Manganram R.Choudhary, Surat V. The Income tax Officerm, Ward-2(3), Surat

ITA 369/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8986 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Peak credit; Onus to prove
• Section: 69C; 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE S/SHRI N S SAINI AND MAHAVIR SINGH) ITA NO.369/AHD/2007 (ASSESSMENT YEAR:- 2003-04) M/S MANGANRAM R CHOUDHARY, 111, BALAJI TEXTILE MARKET, RING ROAD, SURAT V/S THE INCOME-TAX OFFICER, WARD-2(3), SURAT [APPELLANT] [RESPONDENT] APPELLANT BY :- NONE RESPONDENT BY:- SHRI SANJAY RAI, SR. DR O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS) DATED 28-11-20 06 FOR ASSESSMENT YEAR 2003-04. 2 THE ASSESSEE HAS FILED AN APPLICATION FOR ADJOURNMENT OF THE HEARING SEEKING TIME OF ONE AND A HALF MONTH FOR THE REASON THAT IT WILL TAKE SOME TIME TO COMPILE THE PAPER BOOK AND LIST OF CASE LAWS TO BE RELIED U PON. WE FIND THAT THE ASSESSEE FILED THE APPEAL ON 22-1-200 7 AND SINCE THEN MORE THAN THREE YEARS HAS ELAPSED AND STILL TH E ASSESSEE IS NOT READY WITH THE PAPERS REQUIRED FOR PRESENTAT ION OF HIS APPEAL. THIS CASUAL APPROACH OF THE ASSESSEE CANNOT BE 2 VIEWED LENIENTLY. AS THE REASON FOR SEEKING ADJOURN MENT IS NOT A PLAUSIBLE ONE, WE REFUGE TO GRANT THE ADJOURN MENT AND REJECT THE APPLICATION OF THE ASSESSEE. THE APPEAL IS DECIDED TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE LE ARNED DEPARTMENTAL REPRESENTATIVE AND THE MATERIALS AVAIL ABLE ON RECORD. 3 GROUND NO.1 IN THE ASSESSEES APPEAL READS AS UNDER:- 1 THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.5,20,142/- MADE BY THE AO ON ACCOUNT OF DIFFE RENCE IN VALUE OF STOCK FOUND DURING THE SURVEY. 4 THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY, THE LEARNED ASSESSING OFFICER HAD QUANTIFIE D THE VALUE OF THE EXCESS STOCK OF GREY AT RS.9.71 PER MT R. AT RS.7,44,951/-. SIMILARLY, THE EXCESS STOCK OF FINIS HED GOODS WAS VALUED AT RS.16.5 P.ER MTR. AT RS.30,84,213/-. HOWEVER, ON VERIFICATION OF THE PURCHASES MADE BY THE ASSESS EE DURING THE PERIOD APRIL TO NOVEMBER, 2002, IT WAS SEEN THA T THE ASSESSEE HAD PURCHASED THE GREY AT AN AVERAGE PURCH ASE PRICE OF RS.11.69 PER MTR. AS FOR THE FINISHED GOODS, AFT ER INCLUDING THE PROCESSING CHARGES AND EXCISE DUTY, THE AVERAGE COST WORKED OUT TO RS.18.47 PER MTR. THE LEARNED ASSESSI NG OFFICER THEREFORE TOOK THE VIEW THAT, IN COURSE OF SURVEY, THE ASSESSEE HAD UNDERVALUED THE GREY BY RS.1.98 PER MT R. AND THE FINISHED GOODS BY RS.1.97 PER MTR. HE THUS WORK ED OUT THE UNDERVALUATION OF GREY TO RS.1.98 X 76,720 MTRS = 3 RS.1,51,906/- AND THAT OF FINISHED GOODS AT RS.1.97 X 1,86,922 MTRS. = RS.3,68,236/-. THE TOTAL UNDERVALUATION THE REFORE, WAS WORKED OUT BY HIM TO RS.1,51,906 + RS.3,68,236 = RS.5,20,142/-. THE ASSESSEE CONTENDED THAT THE STOC K FOUND DURING THE COURSE OF SURVEY WAS VALUED AT PURCHASE PRICE. THE SURVEY PARTY CHECKED THE RATE AND WAS SATISFIED WIT H THE VALUATION FROM THE PURCHASE BILLS MADE AVAILABLE TO THE SURVEY PARTY. THE LEARNED ASSESSING OFFICER REJECTE D THE SUBMISSION OF THE ASSESSEE AND OBSERVING THAT STOCK WAS VALUED AT THE TIME OF SURVEY AS PER RATE PROVIDED B Y THE ASSESSEE AND THE SURVEY PARTY HAD ONLY QUANTIFIED T HE STOCK AND HAD CHECKED THE QUALITY. THE ASSESSEE HAD PROVI DED ONLY TOTAL VALUE OF UNACCOUNTED STOCK AND HAD NOT EVEN B IFURCATED THE STOCK OF GREY AND FINISHED GOODS, LEAVE ALONE P ROVIDING THE QUALITY-WISE DIFFERENCE IN QUANTITY AND VALUE. THE LEARNED ASSESSING OFFICER REJECTED THE ASSESSEES SUBMISSIO NS THAT HE DEALT WITH THE GREY CLOTH WHOSE VALUE WAS ONLY RS.9 .10 PER MTR. AND THAT THE BETTER QUALITY OF GREY CLOTH AS W ELL AS READY GOODS WERE PURCHASED / PROCESSED ONLY ON SPECIFIC D EMAND OF THE CUSTOMERS. THE ASSESSEE HIMSELF PROVIDED RATE O F GREY AT RS.11.69 PER MTR.IN THE COURSE OF SURVEY WHEREAS IN THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD CLAIMED THA T IT PURCHASED GREY ONLY OF THE VALUE OF RS.9.10 PER MTR . THIS SHOWS THAT PURCHASE PRICE OF THE ASSESSEE WAS MUCH HIGHER THAN CLAIM. FROM THIS, THE LEARNED ASSESSING OFFICE R CONCLUDED THAT THE ASSESSEE HAD NOT DISCLOSED CORRE CT PURCHASE PRICE AND HENCE THE VALUE OF STOCK FOUND I N THE 4 COURSE OF THE SURVEY AND MADE ADDITION OF RS.5,20,1 40/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNDERVALUATION OF UNACCOUNTED STOCK. 5 IN APPEAL, THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) CONFIRMED THE ADDITION OBSERVING THAT THE STOCK IS TO BE VALUED ON THE BASIS OF THE RATE PROVIDED BY T HE ASSESSEE FOR DIFFERENT TYPE OR QUALITY OF STOCK FOUND. IN TH E CASE OF THE ASSESSEE ONLY TWO TYPES OF STOCK WERE FOUND; ONE WA S GREY CLOTH AND THE OTHER WAS FINISHED SAREES. WITHIN THE TWO BROAD CATEGORIES THERE WOULD BE DIFFERENCE IN QUALITY AND EACH QUALITY WOULD HAVE TO BE PRICED AND VALUED SEPARATE LY WHICH APPEARS TO HAVE NOT BEEN DONE. THE ASSESSEE DID NOT SEGREGATE DIFFERENT QUALITIES OF EITHER THE GREY CL OTH OR FINISHED SAREES WHICH RESULTED IN APPLYING A UNIFOR M RATE TO ALL THE STOCK OF GREY CLOTH AND ANOTHER UNIFORM RAT E TO FINISHED SAREES. DURING THE ASSESSMENT PROCEEDINGS THE LEARNED ASSESSING OFFICER FOUND THAT AVERAGE PURCHA SE PRICE PAID BY THE ASSESSEE DURING THE PERIOD PRECEDING TH E SURVEY I.E. 1-4-2002 TO 18-11-2002 WAS MUCH HIGHER THAN TH E AVERAGE RATE ON THE BASIS OF WHICH GREY AND FINISHED SAREES WAS VALUED DURING THE COURSE OF SURVEY. THUS, THE ASSES SEE HAD PRODUCED BEFORE THE SURVEY PARTIES ONLY THOSE BILLS WHICH PERTAIN TO THE LOWER QUALITY OF GREY AND SAREES WHI CH LED TO A LOWER VALUATION OF THE STOCK AS COMPARED TO WHAT WA S DETECTED BY THE LEARNED ASSESSING OFFICER FROM THE ENTRIES IN THE BOOKS OF ACCOUNT. FURTHER, IT HAS BEEN MENTIONE D BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE T HAT WHAT 5 WAS PRODUCED BOTH BEFORE THE SURVEY PARTY AS WELL A S LEARNED ASSESSING OFFICER WERE ONLY SAMPLE BILLS WHICH ME ANT THAT ALL BILLS ARE NOT VERIFIED BY THE SURVEY PARTY WHIC H GAVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE ONLY THE BIL LS OF LOWER VALUE LEADING TO HIS HAVING THE STOCK UNDERVALUED. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALSO O BSERVED THAT THE ALTERNATE ARGUMENT OF THE ASSESSEE THAT TH E ADDITION MADE BY THE LEARNED ASSESSING OFFICER HAS LED TO DO UBLE ADDITION WAS NOT ACCEPTABLE AS THERE WAS NO EVIDENC E TO SHOW THAT THE STOCK FOUND AT THE TIME OF SURVEY WAS SOLD ON AS IS WHERE IS BASIS NOR THERE IS ANY EVIDENCE TO S HOW THAT THE SAME STOCK WAS AVAILABLE IN THE CLOSING STOCK. SIMP LY BECAUSE THE STOCK WAS SOLD AND THE SALES ARE CREDITED OR BE CAUSE A PART OF THE STOCK IS LEFT IN THE CLOSING STOCK, IT CANNOT BE SAID THAT NO ADDITION COULD BE MADE ON ACCOUNT OF UNDISC LOSED INVESTMENT IN UNACCOUNTED STOCK FOUND IN THE COURSE OF THE SURVEY. THIS ARGUMENT OF THE ASSESSEE IF ACCEPTED W OULD MAKE THE PROVISIONS OF SECTION 69C OF THE IT ACT INOPERA TIVE. HE THEREFORE CONFIRMED THE ADDITION MADE BY THE LEARNE D ASSESSING OFFICER. 6 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE OF GREY CLOTH AND GETTING THE SAME PROCESS ED INTO SAREES ON JOB WORK BASIS FROM VARIOUS DYEING AND PR INTING MILLS AND SALE OF SAREES DURING THE YEAR. DURING TH E YEAR UNDER CONSIDERATION, A SURVEY U/S 133A WAS CONDUCTE D ON 18- 6 11-2002. DURING THE COURSE OF SURVEY, INVENTORY OF STOCK FOUND ON PHYSICAL VERIFICATION WAS PREPARED. IT IS NOT IN DISPUTE THAT AS PER THE SAID INVENTORY, IT WAS FOUN D THAT THE ASSESSEE PURCHASED 224146 MTRS OF GREY CLOTH AND 35 7140 MTRS. OF FINISHED GOODS. AS PER THE BOOKS OF ACCOUN T, THE ASSESSEE POSSESSED ON THAT DAY 147426 MTRS GREY CLO TH AND 186922 MTRS FINISHED GOODS. THE ABOVE EXCESS GREY C LOTH WAS VALUED AT RS.1,51,906/- AND THE ABOVE EXCESS FINISH ED GOODS WAS VALUED AT RS.3,68,236/- DURING THE COURSE OF SU RVEY. THE ASSESSEE DISCLOSED INCOME OF RS.38,29,164/- ON ACCO UNT OF THE ABOVE EXCESS STOCK FOUND DURING THE COURSE OF T HE SURVEY IN THE RETURN OF INCOME FILED BY IT ON 7-9-2003. T HE ABOVE FACTS ARE NOT IN DISPUTE. THE LEARNED ASSESSING OFF ICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED T HAT THE AVERAGE COST PRICE OF GREY CLOTH PURCHASED BY THE A SSESSEE FROM 1-4-2002 TILL THE DATE OF SURVEY COMES TO RS.1 1.69 PER MTR. WHEREAS THE AVERAGE PRICE OF GREY CLOTH FOUND DURING THE COURSE OF SURVEY WAS TAKEN AT RS.9.71 PER MTR. SIMI LARLY IN RESPECT OF FINISHED GOODS THE AVERAGE COST COMES TO RS.18.47 PER MTR. WHEREAS DURING THE COURSE OF SURVEY THE EX CESS STOCK WAS VALUED AT RS.16.50 PER MTR. THUS ACCORDING TO T HE LEARNED ASSESSING OFFICER THE VALUE OF STOCK FOUND DURING THE COURSE OF SURVEY SHOULD HAVE BEEN MORE BY RS.5,20,1 42/-. THE EXPLANATION OF THE ASSESSEE THAT DIFFERENT QUALITY OF GREY CLOTH WERE PURCHASED BY IT AND THE STOCK WHICH WAS FOUND DURING THE COURSE OF THE SURVEY WAS OF THE LOWER VA LUE WAS NOT ACCEPTED BY THE LEARNED ASSESSING OFFICER ON TH E GROUND 7 THAT AVERAGE PRICE COMES TO HIGHER AMOUNT THAN THE RATE ADOPTED FOR VALUING EXCESS STOCK. THE CONTENTION OF THE ASSESSEE THAT THE GREY CLOTH PURCHASED AT HIGHER RA TE WERE AGAINST SPECIFIC ORDER AND THE SAME WERE NOT POSSES SED BY IT AT THE TIME OF THE SURVEY WAS ALSO REJECTED BY THE LEARNED ASSESSING OFFICER AND HE MADE THE ADDITION OF RS.5, 20,142/-. IN APPEAL, BEFORE THE LEARNED COMMISSIONER OF INCOM E-TAX (APPEALS), THE ASSESSEE RAISED SIMILAR PLEA WITH AN ADDITIONAL ALTERNATIVE CONTENTION THAT EVEN ASSUMING THERE WAS DIFFERENCE IN VALUATION ON THE DATE OF SURVEY BUT A S THERE IS NO DISPUTE ABOUT THE VALUE OF STOCK AS ON 31-3-2004 THE EFFECT OF THE DIFFERENCE IN VALUATION HAS BEEN OFFS ET BY THE RESULT OF POST-SURVEY PERIOD AND THE SAME HAS NO RE VENUE EFFECT. THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) REJECTED THE ABOVE CONTENTION OF THE ASSESSEE AND C ONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER FOR THE REASONS MENTIONED EARLIER IN THIS ORDER. WE FIND THAT IN TH E INSTANT CASE THE EXCESS STOCK FOUND DURING THE COURSE OF TH E SURVEY WAS ADMITTED BY THE ASSESSEE AND THE ASSESSEE HIMSE LF DISCLOSED INCOME OF RS.38,29,164/- ON ACCOUNT INVES TMENT IN THOSE EXCESS STOCK. THE ONLY DISPUTE IS IN RESPECT OF VALUATION OF SUCH EXCESS STOCK. THOUGH DURING THE COURSE OF T HE SURVEY THE SAME WAS VALUED AT RS.38,29,164/- BUT ACCORDING TO THE LEARNED ASSESSING OFFICER THE SAME SHOULD HAVE BEEN VALUED AT RS.5,20,142/- MORE THAN THE SAID AMOUNT. THE LEA RNED ASSESSING OFFICER CAME TO THE ABOVE CONCLUSION ON T HE BASIS OF APPLYING AVERAGE RATE OF COST OF THE ASSESSEE UP TO THE DATE 8 OF THE SURVEY TO THE EXCESS INVENTORY FOUND DURING THE COURSE OF THE SURVEY INSTEAD OF APPLYING THE COST OF ACTUA L GOODS FOUND DURING THE COURSE OF THE SURVEY KEEPING IN VI EW THE QUALITY OF ITEMS FOUND DURING THE COURSE OF THE SUR VEY. ACCORDING TO US THE COURSE OF ACTION WAS NOT JUSTIF IED ON THE PART OF THE LEARNED ASSESSING OFFICER KEEPING IN VI EW THE FACTS OF THE CASE AS RECORDED IN THE ORDER OF ASSES SMENT THE SURVEY PARTY HAS TAKEN THE STOCK IN RESPECT OF QUAN TITY AND QUALITY ONLY. WHEN THE QUALITY WISE INVENTORY WAS AVAILABLE WITH THE LEARNED ASSESSING OFFICER IT WAS NOT OPEN TO THE LEARNED ASSESSING OFFICER TO VALUE EXCESS STOCK ON THE BASIS OF AVERAGE COST IN PLACE OF ACTUAL COST. FURTHER, W E ALSO FIND THAT THE LEARNED ASSESSING OFFICER WAS NOT ABLE TO APPRECIATE THE SUBMISSION OF THE ASSESSEE TO THE EFFECT THAT H E NORMALLY DEALS IN GREY CLOTH OF RANGE OF RS.9 TO 10 PER MTR AND HAVING GREY CLOTH PURCHASED ONLY AGAINST SPECIFIC DEMAND. THE ABOVE CONTENTION OF THE ASSESSEE WAS DISMISSED BY THE LEA RNED ASSESSING OFFICER ON THE GROUND THAT THE SAME WAS I NCORRECT AS THE AVERAGE COST PRICE COMES TO RS.11.69 PER MTR . AND IF THE ASSESSEE WOULD NOT HAVE PURCHASED GREY CLOTH AT HIGHER PRICE HOW THE AVERAGE COST WOULD HAVE COME TO RS.11 .69 PER MTR. WE FIND THAT IT WAS NOT THE CONTENTION OF THE ASSESSEE THAT IT DID NOT PURCHASE GREY CLOTH AT THE RATE HIG HER THAN RS.10 PER MTR. BUT THE EXPLANATION OF THE ASSESSEE WAS THAT GREY CLOTH PURCHASED AT HIGHER RATES WERE ONLY IN R ESPECT OF SPECIFIC DEMANDS AND NOT FOR THE NORMAL STOCK AND F OR NORMAL BUSINESS IT USED TO PURCHASE GREY CLOTH OF RS.9 TO 10 PER MTR. 9 THE CONTENTION OF THE ASSESSEE THAT IT PURCHASED NO RMALLY CLOTH AT RS.9 TO 10 PER MTRS. WAS NOT CONTROVERTED BY THE LEARNED ASSESSING OFFICER BY BRINGING COGENT MATERI AL ON RECORD. IN OUR CONSIDERED VIEW, THE LEARNED ASSESSI NG OFFICER WAS NOT JUSTIFIED IN VALUING THE EXCESS STOCK AT AN AVERAGE RATE AND THE LEARNED ASSESSING OFFICER SHOULD HAVE VALUED THE SAME AT ACTUAL RATE OF THE QUALITY OF THE STOCK WHI CH WAS FOUND IN EXCESS DURING THE COURSE OF THE SURVEY. BE THAT AS IT MAY. WE ALSO FIND THAT THE ALTERNATIVE SUBMISSION O F THE ASSESSEE WAS REJECTED BY THE LEARNED COMMISSIONER O F INCOME-TAX (APPEALS) WITHOUT PROPERLY APPRECIATING THE SAME. IN THE INSTANT CASE WE FIND THAT THE ADDITION OF RS .5,20,142/- WAS NOT MADE ON ACCOUNT ON EXCESS QUANTITY FOUND BU T WAS ON ACCOUNT OF DIFFERENCE IN VALUATION OF STOCK AT A POINT OF TIME WHICH WAS IN BETWEEN THE FINANCIAL YEAR. THE Q UANTITY AND VALUE OF CLOSING STOCK AS ON 31-3-2003 WAS NOT IN DISPUTE AND THE SAME WAS FOUND CORRECT AT THE VALUE AND QUA NTITY SHOWN BY THE ASSESSEE. AFTER ACCEPTING THE EXCESS S TOCK ON THE DATE OF THE SURVEY BY THE ASSESSEE THERE WAS NO DISPUTE REGARDING THE QUANTITY OF THE STOCK AT THE TIME OF SURVEY AND THE ONLY DISPUTE AFTER THAT WAS IN RESPECT OF VALUA TION OF SUCH STOCK ON THE DATE OF SURVEY. WE FIND THAT FOR THE P OST-SURVEY PERIOD THE PURCHASES, SALES AND THE CLOSING STOCK S HOWN BY THE ASSESSEE WAS FOUND TO BE CORRECT BY THE LOWER AUTHORITIES. ON THE FACTS THE CONTENTION OF THE ASS ESSEE WAS THAT EVEN IF THE VALUATION OF STOCK ON THE DATE OF SURVEY IS INCREASED BY RS.5,20,142/- THE SAME WILL NOT IMPACT OVERALL 10 INCOME BECAUSE THE SAME WILL REDUCE THE GROSS PROFI T DISCLOSED BY THE ASSESSEE FOR THE POST-SURVEY PERIO D AS IN THAT CASE THE OPENING STOCK OF THE POST-SURVEY PERIOD WI L BE INCREASED BY RS.5,20,142/- AND THE PURCHASES, SALES AND CLOSING STOCK OF POST-SURVEY PERIOD REMAINING THE S AME WILL LEAD TO REDUCTION IN GROSS PROFIT OF THE POST-SURVE Y PERIOD BY THE SAME AMOUNT. WE FIND FORCE IN THE ABOVE ARGUMEN T OF THE ASSESSEE. THUS, IT IS OBSERVED THAT IF WE INCREASE THE VALUE ONLY WITHOUT INCREASING THE QUANTITY AT ANY INTERVE NING POINT OF TIME THEN THE SAME DOES NOT HAVE ANY IMPACT ON R ESULT FOR THE YEAR-END. IN THE INSTANT CASE ON INCREASING RS. 5,20,142/- AS INCOME ON ACCOUNT OF EXCESS STOCK ON DATE OF SUR VEY THE SAME WILL LEAD TO REDUCTION IN THE GROSS PROFIT DIS CLOSED BY THE ASSESSEE FOR THE POST-SURVEY PERIOD BY AN EQUAL AMOUNT. THEREFORE THE SAME WILL HAVE NO EFFECT UPON THE INC OME AND A SEPARATE ADDITION WILL LEAD TO A CASE OF DOUBLE ADD ITION OF THE SAME INCOME. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) VIEWED THAT IF THE ABOVE EXPLANATION OF T HE ASSESSEE IS ACCEPTED THEN IN NO CASE ADDITION COULD BE MADE IN RESPECT OF EXCESS STOCK FOUND DURING THE COURSE OF THE SURVEY AND THE PROVISIONS OF SECTION 69C OF THE ACT WILL BECOME INOPERABLE. IN OUR CONSIDERED VIEW, THE ABOV E OPINION OF THE LEARNED ASSESSING OFFICER IS NOT COR RECT. WHEN DURING THE COURSE OF SURVEY EXCESS QUANTITY OF STOC K IS FOUND THEN THE SAME WILL IMPLY THAT THE ASSESSEE MADE INV ESTMENT OUT OF INCOME FROM UNDISCLOSED SOURCE AND ADDITION U/S 69C CAN BE MADE VALIDLY IN RESPECT OF THE INVESTMENT MA DE BY THE 11 ASSESSEE IN RESPECT OF SUCH EXCESS STOCK. HOWEVER, IN CASE WHERE THERE IS NO DIFFERENCE IN THE QUANTITY FOUND THEN IN SUCH CASE ADDITION CANNOT BE MADE MERELY BECAUSE OF DIFFERENCE IN VALUATION OF THE STOCK AT AN INTERVEN ING DATE WHEN THE VALUATION OF STOCK AT THE END OF THE YEAR WAS FOUND TO BE CORRECT. IN VIEW OF THE ABOVE IN THE INSTANT CASE AS AFTER DISCLOSURE OF INCOME OF RS.38,29,164/- ON ACCOUNT O F EXCESS STOCK FOUND THERE REMAINS NO DISCREPANCY ABOUT THE QUANTITY OF STOCK FOUND AT THE DATE OF SURVEY AND THEREAFTER MERELY BECAUSE OF DIFFERENCE IN VALUATION ON THE DATE OF S URVEY WOULD HAVE NO EFFECT TO THE INCOME OF THE ASSESSEE WHEN THE SALES, PURCHASES AND CLOSING STOCK SHOWN FOR THE PO ST-SURVEY PERIOD ARE FOUND TO BE CORRECT. WE THEREFORE DELETE THE ADDITION OF RS.5,20,142/-. THUS THIS GROUND OF APPE AL OF THE ASSESSEE IS ALLOWED. 7 GROUND NO.2 IN THE APPEAL READS AS UNDER:- 2 THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE AO OF RS.25,000/- ON ACCOUNT OF THREE B ENAMI ACCOUNTS. 8 THE FACTS OF THE CASE ARE THAT THE LEARNED ASSESS ING OFFICER FOUND THAT THE THREE BENAMI BANK ACCOUNTS W HICH WERE DETECTED IN THE COURSE OF THE SURVEY, HAD BALA NCES AS ON THE DATE OF SURVEY, TOTALING RS.86,455/-. THE LEARN ED ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY THE SAID AMOUNT SHOULD NOT BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE YEAR IN QUESTION. THE ASSESSEE SUB MITTED THAT HE HAD ALREADY DISCLOSED DURING THE SURVEY, A SUM OF 12 RS.16,27,990/- WHICH INCLUDED THE RECEIVABLES AND T HE BALANCES IN THESE BANK ACCOUNTS. THE ASSESSEE HAD W ITHDRAWN CASH FROM THESE ACCOUNTS AND CREDITED THE SAME IN I TS BOOKS, AMOUNTING TO RS.16,27,990/-, WHICH HE HAD DISCLOSED DURING THE SURVEY. THE AO ACCEPTED THE ASSESSEES EXPLANAT ION IN RESPECT OF TWO OF THE THREE BANK ACCOUNTS. HOWEVER, IN RESPECT OF THE THIRD ACCOUNT, THE AO NOTED THAT THE ASSESSEE HAD PAID A SUM OF RS.25,000/- BY ACCOUNT PAYEE CHEQ UE TO SOME PARTY. THIS AMOUNT THEREFORE, HAD NOT BEEN SHO WN OR ENTERED IN THE CASH BOOK, AND WAS OVER AND ABOVE TH E SUM OF RS.16,27,990/-J WHICH HAD BEEN BROUGHT INTO THE BOO KS AFTER BEING DISCLOSED AS UNACCOUNTED. THE AO THEREFORE AD DED THE SUM OF RS.25,000/- TO THE ASSESSEES TOTAL INCOME. 9 IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCO ME- TAX (APPEALS) THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE CLAIMED THAT THE ASSESSEE HAD ALREADY DISC LOSED THE SUM OF RS.16,27,990/- WHICH REPRESENTED THE PEAK CR EDITS IN THE THREE BANK ACCOUNTS. THE SUM OF RS.25,000/- WAS INCLUDED IN THE PEAK BALANCE AND WAS THEREFORE, COVERED BY T HE DISCLOSURE. 10 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, H ELD AS UNDER 11 I DO NOT ACCEPT THE CLAIM OF THE AR. THE AO GAV E A CLEAR FINDING THAT THE DISCLOSURE OF THE PEAK BALANCES OF RS.16,27,990/- WAS BROUGHT INTO THE BOOKS AS SUNDRY RECEIVABLES. T HIS AMOUNT 13 WAS FROM ONLY TWO OF THE THREE BENAMI ACCOUNTS. FRO M THE THIRD ACCOUNT, THE SUM OF RS.25,000/- WAS NOT BROUGHT INT O THE BOOKS BUT WAS PAID TO SOME PARTY. THE AO THEREFORE WAS FU LLY JUSTIFIED IN TREATING THIS SUM AS UNACCOUNTED INCOME OF THE ASSE SSEE. THE ADDITION OF THE SAID SUM IS THEREFORE CONFIRMED. 11 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS DISCLOSED INCOME OF RS.16,27,990/- ON ACCOUNT OF SUNDRY RECEIPTS AND BA LANCES IN THREE BANK ACCOUNTS FOUND UNDISCLOSED AT THE TIME O F THE SURVEY. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CREDITED THE AMOUNT OF RS.16,27,990/- IN ITS BOOKS OF ACCOUNT AND HAS WITHDRAWN IN CASH THE BALA NCE LYING IN THE SAID THREE ACCOUNTS EXCEPT HOWEVER IN CASE O F ONE BANK ACCOUNT RS.25,000/- WAS PAID BY CHEQUE TO SOMEBODY. AS THIS AMOUNT OF RS.25,000/- WAS NOT AVAILABLE WITH THE AS SESSEE, THE LEARNED ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSES SING OFFICER. WE FIND THAT NO MATERIAL WAS BROUGHT ON RE CORD BY THE ASSESSEE TO SHOW THAT RS.25,000/- WAS PAID TO W HOM AND FOR WHAT PURPOSE AND HOW IT CONSTITUTED PART OF REC EIVABLE OF RS.16,27,990/- CREDITED IN HIS BOOKS OF ACCOUNT. IN ABSENCE OF SUCH MATERIAL WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 14 12 GROUND NO.3 IN THE APPEAL READS AS UNDER:- 3 THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING THE ADDITION BY AO OF GIFT RECEIVED OF RS.2,58,863/- BY TREATING THE GIFT RECEIVED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE A CT. 13 THE FACTS OF THE CASE ARE THAT THE AO FOUND THA T THE ASSESSEE HAD SHOWN THE RECEIPT OF GIFTS AMOUNTI NG TO RS.2,58,863/- FROM FOUR PERSONS. THESE WERE AS UNDE R:- BHANWARLAL JORAJI RATHOD RS.55,351 15/5/2002 -DO RS.54,201 -DO- ADARAM TARAJIT CHOUDHARY RS.51,951 11/7/2002 -DO- RS.51,250 -DO- MANGIRAM POONARAM CHOUDHARY RS.45,110 15/5/2002 FURTHER VERIFICATION SHOWED THAT SHRI BHANWARLAL HA D NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-0 4. HIS ANNUAL INCOME WAS BELOW RS.50,000/- AND HAD A CAPIT AL BALANCE OF RS.3,64,669/-. SHRI ADARAMS INCOME FOR THE YEAR WAS RS.57,000/- AND THE CAPITAL BALANCE AFTER THE G IFT WAS RS.98,388/-. HE HAD OPENED HIS ACCOUNT ON 9/7/2002 AND HAD DEPOSITED CASH OF RS.1,20,000/- ON 10-7-2002. HE MA DE THE GIFTS ON 11/7/2002. SHRI MANGILAL P CHOUNDHARYS IN COME FOR THE YEAR WAS RS.58,000/- OUT OF WHICH RS.42,000/- W AS SALARY FROM M/S BHAVNA INTERNATIONAL, A PROPRIETORSHIP CON CERN OF THE ASSESSEE. EVEN THOUGH THE ASSESSEE HAD FILED TH E DONORS COMPUTATIONS OF INCOME, BALANCE SHEETS, ACKNOWLEDGE MENTS OF RETURN FILED AND COPIES OF BANK PASSBOOKS YET, N O WRITTEN CONFIRMATION WAS FILED FROM THE DONORS. ACCORDING T O THE AO, 15 NOT A SINGLE PAPER WAS FILED WHICH CONTAINED THE OR IGINAL SIGNATURES OF THE DONORS. THE DONORS WERE ALSO NOT PRODUCED PHYSICALLY BEFORE THE AO. THE ASSESSEE HAD FAILED T O ESTABLISH ANY RELATIONSHIP OF LOVE AND AFFECTION WITH THE DON OR. ON THE OTHER HAND, THE SURVEY REVEALED THAT THE ASSESSEE W AS ENGAGED IN THE UNACCOUNTED BUSINESS AND WAS MAINTAI NING BENAMI BANK ACCOUNTS. THE AO THEREFORE TOOK THE VIE W THAT THE UNACCOUNTED INCOME EARNED BY THE ASSESSEE WAS INTRODUCED INTO THE BOOKS THROUGH SUCH BOGUS GIFTS. THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS PERTAINING TO THE GIFTS, THE CREDITWOR THINESS OF THE DONORS AND THE RELATIONSHIP OF LOVE AND AFFECTI ON OF THE DONORS TOWARDS THE ASSESSEE. HE THEREFORE TREATED T HE GIFTS TOTALING TO RS.2,58,863/- AS BOGUS AND ADDED THE SA ME TO THE ASSESSEES TOTAL INCOME, UNDER THE PROVISIONS OF SE CTION 68 OF THE ACT. 14 IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), THE LEARNED AUTHORISED REPRES ENTATIVE OF THE ASSESSEE CONTENDED THAT ALL THE DONORS WERE REGULARLY ASSESSED TO INCOME-TAX IN THE SAME WARD, AND COPIES OF THEIR INCOME-TAX RETURNS HAD BEEN FILED WITH THE LEARNED ASSESSING OFFICER. THE GIFTS WERE RECEIVED THOUGH ACCOUNT PAY EE CHEQUES AND COPIES OF THE DONORS BANK ACCOUNTS AND PASSBOOKS WERE FILED WITH THE AO, ALONG WITH THE GI FT DECLARATIONS. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE OBSERVATION OF THE AO THAT CONFIRMATION LETTERS HAD NOT BEEN FILED FROM THE DO NORS WAS 16 WITHOUT ANY BASIS SINCE, THE DECLARATIONS OF GIFT W ERE SUFFICIENT CONFIRMATION AS FAR AS THE DONORS WERE C ONCERNED. THE AO HAD DISMISSED THE CLAIM OF GENUINENESS OF TH E GIFTS ON THE GROUND THAT THERE WAS NO RELATIONSHIP OF LOVE A ND AFFECTION BETWEEN THE DONORS AND THE ASSESSEE. THIS WAS NOT JUSTIFIED SINCE, AS HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. R S SIBAL (2004) 269 ITR 429, THE E XISTENCE OF BLLOD RELATIONSHIP BETWEEN THE DONOR AND THE DONE W AS NOT NECESSARY, IT WAS A SUFFICIENT DISCHARGE OF THE BUR DEN OF PROOF IF COPIES OF GIFT DEEDS, AFFIDAVITS AND BANK STATEM ENTS WERE FURNISHED. IT HAS BEEN FURTHER SUBMITTED THAT ALL T HE DONORS BELONGED TO THE SAME COMMUNITY AS THE ASSESSEE AND WERE VERY WELL KNOWN TO HIM. AS REGARDS THE NON APPEARAN CE OF THE DONORS, IT HAS BEEN SUBMITTED THAT THE ASSESSEE WAS NOT IN A POSITION TO FORCE THE DONORS TO APPEAR BEFORE THE A O. THE AO COULD HAVE VERIFIED THE GIFTS FROM THE INCOME-TAX R ETURNS OF ALL THE DONORS WHO WERE ALSO ASSESSED BY HIM. THIS WAS HELD BY THE AHMEDABAD BENCH OF THE ITAT IN THE CASE OF R OHINI BUILDERS V. DCIT (2002) 76 TTJ 521, WHICH WAS UPHEL D BY THE HON'BLE GUJARAT HIGH COURT IN 256 ITR 360. THE ADDI TION MADE WAS THEREFORE BASED PURELY ON SUSPICION AND NOT ON ANY COGENT FINDING. 15 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) AFTER HEARING CONSIDERING THE SUBMISSIONS MADE BY T HE ASSESSEE, HELD AS UNDER:- 17 15 I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CO NCLUSION OF THE AO AS WELL AS THE SUBMISSIONS MADE BY THE ASSES SEE BEFORE THE AO AND BEFORE ME, IN COURSE OF THE APPELLATE PROCEE DINGS. THE COURTS HAVE REPEATEDLY LAID DOWN THREE IMPORTANT CR ITERIA FOR DECIDING AS TO WHETHER OR NOT A CASH OR A GIFT IS G ENUINE. FIRSTLY, THE IDENTITY OF THE CREDITOR OR THE DONOR HAS TO BE ESTABLISHED. SECONDLY, THE GENUINENESS OF THE TRANSACTION AND TH IRDLY, THE CAPACITY OF THE CREDITOR OR THE DONOR TO MAKE THE D EPOSIT OR THE GIFT. IT IS TRUE THAT IN THE CASE OF THE ASSESSEE, THERE WAS NO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTION SINCE, ALL TECHNICALITIES HAD BEEN FULFILLED IN THE SENSE THAT , DEMAND DRAFTS HAD BEEN PURCHASED, WITH THE HELP OF FUNDS AVAILABL E IN THE SAVING BANK ACCOUNTS OF THE DONORS, IN FAVOUR OF THE ASSES SEE. THESE WERE DEPOSITED IN THE ASSESSEES BANK ACCOUNT AS WELL. H OWEVER, THE AO RAISED DOUBTS REGARDING, FIRSTLY, THE RATIONALITY O F THE ASSESSEE RECEIVING GIFTS FROM RELATIVELY UNKNOWN PERSONS SEC ONDLY, THE AO RAISED THE QUESTION OF DONORS CAPACITY TO GIVE THE GIFTS. 15.1 IN THE CASE OF POONJABHAI VANMALI & SONS V IT O (1989) 33 TTJ 91 (AHD) THE HON'BLE ITAT AHMEDABAD BENCH HELD THAT IT IS QUITE EVIDENT THAT IN ORDER TO DISCHARGE HIS BURDEN UNDER SECTION 68, AN ASSIGNEE IS REQUIRED TO OFFER AN EXPLANATION ABOUT THE (I) NATURE OF THE CASH CREDIT AND (II) THE SOURCE OF SU CH CREDIT. ONCE AN ASSESSEE HAS DONE THAT HIS JOB IS OVER. THE ONUS OF PROOF SHIFTS TO THE ITO. NOW, IT IS FOR THE ITO TO SHOW THAT THE EX PLANATION OFFERED BY THE ASSESSEE IS NOT UPTO HIS SATISFACTION. IT IS THE SUBJECTIVE SATISFACTION OF THE ITO ABOUT THE NATURE AND SOURCE OF A CASH CREDIT, WHICH IS REQUIRED TO BE UNDER THE SECTION. IT IS THE SATISFACTION OF A MAN OF ORDINARY PRUDENCE. IF THE EXPLANATION OFFERED BY AN ASSESSEE ABOUT THE NATURE AND SOURCE OF A CASH CREDIT PROBABILISES THE EXISTENCE OF THE FACTS, WHI CH MUST ATTEND ON THE CASH CREDIT IN DISPUTE IN DUE COURSE OF THE NAT URE OF THE THINGS, THE ASSESSEE MAY BE SAID TO HAVE OFFERED A SATISFAC TORY EXPLANATION. THE ITO CANNOT INSIST UPON FOR MORE. B UT AT THE SAME TIME AN ASSESSEE CANNOT GET HIMSELF RID OF HIS BURD EN UNDER THIS SECTION BY OFFERING ANY SORT OF EXPLANATION, WHICH MIGHT SUIT HIM. IN ORDER TO BE 'SATISFACTORY' AND AS SUCH ACCEPTABL E, AN EXPLANATION UNDER SECTION 68 SHOULD BE 'REASONABLE PROBABILISI NG THE HAPPENING OF THE THINGS IN THE MANNER TOLD BY THE A SSESSEE, IT IS NOT EACH AND EVERY SORT OF EXPLANATION OFFERED BY A N ASSESSEE ABOUT THE NATURE AND SOURCE OF A CASH CREDIT, WHICH IS REQUIRED TO 18 BE ACCEPTED BY THE ITO UNDER SECTION 68. IT IS ONLY SUCH EXPLANATION WHICH APPEALS TO HUMAN REASONS, WHICH R EFERS TO SUCH HAPPENINGS THAT ARE QUITE PROBABLE TO TAKE PLACE IN THE NORMAL COURSE OF THE THINGS AND WHICH A PRUDENT MIND WOULD FEEL INCLINED TO ACCEPT UNDER THE GIVEN CIRCUMSTANCES, THAT WOULD FULFILL THE REQUIREMENT OF THE WORD 'SATISFACTORY' QUALIFYING T HE REQUIRED EXPLANATION OF THE ASSESSEE UNDER SECTION 68.' 15.2 ON THE FACE OF IT, THE ASSESSEE'S EXPLANATION APPEARED TO SUIT HIM PERFECTLY. SO THAT HE COULD CLAIM TO HAVE DISCH ARGED HIS BURDEN OF PROOF. HOWEVER, A CLOSURE EXAMINATION OF THE ASS ESSEE'S EXPLANATION AGAINST THE TOTALITY OF THE FACTS OF TH E CASE, DOES NOT SHOW THE ASSESSEE'S EXPLANATION TO BE AS CREDIBLE A FTER ALL. FIRSTLY, THE ASSESSEE IS A BIG BUSINESSMAN WHO HAD DECLARED A TOTAL INCOME OF RS. 56,27,990 FOR THE A.Y. 2003-04, WHICH IS THE YEAR UNDER CONSIDERATION. THEREFORE, HE WAS IN NO APPARE NT NEED OF ANY FUNDS. SECONDLY, THERE WAS NO GREAT SOCIAL OR RELIG IOUS OCCASION FOR THE THREE DONORS, WHO DID NOT HAVE ANY DIRECT RELAT IONSHIP WITH THE ASSESSEE, APART FROM ALLEGEDLY BELONGING TO THE SAI D COMMUNITY, TO INVOKE ANY NATURAL LOVE AND AFFECTION. THIRDLY, ALL THE THREE DONORS WERE OF VERY ORDINARY MEANS. NONE OF THEM EA RNED IN EXCESS OF RS. 50,000-60,000 PER YEAR. SUCH PERSONS, WHO HAD APPARENTLY NO RELATIONSHIP WITH THE ASSESSEE, COULD NOT BE EXPECTED TO BE SO ENAMOURED OF THE ASSESSEE WITH OV ERWHELMING LOVE AND AFFECTION, SO AS TO PART WITH SUBSTANTIAL SUMS OF MONEY OUT OF THEIR MEAGER INCOMES AND SAVINGS. FOURTHLY, ALL THE GIFTS WERE MADE ON OR AROUND THE SAME TIME OR DATE. NOTAB LY AMONGST THEM WAS THE CASE OF SHRI ADARAM TARAJI CHOUDHARY, WHO OPENED HIS BANK ACCOUNT ON |9/7/2002, DEPOSITED CASH OF RS . 1,20,000 ON 10/7/2002 AND MADE TWO GIFTS TOTALING TO RS. 1,03,2 01 ON 11/7/2002. IT IS CLEAR THAT THE BANK ACCOUNT WAS OP ENED FOR THE SOLE PURPOSE OF GIVING THE GIFTS. SHRI BHANWARLAL J ORAJI RATHOD AND SHRI MANGILAL POONARAM CHOUDHARY MADE THE GIFTS ON THE SAME DAY I.E. ON 15/5/2002. SHRI MANGILAL POONARAM CHOUD HARY WAS AN EMPLOYEE OF THE ASSESSEE WITH ALMOST HIS ENTIRE EAR NINGS COMING FROM THE SALARY PAID BY THE ASSESSEE. ALL THESE FAC TS CLEARLY POINT TOWARDS THE COLOURABLE AND COLLUSIVE NATURE OF THE TRANSACTIONS. FIFTHLY, THOUGH, AS CLAIMED BY THE AR, THE ASSESSEE HAD FILED GIFT DECLARATIONS WHICH WOULD SUFFICE AS CONFIRMATIONS O F THE GIFTS YET, AS HELD BY THE HON. CALCUTTA HIGH COURT IN THE CASE OF CIT V. UNITED COMMERCIAL AND INDUSTRIAL CO. PVT. LTD. (1991) 187 ITR 596, THE 19 ONUS DOES NOT GET DISCHARGED BY MERELY CONFIRMATORY LETTERS, NOR IS THE TRANSACTION MADE SACROSANCT IF THE AMOUNT IS RE CEIVED BY ACCOUNT-PAYEE CHEQUES, AS HELD IN CIT V. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL). THE SAME COURT ALSO HELD THAT EVEN INCOME-TAX FILE PARTICULARS, WHERE THE CREDITOR IS ASSESSED, MAY NOT BE SUFFICIENT TO DISCHARGE THE ONUS WHICH LIES ON T HE ASSESSEE TO PROVE THE GENUINENESS OF A GIFT OR A CASH CREDIT. T HIS WAS HELD IN CIT V. KORLAY TRADING CO. LTD. (1998) 232 ITR 820(C AL). ALL THAT MATTERS IS THAT THE EXPLANATION SHOULD BE PRIMA-FAC IE REASONABLE, AS HELD IN CIT V. BEDI & CO. PVT. LTD. (1998) 230 I TR 580 (SC). LASTLY, IT IS NOT THAT THE AO REJECTED THE ASSESSEE'S EXPLA NATION ONLY BECAUSE THE ASSESSEE WAS UNABLE TO PRODUCE THE DONO RS OR WAS IT ONLY BECAUSE THERE WAS NO, RELATIONSHIP OF LOVE AND AFFECTION BETWEEN THE DONORS AND THE ASSESSEE. IN EFFECT, IT WAS A COMBINATION OF THREE FACTORS THAT IS, THE LACK OF P ROPER IDENTIFICATION OF THE DONORS IN TERMS OF THEIR PERS ONAL APPEARANCE, ESPECIALLY SINCE, NONE OF THE LETTERS BORE ORIGINAL SIGNATURE, THE LACK OF CREDITWORTHINESS OF THE DONORS, AND FINALLY , THE ABSENCE OF ANY RELATION OF LOVE AND AFFECTION SO AS TO ATTRACT SUCH LARGE AMOUNTS AS GIFTS. IT HAS BEEN SUBMITTED BY THE AR T HAT THE ASSESSEE COULD NOT ENFORCE THE APPEARANCE OF THE DO NORS. HERE THE POINT TO NOTE IS THAT, IF THERE WAS SO MUCH LOVE AN D AFFECTION BETWEEN THE ASSESSEE AND THE DONORS SO AS TO ATTRAC T SUBSTANTIAL SUMS THEN, THE ASSESSEE COULD HAVE EASILY REQUESTED THEM TO APPEAR BEFORE THE AO TO CLEAR HIS GOOD NAME AND EST ABLISH THE GENUINENESS OF THE GIFTS. IT THUS APPEARS THAT THER E WAS A DELIBERATE PLOY TO SIMPLY RELY ON DOCUMENTATIONS AN D CERTAIN CASE- LAWS THAT HAVE HELD THAT SUCH DOCUMENTS WERE SUFFIC IENT, AND TO NOT PRODUCE THE DONORS PERSONALLY BEFORE THE AO AS THEIR EXAMINATION ON OATH WOULD HAVE CONVINCINGLY ESTABLI SHED THE FACT THAT THEY WERE COMPLETELY UNKNOWN AND UNRELATED PER SONS WHO HAD NO REASON TO GIVE SUCH LARGE SUMS OF MONEY. 15.3 I HAVE GONE THROUGH THE CASE-LAWS RELIED UP ON BY THE AR. IN THE CASE OF CIT V. R, 5. SIBAL (SUPRA), THE AO DID NOT RAISE ANY QUERY WITH REGARD TO THE CAPACITY OF THE DONORS TO MAKE T HE GIFT. THE ONLY GROUND TAKEN BY THE AO WAS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH HIS RELATIONSHIP WITH THE DONORS. IN THE CASE OF OUR ASSESSEE, THE AO DID RAISE THE QUERY RE GARDING THE CAPACITY OF THE DONORS TO GIVE THE GIFTS AND IN FAC T, GAVE A CLEAR FINDING THAT THEY INDEED DID NOT HAVE THE CAPACITY TO DO SO. IN THE 20 CASE DECIDED BY THE HON. DELHI HIGH COURT, THE ISSU ED TURNED ONLY ON THE ESTABLISHMENT OF THE RELATIONSHIP WITH THE D ONORS. THE COURT HELD THAT SINCE THE DONORS HAD MADE A DECLARA TION REGARDING THEIR LOVE AND AFFECTION FOR THE DONEE THE GIFTS CO ULD NOT BE HELD TO BE NOT GENUINE. QUITE CLEARLY, THE RATIO OF THIS CA SE IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE, WHE RE THE AO HELD THE GIFTS TO BE BOGUS ON THE BASIS OF A COMBINATION OF FACTORS WHICH ONLY PARTLY INCLUDED THE ABSENCE OF ANY RELAT IONSHIP OF LOVE AND AFFECTION. THE CASE OF ROHINI BUILDERS (SUPRA), INVOLVED THE GENUINENESS OF LOANS. THOUGH LOANS AND GIFTS ARE BO TH TREATED AS UNEXPLAINED CASH CREDITS U/S. 68, YET THERE IS A DI FFERENCE BETWEEN THE TWO, IN THE SENSE THAT, GIFT IS A ONE-SIDED TRA NSACTION GIVEN PURELY OUT OF LOVE AND AFFECTION, WHEREAS, LOAN IS A TWO-WAY TRANSACTION. THE LOAN HAS TO BE RETURNED ALONG WITH INTEREST. THE HON. GUJARAT HIGH COURT HELD THAT THE LOANS WERE GE NUINE SINCE THEY WERE GIVEN BY ACCOUNT-PAYEE CHEQUES AND THE ID ENTITIES OF THE PERSONS GIVING THE LOANS WAS ESTABLISHED. IN TH E CASE OF OUR ASSESSEE, THE AO DID NOT QUESTION THE MODE OR THE M ETHOD OF TRANSACTION. HE QUESTIONED THE CREDITWORTHINESS OF THE DONORS AND THEIR RELATIONSHIP OF LOVE AND AFFECTION WITH THE A SSESSEE. THEREFORE, THE RATIO OF THE CASE OF ROHINI BUILDERS IS NOT APPLICABLE TO THE ASSESSEE'S CASE. 15.4 ALL THE ABOVE FACTS WOULD CLEARLY GO TO SHOW T HAT THE ACT OF THE THREE DONORS WAS NOT IN CONFORMITY WITH NORMAL HUMAN BEHAVIOR. THE EXPLANATION FURNISHED BY THE ASSESSEE DOES NOT SATISFY ANY MAN OF ORDINARY PRUDENCE AND DOES NOT P ROBABILISE THE EXISTENCE OF FACTS WHICH PROVE THE GENUINENESS OF T HE GIFTS, KEEPING IN MIND NORMAL AND RATIONAL HUMAN BEHAVIOR. EVEN THOUGH THE ASSESSEE HAD FURNISHED DOCUMENTS WHICH W ERE CLAIMED TO BE RELEVANT YET, THE AO WAS FULLY JUSTIFIED IN T AKING NOTE OF THE SURROUNDING CIRCUMSTANCES. PROCEEDING ON THE THEORY OF THE TOTALITY OF CIRCUMSTANCES, HE RIGHTLY HELD THAT THE RECEIPTS AS CLAIMED BY THE ASSESSEE WERE NOT GENUINE. THE AO TH US, HAS SUPPORT FROM THE DECISION OF THE AHMEDABAD BENCH OF THE IT AT IN THE CASE OF DHANESHKUMAR D. SHAH V/S. ACIT 52 TTJ 1 85 (AHD.) 15.5 TAKING INTO ACCOUNT THE TOTALITY OF THE FAC TS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE VIEWS EXPR ESSED BY DIFFERENT COURTS, I HOLD THAT THE AO WAS FULLY JUST IFIED IN TREATING GIFTS OF RS. 2,58,863 AS NOT GENUINE. THEREFORE, TH E ADDITION OF THE 21 SAID SUM UNDER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT IS CONFIRMED . 16 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN TH E INSTANT CASE THE ASSESSEE CLAIMED TO HAVE RECEIVED GIFT OF RS.2,58,863/- FROM THE FOLLOWING PARTIES: BHANWARLAL JORAJI RATHOD RS.55,351 15/5/2002 -DO RS.54,201 -DO- ADARAM TARAJIT CHOUDHARY RS.51,951 11/7/2002 -DO- RS.51,250 -DO- MANGIRAM POONARAM CHOUDHARY RS.45,110 15/5/2002 THE LEARNED ASSESSING OFFICER ADDED THE AFORESAID A MOUNT TO THE INCOME OF THE ASSESSEE BY DISBELIEVING THE CLAI M OF THE ASSESSEE OF RECEIPT OF THE GIFTS. ON APPEAL, THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER BY OBSERVING AS UNDER: 15 I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCLUSION OF THE AO AS WELL AS THE SUBMISSIONS MAD E BY THE ASSESSEE BEFORE THE AO AND BEFORE ME, IN COURSE OF THE APPELLATE PROCEEDINGS. THE COURTS HAVE REPEATEDLY LAID DOWN T HREE IMPORTANT CRITERIA FOR DECIDING AS TO WHETHER OR NO T A CASH OR A GIFT IS GENUINE. FIRSTLY, THE IDENTITY OF THE CREDITOR O R THE DONOR HAS TO BE ESTABLISHED. SECONDLY, THE GENUINENESS OF THE TR ANSACTION AND THIRDLY, THE CAPACITY OF THE CREDITOR OR THE DONOR TO MAKE THE DEPOSIT OR THE GIFT. IT IS TRUE THAT IN THE CASE OF THE ASSESSEE, THERE WAS NO DOUBT REGARDING THE GENUINENESS OF THE TRANS ACTION SINCE, ALL TECHNICALITIES HAD BEEN FULFILLED IN THE SENSE THAT, DEMAND DRAFTS HAD BEEN PURCHASED, WITH THE HELP OF FUNDS AVAILABL E IN THE SAVING BANK ACCOUNTS OF THE DONORS, IN FAVOUR OF THE ASSES SEE. THESE WERE 22 DEPOSITED IN THE ASSESSEES BANK ACCOUNT AS WELL. H OWEVER, THE AO RAISED DOUBTS REGARDING, FIRSTLY, THE RATIONALITY O F THE ASSESSEE RECEIVING GIFTS FROM RELATIVELY UNKNOWN PERSONS SEC ONDLY, THE AO RAISED THE QUESTION OF DONORS CAPACITY TO GIVE THE GIFTS. 15.1 IN THE CASE OF POONJABHAI VANMALI & SONS V IT O (1989) 33 TTJ 91 (AHD) THE HON'BLE ITAT AHMEDABAD BENCH HELD THAT IT IS QUITE EVIDENT THAT IN ORDER TO DISCHARGE HIS BURDEN UNDER SECTION 68, AN ASSIGNEE IS REQUIRED TO OFFER AN EXPLANATION ABOUT THE (I) NATURE OF THE CASH CREDIT AND (II) THE SOURCE OF SU CH CREDIT. ONCE AN ASSESSEE HAS DONE THAT HIS JOB IS OVER. THE ONUS OF PROOF SHIFTS TO THE ITO. NOW, IT IS FOR THE ITO TO SHOW THAT THE EX PLANATION OFFERED BY THE ASSESSEE IS NOT UPTO HIS SATISFACTION. IT IS THE SUBJECTIVE SATISFACTION OF THE ITO ABOUT THE NATURE AND SOURCE OF A CASH CREDIT, WHICH IS REQUIRED TO BE UNDER THE SECTION. IT IS THE SATISFACTION OF A MAN OF ORDINARY PRUDENCE. IF THE EXPLANATION OFFERED BY AN ASSESSEE ABOUT THE NATURE AND SOURCE OF A CASH CREDIT PROBABILISES THE EXISTENCE OF THE FACTS, WHI CH MUST ATTEND ON THE CASH CREDIT IN DISPUTE IN DUE COURSE OF THE NAT URE OF THE THINGS, THE ASSESSEE MAY BE SAID TO HAVE OFFERED A SATISFAC TORY EXPLANATION. THE ITO CANNOT INSIST UPON FOR MORE. B UT AT THE SAME TIME AN ASSESSEE CANNOT GET HIMSELF RID OF HIS BURD EN UNDER THIS SECTION BY OFFERING ANY SORT OF EXPLANATION, WHICH MIGHT SUIT HIM. IN ORDER TO BE 'SATISFACTORY' AND AS SUCH ACCEPTABL E, AN EXPLANATION UNDER SECTION 68 SHOULD BE 'REASONABLE PROBABILISI NG THE HAPPENING OF THE THINGS IN THE MANNER TOLD BY THE A SSESSEE, IT IS NOT EACH AND EVERY SORT OF EXPLANATION OFFERED BY A N ASSESSEE ABOUT THE NATURE AND SOURCE OF A CASH CREDIT, WHICH IS REQUIRED TO BE ACCEPTED BY THE ITO UNDER SECTION 68. IT IS ONLY SUCH EXPLANATION WHICH APPEALS TO HUMAN REASONS, WHICH R EFERS TO SUCH HAPPENINGS THAT ARE QUITE PROBABLE TO TAKE PLACE IN THE NORMAL COURSE OF THE THINGS AND WHICH A PRUDENT MIND WOULD FEEL INCLINED TO ACCEPT UNDER THE GIVEN CIRCUMSTANCES, THAT WOULD FULFILL THE REQUIREMENT OF THE WORD 'SATISFACTORY' QUALIFYING T HE REQUIRED EXPLANATION OF THE ASSESSEE UNDER SECTION 68.' 15.2 ON THE FACE OF IT, THE ASSESSEE'S EXPLANATION APPEARED TO SUIT HIM PERFECTLY. SO THAT HE COULD CLAIM TO HAVE DISCH ARGED HIS BURDEN OF PROOF. HOWEVER, A CLOSURE EXAMINATION OF THE ASS ESSEE'S EXPLANATION AGAINST THE TOTALITY OF THE FACTS OF TH E CASE, DOES NOT SHOW THE ASSESSEE'S EXPLANATION TO BE AS CREDIBLE A FTER ALL. FIRSTLY, 23 THE ASSESSEE IS A BIG BUSINESSMAN WHO HAD DECLARED A TOTAL INCOME OF RS. 56,27,990 FOR THE A.Y. 2003-04, WHICH IS THE YEAR UNDER CONSIDERATION. THEREFORE, HE WAS IN NO APPARE NT NEED OF ANY FUNDS. SECONDLY, THERE WAS NO GREAT SOCIAL OR RELIG IOUS OCCASION FOR THE THREE DONORS, WHO DID NOT HAVE ANY DIRECT RELAT IONSHIP WITH THE ASSESSEE, APART FROM ALLEGEDLY BELONGING TO THE SAI D COMMUNITY, TO INVOKE ANY NATURAL LOVE AND AFFECTION. THIRDLY, ALL THE THREE DONORS WERE OF VERY ORDINARY MEANS. NONE OF THEM EA RNED IN EXCESS OF RS. 50,000-60,000 PER YEAR. SUCH PERSONS, WHO HAD APPARENTLY NO RELATIONSHIP WITH THE ASSESSEE, COULD NOT BE EXPECTED TO BE SO ENAMOURED OF THE ASSESSEE WITH OV ERWHELMING LOVE AND AFFECTION, SO AS TO PART WITH SUBSTANTIAL SUMS OF MONEY OUT OF THEIR MEAGER INCOMES AND SAVINGS. FOURTHLY, ALL THE GIFTS WERE MADE ON OR AROUND THE SAME TIME OR DATE. NOTAB LY AMONGST THEM WAS THE CASE OF SHRI ADARAM TARAJI CHOUDHARY, WHO OPENED HIS BANK ACCOUNT ON |9/7/2002, DEPOSITED CASH OF RS . 1,20,000 ON 10/7/2002 AND MADE TWO GIFTS TOTALING TO RS. 1,03,2 01 ON 11/7/2002. IT IS CLEAR THAT THE BANK ACCOUNT WAS OP ENED FOR THE SOLE PURPOSE OF GIVING THE GIFTS. SHRI BHANWARLAL J ORAJI RATHOD AND SHRI MANGILAL POONARAM CHOUDHARY MADE THE GIFTS ON THE SAME DAY I.E. ON 15/5/2002. SHRI MANGILAL POONARAM CHOUD HARY WAS AN EMPLOYEE OF THE ASSESSEE WITH ALMOST HIS ENTIRE EAR NINGS COMING FROM THE SALARY PAID BY THE ASSESSEE. ALL THESE FAC TS CLEARLY POINT TOWARDS THE COLOURABLE AND COLLUSIVE NATURE OF THE TRANSACTIONS. FIFTHLY, THOUGH, AS CLAIMED BY THE AR, THE ASSESSEE HAD FILED GIFT DECLARATIONS WHICH WOULD SUFFICE AS CONFIRMATIONS O F THE GIFTS YET, AS HELD BY THE HON. CALCUTTA HIGH COURT IN THE CASE OF CIT V. UNITED COMMERCIAL AND INDUSTRIAL CO. PVT. LTD. (1991) 187 ITR 596, THE ONUS DOES NOT GET DISCHARGED BY MERELY CONFIRMATORY LETTERS, NOR IS THE TRANSACTION MADE SACROSANCT IF THE AMOUNT IS RE CEIVED BY ACCOUNT-PAYEE CHEQUES, AS HELD IN CIT V. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL). THE SAME COURT ALSO HELD THAT EVEN INCOME-TAX FILE PARTICULARS, WHERE THE CREDITOR IS ASSESSED, MAY NOT BE SUFFICIENT TO DISCHARGE THE ONUS WHICH LIES ON T HE ASSESSEE TO PROVE THE GENUINENESS OF A GIFT OR A CASH CREDIT. T HIS WAS HELD IN CIT V. KORLAY TRADING CO. LTD. (1998) 232 ITR 820(C AL). ALL THAT MATTERS IS THAT THE EXPLANATION SHOULD BE PRIMA-FAC IE REASONABLE, AS HELD IN CIT V. BEDI & CO. PVT. LTD. (1998) 230 I TR 580 (SC). LASTLY, IT IS NOT THAT THE AO REJECTED THE ASSESSEE'S EXPLA NATION ONLY BECAUSE THE ASSESSEE WAS UNABLE TO PRODUCE THE DONO RS OR WAS IT ONLY BECAUSE THERE WAS NO, RELATIONSHIP OF LOVE AND AFFECTION 24 BETWEEN THE DONORS AND THE ASSESSEE. IN EFFECT, IT WAS A COMBINATION OF THREE FACTORS THAT IS, THE LACK OF P ROPER IDENTIFICATION OF THE DONORS IN TERMS OF THEIR PERS ONAL APPEARANCE, ESPECIALLY SINCE, NONE OF THE LETTERS BORE ORIGINAL SIGNATURE, THE LACK OF CREDITWORTHINESS OF THE DONORS, AND FINALLY , THE ABSENCE OF ANY RELATION OF LOVE AND AFFECTION SO AS TO ATTRACT SUCH LARGE AMOUNTS AS GIFTS. IT HAS BEEN SUBMITTED BY THE AR T HAT THE ASSESSEE COULD NOT ENFORCE THE APPEARANCE OF THE DO NORS. HERE THE POINT TO NOTE IS THAT, IF THERE WAS SO MUCH LOVE AN D AFFECTION BETWEEN THE ASSESSEE AND THE DONORS SO AS TO ATTRAC T SUBSTANTIAL SUMS THEN, THE ASSESSEE COULD HAVE EASILY REQUESTED THEM TO APPEAR BEFORE THE AO TO CLEAR HIS GOOD NAME AND EST ABLISH THE GENUINENESS OF THE GIFTS. IT THUS APPEARS THAT THER E WAS A DELIBERATE PLOY TO SIMPLY RELY ON DOCUMENTATIONS AN D CERTAIN CASE- LAWS THAT HAVE HELD THAT SUCH DOCUMENTS WERE SUFFIC IENT, AND TO NOT PRODUCE THE DONORS PERSONALLY BEFORE THE AO AS THEIR EXAMINATION ON OATH WOULD HAVE CONVINCINGLY ESTABLI SHED THE FACT THAT THEY WERE COMPLETELY UNKNOWN AND UNRELATED PER SONS WHO HAD NO REASON TO GIVE SUCH LARGE SUMS OF MONEY. 15.3 I HAVE GONE THROUGH THE CASE-LAWS RELIED UP ON BY THE AR. IN THE CASE OF CIT V. R, 5. SIBAL (SUPRA), THE AO DID NOT RAISE ANY QUERY WITH REGARD TO THE CAPACITY OF THE DONORS TO MAKE T HE GIFT. THE ONLY GROUND TAKEN BY THE AO WAS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH HIS RELATIONSHIP WITH THE DONORS. IN THE CASE OF OUR ASSESSEE, THE AO DID RAISE THE QUERY RE GARDING THE CAPACITY OF THE DONORS TO GIVE THE GIFTS AND IN FAC T, GAVE A CLEAR FINDING THAT THEY INDEED DID NOT HAVE THE CAPACITY TO DO SO. IN THE CASE DECIDED BY THE HON. DELHI HIGH COURT, THE ISSU ED TURNED ONLY ON THE ESTABLISHMENT OF THE RELATIONSHIP WITH THE D ONORS. THE COURT HELD THAT SINCE THE DONORS HAD MADE A DECLARA TION REGARDING THEIR LOVE AND AFFECTION FOR THE DONEE THE GIFTS CO ULD NOT BE HELD TO BE NOT GENUINE. QUITE CLEARLY, THE RATIO OF THIS CA SE IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE, WHE RE THE AO HELD THE GIFTS TO BE BOGUS ON THE BASIS OF A COMBINATION OF FACTORS WHICH ONLY PARTLY INCLUDED THE ABSENCE OF ANY RELAT IONSHIP OF LOVE AND AFFECTION. THE CASE OF ROHINI BUILDERS (SUPRA), INVOLVED THE GENUINENESS OF LOANS. THOUGH LOANS AND GIFTS ARE BO TH TREATED AS UNEXPLAINED CASH CREDITS U/S. 68, YET THERE IS A DI FFERENCE BETWEEN THE TWO, IN THE SENSE THAT, GIFT IS A ONE-SIDED TRA NSACTION GIVEN PURELY OUT OF LOVE AND AFFECTION, WHEREAS, LOAN IS A TWO-WAY 25 TRANSACTION. THE LOAN HAS TO BE RETURNED ALONG WITH INTEREST. THE HON. GUJARAT HIGH COURT HELD THAT THE LOANS WERE GE NUINE SINCE THEY WERE GIVEN BY ACCOUNT-PAYEE CHEQUES AND THE ID ENTITIES OF THE PERSONS GIVING THE LOANS WAS ESTABLISHED. IN TH E CASE OF OUR ASSESSEE, THE AO DID NOT QUESTION THE MODE OR THE M ETHOD OF TRANSACTION. HE QUESTIONED THE CREDITWORTHINESS OF THE DONORS AND THEIR RELATIONSHIP OF LOVE AND AFFECTION WITH THE A SSESSEE. THEREFORE, THE RATIO OF THE CASE OF ROHINI BUILDERS IS NOT APPLICABLE TO THE ASSESSEE'S CASE. 15.4 ALL THE ABOVE FACTS WOULD CLEARLY GO TO SHOW T HAT THE ACT OF THE THREE DONORS WAS NOT IN CONFORMITY WITH NORMAL HUMAN BEHAVIOR. THE EXPLANATION FURNISHED BY THE ASSESSEE DOES NOT SATISFY ANY MAN OF ORDINARY PRUDENCE AND DOES NOT P ROBABILISE THE EXISTENCE OF FACTS WHICH PROVE THE GENUINENESS OF T HE GIFTS, KEEPING IN MIND NORMAL AND RATIONAL HUMAN BEHAVIOR. EVEN THOUGH THE ASSESSEE HAD FURNISHED DOCUMENTS WHICH W ERE CLAIMED TO BE RELEVANT YET, THE AO WAS FULLY JUSTIFIED IN T AKING NOTE OF THE SURROUNDING CIRCUMSTANCES. PROCEEDING ON THE THEORY OF THE TOTALITY OF CIRCUMSTANCES, HE RIGHTLY HELD THAT THE RECEIPTS AS CLAIMED BY THE ASSESSEE WERE NOT GENUINE. THE AO TH US, HAS SUPPORT FROM THE DECISION OF THE AHMEDABAD BENCH OF THE IT AT IN THE CASE OF DHANESHKUMAR D. SHAH V/S. ACIT 52 TTJ 1 85 (AHD.) 15.5 TAKING INTO ACCOUNT THE TOTALITY OF THE FAC TS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE VIEWS EXPR ESSED BY DIFFERENT COURTS, I HOLD THAT THE AO WAS FULLY JUST IFIED IN TREATING GIFTS OF RS. 2,58,863 AS NOT GENUINE. THEREFORE, TH E ADDITION OF THE SAID SUM UNDER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT IS CONFIRMED . 17 WE FIND THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED GIFT OF RS.1,09,552/- FROM SHRI BHANWARLAL J RATHOD WHOSE ANNUAL INCOME WAS BELOW RS.50,000/-. THE ASSE SSEE COULD NOT POINT OUT THAT THE FINDING OF THE LEARNED ASSESSING OFFICER THAT THE AMOUNT OF INCOME OF SHRI BHANWARLA L J RATHOD WAS LESS THAN RS.50,000/- WAS INCORRECT. THE ASSESS EE HAS 26 CLAIMED TO HAVE RECEIVED GIFT OF RS.1,03,201/- FROM SHRI ADARAM T CHOUDHARY. THE LEARNED ASSESSING OFFICER O BSERVED THAT THE INCOME OF SHRI ADARAM T CHOUDHARY AS PER R ETURN FILED BY SAID SHRI A T CHOUDHARY WAS RS.57,000/- AN D THE CAPITAL BALANCE AFTER THIS DISCLOSURE OF GIFT OF RS .1,03,201/- WAS RS.98,388/- ONLY. IN RESPECT OF SHRI MANGIRAM P CHOUDHRY, THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED GIFT OF RS.45,110/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT HE WAS AN EMPLOYEE OF THE ASSESSEE DRAWING ANNUAL SALA RY OF RS.42,000/- AND HAVING TOTAL ANNUAL INCOME OF RS.58 ,000/- ONLY. ON THE ABOVE FACTS AND OBSERVING THE OTHER FA CTS OF THE CASE THAT THE ASSESSEE WAS OF A SOUND FINANCIAL POS ITION AND IN WHOSE CASE ON SURVEY DISCREPANCY WAS FOUND IN RE SPECT OF STOCK, CASH AND UNACCOUNTED BANK ACCOUNTS AND RECEI VABLES, HELD THAT THE ABOVE CLAIM OF THE GIFT WAS NOT GENUI NE. WE FIND THAT NO ERROR IN THE ABOVE FINDINGS OF THE LEARNED ASSESSING OFFICER COULD BE POINTED OUT BY THE ASSESSEE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). ON TH E ABOVE FACTS, IN OUR CONSIDERED VIEW, THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN CONFIRMING TH E ADDITION BY KEEPING IN VIEW THE NORMAL HUMAN BEHAVIOR AND TO TALITY OF THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). THUS, THIS GR OUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 18 GROUND NO.4 READS AS UNDER: 27 4 THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING ADD ITION OF RS.24,852/- ON ACCOUNT OF HOUSE HOLD EXPENSES . 19 WE FIND THAT THIS GROUND OF APPEAL OF THE ASSES SEE DOES NOT ARISE OUT OF THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME-TAX (APPEALS). HENCE THE SAME IS DISMISSE D. 20 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 12-02-2 010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 12-02-2010 COPY OF THE ORDER FORWARDED TO : 1. M/S MANGANRAM R CHOUDHARY, 111, BALAJI TEXTILE M ARKET, RING ROAD, SURAT 2. THE ITO, WARD-2(3), SURAT 3. CIT CONCERNED 4. CIT(A)-II, SURAT 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA