IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM ITA No.5074/Mum/2014 (A.Y:2001-02) Smt. Kantadevi Gpta, (Prop. K. D. Vs. Income Tax Officer, Textiles) Shorewala Textiles, 68, Ward 16(1) (1), Room Mirza Street, Zaveri BAzar, No.116, 1 s t floor, Matru Mumbai 400 003 Mandir, Grant Road, PAN:AADGP 3264H Mumbai 400 007 Appellant .. Respondent Appellant by .. Shri Jay Bhansali, AR Appellant by .. Shri A. K. Dhondial, DR Date of hearing .. 18-10-2016 Date of pronouncement .. 18- 10- 2016 ORDER PER MAHAVIR SINGH, JM: This appeal by assessee is arising out of order of CIT (A)-26, Mumbai in appeal No CIT (A)-26/IT-42/15(1)(1)2013-14 dated 12-05-2014. Assessment was framed by ITO, Ward -15(1)(1), Mumbai for assessment year 2001-02 vide his order dated 12-03-2013 under section 143(3) read with section 254 of Income Tax Act, 1961 (hereinafter Act ). 2. first issue in this appeal of assessee is against order of CIT (A) in upholding addition of Rs.25 lacs being gift received by assessee as not bona fide transaction, added u/s 68 of Act. 3. We have heard rival contentions and gone through facts and circumstances of case. Brief facts are that assessee received gift of Rs.25 lacs from one non-resident Shri Chhanulal Jhunjhunwala, NRI from NRI bank account at Mumbai. AO made addition of this gift as unexplained cash credit u/s 68 of Act for reason that assessee failed to discharge onus cast upon her to prove genuineness of gift. AO has not doubted creditworthiness and identity of donor. AO only noted that there is no relationship and no occasion for such gift. Accordingly, he 2 ITA No.5074/Mum/2014 made addition. CIT (A) also confirmed action of AO by observing in Para 3.2.15 and 3.2.16 of his order as under:- 3.2.15 Adverting to fact in instant case, it is evident that explanation offered by appellant is not satisfactory. appellant has not produced any substantiating documents / evidence to verify genuineness of transaction and therefore, it has been rightly held by Assessing Officer that loan is not bonafide transactions. Therefore, genuineness of gift has not been established. Hence evidence produced in support of creditworthiness is not necessary to examine at this stage. 3.23.16 In view of facts of case and relevant judicial pronouncement, I hold that Assessing Officer was right in rejecting claim of appellant of unsecured loan of Rs.25,00,000/- as bonafide of same was not established. Ground 2 to 7 is dismissed. Aggrieved, assessee is in second appeal before Tribunal. 4. We have heard rival contentions and gone through facts and circumstances of case. We find from case records that assessee during course of assessment proceedings filed following documents to prove identity, source and genuineness of transaction:- a) Replies from IRA, Singapore in response to inquiries by CBDT confirmed identity and donor paying tax in that country. b) assessee has produced zerox copy of passport, to prove identity of Mr. CL Jhunjhunwala donor. c) Copy of bank account of Shri Channulal Jhunjhunmwala bearing account No.50154 at Indian Overseas Bnk to which credit of Rs.82,82,301 has been made by clearing in July, 2000 and out of said deposit payment of Rs.25 Iakhs has been made to assessee vide cheque No.98464. d) assessee has filed annual report of year 1998 of Hind Hotels Ltd worth of which is USD 5,87,000 and Shri Channulal Jhunjhunwala is said to have been holding 7,50,000 equity shares of company of face value of Singaproe $ 1 each. e) copy of e-mail dated April, 6, 2005 from Channulat Jhunjhunwala to one Mr. Ravi stating that source of funds for FD are from Hongkong. 3 ITA No.5074/Mum/2014 f) Also letter is filed dated 08.01.2005 enclosing certificates from Bankers. Copy of certificate from Indian Bank, Singapore Branch is filed that states as under:- "This is to Certify that Mr. C. L. Jhunjhunwala of 55, Gaden Road, Apartment GD, Estonil Court, Hong Kong is constituent of our Bank for over decade. He is seasoned businessman with varied business interests and investments in Singapore, Thailand, Hong' Kong etc. As per Market reports, he and his family members are reportedly worth around USD 100 million. To best of our knowledge, he does not undertake or commit himself for any financial transaction, he cannot honour. This information is given to you in strict confidence, without any responsibility on part of Bank or signatory, whatsoever." g) Another certificate from Citigroup has been filed that states as under:- "Mr. Chhanulal Jhunjhunwala, holder of Indian passport Z - 1508017, has established trust of which Cititrust (Bahamas) Limited is Trustee. trust is revocable by Mr. C. L. Jhunjhunwala. As at 19-01- 2004, revocable trust has net assets of US$ 15,714,527.68. In providing this information, Cititrust (Bahamas) Limited accepts no liability for any consequences howsoever or whatsoever arising from its use." h) assessee has also filed copy of FDR made in Centurion Bank Ltd. on 10.07.1997 for 3 years and maturing on 10.07.2000 n d maturity amount is Rs.82,82,301.97. 5. On basis of these documents, assessee argued that genuineness of transactions and creditworthiness of donor or his capacity to donate cannot be doubted. It is claimed by assessee that it is not necessary for donor to disclose FDR maintained in India to Singapore authorities. FDR is document of Centurion bank showing FDR No.0002003749-001 made on 10.7.1997 and maturity date being 10.7.2000 for Rs.80,00,000/- in joint name of Shri V.I.Jhunjhunwala and Shri Ramesh Jhunjhunwala (FOS). FDR is 4 ITA No.5074/Mum/2014 from NRE account for period of 3 years and interest rate is 14% p.a. maturity value of FDR is not specified in print but subsequently it is written by someone in hand to be Rs.82,82,301.37. We find that AO and his predecessor in original assessment proceedings verified identity of Mr. CL Jhunjhunwala through CBDT and IRS authorities, Singapore and also during reassessment proceedings of Deepa Shoreweala and there was no question on his identity. reference right or wrong to IRS Singapore and reply proves identity of donor his status, capacity etc. but only observation was that NRE account in Indian Overseas Bank was not disclosed in his Tax Returns in Singapore. disclosure of foreign assets may or may not be required in Singapore and Hongkong as per local laws, hence, it is not relevant here to disclose Bank account at Singapore. We find that assessee is able to prove identity of donor before assessing authority in India. assessee is able to explain source of funds and to support this he filed copy of bank statement of NRE account with Bank from which gift was given. We also find that above said gift was received from NRE account No.025 maintained with Indian Overseas Bank, Nariman Point, Mumbai which is mentioned in covering letter of confirmation of gift on oath. We also observed from records that AO has reopened assessee's case solely on basis of gifts entries in this bank account obtained in case of Mrs Deepa Shorewala. AO has no question on source of gift except that said bank account is not disclosed in Income Tax Returns filed in Singapur by donor. 6. From records we observed that queries of CBDT to confirm donor & gift were specific with reference to gift of Rs. 27 lacs received by Deepa Shorewala from Mr. Channulal Jhunjhunwala and reply of IRA Singapore is with reference to queries relating to Deepa Shorewala. But, there was no query or mention about gift received by assessee. However, there is nothing in reply of IRA Singapore which invalidates gift or prove gift in-genuine on account of identity, source, capacity of donor. It is on contrary, positive reply on all queries of Mrs. Vani is his wife and Ramesh is 5 ITA No.5074/Mum/2014 his son and director of Hind Hotels Ltd, whose FDRs in Joint names are credited in Bank account from where gift is given. No money is remitted from Bank to Singapore and there is no requirement of disclosing gift given etc. as per Singapore law or he may not be resident of Singapore hence worldwide income is not taxable in that country, income of that country is only taxed. 7. We find from above facts that when Bank account, covering letter of gift, statement on oath and Bank's letters on solvency and worth, all contains address of Hong Kong given above, he may be assessed there and if requirement of law, Indian Overseas Bank account or gifts might have been disclosed. In view of above, we can presume that assessee has proved identity of donor, source of fund, capacity of donor, genuineness etc. with evidences and hence, we delete addition of unexplained cash credit made by AO and confirmed by CIT (A) u/s.68 of Act and allow appeal of assessee. 8. In result, appeal of assessee is allowed. Order pronounced in open court on 18-10-2016. Sd/- Sd/- (RAMIT KOCHAR) (MAHAVIR SINGH) ACCONTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 18-10-2016 Lakshmikanta Deka/Sr.PS 6 ITA No.5074/Mum/2014 Copy of Order forwarded to: 1. Appellant 2. Respondent. 3. CIT (A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI Sr. Particulars Date Initials Member No. Concerned 1 Dictation given on 18/10/16 LK Deka JM 2 Draft placed before author 19/10/16/ 26/10/16 3 Draft proposed/placed before second Member 4 Draft discussed/approved by Second member 5 Approved Draft comes to Sr.PS 6 Kept for pronouncement on 7 File sent to Bench Clerk 8 Date on which file goes to Head Clerk 9 Date of dispatch of Order Kantadevi Gpta v. Income-tax Officer, Ward 16(1) (1), Mumbai