ASST.C.I.T.-19(3), MUMBAI v. MR. KARIM NOORMOHAMED PREMJI, PROP. LORD SHOES, MUMBAI

ITA 2604/MUM/2009 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 260419914 RSA 2009
Assessee PAN AACPP4001A
Bench Mumbai
Appeal Number ITA 2604/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 7 day(s)
Appellant ASST.C.I.T.-19(3), MUMBAI
Respondent MR. KARIM NOORMOHAMED PREMJI, PROP. LORD SHOES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-05-2010
Assessment Year 2005-2006
Appeal Filed On 23-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH MUMBAI BEFORE SHRI R.V. EASWAR SENIOR VICE-PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2604/MUM/2009 (ASSESSMENT YEAR: 2005-06) ACIT - 19 (3) MR. KARIM NOORMOHAMED PREMJI ROOM NO. 305 3RD FLOOR PR. LORD SHOES 534 LINKIN G ROAD PIRAMAL CHAMBERS PAREL VS. BANDRA (W) MUMBAI 400050 MUMBAI 400012 PAN - AACPP 4001 A APPELLANT RESPONDENT APPELLANT BY: SHRI ABHIJIT PATANKAR RESPONDENT BY: SHRI JITENDRA SANGHAVI O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XIX MUMBAI DATED 06.02.2009. 2. THE REVENUE HAS RAISED 3 GROUNDS ON THE ISSUE OF RS .15 27 618/- CONSIDERED BY THE A.O. AS UNEXPLAINED CASH CREDIT U NDER SECTION 68 OF THE I.T. ACT WHICH WAS DELETED BY THE CIT(A). 3. BRIEFLY STATED THE ASSESSEE WHO IS A PARTNER IN F IRMS AND ALSO PROPRIETOR OF M/S PRINCE ENTERPRISES RECEIVED A GIF T OF RS.15 27 618/- (US $35 000) FROM HIS BROTHER MR. AMIN NOORMOHAMED PREM JI WHO IS A RESIDENT OF USA AND IS IN PROFESSION OF RUNNING MALLS IN USA . ON ENQUIRY FROM THE A.O. THE ASSESSEE SUBMITTED COPY OF THE PASSPORT OF THE DONOR BANK STATEMENT COPY OF CHEQUE COPY OF ACKNOWLEDGEMENT OF RETURN FILED IN INDIA FOR A.Y. 2005-06 PARTICULARS AND NATURE OF PROFESS ION IN USA INCLUDING COPY OF FOREIGN INWARD REMITTANCE CERTIFICATE FROM THE D ONOR. THE A.O. WAS OF THE OPINION THAT EVENTHOUGH THE IDENTITY OF THE DONOR W AS PROVED THE CREDITWORTHINESS WAS NOT PROVED. IT WAS THE SUBMISS ION OF THE ASSESSEE THAT THE SAID DONOR IS ASSESSEES BROTHER AND ALSO PARTN ER IN VARIOUS PARTNERSHIP FIRMS IN INDIA AND HE HAS CAPITAL OF MORE THAN RS.1 .3 CRORES IN HIS PERSONAL CAPACITY IN THE BUSINESS IN INDIA AND HE IS ALSO EQ UALLY WELL PLACED ABROAD ITA NO. 2604/MUM/2009 MR. KARIM NOORMOHAMED PREMJI 2 AND THE DETAILS WERE SUBMITTED BEFORE THE CIT(A). T HE CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND EVIDENCES DELETED T HE ADDITION BY STATING AS UNDER: - 1.3 I HAVE PERUSED THE ASSESSMENT ORDER WRITTEN S UBMISSIONS AND THE CASE LAWS CITED BY THE APPELLANT. SECTION 68 OF THE ACT HAS BEEN IN THE INCOME-TAX ACT SINCE 1961 AND HAS NOT UNDERGONE ANY AMENDMENT SO FAR. IT HAS GENERATED A NUMBER OF CASE LAWS AT THE HON'B LE HIGH COURTS AS WELL AS SUPREME COURT LEVELS. A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SEC TION 68 OF THE ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (A) THE IDENTITY OF THE CREDITOR / DONOR (B) THE GENUINENESS OF THE TRANSACTION NAMELY WHERE IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE C HANNELS (C) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR / DONOR AND (D) RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDI TOR / DONOR. APPLIED TO THE FACTS OF THIS CASE IT IS OBSERVED THAT THE GIF T IS FROM OWN BROTHER. THE APPELLANT HAS SUBMITTED EXTENSIVE DOCUMENTATION WHI LE FURNISHING ITS EXPLANATION AS IS EVIDENT FROM PARA 5.3 OF ITS SUBM ISSIONS FORMING PART OF THIS ORDER. IT HAS COMPREHENSIVELY DISCHARGED ITS O NUS. THE AO HAS REJECTED THE EXPLANATION BASED ON HIS OWN SUBJECTIV E OPINION AND ASSUMPTION. THE SAME IS NOT BACKED BY ANY ADVERSE M ATERIAL IN THE POSSESSION OF THE AO. IF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF THE GIFT HE IS EMPOWERED TO CARRY OUT THOROUGH INVESTI GATION. BUT IF THE AO FAILS TO UNEARTH ANY WRONG OR IRREGULAR DEALINGS H E CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE GIFT AS THE UNDISCLOSED INCOME. THERE HAS TO BE SOME TANGIBLE EVIDENCE AND A MERE S USPICION CANNOT BE A SUFFICIENT GROUND FOR SUCH ADDITION. THE APPELLANT HAS EFFECTIVELY REBUTTED THE REASONS GIVEN FOR MAKING THIS ADDITION AS IS EV IDENT FROM PARAS 5.5 AND 5.6 OF ITS SUBMISSION FORMING PART OF THIS ORDE R. TO MY MIND THE EXPLANATION OF THE APPELLANT IS CONVINCING AND THER E IS NO CAUSE FOR MAKING THIS ADDITION U/S 68 ON THE FACTS OF THE CAS E. HENCE IT IS DELETED. 4. THE LEARNED D.R. ARGUED VEHEMENTLY TO SUBMIT THAT T HE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF THE DONOR AND NO THING PREVENTED HIM IN FURNISHING THE BUSINESS DETAILS OF THE BROTHER AS W ILL AS COMPLETE BANK ACCOUNT TO PROVE THE CREDITWORTHINESS. IN THE ABSEN CE OF CREDITWORTHINESS OF THE DONOR IN USA THE EVIDENCES FURNISHED BY THE ASS ESSEE CANNOT BE ACCEPTED. 5. THE LEARNED COUNSEL REFERRED TO VARIOUS SUBMISSION MADE BEFORE THE CIT(A) AND FURTHER SUBMITTED THAT THE A.O. WAS NOT CORRECT IN INVOKING THE PROVISIONS OF SECTION 68 WHEREAS PROVISIONS OF SECT ION 56(2) ARE APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND SIN CE THE GIFT WAS RECEIVED FROM THE BROTHER OF THE ASSESSEE THE ABOVE AMOUNT G ETS EXCLUDED UNDER SECTION 56 (2) AND SO PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. ITA NO. 2604/MUM/2009 MR. KARIM NOORMOHAMED PREMJI 3 6. WE HAVE CONSIDERED THE ISSUE. WITHOUT GOING INTO TH E LEGALITIES OF THE ADDITION MADE BY THE A.O. UNDER SECTION 68 WE ARE OF THE OPINION THAT THERE WAS NO CASE FOR TREATING THE GIFT RECEIVED BY THE A SSESSEE FROM HIS BROTHER IN USA AS UNEXPLAINED INCOME OF THE ASSESSEE. AS SEEN FROM THE FACTS AVAILABLE ON RECORD THE ASSESSEES BROTHER IS ALSO PARTNER IN VARIOUS FIRMS IN INDIA AND HE HAS SUBSTANTIAL CAPITAL TOWARDS HIS CREDIT IN IN DIA. THE ASSESSEES BROTHER IS ALSO FILING RETURNS IN INDIA ON THE PROFITS FROM FIRMS AND OTHER INCOMES EARNED IN INDIA. AS SEEN FROM THE BANK ACCOUNT FUR NISHED THE ASSESSEE HAS LARGE AMOUNT OF CREDIT AS OPENING BALANCE WHICH WAS IGNORED BY THE A.O. IN COMING TO THE CONCLUSION THAT THE CREDITS ARE ONLY TO THE EXTENT OF US$16 500/- WHEREAS THE GIFT WAS TO THE EXTENT OF U S $35 000. THE OPENING CREDIT OF THE MONTH ITSELF WAS ABOUT US $27 466. IN VIEW OF THESE FACTS WE ARE OF THE OPINION THAT THE DONOR HAS CREDITWORTHIN ESS TO GIFT THE AMOUNT TO HIS BROTHER AND ACCORDINGLY THE ORDER OF THE CIT(A ) IS UPHELD. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2010. SD/ SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) SENIOR VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 31 ST MAY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIX MUMBAI 4. THE CIT XIX MUMBAI CITY 5. THE DR A BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.