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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI D. KARUNAKARA RAO (AM) & SHRI RAM LAL NEGI (JM)
These cross appeals have been preferred by the assessee and the revenue respectively against order dated 22/11/2012 passed by the Ld. CIT (Appeals)-27, Mumbai for the Asst. Year 2009-10, whereby the Ld. CIT(A) partly allowed the appeal filed by the assessee against the assessment order dated 23/12/2011 passed u/s 143(3) of the Income Tax Act, 1961 (for short ‘the Act’).
ITA No. 553/Mum/2013 (A.Y- 2009-10)
Brief facts of the case are that the assessee engaged in the business of diamond and other precious stones filed its return of income declaring the total income of Rs. 2,18,810/-. The return of income was processed and after scrutiny assessment was passed u/s 143 (3) of the Act determining the total income of Rs. 50,11,020/- after making inter alia addition of Rs. 47,78,246/- as undisclosed income. The Assessment Order was challenged before the Ld. CIT (A), who after hearing the assessee partly allowed the appeal.
3. Still aggrieved, the assessee has filed the present appeal on the following effective grounds: 1. “The learned CIT (A) erred in rejecting the claim of the appellant that one of the sources of cash deposits made by him in his bank account is genuine cash gifts of Rs. 6,10,000/- received by him from his relatives.
2. The learned CIT (A) erred in holding and directing the learned AO to consider Rs. 8,73,162/- (being the peak credit of Rs. 10,22,718/-) as unexplained cash credit u/s 68 of the Act.
3. Without prejudice to ground No. 2, the learned CIT (A) erred in not reducing the opening cash balance of Rs. 2,23,987/- from peak credit of Rs. 10,22,718/- to arrive at unexplained cash credit u/s 68 of the Act.”
4. Before us, the Ld. Counsel for the assessee submitted that the assessee does not want to press ground no. 2 & 3 of the appeal. In view of the submission of Ld. Counsel, ground No. 2 and 3 of the appeal are dismissed as not pressed. As regards the first ground of appeal, the Ld. Counsel submitted that the Ld. CIT (A) has erred in rejecting the claim of appellant that one of the sources of actual deposits made by him in his Bank Accounts is the amount of Rs. 6,10,000/- received in gifts from his relatives. The Ld. Counsel further contended that the assessee has submitted declarations from all the five parties from whom gifts amounting to Rs. 6,10,000/- were received. The assessee has also submitted the extract of Form 7 & 12, farmer’s book, translated copy of revenue record and other documents to prove the identity and creditworthiness of the donors and genuineness of the transaction. Hence, the order passed by the Ld. CIT (A) is contrary to the evidence on record and is liable to be set aside.
5. On the other hand, the Ld. DR relying on the concurrent findings of the authorities below submitted that the findings of the Ld. CIT(A) with regard to this ground are based on the evidence on record and as per the settled principles of law. Since, the assessee has failed to establish the creditworthiness of the donors and genuineness of transaction, the Ld. CIT(A) has rightly confirmed the findings of the AO.
6. We have heard the rival submissions and perused the material placed before us by the parties. The Ld. CIT(A) has confirmed the findings of AO holding as under:- “I have carefully considered the contents of the assessment order and the appellant’s submissions. I note that from the copies of the gift declarations placed on record, the creditworthiness of the impugned donors is not established. The respective donors have merely declared that they are agriculturists for the past 35 years and have substantial land holdings and earning income from agricultural produce. Beyond this, no further information is available as to the extent of land owned by them, the location, the crops grown therein, that the year wise agricultural income earned and the likely savings of the family etc. It is also noted that despite being given an opportunity at the time of assessment proceedings, the appellant failed to produce the aforesaid donors for necessary examination by the A.O. In view of the above facts, the declarations placed on record by the appellant are vague and self serving documents which cannot be considered as credible evidence. Therefore, I am of the considered opinion that the claim of receiving gifts of Rs. 6,10,000/- as source for the impugned cash deposits cannot be accepted. As regards the other deposits, I hold that there are regular cash deposits and also cash withdrawals from time to time.”
We have gone through the contents of the affidavits sworn by S/Sh. Bharatbhai Hamabhai Gabani, Gordhanbhai Hamabhai Gabani, Hamabhai Keshavbhai Gabani, Bhagawanbhia Nanjibhai Goyani and Kajnibhai Nanjibhai Goyani from whom the assessee allegedly received the gift in cash amounting to Rs. 6,10,100/-. The said persons have stated in the affidavits that they being relatives of the assessee paid the amounts in question on 01.04.2008 as gift out of natural love and affection, however, they have not mentioned any occasion on which the amounts were received in gift. The assessee has placed on record the extract of Form 7 & 12, farmer’s book, translated copy of revenue record and other documents to prove the identity and creditworthiness of the donors and genuineness of the transaction. The AO has rejected the contention of the assessee holding that the transaction is not genuine as the deposits in the account have been made on different dates whereas, the total amount of Rs. 6,10,000/- was received on 1st April, 2008. Similarly, AO has pointed out that two donors have written their surname as Goyani, whereas the remaining three persons have written their surname as Gabani. Therefore, the persons having surname as Goyani cannot be the brothers of assessee’s father as the assessee’s surname is Patel. We notice that during the assessment proceedings the assessee was asked to produce the donors to verify their identity and creditworthiness, their relations with the assessee and genuineness of the transaction, however, the authorized representative of the assessee filed written reply mentioning that the assessee is out of station and he is not in a position to produce the donors at such a short notice. We further notice that the AR had not sought time to produce the donors. Even this request was not made before the first appellate authority during appellate proceedings. As per the settled law the onus is upon the assessee to establish identity and creditworthiness of the donor and genuineness of the transaction. Hence, in our opinion the documents submitted by the assessee is not sufficient to establish creditworthiness of the donor and the genuineness of the transaction. In the light of the aforesaid facts, we do not find any legal or factual infirmity in the impugned order to interfere with. Hence, we are of the considered view that the assessee has failed to prove the creditworthiness of the donors and the genuineness of the transactions. We, therefore, upheld the findings of the Ld. CIT (A) and dismiss the only ground of appeal of the assessee.
The Revenue has challenged the impugned order on the following effective grounds of appeal:
1. On the facts and circumstances of the case and in law, the Ld.CIT (A) has erred in allowing relief of Rs. 39,05,084/– to the assessee by treating peak credit of the undisclosed bank statements as income of the assessee.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the cheque deposit of Rs.20, 000/- in the undisclosed bank account was not explained by the assessee.
3. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in not considering the total interest credited of Rs. 10, 246/– in the undisclosed account as the income of the assessee.
2. Before us, the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has erred in allowing relief of Rs. 39,05,084/- to the assessee by treating peak credit of the undisclosed bank statements as income of the assessee. The Ld. DR further submitted that since the assessee has failed to explain the source of cheque deposited in the assessee’s undisclosed account, the AO has rightly added to the income of the assessee holding the same as undisclosed income. Similarly, the AO has rightly added the total interest credited of Rs. 10,246/-in the undisclosed account, to the income of the assessee.
The Ld. counsel for the assessee on the other hand submitted that since the Ld. CIT(A) had directed the AO to consider the peak credit of the Bank statement as assessee’s income instead of treating the entire deposits while passing appellate order for the assessment year 2008-09, the Ld. CIT(A) has rightly followed the AO in the assessment year under consideration to consider the peak credit. Therefore, there is no merit in the appeal of the revenue.
In the light of the rival contention, we have perused the material placed before us. The Ld. CIT(A) has decided the said issues holding as under:- “As regards other deposits, I hold that there are regular cash deposits and also cash withdrawal from time to time. It is also noted that appellant has transacted his business of gold jewellery through the aforesaid bank account that the cash was deposited in the appellant’s bank account from different stations like Hyderabad and Bangalore.
While disposing the appeal for the A.Y. 2008-09 in respect of the addition made by the AO on account of cash deposits in the aforesaid bank account, I have directed the AO to consider the peak credit of the bank statement as appellant’s income instead of treating the entire deposits as income. The facts being similar for the year under consideration also, I direct the AO at present to consider the peak credit of Rs.10,22,718/- appearing in the bank account on 22/01/2009, as reduced by the opening balance of Rs. 1,49,556/- as appellant’s income from the undisclosed sources, being cash credits u/s 68 of the Act. In other words, the amount of Rs. 8,73,162/- shall be assessed as income in place of Rs. 47,78,246/-. That apart, interest of Rs. 3,936/- earned from the aforesaid bank account from the date of peak credit to 31/03/2009 shall also be assessed as income in addition to the peak credit. Appellant partly succeeds on this ground.”
We notice that the Ld. CIT(A) has decided the said issues following the decision taken by the CIT in assessee’s own case for the A.Y. 2008-09. Hence we do not find any merit in the contentions of the Ld. DR. Accordingly, we dismiss all the grounds of appeal of the revenue.
In the result, both appeals for the assessment year 2009-10 are dismissed.
Order pronounced in the open court on 28th February, 2017.