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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI ABY T. VARKEY, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLESmt. Ilaben K. Ghadia
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)-47 [hereinafter in short “Ld.CIT(A)”] dated 25.02.2021 for the A.Y.2014-15.
Brief facts of the case are, assessee is an individual having source of income from business income, income from house property and income
(A.Y: 2014-15) Smt. Ilaben K. Ghadia from other sources. The assessee is also partner in the partnership firm M/s. Millennium Corporation and M/s. Millennium Enterprises. A Search action u/s. 132 was conducted on 28.01.2015 at the residential premises of the assessee. The assessee has received gift of ₹.1,99,725/- from Smt. Bhanuben B. Patel and gift of ₹.2,55,000/- from Smt Champaben Sojitra being a person covered by the definition of “relative” under Explanation (e) to section 56(2) of Income-tax Act, 1961 (in short “Act”) which have been disallowed and added back as unexplained gifts. The Assessing Officer before disallowing the same he has observed in his order that assessee has not filed return of income or bank statement of the donor, in the absence of which the genuineness and capacity, i.e., creditworthiness of the donor is not proved. Accordingly, he added the above said income as unexplained cash credit in the hands of the assessee. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and submitted the submissions as under: -.
“1.1 The appellant submits that it is well settled law that the AO is not entitled to inquire into source of source to come to the conclusion that a particular credit was genuine or not, in the instant case the AO in order has stated that the returned income of the donor is not submitted hence the creditworthiness of the of the donor is not proved, which clearly shows that the AO is questioning the source of source. 1.2 The appellant would like to further rely on the jurisdictional High Court in the case of CIT vs Vedanta Towers Private Limited of 2015 dated 17.04.2018. The issue before the Hon'ble
(A.Y: 2014-15) Smt. Ilaben K. Ghadia court was whether the Hon'ble tribunal was correct in interpreting section 68 to hold that the AO was not entitled to inquire into the source of source to come to the conclusion that a particular credit was not genuine. The Hon'ble Tribunal in the order dated 21" January 2015 had deleted the addition made u/s 68 by the assessment officer. The Hon'ble tribunal had held that the assessee had discharged the onus placed on it u/s 68 of the IT act by submitting the gift deed. Proof of filing ITR, Bank. statements, PAN, the address etc. The Hon'ble tribunal held that the revenue had all the information about the identity and the source of the funds, and the revenue could have proceeded against the said Investor. The Hon'ble tribunal have relied upon the decision in case of Lovely exports private limited 319 ITR 5 (Supreme Court). The Hon'ble Supreme court in no uncertain terms has held that once the assessee has given the complete information about the investor and there is no contrary material available on record then the revenue should not proceed against the shareholder who has confirmed the transaction. The hon'ble Bombay high court while confirming the decision of Tribunal has relied upon the finding of the Hon'ble Supreme Court and has also held that the appellant is not expected to prove the source of the source of the funds. 1.3 Further the appellant would like to state that by submitting the Gift Deed & Copy of election card & copy of demand draft the initial onus to prove the genuineness & creditworthiness has already been discharged. 1.4 Without prejudice to above the appellant further states that with the additional evidence paper book page 1-7 I have also submitted the copy of extract of 7/12 as proof of ownership of agriculture land in the name of Bhanuben Patel to prove the capacity of donor to give the gift to the appellant. 1.5 The Appellant craves leave to further substantiate the ground at the time of hearing." 2.1 "The appellant submits that it is well settled law that the AO is not entitled to inquire into source of source to come to the conclusion that a particular credit was genuine or not, in the instant case the AO in order has stated that bank statements of the donor reveals cash deposit before the gift is given to the appellant, which clearly shows that the AO is questioning the source of source. 2.2 The appellant would like to further rely on the jurisdictional High Court in the case of CIT vs. Vedanta Towers Private Limited of 2015 dated 17.04.2018. The issue before the Hon'ble court was whether the Hon'ble tribunal was correct in interpreting section 68 to hold that the AO was not entitled to inquire into the (A.Y: 2014-15) Smt. Ilaben K. Ghadia source source to come to the conclusion that a particular credit was not genuine. The Hon'ble Tribunal in the order dated 21" January 2015 had deleted the addition made u/s 68 by the assessment officer. The Hon'ble tribunal had held that the assessee had discharged the onus placed on it u/s 68 of the IT act by submitting the gift deed. Proof of filing ITR, Bank statements, PAN, the address etc. The Hon'ble tribunal held that the revenue had all the information about the identity and the source of the funds, and the revenue could have proceeded against the said investor. The Hon'ble tribunal have relied upon the decision in case of Lovely exports private limited 319 ITR 5 (Supreme Court). The Hon'ble Supreme court in no uncertain terms has held that once the assessee has given the complete information about the investor and there is no contrary material available on record then the revenue should not proceed against the shareholder who has confirmed the transaction. The hon'ble Bombay high court while confirming the decision of tribunal has relied upon the finding of the Hon'ble supreme court and has also held that the appellant is not expected to prove the source of the source of the funds. 2.3 Further the appellant would like to state that by submitting the ITR Acknowledgment, Bank statements, Gift Deed & Copy of PAN the initial onus to prove the genuineness & creditworthiness has already been discharged. 2.4 Without prejudice to above the appellant further states that with the additional evidence paper book page 8-9 she has also submitted the copy of computation of income, Capital A/c & balance sheet of the donor wherein the capital account reflects the gift given to Usha Ghadia of Rs. 2,55,000/- & further it can also be seen that the donor herself has reported income of Rs. 1,01,470/- in the current year's agriculture income, similarly the same including with accumulated agriculture income of previous years have been deposited in the bank before giving the gift to the appellant. 2.5 The Appellant craves leave to further substantiate the ground at the time of hearing."
After considering the submissions of the assessee Ld.CIT(A) dismissed the ground raised by the assessee with the observation that donors are not assessed to tax nor they have filed any tax returns so far. Therefore, he was of the view that source of income are not proved and (A.Y: 2014-15) Smt. Ilaben K. Ghadia the bank account of the donors are not furnished and does not know how much income the donor actually generated from the agricultural land. Accordingly, he dismissed the appeal filed by the assessee.
Aggrieved assessee is in appeal before us raising following grounds in its appeal: - “Ground No. 1 1.1 On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax (Appeals)
47. Mumbai ['the CIT(A)'], erred in upholding the additions made by the Deputy Commissioner of Income Tax, Central Circle - 1(1) ('the AO') amounting to Rs. 1,99,725/- and Rs. 2,55,000/- u/s 68 of the Income Tax Act, 1961 ('the Act”) in respect of the gifts received from Bhanuben Babulal Patel and Champaben Sojitra respectively alleging that the creditworthiness of the donors was not established. 1.2 The CIT(A) further erred in verifying the source of source and not considering the material placed on record for the relevant year in consideration. 1.3 The Appellant therefore prays that the AO be directed to delete the aforesaid additions amounting to Rs. 4,54,725/-. Ground No. 2: The Appellant craves leave to add to, alter any/ or amend the foregoing grounds of appeal.”
5. At the time of hearing, Ld. AR of the assessee submitted the facts of the present case and details of the gifts received by the assessee. Further, he submitted that the assessment under consideration is abated assessment and Ld.CIT(A) is not supposed to check source of source and assessee has provided all the details including the gift deeds and all the (A.Y: 2014-15) Smt. Ilaben K. Ghadia details relevant to prove the capacity, genuineness of the parties before tax authorities. He submitted that all the relevant informations are filed in the form of Paper Book, Assessee also established the identity of the donors who are close relatives of the assessee. Assessee also submitted additional evidences before us which is placed in the form of Paper Book Page No. 1 to 8 in which assessee has submitted affidavit from Smt Bhanuben B. Patel and affidavit of Smt Champaben Sojitra and holding of Smt Champaben Sojitra. Further, he submitted that in the similar facts on record the Coordinate Bench has decided the issue in favour of the assessee in the case of Ushaben H. Ghadia v. DCIT in ITA.No. 618/Mum/2021 dated 23.03.2022.
On the other hand, Ld. DR relied on the orders passed by the lower authorities.
Considered the rival submissions and material placed on record, we observe that assessee has received gift from Smt Bhanuben B. Patel and Smt Champaben Sojitra by submitting the bank statements, gift deed and other evidences in support of the receipts of the above said gifts which is placed in Paper Book. In the similar facts on record, we observe the (A.Y: 2014-15) Smt. Ilaben K. Ghadia Coordinate Bench has considered the similar issue in the case of Ushaben H. Ghadia v. DCIT (supra) and came to the conclusion, as under: - “7. I have heard both the parties and perused the records. I find that ld.CIT(A) has deleted the first addition of Rs.5,35,000/-, but he has upheld the addition of Rs.1,99,725/-,the reasoning by which ld.CIT(A) has deleted the first addition in any considered opinion duly applies to the second addition. The revenue is not in appeal against the decision of first addition.
8. I note that it is not the case that revenue did not have the name and address of the person giving the gift. It is also not the case that the enquiry was made and the said person has failed to respond. The ld.CIT(A) has also accepted that the said person is having agricultural income and agricultural land. By no stretch of imagination, it can be presumed that people having agricultural income cannot make a small savings to give a small amount of loan or gift. Addition by such presumption without making any cogent enquiry is not sustainable in law. Accordingly, the addition sustained by the ld.CIT(A) is liable to be set aside. I direct accordingly.”
Respectfully following the above said decision, we are inclined to direct the Assessing Officer delete the additions made in this case. Accordingly, ground raised by the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 06th January, 2023