Smt. Rekhaben Rajendra Shah, Surat V. The ACIT.,Circle-3, Surat

ITA 3069/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6594 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 28-08-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Salary income; Set aside; Capital Gains
• Section: 50C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP BHAVNESH SAINI, JM ) ITA NO.3069/AHD/2008 A. Y: 2005-06 REKHABEN RAJENDRA SHAH, M-12, MEGH MAYOUR PLAZA, PARLE POINT, SURAT PA NO. AFXPS 3544P VS THE A. C. I, T., CIRCLE -3, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI HARDIK VORA, AR RESPONDENT BY SHRI C. K. MISHRA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-II, SURAT DATED 25-07-2 008 FOR THE ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. ON GROUND NOS. 1 AND 2 OF THE APPEAL THE ASSESSE E CHALLENGED THE ADDITIONS OF RS.16,03,810/- AND RS.8,55,000/- ON AC COUNT OF UNEXPLAINED INVESTMENTS IN TWO PLOTS OF LAND, ONE A T PITLOD, SURAT AND ANOTHER AT SHIVANGI BUNGALOW RESPECTIVELY. THE ASS ESSEE CLAIMED TO HAVE PURCHASED TWO PLOTS OF LAND AT PITLOD FOR A TO TAL CONSIDERATION OF RS.9,82,000/-. ON ENQUIRIES THE AO FOUND THAT STAMP VALUATION AUTHORITY HAD VALUED THE TWO PLOTS OF LAND AT RS.25 ,85,810/- AND THE ASSESSEE HAD PAID ADDITIONAL STAMP DUTY OF RS.1,34, 720/-. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN WHY THE SU M OF RS.16,03,810/- (RS.25,85,810/- MINUS RS.9,82,000/-) SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT IN TERMS OF SECTION 69 OF TH E IT ACT. SIMILARLY, ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 2 EVEN THOUGH THE ASSESSEE HAD CLAIMED TO HAVE PURCHA SED THE PLOT AT SHIVANGI BUNGALOWS FOR RS.7,20,000/-, YET THE STAMP VALUATION AUTHORITY HAD VALUED THE SAID PLOT AT RS.15,75,000/ - AND HAD CHARGED THE ASSESSEE WITH ADDITIONAL STAMP DUTY OF RS.95,40 0/-. THE AO AGAIN ASKED THE ASSESSEE TO EXPLAIN WHY THE SUM OF RS.8,5 5,000/- (RS.15,75,000/- MINUS RS.7,20,000/-) SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE IT ACT. IT WAS EXPLAINED THAT ADDITIONAL DUTY WAS PAID IN RESPECT OF BOTH THE PRO PERTIES WHICH HAD BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IT WAS CONTENDED THAT THE ASSESSEE HAD ACTUALLY PAID THE CONSIDERATION THAT W AS MENTIONED IN THE SALE DEEDS. ADDITIONAL STAMP DUTY HAS BEEN LEVIED A S PER THE JANTRI PRICE WHICH WAS NOTIONAL VALUATION FOR THE PURPOSE OF DET ERMINING THE STAMP DUTY PAYABLE. IT WAS NOT A CONCLUSIVE EVIDENCE TO S HOW THAT THE ASSESSEE HAD UNDERSTATED THE PURCHASE CONSIDERATION IN BOTH THE PROPERTIES. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND TOOK INTO CONSIDERATION JANTRI RATE BASED UPON SEVERAL FACTORS LIKE ROAD FA CILITIES, AMENITY FACILITIES ETC. IN A PARTICULAR AREA. THE AO ACCORD INGLY NOTED THAT SALE CONSIDERATIONS MENTIONED IN THE SALE DEEDS ARE UNDE RSTATED AND ADDITIONS WERE ACCORDINGLY MADE. SAME SUBMISSIONS W ERE REITERATED BEFORE THE LEARNED CIT(A) AND IT WAS SUBMITTED THAT THERE IS NO IOTA OF EVIDENCE BROUGHT ON RECORD TO SHOW THAT THE ASSESSE E HAD INVESTED MORE THAN WHAT HAS BEEN SHOWN IN THE SALE DEEDS. IT WAS ALSO EXPLAINED THAT PROVISIONS OF SECTION 50C OF THE IT ACT CANNOT BE E XTENDED IN THE CASE OF THE PURCHASER. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND NOTED THAT EVEN IF THE AO HAD NOT INVOKED THE PROVISIONS OF SECTION 50C OF THE IT ACT IN THIS CASE, BUT THE PRINCIPLE HAS BEEN APPLIED. ADDITIONS WERE ACCORDIN GLY CONFIRMED AND APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSED. 4. THE LEARNED COUNSEL FOR THEE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T ADMITTEDLY THE ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 3 ASSESSEE IS PURCHASER, THEREFORE, PROVISIONS OF SEC TION 50C OF THE IT ACT WILL NOT APPLY IN THE CASE OF THE PURCHASER. HE HAS RELIED UPON THE ORDERS OF ITAT AHMEDABAD BENCH IN THE CASES OF JALARAM & C O. VS ITO (ITA NO.3964/AHD/2008 DATED 24-07-2009 AND RICHA NARESH JAIN VS ITO (ITA NO.3997/AHD/2008 DATED 13-08-2009) IN WHICH IT WAS HELD THAT SECTION 50C OF THE IT ACT CREATES A LEGAL FRICTION FOR TAXING CAPITAL GAINS IN THE HANDS OF THE SELLER AND CANNOT BE EXTENDED FOR TAXING THE DIFFERENCE BETWEEN APPARENT CONSIDERATION AND VALUATION DONE B Y STAMP VALUATION AUTHORITY AS UNDISCLOSED INVESTMENT U/S 69 OF THE I T ACT. THE SAME PROVISION IS NOT APPLICABLE IN THE HANDS OF THE PUR CHASER. HE HAS ALSO RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN TH E CASE OF SHRI SUGANCHAND C. SHAH VS ACIT IT(SS)A NO.199/AHD/2003 DATED 17-03- 2005 (PB -8). ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EVEN IF SE CTION 50C OF THE IT ACT IS NOT APPLICABLE BUT THE AUTHORITIES BELOW WAS JUS TIFIED IN REJECTING THE CLAIM OF THE ASSESSEE BECAUSE THERE WAS A HUGE DIFF ERENCE IN THE SALE CONSIDERATION NOTED BY THE AO AND IN THE SALE DEEDS DECLARED BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE PROPERTIES UNDER CONSIDERATION HAVE BEEN PURCHASED BY THE ASSESSEE T HROUGH REGISTERED SALE DEEDS. THE ASSESSEE CLAIMED THAT SHE HAS PAID ACTUAL CONSIDERATION WHICH IS RECORDED IN THE SALE DEEDS. THE ADDITIONAL STAMP DUTY WAS IMPOSED UPON THE ASSESSEE AS PER THE RATE PRESCRIBE D BY JANTRI. THE STAMP VALUATION AUTHORITY ADOPTED SUCH VALUATION AS PER THE JANTRI WHICH IS NOTIONAL VALUE FOR THE PURPOSE OF DETERMIN ING THE STAMP DUTY PAYABLE. THE AO HAS NOT BROUGHT ANY EVIDENCE ON REC ORD THAT THE ASSESSEE IN FACT HAD PAID MORE CONSIDERATION AS AGA INST THE CONSIDERATION RECORDED IN SALE DEEDS. NO MATERIAL I S BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE HAD INVESTED MORE THAN WHAT HAD BEEN SHOWN IN ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 4 THE SALE DEEDS. IT WAS, THEREFORE, AN INFERENCE OF THE AO THAT ASSESSEE PAID MORE CONSIDERATION AS AGAINST THE CONSIDERATIO N SHOWN IN THE SALE DEEDS. THE LEARNED CIT(A) NOTED THAT EVEN IF SECTIO N 50C OF THE IT ACT IS NOT INVOKED BY THE AO BUT THE AO HAS APPLIED ITS PR INCIPLE. WE DO NOT AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) BECAU SE ITAT AHMEDABAD BENCH IN THE CASES OF JALARAM & CO. AND RICHA NARES H JAIN (SUPRA) HAVE HELD THAT PROVISIONS OF SECTION 50C OF THE IT ACT A RE NOT APPLICABLE IN THE HANDS OF THE PURCHASER. IT WOULD, THEREFORE, SHOW T HAT THERE IS NO FOUNDATION FOR MAKING THE ABOVE ADDITIONS AGAINST T HE ASSESSEE. IN THE ABSENCE OF ANY FACTUAL FOUNDATION IN FAVOUR OF THE REVENUE, WE DO NOT FIND IT TO BE A FIT CASE FOR SUSTAINING THE ADDITIO NS IN THE HANDS OF THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. AS A RESULT, GROUND NOS. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 6. ON GROUND NO.3 OF THE APPEAL, THE ASSESSEE CHALL ENGED THE ADDITION OF RS.1,00,000/- ON ACCOUNT OF UNEXPLAINED GIFTS. T HE ASSESSEE RECEIVED TWO GIFTS OF RS.,50,000/- EACH FROM SHRI PAWAN JUTH AWAT AND MS. MANGLA JAIN. IN SUPPORT OF SUCH CLAIM, THE ASSESSEE FURNISHED COPIES OF GIFT DECLARATION AND RETURNS OF INCOME FILED BY THE DONORS. ACCORDING TO THE AO, THE ASSESSEE WAS UNABLE TO FURNISH OTHER EV IDENCE SUCH AS CAPITAL ACCOUNT, BANK STATEMENT AND ALSO BALANCE SH EET OF THE DONORS. THE ASSESSEE HAS ALSO FAILED TO PRODUCE BOTH THE DO NORS BEFORE THE AO FOR VERIFICATION BY THE AO. THE AO, THEREFORE, ISSUED S HOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE GIFTS BE NOT TREATED AS UNEX PLAINED. THE ASSESSEE FAILED TO PRODUCE THE DONORS BEFORE THE AO. THE ASS ESSEE HAS NOT BEEN ABLE TO SUBMIT ANY EVIDENCE OF CREDITWORTHINESS OF THE DONORS AND GENUINENESS OF THE GIFTS IN THE MATTER. THE AO ACCO RDINGLY REJECTED THE EXPLANATION OF THE ASSESSEE AND TREATED THE GIFTS A S UNEXPLAINED AND MADE THE ADDITION ACCORDINGLY. IT WAS EXPLAINED BEF ORE THE LEARNED CIT(A) THAT THE DONORS MUST HAVE HAD PAST SAVINGS APART FR OM CURRENT INCOME. ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 5 IT WAS EXPLAINED THAT SINCE THE AMOUNT OF THE GIFTS WERE SMALL AND BOTH THE DONORS ARE ASSESSED TO TAX, THEREFORE, ADDITION MAY BE DELETED. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE . 7. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO P B 30 TO 35 WHICH ARE COPIES OF GIFT DEEDS AND ACKNOWLEDGEMENTS OF FILING OF RETURNS BY THE DONORS AND COMPUTATION OF THEIR INCOME FOR ASSESSME NT YEAR 2003-04. HE HAS SUBMITTED THAT THERE WAS NO NEED TO PRODUCE THE DONORS BEFORE THE AO FOR EXAMINATION BECAUSE THE ASSESSEE PROVED THE GENUINENESS OF THE GIFTS THROUGH THE ABOVE DOCUMENTS AND THAT GIFT S ARE MADE THROUGH BANKING CHANNEL. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE FAILED TO PROVE THE IDENTITY OF THE DONORS, THEIR CREDITWORTH INESS AND GENUINENESS OF THE GIFTS IN THE MATTER. THE ASSESSEE ALSO FAILE D TO PRODUCE BOTH THE DONORS BEFORE THE AO FOR EXAMINATION. THEREFORE, TH E AUTHORITIES BELOW WERE JUSTIFIED IN TREATING BOTH THE GIFTS AS UNEXPL AINED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE RECEIVED GIFTS FROM THE ABOVE TWO DONORS IN A SUM OF RS.50,000/- E ACH. THE AO WANTED TO VERIFY THE GENUINENESS OF THE GIFTS IN TH E MATTER AND ASKED THE ASSESSEE TO PRODUCE BOTH THE DONORS BEFORE AO FOR E XAMINATION. THE ASSESSEE FAILED TO PRODUCE BOTH THE DONORS BEFORE T HE AO FOR EXAMINATION. IT, THEREFORE, STANDS PROVED ON RECORD THAT THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENT OF THE AO TO PRODUC E BOTH THE DONORS FOR EXAMINATION BEFORE HIM AND TO EXPLAIN THE GENUI NENESS OF THE GIFTS IN THE MATTER. THE ASSESSEE NEVER WANTED THAT THE AO S HOULD VERIFY THE IDENTITY OF THE DONORS, THEIR CAPACITY TO MAKE THE GIFTS AND TO EXAMINE THE GENUINENESS OF THE GIFTS IN THE MATTER. THE ASSESSE E ADMITTEDLY DID NOT ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 6 FILE ANY COPY OF THE BANK ACCOUNTS OF THE DONORS, T HEIR BALANCE SHEETS ETC. BEFORE THE AO. THE COPIES OF THE ACKNOWLEDGMEN TS OF FILING OF THE RETURNS BY THE DONORS ARE FILED IN THE PAPER BOOK A T PB 30 TO 35 FOR ASSESSMENT YEAR 2003-04 WHICH SHOW THAT THE DONORS HAVE FILED RETURNS OF THEIR INCOME AT THE INCOME OF RS.76,240/- WHICH INCLUDES TUITION INCOME OF RS.40,500/- AND RS.90,016/- WHICH INCLUDE S SALARY INCOME OF RS.75,000/-. NO ACKNOWLEDGEMENT OF FILING OF ANY R ETURN FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. 2005-06 HAS BEEN FILED. IT WOULD, THEREFORE, SHOW THAT THE DONORS HAVE NO CAPACITY TO MAKE THE GIFTS TO THE ASSESSEE. NO SOURCE OF INCOME OF THE DONORS IS ALSO PROVED. THE ASSESSEE DID NOT FILE COPIES OF BALANCE SHEETS, BANK ACCOUNT S OF BOTH THE DONORS. THEREFORE, THERE IS NO EVIDENCE AVAILABLE ON RECORD REGARDING PAST SAVINGS OF THE DONORS. THE GIFTS WERE TAKEN FROM COMPLETELY UNKNOWN ENTITIES AND NO RELATIONSHIP HAS BEEN ESTABLISHED BETWEEN TH E ASSESSEE AND THE DONORS. NO NATURAL LOVE AND AFFECTION IS PROVED FOR GIVING GIFTS TO THE ASSESSEE. NO OCCASION IS ALSO PROVED FOR GIVING GIF TS TO THE ASSESSEE. SINCE BOTH THE DONORS FAILED TO APPEAR BEFORE THE AO, TO PROVE GENUINENESS OF THE GIFTS IN THE MATTER, IT WOULD PROVE THAT THE GI FTS IN THE MATER ARE NOT GENUINE GIFTS AND ARE MANAGED AFFAIRS OF THE ASSESS EE. IT MAY BE FURTHER NOTED THAT THE ASSESSEE DECLARED TOTAL INCOME OF RS .83,92,830/- FOR THE ASSESSMENT YEAR UNDER APPEAL IN THE RETURN FILED BU T THE SOURCE OF THE DONORS AS PER THEIR RETURN OF INCOME IS HARDLY ABOU T RS.40,500/- FROM TUITION AND RS.75,000/- FROM SALARY. THE HUGE DIFFE RENCE BETWEEN THE EARNING CAPACITY OF THE DONORS AND THE ASSESSEE WOU LD PROVE THAT THE POORS HAVE MADE GIFTS WITHOUT SOURCE TO THE RICH PE RSON. HONBLE SUPREME COURT IN THE CASES OF DURGA PRASAHD MORE 82 ITR 540(SC) AND SUMATI DAYAL 214 ITR 810(SC) HELD THAT COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM APPLY THE TEST OF HU MAN PROBABILITIES AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES. I F THE RETURN OF INCOME OF THE ASSESSEE AND MEAGER INCOME BY THE DONORS ARE TAKEN INTO CONSIDERATION BY APPLYING THE TEST OF HUMAN PROBABI LITIES IT WOULD LEAD ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 7 IRRESISTIBLE CONCLUSION THAT THE GIFTS ARE NOT GENU INE IN THE MATER. IF THE DONORS WOULD HAVE ANY LOVE AND AFFECTION FOR THE AS SESSEE AND HAVE GIVEN THE GENUINE GIFTS TO THE ASSESSEE, THERE WAS NO REA SON FOR THEM NOT TO APPEAR BEFORE THE AO FOR EXAMINATION IN ORDER TO VE RIFY THEIR CAPACITY TO MAKE THE GIFTS AND TO PROVE GENUINENESS OF THE GIFT S IN THE MATTER. HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F YASH PAL GOEL VS CIT 310 ITR 75 ( P & H) 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. N O REASON WHATSOEVER HAD BEEN ASSIGNED FOR GIFTING SUC H A HUGE AMOUNT BY M TO THE ASSESSEE. M NEVER VISITED THE HO ME OF THE ASSESSEE AND HENCE THERE WAS NO LOVE AND AFFECTION. IT WAS NOTHING BUT A SUBTERFUGE TO AVOID INCOME-AX. THE TRANSACTIO NS WERE NOT GENUINE ONES. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS AN IL KUMAR 292 ITR 552 (DEL) HELD IN THE CASE OF GIFTS MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT A MOUNT THROUGH BANKING CHANNELS IS NOT SUFFICIENT TO PROVE THE GEN UINENESS OF THE GIFT. SINCE THE CLAIM OF GIFT IS MADE BY THE ASSESS EE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PE RSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. IN ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1995-96 THE ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RECEIVED TWO GIFTS O F 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 DONOR S AND HELD THAT THE AMOUNT OF RS.20 LAKHS WHICH HAD BEEN DECLARED B Y THE ASSESSEE AS GIFT, WAS IN FACT HIS INCOME AND ADDED TO HIS TOTAL INCOME UNDER SECTION 68. THE ADDITION WAS DELETED B Y THE COMMISSIONER (APPEALS) AND THIS WAS UPHELD BY THE T RIBUNAL. ON APPEAL TO THE HIGH COURT: HELD THAT THERE WAS NOTHI NG ON RECORD TO SHOW AS TO WHAT WAS THE FINANCIAL CAPACITY OF THE D ONORS, WHAT ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 8 WAS THE CREDIT-WORTHINESS OF THE DONORS, WHAT KIND OF RELATIONSHIP THE DONORS HAD WITH THE ASSESSEE, WHAT WERE THE SOU RCES OF FUNDS GIFTED TO THE ASSESSEE AND WHETHER THEY HAD THE CAP ACITY OF GIVING LARGE AMOUNTS OF GIFT TO THE ASSESSEE. FURTHER, THE ASSESSEE WAS ASKED TO APPEAR IN PERSON BEFORE THE ASSESSING OFFI CER, BUT NEVER APPEARED. THE ADDITION OF RS.20 LAKHS WAS JUSTIFIED . THE HONBLE SUPREME COURT IN THE CASE OF CIT VS P. MOHANKALA 29 1 ITR 278 (SC) HELD THE ASSESSEE RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUE D BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNT OF THE ASSESSEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CH EQUES SENT FROM ABOARD WERE DRAWN ON THE CITIBANK, N. A. SINGAPORE. THE EVIDENCE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE CO MPENSATION FROM THE ASSESSEES. ON THIS MATERIAL THE ASSESSING OFFIC ER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE ACCOUNT BO OKS OF THE ASSESSEES AS THEIR INCOME APPLYING SECTION 68 OF TH E INCOME-TAX ACT, 1961. THE ASSESSEES DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE N OT OF THE NATURE OF INCOME. THE COMMISSIONER (APPEALS) CONFIR MED THE ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFEREN CE OF OPINION BETWEEN THE TWO MEMBERS OF THE APPELLATE TRIBUNAL A ND THE MATER WAS REFERRED TO THE VICE PRESIDENT WHO CONCURRED WI TH THE FINDINGS AND CONCLUSION OF THE ASSESSING OFFICER AND THE COM MISSIONER (APPEALS). ON APPEAL THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FINDINGS AND CAME TO THE CO NCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL WERE IN THE RE ALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TO TH E SUPREME COURT: HELD, REVERSING THE DECISION OF HIGH COURT, THAT FINDINGS OF THE ASSESSING OFFICER, THE COMMISSIONER (APPEALS) A ND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 9 AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CH EQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECT ED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT . 9. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR T HAT THE ASSESSEE FAILED TO PROVE ANY RELATION WITH THE DONORS AND TH EIR CREDITWORTHINESS TO MAKE THE GIFTS. NO SUFFICIENT EVIDENCE OR MATERIAL IS FILED ON RECORD TO PROVE THE GENUINENESS OF THE GIFTS IN THE MATTER. M ERE IDENTIFICATION OF THE DONORS AND SHOWING GIFTS THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFTS IN THE MATTER. T HE ABOVE FACTS, THEREFORE, SHOW THAT THE ASSESSEE FAILED TO PRODUCE BOTH THE DONORS BEFORE THE AO FOR EXAMINATION. THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE DONORS AS WELL AS GENUINENE SS OF THE GIFTS IN THE MATTER. THE DECISIONS REFERRED TO ABOVE CLEARLY APP LY TO THE CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE DO NOT FIN D ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR F INDINGS AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 10. ON GROUND NO.4 OF THE APPEAL, THE ASSESSEE CHAL LENGED THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. THE ASSESS EE HAS SHOWN HOUSEHOLD WITHDRAWALS FOR HERSELF AND HER SIX FAMIL Y MEMBERS IN A SUM OF RS.2,48,663/-. THE AO CONSIDERING THE STANDARD O F LIVING OF THE ASSESSEE AND HER FAMILY MEMBERS NOTED THAT WITHDRAW AL IS INSUFFICIENT AND ACCORDINGLY MADE LUMP SUM ADDITION OF RS.50,000 /-. THE LEARNED CIT(A) CONFIRMED THE ADDITION. 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE ADDITION IS CLEARLY UNJUSTIFIED IN THE MATTER. THE AO HAS NOT BROUGHT ANY MATERIAL AGAINST THE ASSESSEE THAT THE HOUSEHOL D WITHDRAWALS SHOWN BY THE ASSESSEE ARE NOT SUFFICIENT TO MEET OUT HER FAMILYS REQUIREMENTS. THE AO MERELY OBSERVING THE STANDARD OF LIVING MAIN TAINED BY THE ITA NO.3069/AHD/2008 REKHABENI RAJENDRA SHAH 10 ASSESSEE MADE AD HOC ADDITION OF RS.50,000/-. SINCE THE AO HAS NOT BROUGHT ANY MATERIAL AGAINST THE ASSESSEE WHILE MAK ING THE ADDITION, WE ARE OF THE VIEW THAT THE ADDITION IS UNJUSTIFIED. W E ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. AS A RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-04-2010. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 09- 04-2010 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, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD