tax Officer-4(3),
D-148, Kamla Nagar, Agra. Agra.
(PAN : AFHPM 3034 L).
ITA No.22/Agr/2009
Asst. Year: 1999-2000
Income-tax Officer-4(3), Vs. Smt. Pushpa Mohnani,
Agra. W/o. Shri Ishwar Chand Mohnani,
D-150, Kamla Nagar, Agra.
(PAN : ACEPM 6003 F).
C.O. No.16/Agr/2009
(In ITA No.22/Agr/2009)
Asst. Year: 1999-2000
2
Smt. Pushpa Mohnani, Vs. Income-tax Officer-4(3),
W/o. Shri Ishwar Chand Mohnani, Agra.
D-150, Kamla Nagar, Agra.
(PAN : ACEPM 6003 F).
ITA No.24/Agr/2009
Asst. Year: 1999-2000
Income-tax Officer-4(2), Vs. Shri Kanhaiya Lal Mohnani,
Agra. D-15, Kamla Nagar, Agra.
(PAN : AAZPL 4678 P).
C.O. No.15/Agr/2009
(In ITA No.24/Agr/2009)
Asst. Year: 1999-2000
Shri Kanhaiya Lal Mohnani, Vs. Income-tax Officer-4(2),
D-15, Kamla Nagar, Agra. Agra.
(PAN : AAZPL 4678 P).
ITA No.25/Agr/2009
Asst. Year: 1999-2000
Income-tax Officer-4(2), Vs. Smt. Kavita Mohnani,
Agra. D-15, Kamla Nagar, Agra.
(PAN : ACFPM 6005 D).
(Appellant) (Respondents)
Revenue by : Shri R.C. Sharma, Jr. D.R.
Assessee by : Shri Anurag Sinha, Advocate
ORDER
PER BENCH :
These five appeals have been filed by the Revenue and four Cross Objections have been filed by the assessees against the separate orders of the CIT(A) dated 12.11.2008 and 14.11.2008 for Assessment year 1999-2000. Since all the appeals and Cross Objections involve common grounds, except change in figures, for the sake of convenience, all these appeals and Cross Objections are disposed of by this common order.3
2. At the outset, the ld. A.R. did not press the Cross Objections filed by the assessee.
Accordingly, all the Cross Objections stand dismissed as not pressed.
3. Now we are taking up the appeals filed by the Revenue. Both the parties have agreed that the facts involved in these appeals are similar to the facts as are in ITA nos.679, 678, 677 & 676/Agr/2008 in the case of Shri Piyush Goyal & Others vs. ITO and it was contended that in all these cases the gifts have been received by the respective assessees from the Trust controlled by Shi D..K. Agarwal, C.A. Whatever arguments were taken in those cases, the same may be taken for these cases also. Whatever views this Tribunal may take in those cases, the same may be taken in these cases also.
4. We have carefully considered the rival submissions and perused the material on record.
We noted that in all these appeals each of the assessee has received the gifts from Trust in which Shri D.K. Agarwal was the trustee. Similar grounds have been raised in ITA Nos.676 to 679/Agr/2008 which has been agued by both the parties. In those cases, this Tribunal, under paragraph nos.18 to 22, following the decision of this Tribunal in the case of Shri Mukesh Kumar Agarwl in ITA No.312/Agr/2006, has held as under :-
"18. We have also gone through the decision in the case of Mukesh Kumar Agarwal in ITA No.312/Agr/2006, on which the ld. A.R. has vehemently relied, in which, vide order dated 16.10.2009 in respect of similar gift given by trust in which Shri D.K. Agarwal was the trustee, this tribunal has held as under :-
"We have heard the rival contentions and perused the facts of the case. The assessee has submitted the confirmation of the gift, gift deed, balance sheet of the trust, bank account of the trust and income tax particulars of the trust. Shri D K Agarwal, the donor was summoned during the course of the assessment proceedings and the statement was recorded and he has confirmed of having given the gift. The source of the said gifts have been explained to be an account payee cheque given from 4 M/s. Girraj Ji Trust. In the remand report, it has been stated by the AO that there is a deposit of Rs.5.20 lacs in the bank account of M/s. Girraj Ji Trust on 16.04.01 before the said gift of Rs.4.00 lacs was made. It was argued that the said deposit of Rs.5.20 lacs is a transfer entry and not a deposit and the ld. CIT(A) has considered the same as cash deposit which has vitiated the decision making process of the ld. CIT(A), was argued by the ld. A.R. The assessee is required to prove the identity, creditworthiness and genuineness of the transactions. As regards the identity, there is no dispute since the donor Shri D K Agarwal has appeared in person in response to summon by the AO and has confirmed the transactions in the statement recorded. The sources of the said amount are the availability of funds in the trust which have been transferred in the trust at Rs.5.20 lacs before the date of the gift. It has been stated that the trust is regularly assessed to tax and income tax particulars of the trust are on record. Therefore the creditworthiness of the gift cannot be in doubt. As regards the genuineness of the transactions as observed hereinbefore, the said gift having been confirmed by the donor and the sources having been explained but the donor could not state during the course of the statement the family relationship with the assessee or the occasion of giving gift. In this regard, the reliance has been placed by Shri Anurag Sinha, Advocate, the ld. Counsel for the assessee on the decision of Hon'ble Deli High Court in the case of CIT vs. Mrs. Sunita Vachane, supra, Hon'ble Gujarat High Court in the case of Murlidhar Loharmal vs. CIT, supra, ITAT Mmritsar Bench decision in the case of ACIT vs. Manoj Kumar, supra and ITAT Delhi Bench in the case of Mrs. Mayawati vs. DCIT, supra wherein all the cases, occasion and relationship of the gifts are not relevant if otherwise the Tribunal finds sufficient evidence regarding genuineness of the gift. In the present case, we are of the view that there are sufficient evidences of genuineness of the gift and therefore, impugned gift cannot be said to be non-genuine. Therefore, in such circumstances and facts of he case and the authorities relied upon hereinabove, the AO is not justified in treating the said gift as bogus and the same cannot be treated as income of the assessee. Therefore the order of the ld. CIT(A) is reversed on this issue. Thus the appeal of the assesses is allowed".
19. We have also gone through the following cases regarding the discharge of the burden on the part of the assessee as relied by the ld. A.R. Observations made in these cases are given as under :-
(a) Mrs. Ranjana Katiyal vs. ACIT (2008) 113 TTJ (Delhi) 479. The assessee had filed affidavit from the donor, their PAN, copies of Return of income and bank account. On these evidences, the Tribunal held that the assessee had discharged the initial burden and therefore the AO should have made further enquiry to prove that the condition of section 68 were not satisfied.5
(b) In Monnet Ispat and Energy Ltd. vs. DCIT (2008) 171 Taxman 27 (Delhi) (Maz.), the Tribunal accepted the genuineness of credits on the basis of affidavit, confirmatory letter and the bank account of the creditors.
(c) In Kamal Motors vs. CIT (2003) 131 Taxman 155, the Rajasthan High Court observed that the onus is on the assessee to show that the creditor is a man of means and identifiable. When a creditor is an income tax assessee, it can not be said that he cannot be a man of means. The creditworthiness is thus established.
(d) CIT vs. Orissa Corp. (P) Ltd (1986) 159 ITR 78 (S.C.). Letters of confirmation, particulars of creditors and income tax numbers were furnished. Addition not justified.
(e) CIT vs. Kamal Jeet Singh (2005) 147 Taxman 18 (All). The assessee was held to have discharged the onus by placing confirmatory letters; their affidavits, their full address and GIR No.
(f) Sansar Automobile vs. ITO (2005) 96 TTJ (Jodh) 368). A deposit through account payee cheque is a very good piece of evidence establishing the genuineness of the transaction provided identity of the creditor is established.
When the identity of the creditor is very much proved or is obvious and is not doubted by the AO, the payment received through account payee cheque becomes sacrosanct.
(g) The Hon'ble ITAT, Agra Bench, Agra in the case of ITO, Ward-2, Mathura vs. Smt. Sukho Devi in ITA No.1991/Del./1994 (Paper Book pages 14 to17) vide order dated 31/12/2003 held as under :-
"We have heard the parties and perused the records of the case. When a cash credit entry appears in the assessee's books of account in an accounting year the assessee has obligation to explain the transaction. It would appear that in the instant case identity of both the donors is not in dispute. Both the donors are assessed to tax and the gift tax return filed by them has also been accepted by the Department. The fact that there has been cash deposit in their bank accounts prior to issue of the cheques to the assessee may be a cause for enquiry in their hands. In case the A.O. was not satisfied with the cash deposits made by these two persons in their bank, the proper course would have to make assessment in the case of these donors by treating cash deposits in their bank account as unexplained investments of these donors under section 69 of the I.T. Act. In the facts and circumstances of the case, we are of the view that the assessee has discharged initial onus of proving the identity of the creditors, their transaction and the Revenue has not brought any material to rebut the same. We, therefore, find no infirmity in the order passed by the CIT(A). Hence the same is upheld".6
(h) Further, in the case of Kuldeep Gogia vs. ITO in ITA No.297/Agra/2004 (Paper Book pages 18 to 21) for A.Y. 2001-2002, the Hon'ble ITAT vide order dated 31/01/2005 observed as under:-
"In the instant case, the assessee has produced the copy of gift deed, affidavit of the donor, details of its Assessing Officer, showing that the donor is an existing assessee. Therefore, in the circumstances, when she has confirmed the gift of Rs.1,00,000/- advanced to the appellant. Copy of bank account was also filed before the Assessing Officer. Copy of gift deed and affidavit confirming the advancing of gift, was also filed. Therefore, in these circumstances and having regard to the decision of ITAT, Agra Bench, Agra, we are of the view that there is no scope for addition of Rs.1,00,000/- in the hands of the appellant. Hence, this ground of appeal is allowed".
(i) Hon'ble ITAT, Bangalore Bench in the case of ITO vs. N. Sunitha reported in (2001) 70 TTJ (Bang.) 27 approved the action of the learned CIT(A) who deleted the addition by holding that "Assessee received Gifts by cheques and the department has not adduced any material to suggest that the money that were deposited in the bank accounts of the donor flowed from the assessee". The Bench therefore, concluded that Gift could not be treated as unexplained in the hands of the assessee. Addition therefore, rightly deleted by the CIT(A).
(j) Supreme Tyres vs. ITO (2004) 1 SOT 406 (Asr). Where the assessee had produced the creditor for examination and his statement was recorded, the assessee was not required to prove the source of the source.
(k) Bhagwandas Sharda vs. ACIT (2004) 82 TTJ (Hyd) 982. The loan transaction was through bank by account payee cheque. The assessee was held to have discharged the onus. It is not necessary for the assessee to prove the source of the source.
(l) S. K. Jain vs. ITO (2004) 2 SOT 579 (Agra). Asking for source of deposits in bank account of the creditors would amount to asking source of the source.
20. In view of the aforesaid case laws and the provisions of section 68, Section 68 lays down the rule of evidence that when any sum is found credited in the books of the assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of such credit found in the books of the assessee or the explanation offered by the assessee in the opinion of the A.O. is not satisfactory, the same so credited may be charged to income tax as the income if the assessee of that previous year. Before charging the credit as the income of the assessee, the AO has to form an opinion. This opinion is subjective, but it has to be judicious and based on material on record. An opinion is an inference of facts from observed facts. It is not an impression. It is a conviction based on appraisal of evidence on record. In V.L.S. Finance Ltd. v CIT (2000) 246 ITR 707, the Hon'ble Delhi High Court observed as under:
7"'Opinion' means something more than more retailing of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question. It means: judgment or belief based on grounds short of proof. If a man is to form an opinion and his opinion is to govern, he must form it himself on such reasons and grounds as seem good to him."
Thus, before the AO forms an opinion, he must consider the material before him. He has before him the material submitted by the assessee while giving an explanation, then he must collect his own material as an enquiry officer, weigh the two materials and as a quasi-judicial authority form an opinion as to whether explanation furnished by the assessee is satisfactory or not. If the AO does not apply his mind in examining the documents furnished by the assessee and does not find any substantive error in them nor he collects any material by exercising powers under Income-tax Act, then the claim of the assessee cannot be straightway rejected. If he does, it would be a violation of principles of natural justice and provisions of section 68.
The expression "the assessee offers no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found credited in the books of account maintained by the assessee. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory must be based on proper appreciation of the material and other surrounding circumstances available on record. The opinion of the AO is to be based on appreciation of the material on record.
21. The word "may" used in section 68 provides discretion to the AO. In general the word "may" is an auxiliary verb clarifying the meaning of another verb of expressing an ability, contingency, possibility or probability. When used in a statute in its ordinary sense the word is permissive and not mandatory. But where certain conditions are provided in the statute and on the fulfillment thereof a duty is cast on the authority concerned to take an action, then on fulfillment of those conditions the word "may" take the character of "shall" and then it becomes mandatory. In section 68, we find that there are no such conditions on the fulfillment of which the AO is duty bound to make the addition. The word "may" denotes the discretion of the AO that he can make an addition or can not make an addition. The Hon'ble Supreme Court in the case of CIT v Smt. P K Noorjahan 237 ITR 570 (SC) while dealing with the word "may" in section 69 observed, as under:
"In the corresponding clause of the Bill which was introduced in Parliament, while inserting section 69 in the Income-tax Act, 1961, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by 8 the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the Income-tax Officer under section 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case."
22. The evidence filed by the assessee clearly proves that the assessee has duly discharged his onus so far it relates to the identity, creditworthiness and genuineness of the transaction is concerned. The assessee is not required to prove source of the sources. There is no evidence on record which may prove that the assessee has deposited the cash in the bank account of the donor. Apparent is real. The onus is on the party who alleges that apparent is not real. In any case, the case of the assessee is duly covered by the decision of this Bench in the case of Shri Mukesh Kumar Agarwal in ITA No.312/Agr/2006 in which vide order dated 16.10.2009 similar gifts given by Shri D.K. Agarwal, being trustee of the Trust, were accepted to be genuine in the hands of the donees. The decision of the Co-ordinate Bench is binding on us. Respectfully following the decision of the Co-ordinate Bench, we delete the addition made by the A.O. under section 68 in the case of each of the assessee".
5. Respectfully following the aforesaid decision of this Tribunal, as both the parties have agreed that the facts involved are the same as in the aforesaid cases, we dismiss the appeals filed by the Revenue.
6. In the result, appeals filed by the Revenue are dismissed and the Cross Objections filed by the assessees are also dismissed.
(Order pronounced in the open Court on 25.05.2010).
Sd/- Sd/-
(R.K. GUPTA) (P.K. BANSAL)
Judicial Member Accountant Member
Place: Agra
Date: 25th May, 2010.
PBN/*
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1. Appellant
2. Respondent By Order
3. CIT concerned
4. CIT (Appeals) concerned
5. DR, ITAT, Agra Bench, Agra
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Income-tax Appellate Tribunal, Agra
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