ITO Ward 1, V. Sandeep Kumar,

ITA 101/DEL/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65676 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 31-07-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 05-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TASHRID AHMAD
• Keywords: Gift; Salary income
• Section: 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO. 101/DEL/2007 ASSESSMENT YEAR: 2003-2004 INCOME TAX OFFICER, WARD-1, SHAMLI. VS. SH. SANDEEP KUMAR, S/O SH. GYAN CHAND, PROP. M/S BALAJI TRADING COMPANY, V.V. INTER COLLEGE ROAD, SHAMLI, DISTT. MUZAFFARNAGAR (U.P) PAN NO. ADEPK2923K (APPELLANT) (RESPONDENT) APPELLANT BY : SH. NEERAJ KUMAR, SR. DR RESPONDENT BY : SH. ANKIT GUPTA, ADV. & SH. TASHRID AHMAD, ADV. DATE OF HEARING : 31/07/2012 DATE OF PRONOUNCEMENT : 12/10/2012 O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED AG AINST THE ORDER OF LD. CIT(A) DATED 05/10/2006 FOR A.Y. 2003-04. 2. THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEAR, W AS ENGAGED IN THE TRADING OF PVC PIPE AND PUMPS AS PROPRIETOR OF M/S BALAJI TRADING COMPANY. HE HAD FILED HIS RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS. 1,14,680/-. THE ASSESSMENT WAS COMPLETED AT A TOTA L INCOME OF RS. 12,65,435/- AFTER MAKING FOLLOWING ADDITIONS: - ITA NO. 101/D/2007 2 1) UNPROVED/BOGUS GIFTS RS. 6,05,450/- 2) UNPROVED SUNDRY LIABILITIES RS. 5,40,475/-. 3. THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO, WHILE PARTLY ALLOWING THE ASSESSEES APPEAL, DELETED BOTH THE AD DITIONS. 4. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEF ORE US. 5. GROUND NO. 1 READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 6, 05,440/- MADE BY THE ASSESSING OFFICER IN RESPECT OF GIFTS O F RS. 6,05,440/- RECEIVED BY THE ASSESSEE FROM 11 PERSONS TREATING THE GIFTS RECEIVED AS BOGUS. 6. BRIEF FACTS APROPOS THIS ISSUE ARE THAT THE AO H AD REQUIRED THE ASSESSEE TO ESTABLISH THE CAPACITY, GENUINENESS, ID ENTITY AND CREDITWORTHINESS OF DONORS. HE ALSO REQUIRED THE A SSESSEE TO EXPLAIN DEPOSIT OF CASH IN THE ACCOUNTS OF DONORS JUST ONE DAY BEFORE GIVING THE GIFT. THE ASSESSEE PRODUCED DONOR SMT. SUSHMA DEVI ON 13/ 09/2005 WHOSE STATEMENT WAS RECORDED ON OATH ON THE SAID DATE. F OR PRODUCTION OF REST OF THE DONORS, THE CASE WAS ADJOURNED TO 22/09/2005 ON WHICH DATE DONOR SHRI GYAN CHAND KUCHHAL WAS PRODUCED AND HIS STATEM ENT WAS RECORDED ON OATH. FOR PRODUCTION OF REST OF THE DONORS THE CASES WERE ADJOURNED FROM TIME TO TIME AND ON 08/11/2005 DONORS SHRI SON U KUCHHAL AND SHRI NITIN KUCHHAL WERE PRODUCED AND THEIR STATEMENTS WE RE RECORDED ON OATH. AFTER CONSIDERING THE STATEMENTS OF SMT. SUSHMA DEV I AND SHRI GYAN CHAND KUCHHAL THE AO ISSUED NOTICE U/S 142(1) REQUI RING SHRI GYAN CHAND KUCHHAL TO PRODUCE THE BOOKS OF ACCOUNT OF M/S SHAN KAR PIPE STORE & MACHINERY PARTS FOR A.Y. 2004-05. THIS NOTICE WAS DULY SERVED ON SHRI GYAN CHAND KUCHHAL, THE ASSESSEES FATHER. SHRI GY AN CHAND KUCHHAL APPEARED ON 21/11/2005 BUT DID NOT PRODUCE THE ACCO UNT BOOKS OF M/S ITA NO. 101/D/2007 3 SHANKAR PIPE & MACHINERY STORE. THE AO HAS OBSERV ED THAT BECAUSE OF THIS THE VERACITY OF GIFTS FROM SMT. SUSHMA DEVI AN D SHRI GYAN CHAND KUCHHAL COULD NOT BE VERIFIED. 7. IN THE BACKDROP OF THESE FACTS, THE AO AGAIN I SSUED NOTICE REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ALLEGED GI FTS FROM FOLLOWING PERSONS BE NOT ADDED AS THEIR CAPACITY, GENUINENESS , CREDITWORTHINESS AND IDENTITY WERE NOT ESTABLISHED: 1) SMT. SUSHMA DEVI GIFT RS. 1,75,000/- 2) SHRI GYAN CHAND KUCHHAL GIFT RS. 1,10,000/- 3) SHRI NITIN KUCHHAL GIFT RS. 88,000/- 4) SHRI SONU KUCHHAL GIFT RS. 1,09,000/- 5) SHRI ANUJ KUMAR S/O NANAK CHAND GIFT RS. 18,000/- 6) SHRI DEPAK KUMAR S/O SH. MAHENDRA KUMAR GIFT RS. 18,000/- 7) SMT. RADHA W/O SHRI ANUJ KUMAR GIFT RS. 19,000/- 8) SMT. RUPALI W/O SH. DEPAK KUMAR GIFT RS. 19,440/- 9) SH. AJIT S/O SH. CHATAR SAIN GIFT RS. 17,000/- 10) SH. RAM PRASAD S/O SH. CHATAR SAIN GIFT RS. 16,000/- 11) SH. SHEKHAR CHAND S/O SH. CHATAR SAIN GIFT RS. 16,000 /- TOTAL GIFT RS. 6,05,440 /- 8. HE FURTHER REQUIRED THE ASSESSEE TO SHOW CAUSE T HAT IN RESPECT OF FOLLOWING TWO PARTIES THE AMOUNTS APPEARING TO THE CREDIT OF THE SAID PARTIES IN ASSESSEES BOOKS BE NOT ADDED AS THEY WERE NOT P ROVED: 1) M/S E.K. ONKAR FOUNDRY OF KAITHAL RS. 2,01,612 /- 2) M/S BANSAL POLYVIN LTD. SAMANA OF PUNJAB RS. 3,38,863 /- TOTAL RS. 5,40,475 /- 9. THE ASSESSEES REPRESENTATIVE FILED HIS REPLY IN WHICH IT WAS SUBMITTED THAT SINCE GIFTS WERE RECEIVED THROUGH CH EQUE THEIR GENUINENESS ITA NO. 101/D/2007 4 CANNOT BE DOUBTED. THE AO HAS OBSERVED THAT ASSESS EE DID NOT EXPLAIN THE SOURCE OF CASH DEPOSITS IN THE DONORS ACCOUNT. THE AO HAS CONSIDERED EACH AND EVERY GIFT SEPARATELY IN RESPECT OF VARIOU S DONORS. 10. A) SMT. SUSHMA DEVI GIFTS RS. 1,75,000/- THE AO OBSERVED THAT IN THE BANK ACCOUNT NO. 8499 OF SMT. SUSHMA DEVI RS. 1,75,000/- CASH WAS DEPOSITED ON 17/09/2002 (WR ONGLY MENTIONED 2005 IN THE ASSESSMENT ORDER REFER PAGE 20 OF PAP ER BOOK, WHEREIN CONFIRMATION OF SMT. SUSHMA DEVI IS CONTAINED AND O N THE SAME DATE SMT. SUSHMA DEVI GIFTED RS. 1,75,000/- TO ASSESSEE THROU GH CHEQUE NO. 358957. THE AO OBSERVED THAT IN THE STATEMENT SMT. SUSHMA DEVI STATED THAT THE CASH WAS DEPOSITED IN HER BANK ACCOUNT FRO M THE INCOME EARNED OUT OF TRAINING IMPARTED TO GIRLS OF BEAUTY PARLOUR AND STITCHING. THE AO HAS OBSERVED THAT SMT. SUSHMA DEVI IN HER STATEMENT ADMITTED THAT SHE HAD NO DIPLOMA IN BEAUTY PARLOUR AND STITCHING AND THERE WAS NO BOARD ALSO PUT IN THE HOUSE. SHE HAD NOT MAINTAINED ANY ATTENDANCE REGISTER OF GIRLS AND THE FEES WAS ALSO NOT FIXED. SHE SIMPLY STATED THAT SHE TAUGHT THE COURSE OF BEAUTY PARLOUR AND STITCHING TO THE GIRL WHO PAID THE FEES. THE AO DID NOT ACCEPT THE CREDITWORTHINESS AND GENUINEN ESS OF GIFT FOR THE FOLLOWING REASONS: - I) THE CASH WAS DEPOSITED IN THE BANK A/C OF SMT . SUSHMA DEVI AS UNDER: DATE AMOUNT 04/05/2002 RS. 25,000/- 06/05/2002 RS. 25,000/- IN THIS CONNECTION, HE OBSERVED THAT BEFORE 17/09/2 002 AND THEREAFTER, IN HER BANK ACCOUNT THE BALANCE WAS NEV ER MORE THAN RS. 20,000/-. THUS, CAPACITY OF THE DONOR WAS NOT ESTAB LISHED. II) THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF DEPO SIT OF CASH JUST ONE DAY BEFORE GIVING OF GIFT BY DONOR. ITA NO. 101/D/2007 5 III) DONOR SMT. SUSHMA DEVI HAD THREE SONS AND TWO DAUGHTERS BUT SHE DID NOT GIVE GIFT TO ANY OTHER CHILD. IV) ASSESSEES TWO YOUNGER BROTHERS WERE WORKING AT A SALARY OF RS. 4,200/- PER MONTH AT THEIR FATHERS SHOP AND, THERE FORE, THEY WERE IN MORE NEED OF MONEY ALONG WITH DAUGHTERS AND NOT THE ASSESSEE WHO HIMSELF WAS DOING BUSINESS. 10.1 HE, THEREFORE, REJECTED THE ASSESSEES CLAIM R ELYING ON THE FOLLOWING DECISIONS: I) CIT VS. DURGA PRASAD MAURYA, 82 ITR 540 (SC) II) LAL CHAND KALRA VS. CIT, 22 CTR 135 (PCH) [1981 ] III) RAJIV VS. ACIT, 69 ITD 23 (DEL) B) SHRI GYAN CHAND KUCHHAL GIFT RS. 1,10,000/- THIS GIFT WAS RECEIVED ON 18/09/2002 VIDE CHEQUE NO . 837788. THE AO OBSERVED THAT DONOR SH. GYAN CHAND KUCHHAL HAD D EPOSITED RS. 1 LAKH IN CASH ON 16/09/02 IN HIS BANK A/C NO. 6336 . THE SOURCE OF THIS DEPOSIT WAS EXPLAINED FROM THE FIRM BANK ACCOU NT NO. C70. THE AO REQUIRED THE ASSESSEE TO PRODUCE THE COPY OF BAN K A/C AND CASH BOOK OF GYAN CHAND KUCHHAL BUT THE SAME WAS NOT PRO DUCED. THE AO, THEREFORE, MADE THE ADDITION OF RS. 1,10,000/- FOR THE SAME REASONS AS IN RESPECT OF SMT. SUSHMA DEVI. C) SHRI NITIN KUCHHAL - GIFT OF RS. 88,000/- THIS AMOUNT WAS RECEIVED BY THE ASSESSEE ON 19/09/2 002 BY CHEQUE NO. 190533. THE AO NOTED THAT SH. NITIN KUCHHAL HA D OPENED HIS ACCOUNT IN PUNJAB NATIONAL BANK ON 18/09/02 BY DEPO SITING RS. 19,000/- OUT OF WHICH HE GIFTED RS. 88,000/- TO ASS ESSEE. THE AO HAS OBSERVED THAT DONOR SH. NITIN KUCHHAL EXPLAINED THE SOURCE OF DEPOSIT OF RS. 19,000/- FROM HIS SAVINGS AND LOANS BUT HE DID NOT TELL THE NAME OF PERSON FROM WHOM AND WHEN HE TOOK LOAN. HE OBSERVED THAT DONOR HAD EXPLAINED HIS SOURCE OF INCOME FROM SALARY OF RS. ITA NO. 101/D/2007 6 4,200/- FROM THE SHOP OF HIS FATHER M/S SHANKAR PIP E & MACHINERY STORE. 10.2 CONSIDERING ALL THESE ASPECTS, THE AO DID NOT ACCEPT THE ASSESSEES VERSION OBSERVING AS UNDER: - 1) DONOR, WHO IS BROTHER OF THE ASSESSEE, IS 10 YE ARS YOUNGER TO HIM. 2) HIS SOURCE OF INCOME WAS QUITE MEAGER BEING SALA RY OF RS. 4,200/- PER MONTH. 3) THE DONOR WOULD HAVE GIVEN GIFT TO HIS TWO SISTE RS AND NOT TO HIS ELDER BROTHER WHO WAS WELL OFF. 4) THE DONOR HAD DEPOSITED RS. 19,000/- IN CASH IN HIS ACCOUNT, THE SOURCE OF WHICH WAS NOT EXPLAINED. 5) THE AO RELIED ON VARIOUS CASE LAWS NOTED IN THE CASE OF SMT. SUSHMA DEVI. D) SHRI SONU KUCHHAL GIFT OF RS. 1,09,000/- THE AO NOTED THAT SHRI SONU KUCHHAL GIFTED RS. 1,09 ,000/- ON 19/09/2002 VIDE CHEQUE NO. 190541. HE NOTED THAT S H. SONU KUCHHAL HAD DEPOSITED RS. 1,10,000/- IN CASH ON 18/ 09/2002 FROM WHICH HE GIFTED RS. 1,09,000/- ON 19/09/02. T HE DONOR EXPLAINED THE SOURCE OF RS. 1,10,000/- FROM HIS EAR LIER SAVINGS, LOAN AND SALARY RECEIVED FROM HIS FATHERS SHOP. T HE AO AFTER CONSIDERING THE ENTIRETY OF FACTS, MADE AN ADDITION OF RS. 1,09,000/- FOR THE SAME REASONS FOR WHICH HE MADE T HE ADDITION IN THE CASE OF SH. NITIN KUCHHAL. FOLLOWING PERSON S HAD GIFTED LESS THAN RS. 20,000/- TO THE ASSESSEE: NAME OF DONOR AMOUNT DATE OF GIFT RELATIONSHIP WITH ASSESSEE I) DEEPAK KUMAR 18,000/- 12/09/2002 SISTERS HUSBAND II) SMT. RADHA 19,000/- 12/09/2002 SISTER III) SMT. RUPALI W/O SH. DEEPAK KR. 19,440/- 12/09/2002 SISTER IV) AJIT S/O SH. CHATAR SAIN 17,000/- 12/09/2002 - V) RAM PRASAD S/O SH. CHATAR SAIN 16,000/- 12/09/2002 - VI) SH. SHEKAR 16,000/- 12/09/2002 - ITA NO. 101/D/2007 7 CHANDER S/O SH. CHATAR SAIN IN ALL THESE CASES, THE AO HAS OBSERVED THAT NONE O F THE DONORS WERE PRODUCED BEFORE HIM AND ONLY CONFIRMATION LETT ERS WERE FILED. THE AO OBSERVED THAT SINCE IN SPITE OF SEVERAL OPPO RTUNITIES, DONORS WERE NOT PRODUCED THEIR CREDITWORTHINESS, IDENTITY, CAPACITY AND GENUINENESS WAS NOT ESTABLISHED. 11. BEFORE LD. CIT(A), THE ASSESSEE HAD FILED WRITT EN EXPLANATION DATED 13/06/2006 REPRODUCED AT PAGES 2 TO 10 OF HIS ORDER ON WHICH LD. CIT(A) HAD CALLED FOR THE COMMENTS OF AO. THE AO SUBMITTE D HIS REMAND REPORT DATED 04/09/2006 WHICH HAS BEEN REPRODUCED FROM PAG ES 11 TO 15 OF LD. CIT(A)S ORDER. AFTER CONSIDERING THE REMAND REPOR T, THE LD. CIT(A) OBSERVED IN PARA 12.1 AS UNDER: - 12.1 REGARDING GIFTS, IT IS CLEAR THAT ALL REQUISITE INGREDIENTS OF GENUINENESS OF GIFTS ARE PRESENT IN THIS CASE AS ABOUT THE GIFT OF SMT. SUSHMA DEVI, MOTHER OF THE ASSESSEE APPELLANT, WHO HAS GIVEN THE GIFT OF RS. 1,75,000/- TO HIS SON ASSESSEE APPELLANT VIDE A/C P AYEE CHEQUE SHE IS ALSO ASSESSED TO TAX. HER STATEMENT HAS ALSO BEEN RECORDED IN WHICH SHE HAS CLEARLY ACCEPTE D ABOUT THE GIFT GIVEN. IN SUPPORT OF THE GENUINENESS OF THE GIFT SHE HAS PRODUCED HER BANK PASS BOOK COPY OF A/C OF THE FIRM WHERE THE AMOUNT HAS BEEN TRANSFERRED AND THE BANK STATEMENT OF THE FIRM ALSO, THE SIMILAR IS THE POSI TION WITH THE GIFT OF RS. 1,10,000/- RECEIVED FROM SHRI GYAN CHAND KUCHHAL, THE FATHER OF THE ASSESSEE APPELLANT DONEE ,GIFT OF RS. 88,000/- RECEIVED BY ASSESSEE APPELLANT FROM SHRI NITIN KUCHHAL AND GIFT OF RS. 1,09,000/- AS RECEIVE D FROM SHRI SONU KUCHHAL THE DONEE, REAL BROTHERS OF ASSES SEE APPELLANT. IN THE YEAR APPELLANT HAS ALSO RECEIVED PETTY GIFT TOTAL AMOUNT IN TO RS. 1,23,440/- AS DETAIL BE LOW: - S.NO. NAME OF DONEE AMOUNT I) SH. ANUJ KR. S/O NANAK CHAND RS. 18,000/- II) SMT. RADHA W/O SH. ANUJ KUMAR RS. 19,000/- III) SH. AJIT S/O SH. CHATAR SAIN RS. 17,000/- IV) SH. RAM PRASAD S/O SH. CHATAR SAIN RS. 16,000/- ITA NO. 101/D/2007 8 V) SH. SHAKER CHAND S/O SH. CHATAR SAINRS. 16,000/- VI) SH. DEEPAK KR. S/O SH. MAHENDRA KR. RS. 18,000/- VII) SMT. RUPALI W/O SH. DEEPAK KR. RS. 19,440 /- TOTAL AMOUNT RS.1,23,440 /- THE APPELLANT HAS SUBMITTED BEFORE ASSESSING OFFICER THAT ALL THE AFORESAID DONEE ARE VERY CLOSE RELATIONS OF THE ASSESSEE, HE HAS ALSO GIVEN THEIR IDENTIFICA TION AND WAS ALSO READY TO PRODUCE ALL THE DONORS FOR VERIFI CATION. IT IS UNDISPUTED THAT ALL THE DONORS HAVE GIVEN THE GIFTS ON THE OCCASION, THAT ASSESSEE APPELLANT HAS PURCHASED A RESIDENTIAL HOUSE AND ALL THE DONORS ARE VERY CLOSE RELATIVE OF THE ASSESSEE APPELLANT. THUS, SITUATION, WHICH EMERGES, IS THAT THE STATEM ENT OF FOUR MAJOR DONORS HAVE BEEN RECORDED AND FROM TH E FACTS THEY ARE FOUND TO BE GENUINE AND SATISFACTORY . IN THE GIVEN CIRCUMSTANCES, PRODUCTION AND EXAMINATION OF PERSONS, THE DONORS FOR RS. 4,82,000/- OUT OF TOTAL GIFT OF RS. 6,05,440/- SHOULD BE TREATED AS SUFFICIENT TEST CHECKS TO COME TO CONCLUSION THAT THE PETTY GIFTS RECEIVED FR OM CLOSED RELATIVES LIKE REAL BROTHER-IN-LAW, REAL SISTERS AN D FATHER- IN-LAW WERE GENUINE. THEREFORE, NO ADDITION IS WAR RANTED ON A/C OF GIFTS RECEIVED BY ASSESSEE APPELLANT AND ACCORDINGLY AN ADDITION OF RS. 6,05,440/- IS BEING DELETED, APPELLANT WILL GET RELIEF ACCORDINGLY. 12. LD. DR SUBMITTED THAT AO CARRIED OUT DETAILED E NQUIRY IN RESPECT OF EACH AND EVERY CASE AND PROVED THAT NONE OF THE CRE DITORS HAD ANY CREDITWORTHINESS. LD. DR SUBMITTED THAT IN CASE OF SMT. SUSHMA DEVI ONLY PAN NUMBER IS THERE BUT SHE IS NOT ASSESSED TO TAX AS NO COPY OF ITR HAD BEEN FILED. HE SUBMITTED THAT IMMEDIATELY AFTER DE POSITING OF CASH IN THE ACCOUNT, THE CHEQUE WAS ISSUED BY SMT. SUSHMA DEVI. SHE HAD NO KNOWN SOURCE OF INCOME AND, THEREFORE, LD. CIT(A) ERRED I N HOLDING THAT SHE HAD CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TION HAD BEEN ESTABLISHED. AS REGARDS SH. GYAN CHAND KUCHHAL, LD . DR SUBMITTED THAT SOURCE OF DEPOSIT OF RS. 1.10 LAKHS HAD NOT BEEN PR OVED. NO EVIDENCE WAS FILED BEFORE LD. CIT(A). HE SUBMITTED THAT ALL DON ORS WERE CLOSED RELATIVES AND, THEREFORE, IDENTITY ONLY HAD BEEN PROVED AND N OT THE CREDITWORTHINESS OF THE DONORS. HE POINTED OUT THAT EXACT AMOUNT WA S DEPOSITED IN BANK IN ITA NO. 101/D/2007 9 CASE OF FOUR PERSONS, WHO DONATED THROUGH CHEQUES. IN RESPECT OF SEVEN PERSONS, LD. DR SUBMITTED THAT THEY HAD GIVEN CASH GIFTS OF LESS THAN RS. 20,000/- BUT WERE NOT PRODUCED BEFORE THE AO. 13. LD. COUNSEL SUBMITTED THAT ALL FOUR MAJOR DONOR S, WHO HAD GIFTED MORE THAN RS. 20,000/-, APPEARED BEFORE THE AO AND THEY WERE CLOSED RELATIVES LIKE FATHER, MOTHER AND BROTHER OF ASSESS EE. LD. COUNSEL REFERRED TO PAGE 17 TO 19 OF THE PAPER BOOK, WHEREIN THE STA TEMENT OF SMT. SUSHMA DEVI W/O SH. GYAN CHAND KUCHHAL IS CONTAINED IN WHI CH SHE HAD CLEARLY STATED THAT SHE WAS IMPARTING THE TRAINING OF BEAUT Y PARLOUR. SHE ALSO STATED THAT AMOUNT WAS GIVEN THROUGH CHEQUE AND THE CASH WAS DEPOSITED OUT OF HER SAVINGS OF BEAUTY PARLOUR AND STITCHING. LD. COUNSEL FURTHER REFERRED TO PAGE 20 OF PAPER BOOK, WHEREIN THE GIFT DEED IS CONTAINED IN WHICH ALL PARTICULARS WERE GIVEN. LD. COUNSEL FURT HER REFERRED TO PAGE 21 OF PAPER BOOK, WHEREIN THE ACCOUNT OF SHANKER PIPE STO RE & MACHINERY PARTS IS CONTAINED TO CLARIFY THAT THERE WAS WITHDRAWAL O F RS. 1,75,000/- IN THE NAME OF SUSHMA DEVI ON 17/09/02. HE SUBMITTED THAT NO CASH WAS DEPOSITED BEFORE ISSUING CHEQUE BY SMT. SUSHMA DEVI . LD. COUNSEL ALSO FILED COPY OF ACCOUNT STATEMENT OF SMT. SUSHMA DEVI IN THE BOOKS OF SHANKAR PIPE STORE & MACHINERY PARTS, WHEREIN THE C HEQUE OF RS. 1,75,000/- IS REFLECTED. HE FURTHER REFERRED TO PA GE 24 OF PAPER BOOK, WHEREIN THE BANK STATEMENT IN THE ORIENTAL BANK OF COMMERCE OF SUSHMA DEVI IS CONTAINED TO DEMONSTRATE THAT THIS AMOUNT W AS TRANSFERRED FROM THE BANK ACCOUNT OF SHANKAR PIPE STORE & MACHINERY PART S. THUS, LD. COUNSEL SUBMITTED THAT IN CASE OF SUSHMA DEVI THERE IS NO C ASH DEPOSIT AND SHE TOOK LOAN FROM SHANKAR PIPE FOR GIVING GIFT TO ASSE SSEE WHO IS HER SON. HE SUBMITTED THAT ALL THESE AMOUNTS HAD BEEN GIFTED TO ASSESSEE AS HE WAS TO PURCHASE HOUSE. ITA NO. 101/D/2007 10 14. AS REGARDS GYAN CHAND KUCHHAL LD. COUNSEL REFER RED TO PAGE 32 OF PAPER BOOK, WHEREIN THE BANK STATEMENT OF GYAN CHAN D KUCHHAL IS CONTAINED AND POINTED OUT THAT HE HAD ISSUED CHEQUE FROM THIS ACCOUNT IN FAVOUR OF ASSESSEE. AS REGARDS, THE SOURCE OF DEPO SIT OF RS. 1 LAKH IN CASH ON 17/09/2002, LD. COUNSEL REFERRED TO PAGE 35 OF P APER BOOK, WHEREIN THE ACCOUNT OF SH. GYAN CHAND (CAPITAL ACCOUNT) WITH M/ S SHANKAR PIPE STORE & MACHINERY PART IS CONTAINED TO DEMONSTRATE THAT O N 17/09/2002 THERE WAS A CASH WITHDRAWAL OF RS. 1 LAKH. THUS, HE SUBM ITTED THAT FATHER HAD GIFTED THE AMOUNT TO HIS SON OUT OF WITHDRAWAL FROM HIS CAPITAL ACCOUNT WITH M/S SHANKAR PIPE STORE & MACHINERY PARTS. HE FURTH ER SUBMITTED THAT SH. GYAN CHAND KUCHHAL IS ASSESSED TO TAX. AS REGARDS, GIFT FROM SH. NITIN KUCHHAL BROTHER OF ASSESSEE LD. COUNSEL REFERRED TO PAGE 7 & 8 OF PAPER BOOK, WHEREIN THE COPY OF ITR FOR AY 2002-03 IS CON TAINED IN WHICH HE HAD DECLARED AN INCOME OF RS. 53,496/-. AS REGARDS, SH . SONU KUCHHAL LD. COUNSEL REFERRED TO PAGE 9 TO 16 OF PAPER BOOK, WHE REIN THE STATEMENT OF SH. SONU BROTHER OF ASSESSEE AND RELEVANT BANK STAT EMENT IS CONTAINED ALONG WITH COPY OF ITR FOR AY 2002-03. LD. COUNSEL SUBMITTED THAT DONOR WAS AN INCOME-TAX ASSESSEE. THEREFORE, HIS CREDITW ORTHINESS WAS NOT IN DOUBT. 15. AS REGARDS, OTHER GIFTS, LD. COUNSEL SUBMITTED THAT FROM PAGE 37 TO 43 OF PAPER BOOK, THE GIFT DEEDS OF ALL DONORS WHO HAD GIFTED LESS THAN RS. 20,000/-, IS CONTAINED AND FOUR OF THE DONORS WERE RELATED TO ASSESSEE AND THE OTHER THREE DONORS VIZ. AJIT KUMAR, RAM PRASAD AND SHEKHAR CHAND HAD INCOME FROM BUSINESS. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE. ITA NO. 101/D/2007 11 17. THE FACTS HAVE BEEN NARRATED EXTENSIVELY EARLIE R. AS FAR AS THE GIFTS FROM SMT. SUSHMA DEVI, MOTHER OF ASSESSEE AND SH. G YAN CHAND KUCHHAL, FATHER OF ASSESSEE ARE CONCERNED THE SAME HAVE DULY BEEN EXPLAINED FROM THE WITHDRAWALS BEING MADE FROM SHAN KAR PIPE STORE & MACHINERY PARTS. THEREFORE, WE DO NOT FIND ANY REA SON TO INTERFERE WITH THE FINDINGS OF LD. CIT(A) ON THIS ISSUE IN RESPECT OF THESE TWO GIFTS. AS REGARDS, GIFTS FROM SH. NITIN KUCHHAL AND SH. SONU KUCHHAL B ROTHERS OF ASSESSEE ARE CONCERNED, WE FIND THAT BOTH WERE ASSESSED TO T AX AND HAD FILED THEIR RETURNS OF INCOME FOR AY 2002-03 AND 2003-04 DECLAR ING FOLLOWING INCOMES: S.NO. NAME A.Y. INCOME DECLARED NITIN KUMAR KUCHHAL 2002-03 53,496/- 1. NITIN KR. KUCHHAL 2003-04 63,120/- SONU KUCHHAL 2002-03 60,850/- 2. SONU KUCHHAL 2003-04 33,600/- BOTH WERE DRAWING SALARY OF RS. 4,200/- FROM THEIR FATHERS SHOP. AS REGARDS, SONU KUCHHAL THE ASSESSEE HAD SUBMITTED TH AT HE WAS DOING SOME JOBS ALSO. BOTH THE DONORS HAVE ACCEPTED GIVI NG GIFT TO THE ASSESSEE. THE SOURCE OF DEPOSIT BY BOTH HAS BEEN EXPLAINED AS SAVINGS FROM SALARY AND LOANS. 18. THE AO HAS OBSERVED THAT SH. NITIN KUCHHAL DID NOT INFORM ABOUT THE PERSON FROM WHOM AND WHEN HE HAD TAKEN A GIFT. IN THIS REGARD, WE MAY REFER TO THE STATEMENT OF SH. NITIN KUCHHAL WHEREIN HE HAS STATED THAT IN FY 2002-03 HE HAD TAKEN LOAN OF RS. 17,500/- FROM SH. PAWAN KUMAR SHARMA, PRESIDENT OF VILLAGE SHAMLI WITHOUT INTEREST. THE AO HAS NOT TAKEN INTO CONSIDERATION THIS PART OF THE STATEMENT. SIMILARL Y, IN CASE OF SONU KUCHHAL IT CANNOT BE SAID THAT ASSESSEE HAD NOT DISCHARGED HIS PRIMARY ONUS AND, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDINGS OF LD. CIT(A). 19. AS REGARDS, GIFTS FROM OTHER SEVEN DONORS WHO H AD GIFTED LESS THAN RS. 20,000/- TO ASSESSEE, WE FIND FOUR OF THEM WERE CLOSELY RELATED TO ITA NO. 101/D/2007 12 ASSESSEE AND THEY HAD DULY CONFIRMED THE AMOUNT. C ONSIDERING THE SMALLNESS OF THE AMOUNT GIFTED BY THEM IT CANNOT BE HELD THAT MERELY BECAUSE THEY WERE NOT PRODUCED, THEIR CONFIRMATION WAS NOT SUFFICIENT. AS REGARDS, THE OTHER THREE DONORS, WE FIND THAT THEY HAD CONFIRMED THAT THEY HAD INCOME FROM BUSINESS AND, THEREFORE, CONSIDERIN G THE AMOUNT INVOLVED, WE ARE OF THE OPINION THAT THEIR CONFIRMATIONS COUL D NOT BE IGNORED MERELY BECAUSE THEY WERE NOT PRODUCED. 20. WE ACCORDINGLY, CONFIRM THE ORDER OF LD. CIT(A) ON THIS ISSUE. 21. IN THE RESULT, THIS GROUND IS DISMISSED. 22. GROUND NO. 2 READS AS UNDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5, 40,475/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNPROVE D SUNDRY LIABILITIES WHICH THE AO HAS ESTABLISHED THR OUGH INVESTIGATION THAT THE ASSESSEE HAS CLAIMED BOGUS S UNDRY LIABILITIES OF RS. 5,40,475/-. 23. BRIEF FACTS APROPOS THIS ISSUE ARE THAT AO NOTI CED THAT THERE WERE SUNDRY CREDITORS TO THE TUNE OF RS. 41,84,927/- AS ON 31/03/2003 WHICH INCLUDED FOLLOWING: - 1) M/S EK ONKAR FOUNDRY OF KAITHAL RS. 2,01,612/- 2) M/S BANSAL POLYVIN (P) LTD., DISTT. SAMANA ZIL LA RS. 3,38,863/- 24. THE AO OBSERVED THAT INFORMATION WAS OBTAINED U /S 133(6) FROM M/S EK ONKAR FOUNDARY OF KAITHAL IN RESPONSE TO WHICH T HEY SUBMITTED COPY OF ACCOUNT IN THEIR BOOKS OF ASSESSEE FIRM IN WHICH TH EY SHOWED NIL BALANCE, WHEREAS THE ASSESSEE WAS SHOWING M/S EK ONKAR AS IT S CREDITOR FOR RS. 2,01,612/-. FROM THE INFORMATION RECEIVED IT TRANSP IRED THAT ASSESSEE HAD ITA NO. 101/D/2007 13 PURCHASED THROUGH BILL NO. 2214 DATED 17/09/2001 IT EMS WORTH RS. 21,800/- WHICH WAS DULY PAID BY ASSESSEE AS UNDER: - DATES AMOUNT 27/06/2002 RS. 16,000/- 28/06/2002 RS. 12,800/- AFTER ISSUING SHOW CAUSE NOTICE, THE AO MADE AN ADD ITION OF RS. 2,01,612/- OBSERVING THAT ASSESSEE WAS TRYING TO LINGER ON THE ISSUE BY SEEKING ADJOURNMENT. SIMILARLY, IN CASE OF M/S BANSAL POLY VIN (P) LTD., PATRANA ROAD, THE AO HAD OBTAINED INFORMATION U/S 133(6) FR OM WHICH IT TRANSPIRED THAT A SUM OF RS. 1,58,363/- WAS DUE FROM ASSESSEE AS ON 31/03/2002 WHICH WAS PAID BY ASSESSEE AS UNDER: - 1) PO. NO. 398008 OF DATED 08.04.2002 RS. 49,900/- 2) PO. NO. 398009 OF DATED 08.04.2002 RS. 49,900/- 3) PO. NO. 398010 OF DATED 08.04.2002 RS. 49,900/- 4) CASH ON DATED 09.04.2002 RS. 8,663 /- TOTAL RS.1,58,363/- 25. HE FURTHER NOTED THAT THE CREDITOR HAD SHOWN NI L BALANCE AGAINST THE ASSESSEE FIRM AND, THEREFORE, FOR THE REASONS GIVEN IN RESPECT OF M/S EK ONKAR, THE AO MADE AN ADDITION OF RS. 3,38,863/-. 26. LD. CIT(A) OBSERVED THAT THE CRUCIAL QUESTION T O BE CONSIDERED IS TO WHICH YEAR THESE DISCREPANCIES, IF AT ALL, WOULD PE RTAIN. HE OBSERVED THAT IN THE CASE OF M/S BANSAL POLYVIN PVT. LTD., THE OPENI NG BALANCE AS ON 01/04/2002 WAS RS. 3,58,363/- WHILE THE CLOSING BAL ANCE AS ON 31/03/2003 WAS RS. 3,35,863/-. HE, THEREFORE, OBSERVED THAT I T IS NOT CLEAR AS TO HOW THE OPENING BALANCE OF RS. 3,58,363/- COULD BE ADDE D. HE FURTHER OBSERVED THAT IF, AT ALL, ANY BOGUS CREDIT BALANCE HAD BEEN CREATED, THE SAME WOULD BE IN ANY OF THE EARLIER YEARS AND HENCE ALTHOUGH THE AO MUST VERIFY THE DISCREPANCY-PUTTING ONUS ON THE ASSESSEE , BUT HE SHOULD DO SO IN THE RESPECTIVE YEARS WHERE CREDIT BALANCE HAD BEEN CREATED. HE OBSERVED AS UNDER: - ITA NO. 101/D/2007 14 I MUST PUT ON RECORD THAT THE DISCREPANCIES IN RESPECT OF M/S BANSAL POLYVIN ARE INTRIGUING. THE APPELLANT HAS FILED AN AFFIDAVIT VEHEMENTLY CONTENDING THAT IT DID NOT PAY THROUGH PAY ORDERS AS SHOWN BY M/S BANSAL POLYVIN. ACCORDING TO THE APPELLANT, IT PAID BALANCE IN CASH IN THE NEXT FINANCIAL YEAR, IN VARIOUS INSTALLMENTS OF CASH LES S THAN RS. 50,000/-. BUT SURPRISINGLY THE ASSESSEE DOES NOT HAVE ANY PROOF OF THAT. AT THE SAME TIME, M/S BANSAL POLYVIN SAYS THAT IT RECEIVED PAYMENT THROUGH LOCAL PAY ORDERS, WHICH SEEMS UNLIKELY AND DOES INDICATE SUSPICION ON THE GENUINENESS OF THE ENTRIES OF RECEIPTS SHOWN BY M/S BANSAL POLYVIN. I HAVE ALREADY DIRECTED THE AO TO INTIMATE THE AO OF M/S BANSAL POLYVIN TO INITIATE REMEDIAL MEASURE IN THE CASE OF M/S BANSAL POLYVIN (P) LTD. FOR GENUINENESS OF CASH CREDIT OF RS. 1,49,700/- (RS. 49,900 X 4). THE AO SHOULD FOLLOW THIS MATTER. AT THE SAME TIME, THE GENUINENESS OF THE PAYMENTS SHOWN BY THE APPELLANT IN THE NEXT FINANCIAL YEAR AND THE SOURCE OF CASH SHOULD BE EXAMINED BY THE AO IN THE HANDS OF THE APPELLANT IN THE NEXT ASSESSMENT YEAR. AS FAR AS THE ADDITIO N IN THIS ASSESSMENT YEAR IS CONCERNED; THE SAME HAVE TO BE DELETED BECAUSE NO FRESH LIABILITY HAS BEEN CREATED IN THIS YEAR . SIMILARLY, IN THE CASE OF M/S EK ONKAR FOUNDRY, OPENING BALANCE AS ON 01/04/2002 WAS RS. 2,01,612/- WHILE CLOSING BALANCE WAS ALSO SHOWN AS THE SAME AND, THEREFORE, NO FRESH LIABILIT Y HAS BEEN CREATED DURING THE YEAR . SINCE LIABILITIES ARE BROUGHT FORWARDED FROM EARLIER YEARS FOR WHICH THE APPELLANT HAS ALREADY FILED RETURN OF INCOME; NO ADDITION IS REQUIRED IN THIS YEAR. HOWEVER, REMEDIAL ACTION SHOULD BE TAKEN BY THE AO IN THE RESPECTIVE YEARS WHERE LIABILITIES HAVE BEEN CREATED FOR THE FIRST TIME IN THE BOOKS OF THE ASSESSEE APPELLANT. THEREFORE, FOR TH E YEAR UNDER CONSIDERATION, ADDITION OF RS. 5,40,475/- IS BEING DELETED. 27. HAVING HEARD BOTH THE PARTIES, WE FIND THAT FIN DINGS OF LD. CIT(A) DO NOT REQUIRE ANY INTERFERENCE BECAUSE HE HAS RIGHTLY OBSERVED THAT THE ITA NO. 101/D/2007 15 ADDITION, IF ANY, IS TO BE MADE IN THE RESPECTIVE Y EARS IN WHICH THE ALLEGED BOGUS CREDIT WAS CREATED AND NOT IN THE CURRENT ASS ESSMENT YEAR. 28. WE ACCORDINGLY, CONFIRM THE FINDINGS OF LD. CIT (A). 29. IN THE RESULT, THIS GROUND IS DISMISSED. 30. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/10/2012 SD/- SD/- (U.B.S. BEDI) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 12/10/12 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR