ACIT CEN CIR 17 &28, MUMBAI V. CHINTAN M. DOSHI, MUMBAI

ITA 1064/MUM/2010

• Counselvise Citation: 106419914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Gift; Business income; Search and seizure; Earning of tax free income; Source of fund; Question of law; Onus to prove
• Section: 68; 6; 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI, J. SUDHAKAR REDDY, ACCOUNTANT MEMBER A ND SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER ITA NO. 1064/MUM./2010 (ASSESSMENT YEAR : 2004-05 ) DATE OF HEARING: 5.5.2011 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-17 & 28, AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .. APPELLANT V/S MR. CHINTAN M. DOSHI 01, NATRAJ, 34 V.P. ROAD VILE PARLE (WEST) MUMBAI 400 056 PAN - AASPD1182C .... RESPONDENT REVENUE BY : MR. S.S. RANA ASSESSEE BY : DR. K. SHIVRAM O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE REVENUE, IS DIRECTED A GAINST THE IMPUGNED ORDER DATED 27 TH NOVEMBER 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXXIX, MUMBAI, FOR ASSESSMENT YEAR 2004-0 5, WHEREIN THE FIRST APPELLATE AUTHORITY HAD DELETED THE ADDITION OF ` 50,00,000, MADE BY THE ASSESSING OFFICER, ON THE GROUND THAT THE GIFT RECE IVED BY THE ASSESSEE WAS NOT A GENUINE GIFT. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A N INDIVIDUAL AND HAS FILED THE ORIGINAL RETURN OF INCOME DECLARING INCOM E OF ` 3,40,200. THE ASSESSMENT WAS PROCESSED UNDER SECTION 143(1) OF TH E INCOME TAX ACT, MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 2 1961 (FOR SHORT 'THE ACT' ). ON 3 RD AUGUST 2006, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON EURO GROUP OF COMPANIES. CERTAIN MATERIALS WERE SEIZED FROM ONE MR. VIMAL KUMAR RATHI. FROM TH ESE SEIZED MATERIALS, IT HAS COME TO THE KNOWLEDGE OF THE REVENUE THAT MR. V IMAL KUMAR RATHI, HAS MADE THE FOLLOWING GIFTS AS A DONOR. SL.NO. NAME DATE AMOUNT 1. MR. MAHESH M. DOSHI 27.6.2001 50,00,000 2. MR. MAMTA MAHESH DOSHI 1.1.2002 10,00,000 3. MR. HAROON ADAMJI 13.6.2003 11,00,000 4. MRS. ZAINAB HAJI NURSUMAR 20.6.2003 11,00,000 5. MRS. MANORAMA RATHI 24.7.2003 10,00,000 6. MR. CHINTAN MAHESH DOSHI 2.8.2003 50,00,000 7. MRS. MANORAMA RATHI 1.2.2005 10,00,000 8. MRS. MANORAMA RATHI 1.2.2005 10,00,000 9. MRS. MANORAMA RATHI 25.2.2005 10,00,000 10. MRS. SONAL SHARAD RATHI 18.7.2008 10,00,000 TOTAL 1,82,00,000 3. A NOTICE UNDER SECTION 153A OF THE ACT, WAS ISSUED TO THE ASSESSEE ON 30 TH NOVEMBER 2006. IN RESPONSE, THE ASSESSEE FILED RET URN OF INCOME ON 29 TH DECEMBER 2006, DECLARING TOTAL INCOME OF ` 3,40,200, COMPRISING OF CAPITAL GAINS (LOSS OF ` 4,250 AND BALANCE INCOME FROM OTHER SOURCES). THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S, NOTICED THAT THE ASSESSEES CAPITAL ACCOUNT HAS BEEN CREDITED BY A S UM OF ` 50,00,000, AS GIFT FROM MR. VIMAL KUMAR RATHI. THE ASSESSEE WAS ASKED TO FURNISH DOCUMENTARY EVIDENCE / PROOF IN RESPECT OF THE GIFT RECEIVED. HE WAS ALSO ASKED TO FURNISH THE OCCASIONS ON WHICH THE GIFT IS SAID TO HAVE BEEN RECEIVED, RELATIONSHIP OF THE DONOR, FINANCIAL CAPA CITY OF THE DONOR AND ALSO STATE WHETHER THE ASSESSEE HAD EVER GIVEN A GIFT TO ANY PERSON AND, IF SO, TO FURNISH DETAILS. MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 3 4. THE ASSESSEE, IN RESPONSE, FURNISHED THE GIFT CONFI RMATION LETTERS / GIFT DEEDS, ETC. THE ASSESSING OFFICER, ON THE GROUND TH AT THE ASSESSEE HAS NOT SUBMITTED PROOF OF CREDITWORTHINESS OF THE DONOR AS WELL AS THE RELATIONSHIP WITH THE DONOR AND THE OCCASIONS FOR THE GIFT, VIDE OFFICE LETTER DATED 26 TH DECEMBER 2008, REQUESTED THE ASSESSEE TO FURNISH TH E SAME. THE ASSESSEE WAS ALSO INFORMED THAT THE ONUS OF PROVING THE VALI DITY OF GIFT IS ON THE ASSESSEE. THE ASSESSEE REPLIED BY FURNISHING A GIFT DEED AND DECLARATION FROM THE DONOR. IT WAS SUBMITTED THAT THE DONOR IS A FAMILY FRIEND. ON THE IDENTITY AND FINANCIAL CAPACITY, IT WAS SUBMITTED T HAT THE DONOR IS ASSESSED TO TAX UNDER THE CHARGE OF THE VERY SAME ASSESSING OFF ICER. A COPY OF THE CAPITAL ACCOUNT OF THE DONOR WAS FILED. IT WAS SUBM ITTED THAT THE DONOR IS THE FAMILY FRIEND OF THE ASSESSEE HAVING LONG STANDING RELATIONSHIP OF 35 YEARS. THE ASSESSING OFFICER, AT PARA-5.2 ONWARDS, HELD AS FOLLOWS:- 5.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE ASSESSEE AND FOUND THE SAME AS NOT ACCEPTABLE IN VI EW OF THE FOLLOWING REASONS:- I) ON PERUSAL OF THE INCOME-TAX RETURNS FILED BY TH E SO-CALLED DONOR, SHRI VIMAL K. RATHI, ASSESSED IN THIS CHARGE , IT IS NOTICED THAT THE SAID DONOR HAS DECLARED HIS GROSS INCOME OF ` 4,77,928 FOR A.Y. 2001-02, ` 6,43,665 FOR A.Y. 2002-03, ` 1,94,582 FOR A.Y. 2003-04 AND ` 2,53,797 FOR A.Y. 2004-05. THIS SHOWS THE CREDIT W ORTHINESS OF THE SO-CALLED DONOR. FURTHER, ON PERUSAL OF THE BAL ANCE SHEET OF SHRI VIMAL K. RATHI, THE DONOR FOR ASSESSMENT YEARS 2001 -02 TO 2006-07, REVEALS AS UNDER:- VIMAL KUMAR RATHI BALANCE SHEET 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 200 7-08 CAPITAL ACCOUNT BALANCE 9753788 44513401 INCLUSIVE OF GIFT OF ` 4 CR. BY WAY OF JOURNAL ENTRY ** 47906459 38797300 37037293 36926434 34632348 LOANS & ADVANCES PAYABLE 34412293 2557635 9174543 1768407 3536662 3356821 40 76927 LOAN RECE IVABLE 27681953 29297063 36316153 21663945 26097225 330764 32 32002070 TOTAL AMT 477928 643665 194582 253797 213395 177285 605938 MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 4 ** AS REGARDS THE GIFT OF ` 4,00,00,000 BY WAY OF JOURNAL ENTRY IT HAS BEEN STATED BY SHRI VIMAL K. RATHI THAT THE GIFT HAS BEE N RECEIVED FROM SHRI GOPAL KRISHNA RATHI, THE ELDER BROTHER OF SHRI VIMAL KUMA R RATHI. THE STATEMENT ON OATH OF SHRI GOPAL KRISHNA RATHI HAS BEEN RECORDED ON 22 ND DECEMBER, 2008, WHO HAS IN REPLY TO QUESTION NO.8 & 9 HAS CONFIRMED THAT THERE WAS NO TRANSACTION AND THE MODE OF GIFT OF ` 4,00,00,000 WAS PASSED BY THE JOURNAL ENTRY. FURTHER, SHRI GOPAL KRISHNA RATHI, IN HIS ST ATEMENT HAS CONFIRMED THAT NO ACTUAL PAYMENT OF GIFT OF ` 4,00,00,000 TO SHRI VIMAL KUMAR RATHI HAS BEEN MADE TILL DATE. (II) THE OPENING BALANCE IN THE CAPITAL ACCOUNT OF THE DONOR AS ON 1.4.2001 IS OF ` 97,53,788 AND THE SAID DONOR CLAIMED TO HAVE RECEIVED A FIGT OF ` 4,00,00,000 FROM HIS ELDER BROTHER SHRI G.K. RATHI DURING THE PERIOD COVERED FOR A.Y. 2002-03. ON FURT HER INVESTIGATION, IT IS NOTICED THAT THE GIFT OF ` 4,00,00,000 HAS NOT RECEIVED IN PHYSICAL FROM THIS GIFT OF ` 4,00,00,000, IS BY WAY OF DEBITING AND CREDITING T HE JOURNAL ENTRY IN CAPITAL ACCOUNT OF SHRI G.K. RATHI AND SHRI VIMAL KUMAR RATHI THE DONOR. SINCE NO PHYSICAL GIFT OF ` 4,00,00,000 HAS BEEN RECEIVED BY THE DONOR FOR THE A.Y. 2002-03, AN D ON PERUSAL OF THE BALANCE SHEET OF THE DONOR IT IS NOTICED THAT THE L OAN PAYABLE SHOWN BY THE DONOR AS ON 31.3.2001 WAS OF ` 3,44,12,293 WHEREAS THE SAME HAS REDUCED TO ` 25,57,635 AS ON 31.3.2002, WHICH INDICATES THAT TH E DONOR HAS REPAID THE LOAN TO THE EXTENT OF ` 3,18,54,658. THE SOURCE OF THE SAID REPAYMENT OF LOAN HAS NOT BEEN EXPLAINE D BY THE DONOR DURING HE COURSE OF HIS ASSESSMENT PROCEEDINGS FOR A.Y. 2002-03. CONSIDERING THE ABOVE FACTS AND CONSIDERING THE DON ORS TOTAL RECEIPTS ` 2,65,850 (TAXABLE) + ` 9,56,829 (NON-TAXABLE) ARE ` 12,22,679 UNDER ANY CIRCUMSTANCES IT CANNOT BE SAID THAT THE DONOR HAS FINANCIAL / CREDIT WORTHINESS TO GIVE AWAY A GIFT OF ` 50,00,000 TO A FAMILY FRIEND TO WHOM ASSESSEE HAS NEVER GIVEN ANY GIFT. ON PERUSAL OF THE SEIZED MATERIALS REVEALS THAT SHR I VIMA LK. RATHI THE DONOR HAD MADE FOLLOWING GIFTS, THE DETAILS ARE AS FOLLOWS:- SL.NO. NAME DATE AMOUNT 1. MR. MAHESH M. DOSHI 27.6.2001 50,00,000 2. MR. MAMTA MAHESH DOSHI 1.1.2002 10,00,000 3. MR. HAROON ADAMJI 13.6.2003 11,00,000 4. MRS. ZAINAB HAJI NURSUMAR 20.6.2003 11,00,000 5. MRS. MANORAMA RATHI 24.7.2003 10,00,000 6. MR. CHINTAN MAHESH DOSHI 2.8.2003 50,00,000 7. MRS. MANORAMA RATHI 1.2.2005 10,00,000 8. MRS. MANORAMA RATHI 1.2.2005 10,00,000 9. MRS. MANORAMA RATHI 25.2.2005 10,00,000 10. MRS. SONAL SHARAD RATHI 18.7.2008 10,00,000 TOTAL 1,82,00,000 MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 5 (III) ON VERIFICATION OF THE CAPITAL ACCOUNT OF SHR I VIMAL KUMAR RATHI, THE SAID DONOR IT IS SEEN THAT THE ALLEGED GIFT OF ` 50,00,000 HAS BEEN CLEAR FROM THE HDFC BANK. BEFORE CLEARING THE GIFT CHEQUE OF ` 50,00,000, THERE ARE DEPOSITS IN THE SAID BANK ACCO UNT THE DETAILS OF WHICH ARE AS UNDER:- 7.8.2008 DATE ON WHICH GIFT CHEQUE IS CLEARED ` 50,00,000 5.8.2003 ` 1,00,000 4.8.2003 ` 2,50,000 4.8.2003 ` 6,00,000 31.7.2003 ` 14,00,000 31.7.2003 ` 6,50,000 21.7.2003 ` 15,00,000 9.7.2003 ` 25,00,000 THE SAID DONOR IS UNABLE TO EXPLAIN PROPERLY THE A BOVE SAID CREDIT ENTRY OF ` 70,00,000 APPEARING IN HIS BANK ACCOUNT. IN ANY CIRCUMSTANCES, THE DONOR IS NOT HAVING THE FINANCIA L CAPACITY / CREDIT WORTHINESS TO GIVE AWAY THE GIFT OF ` 50,00,000 TO THE ASSESSEE IN THE ASSESSMENT YEAR 2004-05. (IV) IT IS SUBMITTED THAT SHRI VIMAL KUMAR RATHI, D ONOR HAVING LONG STANDING RELATIONSHIP OF 35 YEARS WITH THE ASSESSEE . HERE IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS NEVER GIVEN A SING LE RUPEE GIFT TO EITHER TO THE SAID DONOR FRIEND OR ANY OF HIS FAMIL Y MEMBERS ON ANY OF THE OCCASIONS DURING THE ASSESSMENT YEAR 2001-02 TO 2007-08 OR EARLIER. UNDER THESE CIRCUMSTANCES, IT IS NOT ESTAB LISHED THAT THE ASSESSEE IS THE FAMILY FRIEND OF THE DONOR HAVING L ONG STANDING RELATIONSHIP OF 35 YEARS. (V) THE DECISION QUOTED IN THE SHOW CAUSE LETTER IN THE CASE OF CIT V/S DURGA PRASAD MORE, 82 ITR 540 (SC), IS IN RESPE CT OF TAXING AUTHORITIES CAN TAKE NOTE OF THE SURROUNDING CIRCUM STANCES OF ARRIVE AT A PLAUSIBLE AND REASONS CONCLUSION. IN THIS CASE, T HE SURROUNDING CIRCUMSTANCES IS THAT THE ASSESSEE HAS NEVER GIVEN ANY GIFT TO THE SAID DONOR THEREFORE, THE ONLY PLAUSIBLE AND REASONABLE CONCLUSION CAN BE DRAWN IS THAT THE SAID AMOUNT CREDITED IN THE CAPIT AL ACCOUNT IS NOT SATISFACTORY EXPLAINED BY THE ASSESSEE. THEREFORE, IT CANNOT BE HELD THAT THE CREDIT APPEARING IN THE CAPITAL ACCOUNT IS THE GIFT WHICH CAN BE ALLOWED AS EXEMPT INCOME. FURTHER, IN THE CASE OF SUMATI DAYALS JUDGMENT, TH E COURT HAS HELD THAT CONSIDERATION OF THE SURROUNDING CIRCUMSTANCES AND APPLICATION OF THE TEST OF HUMAN PROBABILITIES IS A MUST TO ARRIVE AT A PROPER CONCLUSION. THE COURT HAS HELD THAT THE CONCOCTED T RANSACTIONS TAKE MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 6 PLACE IN SECRET AND THEREFORE, DIRECT EVIDENCE ABOU T THESE WOULD BE RETEABLE AVAILABLE. IN THIS CASE, THE SURROUNDING C IRCUMSTANCES AND APPLICATION OF THE TEST OF HUMAN PROBABILITIES DOES NOT PROVE THAT THE EXEMPT INCOME CLAIMED BY THE ASSESSEE IS THE GENUIN E GIFT. 5.3 IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSES SEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THE DONOR. THE VERIF ICATION OF THE CASE RECORDS OF SHRI VIMAL K. RATHI, THE DONOR DOES NOT PROVE HIS CREDIT WORTHINESS TO GIVE AWAY A GIFT OF ` 50,00,000 TO THE ASSESSEE. FURTHER, ASSESSEE HAS NOT GIVEN ANY GIFT TO ANY OF THE FAMIL Y MEMBERS OF THE SO-CALLED DONOR IN ANY OF THE ASSESSMENT YEAR. THUS , IT CANNOT BE SAID THAT THE ASSESSEE HAS RECEIVED A GIFT OF ` 50,00,000 FROM A FAMILY FRIEND WHICH CAN BE CLAIMED AS EXEMPT INCOME. THUS, IT IS HELD THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS TO PROVE T HE CREDIT IN HIS CAPITAL ACCOUNT THE VALIDITY AND GENUINENESS OF THE GIFT CLAIMED TO HAVE BEEN RECEIVED BY HIM WHICH CAN BE ACCEPTED AS EXEMP T INCOME. THUS, THE GIFT CLAIMED TO HAVE BEEN RECEIVED FROM SHRI VIMAL KUMAR RATHI OF ` 50,00,000 CANNOT BE TREATED AS GIFT AND ACCEPTED A S EXEMPT INCOME OF THE ASSESSEE. THEREFORE, THE ALLEG ED GIFT CLAIMED TO HAVE RECEIVED OF ` 50,00,000 FROM SHRI VIMAL KUMAR RATHI AND CLAIMED AS EXEMPT INCOME IS ADDED TO THE TOTAL INCO ME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 68 OF THE ACT. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L, WHEREIN THE FIRST APPELLATE AUTHORITY REJECTED THE FIRST GROUND OF AS SESSEE THAT THE ASSESSMENT IS BAD-IN-LAW AS NO INCRIMINATING DOCUMENTS RELATIN G TO GIFT RECEIVED FROM MR. VIMAL KUMAR RATHI, WAS FOUND DURING THE COURSE OF SEARCH, AS ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED IN ASSESSMENT UN DER SECTION 153C R/W 153A OF THE ACT, ON THE GROUND THAT THE RETURN OF I NCOME WAS ORIGINALLY PROCESSED UNDER SECTION 143(1), AND NO SCRUTINY ASS ESSMENT WAS MADE UNDER SECTION 143(3), AND THE ASSESSING OFFICER HAD NO OCCASIONS TO EXAMINE THE GIFT. HE FURTHER HELD THAT ONCE THE SEARCH UNDE R SECTION 132 IS CARRIED OUT IN VIEW OF SECTION 153A(1)(B), THE ASSESSING OF FICER IS EMPOWERED TO ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMM EDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH WAS CONDUCTED. HE HELD THAT THE WORDING OF SECTION 153A (1)(B) IS VERY CLEAR AND IT EMPOWERS THE ASSESSING OFFICER TO ASSESS AND RE- ASSESS THE INCOME IN CASE OF SEARCH. ON MERITS, THE COMMISSIONER (APPEAL S), AT PARAS-14, 15 AND 16, HELD AS FOLLOWS:- 14. I HAVE GONE THROUGH THE FACTS. GIFTS ARE ALSO L IKE CASH CREDITS AND IT CAN BE ASSESSED TO TAX ONLY UNDER SECTION 68 FO THE ACT. IN THIS MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 7 CASE, THE IDENTITY OF THE DONOR IS PROVED. THE DONO R HAS EXECUTED THE GIFT DEED AND HAS ALSO FILED AFFIDAVIT CONFIRMING T HE GIFT. THE DONOR AND THE DONEE ARE ASSESSED IN THE SAME ASSESSING OFFICE RS CHARGE AND HAS ADMITTED THESE TRANSACTIONS IN THEIR BOOKS OF ACCOU NT. THE GIFT IS MADE THROUGH CHEQUE AND IT IS REFLECTED IN THE DONORS B ANK ACCOUNTS AND THE RECEIPT OF GIFT IS ALSO REFLECTED IN THE DONEE S BANK ACCOUNT. THE SOURCE OF FUNDS IS REFLECTED IN THE DONORS BOOKS OF ACCOUNT. CONSIDERING THESE ASPECTS, IT IS CLEAR THAT THE APP ELLANT HAS ESTABLISHED THE GENUINENESS OF THE CASH CREDIT AND THE CREDITWO RTHINESS OF THE CREDITOR. 15. IT IS ALSO NOTICED THAT SEARCH WAS CARRIED OUT UNDER SECTION 132 BY THE INCOME TAX DEPARTMENT IN THE RESIDENTIAL AND BUSINESS PREMISES OF BOTH THE DONOR AND DONEE. NO INCRIMINAT ING DOCUMENT WAS FOUND IN ANY OF THE PLACES TO SHOW THAT THE APPELLA NTS MONEY WAS ROUTED THROUGH THE DONOR AS GIFT. THERE WAS NO MATE RIAL AVAILABLE WITH THE ASSESSING OFFICER TO SHOW THAT THE GIFT IS THE DISGUISED INCOME OF THE APPELLANT. 16. THE APPELLANTS CASE IS NOT A CASE LIKE DONOR A ND DONEE ARE STRANGERS AND THE DONORS IDENTITY AND CREDITWORTHI NESS ARE IN DOUBT. IT IS NOT LIKE A GIFT WHICH IS RECEIVED FROM AN UNKNOW N NON RESIDENT PERSON. IN THIS CASE, THE APPELLANT COULD PROVE THE IDENTITY OF THE DONOR, GENUINENESS OF THE GIFT AND CREDITWORTHINESS OF THE DONOR. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT PROVISIO NS OF SECTION 68 CANNOT BE INVOKED. IN VIEW OF THIS, I DIRECT THE A. O. TO DELETE THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRI BUNAL ON THE FOLLOWING GROUNDS:- A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF ` 50,00,000 MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF T HE ACT. B. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITI ON ON THE GROUND THAT THE ASSESSEE HAD SUFFICIENT BALANCE IN HIS CAP ITAL ACCOUNT AND BANK ACCOUNT WHEN IN FACT ALL THE AMOUNTS RECEIVED IN BANK ACCOUNT WERE FROM THE DONEES ACCOUNT I.E., EURO GROUP AND INCOME RETURNED BY THE DONOR WAS ONLY ` 6,43,665 FOR A.Y. 2002-03. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. S.S. RANA, RELIED ON THE ORDER OF THE ASSESSING OFFICER, SPECIFICALLY AT PAG E-4, PARA-5.2 AND SUBMITS THAT A PERUSAL OF BALANCE SHEET OF MR. VIMAL KUMAR RATHI, CLEARLY DEMONSTRATE THAT HE HAD NO FINANCIAL CAPACITY TO GI FT THE AMOUNT OF ` 50,00,000. HE POINTED OUT THAT MR. VIMAL KUMAR RATH I, STATES THAT HE HAS MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 8 RECEIVED GIFT FROM MR. GOPAL KIRSHNA RATHI, HIS ELD ER BROTHER, BY WAY OF A JOURNAL ENTRY. HE POINTED OUT THAT THERE WAS NO ACT UAL TRANSFER OF FUND AND ONLY ONE JOURNAL ENTRY WAS PASSED CREDITING MR. VIM AL KUMAR RATHI, AND DEBITING MR. GOPAL KRISHNA RATHI, AND IF THIS JOURN AL ENTRY IS ELIMINATED, THEN, THERE IS NO CREDITWORTHINESS. HE POINTED OUT THAT M R. VIMAL KUMAR RATHI, HAS HUGE LIABILITY BY WAY OF LOANS AND ADVANCES PAYABLE AND HE HAD NO PARTICULAR SOURCE FROM WHICH HE COULD HAVE RE-PAID THE AMOUNT TO THE EXTENT OF ` 3,18,54,658. HE POINTS OUT THAT FROM THE MATERIAL S EIZED DURING THE COURSE OF SEARCH, IT HAS COME TO THE LIGHT THAT MR. VIMAL KUMAR RATHI, HAS MADE GIFT OF ` 1,82,00,000, BETWEEN JUNE 2001 AND JULY 2006. HE P OINTED OUT THAT MR. VIMAL KUMAR RATHI, HAS DECLARED GROSS INCOME OF ` 4,77,000 IN THE YEAR 2001-02 AND ` 6,43,000 IN THE YEAR 2002-03, ` 1,94,000 IN THE YEAR 2003- 04, AND ` 2,53,000 IN THE YEAR 2004-05. HE SUBMITS THAT, BY NO STRETCH OF IMAGINATION, IT COULD BE SAID THAT MR. VIMAL KUMAR RATHI, HAS A CREDITWORTHINESS TO DONATE ` 50,00,000 TO THE ASSESSEE ON 2 ND AUGUST 2003. HE REFERRED TO PAGES-47 TO 50 OF THE ASSESSEES PAP ER BOOK WHICH CONSIST OF AN ASSESSMENT ORDER IN RESPECT OF MR. VIMAL KUMAR R ATHI DATED 31 ST DECEMBER 2008, AND DREW THE ATTENTION OF THE BENCH TO THE FINDING OF THE ASSESSING OFFICER THAT THE CLAIM OF MR. VIMAL KUMAR RATHI OF RECEIVING A GIFT OF ` 4,00,00,000, FROM HIS BROTHER MR. GOPAL KRISHNA RA THI, BY WAY OF A JOURNAL ENTRY, IS NOT GENUINE. HE POINTED OUT THAT THE ASSESSING OFFICER HAS CLEARLY COME TO A CONCLUSION IN THE ASSESSMENT ORDE R OF MR. VIMAL KUMAR RATHI, THAT HE HAD NO CREDITWORTHINESS OR FINANCIAL CAPACITY TO GIVE AWAY THE GIFTS TOTALING TO ` 72,00,000 TO OTHERS. HE PRAYED THAT THE ORDER OF T HE ASSESSING OFFICER BE RESTORED AND THE ORDER OF THE COMMISSIONER (APPEALS) BE SET ASIDE. 7. LEARNED COUNSEL, DR. K. SHIVRAM, ALONG WITH MR. AJA Y SINGH, APPEARING ON BEHALF OF THE ASSESSEE, INVOKED RULE-27 OF THE I NCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, AND SOUGHT TO DEFEND THE ORD ER OF THE COMMISSIONER (APPEALS) ON THE GROUND THAT THE ORDER PASSED UNDER SECTION 143(3) R/W SECTION 153A DATED 31 ST DECEMBER 2008, IS WITHOUT JURISDICTION AND BAD-IN- LAW, AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 9 RELATABLE TO THE SAID GIFT. LEARNED COUNSEL DR. SHI VRAM, REFERRED TO PAGE-14 / PARA-15 OF THE COMMISSIONER (APPEALS)S ORDER, WHER EIN IT IS NOTED AS FOLLOWS:- NO INCRIMINATING DOCUMENT WAS FOUND IN ANY OF THE P LACES TO SHOW THAT THE APPELLANTS MONEY WAS ROOTED THROUGH THE D ONOR AS GIFTS. 8. HE REFERRED TO PARA-5 / PAGE-2 OF THE ASSESSMENT OR DER AND SUBMITS THAT NOWHERE IN THIS ORDER IT IS MENTIONED THAT THE ENQUIRY IN QUESTION WAS BASED ON THE MATERIAL SEIZED DURING THE COURSE OF S EARCH. FOR THE ABOVE PROPOSITION, HE RELIED ON THE FOLLOWING CASE LAWS:- ANIL KUMAR BHATIA V/S ACIT, (2010) 001 ITR (TRIB.) 484 (DEL.); LMJ INTERNATIONAL LTD. V/S DCIT, (2008) 119 TTJ 214 (KOL.); ANIL P. KHEMANI V/S DCIT, 2010-TIOL-177-ITAT-MUM; SUN CITY ALLOYS PVT. LTD. V/S ACIT, 124 TTJ (JU.) 6 74. HELIOS FOOD ADDITIVES PVT. LTD. V/S DCIT, ITA NO.39 00- 3901/MUM./2009, ORDER DATED 16 TH JULY 2010; AND GURUPRERNA ENTERPRISES V/S ACIT, ITA NO.225 TO 257/ MUM./2010 AND OTHERS, ORDER DATED 7 TH JANUARY 2011. 9. ON THE ISSUE OF GENUINENESS OF GIFT, THE LEARNED CO UNSEL FILED A PAPER BOOK RUNNING INTO 50 PAGES AND SUBMITS THAT THE ASS ESSING OFFICER WAS WRONG IN MAKING THE ADDITION ON THE GROUND THAT THE RE IS NO RELATIONSHIP BETWEEN THE DONOR AND THE DONNEE AND ALSO ON THE GR OUND THAT THERE IS NO OCCASION FOR THE GIFT. HE SUBMITS THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE DONOR, HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND, HENCE, SECTION 68 OF THE ACT CANNOT BE APPLIED. HE POINTS OUT THAT THE GIFT MADE THROUGH BANKING CHANNELS AND BANK STATEMENTS F ILED, CONFIRMED HAVING DEBITED THE BANK ACCOUNT WITH AN AMOUNT OF G IFT GIVEN. ON CREDITWORTHINESS, HE REFERRED TO PAGE-41 OF THE ASS ESSEES PAPER BOOK AND ARGUED THAT DONOR HAD CAPITAL BALANCE OF ` 3,87,97,300. HE FURTHER POINTS OUT THAT CASH FLOW STATEMENT HAS BEEN FILED ALONG W ITH THE PAPER BOOK. HE SUBMITS THAT THE ASSESSEE DULY DISCHARGED THE ONUS THAT LIES ON IT BY MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 10 FURNISHING OF PRIMARY EVIDENCES. HE TOOK THIS BENCH TO THE VARIOUS DOCUMENTS FILED BY THE ASSESSEE BEFORE THE ASSESSIN G OFFICER WHICH CONSIST OF CONFIRMATION LETTER, AFFIDAVIT FROM MR. VIMAL KU MAR RATHI, FOR VARIOUS YEAR. HE ALSO POINTS OUT THAT THE BANK STATEMENTS WAS ALS O FILED. HE VEHEMENTLY CONTENDED THAT NO RELATIONSHIP IS REQUIRED TO BE PR OVED AND THE ASSESSEE HAS STATED THAT THE DONOR KNOW HIM INTIMATELY FOR THE S PAN OF 35 YEARS. HE ALSO SUBMITS THAT THERE IS NO REQUIREMENT OF OCCASION OR THE MOTIVE IS REQUIRED FOR MAKING A GIFT. LEARNED COUNSEL RELIED ON THE FO LLOWING CASE LAWS AND PRAYED FOR THE RELIEF. CIT V/S ASHA HAMPANNAVAR, ITA NO.5319/MUM./2007, A. Y. 2003-04, ORDER DATED 30 TH JANUARY 2008, WHICH WAS CONFIRMED BY THE HON'BLE BOMBAY HIGH COURT ON 26 TH SEPTEMBER 2008, AND SLP WAS REJECTED, JUDGMENT REPORTED AS 319 ITR (ST.) 5. CIT V/S MADHANI K.J., ITA NO.604/MUM./2005, ORDER D ATED 21 ST MAY 2008, CONFIRMED BY THE HON'BLE BOMBAY HIGH COUR T VIDE JUDGMENT DATED 22 ND SEPTEMBER 2009. ACIT V/S M/S. TRIACE, ITA NO.2827/MUM./2004, ORDER DATED 26 TH NOVEMBER 2007. 10. LEARNED DEPARTMENTAL REPRESENTATIVE, RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN CIT V/S P. MOHANAKALA, (20 07) 291 ITR 278 (SC), SUBMITTED THAT THE HON'BLE SUPREME COURT, ON A SIMI LAR CASE, HAS HELD THAT THE ASSESSEE HAD NO EXPLANATION TO OFFER AND THE GI FT WAS RIGHTLY TAXED UNDER SECTION 68. 11. RIVAL CONTENTIONS WERE HEARD. ON A CAREFUL CONSIDER ATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS F OLLOWS:- I) THE FUNDAMENTAL ISSUE THAT PROMPTED THE ASSESSIN G OFFICER TO MAKE AN ADDITION IN THIS CASE IS THAT THE DONOR HAS NO FINA NCIAL CAPACITY. AT PAGE-47 OF ASSESSEES PAPER BOOK, A COPY OF THE ORDER 31 ST DECEMBER PASSED BY THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-17 A ND 28, MUMBAI, IN THE CASE OF MR. VIMAL KUMAR RATHI, FOR ASSESSMENT YEAR 2004-05, HAS BEEN ENCLOSED. IN THIS YEAR, MR. VIMAL KUMAR RATHI, FILE D THE RETURN OF INCOME MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 11 DECLARING TOTAL INCOME OF ` 2,53,797. AT PARAS-4 AND 5 OF THE ORDER, THE ASSESSING OFFICER OBSERVED AS FOLLOWS:- 3. NOTICES UNDER SECTION 143(2)/142(1) OF THE ACT W ERE ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE ABOVE STATUTORY NOTICES, THE ASSESSEE ALONG WITH SHRI NIRMAL K. MALLAWAT, IT P AND SHRI G.P. MEHTA, C.A. ATTENDED FROM TIME TO TIME AND FILED TH E DETAILS CALLED FOR. THE CASE HAS BEEN DISCUSSED WITH THEM. 4. ASSESSEES INCOME COMPRISES OF BUSINESS INCOME . THE ASSESSEE HAS CARRIED OUT TRADING BUSINESS OF PLYWOO D, LAMINATES AND TIMBER. THE ASSESSEE IS THE PROPRIETOR OF THE FOLLO WING CORNERS. THE DETAILS OF PURCHASES AND SALES AND THE G.P. & N.P. RATIO IS AS UNDER:- NAME OF PROPRIETARY CONCERN SALES PURCHASES GROSS PROFIT G.P% NET PROFIT N.P% BOMBAY SALES CORPORATION 9842809 9022085 570483 5.92% (-) 307837 NIL PLYWOOD AGENCIES 1093660 423939 409173 37.41% (-)263828 NIL SHARDA LAMINATES NIL NIL NIL NIL (-) 21,758 NIL 5. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL P REMISES OF THE ASSESSEE THE FILE CONTAINING VARIOUS GIFT DEEDS/DEC LARATION, ETC. HAS BEEN FOUND AND THE SAME WAS SEIZED AS PER ANNEXURE- A-3 (PAGE NO.1 TO 36) TO PANCHANAMA DATED 3.8.2006. ON PERUSAL OF THE SAID SEIZED PAPERS, IT IS NOTICED THAT THE ASSESSEE HAD PAID TH E FOLLOWING GIFTS TO HIS WIFE AS WELL AS TO OTHERS. THE DETAILS ARE AS U NDER:- 1. MRS. MANORAMA VIMAL RATHI (WIFE) ` 15,00,000 2. MRS. ZEINAB HAJI HABIB ` 11,00,000 3. MR. HAROOM ADAMJI ` 11,00,000 4. MR. CHITAN M. DOSHI ` 50,00,000 5.1 IN THIS REGARD, THE ASSESSEES CAPITAL ACCOUNT FOR A.Y. 2001-02 TO 2007-08 IS TAKEN INTO THE CONSIDERATION WHICH RE VEALS AS UNDER:- BALANCE SHEET 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 200 7-08 CAPITAL ACCOUNT BALANCE 9753788 44513401 INCLUSIVE OF GIFT OF ` 4 CR. BY WAY OF JOURNAL ENTRY ** 47906459 38797300 37037293 36926434 34632348 ** AS REGARDS THE GIFT OF ` 4,00,00,000 BY WAY OF JOURNAL ENTRY IT HAS BEEN STATED BY SHRI VIMAL K. RATHI THAT THE GIFT HAS BEE N RECEIVED FROM SHRI GOPAL KRISHNA RATHI, THE ELDER BROTHER OF SHRI VIMAL KUMA R RATHI. THE STATEMENT ON MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 12 OATH OF SHRI GOPAL KRISHNA RATHI HAS BEEN RECORDED ON 22 ND DECEMBER, 2008, WHO HAS IN REPLY TO QUESTION NO.8 & 9 HAS CONFIRMED THAT THERE WAS NO TRANSACTION AND THE MODE OF GIFT OF ` 4,00,00,000 WAS PASSED BY THE JOURNAL ENTRY. FURTHER, SHRI GOPAL KRISHNA RATHI, IN HIS ST ATEMENT HAS CONFIRMED THAT NO ACTUAL PAYMENT OF GIFT OF ` 4,00,00,000 TO SHRI VIMAL KUMAR RATHI HAS BEEN MADE TILL DATE. ON PERUSAL OF THE CAPITAL ACCOUNT OF THE ASSESSEE, IT IS NOTICED THAT THE OPENING BALANCE FOR A.Y. 2004-05 HAS BEEN SHOWN OF ` 4,79,06,460 AND THIS BALANCE HAS BEEN ARRIVED ON ACCOUNT OF THE GIFT OF ` 4,00,00,000 CLAIMED TO HAVE RECEIVED FROM THE ASSES SEES BROTHER SHRI G.K. RATHI, BY WAY OF PASSING JOURNAL ENTRY IN HIS CAPITAL ACCOUNT FOR THE A.Y. 2002-03. SINCE THE SAID SO CALLED GIFT BY WAY OF JOURNAL ENTRY HAS NOT BEEN CONSIDERED AS ACTUAL AND GENUINE GIFT AND NO PHYSICAL GIFT BY WAY OF CHEQUE OR CASH HAS BEEN RECEIVED BY THE A SSESSEE. THEREFORE, IN FACT AFTER REDUCING THE SAID AMOUNT O F ` 4,00,00,000 THE BALANCE AVAILABLE WITH THE ASSESSEE AS ON THE OPENI NG DAY OF THE ASSESSMENT YEAR 2002-03, WAS OF ` 70,06,400. FROM THE SAID OPENING BALANCE, ASSESSEE HAS PAID A GIFT OF ` 15,00,000 TO HIS WIFE MRS. MANORAMA RATHI AND AFTER REDUCING THE SAID GIFT OF ` 15,00,000 TO HIS WIFE MRS. MANORAMA RATHI AND AFTER REDUCING THE SAI D GIFT THE AVAILABLE BALANCE WITH THE ASSESSEE IS ` 64,06,460. THUS, IT CANNOT BE SAID THAT A PERSON WHO IS HAVING THE CAPITAL BALANCE OF ` 64,06,460 CAN GIVE AWAY THE GIFT OF ` 72,00,000 TO OTHER VIZ. MRS. ZAINAB HAJI HABIB, MR . HAROON ADAMJI AND MR. CHITAN M. DOSHI. THUS, IT IS HELD THAT THE ASSESSEE HAS NOT CREDIT WORTHINESS OR FINANCIAL CAP ACITY TO GIVE AWAY GIFTS TOTALING TO ` 72,00,000 TO OTHERS. FURTHER, THE ASSESSEE OR ANY OF HIS FAMILY MEMBERS ARE NEVER RECEIVED ANY GIFTS FRO M THE ABOVE DONEES. THUS, THE SO-CALLED ALLEGED GIFTS CLAIMED T O HAVE MADE TOTALLING TO ` 72,00,000 CANNOT BE ACCEPTED AS GENUINE GIFTS AND THE SAME IS THEREFORE, TREATED AS INCOME FROM UNEXPLAIN ED SOURCES AND IS ADDED TO THE TOTAL INCOME. II) FROM THE ABOVE, IT IS CLEAR THAT MR. VIMAL KUMAR RA THI, HAD NOT RECEIVED GIFT PHYSICALLY BY WAY OF CHEQUE OR CASH F ROM HIS BROTHER MR. GOPAL KRISHNA SETH. IT IS ALSO FOUND THAT MR. VIMAL KUMAR RATHI, HAS CLAIMED TO HAVE GIVEN THE FOLLOWING GIFTS:- SL.NO. NAME DATE AMOUNT 11. MR. MAHESH M. DOSHI 27.6.2001 50,00,000 12. MR. MAMTA MAHESH DOSHI 1.1.2002 10,00,000 13. MR. HAROON ADAMJI 13.6.2003 11,00,000 14. MRS. ZAINAB HAJI NURSUMAR 20.6.2003 11,00,000 15. MRS. MANORAMA RATHI 24.7.2003 10,00,000 16. MR. CHINTAN MAHESH DOSHI 2.8.2003 50,00,000 MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 13 17. MRS. MANORAMA RATHI 1.2.2005 10,00,000 18. MRS. MANORAMA RATHI 1.2.2005 10,00,000 19. MRS. MANORAMA RATHI 25.2.2005 10,00,000 20. MRS. SONAL SHARAD RATHI 18.7.2008 10,00,000 TOTAL 1,82,00,000 III) IT WOULD BE EVIDENT FROM THE ABOVE THAT MR. VIMAL K UMAR RATHI, DOES NOT HAVE CREDITWORTHINESS OR FINANCIAL CAPACITY TO DONATE ` 50,00,000 TO THE ASSESSEE. IT IS ALSO STRANGE THAT MR. VIMAL KUMAR R ATHI, IS A GENEROUS DONOR WHO HAS GIVEN GIFTS TO VARIOUS PERSONS IN HUGE AMOU NT. THIS IS NOT ONLY QUITE UNUSUAL BUT IT IS ALSO UN-NATURAL. IT IS STRANGE TH AT A PERSON WHO HAS DECLARED GROSS INCOME OF ` 4,78,000, FOR ASSESSMENT YEAR 2001-02, ` 6,44,000 FOR ASSESSMENT YEAR 2002-03, ` 1,95,000 FOR ASSESSMENT YEAR 2003-04 AND ` 2,54,000 FOR ASSESSMENT YEAR 2004-05, HAS GIVEN SUC H HUGE AMOUNT OF GIFTS ON THE GROUND OF NATURAL LOVE AND AFFECTION. THE AS SESSING OFFICER ALSO POINTED OUT THAT OUTSTANDING LOANS OF MR. VIMAL KUM AR RATHI, ON 31 ST MARCH 2001, WAS ` 3,44,12,293 AND THIS BALANCE REDUCED TO ` 2,57,635 (APPROX.) AS ON 31 ST MARCH 2002, WHICH INDICATES THAT HE HAS RE-PAID A LOAN OF ` 3,19,00,000 IN THAT YEAR FOR WHICH THE SOURCE HAS N OT BEEN PROPERLY EXPLAINED. HE HAS FURTHER POINTED OUT THAT THE TOTA L RECEIPTS OF THE DONOR IS ONLY ` 12,22,000 (APPROX.) IN THE YEAR AND, HENCE, THE CR EDITWORTHINESS OF MR. VIMAL KUMAR RATHI, HAS NOT BEEN PROVED. WE AGRE E WITH THIS FINDING OF THE ASSESSING OFFICER. THE COMMISSIONER (APPEALS) H AS, AT PARAS-13, 14 AND 15 OF HIS ORDER, HAS NOT CONTROVERTED THE FINDINGS OF THE ASSESSING OFFICER ON THE ISSUE OF CAPACITY OF THE DONOR. HE HAS NOT GIVE N AN INDEPENDENT FINDING THAT THE ASSESSEE HAS PROVED THE FINANCIAL CAPACITY OF THE DONOR. CONSEQUENTLY, WE HAVE TO NECESSARILY REVERSE THE DE CISION OF THE COMMISSIONER (APPEALS) AND UPHOLD THE FINDINGS OF T HE ASSESSING OFFICER. IV) COMING TO THE CASE LAW CITED BY THE ASSESSEE IN THE CASE OF ASHA HAMPANNAVAR (SUPRA), THE TRIBUNAL HAS HELD THAT THE CAPACITY OF THE DONOR STOOD ESTABLISHED. IN THE CASE ON HAND, OUR FINDING OF THE FACTS IS THAT THE DONOR HAS NO FINANCIAL CAPACITY. SIMILARLY, THE TRI BUNAL IN THE CASE OF MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 14 MRS.MADHAVI K. JAIN V/S ITO, ITA NO.604/MUM./2005, ORDER DATED 21 ST MAY 2008, AT PARA-5.1 / PAGE-4, HAS RECORDED THAT THE A SSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS) HAVE NOT DISPUTED THE IDENTITY OF THE DONOR OR THE CAPACITY OF THE DONOR TO MAKE THE GIFT. THUS , THIS CASE LAW IS NOT APPLICABLE TO THE FACTS OF THE CASE. V) IN THE CASE OF TRIACE (SUPRA), RULE-27 WAS INVOKED AND THE RE-OPENING OF THE ASSESSMENT WAS HELD AS BAD-IN-LAW. THIS CASE IS OF NO USE. ON THE OTHER HAND, THE HON'BLE SUPREME COURT IN P. MOHANAK ALA (SUPRA), HELD AS FOLLOWS:- HELD IT IS TRUE THAT EVEN AFTER REJECTING THE EXPL ANATION GIVEN BY THE ASSESSEES IF FOUND UNACCEPTABLE, THE CRUCIAL ASPECT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT SHOULD BE IN FERRED THE SUMS CREDITED IN THE BOOKS OF THE ASSESSEES CONSTITUTED INCOME OF THE PREVIOUS YEAR MUST RECEIVE THE CONSIDERATION OF THE AUTHORITIES PROVIDED THE ASSESSEES REBUT THE EVIDENCE AND THE I NFERENCE DRAWN TO REJECT THE EXPLANATION OFFERED AS UNSATISFACTORY. I T NEEDS BE NOTICED THAT S. 68 ITSELF PROVIDES, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEES FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEES OF THE PR EVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEES ABOUT THE NATU RE AND SOURCE OF SUCH SUMS FOUND CREDITED IN THE BOOKS OF THE ASSESS EES IS IN THE OPINION OF THE AO NOT SATISFACTORY. SUCH OPINION FO RMED ITSELF CONSTITUTES A PRIMA FACIE EVIDENCE AGAINST THE ASSE SSEES, VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBU T THE SAID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEES BY HOLDI NG THAT IT WAS A RECEIPT OF AN INCOME NATURE. IN THE CASE IN HAND TH E AUTHORITIES CONCURRENTLY FOUND THE EXPLANATION OFFERED BY THE A SSESSEES UNACCEPTABLE. THE AUTHORITIES UPHELD THE OPINION FO RMED BY THE AO THAT THE EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSESSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS N OT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON R ECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS TO BE TREATED A S A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. TH E AO FOUND THAT ALL THE SO-CALLED GIFTS CAME FROM A AND S. THE ASSE SSEES DID NOT DECLARE THAT THEY ARE THE ALIAS OF SP. IT IS ONLY A N AFTERTHOUGHT THEY HAVE COME FORWARD WITH THE SAID PLEA. THE AO ALSO F OUND THAT THE GIFTS WERE NOT REAL IN NATURE. VARIOUS SURROUNDINGS CIRCU MSTANCES HAVE BEEN RELIED UPON BY THE AO TO REJECT THE EXPLANATION OFF ERED BY THE ASSESSEES. THE CIT(A) CONFIRMED THE FINDINGS AND CO NCLUSION DRAWN BY THE AO. THE TRIBUNAL SPEAKING THROUGH ITS SENIOR VI CE PRESIDENT CONCURRED WITH THE FINDINGS OF FACT. THE FINDINGS A RE BASED ON THE MATERIAL AVAILABLE ON RECORD AND NOT ON ANY CONJECT URES AND SURMISES. THEY ARE NOT IMAGINARY AS SOUGHT TO BE CONTENDED. T HE FINDINGS OF FACT ARRIVED AT BY THE AUTHORITIES BELOW ARE BASED ON PR OPER APPRECIATION OF THE FACTS AND THE MATERIAL AVAILABLE ON RECORD AND SURROUNDING MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 15 CIRCUMSTANCES. THE DOUBTFUL NATURE OF THE TRANSACTI ON AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN DULY TAKEN INT O CONSIDERATION BY THE AUTHORITIES BELOW. THE TRANSACTIONS THOUGH A PPARENT WERE HELD TO BE NOT REAL ONES. MAY BE THE MONEY CAME BY WAY O F BANK CHEQUES AND PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE. NO QUESTION OF LAW MUCH LESS ANY SU BSTANTIAL QUESTION OF LAW HAD ARISEN FOR CONSIDERATION OF THE HIGH COURT. THE HIGH COURT MISDIRECTED ITSELF AND COMMITTED ERROR I N DISTURBING THE CONCURRENT FINDINGS OF FACTS.SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124 : 1995 SUPP. (2) SCC 453 RELIED ON; A. RAJ ENDRA & ORS. VS. ASSTT. CIT (2006) 204 CTR (MAD) 9 SET ASIDE. APPLYING THE PROPOSITION LAID BY THE HON'BLE SUPREM E COURT TO THE FACTS OF THIS CASE, WE UPHOLD THE ORDER OF THE ASSESSING OFFICER AND SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS). THE REVENUE, T HUS, SUCCEEDS ON MERIT. VI) NOW, COMING TO THE INVOCATION OF RULE-27 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, WE HOLD THAT THE ASSESSEE IS ENTITLED TO INVOKE RULE- 27, AS HELD BY A CO-ORDINATE BENCH OF THIS TRIBUNAL IN TRIACE (SUPRA). VII) COMING TO THE ISSUE WHETHER THE ASSESSMENT MADE UND ER SECTION 143(3)(II) R/W SECTION 153A, IS TO BE TREATED AS BA D-IN-LAW FOR THE REASON THAT NO INCRIMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH, WE FIND FROM THE ASSESSMENT ORDER AT PAGE-5 , THAT THE ASSESSING OFFICER HAS RECORDED THAT CERTAIN SEIZED MATERIAL W AS FOUND FROM MR. VIMAL KUMAR RATHI, AND THAT THE SEIZED MATERIAL DISCLOSES THAT THE DONOR HAS MADE NUMEROUS GIFT BETWEEN 27 TH JUNE 2001 AND 18 TH JULY 2006. IN THE ASSESSMENT ORDER OF MR. VIMAL KUMAR RATHI, AT PAGE- 5, THE ASSESSING OFFICER RECORDED THAT DURING THE COURSE OF SEARCH AT THE RE SIDENTIAL PREMISES OF MR. VIMAL KUMAR RATHI, A FILE CONTAINING VARIOUS GIFT D EEDS, DECLARATION, ETC., WERE FOUND AND THE SAME WAS SEIZED AS PER ANNEXURE- A(3), PAGES-1 TO 36 OF PANCHANAMA DATED 3 RD AUGUST 2006, AND THAT THIS SEIZED PAPERS DISCLOSED THAT THE ASSESSEE HAD MADE GIFTS TO HIS WIFE AND OT HERS. HENCE, IT CANNOT BE SAID THAT THERE IS NO MATERIAL FOUND DURING THE COU RSE OF SEARCH IN THIS GROUP. HENCE, ALL THE CASE LAWS RELIED UPON BY THE ASSESSE E FOR THE PROPOSITION THAT THE ASSESSMENT ITSELF IS BAD-IN-LAW, DO NOT COME TO THE RESCUE OF THE ASSESSEE. AS INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF MR. CHINTAN M. DOSHI ITA NO.1064/MUM./2010 16 SEARCH, THE ASSESSING OFFICER, IN OUR OPINION, HAS RIGHTLY ISSUED NOTICE UNDER SECTION 153A AND VALIDLY PASSED THE ORDER UNDER SEC TION 153A R/W SECTION 143(3) OF THE ACT. 12. IN THE RESULT, REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.5.2011 SD/- ASHA VIJAYRAGHAVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 27.5.2011 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, C BENCH, ITAT, MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI