TMI Blog2013 (5) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... for letting out the property on rent and service charges. These rent and service charges were paid by the companies proportionately to the co-owners. Taxes on the same were also deducted at source and TDS certificates were issued in the name of respective co-owners. The assessee has explained that the sum of Rs.1,56,200/- being a contractual receipt i.e. service charges received from ICICI Bank vide lease agreement with ICICI Bank dated 20.02.2003, 16.10.2003 and 21.02.2003 & filed complete reconciliation and details of rent and service charges received from ICICI Bank. This sum of Rs.1,56,200/- is included in the business income of the Assessee and also TDS was claimed. In such circumstances CIT(A) has rightly deleted the addition. In favour of assessee. Bogus gift of immovable property - CIT(A) deleted the addition - assessee's brothers and mother have gifted their 1/8th undivided share in the above building Sky Star - Held that:- The burden of showing that the apparent state of affairs was not the real one, very heavy burden lies on the department. In the facts and circumstances of the instant case, apart from circumstances which by themselves could be said to be neutral, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Sad was not proved on account of non-production of the loan creditor. 2.2. That the Ld. CIT(A) failed to appreciate the factual matrix of the case as appearing at page 5, para 4 to his order while holding that the loan credit from Shri Sushil Kumar Sad remained unexplained. 2.3. That the Ld. CIT(A) erred in holding that the appellant failed to prove identity and credit-worthiness of the creditor and establish the genuineness of loan.." 3. Brief facts leading to the above issue are that the AO during the course of assessment proceedings noticed that the assessee received unsecured loan from Shri Subhash Chandra Gautam of Rs.13.25 lakh and from Shri S. K. Sad of Rs.1 lakh. The assessee filed copies of Balance Sheet, bank statement, confirmation and I. T. returns to support these two cash creditors. The AO after examination of bank statement found that the creditor Shri S. K. Sad has deposited a sum of Rs. 1 lakh immediately before the date of payment of this loan to assessee. The AO required the assessee to produce the cash creditor to prove his identity and creditworthiness. Further, on examination of Balance Sheet of Shri Subhash Chandra Gautam, the AO observed that he too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the creditors and their creditworthiness. Therefore, the burden never shifted to the department. It is also held that mere filing the Income tax file numbers of the creditors is not enough. Their identity and creditworthiness should be proved and there should be genuine transactions as held in CIT vs Korley Trading Co Ltd (1998) 232 ITR 820 (Cal). Thus. I am the opinion that AO has rightly concluded that the assessee failed to establish the genuineness of the loans. The observation made by the ITAT Kolkata in the cases of Smt Kalpana Ghosh vs ITO (supra) applies to this case. In that case, the identity of the donors were established and gift amount was given by Bank cheque but the source of the bank deposit remain unexplained. The assessee failed to produce any evidence regarding amount deposited in cash in their bank accounts to the effect that these were their business receipts despite opportunity was provided and the ITAT found that the credit worthiness the donors have rightly been disbelieved by the AO. The Hon'ble ITAT held that whether the donors were capable to make gift, is more important. In view of the above discussion, the addition made by the Ld AO is confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk statements and also contra confirmation. Once this is the position and none of the authorities below have gone into the details and not doubted the genuineness of the transaction or the creditworthiness of these creditors, in our view, now nothing before us remains after the decision of Hon'ble Calcutta High Court in the case of M/s. Dataware Private Limited (supra). Respectfully following the said decision in the case of M/s. Dataware Private Limited (supra), we are of the view that in the absence of any enquiry from the AO of the creditors, the AO cannot make the addition in the hands of the assessee by treating the loans received by assessee as unexplained. We delete the same and allow the appeal of assessee. 5. Now, coming to ITA No. 1480/Kol/2010. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition of Rs.1.56 lakhs added by AO as undisclosed receipts. For this, revenue has raised following ground nos.1 and 5:- "1. That on the fact and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs.1,56,000/- on account of receipts from ICICI Bank without considering the fact that the assessee has not discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case the Ld. CIT(A) has erred in deleting the addition of Rs. 14,70,34,400/- on account of bogus gift of immovable property (multi storied building) without considering the fact that the creditworthiness of the alleged gift donors is very much poor in comparison to the assessee. 3. That on the fact and in the circumstances of the case the Ld. CIT(A) is not justified in deleting the addition of Rs. 14,70,34,400/- on account of bogus gift of immovable property multi storied bu lding ) without considering the fact that the Municipality mutation of the building was in the name of the assessee and others, there was no partit on of the property among the co-owners. 4. That on the fact and in the circumstances of the case the Ld. CIT(A) is not justified n deleting the addition w thout considering the fact that the share of each co-owners was not marked or identified. 6. That on the fact and in the circumstances of the case the Ld. CIT(A) has wrongly concluded that the addition made u/s 69B based on the value adopted by the Stamp Valuation Authority and A.O. had applied the provisions of section 50C of the IT Act without considering the fact that there was no valid gift in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by separate deed of gifts registered on 08.08.2005. The assessee and four donors are assessed to tax and gifts were duly incorporated in the respective accounts. It was also explained by the assessee before the AO that the donors have gifted their rights over 1/8th share of each of the co-owners i.e. undivided share of house property. The assessee also explained that circle rates or stamp duty rates has nothing to do with the valuation of gift of immovable property because in any eventuality, the property is gifted and not sold by them on a consideration. As such, valuation does not change the substance of gift. 10. Finally AO was of the view that "While the deeds were registered, the market value of the properties have been determined by the Registrar at Rs 3,67,58,600/- in respect of each undivided l/8th share of the immovable property, Sky Star Building and Rs. 17,71,000/- in respect of each of the two flats. Now the question is why all the four persons made the said gifts to one and only Sri Indra Chand Agarwal. All of them are having family of their own. They have small children to look after. None of these donors have any res dential properties. All the donors spent hug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been specified and determinate. Accordingly, the donors cannot make the alleged gifts, when they have the title and definite share in their own name. hence, the alleged gifts are treated as void. On the contrary, since the transactions have taken place between the assessee and his four relatives, this can be treated as relinquishment of their rights in the undivided property. This is nothing but a transfer with adequate consideration. Since the market value of the properties have been determined by the Registrar at Rs 3,67,58,600/-, it is inferred that the assessee has paid the said sum of Rs 3,67,58,600/- each to all the four persons to acquire their right in the undivided property. This is nothing but undisclosed investments in the hands of the assessee which is covered by Section 69B of the I.T. Act. Accordingly, the total undisclosed investments made by the assessee comes to Rs 14,70,34,400/- ( Rs 3,67,58,600/-X4) which is added to the total income of the assessee u/s 69B of the I.T. Act." Aggrieved, assessee preferred appeal before CIT(A). 11. CIT(A) deleted the addition made by AO by observing as under: "I have carefully considered the submission of the Ld AR and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case. Therefore, the action of the AO amounts only to act on surmise. While making assessment. there is no scope of any suspicion and surmise. Thirdly, in a number of cases different Courts held that the provisions of Sec.50C are applicable only in the case of a seller and the rate determined by the Stamp Valuation authority cannot be applied as the investment made by the purchasers (Ref. ITO vs Optec Disc Manufacturing (2008) l I DTR (Chd) (Trib) 264; ITO vs Satya Narayan Agarwal (2007) 112 TTJ (Jd) 717. In view of the aforesaid legal posit on and fact of the case, t is held that the decision cited by the ld AO cannot be applied in this case. The ITAT, Kolkata in the case of DCIT vs Dr. R K Agarwal in [ITAT (SS) A No. 30/Kol/2009] has taken similar view. Therefore, the addit on made u/s.69B based on the value adopted by the SVA cannot be sustained. The addition of the AO, is deleted." Aggrieved, now revenue is in appeal before us. 12. We have heard rival submissions and gone through facts and circumstances of the case. We find that the admitted facts are that the (SS) Building was owned by 8 co-owners and that also undivided share having floor area of 1,29,802 sft. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property i.e. HUF property cannot be transferred by way of gift. Further, the Ld. CIT, DR as well as the AO referred to the decision of Hon'ble M. P. High Court in the case of Balchand Malaiya (HUF) Vs. CIT 227 ITR 651 (as referred in AO's order). We find that even in the case before Hon'ble M. P. High Court, the issue was alienation of undivided interest in the coparcener property by way of gift because in the Joint Hindu Family property the individual has no definite share. From the above two citations referred by Ld. CIT, DR, it is clear that both cases pertain to the coparceners property and that also interest in the property not undivided share. It can happen that the coparceners property the undivided interest cannot be determinate but in the case of undivided property of co-owners i.e. of individuals, has a definite share as in the present case that each of the co-owners is having 1/8th share and that share is being assessed to income tax separately. In the case of coparceners, only one assessment of HUF is carried out and not of coparceners because coparceners are not having definite undivided interest in that movable or immovable property. In such circumstances, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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