COMMISSIONER OF INCOME TAX,RAIPUR vs. SMT. SUSHILA DEVI JAIN

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TAXC/176/2010HC ChhattisgarhCGHC01013393201028 August 2013Bench: HON'BLE THE CHIEF JUSTICE,HON'BLE SHRI JUSTICE SUNIL KUMAR SINHA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeals by the Department against the Tribunal's order in the assessment proceedings were without merit and dismissed them. The Court noted that the Assessees had provided various documents including declarations, certificates, and affidavits from the donor, and that the entire transaction was conducted through the bank. The Tribunal, after considering these documents and circumstances, had believed the genuineness of the gifts. The Court considered this a finding of fact and therefore, no interference was warranted. Regarding the penalty proceedings, the Court held that if the appeals arising out of the assessment proceedings were dismissed, then there was no merit in the appeals arising out of the penalty proceedings. Consequently, the appeals of the Department against the penalty proceedings were also dismissed. The operative direction was the dismissal of all four appeals filed by the Department.

What were the facts?

The Assessees, Smt. Hulas Devi Jain and Smt. Sushila Devi Jain, received gifts of ₹20,00,000 each on 09.10.2003 from Shri Hasmukh Bhagwanji Pattani, a donor residing in UAE. The amounts were received via demand drafts and credited to their bank accounts on 15.10.2003. The Assessees declared these as gifts in their returns filed on 16th and 17th February 2005. The Assessing Officer (AO) issued notices under Section 142(1) and demanded production of the donor, which was not met. The AO added ₹20,00,000 to each assessee's income on 29.12.2006, deeming the gifts unexplained. The Commissioner of Income Tax (Appeals) (CIT-A) dismissed the appeals on 18.01.2008. The Income Tax Appellate Tribunal (Tribunal) allowed the Assessees' appeals on 21.01.2010. The Department appealed these orders. Penalty proceedings under Section 271(1)(c) were initiated, and penalties were imposed by the AO on 18.03.2009, sustained by the CIT-A on 08.10.2009, and then deleted by the Tribunal on 03.06.2010. The Department also appealed these penalty orders.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was legally justified in deleting the addition of ₹20,00,000 received by the Assessee by way of gift, particularly when the Assessee has not given any cogent reason to prove the genuineness of the gift and creditworthiness of the Donor? (This issue turns on Section 68 or Section 69A of the Income Tax Act, 1961). 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the penalty of ₹20,00,000 imposed by the AO and which was sustained by the CIT-A also? (This issue turns on Section 271(1)(c) of the Income Tax Act, 1961). Assessee's Contentions: The Assessees contended that the gifts were genuine and supported by various documents including declarations from the donor, an affidavit, a declaration before an Embassy official, and a letter from a bank confirming the donor's account. They also highlighted that the transactions were routed through the bank. Revenue's Contentions: The Revenue (Department) argued that the Tribunal was not legally justified in deleting the addition as the Assessees failed to provide cogent reasons to prove the genuineness of the gifts and the creditworthiness of the donor. They also argued that the penalty was rightly imposed and sustained by the CIT-A.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 142(1),Section 68,Section 69A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

IN THE^HIGH^OU^T OF_ JUbICATURE AT BILASPUR Tax Case ^^^) N0. J ^^ _/2010 I;iw >^^ :.^' APPELLAj^^'^' Commis&'ioner of Income Tax, .^^"^y^i^ Raipur X^";.'^'^ i.L.:^/<w' vs ^^^^tft^ . vs t^..'R^SPONDENT Smt. Sushila bevi jain, c/o Prem (Assessee) Jewellers, Durg (CG) APPEAL UNDER SECTION 260-A OF THE INCOME TAX ACT. 1961 :-:„ 'll@^c;'' ..<.

y ^ CORAM: HIGH COURT OF CHHATTISGARH AT BILASPUR DIVISION BENCH HON'BLE SHRI YATINDRA SINGH, C.J. HON'BLE SHRI SUNIL KUMAR SINHA, J Appellant Resoondent Appellant Respondent Aopellant Resoondent AppeIIant Resoondent 1. TaxCaseNo.40of2011 Income Tax Officer VERSUS Smt Hulas Devi Jain 2. TaxCaseNo.42of2011 Income Tax Officer VERSUS Smt Sushila Devi Jain 3. Tax Case No. 175 of 2010 Commissioner of Income Tax VERSUS Smt Hulas Devi Jain 4. Tax Case No. 176 of 2010 Commissioner of Income Tax VERSUS Smt Sushila Devi Jain Income Tax Appeals under Section 260-A of the Income Tax. 1961 Appearance: Shri Anand Dadaria, counsel for the Appellant/ Department. Shri GN Purohit, Senior Counsel with Shri Abhishek Oswal, counsel for the Respondents/ Assessees. JUDGEMENT (29thAugust,2013) 1. These four tax appeals are under section 260A ofthe Income Tax, 1961 (the Act) are against the order of the Income Tax Appellate Tribunal, Bilaspur (the Tribunal) in respect of the assessment year 2004-05 for Smt. Hulas Devi Jain and Smt Sushila Devi Jain (the Assessees) as well as the penalty proceedings for the same year and for the same persons. B

\ ^vh"^. ^•. .A ^.^''"/ z \jb THE FACTS Relating to the assessment proceedings 2. The Assessees are related to each other. Smt. Hulas Devi Jain is mother-in-law of Smt. Sushila Devi Jain. Both of them received a gift of ^20,00,0007- each (given in the form of4 demand drafts of ^5,00,000/-) on 09.10.2003 from one Shri Hasmukh Bhagwanji Pattani (the Donor) from UAE Exchange Centre Limited Corporation, PB No. 170 Abu-Dhabi, UAE, Sharjah Branch. 3. The aforesaid drafts were also credited in the saving bank accounts of the Assessees in Industrial Development Bank of India (the Bank) on 15.10.2003. 4. The Assessees filed their written on 16th and 17th February, 2005 in which the aforesaid amounts were mentioned as gifts. 5. The cases of the Assessees were taken up for the scrutiny and the relevant notices under section 142(1) ofthe Act were issued. 6. The Assessing Officer (the AO) also asked the Assessees to produce the Donor, but he was not produced. Subsequently, the AO passed an order on 29.12.2006 holding that the gifts were not satisfactorily explained and he added the income of ^20,00,000/- each in the income of the Assessees. 7. Aggrieved by the aforesaid orders, the Assessees filed separate appeals before the Commissioner of Income Tax (Appeals) (the CIT-A). 8. Before the CIT-A, the Assessees were again required to produce the Donor. However, instead of producing the Donor, they produced certain more documents. The CIT-A dismissed the appeals by separate orders on 18.01.2008. -—

^ ^\ -3 9. Aggrieved by the aforesaid orders, the Assessees filed separate appeals before the Tribunal. They were allowed on 21.01 .2010. 10. Aggrieved by the aforesaid orders, the Income Tax Department (the Department) has fited Tax Case Numbers 40 and 42 of 2011. Relating to penalty proceedings 11. The AO while finalising the assessment proceedings on 29.12.2006 also directed to initiate the penalty proceedings. Subsequently, the AO by order dated 18.03.2009 imposed penalty under section 271(1) (c) of the Act. 12. Against the aforesaid orders, the Assessees filed appeals before the CIT-A. They were dismissed on 08.10.2009. 13. Aggrieved by the aforesaid orders, the Assessees filed appeals before the Tribunal. They were allowed by separate orders on 03.06.2010 on the ground that the addition has been deleted. 14. Aggrieved by the aforesaid orders, the Department has filed Tax Case Numbers 175 and 176 of2010. THE DECISION 15. We have heard counsel for the parties. 16. The appeals by the Department against the order dated 21.01.2010 in the assessment proceedings were admitted on the following substantial question of law: 'Whether on the facts and circumstances of the case, the Tribunal was legally justified in deleting the addition of ^20,00,000/- received by the Assessee by way of gift particular when the Assessee has not given any cogent

^ reason to prove the genuineness of the gift and creditworthiness of the Donor?' \At> 17. The appeals against the order of the Tribunal dated 03.06.2010 in the penalty proceedings were also admitted on the following substantial question of law: 'Whether on facts and in the circumstances of the case and in law the Tribunal was justified in deleting the penalty of ^20,00,0007- imposed by the AO and which was sustained by the CIT-A also?' Assessment Proceedings 18. The Assessees along with the return had also filed separate copies of dedaration executed by the Donor written on the stamp purchased on 21.01.2004, executed in Mumbai. Thereafter, they also filed another declaration dated 16.10.2006 as well as affidavit ofthe Donor. 19. The Donor is an Indian citizen though residing in UAE. Before the CIT-A, the Assessees also filed a declaration of the Donor dated 11.04.2007 executed before the Embassy official at Abu-Dhabi alongwith the letter of Abu-Dhabi Commercial Bank that they are maintaining his account. In the declaration, it is also mentioned that the Donor is holding an Indian Passport number 8965000. 20. The CIT-A confirmed the order passed the AO. However, the Tribunal after considering the documents allowed the appeals filed by the Assessees. 21. The AO has disbelieved the genuineness of the gifts and as such, added the amount in the income of the Assessees. However, he did not mention under which section it has been added. The CIT-A has discussed section 68 of the Act. However, he has also not specifically mentioned that under which section he was adding the amount in the income of the 1^1

(^ Assessees. The Tribunal has merely believed the genuineness ofthe gifts, but has also not mentioned any specific provision of the Act. 22. Section 69A of the Act is titled 'Unexplained money, etc.'. It provides that in case an assessee is found to be the owner of any money and he is unable to explain it satisfactorily, then that may be deemed to be income of that assessee. 23. It was not disputed by the Assessees that ^20,00,0007- each were credited in their accounts and they were owner of the same. In case they could not satisfactorily explain the same, then the said amount could be added in their income under section 69A of the Act. 24. Nevertheless, the Tribunal after considering the declaration, certificate and the affidavit filed by the Donor and the circumstances that the entire transaction was through the Bank, has believed the genuineness of the gift. This being a finding of fact, no interference is warranted in these appeals. The appeals have no merit. They are dismissed. Penalty Proceedings 25. It is not disputed that in case the appeals arising out of the assessment proceedings are dismissed, then there is no merit in the appeals arising out of the penalty proceedings and they are liable to be dismissed. In view of the same, the appeals of the Department against the penalty proceedings are also dismissed. CONCLUSION 26. In view of above, there is merit in all the four appeals. They are dismissed. , —- — Sd/- Chief Justice Sd/- Sunil Kumar Sinha Judge nimmi

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