Mr. Alok Agarwal, Aligarh V. I.T.O., Ward - 4, Aligarh

ITA 39/AGR/2011

• Counselvise Citation: 3920314 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Unexplained cash credit; Gift; Question of law; Reasonable cause
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.49/AGR/2011 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, VS. SHRI ALOK AGRAWAL, WARD-1(4), ALIGARH. PROP. S.S. INTERNATIONAL, 3/219, MARRIS ROAD, ALIGARH. (PAN: ACEPA 6229 R) ITA NO.39/AGR/2011 ASSESSMENT YEAR: 2006-07 SHRI ALOK AGRAWAL, VS. INCOME TAX OFFICER, PROP. S.S. INTERNATIONAL, WARD-4, ALIGARH. 3/219, MARRIS ROAD, ALIGARH. (PAN: ACEPA 6229 R) (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI A.K. SHARMA, JR. D.R. ASSESSEE BY : SHRI RAJEEV KUMAR, C.A. DATE OF HEARING : 26.03.2012 DATE OF PRONOUNCEMENT : 04.04.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 2 THESE ARE CROSS APPEALS FILED BY THE REVENUE AND AS SESSEE AGAINST THE ORDER DATED 16.11.2010 PASSED BY THE LD. CIT(A), GHAZIABA D FOR THE ASSESSMENT YEAR 2006-07. ITA NO.49/AGR/2011 BY THE REVENUE FOR A.Y. 2006-07 2. THE SOLE GROUND RAISED IN THE APPEAL BY THE REVE NUE IS IN RESPECT OF DELETION OF ADDITION OF RS.18,24,950/- ON ACCOUNT OF LOAN TO M/S. SONA TRADERS UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 (THE ACT H EREINAFTER). 3. THE BRIEF FACTS OF THE GROUND ARE THAT THE ASSES SEE IS PROPRIETOR OF M/S. S S INTERNATIONAL WHICH IS ENGAGED IN TRADING OF GHEE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT AS PER ANNEXURE-B OF AUDIT REPORT FRESH LOAN OF RS.58,42,320/- HAS BEEN SHOWN WHICH I NCLUDED LOAN FROM SONA TRADERS RS.18,24,950/-. THE ASSESSING OFFICER HAS GIVEN DETAILS OF THESE LOANS AT PAGE NO.2, PARAGRAPH NO.2.1 OF HIS ORDER. THE ASSE SSING OFFICER ASKED THE ASSESSEE TO FURNISH THE NECESSARY EVIDENCE AND MATERIAL IN S UPPORT OF THE LOANS TAKEN BY THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT IN CASE OF SONA TRADERS THE ASSESSEE COULD NOT PRODUCE BANK ACCOUNT. THEREFORE, THE CRE DITWORTHINESS OF THE SAID PARTY HAS NOT BEEN ESTABLISHED. IN ADDITION TO THAT, THE ASSESSING OFFICER NOTICED THAT THE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 3 ASSESSEE FILED A COPY OF ACCOUNT FOR F.Y. 2005-06 I N THE BOOKS OF ACCOUNTS OF SONA TRADERS WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER AT PAGE NO.4 OF HIS ORDER. THE ASSESSING OFFICER HAS ALSO REPRODUCED C OPY OF ACCOUNT OF SONA TRADERS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AT PAGE NO. 5 OF ASSESSMENT ORDER. FROM BOTH THE ACCOUNTS THE ASSESSING OFFICER NOTICED THA T THE PARTY SONA TRADERS IS LENDER OF THE CREDITOR. BOTH THE PARTIES HAVE SHOW N THAT THERE WAS AN OPENING BALANCE WHICH WAS SQUARED UP DURING THE YEAR. THE ASSESSEE HAS SHOWN REPAYMENT OF THE LOAN THROUGH CHEQUES WHEREAS SONA TRADERS HA S SHOWN REPAYMENT THROUGH DEMAND DRAFT. THE AUDITOR HAS ALSO REPORTED THAT T HE ASSESSEE HAS TAKEN FRESH LOAN OF RS.18,24,950/-. THE ASSESSING OFFICER FURTHER N OTICED THAT THE AUDIT REPORT AND BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT MATCH. S INCE THE BANK ACCOUNT AND OTHER DETAILS WERE NOT FURNISHED, THE ASSESSING OFFICER M ADE ADDITION OF RS.18,24,950/- AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE CIT(A) DELETED THE SAID ADDITION OBSERVING THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE ISSUE AS THE ASSESSEE MAINTAINED ACCOUNT IN HIN DI BY KHATA SYSTEM WHERE THE CREDIT IS SHOWN AT LEFT-HAND SIDE WHILE DEBIT IS SH OWN AT THE RIGHT-HAND SIDE, WHEREAS, SONA TRADERS MAINTAINED BOOKS OF ACCOUNTS IN ENGLISH COLUMN SYSTEM. THE CIT(A) HAS ALSO NOTICED THAT THERE IS A MISTAKE IN THE REPORTING IN ANNEXURE-B OF THE AUDIT REPORT. THE CIT(A) FURTHER NOTICED TH AT IN FACT THE TRANSACTION WITH THE PARTY WAS ON ACCOUNT OF SALE OF GHEE WHICH WAS SOLD IN EARLIER YEAR AND THERE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 4 WAS AN OUTSTANDING BALANCE OF SALE CONSIDERATION. THE AMOUNT RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS AGAINST OUTSTANDING SA LE CONSIDERATION. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE ISSUE IS THAT THERE WAS O PENING BALANCE IN THE ACCOUNT OF SONA TRADERS FOR A CREDIT BALANCE AS EVIDENT FROM T HE COPIES OF ACCOUNT REPRODUCED BY THE ASSESSING OFFICER IN HIS ORDER AT PAGE NOS.4 & 5. FROM THE BOOKS OF ACCOUNTS OF SONA TRADERS AS WELL AS OF THE ASSESSEE THE ASSESSING OFFICER HIMSELF ADMITTED AT PAGE NO.5 OF HIS ORDER THAT BOTH THE PA RTIES ARE SHOWING THAT THERE WAS OPENING BALANCE WHICH WAS SQUARED UP DURING THE YEA R. IT APPEARS FROM THE PERUSAL OF RECORD THAT ENTIRE CONFUSION ARISEN ON ACCOUNT O F AUDITORS REPORT WHO HAS REPORTED IN ANNEXURE-B OF HIS REPORT THAT THIS AMOU NT WAS LOAN AND DEPOSIT. THE ASSESSEE VIDE WRITTEN SUBMISSION BEFORE THE CIT(A), OF WHICH COPY APPEARS AT PAGE NO.5, SUBMITTED THAT THERE WAS MISTAKE ON THE PART OF THE AUDITOR AND A CLARIFICATION LETTER FROM THE AUDITOR WAS FURNISHED BEFORE THE CI T(A) THOUGH THE COPY OF SAID CLARIFICATION OF THE AUDITOR HAS NOT BEEN PLACED ON RECORD. HOWEVER, THIS FACT HAS BEEN RECORDED BY THE CIT(A) IN HIS ORDER. AFTER OB TAINING THE REMAND REPORT FROM THE ASSESSING OFFICER, THE CIT(A) IN PARAGRAPH NOS. 7.2 (A) OBSERVED THAT THE CONFUSION AROSE ON ACCOUNT OF AUDITORS MISTAKE. H OWEVER, THE AUDITOR HAS FURNISHED CERTIFICATE TO THAT EFFECT THAT THE ACTUA L POSITION WAS THAT THIS AMOUNT HAS ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 5 BEEN RECEIVED BUT AS A REPAYMENT OF EARLIER LOAN BA LANCE AND HENCE IT WAS NIL CLOSING BALANCE. WE NOTICED THAT THE ENTIRE CONFUS ION AROSE ON ACCOUNT OF REPORTING OF THE AUDITOR WHICH HAS BEEN SUBSEQUENTL Y RECTIFIED AS PER THE ORDER OF CIT(A). IT APPEARS FROM THE FACTS ON RECORD THAT T HERE WAS AN OPENING BALANCE OF RS.18,24,950/- IN THE ACCOUNT OF SONA TRADERS. AGA INST THE SAID OPENING BALANCE, THE ASSESSEE RECEIVED AMOUNT OF RS.18,24,950/- DURI NG THE YEAR AND THE ACCOUNT HAS BEEN SQUARED UP SO NIL BALANCE AS AT THE END OF THE YEAR. SINCE THERE IS NO CONTRARY MATERIAL OR FACTS AVAILABLE ON RECORD NOR THE LD. D EPARTMENTAL REPRESENTATIVE POINTED OUT ANY SUCH CONTRARY MATERIAL TO THE FINDI NG OF THE CIT(A), IN THE LIGHT OF THE FACTS, ORDER OF THE CIT(A) IS CONFIRMED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.39/AGR/2011 BY THE ASSESSEE FOR A.Y. 2006-0 7 6. THE ASSESSEE RAISED AS MANY AS 4 GROUNDS IN HIS APPEAL WHICH IS PERTAINING TO ADDITION OF RS.15,40,000/- MADE UNDER SECTION 68 OF THE ACT BY THE ASSESSING OFFICER IN RESPECT OF GIFT RECEIVED FROM SMT. ANJAL I CONSUL. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 6 7. BRIEF FACTS OF THE ISSUE ARE THAT DURING THE ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CREDITE D RS.15,40,000/- IN THE CAPITAL ACCOUNT. THE ASSESSING OFFICER ASKED EXPLANATION O F THE SAID AMOUNT OF RS.15,40,000/-. THE ASSESSING OFFICER NOTICED THAT A REMARK IS APPEARING AS BY SB 3361 ANJALI CONSUL. ASSESSING OFFICER NOTED TH AT NO FURTHER CLARIFICATION OR EXPLANATION HAS BEEN GIVEN FOR THE SAID ENTRY. IT HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS TAKEN UNSEC URED LOAN FROM THESE PERSONS WHICH IS BEING REFLECTED IN THE SCHEDULE OF UNSECUR ED LOANS. ON PERUSAL OF DETAILED COPY OF ACCOUNT, THE ASSESSING OFFICER NOTICED THAT NO FRESH LOAN FROM SMT. ANJALI CONSUL HAS BEEN TAKEN DURING THE YEAR. THE ASSESSI NG OFFICER WAS OF THE VIEW THAT UNDER THE CIRCUMSTANCES THE AMOUNT OF RS.15,40,000/ - COULD NOT BE TREATED AS EXPLAINED CREDIT ENTRY. THE ASSESSEE DID NOT FURNI SH ANY EXPLANATION. THE ASSESSING OFFICER ALSO NOTICED THAT SMT. ANJALI CON SUL IS ALSO ASSESSED IN HIS WARD AND ON PERUSAL OF INCOME TAX RETURN FOR THE ASSESSM ENT YEAR 2006-07, IT WAS NOTICED THAT THE SOURCE OF INCOME WAS ONLY LIMITED I.E. THE INTEREST INCOME OF RS.36,564/- ON FDRS. THERE WAS NO OTHER SOURCE OF INCOME. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSEE FAILED T O PROVE THE CREDITWORTHINESS OF THE AMOUNT OF RS.15,40,000/-. THE ASSESSING OFFICER MA DE ADDITION OF RS.15,40,000/- UNDER SECTION 68 OF THE ACT AS THE ASSESSEE HAS FAI LED TO EXPLAIN THE CREDIT ENTRY APPEARING IN THE CAPITAL ACCOUNT. BEFORE THE CIT(A ) IT WAS CLAIMED BY THE ASSESSEE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 7 THAT THE AMOUNT CREDITED IN THE CAPITAL ACCOUNT WA S THE AMOUNT OF GIFT RECEIVED FROM REAL SISTER SMT. ANJALI CONSUL WHO IS RESIDENT OF SINGAPORE. THE CIT(A) CONFIRMED THE ADDITION AS UNDER :- 7.3 GROUND NO.3 AGAINST ADDITION OF RS.15,40,000 /- IN RESPECT OF GROUND NO.3, I FIND THAT THE APPELLAN TS CASE IS ON A WEAK FOOTING. DURING APPELLATE PROCEEDINGS, THE ASSESSEE IS CLAIMING THAT THIS WAS GIFT RECEIVED FROM HIS REAL SISTER, SMT. ANJALI CONSUL, WHO IS NOW RESIDENT OF SINGAPORE. I DO NOT SEE ANY REASON AS TO WHY THE ASSESSEE COULD NOT FURNISH SUCH SIMPLE E XPLANATION BEFORE THE ASSESSING OFFICER, IN CASE THE SAME WAS TRUE. NEITHER ANY SUCH EXPLANATION NOR ANY EVIDENCE TO THAT EFFECT WAS FUR NISHED BEFORE THE ASSESSING OFFICER. DURING APPELLATE PROCEEDINGS, T HE APPELLANT HAS NOT BEEN ABLE TO CONVINCE ME AS TO WHAT WAS THE REA SONABLE CAUSE WHICH PREVENTED THE ASSESSEE FROM FURNISHING SUCH E XPLANATION AND EVIDENCE, DURING ASSESSMENT PROCEEDINGS. 7.3(A) NOT ONLY THAT, NEITHER SUCH GIFT WAS SHO WN IN THE RETURN OF SMT. ANJALI CONSUL (AS MENTIONED BY ASSESSING OFFIC ER IN ASSESSMENT ORDER BECAUSE HE WAS ALSO ASSESSING THE CASE OF SMT . ANJALI CONSUL) NOR THE ASSESSEE MENTIONED ANY NOTE TO THAT EFFECT EVEN IN HIS RETURN OR IN THE ACCOMPANIED COMPUTATION OF INCOME OR ACCOUNT S. 7.3(B) APART FROM THE FACT THAT SUCH A HUGE GIF T IS CERTAINLY UNUSUAL AND ALSO THAT CREDITOR CANNOT BE EXAMINED (WHICH MA KES THE CREDIT ENTRY DIFFICULT TO BE VERIFIED); I DO NOT FIND ANY GOOD REASON TO ADMIT SUCH SUBMISSION/EVIDENCE AT THIS STATE. THUS I HOL D THAT THE ASSESSING OFFICER WAS CORRECT IN MAKING ADDITION OF RS.15,40, 000/- U/S 68. 8. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE RECEIVED GIFT OF RS.15,40,000/- FROM HIS REAL SISTER SMT. ANJALI CON SUL. HE FURTHER SUBMITTED THAT AT THE TIME OF ASSESSMENT THE ASSESSEE SUBMITTED COPY OF BANK ACCOUNT OF SMT. ANJALI CONSUL FROM WHICH GIFT CHEQUE WAS GIVEN. COPIES OF CHEQUES RECEIVED FROM UTI ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 8 AND COPY OF FDRS RECEIVED BY SMT. ANJALI CONSUL, TO PROVE THE CREDIT ENTRY IN THE BANK ACCOUNT, WERE ALSO SUBMITTED BEFORE THE ASSESS ING OFFICER. THE ASSESSEE ALSO SUBMITTED COPY OF INCOME TAX RETURN, PAN AND PASSPO RT OF SMT. ANJALI CONSUL. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THA T THE ASSESSING OFFICER HAS WRONGLY STATED IN HIS ORDER THAT NO SUCH PAPERS WER E FURNISHED BY THE ASSESSEE. HE SUBMITTED THAT SMT. ANJALI CONSUL WAS ALSO ASSESSED WITH ASSESSING OFFICER BUT THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRY FROM H ER. AS REGARDS THE OBSERVATION OF THE CIT(A) THAT THE ASSESSEE COULD NOT FURNISH S UCH SIMPLE EXPLANATION BEFORE THE ASSESSING OFFICER, THE LD. AUTHORISED REPRESENT ATIVE SUBMITTED THAT CONTENTION OF THE ASSESSEE IS THAT THE SAME WAS FURNISHED BEFO RE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, THEREFORE, THE QUESTION OF SUPPLYING REASONABLE CAUSE FOR NOT FURNISHING THE EXPLANATION OR EVIDENCE DOES NOT ARISE. LD. AUTHORISED REPRESENTATIVE SUBMITTED IN RESPECT OF OBSERVATION OF CIT(A) THAT THE ASSESSEE AS WELL AS SMT. ANJALI CONSUL DID NOT SHOW THE GIFT IN THE RETURN OF INCOME. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE IS N O SUCH COLUMN IN THE SARAL RETURN FORM. LAW DOES NOT SAY THAT IF GIFT IS NOT SHOWN IN THE RETURN, IT SHALL BE ADDED IN THE INCOME. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT CREDITOR WAS NOT EXAMINED NEITHER BY THE ASSESSING OFFICER NOR B Y CIT(A). LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSING OFFICER COULD KNOW THAT THE DONOR ALSO ASSESSED BY HIM THAT TOO WHEN NO EXPLANA TION WAS ALLEGED TO BE GIVEN ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 9 BY THE ASSESSEE IF THE ASSESSING OFFICER COULD MAKE SO MUCH EFFORTS, WHY HE DID NOT MAKE ANY EFFORT TO CALL THE ASSESSEE AND ASCERT AIN THE TRUE FACTS. LD. AUTHORISED REPRESENTATIVE REFERRED VARIOUS PAGES OF PAPER BOOK . PAGE NO.18 IS COPY OF CONFIRMATION OF GIFT GIVEN BY SMT. ANJALI CONSUL AN D ACCEPTED BY THE ASSESSEE DATED 15.12.2005, PAGE NOS.15 & 16 IS COPY OF PASSP ORT OF SMT. ANJALI CONSUL, PAGE NO.14 IS PAN CARD OF SMT. ANJALI CONSUL, PAGE NO.13 IS COMPUTATION OF TOTAL INCOME OF SMT. ANJALI CONSUL, PAGE NO.8 IS COPY OF BANK ACCOUNT OF SMT. ANJALI CONSUL FROM WHICH SMT. ANJALI CONSUL HAS GIVEN GIFT S TO THE ASSESSEE, PAGE NOS.9, 10, 11 & 12 WHICH ARE IN SUPPORT OF PROOF OF CREDIT ENTRIES IN THE BANK ACCOUNT BEFORE ISSUING CHEQUE OF THE GIFT. 9. LD. AUTHORISED REPRESENTATIVE WHILE CONCLUDING T HE ARGUMENT SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT PAPERS BEFORE THE ASSESSING OFFICER BUT THE ASSESSING OFFICER WRONGLY STATED THAT THESE PAP ERS WERE NOT FURNISHED BEFORE HIM. THE ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRY. THE GIFT WAS GIVEN BY THE ASSESSEES SISTER FOR THE CHILDREN OF HER BROTH ER AFTER THE DEATH OF HER FATHER ON 23.03.2005. 10. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED UPON THE ORDER OF REVENUE AUTHORITIES AND SUBMITTED THAT THE ASSESSEE FAILED TO FURNISH ANY ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 10 EXPLANATION. THE ASSESSING OFFICER IS EMPOWERED TO MAKE ADDITION UNDER SECTION 68 OF THE ACT IN RESPECT OF NON-GENUINE GIFTS. LD. DEPARTMENTAL REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE DECISION OF I.T.A.T. DELHI BENCH IN THE CASE OF ACIT VS. RAJEEV TANDON, 108 ITD 560 (DELHI) WHICH HAS BEEN CONFIRMED BY THE DELHI HIGH COURT REPORTED IN RAJEEV TANDON V S. ACIT, 294 ITR 488 (DELHI). 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IN THE CASE UNDER CONSIDERATION THE ISSUE IS IN RESPEC T OF GIFT OF RS.15,40,000/- FROM YOUNGER SISTER OF THE ASSESSEE. TO EXAMINE THE ISSU E LET US SEE WHAT IS MEANING OF THE GIFT. THE ORDINARY MEANING OF THE GIFT IS A TR ANSFER BY ONE PERSON TO ANOTHER OF ANY EXISTING MOVABLE OR IMMOVABLE PROPERTY MADE VOL UNTARILY OR WITHOUT CONSIDERATION OF MONEY OR MONEY WORTH. IN LEGAL EFF ECT, THERE CANNOT BE A GIFT WITHOUT A GIVING AND TAKING. THE GIVING AND TAKING ARE THE TWO CONTEMPORANEOUS RECIPROCAL ACTS WHICH CONSTITUTE A GIFT. IN ORDER TO MAKE A VALID GIFT, THERE MUST BE PERFECT KNOWLEDGE IN THE MIND OF THE PERSON MAKING THE GIFT OF THE EXTENT OF THE BENEFICIAL INTEREST INTENDED TO BE CONFERRED, AND O F WHICH MAKING IT. DONOR GIVES GIFT IN MONEY OR MONEYS WORTH AND TAKING LOVE AND AFFECTION FROM DONEE. TO EXAMINE THE ISSUE FROM POINT OF VIEW OF THE PROVISI ONS OF INCOME TAX ACT WE ARE TO SEE THE NATURE OF THE TRANSACTION. GIFT, ITS NAT URE IS CREDIT IN THE HANDS OF THE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 11 DONEE BECAUSE DONEE CREDITED GIFT AMOUNT HIS/HER CA PITAL ACCOUNT AND BEING TREATED AS OWN MONEY/CAPITAL. NORMALLY SUCH CREDIT ENTRY IN CAPITAL ACCOUNT CAN BE MADE ONLY OF THE TRANSITION WHICH HAS BEEN PROCESSED THR OUGH THE PROVISIONS OF THE INCOME TAX ACT. IT APPEARS FROM READING OF SECTION 68 OF THE ACT THAT WHENEVER A SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE THEN, IRRESPECTIVE OF THE COLOUR OR THE NATURE OF THE SUM RECEIVED WHICH IS SOUGHT TO BE GIVEN BY THE ASSESSEE, THE INCOME-TAX OFFICER HAS THE JURISDICTI ON TO ENQUIRE FROM THE ASSESSEE THE NATURE AND SOURCE OF THE SAID AMOUNT. WHEN AN EXPLANATION IN REGARD THERETO IS GIVEN BY THE ASSESSEE THEN, IT IS FOR THE INCOME-TA X OFFICER TO BE SATISFIED WHETHER THE SAID EXPLANATION IS CORRECT OR NOT. IT IS IN TH IS REGARD THAT ENQUIRIES ARE USUALLY MADE IN ORDER TO FIND OUT AS TO WHETHER, FIRSTLY TH E PERSONS FROM WHOM MONEY IS ALLEGED TO HAVE BEEN RECEIVED ACTUALLY EXISTED OR N OT. SECONDLY DEPENDING UPON THE FACTS OF EACH CASE, THE INCOME-TAX OFFICER MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE OF THE DEPOSITOR, ASSUMING HE IS IDENTIFIED, IN ORDER TO DETERMINE WHETHER THAT DEPOSITOR IS A MERE NAME LE NDER OR NOT. BE THAT AS IT MAY, IT IS CLEAR THAT THE INCOME-TAX OFFICER HAS JURISDICTI ON TO MAKE ENQUIRIES WITH REGARD TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE B OOKS OF ACCOUNT OF AN ASSESSEE AND IT WOULD BE IMMATERIAL AS TO WHETHER THE AMOUNT SO CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REPRESENTING THE SALE PROCEEDS O R EVEN RECEIPT OF GIFT. THE USE OF THE WORDS ANY SUM FOUND CREDITED IN THE BOOKS IN SECTION 68 INDICATES THAT THE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 12 SAID SECTION IS VERY WIDELY WORDED AND AN INCOME-TA X OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND S OURCE THEREOF EVEN IF THE SAME IS CREDITED AS GIFT. WHAT IS CLEAR, HOWEVER, IS THAT S ECTION 68 CLEARLY PERMITS AN INCOME-TAX OFFICER TO MAKE ENQUIRIES WITH REGARD TO THE NATURE AND SOURCE OF ANY OR ALL THE SUMS CREDITED IN THE BOOKS OF ACCOUNT OF THE COMPANY IRRESPECTIVE OF THE NOMENCLATURE OR THE SOURCE INDICATED BY THE ASSESSE E. IN OTHER WORDS, THE TRUTHFULNESS OF THE ASSERTION OF THE ASSESSEE REGAR DING THE NATURE AND THE SOURCE OF THE CREDIT IN ITS BOOKS OF ACCOUNT CAN BE GONE INTO BY THE INCOME-TAX OFFICER. THERE IS NO QUARREL WITH THE PROPOSITION THAT A MERE IDEN TIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BAN KING CHANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT AND SINCE THE CLAIM OF A GIFT IS MADE BY THE ASSESSEE THE ONUS LIES ON HIM NOT ONLY TO ES TABLISH THE IDENTITY OF THE DONOR BUT HIS CAPACITY TO MAKE SUCH A GIFT. THE ASSESSEE IS REQUIRED TO PROVE THREE IMPORTANT CONDITIONS, NAMELY, (I) THE IDENTITY OF T HE CREDITOR, (II) THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY, AND (III) THE GENUIN ENESS OF THE TRANSACTION. WHAT EVIDENCE WOULD BE SUFFICIENT TO ESTABLISH THE SAID CONDITIONS OR WHAT MATERIAL WOULD BE RELEVANT IN A PARTICULAR CASE, WOULD DEPEN D ON THE FACTS OF EACH CASE. THERE CANNOT BE ONE GENERAL GUIDING YARDSTICK IN TH E MATTER. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 13 11.1 THE ASSESSEE HAS FURNISHED SOME MATERIAL/ EVIDENCE LIKE BANK ACCOUNT, COPY OF PASSPORT, GIFT LETTER AND OTHERS, TO APPREC IATE THOSE MATERIAL/EVIDENCES WE WOULD LIKE REFER ONE OF THE JUDGMENT OF THE APEX CO URT IN THE CASE OF CIT V DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN THE COURT HELD THAT SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HA VE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. IT HAS BEEN FURTHER HELD AS UNDER:- IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO REL IES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUME NTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME REC ITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS N OT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLIN KERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE EN TITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. 11.2 THE APEX COURT IN THE CASE OF COMMISSIONER O F INCOME-TAX V. P MOHANAKALA 291 ITR 278 (SC) HAS LAID DOWN CERTAIN G UIDELINES IN RESPECT OF THE GENUINENESS OF A GIFT. IN THIS CASE FOLLOWING QUES TIONS HAVE BEEN ANSWERED BY THE HIGH COURT IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE: ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 14 (A) WHETHER, IN THE FACTS AND CIRCUMSTANCES, THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW TO ACCEPT THE PRINCIPLE OF PREPO NDERANCE OF PROBABILITIES IN HOLDING THAT THE CLAIM OF THE APPELLANT THAT THE SUM OF RS. 15,62,500 RECEIVED HIM BY WAY OF GIFTS THROUGH NORMAL BANKIN G CHANNELS WAS NOT GENUINE AND THAT IT WAS LIABLE TO BE ASSESSED UNDE R SECTION 68 OF THE INCOME- TAX ACT, 1961 ? (B) WHETHER, IN THE LIGHT OF THE LAW ESTABLISHED AND BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOME-TAX A PPELLANT TRIBUNAL IS LEGALLY JUSTIFIED IN CONCLUDING THAT BURDEN OF PROO F CAST ON THE APPELLANT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 HAS NO T BEEN DISCHARGED AND THE INGREDIENTS FOR INVOKING SECTION 68 OF THE INCO ME-TAX ACT ARE PRESENT? (C) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CONCLUSION OF THE TRIBUNAL THAT THE CLAIM OF GIFT IS NOT GENUINE IS R EA SONABLE AND BASED ON RELEVANT MATERIAL AND NOT PERVERSE ? 11.3 THE DISPUTE IN ALL THESE APPEALS RELATES TO TH E ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SEVERAL FOREIGN GIF TS STATED TO HAVE BEEN RECEIVED BY THE ASSESSEES FROM ONE COMMON DONOR NAMELY SAMPA TH KUMAR. THE GIFTS ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 15 RECEIVED WERE FROM ONE ARIAVAN THOTAN AND SUPROTOMA N. IT IS DURING THE ENQUIRY BY THE REVENUE IT IS ASSERTED THAT THEY WERE THE AL IASES OF SAMPATHKUMAR. THESE GIFTS WERE MADE TO A. SRINIVASAN AND HIS WIFE, SMT . S. KALAVATHY, HIS SON, S. BALAJI MANIKANDAN AND TO ONE OF HIS BROTHERS, RAJE NDRAN AND SMT. MOHANAKALA.IN ALL THE AGGREGATE GIFTS RECEIVED BY THE ASSESSEES I S TO THE EXTENT OF RS.1,79,27,703. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OFFERED BY THE RESPECTIVE ASSESSEES THAT THE AMOUNT OF CREDIT IS A GIFT FROM NRI AND PROCEEDED TO ADD IT AS THE INCOME OF THE ASSESSEES FROM UNDISCLOSED SOURCES. T HE CREDIT ENTRIES HAVE BEEN MADE DURING THE PERIOD FROM JULY 8, 1992 TO OCTOBER 19, 1995. THERE IS NO DISPUTE THAT THE PAYMENTS WERE MADE BY INSTRUMENTS ISSUED B Y A FOREIGN BANK AND CREDITED INTO THE RESPECTIVE ASSESSEES ACCOUNT BY NEGOTIATI ON THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT FROM ABROAD WERE DRAWN ON CITIB ANK, N.A. SINGAPORE. THE ASSESSING OFFICER DEALT WITH THE CONTROVERSY AS REG ARDS THE CASH CREDIT ENTRIES RECEIVED FROM THE FOREIGN DONOR. HE NOTICED THAT TH E GIFTS HAVE BEEN SENT IN THE NAME OF ARIAVAN THOTTAN AND RECEIVED BY A. SRIN IVA SAN AND OTHERS WHO ARE ALL HIS FAMILY MEMBERS. EACH ONE OF THEM IS AN INDIVIDUAL A SSESSEE. ALL THE ASSESSEES WERE SUMMONED AND THEIR STATEMENTS HAVE BEEN RECORD ED BY THE ASSESSING OFFICER. SRINIVASAN WHO IS THE KEY PERSON IN HIS STATEMENT S AID THAT HE KNEW SAMPATHKUMAR FOR THE LAST 20 YEARS AND HE HAD BEEN HELPING SAMPA THKUMAR PRIOR TO 1985 BY PAYING RS. 100 TO 200 EVERY MONTH AS HE HAD NO SOUR CE OF INCOME TO GET HIMSELF ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 16 EDUCATED. SAMPATHKUMAR IN HIS OWN STATEMENT STATED THAT HE WAS IN INDONESIA UP TO THE YEAR 1992 AND EMPLOYED AS AN ENGINEER. THEREAFT ER, HE SHIFTED TO ENGLAND AND STARTED CONSULTANCY PROFESSION THERE. LATER IN THE END OF THE YEAR 1994-95, HE JOINED NEW CENTURY MACHINERY LTD., CHESHIRE, SK 16 4XS AND BECAME ITS DIRECTOR IN 1996. IT IS IN HIS STATEMENT THAT HE IS PAYING T AXES IN ENGLAND FROM HIS INCOME EARNED IN ENGLAND. AS FAR AS HIS INDIAN INCOME IS C ONCERNED, HE STATED THAT HE FILED THE RETURNS FOR THE ASSESSMENT YEARS 1996-97 AND 19 97-98 BEFORE THE INCOME-TAX OFFICER, WARD 1(4), CBE ONLY ON OCTOBER 23, 1997. H IS INVESTMENT IN INDIAN COMPANIES ACCORDING TO HIM WILL BE AROUND RS. 5 CRO RES AND MADE OUT OF HIS INCOME EARNED IN THE FOREIGN COUNTRIES. HE DID NOT REVEAL THE DETAILS OF HIS BANK ACCOUNT IN INDIA AND STATED THAT HE WOULD BE SUBMIT TING THE DETAILS THROUGH HIS AUDITOR WHICH HE DID NOT. EXCEPT THE SELF SERVING S TATEMENT THERE IS NO MATERIAL EVIDENCE AS REGARDS HIS FINANCIAL STATUS. HE STATED FROM 1972-73 HE KNEW SRINIVASAN, RAJENDRAN AND THEIR FAMILIES. HIS FATHE R WAS A TAXI DRIVER, AND WAS VERY POOR. SRINIVASAN AND HIS FAMILY MEMBERS WERE SUPPOR TING HIM WHEN HE WAS IN INDIA. TO A POINTED QUERY AS TO WHETHER THERE IS AN Y EVIDENCE TO SHOW THAT HE WAS ALSO KNOWN BY ANY OTHER NAME OTHER THAN SAMPATHKUMA R, HE STATED THAT NO EVIDENCE. ONLY MR. SRINIVASAN USED TO CALL ME AS SU PROTOMAN. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 17 11.4 THE ASSESSING OFFICER IN THE CIRCUMSTANCES CAM E TO THE CONCLUSION THAT THE GIFTS THOUGH APPARENT ARE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS CREDITED IN THE BOOKS OF THE ASSESSEE AS THE INCOME OF THE ASSESSEE. ON APPEAL THE COMMISSIONER OF INCOME-TAX CONCLUDED THAT THE STORY SET UP BY THE ASSESSEE IS UNACCEPTABLE AND HARD TO BELIEVE AND THE PREPONDER ANCE OF PROBABILITIES, THE COMMON COURSE OF HUMAN LIVINGS POINT TO THE CONTRAR Y. THE APPEALS WERE ACCORDINGLY DISMISSED. THE ITAT CONCURRED WITH THE FINDINGS AND CONCLUSIONS ARRIVED AT BY THE ASSESSING OFFICER AND THE COMMISS IONER OF INCOME-TAX. THE TRIBUNAL NOTICED THAT THE LETTERS EXCHANGED BY THE PER- SON WHO HAD SENT FOREIGN EXCHANGE TO THE ASSESSEE ONLY INDICATE THAT THERE I S NO LOVE AND AFFECTION BETWEEN THEM AND THAT HE IS CLEARLY MATERIALISTIC AND HIS S TATEMENT OF ACCEPTING A RECIPROCATION IS ALSO AN INDICATION TO THE FACT THA T HE IS NOT DOING ANYTHING FREE BUT CLEARLY THE COMPENSATION WAS A ROUNDABOUT MANNER OF SHOWING OF HE HAVING BEEN COMPENSATED EITHER IN INDIA OR ABROAD. THE TRIBUNA L ALSO TOOK NOTE OF THE VARIOUS OTHER ATTENDING CIRCUMSTANCES AND FOUND IT DIFFICUL T TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE. THE HIGH COURT CAME TO TH E CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL AND OTHER AUTHORITIES ARE IN THE REALM OF SURMISES, CONJECTURES AND SUSPICIONS . . . THE AUTHORITIES UN DER THE ACT HAVE FAILED TO DRAW THE ONLY CONCLUSION THAT IS POSSIBLE LEGALLY AND LOGICA LLY. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 18 11.5 THE APEX COURT HELD AS UNDER :- EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSE SSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON R ECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. ALL THE DECISIONS CITED AND REFERRED TO HEREINABOVE ARE REQUIRED TO B E APPRECIATED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI DAYAL [1995] SUPP 2 SCC 453. WHETHER THE HIGH COURT WAS JUSTIFIED IN INTERFERIN G WITH THE CONCURRENT FINDING OF FACT ARRIVED AT BY ALL THE AU THORITIES INCLUDING THE TRIBUNAL? THE ASSESSING OFFICER FOUND THAT ALL THE SO-CALLED GIFTS CAME FROM ARIAVAN THOTAN AND SUPROTOMAN. THE ASSESS EES DID NOT DECLARE THAT THEY ARE THE ALIASES OF SAMPATHKUMAR. IT IS ONLY AN AFTERTHOUGHT THEY HAVE COME FORWARD WITH THE SAID P LEA. THE ASSESSING OFFICER ALSO FOUND THAT THE GIFTS WERE NO T REAL IN NATURE. VARIOUS SURROUNDINGS CIRCUMSTANCES HAVE BEEN RELIED UPON BY THE ASSESSING OFFICER TO REJECT THE EXPLANATION OFFERED BY THE ASSESSEES. THE COMMISSIONER OF APPEALS CONFIRMED THE FINDINGS AND CONCLUSION DRAWN BY THE ASSESSING OFFICER. THE TRIBUNAL SPEAKI NG THOUGH ITS SENIOR VICE PRESIDENT CONCURRED WITH THE FINDINGS O F FACT. THE FINDINGS IN OUR CONSIDERED OPINION ARE BASED ON THE MATERIAL AVAILABLE ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THE Y ARE NOT IMAGINARY AS SOUGHT TO BE CONTENDED. RELYING ON THE DECISIONS OF THIS COURT IN BEJOY GOP AL MUKHERJI V. PRATUL CHANDRA GHOSE, AIR 1953 SC 153 AND ORIEN T DISTRIBUTORS V. BANK OF INDIA LTD. AIR 1979 SC 867, SHRI IYER, LEARNED SENIOR COUNSEL CONTENDED THAT THE ISSUE RELATING TO THE P ROPRIETY OF THE LEGAL CONCLUSION THAT COULD BE DRAWN ON THE BASIS OF PRO VED FACTS GIVES RISE TO A QUESTION OF LAW AND, THEREFORE, THE HIGH COUR T IS JUSTIFIED IN INTERFERING IN THE MATTER SINCE THE AUTHORITIES BE LOW FAILED TO DRAW A PROPER AND LOGICAL INFERENCE FROM THE PROVED FACTS. WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SUBMISSION. THE FI NDINGS OF FACT ARRIVED AT BY THE AUTHORITIES BELOW ARE BASED ON PR OPER APPRECIATION ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 19 OF THE FACTS AND THE MATERIAL AVAILABLE ON RECORD A ND SURROUNDING CIRCUMSTANCES. THE DOUBTFUL NATURE OF THE TRANSACTI ON AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN DULY TAKEN IN TO CONSIDERATION BY THE AUTHORITIES BELOW. THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONES. MAY BE THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSAC TION BUT THAT ITSELF IS OF NO CONSEQUENCE. NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUEST ION OF LAW HAD ARISEN FOR CONSIDERATION OF THE HIGH COURT. THE HIGH COURT MISDIRECTED ITSELF AND COMMITTED AN ERROR IN DISTUR BING THE CONCURRENT FINDINGS OF FACT. 11.6 DELHI HIGH COURT IN THE CASE OF RAJEEV TANDON VS. ACIT, 294 ITR 488 (DELHI) HELD AS UNDER :- HAVING HEARD LEARNED COUNSEL FOR THE ASSESSEE, WE FIND THAT THE TRIBUNAL CONSIDERED THE ENTIRE CASE LAW ON THE SUBJECT INCLUDING SEVERAL DECISIONS OF THE SUPREME COURT AND THIS COU RT. REFERENCE HAS BEEN MADE TO CIT V. DURGA PRASAD MORE [1971] 82 ITR 540, WHEREIN THE SUPREME COURT OBSERVED THAT THE TAXING AUTHORIT IES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REAL AND FACTUAL POSITION. SIMILARLY, THIS COURT IN SAJAN D ASS AND SONS V. CIT [2003] 264 ITR 435 TOOK THE VIEW THAT NOT ONLY MUST THE ASSESSEE ESTABLISH THE IDENTITY OF THE DONOR AND HIS CAPACIT Y TO MAKE THE GIFT, BUT HE MUST ALSO ESTABLISH THAT THE AMOUNT RECEIVED BY HIM WAS IN FACT A GIFT. WE MAY NOTE THAT VERY RECENTLY, THE SUPREME COURT D EALT WITH A SOMEWHAT SIMILAR SITUATION IN CIT V. P. MOHANAKALA [2007] 291 ITR 278. WHILE DEALING WITH SECTION 68 OF THE ACT, THE SUPREME COURT HELD THAT : (I) THERE HAS TO BE A CREDIT OF THE AMOUNT IN THE B OOKS MAINTAINED BY THE ASSESSEE. (II) SUCH CREDIT HAS TO BE OF A SUM DURING THE PREV IOUS YEAR. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 20 (III) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS, OR IF THE ASSESS EE OFFERS AN EXPLANATION THEN, IN THE OPINION OF THE ASSESSING O FFICER, IT IS NOT SATISFACTORY. IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF AN ASSESSEE. THE SUPREME COURT CONSIDERED THE EXPRESSION THE AS SESSEE OFFERS NO EXPLANATION AND OBSERVED THAT WHAT IT ME ANS IS THAT THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABL E EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER, FORMED OBJECT IVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. 11.7 PUNJAB& HARYANA HIGH COURT IN THE CASE OF YASH PAL GOEL V. CIT(A), 310 ITR 75 (P&H) UNDER THE CIRCUMSTANCES HELD THAT GIFT TRANSACTION WAS NOT GENUINE. THE COURT ALSO OBSERVED AS UNDER:- THE SO-CALLED GIFT SET UP BY THE APPELLANT WAS NOT BONA FIDE TRANSACTION. THE UNSCRUPULOUS USE EVERY GIMMICK TO AVOID PAYING INCOME-TAX. IF THE STATE EXCHEQUER IS MADE THE TAR GET OF DECEIT AND THE REVENUE COMES DOWN, THE DEVELOPMENT OF THE COUNTRY WILL BE A CASUALTY. IT IS REPREHENSIBLE THAT SAME CITIZENS S PEND ON LITIGATION AND UNNECESSARILY BRING MATTERS BEFORE COURTS THAN TO P AY TAX ON THEIR INCOME. THE TENDENCY NEEDS TO BE DISCOURAGED AND C URBED. THIS COURT IS CONSTRAINED TO FEEL THAT THE DEPARTMENT OF INCOME-TAX HAS UNNECESSARILY BEEN DRAGGED IN THIS LITIGATION AND T HE TIME OF THE COURT HAS ALSO BEEN WASTED. THEREFORE, RS.30,000/- IS IM POSED AS COSTS ON THE APPELLANT. THE AMOUNT SHALL BE DEPOSITED BY TH E APPELLANT WITHIN 45 DAYS FROM TODAY FAILING WHICH THE INCOME-TAX AUT HORITIES SHALL RECOVER IT FROM HIM AS ARREARS OF INCOME-TAX. ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 21 11.8 IN THE LIGHT OF ABOVE LAW LAID DOWN BY T HE APEX COURT IN THE CASE OF CIT V DURGA PRASAD MORE 82 ITR 540 (SC), IN THE CASE OF C OMMISSIONER OF INCOME-TAX V. P MOHANAKALA 291 ITR 278 (SC) AND OTHER DECISIO NS AS DISCUSSED ABOVE IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSIDERATION AND THE SURROUNDING CIRCUMSTANCES, PREVAILING PRACTICE/CUSTOMS IN THE S OCIETY, WE FIND THAT IN THE CASE UNDER CONSIDERATION CLAIM OF THE ASSESSEE TO RECEIV E GIFT FROM YOUNGER SISTER WHICH IS AGAINST WHOLE PHILOSOPHY, TRADITION AND RECOGNIZ ED SOCIAL CUSTOM AND RELIGIOUS. IN INDIA IT IS OLD AGE ACCEPTED FACT THAT ELDER BRO THER NEVER TAKES ANYTHING FROM HIS YOUNGER SISTER, EVEN DRINKING WATER FROM HIS YOUNGE R SISTER. RELATION OF BROTHER AND SISTER IS HOLLY RELATION AND BROTHER IS ALWAYS PROTECTING SISTER AN ALL ASPECT OF THE MATTER INCLUDING FINANCIAL MATTER BUT GIFT FROM YOUNGER SISTER IS AN UNUSUAL CIRCUMSTANCES WHICH IS UNBELIEVABLE. IT MAY BE AN O LD CUSTOMS BUT THIS CONCEPT HAS TO TAKE INTO CONSIDERATION FOR PEACEFUL, AND GRACE FULL RUNNING OF A CIVIL SOCIETY AND IF SOME HAS TRIED TO DEMOLISH SUCH ACCEPTED SOCIAL CUSTOM SUCH ACTION IS REQUIRED TO QUASH AT THE FIRST SAGE ITSELF, OTHERWISE EXISTE NCE OF CIVIL SOCIETY ITSELF WILL BE IN DANGER. A CONSENT OF SUCH ACTION OF A PERSON CANNOT BE GIVEN WHILE RECORDING FACTS OF THE CASE FOR THE PURPOSE OF EVEN IN INCOME TAX P ROCEEDING. THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE ASSESSEE HAS FURNISHED NECESSARY EXPLANATION AND EVIDENCE BEFORE THE ASSESSING OFFIC ER, CONTRARY TO THAT, THE ASSESSING OFFICER NOTED IN HIS ORDER THAT NO EVIDEN CE WAS FURNISHED. THE CIT(A) ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 22 SURPRISED TO NOTE THAT EVEN SUCH A SIMPLE EXPLANATI ON THAT THE AMOUNT WAS GIFTED BY THE ASSESSEES SISTER WAS NOT POINTED OUT TO THE AS SESSING OFFICER NOR SUCH EXPLANATION WAS FURNISHED BEFORE THE ASSESSING OFFI CER. RULE 10 OF ITAT RULES PROVIDES THAT WHERE A FACT WHICH CANNOT BE BORNE OU T BY, OR IS CONTRARY TO, THE RECORD IS ALLEGED, IT SHALL BE STATED CLEARLY AND C ONCISELY AND SUPPORTED BY A DULY SWORN AFFIDAVIT. THE ASSESSEE DID NOT FILE SUCH SW ORN AFFIDAVIT STATING THAT THE ASSESSING OFFICER HAS RECORDED CONTRARY FACTS IN HI S ORDER. NOT ONLY THIS, BUT IT IS ALSO FACT THAT THE ASSESSEE FAILED TO FURNISH ANY E VIDENCE TO SUPPORT THAT THESE DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER. HOWEVER, IN THE INTEREST OF JUSTICE, WHATEVER PAPERS WERE FILED IN PAPER BOOK A ND POINTED OUT BY THE LD. AUTHORISED REPRESENTATIVE, IF WE CONSIDER IT ON MER IT, ON PERUSAL OF COPY OF STATEMENT OF SYNDICATE BANK ACCOUNT OF ALIGARH MAIN BRANCH WHICH HAS BEEN PLACED AT PAGE NO.8 OF ASSESSEES PAPER BOOK, IT HA S BEEN NOTICED THAT CREDIT BALANCE IN THE SAID ACCOUNT UP TO 09.07.2005 WAS RS .13,582/-. ON 15.10.2005, IT IS MENTIONED AS CLOSE TRF-VCC 42493 RS.9,06,167/-. NE XT ENTRY IS DATED 09.11.2005 NARRATING CLOSE TRF-VCC 42551 RS.3,07,744/-. NEXT ENTRY IS DATED 17.11.2005 CLG RS.17,770/-, THEN ENTRY DATED 19.11.2005 CLG RS .2,96,949.26, THEN ENTRY DATED 02.01.2006 TO ALOK AGARWAL CHEQUE NO.869326 R S.15,40,000/- SHOWN AS DEBIT AMOUNT. AFTER THAT DEBIT AMOUNT OF RS.15,40, 000/-, THE BALANCE AMOUNT REMAINED IN THE BANK ACCOUNT WAS RS.2,212.82. ON A PERUSAL OF PAGE 11 OF THE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 23 PAPER BOOK WHERE SUPPORTING DOCUMENT FROM SYNDICATE BANK IN RESPECT OF VIKAS CASH CERTIFICATE HAS BEEN PLACED, IT HAS BEEN NOTIC ED THAT THE DATE OF MATURITY OF THE SAID VCC WAS 10.10.2005 FOR RS.9,07,067/- WHICH HAS BEEN CREDITED IN ASSESSEES SAVINGS BANK ACCOUNT ON 15.10.2005 RS.9, 06,167/-. THE OTHER VCC OF WHICH COPY HAS BEEN PLACED AT PAGE NO.10 OF ASSESSE ES PAPER BOOK WHICH BEARING NO.33339 36160, THE DATE OF MATURITY OF THIS VCC WA S 07.11.2004 FOR RS.3,07,589/- WHEREAS IN BANK ACCOUNT THE ENTRY IS DATED 09.11.2005 VCC 42551 FOR RS.3,07,744/-.. IN THIS ENTRY, NEITHER THE DAT E OF MATURITY NOR THE VCC OR AMOUNT IS TALLIED AS PER THE ENTRY IN S.B. ACCOUNT AND A COPY OF VCC WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 10. THE ASSE SSEE DID NOT POINT OUT ANY EXPLANATION IN RESPECT OF THESE DISCREPANCIES. IN RESPECT OF ENTRY DATED 17.11.2005 FOR RS.17,770/-, IT WAS EXPLAINED THAT IT WAS INCOM E TAX REFUND BUT NO EVIDENCE HAS BEEN FURNISHED. THE ASSESSEE HAS FAILED TO EXPLAIN ENTRY OF RS.2,96,949.26 DATED 19.11.2005. HOWEVER, THE ASSESSEE POINTED OUT THAT THIS IS OUT OF MATURITY AMOUNT FROM UNIT TRUST OF INDIA OF WHICH COPY PLACED AT PA GE NO.9 OF ASSESSEES PAPER BOOK. ON PERUSAL OF PAGE NO.9 OF PAPER BOOK, WE NO TICED THAT THE UNIT WHICH WAS AMOUNTING RS.96,949.26 OF WHICH ISSUE DATE IS 07.11 .2005 AND VALID UPTO 06.01.2006. SIMILARLY, OTHER UNIT OF RS.1,00,000/- OF WHICH ISSUE DATED IS 07.11.2005 AND VALID UPTO 06.01.2006. DATES AND AM OUNTS OF THE SAID UNITS DO NOT MATCH WITH THE ENTRY SHOWN IN S.B. ACCOUNT DATED 19 .11.2005. FROM THE ABOVE ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 24 FACTS NOTED AND ON PERUSAL OF RELEVANT RECORDS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF RS .15,40,000/- WHICH WAS ALLEGEDLY STATED TO BE GIVEN AS GIFT TO THE ASSESSEE. THE AS SESSEE HAS ALSO FAILED TO FURNISH THE COMPLETE CIRCLE OF ALL THESE TRANSACTIONS THAT WHER EFROM ORIGINAL MONEY CAME TO THE ACCOUNT OF SMT. ANJALI CONSUL WHICH WAS INVESTED IN UNITS AS WELL AS IN BANKS IN THE FORM OF FIXED DEPOSITS AND OTHERS. UNLESS THE ASSESSEE FURNISHES THE COMPLETE CHAIN OF FUNDS OR MONEY THAT THE MONEY RECEIVED BY SMT. ANJALI CONSUL, NRI, WAS IN ACCORDANCE WITH RESERVE BANK OF INDIA PROCEDURES , SMT. ANJALI CONSUL BEING NRI AND STRICT RULES ARE TO BE COMPLIED WITH FOR SE NDING MONEY TO INDIA BY ANY NRI OR OTHERS, THE ASSESSEE HAS FAILED TO POINT OU T ANY SINGLE PAPER THAT THE ORIGINAL INVESTMENT MADE BY SMT. ANJALI CONSUL IN THE UNITS AND F.D. IN BANKS WERE CAME FROM OUT OF INDIA IN ACCORDANCE WITH RULES AND REGU LATIONS FRAMED BY THE RESERVE BANK OF INDIA. IN ABSENCE OF SUCH MATERIAL, IT CAN NOT BE HELD THAT THE ORIGINAL AMOUNT INVESTED BELONGS TO SMT. ANJALI CONSUL AND I N FACT THE AMOUNT GIFTED WAS FROM OUT OF INDIA. EVEN OTHERWISE, CONSIDERING THE FACT THAT THIS MAY BE THE INVESTMENT IN UNITS AND FD OUT OF INCOME EARNED IN INDIA, SUCH EXEMPTION OR EXPLANATION IS ALSO NOT ACCEPTABLE. THE REVENUE AU THORITIES HAS NOTED THAT THE DONOR SMT. ANJALI CONSUL IS FILING RETURN SHOWING M EAGER AMOUNT OF INCOME. FOR EXAMPLE, IN ASSESSMENT YEAR 2006-07, IT WAS RS.36,5 64/- ONLY. THUS, THE GIFT OF RS.15,40,000/- CANNOT BE SAID TO BE GIVEN BY SUCH M EAGER INCOME. CAN IT ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 25 BELIEVABLE FACT THAT A YOUNGER SISTER RECEIVED HER OLD INVESTMENT ON MATURITY AND GIVE ENTIRE MONEY AS GIFT HER ELDER BROTHER. AFTER THE AMOUNT GIFTED, RS.15,40,000/-, THE BALANCE AMOUNT REMAINED IN THE BANK ACCOUNT WAS RS.2,212.82THUS THERE ARE REASONS TO BELIEVE THAT T HE GIFT IS NOT THE REAL. THE TRANSACTIONS THOUGH MAY BE APPARENT BUT CANNOT HOLD TO BE REAL. THE ASSESSEE RELIED UPON ON A GIFT LETTER THAT TOO IS IN DOUBT FULL, IT WILL BE VERY EASY TO MAKE SELF- SERVING GIFT LETTER EITHER EXECUTED OR TAKEN BY A P ARTY AND RELY ON THOSE RECITALS. THE GIFT LETTER EXECUTED ON A LETTER HEAD OF HOTEL, HOT EL RAJHANS HOW DONOR AND DONEE BOTH WERE AVAILABLE ON SAME PLACE IN INDIA ON 15.12 .2005, NO RELEVANT SATISFACTORY EXPLANATION IS ON RECORD. THEREFORE, IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APP ARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS. IN SUCH TYPE OF CASES RECIPIENTS MADE CASH PAYMENTS OR INCURRED EXPENDITURES ON BEHALF OF NRI WHILE THE NRI VISITED INDIA AND AGAIN ST THAT AMOUNT RECEIVED THROUGH DDS. OR CHEQUES IN INDIA. UNDER THE CIRCUMS TANCES IT IS NOT UNREASONABLE TO TAKE NOTE OF THE COMMON PHENOMENON THAT GIFT REC EIVED IN THIS MANNER IS ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 26 COMMON MODE OF MONEY LAUNDERING. UNDER THE ALLEGED CIRCUMSTANCES GIFT RECEIVED BY THE ASSESSEE IS NOT A GENUINE GIFT. WHEN GIFT IS NOT GENUINE, THE ADDITION U/S 68 IS WARRANTED. FURTHER, AS SAID ABOVE THOSE TWO ELEM ENTS ARE ESSENTIAL IN THE GIFT, GIVING AND TAKING. IN THE CASE UNDER CONSIDERATI ON, THE ASSESSEE HAS FAILED TO ESTABLISH SECOND PART OF THAT ELEMENT I.E. GIVING A NY LOVE AND AFFECTION TO DONOR AS DISCUSSED ABOVE. ONE OF THE ASPECTS OF THE GIFT IS THAT UNLESS IT IS IN FAVOR OF A RELATIVE, A DISPOSITION CAN BE SAID TO OPERATE AS A GIFT ONLY IF IT CAN BE SHOWN TO CONTAIN SOME ELEMENT OF BOUNTY. THE BURDEN IS ON TH E ASSESSEE TO PROVE SOME ELEMENT OF BOUNTY. BUT THE ASSESSEE HAS FAILED IN T HIS REGARD. THE BURDEN IS ON ASSESSEE THAT NOT ONLY MUST THE ASSESSEE ESTABLISH THE IDENTITY OF THE DONOR AND HIS CAPACITY TO MAKE THE GIFT, BUT HE MUST ALSO ESTABLI SH THAT THE AMOUNT RECEIVED BY HIM WAS IN FACT A GIFT. THE ASSESSEE FAILED TO DISC HARGE HIS DUTY IN THIS REGARDS. IN THE CASE OF CIT V. P. MOHANAKALA [2007] 291 ITR 278 , THE SUPREME COURT CONSIDERED THE EXPRESSION THE ASSESSEE OFFERS NO E XPLANATION AND OBSERVED THAT WHAT IT MEANS IS THAT THE ASSESSEE OFFERS NO PROPER , REASONABLE AND ACCEPTABLE EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER , FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE ASSESSEE HAS FAILED TO FURNISH EXPLANATION AS REQUIRED IN THIS REGARDS. HE RE IT IS TO RELEVANT TO REFER OBSERVATION OF PUNJAB & HARYANA HIGH COURT IN THE C ASE OF YASH PAL GOEL V. CIT(A), 310 ITR 75 (P&H) WHERE THE COURT OBSERVED THAT THE SO-CALLED GIFT SET UP ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 27 BY THE APPELLANT WAS NOT BONA FIDE TRANSACTION. TH E UNSCRUPULOUS USE EVERY GIMMICK TO AVOID PAYING INCOME-TAX. IF THE STATE E XCHEQUER IS MADE THE TARGET OF DECEIT AND THE REVENUE COMES DOWN, THE DEVELOPMENT OF THE COUNTRY WILL BE A CASUALTY. IT IS REPREHENSIBLE THAT SAME CITIZENS S PEND ON LITIGATION AND UNNECESSARILY BRING MATTERS BEFORE COURTS THAN TO P AY TAX ON THEIR INCOME. THE TENDENCY NEEDS TO BE DISCOURAGED AND CURBED. THE C OURT IS CONSTRAINED TO FEEL THAT THE DEPARTMENT OF INCOME-TAX HAS UNNECESSARILY BEEN DRAGGED IN THIS LITIGATION AND THE TIME OF THE COURT HAS ALSO BEEN WASTED .THE ABO VE OBSERVATION OF THE COURT IS FULLY APPLICABLE TO THE FACTS OF THE CASE UNDER CON SIDERATION. IN THE LIGHT OF ABOVE DISCUSSIONS AND UNDER THE CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY MADE THE ADDITION U/S 68 OF THE ACT AS GIFT WAS NOT A GENUINE GIFT AND THE CIT(A) RIGHTLY CONFIRMED THE ACTION OF THE AO IN THIS REGARDS. 12 IN THE RESULT, ITA NO.49/AGR/2011 FILED BY THE R EVENUE AND ITA NO.39/AGR/2011 FILED BY THE ASSESSEE BOTH ARE DISMI SSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 04.04.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 4 TH APRIL, 2012 ITA NOS.49 & 39/AGR/2011 A.YS. 2006-07 28 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY