SHILPA SHETTY KUNDRA,MUMBAI vs. DCIT, CC-5(2), MUMBAI, MUMBAI

The Assessee being aggrieved challenged the said addition by filing first appeal before Ld. Commissioner raising various grounds, as mentioned by the Ld. Commissioner in para -3 of the impugned order and also filed her written submissions, which read as under:

The case of the appellant was selected for compulsory scrutiny and notice u/s 143(2) and 142(1) of the Act was issued to the appellant. The appellant filed her reply from time to time.

It is submitted that the Assessing Officer failed to consider the documents and submissions made by the Appellant and passed the impugned assessment order dated 21.09.2022, u/s 143(3) r.w.s. 1448 of the Act, assessing total income at Rs 23,39,00,094/- on account of alleged addition of Rs 12,54,54,594/- on account of unexplained credit u/s 68 of the Act.

In reply to the said notice the appellant vide letter dated 24.03.2022 and 15.09.2022 submitted the relevant documents to prove the genuineness of the said transaction. The relevant portion of letter dated 15.09.2022 is reproduced for your honour's ready reference: "2. The husband of the assessee Shri Ripu Sudan Kundra having PAN: AZUPK9777F has gifted to her wife during the year ended on 31st March, 2020 relevant to the assessment year 2020-21 out of natural love and affection and to hold the same absolutely forever. The copy of the duly signed 'Gift Deed' between husband and wife dated 05.03.2020 having full name, PAN, relation, address, full particulars, amount and signature of witnesses is enclosed herewith for your honour's kind perusal alongwith the acknowledgement of income tax return in form ITR V filed on 29.01.2021 vide efiling acknowledgement number 231839011290121 of husband, Shri Ripu Sudan Kundra as asked by your goodself. Being the gift received from spouse, the genuineness of the abovesaid gift is beyond doubt."

It is submitted that to prove the identity, genuineness and creditworthiness of the transaction executed between the party, the appellant during the assessment proceedings submitted the following documents: (enclosed at page number 64-69 of the paper book) i. Copy of duly signed gift deed dated 05.03.2020 along with signature of two witnesses. ii. Full name of Doner and Donee.

In view of the aforesaid evidences filed during the course of reassessment proceedings, the appellant has fully discharged the burden u/s 68 of the Act and the burden has shifted on to the department and the Assessing Officer has not conducted any enquiries thereafter by confronting these evidences with the Donor or otherwise to shift the burden back on to the appellant. The appellant has received the said gift from her husband out of natural love and affection, therefore the genuineness of the abovesaid gift is beyond doubt.

It is pertinent to note that the Assessing Officer has failed to adopt the due process of law by issuing summons under section 131 of the Act for carrying out detailed investigation from the Donor, when the Assessing Officer was already having information regarding PAN details, complete residential address and Income Tax Return of the Donor. In absence of such enquiry conducted by the Assessing Officer, the impugned order passed u/s 143(3) is bad in law and shall be deleted.

In order to prove the above contentions, the appellant places reliance on the following judgements: a. Decision of Hon'ble ITAT, Patna Bench in the matter of Sandeep Bansal v. Assistant Commissioner of Income-tax, Central Circle-2, Patna, [2018] 89 taxmann.com 224 (Patna - Trib.). The facts of the case are that pursuant to search and survey conducted upon premises of assessee, gift deeds and affidavits were found. Assessing Officer made additions under section 68. It was noticed that though assessee was in receipt of gifts from various parties, but he had not discharged his onus completely by producing Donors before Assessing Officer or any other documentary evidence to prove creditworthiness of Donors and proving genuinity of gifts. At same time, revenue had not adopted due process of law by issuing summons under section 131 for carrying out detailed investigation from Donors, more particularly 9 Shilpa Shetty Kundra when Assessing Officer was already having information regarding PAN of Donors, bank accounts of Donors and other related details. The Hon'ble ITAT held that, on facts, additions under section 68 could not be made and issue of verification of gifts was to be remanded to file of Assessing Officer to decide same afresh. b. Decision of Hon'ble Gujarat High Court in the matter of Commissioner of Income-tax VI v. Heena Sharma, [2013] 33 taxmann.com 176 (Gujarat). The Hon'ble High Court held that where assessee in support of gifts received from Donors submitted requisite documents such as copies of demand drafts, gift deed, PAN cards and acknowledgement of returns of Donors, no addition could be made in respect of gift amount by taking recourse to provisions of section 68. c. It is submitted that Hon'ble Apex court in the case of CIT Vs Divine Leasing & Finance Ltd. (2007 158 Taxman 440/299 ITR 268) has held that if the relevant details of the address or PAN/identity of the creditor are furnished to the Department it would constitute acceptable proof or acceptable explanation by the assessee. In this case, the creditors existence is recognized as the company is in the records of the IT Department, since the appellant has submitted their PAN and also copies of IT. Return. d. The Hon'ble Supreme Court in the case of CIT Orissa Vs Orissa Corp. Pvt. Ltd. [1986] 159 ITR 78, held that: "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessee. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusions that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or preserve or based on no evidence. If the conclusion is based on some evidence 10 Shilpa Shetty Kundra on which a conclusion could be arrived at, no question of law as such arises."

The ground of appeal

The Assessee being aggrieved challenged the said decision of the Ld. Commissioner in sustaining the addition vide impugned order, which is under consideration before us.

The Ld. Counsel for the Assessee at the outset submitted that the Assessee had duly filed the relevant documents and details substantiating the donation under consideration, such as full name of the Donor and Donee, details of PANs of Donor and Donee, relationship between the Donor and Donee, full address of Donor and Donee and acknowledgment of income tax return of Donor for the A.Y 2020-21 and therefore the Assessee has discharged her primary onus cast u/s 68 of the Act. The Ld. Counsel for the Assessee also relied on various judgments including the decisions of Hon’ble Apex Court in the cases of CIT Vs. Orissa Corporation (P) Ltd., 1986 AIR 1849 and CIT Vs. Divine Leasing & Finance ltd, 2007, 158 Taxman 440/299 ITR 268, which we will deal with, in the latter part of the order. The Ld. Counsel also placed on record, the copy of gift deed executed by the husband of the Assessee and clarificatory affidavits of the Assessee and her husband qua gift.

Heard the parties and perused the material available on record. The controversy involved in the instant case pertains to the amount of Rs.12,54,54,594/- which has been claimed as gift received by the Assessee from her husband and accordingly declared the said amount in her return of income, which came into consideration, during the assessment proceedings and thus, the AO issued show cause notices to the Assessee to justify the gift amount received from her husband, by producing the relevant documents including the bank statements etc.

The Assessee before the AO, vide reply dated 15.09.2022 claimed that the Assessee’s husband has gifted the said amount during the year ended on 31.03.2020 out of natural love and affection to hold the same by the Assessee absolutely forever. The Assessee before the AO also filed the gift deed dated 05.03.2020 executed between husband and wife, along with 15 Shilpa Shetty Kundra acknowledgment of income tax return in form no.ITR-5 filed on dated 29.01.2021 by the Assessee’s husband.

The AO though considered the said reply and the gift deed filed by the Assessee. However, could not get impressed, as in spite of repeated opportunities, the Assessee except providing scanned copy of ‘gift deed’ failed to provide any evidence with regard to mode of payment/receipt and bank statement of Assessee and her husband, showing the actual transfer of the gifted amount. The AO also observed that the PAN of Assessee’s husband was provided only by reply dated 15.09.2022 i.e. at the fag end, so that no further enquiry could be made under Section 68 of the Act. Further the Assessee’s husband has shown his total income at Rs.27,71,020/- for the AY under consideration, which does not commensurate with the amount of gift given and therefore, the credit worthiness of the Donor could not be established. The AO therefore, more or less on the aforesaid reasons made the addition of the gifted amount under consideration.

We further observe from the impugned order that before the ld. Commissioner as well, the Assessee admittedly failed to file any copy of the bank statement of the Assessee and her husband despite being asked specifically and therefore the ld. Commissioner affirmed the addition made by the AO under 16 Shilpa Shetty Kundra Section 68 of the Act by considering the peculiar facts and circumstances specific to the effect that the Assessee failed to file the bank statement showing the corresponding bank entry pertaining to the gifted amount and the Assessee’s husband’s income to the tune of Rs.27,71,020/- for the AY 2020-21 does not commensurate with the gift amount. Further, the Assessee failed to furnish the source of fund.

We observe that before us, on being asked specifically the Assessee only provided the joint bank statement of account maintained with Punjab National Bank, which was/is operated jointly by the Assessee and her husband, wherefrom it appears that the amount of Rs.12,81,41,672/- is appearing, as deposit on dated 12.02.2020 vide remittance ID (4553 IMT 034914) and prior to that entry, as on 31.01.2020 in that particular account, the amount of Rs.3045,41,637/- is appearing as credit balance after entry of Rs.12,81,41,672/- on dated 12.02.2020. There are various transactions, appears to have been carried out. The Assessee has claimed that on 31.03.2020, she has received Rs.12,54,54,593/- through aforesaid bank account bearing no.6629009300000144 maintained with Punjab National Bank. However, as per bank statement dated 20.04.2024 submitted by the Assessee, it appears that as on 31.03.2020, the amount of Rs.24,82,29,633/- was available in such bank account and there 17 Shilpa Shetty Kundra is no clear cut transaction of the gifted amount under consideration, reflecting in such bank account.

We further observe from the gift deed submitted by the Assessee, which read as under: -

Though the Assessee has filed the copy of ledger account qua Assessee’s husband for the AY under consideration showing the amount of Rs.12,81,41,672/- with a narration: Remittance ID (4553 IMT 03491420) realize Kuki – received towards repayment of loan of Ripu Sudan Kundra dated 12.02.2020 and thereafter two bank transactions of Rs.10 lakhs each carried out on dated 17.02.2020 and further shown the amount of Rs.12,54,54,593/- as on 31.03.2020 the gifted amount received from Shri Ripu Sudan Kundra however, it is a fact that from the bank statement referred to above, the actual movement of gifted amount, is no-where appearing. There is also no co- relation in the bank entries, qua amount involved.

As observed above that in the above bank statement, as on 31.03.2020, the amount of Rs.24,82,29,633/- was available as balance and up to 31.03.2020, the mode/movement of aforesaid gifted amount, is nowhere appearing in the bank statement and also not clearly established by the Assessee.

We further observe that the Assessee before the authorities below has only filed acknowledgment of return filed by the Assessee’s husband for the AY under consideration, without its financials/profit and loss account. However, before us on being asked the Assessee has filed complete copy of ITRs of the Assessee’s husband for the AYs 2019-20 and 2020-2021.

Further in the Column-B of Schedule-FA filed alongwith ITR for the AY 2020-21, which is under consideration, the Assessee’s husband repeated the same entries, as mentioned in the ITR of AY 2019-20. Further, in the Column-D, which pertains to details of any other capital asset held (including any beneficial interest) at any time during the relevant accounting period, has shown the amount of total investment at ‘Rs.22,81,85,851/-‘. Further shown having ‘no taxable income and offered in the return of income ‘during the year under consideration.

In both the ITRs of 2019-20 and 2020-21, the income derived from the Asset has been shown as “0”. Admittedly in the bank statement, the credit amount of Rs.12,81,41,672/- having 21 Shilpa Shetty Kundra credited on 12.02.2020 having remittance ID (4553 IMT 034914) however, such amount is nowhere appearing in the FA Schedules of ITRs as filled up by the Assessee. There is also no co-relation of Schedule FA, with the aforesaid transaction dated 12.02.2020.

Thus, on the aforesaid analyzations, we reiterate again: (i) That in the gift deed as submitted by the Assessee, the mode of transaction of gifted amount is not specified. (ii) Further, how the gifted amount has actually been transferred is also not specified.

No doubt the Assessee has provided PAN no. of the Assessee’s husband, along with the copy of the ITR filed by the Assessee’s husband however, it is a fact as observed by the AO that the Assessee has provided the details of the Assessee’s husband at the fag end of the assessment proceedings and therefore, the AO was unable to carry out proper enquiries under Section 133(6) of the Act. Further it is also a fact that before both the authorities below, the Assessee despite being asked specifically, failed to file the bank statements depicting the actual 23 Shilpa Shetty Kundra transactions carried out with regard to the gifted amount. Further, in the gift deed and the clarificatory affidavits, as filed before us, the Assessee failed to specify the mode of payment received and/or the mode of gift amount. Further, it is also admitted fact that the Assessee though before us has filed complete ITRs of Assessee’s husband for the AYs 2019-20 and 2020-21 however, failed to establish the transaction clearly. Further, also failed to establish the source of the Assessee’s husband for gifting such huge amount in clear manner and with substantive documents. Even otherwise complete ITRs and the Punjab National Bank statement as filed by the Assessee before us were not made available before the authorities below, despite being asked specifically. Thus, in our view the Assessee deserve no leniency however, considering the peculiar facts and circumstances specific to the effect as well that the Assessee though filed certain details and documents but not discharged her prima facie onus cast under Section 68 of the Act completely by filing complete details/clarifications and relevant documents and in the absence of relevant details and documents and clarification, which the Assessee admittedly failed to file/offer, the issue involved also remained to be adjudicated in its right perspective and proper manner. Even otherwise in our considered view, the details and documents available on record and to be furnished by the Assessee in order to discharge her prima facie 24 Shilpa Shetty Kundra onus cast u/s 68 of the act completely, as observed above, requires factual verification. Thus, considering the peculiar facts and circumstances in totality for proper and just decision of the case and substantial justice, we are inclined to remand the instant case to the file of the Jurisdictional AO (JAO) for decision afresh, suffice it to say by affording reasonable opportunity of being heard to the Assessee.

We also deem it appropriate to direct the Assessee to establish her claim by filing/providing complete details/clarifications and documents before the JAO, without any default. We clarify that in case of subsequent default, the Assessee shall not be entitled for any leniency.

Thus, the case is accordingly remanded to the file of the Jurisdictional AO (JAO) for decision afresh, suffice it to say by affording reasonable opportunity of being heard to the Assessee.

The judgements relied on by the parties prima facie appears to be factually dissimilar to the peculiar facts and circumstances of this case and the issue involved and therefore are not strictly applicable to the case in hand and thus, we deem it appropriate not to explore the same in depth, as we have decided to remand the case to the file of the AO for ‘de novo decision’.