RANI LALCHAND KALRO,MUMBAI vs. ITO 16(1)(1), MUMBAI

This appeal u/s. 253 of the Income-tax Act (Act) is directed by assessee 1. against the order of CIT(A)-25, Mumbai dated 05.11.2012 for Assessment Year (AY) 2006-07).

Brief facts of the case are that assessee filed return of income for the relevant AY on 28.07.2006 declaring total income at Rs. 1,24,011/-. The case was selected for scrutiny. While framing the assessment, the Assessing Officer (AO) made the disallowance of gift of Rs. 11,00,000/- and further made the addition of unexplained cash credit u/s 68 of Rs. 5,49,500/-,in assessment order dated 16.12.2008. Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A) but without any success. Thus, this second appeal is filed before us u/s. 253 of the Act.

We have heard the Ld. Authorised Representative (AR) of the assessee and the Ld. Departmental Representative (DR) for Revenue and perused the material available on record. The Ld. AR for assessee argued that the assessee received gift of Rs. 10,00,000/- from his brother. Assessee furnished the copy of NRE Bank A/c in India from which Rs. 10,00,000/- was credited through cheque. The assessee also furnished the statement of account of donor’s bank in Dubai to prove the creditworthiness of the donor. The assessee has also filed a copy of confirmation and certificate of donor about running of proprietary concern in Dubai. In respect of Rs. 1,00,000/-,it was argued that the assessee received this amount from her son Neeraj kalro.. It was further argued that the AO as well as ld. CIT(A) not considered the fact in a proper manner. Against the unexplained cash credit of Rs. 5,49,500/- it was argued by the ld. AR of the assessee that assessee had withdrawn the cash from Bank A/c in United Bank of India for making expenses in the marriage of her son. As the marriage could not take place, the said amount was again deposited back in the Bank A/c. The Ld. AR of the assessee further argued that he has placed on record the copy of confirmation gift of Rs. 1,00,000/- from Neeraj Kalro along with the statement of account of Neeraj Kalro. The assessee has further placed on record the copy of certificate issued by Punjab & Sind Bank dated 01.03.2014, with reference to the statement of account of Sh.Gopal Chabria showing the transaction of Rs. 10,00,000/- to the assessee on 01.02.2006, copy of cheque drawn on Punjab & Sind Bank bearing No. 387627 and the copy of confirmation of the donor. The identities of the creditors and transaction through banking channels were not disputed by the AO. The revenue authority has also not disputed that assessee withdrew the cash from his bank account. The Revenue authorities disputed the genuinity of the transaction. On the other hand the ld. DR for Revenue argued that the assessee has not filed any proof regarding marriage of her son. It was argued that, if the purpose of marriage was not fulfilled then the amount should have been deposited in the Bank immediately. The huge cash transaction was against of possible probabilities and thus, the findings of authorities below are in accordance with the provisions of law.

We have considered the rival contentions of the parties and gone through the order of authorities below including the document placed on record. The AO while framing the assessment observed that assessee has received gift of Rs.10,00,000/-, Rs. 3,00,000/- and Rs. 1,00,000/- from Shri Gopal Chabria, Vasudev Chabria and Neeraj Kalro respectively. The assessee was asked to prove the creditworthiness, genuineness of the gift, bank statement of donor and relationship with the donor, loan confirmation of bank and complete statement of account of United Bank of India. The assessee filed its reply and contended that the assessee received Rs. 1,00,000/- from her son Neeraj Kalro, Rs. 10,00,000/- from Gopal Chabria and Rs. 300,000/- from Sh Vasudev Chabaria. It was further contended that Neeraj Kalro has been filing return from last several years. The copy of cash book of Neeraj Kalro was also filed showing that he was having sufficient cash balance to deposit in his account. The assessee also filed copy of confirmation letter of the gift and the statement of bank account about the gift from Gopal Chabria, the AO not accepted the contention of the assessee holding that the gift received from Neeral Kalro does not appear to be genuine as the cash was deposited in the account of Neeraj Kalro one day before the issuance of cheque of Rs. 1,00,000/- and the same was added u/s. 68 as an unexplained cash credit. In respect of gift from Gopal Chabria, the AO concluded that the assessee has not furnished the original statement of donor and their creditworthiness and genuineness of the transaction is not established and the addition was made u/s 68 of the Act. The explanation of gift from Vasudev Chabaria was accepted. With regard to cash deposit of Rs. 5,49,500/- on various dates in United Bank of India & HDFC Bank, the assessee was asked to furnish source of cash transaction. The AO concluded that assessee is non-co-operative and did not offer any explanation. The source of cash transaction is not proved, thus, the entire deposit was treated u/s 68 of the Act. During the first appellate stage, the similar submission and contention were raised before the First Appellate Authority (FAA). While considering the contention of the assessee with regard to gift of Rs. 10,00,000/-, the ld. CIT(A) concluded that the donor/Gopal Chabria is residing at Dubai from last 24 years and settled there. The donor confirmed that a gift of Rs. 10,00,000/- was given to his cousin sister Miss. Rani Kalro (assessee) and as per Explanation to section 56(2), the cousin sister did not fall in the category of relative, therefore, the said amount is taxable u/s 56(2)(v) of the Act. For gift of Rs. 1,00,000/-, it was hold by ld. CIT(A) that cash was deposited in the donor’s Bank Account immediately prior to issuance of cheque. And in respect of unexplained cash credit, it was concluded by ld. CIT(A) that there was no evidence about the marriage or re- schedule of marriage of her son. There is no evidence that withdrawal was for the purpose of marriage. If, the entire amount was not utilized, the whole of withdrawal should have been deposited immediately.

We have noticed that the Revenue authorities have not disputed the identity of both the donor i.e. brother Shri Gopal Chabria and Neeraj Kalro. The creditworthiness of Gopal Chabria was also not disputed. The gift of Rs. 10,00,000/- was through banking channel. We have further seen that the assessee has placed on record the certificate of Punjab & Sindh Bank dated 01.03.2014, which contained the reference of Cheque No. 387627 dated 01.02.2006, copy of Cheque dated 01.02.2006 drawn on Punjab & Sindh Bank, Kazi Syeed Street, Mumbai, and confirmation of donor dated 27.09.2008, 12.03.2008 & 29.10.2012. All these documents clearly established the creditworthiness of the donor and genuineness of the transaction. So far as, the gift of Rs. 1,00,000/- received from Neeraj Kalro (son) is concerned only objection of the Revenue is that the amount was deposited just prior to issuance of cheque. Mere suspicion of the Revenue that the amount was deposited just before the issuance of cheque cannot be a ground for rejection of claim/gift where capacity of the donor and the identity is not in dispute. Thus, we delete the addition of Rs. 1,00,000/-. We have observed that the ld CIT(A) while disposing the appeal of the assessee, instead of examining the gift from the angel of section 68 of the Act, examined the same under section 56 of the Act. The ld CIT(A) concluded that cousin sister did not fall under the category of ‘relative’ as per explanation attached with section 56(2) (v) and therefore the impugned gift is liable to be taxed under this section. As per our opinion the case of the assessee may fall under clause (vi) instead of clause (v) of sub section (2) of secion56. Since ld CIT(A) examined the case of assessee under section 56(2) (v) of the Act, without confronting the assessee hence we deem it appropriate to restore this part of ground to the file of ld CIT(A) to consider it afresh after giving the opportunity to the assessee and pass order in accordance with law. So far as, the cash deposit of Rs. 4,85,000/- in United Bank of India & Rs. 64500/- in HDFC Bank are concerned, the Revenue authority has not disputed the withdrawal of cash from her bank on earlier dates. The objection of Revenue is only that cash deposit varies at different occasions and frequent cash deposit itself establishing non-genuine character of the explanation offered. However, the contention of the assessee throughout the assessment proceedings and appellate stage was that, amount was withdrawn for the expenses to be incurred for marriage of her son. We think that there cannot be any evidence about the re-schedule of marriage, though there may be evidence of solemnisation of the marriage. Further, the objection of the Revenue is that if the amount was not utilized, whole amount of withdrawal should have been deposited immediately. Neither the AO nor the CIT (A) worked out the difference of amount withdrawn and the subsequent deposit. The grounds of addition on account of unexplained cash credit when the assessee has categorically pleaded that the cash was withdrawn for specific utilization and the same was deposited is based only on hypothetication of the Revenue authorities. Thus, the addition on account of cash credit of Rs. 5,49,500 is deleted. In the result, the ground related to the addition of gift of Rs. 10,00,000/-is restored to the file of CIT(A) for fresh finding and the addition on account of Gift of Rs. 1,00,000/- from son and the addition on account of cash credit are deleted.