Case Law Details
In regard to jewellery found on person and in the bedroom of Smt. S.H. Khorakiwala, it was stated before the Assessing Officer that the same was received at the time of her marriage. The Assessing Officer accepted the confirmation of mother but the confirmation of NRI gifts from relatives was not accepted. He observed that whether they had purchased the jewellery abroad and gifted to Smt. Samina H. Khorakiwala in which case the customs clearance receipt should have been filed.
The proof of local purchase in the form of a purchase receipt should have been filed. In the absence of such evidence the said gift confirmation was only self-serving documents. Further, as rightly pointed out by learned CIT(A) the identity of the donor was fully established which was also stated in the confirmation that they jewellery was purchased out of the income earned abroad and earnings per annum was also stated therein. The fact of NRIs coming for marriage is not disputed by the department and, therefore, merely on the ground that local purchase bill or custom clearance receipt was not produced, the genuineness of the gift could not be disputed. Learned Counsel has rightly pointed out that net addition was not of Rs. 11,36,362/- but only Rs.4, 12,243/-. We are therefore, of the view that keeping in view the status of the family, the genuineness of the gifts from NRI cannot be disputed. We accordingly confirm the order of learned CIT(A). This ground is accordingly dismissed
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
I.T.(SS)A. No. 64/Mum/2008
(Block period: 1.4.1990 to 19.9.2000)
Asst. CIT Vs. Smt. Samina H. Khorakiwala
Date of order: 22.03.2010
ORDER
PER R.K.PANDA, AM,
This appeal filed by the Revenue is directed against the order dated 27th March, 2008 of the CIT(A) Central-III, Mumbai relating to the block period 1.4.1990 to 19.9.2000.
2. The only ground raised by the Revenue reads as under:
i. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) Central-III, Mumbai erred in deleting the addition of Rs.5,44,084/- as unaccounted investment in jewellery and in holding that the assessee has discharged the onus of proving that the jewellery in question was received as gifts particularly when the evidence(s)such as proof of purchase of jewellery and Customs clearance etc., of the jewellery allegedly gifted by the said Non-Resident Indian was not provided.
3. Facts of the case, in brief, are that a search was conducted in the Wockhardt group of cases and the assessee being the daughter-in-law of Shri Habil Khorakiwala, the Managing Director of M/s. Wockhardt Ltd. was also covered. The Assessing Officer observed from the return of income filed by the assessee that she has declared jewellery valued at Rs.9,78,890 as undisclosed income for the block period being the value of jewellery seized. However, the total jewellery found was valued at Rs.15,22,974. The Assessing Officer asked the assessee to explain the source and date of acquisition of the balance jewellery worth Rs.5,44,084. It was explained by the assessee that she had received gifts on the occasion of her marriage from her NRI relatives during February, 2000 i.e., the month of marriage. However, the Assessing Officer did not accept the explanation of the assessee on the ground that the source of the income of the donors was not known and there was no proof of purchase of the jewellery in India by way of local purchase bills or proof of purchase abroad by way of Customs clearance receipt. In absence of any satisfactory evidence to prove the jewellery worth Rs.5,44,084, the Assessing Officer added the same as unexplained investment.
4. Before CIT(A) it was submitted that the identity of the donors was established by submitting the photocopies of their passports. Further the confirmations form the said donors were also filed before the Assessing Officer wherein it was mentioned that jewellery was purchased out of income earned abroad and earning per annum were also stated therein. Based on the arguments advanced by the assessee, the CIT(A) deleted the addition by holding that the assessee discharged the onus of proving the identity of the donors who have confirmed to have gifted the jewellery on the occasion of marriage from their earnings. He observed that it is not the case of the Assessing Officer that the donors do not exist and the assessee has discharged the onus of proving that the jewelleries in question were received as gifts. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us.
5. The learned DR strongly assailed the order of the CIT(A) and submitted that no evidence on account of purchase of the jewellery in India or the Customs clearance receipt in case of purchase of jewellery abroad were produced before the Assessing Officer. Referring to the copies of the confirmations filed before the Assessing Officer which are placed at Paper Book pages 31 to 34, he submitted that the confirmations are bald statements and did not contain any financial position of the donors. Further the language of all the confirmations is same. He submitted that when two persons are staying at different places and the language of the confirmation letters is same, such confirmations become unbelievable.
6. Further no local address of any of the donors was available. Referring to the decision of the Delhi Bench of the Tribunal in the case of ACIT vs. Rajeev Tandon reported in 108 ITD 560, he submitted that the Tribunal in the said decision has held that unless the bank statements are supported by any corroborative evidence to establish the financial capacity of the donors, the bank statements do not prove the creditworthiness of the donors for showing that they were financially sound for making such gifts. It was held in the said decision that the bank statement merely indicate the movement of the funds and not creditworthiness of the account holder. Referring to the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Jawaharlal Oswal reported in 267 ITR 308, he submitted that financial capacity of the donor is very important for accepting any gift. Referring to the decision of the Hon’ble Kerala High Court in the case of P.P. Koya vs. DCIT reported in175 Taxman 4, he submitted that in absence of production of local address of any of the so called donors, the Assessing Officer cannot verify the genuineness of the transactions. Referring to the decision of the Hon’ble Delhi High Court in the case of Sandeep Kumar (HUF) vs. CIT reported in 293 ITR 294, he submitted that mere identification of the donor and proof of movement of gift through banking channels is not sufficient to prove the genuineness of a gift. The onus lies on the assessee not only to establish the identify of the person who has made a gift but also the capacity of the person to make the gift. Since in the instant case the assessee has not established the creditworthiness of the donor, therefore, the CIT(A) was not justified in deleting the addition. He also relied on the decision of the Hon’ble Supreme Court in the case of CIT vs. P. Mohankala & Others reported in 291 ITR 278.
7. The learned counsel for the assessee, on the other hand, strongly relied on the order of the CIT(A). Referring to the decision of the Tribunal in the case of DCIT vs. Nafisa Khorakiwala vide I.T.(SS)A. No. 262/Mum/06 order dated 26th November, 2008 for the block period 1.4.1992 to 19th September, 2000 he submitted that the Tribunal has considered the issue and has deleted the addition in the hands of Ms. Nafisa Khorakiwala. Referring to paras 6 and 7 of the order of the Tribunal, he submitted that the jewellery was found from Smt. Nafisa Khorakiwala and Smt. Samina Khorakiwala and the Tribunal after considering the whole aspect of the case has accepted the gifts received by Mrs. Samina Khorakiwala from her NRI relatives. Therefore, the issue is a covered matter.
8. The learned DR, in his rejoinder, submitted that the decisions cited by him are not considered by the Tribunal. Therefore, the issue may be readjudicated.
9. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by the learned DR. There is no dispute to the fact that the Assessing Officer in the assessment order has mentioned that during the course of search the total gold and diamond jewellery found on person of Mrs. Samina Khorakiwala and Mrs. Nafisa Khorakiwala and at the residence was valued at Rs.30,40,879. There is also no dispute to the fact that out of the same, jewellery valued at Rs.15,26,095 was claimed to be belonging to Smt. Nafisa Khorakiwala and the balance jewellery valued at Rs.15,22,974, was claimed to be belonging to the assessee. There is also no dispute to the fact that out of Rs.15,22,974, the assessee declared the jewellery valued at Rs.9,78,891 as her undisclosed income for the block period. There is also no dispute to the fact that the assessee vide letter dated 24th July, 2006 has submitted before the Assessing Officer along with the copy of the assessment order in the case of Mrs. Nafisa Khorakiwala and claimed that since the total jewellery has already been considered in the block assessment of Mrs. Nafisa Khorakiwala only the jewellery declared in assessee’s return of income at Rs.9,78,890 must be assessed in her assessment u/s. 158BD of the Act. We find the Assessing Officer did not accept the contention of the assessee that the balance jewellery of Rs.5,44,084 was received by her from her NRI relative during her marriage on the ground that neither the source of the income of the donor was known nor the proof of purchase of the same by way of bills or Customs clearance certificate was produced before him.
10. We find the Tribunal in the case of Mrs. Nafisa Khorakiwala, the mother-in-law of the assessee, has considered this issue and has held that the genuineness of the gifts cannot be disputed merely on the ground that the local purchase bills or Customs clearance receipt was not produced especially when the NRIs coming for marriage is not disputed by the Department. The relevant portion of the order of the Tribunal at paras 6 and 7 is reproduced hereunder for the sake of clarity:
“Apropos Ground o. 2, the Assessing Officer determined the unaccounted investment in jewellery at Rs.23,2 1,469/- as under:
Gold ornaments:
Samina H. Khorakiwala 484.690 gms Rs. 1,88,612
Nafisa Khorakiwala 1,776.400 gms Rs.7, 15,912
Total 2,261.090 gms Rs.9,04,524
Less allowed 1,821.00 gms Rs.7,28,410
Diamond jewellery
Nafisa Khorakiwala 545.400 gms Rs.8, 10,993
Samina H. Khorakiwala 415.610 gms Rs. 13,34,362
Total Rs.2 1,45,355
Total unaccounted investment in jewellery by the assessee and Smt. Samina H. Khorakiwala:
(A) Rs. 1,76,114/-
(B) Rs.2 1,45,355/-
Rs. 23,21,469″
7. We have considered the rival submissions and perused the record of the case. The gold found on person and at the residence of the assessee was 1776.40 gms and diamond found on person and at the residence was 545.400 cts. The gold on person and in the bedroom of Smt. Samina H. Khorakiwala (daughter-in-law of the assessee) was 484.690 gms and diamond found with Smt. Samina H. Khorakiwala was 415.610 cts. The value of gold and diamond found with Smt. S.H. Khorakiwala was Rs. 15,22,974 (gold Rs. 1,88,612 and diamond of Rs. 13,34,362). Out of this, Smt. S.H. Khorakiwala had declared undisclosed income in her block return at Rs.9,78,890/- and the balance was added to the total income of the assessee. In regard to jewellery found on person and in the bedroom of Smt. S.H. Khorakiwala, it was stated before the Assessing Officer that the same was received at the time of her marriage. The Assessing Officer accepted the confirmation of mother but the confirmation of NRI gifts from relatives was not accepted. He observed that whether they had purchased the jewellery abroad and gifted to Smt. Samina H. Khorakiwala in which case the customs clearance receipt should have been filed. The proof of local purchase in the form of a purchase receipt should have been filed. In the absence of such evidence the said gift confirmation was only self-serving documents. Further, as rightly pointed out by learned CIT(A) the identity of the donor was fully established which was also stated in the confirmation that they jewellery was purchased out of the income earned abroad and earnings per annum was also stated therein. The fact of NRIs coming for marriage is not disputed by the department and, therefore, merely on the ground that local purchase bill or custom clearance receipt was not produced, the genuineness of the gift could not be disputed. Learned Counsel has rightly pointed out that net addition was not of Rs. 11,36,362/- but only Rs.4, 12,243/-. We are therefore, of the view that keeping in view the status of the family, the genuineness of the gifts from NRI cannot be disputed. We accordingly confirm the order of learned CIT(A). This ground is accordingly dismissed.”
11. Since the Tribunal has considered the issue and has given a finding that the genuineness of the gift cannot be disputed, therefore, respectfully following the order of the Tribunal and in absence of any contrary material brought to our notice against the order of the Tribunal, we uphold the order of the CIT(A). The various decisions relied on by the learned DR are distinguishable and not applicable to the facts of the present case especially when there is no cash gift and the gifts are in kind on the occasion of the marriage of the assessee. The ground raised by the Revenue is accordingly dismissed.
12. In the result, the appeal filed by the Revenue is dismissed.
Pronounced on 22nd March, 2010
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