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01-03-2019, E. Ummer Bava, Section 68, 147, 263, Tribunal Cochin

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2 months 1 week ago #8748 by amit
Section - 68, 147, 263
Order Date - 01-03-2019
Favouring - Revenue
Court - Tribunal Cochin
Appellant - E. Ummer Bava
Respondent - ACIT
Citation - 319Taxpundit188
Appeal No. - I.T.A. No.356/Coch/2015
Asstt. Year - 2004-05



This appeal filed by the assessee is directed against the order of the CIT(A), Kozhikode dated 20/03/2015 and pertains to the assessment year 2004-05.

2. The assessee has raised the following grounds:

1. The order of assessment passed by the Assessing Authority as well as the order of the First Appellate Authority are both wrong, contrary to law, facts and circumstances of the case.

2.1 The assessing authority erred in holding that the Appellant has not proved the genuineness of the gift amounting to Rs. 80 lakhs received from his brother Sri E.Hamza Bava who was a Partner in Ms. Palm General Trading [L.LC.l who had, in turn, proved that he had received Dhs. 11,00,000/- at the time of his retirement from the said L.L.C. The Assessing Authority ought to have noted that the source of the donor has been proved properly by producing the Certificate
issued by Ms. Palm General Trading [L.L.C.l

2.2 The learned Appellate Authority erred in refusing to place reliance on the Certificate by observing that "the appellant failed to establish any nexus between the retirement funds of donor and gifts received by the appellant" and further observing that "a corresponding declaration duly counter-signed by Indian Embassy in the relevant country ought to have been placed on record along with financial statement indicating financial status of the donor and deployment of income earned abroad". He has failed to note that the Donor had confirmed that he had made the gifts in favour of the Appellant through Demand Drafts which originated abroad.

2.3 The authorities below ought to have noted that the Appellant had [1]: disclosed the gift in the books of account as a credit in the capital account, [2]: filed photocopies of the instruments by which gift was received, [3]: had produced evidence for donor's source for the gift in the form of Third Party’s Certificate. It ought to have been noted that when there is no dispute regarding the fact that the demand drafts had originated abroad and when the Assessing Authority has no case that the Appellant has any source of income outside the Country, the fact that the demand drafts have originated outside the country is conclusive with regard to the genuineness of the gift and the Certificate, conclusive proof of the source of the gift.

3.1 The Assessing Authority erred in applying the dictum laid down by the Hon'ble Supreme Court in MOHANAKALA's case which is distinguishable on facts. In fact, the donor in the said case was not related to the donee at all and the circumstances in which the gifts were made were not beyond suspicion and the
donor in fact was found to have been of very poor means, having had to depend on the donee himself for even education expenses. As against this, in the case of the Appellant [1]: the Donor is the brother of the appellant/donee, [2]: the credits were direct gifts made through demand drafts by brother and [3]: the donor has been gainfully employed for over 35 years and is doing flourishing business.

3.2: The learned First Appellate Authority erred in not adverting to the above facts indicating that the dictum laid down in Mohanakala's case were not applicable to the facts of the case. In fact, no reference is made to the various contentions specifically raised in the grounds of appeal and during the hearing of the appeal.

3. The facts of the case are that the assessee is a PWD contractor. The return of income for AY 2004-05 was filed on 26/04/2005 declaring a total income of Rs.31,43,979/-. The assessment was completd u/s. 143(3) r.w.s. 147 on a total income of Rs.35,67,020/- by making an addition of Rs.4,23,045/- to the returned income. Subsequently, the CIT, Calicut set aside the assessment order for verifying the submission of the gift amounting to Rs.80,00,000/- received by the assessee during the relevant previous year. The Assessing Officer passed the order u/s. 143(3) r.w.s. 263 of the Act on 25/11/2008, rejecting the claim of the assessee in receipt of gift amounting to Rs.80,00,000/- and assessed the same to the tax.

4. On appeal, the CIT(A) found that the assessee did not receive the gift amounts through banking channel as calimed by the Ld AR. According to the CIT(A), the gift amounts had been received by the assessee by way of DDs and no nexus has been established between the source of funds for procuring these DDs by the donor and his earnings in the NRE bank account. A copy of the bank account for the relevant period of the donor has not been placed on record. It was seen that the donor had received fund on retirement as under:

The CIT(A) found that no balance sheet or financial statement or cash flow statement of the donor was placed on record to indicate exhaustive resources of funds of the donor and the corresponding gifts. The CIT(A) also noticed that the above sums on retirement were received by the donor in the preceding financial year and therefore, there is no nexus between the gifts received by the assessee

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