KANTADEVI GUPTA, MUMBAI v. ITO WD 15(1)(1), MUMBAI

ITA 5074/MUM/2014 | 2001-2002
Pronouncement Date: 18-10-2016 | Result: Allowed

Appeal Details

RSA Number 507419914 RSA 2014
Assessee PAN AADGP3264H
Bench Mumbai
Appeal Number ITA 5074/MUM/2014
Duration Of Justice 2 year(s) 2 month(s) 12 day(s)
Appellant KANTADEVI GUPTA, MUMBAI
Respondent ITO WD 15(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-10-2016
Date Of Final Hearing 27-09-2016
Next Hearing Date 27-09-2016
Assessment Year 2001-2002
Appeal Filed On 05-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE SRI MAHAVIR SINGH JM AND SRI RAMIT KOCHAR AM ITA NO.5074/MUM/2014 (A.Y:2001 - 02) APPELLANT BY .. SHRI JAY BHANSALI AR APPELLANT BY .. SHRI A. K. DHONDIAL DR DATE OF HEARING .. 18 - 10 - 2016 DATE OF PRONOUNCEMENT .. 18 - 10 - 2016 O R D E R PER MAHAVIR SINGH JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF THE CIT (A) - 26 MUMBAI IN APPEAL NO CIT (A) - 26/IT - 42/15(1)(1)2013 - 14 DATED 12 - 05 - 2014. ASSESSMENT WAS FRA MED BY THE ITO WARD - 15(1)(1) MUMBAI FOR THE ASSESSMENT YEAR 2001 - 02 VIDE HIS ORDER DATED 12 - 03 - 2013 UNDER SECTION 143(3) READ WITH SECTION 254 OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT). 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE IS A GAINST THE ORDER OF THE CIT (A) IN UPHOLDING THE ADDITION OF RS.25 LACS BEING GIFT RECEIVED BY THE ASSESSEE AS NOT BONA FIDE TRANSACTION ADDED U/S 68 OF THE ACT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT THE ASSESSEE RECEIVED A GIFT OF RS.25 LACS FROM ONE NON - RESIDENT SHRI CHHANULAL JHUNJHUNWALA AN NRI FROM THE NRI BANK ACCOUNT AT MUMBAI. THE AO MADE THE ADDITION OF THIS GIFT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT FOR THE REASON THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST UPON HER TO PROVE THE GENUINENESS OF THE GIFT. THE AO HAS NOT DOUBTED THE CREDITWORTHINESS AND IDENTITY OF THE DONOR. THE AO ONLY NOTED THAT THERE IS NO RELATIONSHIP AND NO OCCASION FOR SUCH GIFT. ACCORDINGLY HE SMT. KANTADEVI GPTA (PROP. K. D. TEXTILES) SHOREWALA TEXTILES 68 MIRZA STREET ZAVERI BAZAR MUMBAI 400 00 3 PAN:AADGP 3264H VS. THE INCOME TAX OFFICER WARD 16(1) (1) ROOM NO.116 1 ST FLOOR MATRU MANDIR GRANT ROAD MUMBAI 400 007 APPELLANT .. RESPONDENT ITA NO. 5074 /MUM/20 1 4 2 MADE THE ADDITION. THE CIT (A) ALSO CONFIRMED THE ACTION OF THE AO BY OBSERVING IN PARA 3.2.15 AND 3.2.16 OF HIS ORDER AS UNDER: - 3.2.15 ADVERTING TO THE FACT IN THE INSTANT CASE IT IS EVIDENT THAT THE EXPLANATION OFFERED BY APPELLANT IS NOT SATISFACTORY. THE APPELLANT HAS NOT PRODUCED ANY SUBSTANTIATING DOCUMENTS / EVIDENCE TO VERIFY THE GENUINENESS OF THE TRANSACTION AND THEREFORE IT HAS BEEN RIGHTLY HELD BY THE ASSESSING OFFICER THAT THE LOAN IS NOT BONAFIDE TRANSACTIONS. THEREFORE TH E GENUINENESS OF THE GIFT HAS NOT BEEN ESTABLISHED. HENCE EVIDENCE PRODUCED IN SUPPORT OF THE CREDITWORTHINESS IS NOT NECESSARY TO EXAMINE AT THIS STAGE. 3.23.16 IN VIEW OF THE FACTS OF THE CASE AND RELEVANT JUDICIAL PRONOUNCEMENT I HOLD THAT THE ASSESS ING OFFICER WAS RIGHT IN REJECTING THE CLAIM OF APPELLANT OF UNSECURED LOAN OF RS.25 00 000/ - AS THE BONAFIDE OF THE SAME WAS NOT ESTABLISHED. GROUND 2 TO 7 IS DISMISSED. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE CASE RECORDS THAT THE ASSESSEE D URING THE COURSE OF ASS ESSMENT P ROCEEDINGS FILED FOLLOWING DOCUMENTS TO PROVE THE IDENTITY SOURCE AND GENUINENESS OF TRANSACTION : - A) R EPLIES FROM IRA SINGAPORE IN RESPONSE TO INQUIRIES BY CBDT CONFIRMED THE IDENTITY AND DONOR PAYING TAX IN THAT COUNTRY. B) T HE ASSESSEE HAS PRODUCED THE ZEROX COPY OF PASSPORT TO PROVE THE IDENTITY OF MR. CL J HUNJHUNWALA THE DONOR. C) COPY OF BANK ACCOUNT OF SHRI CHANNULAL JHUNJHUNMWALA BEARING ACCOUNT NO.50154 AT INDIAN OVERSEAS BNK TO WHICH A CREDIT OF RS.82 82 301 HAS BEEN MADE BY CLEARING IN JULY 2000 AND OUT OF THE SAID DEPOSIT A PAYMENT OF RS.25 IAKHS HAS BEEN MADE TO THE ASSESSEE VIDE CHEQUE NO.98464. D) THE ASSESSEE HAS FILED ANNUAL REPORT OF THE YEAR 1998 OF HIND HOTELS LTD THE WORTH OF WHICH IS USD 5 87 000 AND SHRI CHANNULAL JHUNJHUNWALA IS SAID TO HAVE BEEN HOLDING 7 50 000 EQUITY SHARES OF THE COMPANY OF FACE VALUE OF SINGAPROE $ 1 EACH. E) A COP Y OF E - MAIL DATED APRIL 6 2005 FROM CHANNULAT JHUNJHUNWALA TO ONE MR. RAVI STATING THAT THE SOURCE OF FUNDS FOR THE FD ARE FROM HONGKONG. ITA NO. 5074 /MUM/20 1 4 3 F) ALSO A LETTER IS FILED DATED 08.01.2005 ENCLOSING THE CERTIFICATES FROM BANKERS. COPY OF CERTIFICATE FROM INDIAN BANK SINGAPORE BRANCH IS FILED THAT STATES AS UNDER: - 'THIS IS TO CERTIFY THAT MR. C. L . JHUNJHUNWALA OF 55 GADEN ROAD APARTMENT GD ESTONIL COURT HONG KONG IS A CONSTITUENT OF OUR BANK FOR OVER A DECADE. HE IS A SEASON ED BUSINESSMAN WITH VARIED BUSINE SS INTERESTS AND INVESTMENTS IN SINGAPORE THAILAND HONG' KONG ETC. AS PER MARKET REPORTS HE AND HIS FAMILY MEMBERS ARE REPORTEDLY WORTH AROUND USD 100 MILLION. TO THE BEST OF OUR KNOWLEDGE HE DOES NOT UNDERTAKE OR COMMIT HIMSELF FOR ANY FINANCIAL TRA NSACTION HE CANNOT HONOUR. THIS INFORMATION IS GIVEN TO YOU IN STRICT CONFIDENCE WITHOUT ANY RESPONSIBILITY ON THE PART OF THE BANK OR THE SIGNATORY WHATSOEVER.' G) ANOTHER CERTIFICATE FROM CITIGROUP HAS BEEN FILED THAT STATES AS UNDER: - 'MR. CHHANULAL J HUNJHUNWALA THE HOLDER OF INDIAN PASSPORT Z - 1508017 HAS ESTABLISHED A TRUST OF WHICH CITITRUST (BAHAMAS) LIMITED IS THE TRUSTEE. THE TRUST IS REVOCABLE BY MR. C . L. JHUNJHUNWALA. AS AT 1 9 - 01 - 2004 THE REVOCABLE TRUST HAS NET ASSETS OF US$ 15 714 527.68. IN PROVIDING THIS INFORMATION CITITRUST (BAHAMAS) LIMITED ACCEPTS NO LIABILITY FOR ANY CONSEQUENCES HOWSOEVER OR WHATSOEVER ARISING FROM ITS USE.' H ) THE ASSESSEE HAS ALSO FILED A COPY OF FDR MADE IN CENTURION BANK LTD. ON 10.07.1997 FOR 3 YEARS AND MATURING ON 10.07.2000 AND MATURITY AMOUNT IS RS.82 82 301.97. 5. O N THE BASIS OF THESE DOCUMENTS THE ASSESSEE ARGUED THAT GENUINENESS OF THE TRANSACTIONS AN D CREDITWORTHINESS OF THE DONOR OR HIS CAPACITY TO DONATE CANNOT BE DOUBTED. IT IS CLAIMED BY T HE ASSESSEE THAT IT IS NOT NECESSARY FOR THE DONOR TO DISCLOSE THE FDR MAINTAINED IN INDIA TO SINGAPORE AUTHORITIES. THE FDR IS A DOCUMENT OF CENTURION BANK SHOWING FDR NO.0002003749 - 001 MADE ON 10.7.1997 AND MATURITY DATE BEING 10.7.2000 FOR RS.80 00 000/ - IN THE JOINT NAME OF SHRI V.I.JHUNJHUNWALA AND SHRI RAMESH JHUNJHUNWALA (FOS). THE FDR IS ITA NO. 5074 /MUM/20 1 4 4 FROM NRE ACCOUNT FOR A PERIOD OF 3 YEARS AND THE INTEREST RATE IS 14% P.A. THE MATURITY VALUE OF THE FDR IS NOT SPECIFIED IN PRINT BUT SUBSEQUENTLY IT IS WRITTEN BY SOMEONE IN HAND TO BE RS.82 82 301.37. W E FIND THAT T HE AO AND HIS PREDECESSOR IN ORIGINAL ASSESSMENT PROCEEDINGS VERIFIED THE IDENTITY OF MR. CL JHUNJHUNWALA THROUGH CBDT AND IRS AUTHORITIES SINGAPORE AND ALSO DURING REASSESSMENT PROCEEDINGS OF DEEPA SH OR E WEALA AND THERE WAS NO QUESTION ON HIS IDENTITY. THE REFERENCE RIGHT OR WRONG TO IRS SINGAPORE AND REPLY PROVES THE IDENTITY OF THE DONOR HIS STATUS CAPACITY ETC. BUT ONLY OBSERVATION WAS THAT THE NRE ACCOUNT IN INDIAN OVERSEAS BANK WAS NOT DISCLOSED I N HIS TAX RETURNS IN SINGAPORE. THE DISCLOSURE OF FOREIGN ASSETS MAY OR MAY NOT BE REQUIRE D IN SINGAPORE AND HONGKONG AS PER LOCAL LAWS HENCE IT IS NOT RELEVANT HERE TO DISCLOSE BANK ACCOUNT A T SINGAPORE. WE FIND THAT THE ASSESSEE IS ABLE TO PROVE THE ID ENTITY OF THE DONOR BEFORE THE ASSESSING AUTHORITY IN INDIA. THE ASSESSEE IS ABLE TO EXPLAIN THE SOURCE OF FUNDS AND TO SUPPORT THIS HE FILED COPY O F BANK STATEMENT OF NRE ACCOUNT WITH BANK FROM WHICH GIFT WAS GIVEN. WE ALSO FIND THAT THE ABOVE SAID GIFT W AS RECEIVED FROM NRE ACCOUNT NO.025 MAINTAINED WITH INDIAN OVERSEAS BANK NARIMAN POINT MUMBAI WHICH IS MENTIONED IN THE COVERING LETTER OF TH E CONFIRMATION OF GIFT ON OATH. WE ALSO OBSERVED FROM THE RECORDS THAT T HE AO HAS REOPENED A SSESSEE'S CASE SOLELY ON THE BASIS OF GIFTS ENTRIES IN THIS BANK ACCOUNT OBTAINED IN THE CASE OF MRS DEE PA SHORE WA L A. THE AO HAS NO QUESTION ON THE SOURCE OF THE GIFT EXCEPT THAT THE SAID BANK ACCOUNT IS NOT DISCLOSED IN THE INCOME TAX RETURNS FILED IN SINGAPUR BY THE DONOR. 6 . FROM THE RECORDS WE OBSERVED THAT T HE QUERIES OF CBDT TO CONFIRM THE DONOR & GIFT WERE SPECIFIC WITH REFERENCE TO THE GIFT OF RS. 27 LACS RECEIVED BY DEEPA SHOREWALA FROM MR. CHANNULAL JHUNJHUNWALA AND REPLY OF IRA SINGAPORE IS WITH REFERENCE TO THE QUE RIES RELATING TO DEEPA SHORE WALA. BUT T HERE WAS NO QUERY OR MENTION ABOUT THE GIFT RECEIVED BY THE ASSESSEE. HOWEVER THERE IS NOTHING IN THE REPLY OF IRA SINGAPORE WHICH INVALIDATES THE GIFT OR PROVE THE GIFT IN - GENUINE ON ACCOUNT OF IDENTITY SOURCE CA PACITY OF THE DONOR. IT IS ON THE CONTRARY POSITIVE REPLY ON ALL QUERIES OF MRS. VANI IS HIS WIFE AND RAMESH IS ITA NO. 5074 /MUM/20 1 4 5 HIS SON AND DIRECTOR OF HIND HOTELS LTD WHOSE FD R S IN JOINT NAMES ARE CREDITED IN THE BANK ACCOUNT FROM WHERE THE GIFT IS GIVEN. NO MONEY IS R EMITTED FROM BANK TO SINGAPORE AND THERE IS NO REQUIREMENT OF DISCLOSING GIFT GIVEN ETC. AS PER SINGAPORE LAW OR HE MAY NOT BE RESIDENT OF SINGAPORE HENCE WORLDWIDE INCOME IS NOT TAXABLE IN THAT COUNTRY THE INCOME OF THAT COUNTRY IS ONLY TAXED. 7 . WE FIND FROM ABOVE FACTS THAT WHEN THE BANK ACCOUNT COVERING LETTER OF THE GIFT STATEMENT ON OATH AND BANK'S LETTERS ON SOLVENCY AND WORTH ALL CONTAINS THE ADDRESS OF HONG KONG GIVEN ABOVE HE MAY BE ASSESSED THERE AND IF REQUIREMENT OF LAW THE INDIAN OVERSEA S BANK ACCOUNT OR GIFTS MIGHT HAVE BEEN DISCLOSED. IN VIEW OF THE ABOVE WE CAN PRESUME THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE DONOR SOURCE OF FUND CAPACITY OF THE DONOR GENUINENESS E TC. WITH EVIDENCES AND HENCE WE DELETE THE ADDITION OF UNEX PLAINED CASH CREDIT MADE BY AO AND CONFIRMED BY CIT (A) U/S.68 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 - 10 - 2016. SD/ - (RAMIT KOCHAR) ACCONTANT MEMBER MUMBAI DATED: 18 - 10 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - (MAHAVIR SINGH) JUDICIAL MEMBER ITA NO. 5074 /MUM/20 1 4 6 BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI SR. NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 18/10/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 19/10/16 / 26/10/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//