Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA BENCH ‘SMC’, KOLKATA
Before: Shri P.M. Jagtap, AM]
order : June 22, 2018 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 7, Kolkata dated 25.05.2017 and the solitary issue involved therein relates to the addition of Rs. 28,55,000/- made by the AO under section 68 by treating the gifts received by the assessee as unexplained cash credit which is sustained by the Ld. CIT(A) to the extent of Rs. 13,90,000/-.
The assessee in the present case is an individual who derives income from stiching charges. The return of income for the year under consideration was filed by him on 29.09.2012 declaring a total income of Rs. 5,42,833/-. During the year under consideration, the assessee had made investment of Rs. 39,94,653/- in purchase of shop and while explaining the source of funds for the said investment, he
Assessment Year: 2012-13 Mr. Mohammed Ayaz claimed to have received gifts of Rs. 42,55,000/- from the following persons: “1. Shahnaj Khatoon Rs. 75,000/- 2. Sekh Shahzada Rs. 7,60,000/- 3. Sabra Bibi Rs. 7,60,000/- 4. Md. Moin Rs. 7,60,000/- 5. Nazneen Kauser Rs. 5,00,000/- 6. Md. Rashid Rs. 5,00,000/- 7. Md. Imtiaz Rs. 2,50,000/- Rs. 6,50,000/-“ 8. Md. Shahjahan
During the course of assessment proceedings, the claim of the assessee of having received the above gifts was examined by the AO in terms of section 68. On such examination, he found that the 5 donors namely Shahnaz Khatoon, Sekh Shahzada, Sabra Bibi, Md. Moin, Nazneen Kauser had deposited cash in their bank accounts before giving gifts to the assessee by cheques. He also found that they all were marginal assessees having little to show by way of income and their creditworthiness to gift such huge amount to a person having income more than them defied logic and human probability. He also found that the accounts maintained by them had no transactions to show any business receipts and the same were opened with the sole aim of facilitating gifts to the assessee and his spouse. He, therefore, held that creditworthiness of the said 5 donors was not proved and the relevant transactions involving gifts were not genuine. He accordingly treated the gifts received by the assessee from the said 5 donors aggregating to Rs. 28,55,000/- as unexplained cash credits and made an addition to that extent under section 68 in the assessment completed under section 143(3) vide an order dated 30.03.2015.
Assessment Year: 2012-13 Mr. Mohammed Ayaz
Against the order passed by the AO under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) and after considering the submissions made by the assessee as well as the material placed on record, the Ld. CIT(A) treated the gifts received by the assessee to the extent of Rs. 14,65,000/- as explained and restricted in the addition made by the AO under section 68 to the extent of Rs. 13,90,000/- on the basis of the following findings recorded in his impugned order in the tabular form: SL. No Name Amount Findings 1. Shahnaz 75,000/- Copy of ITR of the donor for the AY 2010-11, Khatoon 2011-12 and 2012-13 has been submitted. As on the last day of immediately preceding financial year, the donor was having cash in hand for more than the amount of gift made to the appellant. Therefore, amount of gift being small and reasonable, ground of the appellant in this behalf is allowed. 2. Sekh 7,60,000 Copy of ITR of the donor for the AY 2010-11, Shahzada 2011-12 and 2012-13 has been submitted. It is observed that the amount of gift made is very high in terms of the returned income and capital of the donor. Amount of gift being unreasonably high and on account of the fact that the gift was made after depositing cash in bank account, 50% of the addition made by the A.O. in this behalf is upheld and ground of the appellant in this behalf is partly allowed. 3. Sabra 7,60,000 Copy of ITR of the donor for the AY 2010-11, Bibi 2011-12 and 2012-13 has been submitted. It is observed that the amount of gift made is very high in terms of the returned income and capital of the donor. Amount of gift being unreasonably high and on account of the fact that the gift was made after depositing cash in bank account, 50% of the addition made by the A.O. in this behalf is upheld and ground of the appellant in this behalf is partly allowed. 4. Md. Moin 7,60,000 Copy of ITR of the donor for the AY 2010-11, 2011-12 and 2012-13 has been submitted. It
Assessment Year: 2012-13 Mr. Mohammed Ayaz is observed that the amount of gift made is very high in terms of the returned income and capital of the donor. Amount of gift being unreasonably high and on account of the fact that the gift was made after depositing cash in bank account, 50% of the addition made by the A.O. in this behalf is upheld and ground of the appellant in this behalf is partly allowed.
Nazneen 5,00,000 Copy of ITR of the donor for the AY 2008-09, Kauser 2009-10 and 2010-11, 2011-12 and 2012- 13 has been submitted alongwith audited accounts. It is observed that the amount of gift made is very high in terms of the returned income and capital of the donor. Amount of gift being unreasonably high and on account of the fact that the gift was made after depositing cash in bank account, 50% of the addition made by the A.O. in this behalf is upheld and ground of the appellant in this behalf is partly allowed.
Still aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
5. The learned counsel for the assessee submitted that the gifts received by the assessee from 5 donors aggregating the Rs. 28,55,000/- were treated by the AO as unexplained and although the Ld. CIT(A) treated the gift received from one donor Shri Shahnaz Khatoon amounting to Rs. 75,000/- as explained, the explanation of the assessee in respect of gifts received from other 4 donors was accepted by him only party. He contended that all the 4 donors were regularly assessed to tax and the gifts given by them to the assessee were duly reflected in their balance sheets filed along with the returns of income. He contended that even the fact of having given the gifts to the assessee was affirmed by the said donors in the examining
Assessment Year: 2012-13 Mr. Mohammed Ayaz the said donors, the authorities below were not justified in not accepting their gifts. In support of this contention, he relied on the decision of Hon’ble Supreme Court in the case of M/s. Mehta Parikh & Co. vs CIT 30 ITR 181 as well as the decision of Hon’ble Calcutta High Court in the case of Taradevi Goenka vs CIT 122 ITR 14.
The learned DR, on the other hand, strongly supported the impugned order of the Ld. CIT(A) confirming partly the addition made by the AO under section 68 by treating the relevant gifts as unexplained cash credit. He contended that only a nominal income was declared by the concerned donors in their income tax returns and their balance sheets clearly showed that almost the entire capital was given as gift to the assessee and his wife. He contended that the Ld. CIT(A) has already given a reasonable relief to the assessee by considering the evidence placed on record and the assessee does not deserve any more relief on this issue in the facts and circumstances involved in his case.
I have considered the rival submissions and also perused the relevant material available on record. It is observed that even though all the 4 donors in question were regularly assessed to tax, the income declared by them was very nominal. As specifically pointed out by the AO, cash was deposited by them before giving gifts to the assessee in their bank accounts and there were no other transactions reflected in the said bank accounts to show their business transactions or financial transactions. As further pointed out, capital generated by them over the years was given almost entirely to the assessee and his
Assessment Year: 2012-13 Mr. Mohammed Ayaz wife as gifts and that too for making investment in purchase of shop. For example, Sekh Sahazada had a total capital of Rs. 17.58 lakhs at the relevant time out of which gifts were given to the assessee and his wife to the extent of Rs. 14.94 lakhs. Similarly Md. Moin had a capital of Rs. 16.86 lakhs out of which gifts of Rs. 14.58 lakhs were given to the assessee and his wife. Even in case of Sabra Bibi, the capital was 18.68 lakhs out of Rs. 14.58 lakhs given to the assessee and his wife. Keeping in view all these facts and circumstances of the case, I am of the view that the creditworthiness of the concerned 4 donors as well as the genuineness of the gifts given by them to the assessee was not established as rightly held by the AO. The Ld. CIT(A) however still accepted the said gifts to the extent of 50% as explained after taking into consideration the evidence placed on record by the assessee and I fully agree with the contention of the learned DR that the assessee already having got reasonable relief on this issue from the Ld. CIT(A), no further relief is warranted in the facts and circumstances of the case. As regards the reliance placed by the learned counsel for the assessee on the decision of Hon’ble Supreme Court in the case of M/s. Mehta Parikh & Co. (supra), I find that the facts involved in the said case were entirely different in as much as addition of Rs. 61,000/- made to the total income of the assessee representing the value of high denominations notes was confirmed by the Tribunal to the extent of Rs. 30,000/- and the same was deleted by the Hon’ble Supreme Court after having found that the cash book of the assessee was accepted without challenging any entries made therein. It was also noted by the Hon’ble Supreme Court that the persons who had given the affidavits in support were not cross-examined. In the Assessment Year: 2012-13 Mr. Mohammed Ayaz present case, the issue involved is relating to the addition under section 68 and the primary onus to establish the identity of the concerned donors as well as their creditworthiness and the genuineness of the transaction was of the assessee. As already held by us, the same was not fully discharged by the assessee which ustified the sustenance by the Ld. CIT(A) of the addition made by the AO under section 68 partly. In the case of Taradevi Goenka (supra) cited by the learned counsel for the assessee, the issue relating to the unexplained jewellery was involved and the same being different from the issue involved in the present case under section 68, I am of the view that the same is hardly of any help to the assessee, I, therefore, uphold the impugned order of the Ld. CIT(A) sustaining the addition of Rs. 28,55,000/- made by the AO under section 68 treating the gifts received by the assessee as explained cash credit to the extent of Rs. 13,90,000/- and dismiss this appeal of the assessee.
In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 22nd June, 2018.