Shri R. Venkatachalam (HUF), Baroda V. The Income tax Officer,Ward-3(2), Baroda

ITA 305/AHD/2011

• Counselvise Citation: 30520514 RSA 2011
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 04-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: ATUL R SHAH
• Keywords: Reopening of assessment; Gift; Difference of opinion; Onus to prove; Reason to believe
• Section: 147; 68; 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.305/AHD/2011 A. Y.: 2000-01 R. VENKATACHALAM (HUF), C-17, MANORATH SOCIETY, OPP. AMAR COMPLEX, NEW SAMA ROAD, BARODA VS INCOME TAX OFFICER, WARD 3 (2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390 007 PA NO. AAAHV 8251 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ATUL R. SHAH, AR RESPONDENT BY SHRI VINOD TANWANI, DR DATE OF HEARING: 23-08-2011 DATE OF PRONOUNCEMENT: 25-08-2011 O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-IV, BARODA DAT ED 24-11-2010 FOR ASSESSMENT YEAR 2000-01, ON THE FOLLOWING GROUNDS: 1. THE INCOME TAX OFFICER HAS ERRED BOTH IN LAW AN D ON THE FACTS OF THE CASE IN RESORTING TO SEC.148//147 AND REOPENING THE ASSESSMENT. 2. THE INCOME TAX OFFICER HAS ERRED IN NOT SUPPLYIN G REASONS RECORDED FOR REOPENING OF ASSESSMENT THOUGH ASKED FOR. 3. IN THE CIRCUMSTANCES AND ON THE FACTS OF THE CAS E, THE CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION F OR ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 2 RS.1,00,000/- BEING THE AMOUNT OF GIFT RECEIVED FRO M A FAMILY FRIEND. 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY, FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 11-01-2001 DECLARING TOTAL INCOME OF RS.7 4,446/-. THE CASE WAS REOPENED AND NOTICE U/S 148 OF THE IT ACT WAS ISSUED ON 19-03-2007. THE ASSESSEE HAD DECLARED INCOME FROM C APITAL GAINS, OTHER SOURCES AND AGRICULTURAL INCOME. DURING THE Y EAR UNDER CONSIDERATION, THE ASSESSEE ALSO RECEIVED GIFT OF R S.1,00,000/- FROM SHRI SARLESHKUMAR S. PATEL IN RESPECT OF WHICH THE AO ASKED THE ASSESSEE TO FILE CONFIRMATION AND ESTABLISH GENUINE NESS OF THE TRANSACTION, CREDITWORTHINESS OF THE PARTY AND PROO F OF IDENTIFICATION. IN THIS REGARD THE ASSESSEE FILED LETTER DATED 02-07-1 999 FROM THE DONOR. THE AO OBSERVED THAT THIS LETTER WAS IN THE NATURE OF PROFORMA WHEREIN NAME OF THE PERSON TO WHOM IT WAS ADDRESSED , CHEQUE NUMBER, DATE, AMOUNT AND DATE OF ISSUE WERE BLANKS AND THE DETAILS WERE FILLED IN BY HAND AGAINST THESE BLANKS IN THE TYPED PROFORMA. AS PER THE AO, THIS ESTABLISHES THAT BLANKS WERE FILLE D IN BY SOME OTHER PERSON AS PER HIS OR HER CONVENIENCE. THE AO FURTHE R OBSERVED THAT THE CHEQUE DATED 02-07-1999 WAS SENT FROM KUWAIT AN D WAS CREDITED IN THE ACCOUNT ON 03-07-1999 WHICH WAS NOT POSSIBLE . FURTHER AS PER THE LEDGER ACCOUNT OF KARUR VYASYA BANK AT IT APPEA R IN THE BOOKS OF THE ASSESSEE, THE AMOUNT OF RS.1,00,000/- WAS SHOWN TO HAVE BEEN RECEIVED ON 26-06-1999 AND AS PER THE AO, BY NO STR ETCH OF ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 3 IMAGINATION CHEQUE DATED 02-07-1999 COULD HAVE BEEN CREDITED ON 26-06-1999. THE ASSESSING OFFICERS INFERENCE WAS T HAT CHEQUE WAS ALREADY IN POSSESSION OF THE ASSESSEE AND LETTER DA TED 02-07-1999 WAS NOT SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF THE TRANSACTION. FURTHER, OBSERVATION OF THE AO WAS THAT THE ASSESSE E DID NOT FURNISH ANY EVIDENCE SHOWING HIS ASSOCIATION OR RELATION WI TH THE DONOR AND THERE WAS NO EVIDENCE REGARDING CAPACITY OF THE DON OR TO MAKE SUCH GIFT. ADDITION U/S 68 OF THE IT ACT WAS MADE IN A S UM OF RS.1,00,000/-. 4. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A) AND IT WAS SUBMITTED THAT THE AO DID NOT PROVIDE COPY OF T HE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT AND FURTHE R THE ASSESSEE FILED CONFIRMATION FROM THE DONOR AND GIFT WAS GIVE N THROUGH CHEQUE AND COPY OF THE PAN CARD WAS ALSO FURNISHED. THEREF ORE, THE ASSESSEE HAS DISCHARGED HIS RESPONSIBILITY TO PROVE IDENTITY AND CREDITWORTHINESS OF THE DONOR AS WELL AS PROVED GEN UINENESS OF THE TRANSACTION IN THE MATTER. 5. THE LEARNED CIT(A) ON CONSIDERATION OF THE SUBMI SSION OF THE ASSESSEE DIRECTED THE AO TO SUPPLY COPY OF THE REAS ONS RECORDED FOR REOPENING OF THE ASSESSMENT TO THE ASSESSEE AND THE AO ACCORDINGLY FORWARDED A COPY OF THE REASONS FOR REOPENING OF TH E ASSESSMENT TO THE ASSESSEE FOR COMMENTS. THE ASSESSEE SUBMITTED T HAT SINCE COPY OF THE REASONS WAS NOT SUPPLIED AT THE ASSESSMENT S TAGE, THEREFORE, ASSESSMENT IS NULL AND VOID. AS REGARDS GIFT, SAME SUBMISSIONS WERE REITERATED. IT WAS ALSO SUBMITTED THAT REASONS ARE IRRELEVANT TO THE CASE OF THE ASSESSEE; THEREFORE, REOPENING IS BAD I N LAW. THE LEARNED ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 4 CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE MATERIAL ON RECORD DISMISSED THE APPEAL OF THE ASSE SSEE. HIS FINDINGS IN PARA 5 AND5.1 OF THE IMPUGNED ORDER ARE REPRODUC ED AS UNDER: 5. I HAVE CONSIDERED FACTS OF THE CASE, AND APPEL LANT'S SUBMISSIONS. AS HELD IN THE CASE OF GKN -DRIVESHAFT S (INDIA) LTD. BY THE SUPREME COURT, ASSESSING OFFICE R IS BOUND TO FURNISH REASONS RECORDED FOR REOPENING THE ASSESSMENT, WHEN APPELLANT HAD SPECIFICALLY ASKED F OR THE SAME. SINCE POWERS OF CIT(A) ARE COTERMINUS WIT H THAT OF ASSESSING 4 OFFICER, AS HELD BY COURTS/TRIB UNALS IN SEVERAL CASES INCLUDING IN THE CASE OF CHICAGO PNEU MATIC (INDIA) LTD. (2007) 15 SOT 252 (MUMBAI), COPY OF REASONS RECORDED WAS PROVIDED TO THE APPELLANT DURI NG APPELLATE PROCEEDINGS FOR COMMENTS. COMMENTS/OBJECTIONS OF THE APPELLANT ARE NOW DEALT WITH ON MERITS. IN APPELLANT'S CASE, NO ASSESSMENT U/S. 143(3) HAD BEEN FRAMED BEFORE THE ASSESSMENT UNDER APPEAL AND CASE THEREFORE, FALLS UNDER THE MAIN SECTION AN D NOT THE PROVISO TO SECTION 147. AS HELD IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500( SC). THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' MEANS CAUSE OR JUSTIFICATION AND IF THE ASSESSING O FFICER HAD CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REAS ON TO BELIEVE THAT INCOME HAD -ESCAPED ASSESSMENT. SUPREME COURT FURTHER HELD THAT 'EXPRESSION 'REASON ' CANNOT BE READ TO MEAN THAT ASSESSING OFFICER SHOUL D HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. AT THE INITIATION STAGE ; WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISHED FACT O F ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF, WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO, BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUB JECTIVE ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 5 SATISFACTION'. THE COURT FURTHER HELD THAT FOR CASE S FALLING UNDER MAIN SECTION 147 AND NOT ITS PROVISO, IF THE ASSESSING OFFICER, FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. IN VIEW OF SUPREME COURT'S DECISION IN THE CASE OF RAJESH J HAVERI STOCK BROKERS LTD., SUFFICIENCY OF REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE QUESTIONED BY THE APPEL LANT WHOSE CASE FALLS UNDER MAIN SECTION 147 AND NOT ITS PROVISO. THE REASONS RECORDED BY THE ASSESSING OFFI CER INCLUDE REFERENCE TO RECEIPT OF GIFT OF RS. 1,00,00 0/- BY THE APPELLANT REQUIRING VERIFICATION. THERE IS NO DISPU TE THAT THIS 'REASON' WAS DIRECTLY RELEVANT IN APPELLANT'S CASE. OTHER REASONS RECORDED BY ASSESSING OFFICER EVEN IF IRRELEVANT, THEREFORE DO NOT VITIATE THE REASSESSME NT PROCEEDINGS. OBJECTIONS RAISED BY THE APPELLANT AGA INST REOPENING OF ASSESSMENT/REASONS RECORDED ARE THEREF ORE, NOT ACCEPTABLE AND IT IS HELD THAT THE ASSESSMENT U /S. 147 WAS VALID. OTHER PART OF GROUND NO.1 OF THE APPEAL ABOUT NOT PROVIDING OPPORTUNITY TO THE APPELLANT IS NOT V ALID SINCE THE ASSESSING OFFICER CALLED FOR NECESSARY DETAILS FROM THE APPELLANT AND TOOK THEM INTO ACCOUNT BEFORE FRA MING THE ASSESSMENT. GROUND NO.1 OF THE APPEAL IS HENCE DISPOSED OFF AND IT IS HELD THAT ASSESSMENT U/S. 14 7 IN APPELLANTS CASE IS VALID. 5.1. GROUND NO.2 OF APPEAL IS NOW TAKEN UP. APPELL ANT HAS NOT ASSIGNED ANY VALID REASON, EITHER BEFORE TH E ASSESSING OFFICER OR AT APPELLATE STAGE FOR RECEIVI NG GIFT OF SUBSTANTIAL AMOUNT FROM A NON-RELATIVE. NO EVIDENCE REGARDING SHRI SARLESH PATELS FRIENDSHIP WITH THE APPELLANT, AS CLAIMED HAS BEEN FILED. THE DECLARATI ON OF GIFT BY SHRI SARLESH PATEL IS IN A TYPED REFORM A, IN WHICH BLANKS HAVE BEEN FILLED IN WITH APPELLANT'S NAME, D ATE, AMOUNT OF CHEQUE AND CHEQUE NUMBER. NO REASON FOR MAKING THE GIFT IS MENTIONED IN THIS LETTER DATED 2 .7.1999. FILLING UP OF THE BLANKS IN A TYPED PROFORMA INDICA TES THAT THE GIFT TRANSACTION IS ENGINEERED BY SOMEBODY ELSE AND ACTUALLY THERE IS NO VALID REASON FOR THE SAID 'GIF T'. HON'BLE SUPREME COURT IN THE CASE OF P. MOHANKALA & OTHERS ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 6 (2007) 210 CTR (SC) 20 HELD THAT 'SECTION 68 ITSELF PROVIDES, WHERE ANY SUM IS FOUND CREDITED IN THE BO OKS OF ASSESSEES FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSES OF THE PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASS ESSEE ABOUT THE NATURE AND SOURCE OF SUCH SUMS FOUND CRED ITED IN THE BOOKS OF ASSESSEE IS, IN THE OPINION OF ASSE SSING OFFICER, NOT SATISFACTORY'. THE SUPREME COURT UPHEL D ADDITION OF GIFTS U/S.68 ON THE GROUND THAT 'THE TRANSACTIONS THOUGH APPARENT, WERE HELD TO BE NOT REAL ONES'. IN APPELLANT'S 'CASE, GENUINENESS OF THE GIFT TRANSACTION IS NOT ESTABLISHED. ASSESSING OFFICER W AS THEREFORE, JUSTIFIED IN MAKING ADDITION OF THE SO' CALLED GIFT' OF RS.1,00,000/- FROM SHRI SARLESH PATEL U/S .68, ADDITION IS CONFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO PB- 16, WHICH IS NOTICE U/S 148 OF THE IT ACT DATED 19- 03-2007 AND ALSO LETTER OF THE AO FILED BEFORE THE LEARNED CIT(A) (P B-17) IN WHICH THE AO MENTIONED THE REOPENING OF THE ASSESSMENT ON 13- 03-2007. HE HAS, THEREFORE, SUBMITTED THAT THERE IS A CHANGE IN THE DATE OF REOPENING OF THE ASSESSMENT WHICH IS NOT MENTIONED IN THE REASONS (PB-18). HE HAS SUBMITTED THAT THE AO WANTED TO MAK E FISHING ENQUIRY WITH REGARD TO GIFT, THEREFORE, REOPENING I S BAD IN LAW. HE HAS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN TH E CASE OF MAHENDRAKUMAR K. PATEL VS ITO IN ITA NO.1954/AHD/20 07 DATED 13- 08-2010 AND CONTENDED THAT REOPENING WAS DONE MEREL Y ON SUSPICION, THEREFORE, SAME IS BAD IN LAW. AS REGARD S MERIT, HE HAS REFERRED TO CONFIRMATION FROM THE DONOR (PB-13), CH EQUE DATED 02-07- 1999 (PB-14), COPY OF THE PAN (PB-15) AND COPY OF B ANK ACCOUNT OF ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 7 THE ASSESSEE (PB-12) AND SUBMITTED THAT THE ASSESSE E HAS DISCHARGED ONUS TO PROVE GENUINE GIFT IN THE MATTER . 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS RIG HTLY REOPENED THE ASSESSMENT BECAUSE THE INCOME ESCAPED ASSESSMENT. T HE AO FORMED HIS OPINION ON THE BASIS OF INFORMATION RECE IVED THAT GIFT IN QUESTION IS NOT GENUINE. THEREFORE, REOPENING OF TH E ASSESSMENT IS JUSTIFIED. HE HAS SUBMITTED THAT FACTS IN THE CASE OF MAHENDRAKUMAR K. PATEL (SUPRA) ARE DISTINGUISHABLE IN WHICH THE A SSESSMENT WAS REOPENED TO FIND OUT PROBABILITY OF ESCAPED INCOME WHICH WAS NOT FOUND PERMISSIBLE IN LAW. THE LEARNED DR SUBMITTED THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE DO NOR AND GENUINENESS OF THE GIFT. NO OCCASION OR REASON OF T HE GIFT IS PROVED. THERE WAS NO RELATION BETWEEN THE ASSESSEE AND THE DONOR. NO EVIDENCE OF ANY LOVE AND AFFECTION IS PROVED. THERE FORE, THE ASSESSEE FAILED TO PROVE GENUINE GIFT IN THE MATTER. THE LEA RNED DR SUBMITTED THAT ONCE ADDITION IS MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF BOGUS GIFT WOULD PROVE THAT TH E AO HAS RIGHTLY REOPENED THE ASSESSMENT IN THE MATTER ON THE ISSUE. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT NO ASSESSMENT U/S 143(3) OF THE IT ACT HAD BEEN FRAMED BEFORE THE REASSESSMENT ORDER FRAME D BY THE AO UNDER APPEAL. ACCORDING TO SECTION 147 OF THE IT AC T, IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE OTHER ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 8 PROVISIONS OF THE IT ACT ASSESS OR REASSESS SUCH IN COME IN ACCORDANCE WITH LAW. THEREFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN PLACING RELIANCE UPON THE DECISION IN THE CASE OF R AJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). THE ASSESSEE HAS F ILED A COPY OF THE ACKNOWLEDGEMENT OF FILING OF THE RETURN IN THE PAPE R BOOK AT PAGE 7 IN WHICH THE ASSESSEE HAS SUBMITTED STATEMENT OF TOTAL INCOME ALONG WITH WORKING OF CAPITAL GAINS, SELF ASSESSMENT CHAL LAN AND STATEMENT OF ACCOUNT ALONG WITH RETURN OF INCOME. COPY OF STA TEMENT OF INCOME IS FILED AT PAGE 8 OF THE PAPER BOOK IN WHICH NO GI FT IN THE MATTER HAS BEEN SHOWN TO THE REVENUE DEPARTMENT IN THE RETURN OF INCOME. COPY OF THE REASONS FOR REOPENING OF THE ASSESSMENT WAS SUPPLIED TO THE ASSESSEE AT THE APPELLATE STAGE, THEREFORE, THE LEA RNED CIT(A) WAS JUSTIFIED IN HOLDING THAT SINCE HIS POWERS ARE CO-T ERMINUS TO THAT OF THE AO, THEREFORE, THERE IS SUFFICIENT COMPLIANCE IN TH E MATTER. COPY OF THE REASONS ARE FILED IN THE PAPER BOOK AT PAGE 18 IN WHICH THE AO FORMED HIS BELIEF ON THE BASIS OF INFORMATION RECEI VED THAT INCOME CHARGEABLE TO TAX IN A SUM OF RS.1,00,000/- HAS ES CAPED ASSESSMENT ON ACCOUNT OF GIFT RECEIVED ON 26-06-199 9. THE AO WAS, THEREFORE, HAVING REASON TO BELIEVE THAT INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT. THESE WERE SUFFICIENT REASONS R ECORDED IN THE REASONS FOR REOPENING OF THE ASSESSMENT. THEREFORE , THE AO HAS RIGHTLY REOPENED THE ASSESSMENT IN THE MATTER. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE AO IN HIS LETTER ( PB-17) MENTIONED THE DATE OF REOPENING OF THE ASSESSMENT ON 13-03-20 07 BUT NOTICE U/S 148 OF THE IT ACT HAS BEEN ISSUED ON 19-03-2007 (PB -17), THUS THERE IS A DISCREPANCY IN DATE. I DO NOT FIND ANY SUBSTAN CE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE BECAUSE THE RE IS NO ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 9 DISCREPANCY IN THE SAME. THE NOTICE U/S 148 OF THE IT ACT COULD BE ISSUED ONLY AFTER RECORDING THE REASONS BY THE AO. IN THIS CASE THE AO RECORDED THE REASONS FOR REOPENING OF THE ASSESS MENT ON 13-03- 2007 AND THEREAFTER ISSUED NOTICE U/S 148 OF THE IT ACT ON 19-03- 2007, THEREFORE, ARGUMENT OF THE LEARNED COUNSEL FO R THE ASSESSEE THAT THERE IS A DISCREPANCY IN THE REASONS AND THE NOTICE HAS NO MERIT AND IS ACCORDINGLY REJECTED. THE AO HAS ALSO NOTED IN THE REASONS FOR REOPENING THAT THE ASSESSEE HAS CLAIMED TO HAVE REC EIVED THE GIFT IN THE MATTER ON 26-06-1999. BUT THE CONFIRMATION OF T HE DONOR SHOWS THE DATE OF THE GIFT AS 02-07-1999 WHICH WAS IMPOSS IBLE. FURTHER, THE CHEQUE OF THE GIFT WHICH WAS SENT FROM KUWAIT ON 02 -07-1999 THROUGH POST CANNOT BE CREDITED IN THE ACCOUNT OF THE ASSES SEE ON 03-07- 1999. THESE FACTS AND THE INFORMATION RECEIVED BY T HE AO WOULD CLEARLY REVEAL A CASE OF ESCAPED ASSESSMENT ON ACCO UNT OF BOGUS GIFT. THE ORDER OF THE TRIBUNAL IN THE CASE OF MAHE NDRAKUMAR K. PATEL (SUPRA) IS CLEARLY DISTINGUISHABLE ON FACTS BECAUSE IN THAT CASE IT WAS FOUND THAT REASSESSMENT WAS OPENED TO FIND OUT PROB ABILITY OF ESCAPED INCOME WHICH IS NOT PERMISSIBLE IN LAW. HOW EVER, IN THE CASE OF THE ASSESSEE, THERE WAS DEFINITE AND CONCRETE IN FORMATION RECEIVED BY THE AO THAT INCOME ESCAPED ASSESSMENT ON ACCOUNT OF BOGUS GIFT. CONSIDERING THE ABOVE DISCUSSIONS I AM OF THE VIEW THE AO HAS CORRECTLY REOPENED THE ASSESSMENT IN THE MATTER IN WHICH NO ILLEGALITY HAS BEEN POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE. GROUND NO.1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY DISMISSED. ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 10 8.1 AS REGARDS MERIT OF THE GENUINE GIFT IS CONCERN , I AM OF THE VIEW THAT THE ASSESSEE HAS FAILED TO ADDUCE SUFFICIENT E VIDENCE IN SUPPORT OF GENUINENESS OF THE GIFT IN THE MATTER. 8.2. THE HONBLE DELHI HIGH COURT IN THE CASE OF C IT VS ANIL KUMAR 292 ITR 552 HELD AS UNDER: IN THE CASE OF GIFTS MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF GIF T IS MADE BY THE ASSESSEE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. IN ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1995-96 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RECEIVED TWO GIFTS OF RS.10 LAKHS EACH FROM N. R. E. ACCOUNTS OF TWO DONORS, NAMELY V AND D. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS OF PROVING THE CREDIT- WORTHINESS OF THE DONORS AND HELD THAT THE AMOUNT OF RS.20 LAKHS WHICH HAD BEEN DECLARED BY THE ASSESSEE AS GIFT, WAS IN FACT HIS INCOME AND ADDED TO HIS TO TAL INCOME UNDER SECTION 68. THE ADDITION WAS DELETED B Y THE COMMISSIONER (APPEALS) AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD THA T THERE WAS NOTHING ON RECORD TO SHOW AS TO WHAT WAS THE FINANCIAL CAPACITY OF THE DONORS, WHAT WAS THE CREDIT-WORTHINESS OF THE DONORS, WHAT KIND OF RELATIONSHIP THE DONORS HAD WITH THE ASSESSEE, WHAT WERE THE SOURCES OF FUNDS GIFTED TO THE ASSESSEE AN D WHETHER THEY HAD THE CAPACITY OF GIVING LARGE AMOUNTS OF GIFT TO THE ASSESSEE. FURTHER, THE ASSESSEE WAS ASKED TO APPEAR IN PERSON BEFORE THE ASSESSING OFFICER, BUT NEVER APPEARED. THE ADDITION OF RS.20 LAKHS WAS JUSTIFIED. ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 11 8.3 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS P. MOHANKALA 291 ITR 278 HELD AS UNDER: THE ASSESSEE RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNT OF THE ASSESSEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT FROM ABOARD WERE DRAWN ON THE CITIBANK, N. A. SINGAPORE. THE EVIDENCE INDICATED T HAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE ASSESSEES. ON THIS MATERIAL THE ASSESSING OFFIC ER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL A ND 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 THE ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFERENCE OF OPINION BETWEEN T HE TWO MEMBERS OF THE APPELLATE TRIBUNAL AND THE MATER WAS REFERRED TO THE VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCLUSION 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 TRIBUNA L WERE IN THE REALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TO THE SUPREME COURT: HELD, REVERSING THE DECISION OF HIGH COURT, THAT 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 COUR T MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT. ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 12 8.4 THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F YASH PAL GOEL VS CIT 310 ITR 75 HELD AS UNDER: HELD, DISMISSING THE APPEAL THAT THE FINANCIAL POSITION OF M. SUGGESTED THAT HE NEITHER HAD THE CAPACITY TO MAKE THE GIFT NOR THE SOURCE FROM WHERE THE GIFT WAS MADE. NO REASON WHATSOEVER HAD BEEN ASSIGNED FOR GIFTING SUCH A HUGE AMOUNT BY M TO THE ASSESSEE. M NEVER VISITED THE HOME OF THE ASSESSEE AND HENCE THERE WAS NO LOVE AND AFFECTION. IT WAS NOTHING BUT A SUBTERFUGE TO AVOID INCOME-TAX. THE TRANSACTIONS WERE NOT GENUINE ONES. 8.5 IN THE CASE OF THE ASSESSEE, THE ASSESSEE FILED LETTER DATED 02- 07-1999 FROM THE DONOR AND THE AO RIGHTLY OBSERVED THERE FROM THAT IT WAS A PROFORMA WHEREIN, NAME OF THE PERSON TO WHOM IT WAS ADDRESSED, CHEQUE NUMBER, DATE, AMOUNT AND DATE OF ISSUE WERE BLANKS AND THE DETAILS WERE FILLED IN BY HAND AGAIN ST THESE BLANKS IN THE TYPED PROFORMA. THE AO, THEREFORE, RIGHTLY NOTE D THAT THE BLANKS HAVE BEEN FILLED IN AS PER CONVENIENCE. FURTHER, TH E SAID GIFT CHEQUE WAS SENT FROM KUWAIT ON 02-07-1999; THEREFORE, THE AO RIGHTLY HELD THAT THE SAME COULD NOT BE CREDITED IN THE ACCOUNT OF THE ASSESSEE ON 03-07-1999. IT WAS FURTHER FOUND THAT THE ASSESSEE HAS SHOWN IN HIS BOOKS RECEIPT OF THE GIFT ON 26-06-1999, THEREFORE, IT COULD NOT HAVE BEEN BELIEVED THAT SAME WOULD BE CREDITED IN THE AC COUNT OF THE ASSESSEE ON 02-07-1999. THE ASSESSEE HAS, THEREFORE , FAILED TO EXPLAIN THE NATURE AND PURPOSE OF THE GIFT. NO RELA TIONSHIP, LOVE AND AFFECTION HAVE BEEN PROVED. NO EVIDENCE OF CREDITWO RTHINESS OF THE DONOR HAS BEEN FILED. THE CONFIRMATION FILED BY THE ASSESSEE IS HIGHLY DOUBTFUL AS IS NOTED BY THE AUTHORITIES BELOW. THER EFORE, MERE FILING OF ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 13 CONFIRMATION IS NOT SUFFICIENT TO PROVE GENUINE GIF T IN THE MATTER. NO REASON OR OCCASION OF THE GIFT HAS BEEN PROVED. ME RELY BECAUSE, GIFT HAS BEEN GIVEN THROUGH ACCOUNT PAYEE CHEQUE WOULD N OT PROVE GENUINENESS OF THE GIFT IN THE MATTER. THUS, THE AS SESSEE FAILED TO PROVE ALL THE BASIS INGREDIENTS OF GENUINE GIFT IN THE MATTER. EVEN, NO COPY OF THE BANK ACCOUNT OF THE DONOR HAS BEEN FILE D. THEREFORE, GENUINENESS OF THE GIFT IS NOT PROVED BY THE ASSESS EE. IT IS, THEREFORE, CLEAR THAT GIFT IN THE MATTER IS NOT GENUINE GIFT A ND WAS ARRANGED AFFAIRS OF THE ASSESSEE. 9. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR T HAT THE ASSESSEE FAILED TO PROVE ANY RELATION WITH THE DONOR AND HIS CREDITWORTHINESS. NO SUFFICIENT EVIDENCE OR MATERIAL IS FILED ON RECO RD TO PROVE THE GENUINENESS OF THE GIFT IN THE MATTER. MERELY SHOWI NG GIFT WAS MADE THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE GENUINENESS OF THE GIFT IN THE MATTER. HONBLE SUPREME COURT IN THE C ASE OF DURGA PRASAD MORE 82 ITR 540 AND IN THE CASE OF SUMATI DA YAL 214 ITR 801 HELD THAT COURTS OF TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILI TIES. IF THE SAID TEST IS APPLIED IN THIS MATTER, IT IS CLEARLY ESTABLISHED THAT THE ASSESSEE HAS FAILED TO PROVE GENUINE GIFT IN THE MA TTER. I ACCORDINGLY, DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE . THE SAME IS ACCORDINGLY DISMISSED. ITA NO. 305/AHD/2011 R. VENKATACHALAM (HUF) VS ITO, W- 3 (2), BARODA 14 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- CONCERNED 5. THE DR, ITAT, CONCERNED 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD