Commissioner of Income Tax vs Smt. Shweta Bhuchar

M.M. Kumar, J.—By this order we propose to dispose of ITA Nos. 67 and 75 of 2010 as common questions of law and fact are involved. However, facts are being referred from ITA No. 67 of 2010.

The revenue has approached this Court by filing the instant appeal u/s 260A of the Income Tax Act (for brevity ''the Act'') challenging order dated 8-4-2009, passed by the Income Tax Appellate Tribunal, Delhi Bench ''G'', Delhi (for brevity, ''the Tribunal''), in ITA No. 1578 (Delhi) of 2008, for the assessment year 2004-05. The revenue has claimed various questions of law but at the time of arguments the following three questions were pressed:

(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 6,43,800 on account of unexplained investment in the purchase of property, instead of getting proper enquiry made by directing the Assessing Officer to make a reference to the Valuation Officer in terms of Sub-section (2) of Section 50C of the Act?

(ii) Whether the failure of the Tribunal to get proper enquiry made by the lower authority through reference to the Valuation Officer in a case where the facts and circumstances so demanded does not result in failure which lays open the action of the Tribunal to correction by a higher authority in the light of the ratio of the judgment of Bombay High Court in Brabhavati S. Shah v. CIT [1998] 231 ITR 277?

(iii) Whether the Tribunal''s decision in respect of addition of Rs. 17,00,000 on account of supposed gifts was justified in view of the fact that creditworthiness for making gifts was not proved and in the light of the decision of the Calcutta High Court in the case of Commissioner of Income Tax Vs. Precision Finance Pvt. Ltd., ; and Commissioner of Income Tax Vs. Korlay Trading Co. Ltd., , wherein it was held that mere payment by account payee cheque and mere filing of the Income Tax file number of the creditors is not enough to prove the genuineness of credits unless the assessee proves genuineness on all 3 points viz, the identity of the creditors/their creditworthiness/the genuineness of the transactions?

It is appropriate to mention that the Tribunal has noticed in its order that the issue involved in the case before it was squarely covered by the order of the Tribunal passed on 27-2-2009 in ITA No. 1580 (Delhi) of 2008, for the assessment year 2004-05, in the case of Smt. Chandni Bhuchar, a co-assessee of the present assessee. Against the aforesaid order passed by the Tribunal, the revenue has approached this Court by filing CIT v. Chandni Bhuchar IT Appeal No. 653 of 2009, which was dismissed on 7-1-2010, holding that the value adopted or assessed by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building at the time of execution of the transfer deed cannot be taken as sale consideration received for the purpose of Section 48 of the Act. Accordingly, it was held that no additions could have been made by the Assessing Officer merely because the State Government assessed the price of the property at a much higher value for the purposes of payment of stamp duty. Accordingly, the first two questions deserves to be answered against the revenue, as has been done in the case of co-assessee in ITA No. 653 of 2009, dismissed on 7-1-2010.

The third question is that creditworthiness for making gift was not proved. Again it has to be decided against the revenue because in the case of co-assessee, namely, Smt. Chandni Bhuchar it was found from the bank statements of Smt. Shweta Bhuchar, respondent in the instant appeal, Shri Rishi Bhuchar and M/s. S.R. Ashok & Associates, wherein it was proved that a sum of Rs. 17,00,000 was drawn by donor through two cheques from M/s. S.R. Ashok and Associates, which were encashed from the bank account of the firm on 23-5-2003 and the capital account of the co-assessee in the said firm was debited after receiving the cheque from the firm by the donors, the donors issued a cheque amounting to Rs. 17,00,000 to his sister-in-law Smt. Shweta Bhuchar respondent. Therefore, there is no doubt about the creditworthiness of the assessee-respondent to make the gift. Accordingly, the third question is also decided against the revenue and in favour of the assessee-respondent.

Accordingly, these appeals stands disposed of in the above terms.