DCIT, Salem V. Sri Laxmikant Bhandari, Salem

ITA 1136/CHNY/2000

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1089 (ITAT-CHENNAI)
• Duration Of Justice: 10 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-02-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 16-06-2000
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RANGAR AJAN JR
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Unexplained cash credit; Gift; Difference of opinion; Set aside
• Section: 264; 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. B. RAMAKOTAIAH, A.M. I.T.A. NO.1136/MDS/2000 ASSESSMENT YEAR: 1995-96 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(I), SALEM 7. . VS. SRI VITHALDAS BHANDARI (DECEASED) THROUGH L/H 1. SMT. RAMESHWARI BAI BHANDARI, W/O LATE SRI VITHALDAS BHANDARI, 2. SRI LAXCMIKANT BHAND ARI, SRI GOPALDAS BANDARI, NO.4, SYED MADAR STREET, SHEVAPET, SALEM 636002. 3. SMT. PUSHPA BOOB, W/O SRI BALKISHAN BOOB, NO. 539, VISHAL DEEP, A.T. HALLI, SHANTINAGAR, BANGALORE. 4. SMT. JAMUNA SARADA, W/O LAXMINARAYAN SARDA, 4-4-64, GUNJ BAJAR, SECUNDERABAD 500003 5. KUM. SHARDA INNANI & KUM. MADHURI INNANI D/O SRI KISHANGOPAL I NNANI, PADDPUTALAWARI STREET, GOVERNOR BADA, 3 RD FLOOR FLAT NO.1, RAMACHANDRA COMPLEX, VIJAYAWADA 520002. [GIN/PAN: V-735] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.E.B. RANGARAJAN, JR. STANDING COUNSEL ASSESSEE BY : DR. ANITA SUMANTH ORDER PER U.B.S. BEDI, J.M . THIS APPEAL OF THE DEPARTMENT IS DIRE CTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) XII, CHENNAI DATED 30. 03.2000 RELEVANT TO THE ASSESSMENT YEAR 1995-96 WHEREBY THE DEPARTMENT HAS CHA LLENGED DELETION OF ADDITION OF ` .8.00 LAKHS MADE BY THE ASSESSING OFFICER BY HOLDING THAT IN THE ABSENCE OF CORROBORATIVE EVIDENCE TO PROVE THE GENUINENESS OF THE NRI GIFT, THE CREDITS APPEARING IN THE CAPI TAL ACCOUNT OF THE ASSESSEE IS TREATED AS UNEXPLAINED AND ACCORDI NGLY ASSESSED TO TAX UNDER SECTION 68 OF THE INCOME TAX ACT. I.T.A. NO.1136/MDS/2000 2 2. THIS CASE WAS ASSESSED ON 30.09. 1999 AND APPEAL OF THE ASSESSEE WAS DECIDED ON 30.03.2000 BY THE LD. CIT( A) AGAINST WHOSE ORDER, THE DEPARTMENT HAS FILED APPEAL ON 16.06.2000 BUT THE ASSESSEE, AS PER APPLICATION OF ASSESSEES ONE OF THE LEGAL HEIRS UNDER CLAUSE (VIII) OF SUB-RULE 4A OF INCOME TAX (AT) RULES, 1963, LEGAL HEIRS HAVE BEEN BROUGHT ON RECORD. 2.1 FACTS INDICATE THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1995-96, THE ASSESSEE IS STATED TO HAVE RECEIVED A GIFT OF ` .8.00 LAKHS FROM THE NON- RESIDENT INDIAN DR. D.P. PARW AL RESIDING AT HONGKONG. T HE ASSESSING OFFICER HAS MADE THE FOLLOWING OBSERVATION IN THE ASSESSMENT ORDER FOR THE ASSE SSMENT YEAR 1995-96: THE GIFT WAS MADE THROUGH CHEQUE DATED 5.8.94 FOR ` .8 LAKHS, ISSUED FROM THE NRE ACCOUNT 3317 OF DR. D.P. PARWAL, MAINTAINED AT STATE BANK OF INDIA, NRI BRANCH, BOMBAY, IN S UPPORT OF THIS, THE ASSESSEE PRODUCED LETTER GIVEN BY THE DONOR, DR.D.P . PARWAL, CONFIRMING THE GIFT. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE THE GIFT OF ` .8 LAKHS. AS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE ASSE SSEE AND 5 OTHER DONEES, I.E. S/SHRI/SMT. GOPALDAS BHANDARI, VITHALDAS BHANDARI, RAMESHWARI BHANDARI, JYOTHI BHANDARI AND SANGEETHA BHANDARI, ADMITTED THAT DR. D. P. PARWAL, NON-RESIDENT I NDIAN RESIDING AT HONGKONG HAD GIVEN GIFTS TO THEM FOR ` .1.07 CRORES ON VARIOUS DATES BY DEBITING HIS NRE ACCOUNTS AT STATE BANK OF INDIA, BOMBAY AND JAIPUR. THE ASSESSEE REPR ESENTED BY HER SON, SHRI GOPALDAS BHANDARI, ST ATED BEFORE THE ASSESSING OFFICER T HAT DR. D.P. PARWAL IS A DIAMOND MERCHANT AND INDUSTRIALIST. AS THE ASSESSEE COULD NOT PRODUCE THE INCOME TAX ASSESSMENT ORDERS, RELEVANT PAG ES FROM THE PASSPORT OF DR. D.P. PARWAL INDICATING THE DATE OF ARRIVAL IN INDIA AND DEPARTURE DATES OUT OF INDIA, THE ASSESSING OFFICER TREATED I.T.A. NO.1136/MDS/2000 3 THE GIFT OF ` .8 LAKHS, AS UNEXPLAINED CASH CREDIT UN DER SECTION 68 OF THE INCOME TAX ACT. ACCORDING TO THE ASSESSING OFFICER, IT WAS IM PROBABLE THAT DR. D.P. PARWAL WOULD HAVE GIVEN SUCH A HUGE GIFT TO SHOW HIS LOVE AND AFFECTION IN GRATITUDE OF THE HELP RENDERED TO HIS FAMILY IN THE PAST. THE ASSESSING OFFICER HAS MADE FURTHER OBSERVATION IN THE LAST PARAGRAPH OF THE ASSESSMENT ORDER FOR TREAT ING THE GIFT AS UNEXPLAINED AS UNDER: IT HAS BEEN REPORTED IN THE PRESS AND ELSEWHERE THAT THE NRI GIFT CHANNEL HAS BEEN MISUSED BY THE ASSESSEE TO BRING BLACK MONEY INTO THE BOOKS WITHOUT PAYING TAX AND T HE DEPARTMENTAL ENQUIRIES IN MANY CASES HAVE CONFIRMED THIS. IN MANY CASES, THE ASSESSEES HAVE VOLUNTARILY OFFERED THE NRI GIFT FOR TAX TO ESCAPE FROM PENAL ACTION. THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE LEAD ONE TO BELIEVE THAT THE ASSESSEE HAS MISUSED THE NRI GIFT CHANNEL TO WHITE WASH HIS BL ACK MONEY GENERATED IN HIS BUSINESS. THEREFORE, IN THE ABSENCE OF CO RROBORATIVE EVIDENCE, TO PROVE THE GENUINENESS OF THE NRI GIFT, T HE CREDITS APPEARING IN TH E CAPITAL ACCOUNT OF THE ASSESSEE ARE TREATED AS UNEXPLAI NED AND ACCORDINGLY ASSESSED TO TAX UNDER SECTION 68 OF THE IT ACT. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE ASSESSING OFFICER WAS NOT JUST IFIED IN TREATING THE GIFT RECEIVED BY THE ASSESSEE FROM DR. D.P.PARWAL AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HE STATED THAT THE PHOTOCOPY OF THE LETTER I SSUED BY THE DONOR DR. D.P. PARWAL CONFIRMING THE GIFT, COPY OF LETTER ISSUED BY THE M ANAGER, STATE BANK OF INDIA, NRI BRANCH THAT THE CHEQUE WA S ISSUED IN FAVOUR OF T HE ASSESSEE BY DEBITING THE ACCOUNT MAINTAINED BY DR. D.P. PARWAL AND XEROX COPY OF THE GIFTED CHEQUE WERE FURNISHED BEFORE THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS SUMMONED TO DEPOSE BEFORE THE A SSESSING AUTHORITY REGARDING GIFT RECEIVED BY HIM AND RECEIPT OF GIFT WAS ACCORDINGLY CONFIRMED. ELABORATING HIS ARGUMENTS , HE STATED THAT THE I.T.A. NO.1136/MDS/2000 4 ASSESSING OFFICER WAS CARRIED AWAY BY PRESS REPORT AND THOUGH LETTERS WERE ISSUED TO THE BANK MANAGER, STATE BANK OF INDIA, BOMBAY AND JAIPUR FOR FURNISHING THE COPIES OF NRE ACCOUNTS OF DR. D.P. PA RWAL, NO EFFORTS WERE MADE BY THE ASSESSING OFFICER TO OBTAIN THE DETAILS BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDING, WHICH WERE GETTING TIME BARRED BY 31.03.1999. HE FURTHER ARGUED THAT THOUGH A QUALIFIED MEDICAL PRACTITIONER IS AN AUTHORITY IN PRECIOUS STONE AND HAS BEEN IN THE BUSINESS FOR THE PAST 30 YEARS EVER SINCE HE SETTLED IN HONGKONG AS A PERMANENT CITIZEN. IT WAS THUS, ARGUED THAT AS THE IDENTITY OF T HE DONOR, FINANCIAL CAPACITY TO GIFT HAVE BEEN ESTABLISHED, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE GIFT APPEARING IN THE CAPITAL ACCOUNT AS UNEXPLAINED UNDER SECTION 68 OF THE ACT. IT WAS THUS ARGUED FOR DE LETION OF THE IMPUGNED ADDITION. RELIANCE WAS PLACED ON C HANDIGARH BENCH OF ITAT IN THE CASE OF R.K. SYAL VS. ASSISTANT COMMISSIONER OF INCOME TAX 66 ITJ 656 WHERE THE TRIBUNAL HAS HELD THAT ADDITION ON ACCOUNT OF UNEXPLAINED GIFT IS TO BE DELETED WHERE THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT MONEY CAME OUT OF NRE ACCOUNT OF THE DONORS, AND THERE WAS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS REPAID THE AMOUNT TO THE DONEE. 4. THE LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE AS RAISED DURING THE COURSE OF APPEAL HEARING HAS CONCLUDE D TO DELETE THE IMPUGNED ADDITION. 5. AGGRIEVED BY T HE ORDER OF THE LD. CI T(A), THE DEPARTMENT HAS COME UP IN APPEAL AND IT WAS CONTENDED THAT THE LD . CIT(A) HAS ERRED IN DEL ETING THE ADDITION MADE UNDER SECTION 68, WHO OUGHT TO HAVE SEEN THAT THE BURDEN OF PROVING THE GENUINENESS OF ALLEGED GIFT FROM DR. D.P. PARWAL IS ON THE ASSESSEE AS HELD BY TH E HONBLE DELHI HIGH COURT IN THE CASE OF K.L. AGGARWAL VS. CIT 190 ITR 303. T HE LD. CIT(A) OUGHT TO HAVE SEEN THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. PRECICION FINANCE (P) I.T.A. NO.1136/MDS/2000 5 LTD. 121 CTR 20 HAS HELD THAT MERE PAYM ENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE THE NON-GENUIN E TRANSACTION GENUINE, BUT THE SURROUNDING CIRCUMSTANCES LIKE RELATIONSHIP BETWEEN TH E DONOR AND DONEE, OCCASION FOR MAKING SUCH A GIFT SHOULD BE SEEN AND IN VIEW OF THE CA SE OF SUMATI DAYAL VS. CIT 125 CTR 124 (SC) IN WHICH IT WAS HELD THAT TEST OF HUMAN PROBABILITY IS A MUST TO PROVE THE GENUINENESS OF THE TRANSACTION AND IN THIS CASE THE SO CALLED DONEES WERE NOT ABLE TO GIVE THE PRESENT WHEREABOUTS AND OTHER DETAILS REGARDING THE DONOR AND THEY HAVE NOT EVEN SEEN THE DONOR EVEN THOUGH THE TOTAL GIFTS FROM T HE SO CALLED DONOR COME TO THE EXTENT OF ` .1.07 CRORES TO THE ASSESSEE AND HIS FAMILY MEMBERS. IT WAS, THUS PRAYED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE RE VERSED AND THE ORDER OF THE ASSESSING OFFICER SHOULD BE RESTORED. 6. THE LD. COUNSEL FOR THE ASSESSEE DR. AN ITA SUMANTH, WHILE ST RONGLY RELYING UPON THE ORDER OF THE LD. CIT(A) HAS PLEADED FOR CONFIRMA TION OF THE IMPUGNED ORDER. SHE FURTHER SUBMITTED THAT THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN TREATING THE GIFT RECEIVED BY THE ASSESSEE FROM DR. D.P. PARWAL AS UNEXPLAINED CASH CREDI T UNDER SECTION 68, BECAUSE, THE PHOTOCOPY OF THE LETTER ISSUED BY THE DONOR DR. D.P. PA RWAL CONFIRMING THE GIFT, COPY OF THE LETTER ISSUED BY THE MANAGER, STATE BANK OF INDI A NRI BRANCH THAT THE CHEQUE WAS ISSUED IN FAVOUR OF THE ASSESSEE BY DEBITING THE NRE ACCOUNT OF DR. D.P. PARWAL. THE XEROX COPY OF THE GIFT CHEQUE WE RE FILED BEFORE THE A SSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. TH E ASSESSEE WAS ALSO SUMMONED TO DEPOSE BEFORE THE ASSESSING AUT HORITY REGARDING THE GIFT RECEIVED BY HIM AND SUCH RECEIPT OF GIFT WAS ACCORDINGLY ACCEPTED AND CONFIRMED BY THE ASSESSEE. BUT THE ASSESSING OFFICER WAS JUST CARRIED AWAY BY PRESS REPORTS AND THOUGH LETTERS WERE ISSUED TO THE BANK MANAGER, STATE BANK OF INDIA, BOMBAY AND JAIPUR FOR FU RNISHING THE COPIES OF NRE I.T.A. NO.1136/MDS/2000 6 ACCOUNTS OF DR. D.P. PARWAL, NO EFFORTS WE RE MADE BY THE ASSESSING OFFICER TO OBTAIN THE DETAILS BEFORE COMPLETION OF THE ASSESSM ENT PROCEEDING, WHICH WERE GOING TO BE TIME BARRED. SO, THERE IS NO LAPSE ON THE PAR T OF THE ASSESSEE AND OT HERWISE, DR. D.P. PARWAL IS A QUALIFIED MEDICAL PR ACTITIONER AND IS AN AUTHORITY IN THE PRECIOUS STONES AS HE HAS BEEN IN THE BUSINESS FOR THE PAST 30 YEAR S EVER SINCE HE SETTLED IN HONGKONG AS A PERMANENT CITIZEN. SO, T HERE CANNOT BE ANY DOUBT ABOUT THE DONOR, HIS FINANCIAL CAPACITY HAS ALSO BEEN ESTABLIS HED, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE GIFT AS UNEXPLAINED AND THE LD. CIT(A) CONSIDERING ALL THESE ASPECTS AND MATERIAL ON RECORD HAS CAME TO A PROPER C ONCLUSION. THEREFORE, HIS ACTION SHOULD BE CONFIRMED AND ALTERNATIVELY, SH E PLEADED IN CASE THIS BENCH IS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY BY OBTAINING DETAILS FROM THE CONCERNED BANKS BEFORE COMPLETION OF THE ASSESSMENT PR OCEEDING, WHICH WERE GETTING TIME BARRED BY 31.03.1999, MATTER MAY BE SET ASIDE ON THE F ILE OF THE ASSESSING OFFICER FOR DOING THE NEEDFUL AND PASSING FRESH ORDER. 7. THE LD. DR IN ORDER TO COUNTER T HE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, HAS PLEADED THAT THE ASSESSEE HAS MISERABLY FAILED TO ESTABLISH THE GENUINENESS OF THE DONOR AS WELL AS FINANCIAL CAPACITY TO GIFT SUCH AN HUGE AMOUNT OF ` .8.00 LAKHS WHEN TOTAL GIFTS MADE BY THE SA ME DONOR TO THE ASSESSEE AND THEIR FAMILY MEMBERS OF THE ASSESSEE AMOUNT TO ` .1.07 CRORES AND THE MAIN PLEA OF THE ASSESSEES COUNSEL THAT GIFT AMOUNT HAS COME THROUGH BANK ING CHANNEL AND PERSON GIVING THE GIFT IS IDENTIFIABLE, IT CANNOT BE SUFFICIENT TO HOLD THAT THE GIFT TO BE GENUINE IF CAPACITY TO GIVE THE AMOUNT IN GIFT AND OTHER RELEVANT DETAI LS OF THE DONOR ARE NOT PRODUCED DESPITE HAVING BEEN GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE. IT WAS THUS PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORI NG THAT OF THE ASSESSING OFFICER BECAUSE, THE I.T.A. NO.1136/MDS/2000 7 ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE GIFT OR CAPACITY OF THE DONOR TO MAKE SUCH GIFT OF ` . 8.00 LAKHS TO THE ASSESSEE. 8. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON BY THE LD. CIT(A) AND A SSESSING OFFICER. IT IS NOT IN DISPUTE THAT GIFT OF ` .8.00 LAKH WAS STATED TO HAVE BEEN MADE IN FAVOUR OF THE ASSESSEE THROUGH A CHEQUE DATED 05.08.1994 FOR ` .8.00 LAKHS ISSUED THROUGH NRI ACCOUNT NO. 3317 OF DR. D.P. PARWAL MAINTAINED AT ST ATE BANK OF INDIA NRI BRANCH, BOMBAY AND EXCEPT FILING PHOTOCOPY OF THE LETTER OF THE DONOR, PHOTOCOPY OF THE LETTER ISSUED BY THE BRANCH MANAGER, SBI, NRI BRANCH BY DEBITI NG THE NRI ACCOUNT OF DR. D. P. PARWAL MAINTAINED IN THE BANK AND COPY OF THE GIFTED CHEQUE, NO OTHER DOCUM ENTARY EVIDENCE SUCH AS INCOME TAX ASSESSMENT ORDER RELEVANT PAGES FROM THE PASSPORT OF THE DR. D.P. PARWAL INDICATING THE DETAILS OF ARRIVAL AND DEPARTURE DATE OUT OF INDIA AND NO OTHER EVIDENCE OR MATERIAL HAS BEEN PRODUCED TO ESTABLISH THE FI NANCIAL CAPACITY OF THE DONOR TO MAKE GIFT OF ` .8.00 LAKHS TO THE ASSESSEE AND THE ASSE SSING OFFICER TAKING IN TO ACCOUNT THESE FACTS HAS CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO EITHER PROVE THE GENUINETY OF THE GIFT NOR FI NANCIAL CAPACITY OF THE SO CALLE D DONOR AND THE LD. CIT(A) HAS JUST ACCEPTED THE PLEA OF THE ASSESSEE TO DELETE THE ADDITION. NOW IT HAS TO BE SEEN WHETHER THE ACTION OF THE LD. CI T(A) CAN, IN VIEW OF THE FA CTS, CIRCUMSTANCES AND MATERIAL ON RECORD, BE HELD TO BE PROPER OR ORDER OF T HE ASSESSING OFFICER IS TO BE RESTORED BY SETTING ASIDE THE ORDER OF THE LD. CIT(A). 8.1 THE LD. COUNSEL FOR THE ASSESSEE, THE MAIN STRESS LAID ON THE POINT THAT THE AMOUNT HAS BEEN ROUTED THROUGH BANKING CHANNEL AND IT IS IN SUCH DONORS NRI ACCOUNT WHERE GIFT AMOUNT HAS BEEN DEBI TED, THEREFORE ADDITION COULD NOT BE MADE. WHEREAS, THE DEPARTMENTS PLEA IS THAT EVEN IF THE AMOUNT OF GIFT HAVING BEEN ROUTED THROUGH I.T.A. NO.1136/MDS/2000 8 BANKING CHANNEL, IT CANNOT BE SUFFICIENT TO HOLD THAT TH E TRANSACTION IS GENUINE AND THE ADDITION CANNOT BE DELETED IN THE ABSENCE OF ANY OTHER CORROBORATIVE MATERIAL SUCH AS ESTABLISHING FINANCIAL CAPACITY OF THE DON OR, OCCASION ON WHICH GIFT WAS MADE AND RELATIONSHIP BETWEEN THE DONOR AND DONEE. THE HON BLE SUPREME COURT IN THE CASE OF CIT V. P. MOHANAKALA [2007] 291 ITR 278 (SC) WHILE DEA LING WITH SIMILAR TYPE OF SITUATION HAS HELD IN FAVOUR OF THE DEPARTMENT WHILE REVERS ING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF A. RA JENDRAN AND OTHERS V. A SSISTANT COMMISSIONER OF INCOME TAX [2007] 291 IT R 178 (MAD). THE RELEVANT HEL D PORTION IS REPRODUCED HEREUNDER: A BARE READING OF SECTION 68 OF TH E INCOME-TAX ACT, 1961, SUGGESTS THAT (I) THERE HAS TO BE CREDIT OF AM OUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE; (II) SUCH CREDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR; AND (III) EITHER (A ) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDITS FOUND IN TH E BOOKS OR (B) THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPI NION OF THE ASSESSING OFFIC ER, IS NOT SATISFACTORY. IT IS ONLY THEN THAT THE SUM SO CREDITE D MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREV IOUS YEAR. THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION MEANS THE ASSE SSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESS EE. THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION O FFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORM ED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUN D CREDITED IN THE BOOKS IS NOT SATISFACTORY THERE IS, PRIMA FACIE, EVI DENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY. THE BUR DEN IS ON THE ASSESSEE TO REBUT THE SAME, AND, IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME NATURE. THE BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT, EVEN IF THE EXPLANATION IS NOT ACCEPTABLE, THE MA TERIAL AND ATTENDING CIRCUMSTANCES I.T.A. NO.1136/MDS/2000 9 AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CR EDITED IN THE BOOKS BEING TREATED AS A RECEIPT OF INCOME NATURE. THE ASSESSEES RECEIVED FOREIGN GIFTS FROM COMM ON DONOR. THE PAYMENTS WERE MADE TO THEM BY INST RUMENTS ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNT OF THE ASSESSEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CHEQUE S SENT FROM ABROAD WERE DRAWN ON THE CITIBANK, N. A. SINGAPORE . THE EVIDENCE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE ASSESSEES. ON THIS MATERIAL THE ASSESSING OFFICER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASSESSEES AS THEIR INCOME APPLYING SECTION 68 OF THE INCOME- TAX ACT, 1961. THE ASSESSEES DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE NOT OF THE NATURE OF INCOME. THE COMMISSIONER (APPEALS) CONFIRMED TH E ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFERENCE OF OPINION BETWEEN THE TWO ME MBERS OF THE APPELLATE TRIBUNAL AND THE MATTER WAS REFERRED TO THE VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCLUSIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS). ON APPEAL THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FINDINGS AND CAME TO THE CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL WERE IN THE REALM OF SURMISES, CONJECTURE AND SUSPICION. ON A PPEAL TO THE SUPREME COURT: HELD, REVERSING THE DECISION OF THE HIGH COURT, THAT THE FINDINGS OF THE ASSESSING OFFICER, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT. 8.2 WHILE RELYING UPON THE CASE OF SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC) (125 CTR 124), THE HONBLE PUNJAB AND HARYANA HIGH C OURT IN THE CASE OF TIRATH RAM GUPTA V. CIT [2008] 304 ITR 145 HAS DEALT WITH SIMILAR TY PE OF SITUATION AND WHILE FOLLOWING THE EARLIER VIEW IN THE CASE OF SU BHASH CHANDER SEKHRI V. DY. COMMISSIONER OF INCOME TAX [2007] ITR 300 (P&H) AND DI SCUSSING 82 ITR 540 (SC) [IN THE CASE OF CIT V. DURGA PRASAD MORE], [1981] 22 CTR P&H 135 (IN THE CASE OF LALL CHAND KALRA V. I.T.A. NO.1136/MDS/2000 10 CIT) & [2003] 264 ITR 435 (DELHI) (IN THE CASE OF SAJAN DASS AND SONS V. CIT) HAS OPINED AS UNDER: A GIFT CANNOT BE ACCEPTED AS SU CH TO BE GENUINE , MERELY BECAUSE THE AMOUNT HAS COME BY WAY OF CHEQUE OR DRAFT THROUGH BANKING CHANNELS, UNLESS THE IDENTITY OF THE DONOR, HIS CR EDITWORTHINESS, RELA TIONSHIP WITH THE DONEE AND THE OCCASION ARE PROVED. UN LESS THE RECEIPT HAS PROVED THE GENUINENESS THEREOF, THE GIFT CAN VERY WELL BE TREATED TO BE AN ACCOMMODATION ENTRY OF THE ASSESSEES OWN MONEY, WHICH IS NOT DISCLOSED FOR THE PURPOSE OF TAXATION. THE ASSESSEE HAD SHOW N A FOREIGN GIFT OF ` .1LAKH FROM ONE D. THE ASSESSING OFFICER FOUND TH AT THE GIFT WAS NOT GENU INE AS THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE FOREIGN GIFT AND RELATIONSHIP WITH THE DONOR. THE COMMISSIONER OF INCOME-TAX (APPEALS) REVERSED THE VIEW TAKEN BY THE ASSESSING OFFICER BUT THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER AND HELD THAT THE GIFT WA S NOT GENUINE. ON APPEAL: HELD ACCORDINGLY, DISMISSING THE APPEAL, THAT THERE WAS NO OCCASION FOR THE ALLEGED DONOR TO HAVE GIFTED A HUGE AMOUNT OF MONEY TO THE ASSESSEE AND HIS FAMILY. THE DONOR WAS WORKING AS A WATCHMAN IN A FOREIGN COUNTRY AND HIS GIFT OF ` .1 LAKH EACH TO THE ASSESSEE, TWO SONS AND TWO OTHER FAMILY MEMBERS WAS HIGHLY IMPROBABLE. TH E ASSESSEE COULD NOT ESTABLISH THE RELATIONSHIP WITH THE DONOR. THE TRIB UNAL ON A CONSIDERATION OF THE FACTS HAD COME TO THE CONCLUSION THAT THE GIFT RECEIVED BY TH E ASSESSEE WAS NOT GENUINE. THE VIEW TAKEN BY THE TRIBU NAL WAS THE ONLY POSSIBLE VIEW IN THE FACTS AND EVIDENCE ON RECORD. 8.3 HAVING CONSIDERED THE FACTS, CIRCUMST ANCES AND MATERIAL ON RECORD, IT IS FOUND THAT NEITHER THE ASSESSEE HAS BEEN ABLE TO ASSERT NOR ES TABLISH THAT THERE WAS ANY OCCASION FOR MAKING A GIFT NOR HE COULD SHOW RELATIONSHIP OR CLOSE PROXIMITY OF THE SO CALLED DONOR WITH THE DONEE AND MOREOVER, NO MATERIAL OR EVIDENCE HAS BEEN PRODUCED EITHER BEFORE THE LOWER AUTHORIT IES OR BEFORE THIS BENCH TO SHOW THAT EITHER THE SAID DONEE IS A INCOME TAX ASSESSEE AND HE HAS FINANC IAL CAPACITY TO GIFT SUCH AMOUNT TO THE ASSESSEE. THEREFORE, WHILE CONSIDERING THE RATIO OF T HE HONBLE SUPREME COURTS DECISION AND HONBLE PUNJAB & HARYANA HIGH CO URTS DECISION AS REPRODUCED ABOVE I.T.A. NO.1136/MDS/2000 11 AND IN VIEW OF THE FACTS AND CIRCUMSTANCES , WE HOLD THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH EITHER THE GENUINENESS OF T HE TRANSACTION OR THE FI NANCIAL CAPACITY BY PLACING FINANCIAL EARNINGS/ACCRUA LS AND DETAILS OF THE SO CALLED DONOR TO GIFT THE AMOUNT OF ` .8.00 LAKH AND THERE WAS NEITHER ANY OCCASION TO MAKE THE GIFT NOR RELATIONSHIP BETWEEN THE DONOR AND DONEE HAS EITHER BEEN SHOWN OR ESTABLISHED, AS SUCH THE ASSESSING OFFICER IS FOUND TO BE JUSTIFIED IN MAKING THE ADD ITION AND THE LD. CIT(A) IS FOUND TO HAVE JUST DELETED THE ADDITION WITHOUT PROPER BASIS AND MATERIAL. AS SUCH, WHILE ACCEPTING THE APPEAL OF THE REVENUE, WE REVERS E THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 9. IN THE RESULT, THE APPEAL OF THE DEPARTMENT GETS ACCEPTED. ORDER PRONOUNCED ON 10.02.2011. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE. 10.02.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.