Income Tax Appellate Tribunal - Delhi
Vijender Kumar Jain & Sons (Huf), ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'SMC': NEW DELHI
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
ITA No. 1315/Del/2011
Assessment Year: 1995-96
Vijender Kumar Jain & Sons ITO,
(HUF), Ward-3,
C/o Dr. Shobha Jain, Vs. Income Tax Office,
Pratap Nagar, Saharanpur. Saharanpur.
PAN No. AAAHV4814R
(Appellant) (Respondent)
Appellant by: Shri Pratiyush Jain, CA
Respondent by: Sh. Satpal Singh, Sr. DR
ORDER
This appeal filed by the assessee is directed against the order of ld.
CIT(A) dated 25/08/2010 for A.Y. 1995-96.
2. The assessee had filed return of income declaring total income at Rs.
35,450/- from rent, interest and agricultural income of Rs. 21,070/-. The return was processed on 16/08/1996 at returned income. Later on notice u/s 148 was issued on 20/01/1998 and assessment u/s 143(3)/148 was completed on 13/04/1998 at income of Rs. 2,55,450/- and agricultural income of Rs. 21,070/-. The assessee preferred appeal before ld. CIT(A) who vide his order dated 24/07/1998 restored back the matter to the file of ITA No. 1315/D/2011 2 Assessing Officer for re-examination of bank accounts. The assessment was again completed on 21/03/2001 at an income of Rs. 2,60,950/- and agricultural income of Rs. 21,070/-, which included addition of Rs. 2,20,000/-
on account of unexplained expenditure and Rs. 5,500/- on account of interest of KVP's. The appeal by assesee before ld. CIT(A) was dismissed.
The assessee preferred appeal before ITAT, New Delhi. The ITAT had set aside the case for fresh assessment with following directions: -
"We also found that the Tribunal in its order dt. 03.07.2006 in ITA No. 4932/Del/98, had categorically observed that in case the revenue authorities are not able to produce Sh. Mohd. Shamim Khan for cross- examination of the assessee, then the said assessment of Sh. Mohd. Shamim Khan recorded at the back of assessee should be discarded and Assessing Officer would re- determine the issue based on the other relevant material available on record. Respectfully following the observations of the co-ordinate bench in the case having exactly same facts and circumstances, as well as same donor and in view of the facts discussed herein above, we are inclined to set aside the orders of both the lower authorities and the matter is restored back to the file of the Assessing Officer for deciding the issue afresh after giving reasonable opportunity to the assessee in terms of directions given herein above."ITA No. 1315/D/2011 3
As per the office report the appeal is barred by limitation by 111 days. The assessee has filed an affidavit dated 22/02/2011 in which it is averred as under: -
"Before the Income Tax Appellate Tribunal, New Delhi I, Vijender Kumar Jain, son of late Shri Kulwant Rai Jain, Resident of Pratap Nagar, Saharanpur aged about 66 years do dolemnly and on oath declare as follows:
1. That I am the karta of Vijender Kumar Jain HUF and look after the affairs of my HUF.
2. That I was suffering from PUO due to which I was bed-ridden since August, 2010.
3. That I had filed an appeal of Income Tax with the Commissioner of Income Tax (Appeals), Muzaffar Nagar in the case of Vijender Kumar Jain, HUF relevant to the A.Y. 1995-96.
4. That all the documents relating to the above mentioned appeal case were in the possession of my Authorized Representative C.A. Vijayant Singh.
5. That C.A. Vijayant Singh had gone Abroad somewhere in July, 2010 and has not returned since then.
6. That I could get all the papers relating to my above mentioned appeal only about 10 days back.
I, Vijender Kumar Jain, son of Late Kulwant Rai Jain, do solemnly and on oath declare that my name, parentage and address and the contents of para 1 to 6 herein above are true and correct to the best of my knowledge and belief. Nothing has been cancelled ITA No. 1315/D/2011 4 or misstated therefrom. So help me God.
Deponent: Vijender Kumar Jain"
The assessee has also filed various medical prescriptions.
3. Considering the averments made in the affidavit and the medical prescriptions I am of the opinion that the assessee was prevented by reasonable cause from filing the appeal within time and, therefore, condone the delay in filing the appeal and proceed to decide the appeal on merits.
4. In consequence to the aforementioned directions of ITAT, the AO has passed the impugned assessment order and has determined the income at Rs. 2,60,950/-. The main addition is in regard to the gift of Rs. 2 lakhs from one Sh. Mohd. Shamim Khan claiming NRE status. The AO issued summons u/s 131 of the Income Tax Act to Mohd. Shamim Khan requiring him to attend the office on 10/12/2008 to provide opportunity for cross examination to assessee, as directed by the ITAT. However, since he was in Dubai, he could not be produced for cross examination. Accordingly, the statement of Shamim Khan had to be ignored. Therefore, the AO examined the facts and material available on record and noted that Mohd. Shamim had issued gift cheques to 9 persons as under: -
(i) M/s Vijender Kr. Jain & Sons Rs. 2,00,000/-
(ii) Smt. Sushma Jain W/o Rajesh Jain Rs. 2,00,000/-
(iii) Sh. Sanjay Kr. Jain S/o Sukhmal
Chand Jain Rs. 50,000/-
ITA No. 1315/D/2011 5
(iv) Rakesh Kr. Jain Rs. 50,000/-
(v) Smt. Reena Jain W/o Sanjay Jain Rs. 2,00,000/-
(vi) M/s Avinash Chand & Sons Rs. 1,00,000/-
(vii) M/s Jagdish Chand & Sons Rs. 2,00,000/-
(viii) M/s Gurbachan Lal & Sons Rs. 1,00,000/-
(ix) Smt. Usha Chawla Rs. 2,00,000/-
Total Rs. 13,00,000/-
5. The AO observed that all the above 9 donees were family members of two groups and it was quite unbelievable that Sh. Mohd. Shamim Khan would go on giving huge gifts to various family members without any consideration. The AO did not believe that persons of moderate means, who goes to Saudi Arabia to earn the money, would remit Rs. 12 lakhs to India to be utilized for giving gifts to various persons with whom he does not have any relation. The AO further noticed that credits in account of donor in Punjab National Bank and Allahabad Bank were made from which cheques were issued. He noted that first cash was deposited in these accounts and then cheques were issued for transfer of amount to Central Bank of India from where cheques for gifts were issued. The AO further noticed that total remittances of Mohd. Shamim Khan from Saudi Arabia were approximately Rs. 12 lacs most of which had been credited in another NRI account no. 26 maintained by him with PNB, Shahid Ganj, Saharanpur, whereas total amount of gifts made by him to the 9 persons were Rs. 13 lakhs. He further noticed that cash deposit in various saving bank account were approximately ITA No. 1315/D/2011 6 Rs. 14 lakhs. He further observed that during the period when these deposits were made, donor had no apparent source of income to even remotely justify the sources of the same. After considering these facts the AO concluded that there was no nexus between the foreign remittances and gift observing as under: -
"If assessee's claim that gift was made out of NRE a/c which contained the remittance from Saudi Arab, is to be considered then it cannot be considered isolated from other 8 gifts which have also been given out of the same remittance. As state earlier, simple equation is that the donor remitted Rs. 12 lac out of which he deposited cash of Rs. 14 lac in various a/cs and made gift of Rs. 13 lac to 9 persons belonging to just two families one of which is that of assessee itself. Gifts of Rs. 13 lac cannot be given out of Rs. 12 lac. Therefore, its gift cannot be considered in isolation i.e. Rs. 2 lac versus Rs. 12 lac but is should have to be considered in totality of facts i.e. Rs. 12 lac versus Rs. 13 lacs. From the above it is crystal clear that immediate source of gift was not the remittance from Saudi Arab but is was the cash deposit in one a/c which was channalized to the a/c from which gift was given."
6. He, accordingly, held that there was no capacity with the donor to donate the gift and the gift was not genuine. He further observed that there was no occasion for gift. As regards the assessee's submission that the gift was given by the donor to him and his family on the occasion of his ITA No. 1315/D/2011 7 daughter's birthday, the AO observed that the date of her birthday was not mentioned. In view of these facts, the AO made an addition of Rs. 2,20,000/-
being the cash deposits in the bank account and telescoped the sum of Rs.
2 lakh found credited in the books of account against these deposits.
7. Ld. CIT(A) confirmed the addition.
8. Ld. Counsel for the assessee submitted that under identical circumstances, in the case of Avinash Chand and Sons, Tribunal has deleted the addition. Ld. Counsel referred to page 4 of assessment order and pointed out that AO has wrongly observed that the gifts were given to related persons as assessee was not part of any of the two groups. He further pointed out that in the case of Avinash Chand and Sons there was no occasion of gift but in the present case the gift has been given on the occasion of birthday of daughter of Karta co parcener.
9. He submitted that as per PAN Card the date of birth is 28/07/1975 and the gift was given on 26/07/1994 through cheque. Ld. Counsel further submitted that in pursuance to the direction of Tribunal, summons were issued to the donor after 2 years of Tribunal's order. In view of these facts, ld. Counsel submitted that the decision of Tribunal in the case of Avinash Chand & Sons is to be applied.
ITA No. 1315/D/2011 810. Ld. DR vehemently submitted that the entire conduct of assessee is against the human probability. He submitted that the donor was of meager means and had gone to Saudi Arabia to earn money. Therefore, it is quite abnormal and unbelievable that he would have remitted the money to India for giving donation to unrelated persons. Ld. DR submitted that it is a case of accommodation entry only taken by assessee.
11. I have considered the submissions of both the parties and have perused the record of the case. I find that the assessment order in the case of Avinash Chand & Sons and in the case of assessee is almost identical.
The gifts have been given by Mohd. Shamim Khan to both the donees. The facts in both the cases are identical and, therefore, there is force in the submission of ld. Counsel that the decision of Tribunal in the case of Avinash Chand & Sons should be applied. No distinguishing fact has been brought on record by Department. I find that in the case of Avinash Chand & Sons (HUF) vs. ITO vide ITA No. 1463/D/2009 the Division Bench of Tribunal vide its order dated 23/10/2009 has observed as under: -
"6. We have carefully considered the rival submission perused the material on record along with the order of the tax authorities below. We have also gone through the various case laws as relied before us. This is an admitted fact that the assessee was not maintaining any books of account. Section 68 of the Income Tax Act lays down as under: -
68. "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no ITA No. 1315/D/2011 9 explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year."
From the reading of aforesaid section, it is apparent that this section prescribes the rule of evidence. If the AO found any sum credited in the books of an assessee maintained for the previous year, the assessee if does not offer any explanation about the nature and source of the said amount or in the opinion of the AO the explanation offered by the assessee is not satisfactory the same so credited may be charged to the Income Tax as the income of the assessee. In this case we noted that the assessee has received the gift of Rs. 1 lakh from Mohd. Shamim Khan, NRI through banking channel. The assessee is not maintaining any books of account. Therefore, the question of credited in the amount in the books of the assessee does not arise. This Tribunal in the case of Ms. Mayawati vs. DCIT, 113 TTJ 178 (Del.) has held as under:
"Ms. Mayawati vs. DCIT, Income Tax Act, 1961 - 113 TTJ 178 (Del.): Income from undisclosed sources - Addition u/s 68 Applicability of sec. 68 - section 68 would has no application where the assessee was not maintaining any books of account. A pass book of bank cannot be treated as books of account of the assessee because a pass book is provided by the banker, and is ITA No. 1315/D/2011 10 only a copy of the customer's account in the books maintained by the bank. The bank does not act as an agent of the customer nor can it be said that the banker maintains the pass book under the instructions of the customer. The relationship between the banker and customer is one of debtor and creditor only. Therefore, a cash credit appearing in assessee's pass book relevant to a particular previous year, in a case where the assessee does not maintain books of account, does not attract the provisions of sec. 68. Section 68 has no applicability where the assessee is not maintaining any books of account. If that be so sec. 68 does not apply in her case for the simple reason that the cheque received from P has been deposited in her bank account balance sheet/statements of affairs cannot be equated to books of accounts because "in traditional terms books means a collection of sheets of paper bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. It can, also be assumed that it connotes the contention that it should serve as a permanent record. Therefore, a pass book of the bank cannot be treated as a book of account of the ITA No. 1315/D/2011 11 assessee because this is provided by the banker, which is given to its customer and is only a copy of the customer's account in the books maintained by the bank. The bank does not act as an agent of the customer nor can it be said that the banker maintains the pass book under the instructions of the customer (the assessee). The relationship between the banker and customer is one of debtor and creditor only. Therefore, a cash credit appearing in assessee's pass book relevant to a particular previous year, in a case where the assessee does not maintain books of account, does not attract the provisions of sec. 68."
7. Similar view has been taken by Hon'ble Gauhati High Court in the case of Anand Ram Rai Tani vs. CIT in which it was held that: -
"223 ITR 544 Anand Ram Raitani vs. CIT(Gau.): We have gone through sec. 68 of the Act. The AO before invoking the power u/s 68 of the Act must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account and if the assessee fails to satisfy the AO, the said sum so credited has to be charged to income tax as the income of the assessee of that previous year. The existence of books of ITA No. 1315/D/2011 12 account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. The AO made the assessment by making addition of the amount for which disallowance was claimed. Mr. Bhuyan very candidly admits that addition was made in exercise of the power u/s 68 of the Act, therefore, the first condition necessary for invocation of the power is the existence of the books of account."
8. Similar view has been taken in the case of CIT vs. Bhai Chand Gandhi by Hon'ble Mumbai High Court in which there held that Pass Book supplied by the bank to the assessee cannot be regarded as the book of the assessee. Therefore, cash credit for the previous year shown in the assessee's bank Pass Book but not shown in the cash book maintained by the assessee for that year does not fall within their ambit of section 68 of the Income Tax Act, 1961. No contrary decision was brought to our knowledge by the ld. DR on this aspect. Therefore, in our opinion no addition can be made u/s 68 only on this basis that the amount credited in the Pass Book is not the book maintained by the assessee. We, therefore, on this basis itself the addition made should have been deleted.
ITA No. 1315/D/2011 139. Coming to the other ingredient no doubt the onus is on the assessee to prove the identity, creditworthiness and the capacity of the donor. This Tribunal in the first round of appeal vide order dated 3rd July, 2006 has held that the donor had prima facie capacity to make a gift to the Donnee. Even it was also held that at the relevant time Indian currency could not be deposited in an NRE account. Therefore, in our opinion on these basis the AO was not correct in law in making the addition in the case of the assessee again in set aside proceedings. The AO was duty bound to provide the opportunity to cross examination Mr. Khan. If the AO was relying on the statement of Mr. Khan for making the addition. Hon'ble Delhi High Court in the case of CIT vs. SMC Share Brokers Ltd. 288 ITR 345 has laid down the proposition that if the request for permission to cross examine persons on the basis of whose statement the additions are made if not allowed the principles of natural justice stand violated and the order of the assessment is not valid. This is an admitted fact that in this case the AO could not produce Mohd. Shamim for the cross examination of the assessee. The basis of the addition is the statement of Mohd. Shamim whose statement has been recorded at the back of the assessee. Once the AO could not produce Mohd. Shamim for cross examination in view of the decision of this Tribunal dated 3rd July, 2006 no doubt the AO was bound to re-determine this issue on the basis of the other relevant material available on record.
ITA No. 1315/D/2011 1410. We have gone through the original assessment order in which the additions were made in respect of the said gift, we noted no other material was brought on record except the material on the basis of which the addition were earlier made and the points were duly considered by this Tribunal.
11. We have gone through the decision of Delhi High Court in the case of Sajan Das & Sons vs. CIT in this case the facts involved were entirely different to notary affirm that on the date on which notary notarized the document, the deponent was present before him but the Passport of the deponent shown that he was not in India on that date. The signature of the donor on the gift deed and that on Passport did not tally. Therefore, the identity was in doubt. In the case of Subhash Chand Sitri vs. DCIT, 290 ITR 300, the assessee has submitted that the gifts were received on the occasion of marriage in family or other happy occasions from relatives and close family friends residing abroad, but did not brought on record any evidence about the marriage or any function in the family. Thus, court took the view that the assessee did not discharge his onus. The facts in this case are entirely different. Therefore, it is not applicable in the case of D.C. Rastogi vs. ACIT 57 ITD 295 (Del.) the facts were different it was held that onus lies on the assessee to establish identity and capacity of the creditor and genuineness of the transaction. Mere filing of the confirmation from donor will not discharge the burden of the assessee. The assessee failed to furnish present ITA No. 1315/D/2011 15 address of the donors in this case the identity of the donor is not in dispute rather the AO relied on the statement of the donor regarded at the back of the assessee. Whether there must be a relationship between a donor or Donnee. This fact has been duly dealt with by the decision of this Tribunal in the case of CIT vs. Ms. Mayawati 113 TTJ 178. In this case this Tribunal has taken a view that the relationship is not necessary for making the gift. We do not agree with the revenue that the transaction entered into was merely an accommodation entry in the absence of any evidence being brought on record. In view of our aforesaid discussion, we delete the addition made by the AO.
12. In the result, the appeal filed by the assessee is partly allowed."
12. Respectfully following the aforesaid decision of Tribunal, the assessee's appeal is allowed.
Order pronounced in the open court on 08/02/2013 Sd/-
(S.V. MEHROTRA) ACCOUNTANT MEMBER Dated: 08/02/13 *Kavita Copy to:
1. Appellant ITA No. 1315/D/2011 16
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
TRUE COPY By Order ASSISTANT REGISTRAR