SHATISHKUMAR KANTILAL SHAH (HUF) vs. INCOME TAX OFFICER

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TAXAP/856/2011HC GujaratGJHC24025479201122 August 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT's findings were based on facts and material relevant to the issue, and were findings of fact arrived at properly, not being perverse. The Court found that the ITAT had considered the evidence and applied the test of human probabilities, as laid down in cases like Durga Prasad More and Sumati Dayal, to conclude that the assessee failed to prove the donor's creditworthiness and the genuineness of the gifts. The High Court found no substantial question of law arising for consideration, stating that when factual findings are properly arrived at and not perverse, interference is not called for. Therefore, the appeal was dismissed. The ITAT's decision to treat the gift as an unexplained cash credit under Section 68 was upheld.

What were the facts?

The assessee, Shatishkumar Kantilal Shah (HUF), filed a return for Assessment Year 2004-2005. The Assessing Officer (AO) initiated scrutiny and noticed a gift of Rs. 9,51,257/- from Smt. Bhanumati J. Doshi of USA. The AO requested proof of the donor's identity and creditworthiness, which the assessee failed to provide. Consequently, the AO added the gift amount to the assessee's income under Section 68 of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) deleted this addition, finding the gift genuine based on documents produced by the assessee. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT allowed the Revenue's appeal, holding the gift unexplained.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that a gift of Rs. 9,51,257/- received by the appellant is an unexplained cash credit within the provisions of Section 68 of the Act? (Question of law turning on Section 68) 2. Whether, in the facts and under the circumstances of the case, the Income Tax Appellate Tribunal was right in not appreciating that the appellant has fully discharged the burden of proving the gift under the provisions of Section 68 of the Act? (Question of mixed law and fact turning on Section 68) 3. Whether, in the facts and circumstances of the case, the order of the Income Tax Appellate Tribunal was perverse in as much as it has not properly appreciated the evidences already placed on record; has passed the order in breach of principles of natural justice without giving proper opportunity to the appellant and has not given any reasons or material findings to reverse the findings of CIT(A)? (Question of mixed law and fact) 4. Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in concluding without discussing the findings reached by the other authorities and finding the same to be erroneous as “it was a duty of the Tribunal to ascertain the reasons which were given by the Commissioner (Appeals) in whose order, the order of the Assessing Officer had merged” before reversing the same? (Question of law turning on principles of appellate review, citing 257 ITR 297). Assessee's Contentions: The assessee argued that it had fully discharged the burden under Section 68 by producing documents proving the gift's genuineness, identity, and creditworthiness of the donor. The assessee also contended that the ITAT's order was perverse, breached natural justice, and failed to properly appreciate evidence and the CIT(A)'s findings. The assessee relied on the principle that the Tribunal must ascertain the CIT(A)'s reasons before reversing its order. Revenue's Contentions: The judgment records no specific contentions for the Revenue before the High Court.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
TAXAP/856/2011 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 856 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= SHATISHKUMAR KANTILAL SHAH (HUF) - Appellant(s) Versus INCOME TAX OFFICER – Opponent(s) ========================================================= Appearance : MRTUSHARPHEMANI for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA TAXAP/856/2011 2/4

JUDGMENT Date : 22/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) The present appeal by the assessee arises out of order dated 23.12.2010 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’, passed in ITA No. 1710 of 2008 for the Assessment Years 2004-2005

1.

1 Following questions are raised by the appellant proposing them as substantial questions of law. “[i] Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that gift of Rs. 9, 51,257/- received

by the appellant is unexplained cash credit within the provisions of S. 68 of the Act? (ii) Whether, in the facts and under the circumstances of the case, the Income Tax Appellate Tribunal was right in not appreciating that the appellant has fully discharged the burden of proving the gift under the provisions of S. 68 of the Act? (iii) Whether, in the facts and circumstances of the case, the order of the Income Tax Appellate Tribunal was perverse in as much as it has not properly appreciated the evidences already placed on record; has passed the order in breach of principles of natural justice without giving proper opportunity to the appellant and has not given any reasons

or material findings to reverse the findings of CIT(A)? (iv) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in concluding without discussing the findings reached by the other authorities and finding the same to be erroneous as “it was a duty of the Tribunal to ascertain the reasons which were given by the Commissioner (Appeals) in whose order, the order of the Assessing Officer had merged” before reversing the same [257 ITR 297]?”

2.

We heard Mr. Tushar P. Hemani, learned advocate for the appellant.

TAXAP/856/2011 3/4 JUDGMENT

3.

Upon the appellant assessee filing his return of income for the assessment year 2004-2005, the case was taken up for scrutiny by issuing notice under section 143(2) of the Income Tax Act, 1961 (hereafter referred to as 'the act' for sake of brevity). In course of the proceedings, the assessing officer noticed that the assessee had not submitted any proof in respect of amount shown as a gift of Rs. 9,51,257/- from one Smt. Bhanumati J. Doshi of USA. Therefore, the officer called upon the assessee vide letter dated 13.11.2006 to produce the bank pass book, salary certificate, return of income etc. in support of identity and creditworthiness of the donor. The assessee having failed to produce any such document, the amount of gift was treated as unexplained cash credit under section 68 of the Act and was added to the income for the purpose of tax.

3.

1 The assessee preferred appeal before the Commissioner of Income Tax (Appeals). The CIT(A), however, deleted the addition and accordingly allowed the appeal of the assessee holding that the assessee had produced the documents proving the genuineness of the gift. Against the order of CIT(A), the department went in appeal before the Income Tax Appellate Tribunal. The Tribunal allowed the appeal of the department by observing as under : “....it is clear that the assessee failed to prove any close relation with donor and her creditworthiness to make the gift. No sufficient evidence or material is filed on record to prove the genuineness of the gift in the matter. Merely showing the gift was made through banking channel is not sufficient to prove the genuineness of the gift in the matter. The Hon'ble Supreme Court in the case of Durga Prasad More 82 ITR 540 and in the case of Sumati Dayal 214 ITR 801 held that “Courts and the Tribunals have to judge the evidence before them by applying the test of human probabilities”. ......... it is clearly established that the assessee has failed to prove creditworthiness of the donor and genuineness of the gifts in the matter.....”

TAXAP/856/2011 4/4 JUDGMENT

4.

From the facts it was disclosed that the assessee had furnished the gift deed, bank certificate, copy of passport as well as copy of return of income filed by the doner. These documents would sufficiently establish the identity and creditworthiness of the said named party. The Assessing Officer simply brushed them aside.

4.

1 The confirming findings recorded by the Tribunal were based upon the facts and material relevant to the issue before it. They were findings of facts and in the realm of appreciation. When the findings are of factual in nature and properly arrived at, and when they are in no way perverse, as they are in the impugned order, no interference is called for in the present appeal. No substantial question of law arises for consideration.

5.

Accordingly, the appeal is dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi

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