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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI S. RIFAUR RAHMAN & SHRI PAVAN KUMAR GADALE
ORDER PER S. RIFAUR RAHMAN, A.M. The present appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-30, Mumbai [in short ‘CIT(A)’] for the assessment year 2014-15 dated 03.10.2018 and arises out of assessment completed u/s 143(3) of the Income Tax Act, 1961 (in short the Act).
Brief facts of the case are, the assessee is a HUF and the Karta of HUF is Vishal A. Bhansali. The Assessing Officer while perusing the return of income for assessment year 2013-14 and 2014-15 observed that the assessee has introduced capital to the extent of ₹2,62,16,548/- and the assessee was asked to Vishal A. Bhansali (HUF) 2 explain the source of capital introduced. The assessee explained that the assessee has declared total income of ₹11,85,554/- and has received an amount of ₹2,53,09,000/- in cash through Will of Mrs. Rekha K. Bhansali who is sister of Ashok K. Bhansali (Father of the assessee). The Assessing Officer has reproduced the Will in his order at page 2. The Assessing Officer (AO) perused the above Will and observed that Mrs. Rekha K. Bhansali has bequeathed the immovable properties to M/s Kirtilal & Sons HUF and Vishal A. Bhansali HUF. He also observed that the Will do not mention anything about cash in hand. On inquiry, the assessee has submitted copy of statement of affairs of late Mrs. Rekha K. Bhansali with pending cash balance of ₹ 5.07 crores. The AO observed that 50% of the cash deposit made by the assessee is matches with the cash in hand disclosed. In order to verify the genuineness and creditworthiness of Mrs. Rekha K. Bhansali, the AO asked the assessee to file the return of income of Mrs. Rekha K. Bhansali for earlier assessment years, the details of all the properties held by her, break up of capital account and source of cash deposit in bank of the assessee with documentary evidence. 2.1 Not satisfied with the submissions made by the assessee. The AO in order to verify the genuineness of the Will submitted before him, he issued summons to the two witnesses to the Will and one of the witness Shri Harry Ashar attended the office and recorded his statement on 26.12.2016. In the statement Shri Harry Ashar agreed that the signature belongs to him and having visited several times to the residence of assessee and Mr. Ashok K. Bhansali but he expressed that he did not remember Late Mrs. Rekha K. Bhansali and he did not remember that Will was made in his presence.
Vishal A. Bhansali (HUF) 3
3. Based on the statement of Shri Harry Ashar statement, The Assessing Officer treated the copy of ‘Will’ as bogus and treated the source of cash as non- genuine and made the addition in the hands of assessee as undisclosed cash to the extent of ₹2,53,09,000/-.
Aggrieved with the above order, the assessee preferred an appeal before the Ld. CIT(A) and the assessee made detailed submissions before the Ld. CIT(A), for the sake of clarity it is reproduced below: "The Ld. A0 has assessed the sum of Rs.2,53,09,000/- as unaccounted income of the assessee or as undisclosed cash of the assessee, however in the entire income tax act he could not found out any provisions or sections under which these additions can be made. And that really shows his prejudiced attitude towards your appellant. The Cursory reading of assessment order would come to suggest that cash was not belonging to your appellant but the same has come to him from her Aunt Smt. Rekha K Bhansali on her death through will executed by her. The Ld. AO has not stated any reasons to say that second page is not the continuation of will, nobody can whisper like this on this kind of original documents. The Ld. AO further wish to suggest that to whom the executor of the will would have bequeathed the properties, he ought to have appreciated that this is purely the prerogative of the executor in which none have rights whatsoever to express their opinion in this regard. The AO would have further appreciated that when there was no significant cash how anyone is going to write anything in will about that, will says all the movables and immovable would go to two of them in equal proportion, and one of which is your appellant. The reasons stated by the Ld. AO for disbelieving the will is very flimsy, based on full of suspicious and surmises, he ought to have appreciated that surprises and surmises however strong can take the place of evidence in the eye of law. Money could not be deposited at a time in bank as she was not holding any cash but it was all outstanding with the various peoples, and as and when your appellant realized money from them Vishal A. Bhansali (HUF) 4 same have been deposited in the bank account. The Ld. AO is once again writing stories on this issue without even examining the bare facts of the case. It is very apparent the Ld. AO has applied the provisions wrongly for the reasons best known to her only, now coming to the other issues raised by her in the Assessment Order. But before going in to that it would be pertinent. to state the bare facts of the case which is that appellant HUF has received funds from her own spinster sister on her death on the basis of will executed by her, the appellant HUF had unmarried sister namely Smt. Rekha Bhansali who was staying with her throughout her life till death with them only, apparently there cannot be any legal heir for her in accordance with her status as she was single thorough out her life. Not only that she was also assessed to Income tax as well as wealth tax and up to date returns were filed in her case till her death, the copy of latest and last return filed were also filed with the Ld. AO. The Learned AO nowhere in the entire assessment order doubted about the bonafide of Smt. Rekha Bhansali or Anusam Associates etc. The additions are mainly made on account of disbelieving the facts or on account of alleged allegation of partial furnishing of details which is not correct. The Page 7 she is issuing show cause notice on account of unexplained cash credit us.68 of the income tax act which is not the case here. On Page 8 your appellant reply to show cause notice stating the provisions of section are not applicable to them as they have submitted the explanation with documentary evidences which are verifiable. On Page 9 of the Assessment Order she states that the last return of Smt. Rekha K Bhansali was filed by the executors of her in form no. ITR-2 in which no details of assets, liabilities, capital account, balance sheet is reflected. And thus genuineness of the transactions cannot be verified from the return filed and AR has also not furnished any other documentary evidence to prove the genuineness and creditworthiness of transaction. Obviously for the person who is dead there cannot be any assests, liabilities, balance sheet etc. As she is no more and upon her death all the assests liabilities etc. has been transferred to the concerned persons designated in her will. The Ld. AO has erroneously stated that there is no capital account in fact that is very much available with the return filed. The income of late Smt. Rekha k Bhansali for the year in which she died was about Vishal A. Bhansali (HUF) 5 Rs.9.93 Lakhs, not only that she was assessed to tax for many years and she was 76 years old at the time of death, now what more than that is needed to prove her creditworthiness. As regards to the Anusam Associates though they have furnished all the possible details in given time, her observation is that they have furnished partial details. She ought to have appreciated that the firm is genuine one and had furnished all the basic information to establish about their geniunenity, not only that even details of transaction along with each and every deposits made in to the account of appellant were also confirmed and furnished by them the observation made by the Ld. AO of M/s. Anusam Associated on Page 11 para 18 of the order is that "it is difficult to trace the manual returns filed." However, the Ld. AO twisted the fact in para, is by saying that they have not filed any return after A. Y. 2005- 06 which clearly shows her arbitrariness and ulterior motive to harass the appellant. If she was very particular to know about the name of signatory of the firm she must have written one more letter and asked for the same, but than she might have not be in position to do what she has done otherwise. Now his sworn statement is more fatal to the Ld. AO than your appellant for the following reasons:- He admittedly confirm having known to the family of appellant, he also admit to frequenting the house and office of the appellant during the relevant period when the will was executed. He identifies the signature thereon as his own, but do not remember, how it could be? She must have allowed her with time to remember, ought to have given us an opportunity to cross examine him to arrive at the truth, must have recalled another witness, but she has measurably failed in doing all that, reasons are very obvious because if she would have done all that probably her ambition of making addition would not have got fulfilled. It is strange that person who has frequented the residence of the appellant so regular would not even know the death of their close relative, who is none the else but the own sister of the appellant. The appellant is of the bonafide opinion that witness has played in the hand of Ld. AO to give the evidence against them to her requirement. The statement Vishal A. Bhansali (HUF) 6 is not at all free and fair. The certain citations relevant to the facts of the case of your appellant are as under: CIT v. Shiv Dhoti Pearls & Investment Ltd. (2015) 64 taxman.com 329/(2016] 237 TAXMAN 104 (Delhi), Smt. Manasi Mahendra Pitkar v. ITO (2016) 73 taxmann.com 68/160FTD 605 (Mum.), Anandasayanam P. Pillai v. CIT (2017) 54ITR (Trib.) 607 (Mum.) Amaranth ...... The gist of written submission no 2 is as under: It is pertinent to note here that Assessment Order is silent about the provision of income tax act under which the addition is made, which is very vital lapse on the part of the Ld. Assessing Officer, the person who is authorized to administer the income tax law could not make any addition if there is no violation to the provision of income tax law. Admittedly according to the Ld. Assessing officer your appellant HUF has not violated any provision of Income tax law warranting any addition. When the appellant was questioned about this he explained as follows:- Yes there was a cash deposited in to the various bank accounts of the appellant and copies of such bank accounts was duly submitted by the appellant HUF. He further explained that amount has been received on account of WILL executed by her own sister (that is sister of the kartha of the appellant's (HUF) namely Late Smt.Rekha Bhansali who was also assessed to tax. The existence of the executants' of will is not in dispute, however her creditworthiness was questioned for which it was submitted that she was assessed to tax and her annual income returned was in order of 10 to 15 lakhs, she was filing her returns regularly and on time and copies of the same was submitted, which has not been countered by the Learned AO in any way. It was further stated that she was Single and Spinster not married and was living with father of the kartha of HUF throughout her life, and when she died she was aged more than 75 years, and considering all that factors in account by no stretch of imagination you can say that she cannot save that kind of money or that was excess in any way. The appellant further produced the Agreement of Sale dated 04-09-2012 which was signed by the executants of will during her life time with the seller of Tea Estate, it also contains the details of advance paid by her during her life time, the said agreement Vishal A. Bhansali (HUF) 7 ITA No. 501/M/2019 was produced before the Learned AO for his perusal and return but unfortunately he has not mentioned anything on this in the assessment order for your ready reference we are enclosing herewith the copy of the same. It was this sale agreement referred above from which money has come back after her death on cancellation of the sale agreement.”
After considering the detailed submissions of the assessee, the Ld. CIT(A) allowed the grounds raised
by the assessee with the following observation :
5. I have given my careful consideration to the rival submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position for arriving the following decision.
6. Ground No. 1 to 9 basically to the addition of ₹ 2,53,09,000/- to the total income of the appellant without quoting any particular section of the Act, under which the addition is made. As the appellant failed to establish the genuineness of the Will of Mrs Rekha K. Bhansali and also failed to prove the cash-in-hand with Mrs Rekha K. Bhansali to the extent of Rs.2,53,09,000/-, the AO held the same to be unaccounted income of the assessee and added the same to the total income of the assessee. 6.1 After hearing the appellant during the course of appellate proceedings and after going through the submissions, it is concluded as under: 6.2 The appellant had an aunt Mrs Rekha K. Bhansali, who stayed with him and in the event of her death on 07.03.2013 had bequeathed her movable and immovable property/materials through Will dt. 19.04.2012 to Shri. Vishal A. Bhansali, who is the Karta of the HUF M/s Vishal A. Bhansali. The deceased had filed her returns till the date of her death. 6.3 The said amount in question viz. unexplained cash deposit of ₹2,53,09,000/- was received by the appellant as per the terms of the Will dated 19.04.2012 and which the assessee had introduced as capital in his business. The AO doubted the genuinenity of the source of the cash and went ahead to make an addition of Rs. 2,53,09,000/-, but in doing so the AO overlooked the provision/section under which the addition has been made. Mentioning of the particular section under the Income Tax Act, which the assessee has Vishal A. Bhansali (HUF) 8 defaulted, is very important to put/fix the onus on the assessee to bring him/her under the legal purview which will be binding on him/her. Be as it may, on-going through the assessment order, the AO has stated that".... hence the amount of Rs. 2,53,09,000/- which was claimed by the assessee as received on account of will of Smt. Rekha Bhansali, is held to be unaccounted income of the assessee a major part of which has been received already in the form of cash deposits in the bank account of the assessee. In view of this, an amount of Rs. 2,53,09,000/- is added to the total income of the assessee". The Lid. AO had made the addition on the basis of insufficient evidences furnished by the appellant to prove the genuineness and credit worthiness of the party viz. the late aunt of the Karta of the appellant HUF. 6.4 As regards the authenticity of the "Will", it being a legal document stamp paper, the validity of it cannot be questioned. The Ld. AO has not stated any reasons for holding that second page is not the continuation of will. The reasoning of the AO that the will is not genuine is based on suspicion and surmises. In case the validity of the Will is questioned, the AO should be able to support his stance with solid proof. In this case the AO has no evidence to support his claim, which seems to only be a hunch. In the sworn statement recorded by the AO, of one of the witnesses to the "Will", has admitted that the signature on the "Will" is his. Therefore, it cannot be said that the "Will" is not genuine. 6.5 There are certain decisions, in which facts of the case are similar to that of the appellant:
1.
Amaranth Agarwal v. Asst. CIT (2014) 52 taxmann.com 218/219 Taxman 54 (All.) The Assessing Officer treated entire deposit of cash in bank account as assessee's own money earned from undisclosed source. The Tribunal partly upheld addition made by the Assessing Officer. Held that there was no attempt on part of Tribunal to determine as to whether section 68 could have been invoked, even if the Assessing Officer had invoked provisions of section 68. Thus it would be appropriate to restore proceeding back to the Tribunal.
2. CIT v. Ramesh Suri (2015) 57 taxman. com 84/231 Taxman 380 (Delhi).
Vishal A. Bhansali (HUF) 9 One W, who was settled in US, gifted a sum to one A. Further W directed A to distribute a portion of said sum to the assessee who was a relative of A. The Assessing Officer treated amount received by the assessee by way of gifts as not genuine and made additions under section 68. Held that it was submitted that the modes for gifting amounts of properties cannot be really gone into by the revenue, so long as the identity or relationship is established, which has been done in the present instance. The revenue does not dispute the present relationship between the donor (through W) and A. It also does not dispute that the letter in terms of which the initial donation was made to A, who was directed the disbursement of amounts in a particular proportion, which he did. The assessee is also related to A. In these circumstances, the underlined transaction whereby the donor directed amounts to be disbursed by A to specified or named individuals cannot be treated as unnatural. Both the authorities - the Commissioner (Appeals) and the Tribunal took note of these facts and Further noticed that all the gifts were rooted to normal banking transaction: While section 68 certainly enables the Assessing Officer to bring to tax amount which are suspect, in a transaction of the present kind, where the identity and the relationship of the donor are known, the Assessing Officer ought not to have concluded that the transaction by which the assessee received the amount in question was in-genuine.
PIT v. Talbros Engineering Ltd (2016) 386ITR 154 (P&H) The facts of the case is very simple as spelt out supra, creditworthiness of the executor of will are proved beyond any doubt, moreover no addition could be made u/5.68 of the Income -Tax Act, and therefore addition made in the Assessment Orders are requires to be deleted to 6.6 From a perusal of the retorns filed by the deceased Mrs Rekha K. Bhansali it is seen that she was earning income of Rs. 10:15 lakhs per annum and was regularly filing her return of income. One of the witness to the will has admittedly confirmed having known to the family of appellant, he also admits to frequenting the house and office of the appellant during the relevant period when the Will was executed. He identifies the Vishal A. Bhansali (HUF) 10 signature thereon as his own, but do not remember, how it could be? How can he be so ignorant, and even if he is so ignorant the Ld. AO cannot punish the appellant for the lameness of the witness. Therefore, the existence of will, identity and creditworthiness of Mrs. Rekha K. Bhansali cannot be disputed. With regard to the genuineness of the transaction, copy of Will of Mrs. Rekha K. Bhansali was furnished before the AO as well during the appellate proceedings. This will has not been proved fake / false by the AO. The appellant has produced a sale agreement dated 04.11.2012 in which Mrs Rekha K. Bhansali had paid total amount of Rs.5,06,18,000/- to the seller of the tea estate. Upon her untimely death the sale agreement was revoked and as per the terms of the will the appellant received half of amount totaling Rs.2,53,09,000/- only. 6.7 In view of the above facts and circumstances of the case, I am inclined to agree with the contention of the appellant. Accordingly, the appeal on Grounds No. 1 to 9 are treated as 'Allowed'.”
Aggrieved, the Revenue is in appeal before us raising following grounds of appeal :
1. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,53,09,000/- u/ s. 68 of the IT. ACT, 1961 ignoring the fact that the assessee could not furnish documentary evidence to prove the genuineness of the transaction and creditworthiness of Aunt of the Karta of the Assessee HUF?"
2. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,53,09,000/ - u/ s. 68 of the IT. Act, 1961 ignoring the fact that during the assessment proceedings, the witness of the will was not even aware whether late Rekha Bhansali was alive or not and further failed to prove that she had signed the will in his presence.? 3. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored.
Vishal A. Bhansali (HUF) 11
At the time of hearing the Ld. DR in support of grounds of appeal raised by the Revenue she brought to our notice, the findings of the AO in para 3 and submitted that the Will is not properly signed in page 1 and the assessee has not proved the genuineness of the Will and also AO examined the witnesses. She further submitted that no doubt witness has agreed that he has signed the Will but do not remember the details when he has signed the Will and he has not aware whether Late Mrs. Rekha K. Bhansali was alive or passed away at the time of signing of Will. She vehemently argued that the denial of the witness with regard to genuineness of the Will and he does not remember about the Will, it clearly shows that the Will is not genuine and prayed that the addition made by the AO may be sustained.
On the other hand, the Ld. AR submitted that he relies on his written submissions and order of Ld. CIT(A). The Ld. AR submitted the following written submission : “In continuation of Grounds of Appeal filed and written submissions filed on 07-03-2018 the appellant wish to submit the following more for your kind consideration:- It is pertinent to note here that Assessment Order is silent about the provision of income tax act under which the addition is made, which is very vital lapse on the part of the Ld. Assessing officer, the person Who is authorized to administer the income tax law could not make any addition if there is no violation to the provision of income tax law. Admittedly according to the Ld. Assessing officer your appellant HUF has not violated any provision of income tax law warranting any addition. Now coming to the issue addition said to be on account of cash deposited in the bank accounts of appellant. When the appellant was questioned about this he explained as follows:- Yes, there was a cash deposited in to the various bank accounts of the appellant and copies of such bank accounts was duly submitted by the appellant HUF.
Vishal A. Bhansali (HUF) 12 >>>> He further explained that amount has been received on account of WILL executed by her aunt that is her father's sister namely Late Smt. Rekha Bhansali who was also assessed to tax. The existence of the executants' of will is not in dispute, however her creditworthiness was questioned for which it was submitted that she was assessed to tax and her annual income returned was in order of 10 to 15 lakhs, she was filing her returns regularly and on time and copies of the same was submitted, which has not been countered by the Ld. AO in any way. >>>> It was further stated that she was Single and Spinster not married and was living with father of the kartha of HUF throughout her life, and when she died she was aged more than 75 years, and considering all that factors in account by no stretch of imagination you can say that she cannot save that kind of money or that was excess in any way. >>>> The appellant further produced the Agreement of Sale dated 04-09-2012 which was signed by the executants of will during her life time with the seller of Tea Estate, it also contains the details of advance paid by her during her life time, the said agreement was produced before the Ld. AO for his perusal and return but unfortunately he has not mentioned anything on this in the assessment order for your ready reference we are enclosing herewith the copy of the same. >>>> It was this sale agreement referred above from which money has come back after her death on cancellation of the sale agreement. In view of the above it is respectfully submitted that addition made by the Learned Assessing Officer is without any basis and against the law and principles on natural justice and fair play same is requires to deleted to render the justice.”
Considered the rival submissions and material on record. We noticed that the AO made an addition based on his observation that the assessee has not proved the genuineness of the Will and also the assessee has not proved that Late Mrs. Rekha K. Bhansali has accumulated cash in hand to the extent of ₹5.07 crores. It is submitted that the assessee has submitted return of income and Vishal A. Bhansali (HUF) 13 statement of affairs of Late Mrs. Rekha K. Bhansali and also submitted before the Assessing Officer ‘Will’ and Agreement dated 04.11.2012 in which Late Mrs. Rekha K. Bhansali has paid total amount of ₹5.06 crores to the seller of the Tea Estate. It clearly indicates that Mrs. Rekha K. Bhansali had the cash in her possession. This evidence was submitted before the Assessing Officer and has not brought on record the same in the assessment order and also not discussed. 9.1 The above said sale agreement clearly indicates that there exists of cash to the extent of ₹5.06 crores with Late Mrs. Rekha K. Bhansali. This fact was brought to the notice of Ld. CIT(A) and also the AR of the assessee submitted in his written submission dated 15.09.2021 that this evidence was submitted before tax authorities and the tax authorities has not controverted the above existence of the sale agreement and we also noticed that even though the Assessing Officer expressed the non-genuinity of the ‘Will’ based only on witness submission before him and we noticed that the Ld. CIT(A) rejected the submissions of the witness with the observation that the witness has admitted to frequent the house and office of the assessee from relevant period when the Will was executed. He identified the signature as his own but do not remember. The Ld. CIT(A) observed that lameness of the witness cannot be the reasons to punish the assessee. It is fact on record that there exists Will agreement and the Will and the sale agreement confirming the existence of cash in hand with Late Mrs. Rekha K. Bhansali and subsequent distribution of the cash based on the Will to existing HUF and respective cash deposits in the bank account of the assessee clearly indicates that the assessee has proved the source of cash. It is not expected to bring on record, the genuineness of source of source of a deceased person. The assessee can prove only the source for the credit in its books of