DCIT, New Delhi V. Sh. Dinesh Jain,

ITA 41/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1224 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 07-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: STEPHEN GEORGE
• Keywords: Unexplained investment; Gift; Search and seizure; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 153A; 234B; 143(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.3523/DEL/2008 ASSESSMENT YEAR : 2004-05 SHRI DINESH JAIN, 201, SURYAKIRAN BUILDING, 19, KASTURBA GANDHI MARG, NEW DELHI. PAN NO.ADBPJ2732Q. VS. DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO.41/DEL/2009 ASSESSMENT YEAR : 2004-05 DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, NEW DELHI. VS. SHRI DINESH JAIN, 201, SURYAKIRAN BUILDING, 19, KASTURBA GANDHI MARG, NEW DELHI. PAN NO.ADBPJ2732Q. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH JAIN, CA. REVENUE BY : SHRI STEPHEN GEORGE, CIT-DR. ORDER PER BENCH : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 6.10.2008 IN THE MATTER O F ORDER PASSED U/S 153A/143(3) OF THE IT ACT, FOR THE ASSESSMENT YEAR 2004-05. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE I NCOME TAX ACT WERE CONDUCTED ON 9.12.2003 IN THE RESIDENTIAL/BUSINESS PREMISES O F THE RELATED PERSONS/CONCERNS OF BEGUM GUTKHA GROUP OF CASES. ON THE BASIS OF DO CUMENTS FOUND DURING THE COURSE OF SEARCH AND THE STATEMENT RECORDED, VARIOU S ADDITIONS WERE MADE BY THE ITA-3523/D/2008 & 41/D/2009 2 AO WHICH MAINLY RELATE TO GIFTS RECEIVED BY THE ASS ESSEE DURING THE YEARS UNDER CONSIDERATION, INVESTMENT ON ACCOUNT OF PURCHASE OF VARIOUS PROPERTIES AND THE CASH FOUND DURING THE COURSE OF SEARCH ETC. WHILE FRAMING ASSESSMENT U/S 153A, THE AO OBSERVED THAT AS PER THE DOCUMENTS FOUND, TH E ASSESSEE AND HIS MINOR CHILDREN WERE IN RECEIPT OF GIFTS FROM VARIOUS FRIE NDS VIZ. SHRI NARESH JAIN AND SHRI ANIL JAIN. THESE PERSONS APPEARED BEFORE THE AO AN D THEIR STATEMENTS WERE RECORDED U/S 131. THE ADDITION WAS ALSO MADE ON AC COUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF VARIOUS PROPERTIES LIKE P ROPERTY NO.49, RAMA ROAD, NEW DELHI WHICH WAS PURCHASED FOR RS.24,45,000/- WH EREIN ASSESSEE WAS IN RECEIPT OF INCOME OF RS.3 LAKHS P.A. THE AO OBSERV ED THAT ASSESSEE HAS MADE HEAVY INVESTMENT IN INCOME YIELDING ASSETS AND THAT RENTAL INCOME GENERATED BY THOSE ASSETS WAS DISPROPORTIONATELY HIGH WHEN COMPA RED WITH THE INVESTMENT SHOWN TO HAVE BEEN MADE IN THEM. AS PER AO, THIS D ISPROPORTIONATE YIELDING OF INCOME PRIMA FACIE/SUFFICIENTLY INDICATES THAT THE DOCUMENTED INVESTMENT HAS BEEN SUPPRESSED SUBSTANTIALLY. IN THIS CONNECTION, THE ASSESSEE WAS ASKED TO EXPLAIN WHAT THE COST OF ACQUISITION, IGNORING THE DOCUMENT ED INVESTMENT, SHOULD NOT BE TAKEN AT THE FAIR MARKET VALUE AND WHILE DOING SO W HY THE PROVISIONS OF RULE 3 OF PART B OF THE 3 RD SCHEDULE 3 TO THE WEALTH TAX ACT NOT BE TAKEN HELP OF BOTH FOR THE PURPOSES OF INCOME TAX AND FOR THE PURPOSE OF WEALT H TAX ASSESSMENT. THE AO STATED THAT IN THE ENTIRE BLOCK PERIOD COMPRISING A Y 1998-99 TO 2004-05 MANY PROPERTIES HAVE BEEN ACQUIRED BY THE ASSESSEE, WHIC H ARE DULY DECLARED IN THE INCOME TAX RETURNS. FURTHER DURING THE PROCEEDINGS U/S 153A/143(3) OF THE ACT, THE DETAILED CHARTS OF VARIOUS PROPERTIES ACQUIRED BY DIFFERENT ASSESSEES OF THE GROUP, SUBSTANTIATING THE SOURCE OF INVESTMENT, HAV E BEEN FURNISHED AND ARE AVAILABLE ON RECORDS. THE AO ALSO MADE A REFERENCE TO THE VALUATION CELL IN RESPECT OF THE PROPERTY SO PURCHASED BY THE ASSESSE E FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY ON THE VERY SAME DATE WHEN THE ASSESSMENT ORDER WAS PASSED. THE AO RESORTED TO PROVISIONS OF WEALTH TA X ACT FOR ARRIVING AT THE FAIR MARKET PRICE OF THESE PROPERTIES AND MADE ADDITION ON THE BASIS OF DIFFERENCE BETWEEN FAIR MARKET VALUE SO ARRIVED AT AS PER THE PROVISIONS OF SCHEDULE 3 OF ITA-3523/D/2008 & 41/D/2009 3 WEALTH TAX RULES. IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE PROPERTIES SO PURCHASED WERE DULY SUPPORTED BY PROPER CONVEYANCE DEED/SALE DEED AND VALUE OF WHICH HAS DULY BEEN ACCEPTED BY THE SUB REGISTRAR F OR THE PURPOSE OF STAMP DUTY VALUATION. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NOT PAID ANY AMOUNT OVER AND ABOVE THE CONSIDERATION STATED IN THE SAID SALE DEE D. IT WAS ALSO STATED THAT THIS FACT CAN FURTHER BE VERIFIED BY SELLER OF RESPECTIVE PRO PERTIES WHOSE ADDRESS IS GIVEN IN THE RESPECTIVE SALE DEEDS. IT WAS ALSO BROUGHT TO THE NOTICE OF THE AO THAT IT WAS A CASE OF SEARCH AND NO INCRIMINATING MATERIAL WHATSO EVER HAS BEEN SEIZED OR CAME TO THE NOTICE OF THE DEPARTMENT WHICH OTHERWISE PRO VES THAT INVESTMENT IN PROPERTIES HAS BEEN UNDERSTATED. BY REFERRING TO T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K.P.VERGHESE 131 ITR 597, IT WAS CONTENDED BY LEARNED AR THAT ONUS LIES ON THE DEPARTMENT TO PROVE THAT SOME CONSIDERATION OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED HAVE BEEN INVESTED AND THAT NO ADDITION CAN BE MADE ON PRESUMPTION AND SUSPICIONS. THE ADD ITION WAS ALSO MADE IN RESPECT OF CASH FOUND AT THE RESIDENCE OF THE ASSES SEE AS WELL AS IN THE BANK LOCKER. 3. BY THE IMPUGNED ORDER, THE CIT(A) OBSERVED THAT THE AO HAS PROCEEDED ON THE PLEA THAT ANNUAL RENT YIELD ON THIS PROPERTY WA S VERY HIGH AS COMPARED TO THE NORMAL RETURN OF INVESTMENT, ACCORDINGLY APPLYING T HE RENT CAPITALIZATION METHOD, THE AO HAS ARRIVED AT THE FAIR MARKET VALUE. AS PE R CIT(A), SUCH VALUATION DEPENDS UPON VARIOUS FACTORS THAT ARE RULING IN THE MARKET AT THE TIME OF GIVING RENT OR PURCHASING PROPERTY. HE FURTHER OBSERVED T HAT IT IS NOT POSSIBLE TO ADDUCE EVIDENCE IN RESPECT OF EXCHANGE OF MONEY AND MERELY ON THE BASIS OF STAMP DUTY VALUATION AUTHORITY, ONE CANNOT CONCLUDE THAT THE R ATES ADOPTED BY THEM ARE REFLECTING THE TRUE VALUE IN THE OPEN MARKET. WITH OUT REFERRING TO THE SPECIFIC REASON OR JUSTIFICATION, THE CIT(A) HELD THAT IN HI S OPINION THE VALUATION OF THE PROPERTY CAN REASONABLY BE TAKEN AT A RATE WHICH WA S HIGHER THAN THE VALUE DISCLOSED BY THE ASSESSEE. ACCORDINGLY, PART RELIE F WAS GIVEN BY THE CIT(A). BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL AGAINST THE ORDER OF CIT(A). ITA-3523/D/2008 & 41/D/2009 4 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AN ADDITION OF RS .25,76,000/- WAS MADE ON ACCOUNT OF CASH FOUND AT THE RESIDENCE OF THE ASSES SEE, 22-A, RAJPUR ROAD, NEW DELHI. STATEMENT OF THE ASSESSEE WAS RECORDED AT T HE TIME OF SEARCH WHEREIN HE HAS CATEGORICALLY STATED THAT CASH AVAILABLE AT HIS RESIDENCE BELONGS TO HIS FAMILY MEMBERS AND GROUP ENTITIES. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, VIDE LETTER DATED 4.4.2007, THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH FOUND AT THE TIME OF SEARCH. VIDE LETTER DATED 9.4 .2007, THE CASH FOUND WAS EXPLAINED TO BE AVAILABLE IN THE BOOKS OF SHRI DINE SH JAIN, SMT.LATA JAIN AND PROPRIETARY CONCERN OF THE ASSESSEE M/S MUDIT IMPEX . EXTRACTS AND RELEVANT PAGES OF CASH BOOK OF THE SAID ENTITIES WERE ALSO PRODUCE D BEFORE THE AO TO SUBSTANTIATE THE AVAILABILITY OF CASH. WE FOUND THAT CASH BOOKS OF THESE ENTITIES WERE MAINTAINED ON COMPUTER WHICH WERE ALSO SEIZED BY TH E INVESTIGATION TEAM VIDE PANCHNAMA PREPARED ON THE DATE OF SEARCH. WE HAVE DULY VERIFIED THE AVAILABILITY OF CASH IN THE BOOKS OF THE ASSESSEE SO FURNISHED W HICH INDICATE THAT MORE THAN WHAT WAS FOUND BY THE DEPARTMENT WAS AVAILABLE IN T HE RECORD. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY MERIT IN THE ACTION OF LO WER AUTHORITIES FOR MAKING ADDITION IN RESPECT OF CASH FOUND AT THE RESIDENCE, WHICH WAS DULY EXPLAINED THROUGH AVAILABILITY OF CASH IN THE RESPECTIVE BOOK S OF THE ASSESSEE AND ITS ASSOCIATE CONCERN AND WHICH WERE DULY CORROBORATED WITH THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE ACT. 5. IN THE RESULT, GROUND TAKEN BY THE ASSESSEE FOR UPHOLDING THE ADDITION OF CASH FOUND AT THE RESIDENCE IS BEING ALLOWED IN HIS FAVOUR. 6. THE ISSUE WITH REGARD TO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY HAS ALREADY BEEN DEALT BY THE TR IBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS VIDE ORDER DATED 30.9.2009, WHEREI N FOLLOWING WERE THE OBSERVATIONS OF THE TRIBUNAL :- ITA-3523/D/2008 & 41/D/2009 5 FROM THE RECORD, WE FOUND THAT ON THE BASIS OF SAL E DEED FOUND DURING THE COURSE OF SEARCH IN RESPECT OF PURCHASE OF VARIOUS PROPERTIES, THE AO FOUND THAT ASSESSEE WAS IN RECEI PT OF RENTAL INCOME IN RESPECT OF THESE PROPERTIES. AS PER AO, THE DISPROPORTIONATE YIELD OF INCOME FROM THESE PROPERT IES INDICATE THAT THE AMOUNT INVESTED HAS BEEN SUPPRESSED. ACCORDING LY, HE APPLIED PROVISIONS OF RULE 3 OF PART (B) OF THE 3 RD SCHEDULE TO THE WEALTH TAX RULES FOR THE PURPOSE OF DETERMINING THE FAIR M ARKET VALUE OF THESE PROPERTIES. THE AO ALSO MADE A REFERENCE TO THE DVO, AS THE REFERENCE WAS MADE ONE DAY PRIOR TO THE FRAMING OF ASSESSMENT, HE WAS NOT IN RECEIPT OF ANY DVOS REPORT. IT IS UNDI SPUTED FACT THAT DEPARTMENT HAS NOT REFERRED ANY INCRIMINATING MATER IAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH AND INVESTIGATION MADE THEREAFTER WHICH INDICATE THAT ASSESSEE HAD PAID ANYTHING MORE THAN WHAT HAS BEEN STATED IN THE SALE DEEDS. IT WAS ALSO NOT THE ALLEGATION OF THE DEPARTMENT THAT THERE WAS ANY DIFFERENCE IN THE VAL UE OF THE PROPERTY AS ACCEPTED BY THE SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY VALUATION. IN VIEW OF THE FACT THAT NO MATERIAL WA S FOUND INDICATING ANYTHING PAID OVER AND ABOVE THE REGISTERED SALE PR ICE OF THE PROPERTY SO ACQUIRED, KEEPING IN VIEW OF THE DECISI ON OF HON'BLE SUPREME COURT IN THE CELEBRATED JUDGMENT OF K.P.VER GHESE (SUPRA) WHEREIN IT WAS HELD THAT ONUS LIES ON THE DEPARTMEN T TO PROVE THAT SOME CONSIDERATION OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED HAVE BEEN INVESTED, NO ADDITION CAN BE MA DE ON PRESUMPTIONS AND SUSPICIONS. IN THE LATEST CASE OF CIT VS. SHAKUNTALA DEVI (ITA NO.345/2007), HON'BLE DELHI HI GH COURT HELD IT MAY BE RELEVANT TO NOTE THAT A DIVISION BENCH O F THE COURT COMPRISING DR.ARIJIT PRASAYATH AND JUSTICE D.K.JAIN , AS THEIR LORDSHIPS THEN WERE RETREATED THAT THERE MUST BE A FINDING OF THE REVENUE THAT THE ASSESSEE HAD RECEIVED AMOUNTS OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED, FOLLOWING TH E RATIO OF K.P.VERGHESE (SUPRA). K.P.VERGHESE (SUPRA) HAS ALS O BEEN FOLLOWED AND APPLIED BY THE SUPREME COURT IN CIT VS. GODAVAR I CORPORATION LIMITED 200 ITR 567. THE DIVISION BENCH OF HON'BLE DELHI HIGH COURT IN CIT VS. ASHOK KHETRAPAL 294 ITR 143 OBSERV ED THAT BY REFERRING TO THE REPORT OF VALUATION OFFICER IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF A SE ARCH NO ADDITION COULD BE MADE BY TREATING INVESTMENT AS UNDISCLOSED ON THE BASIS OF ANY DVOS REPORT. THE DECISION IN CIT VS. MANOJ JA IN 287 ITR 285 IS ALSO TO THE SAME EFFECT. IN CIT VS. SHIVAKAMI C OMPANY (P) LTD. 151 ITR 79(SC), THEIR LORDSHIPS HAVE ONCE AGAIN RET REATED THAT ONUS WHETHER THE ASSESSEE HAD RECEIVED MORE CONSIDERATIO N THAN WHAT WAS STATED IN THE DOCUMENTS OF TRANSFER, RESTED ON THE REVENUE AND IN THE ITA-3523/D/2008 & 41/D/2009 6 ABSENCE OF THAT BURDEN HAVING BEEN BEING DISCHARGED , IT WOULD BE LEGALLY IMPERMISSIBLE TO MAKE ANY INFERENCES AGAINS T THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE AO UNDER THE HEAD UNEXPLAI NED INVESTMENT ON ACCOUNT OF VARIOUS PROPERTIES PURCHASED BY THE A SSESSEE DURING THE BLOCK PERIOD ON THE BASIS OF FAIR MARKET VALUE AS ESTIMATED BY THE AO. ALL THESE ADDITIONS ARE DIRECTED TO BE DELETED . 7. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE IN PARI-MATERIA, RESPECTFULLY FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE AO. 8. WITH REGARD TO ADDITION OF RS.26 LAKHS ON ACCOUN T OF GIFTS RECEIVED BY THE ASSESSEE AND HIS MINOR CHILDREN AS INCOME FROM OTHE R SOURCES, THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE IN THE OR DER OF THE TRIBUNAL DATED 30.9.2009 AFTER HAVING THE FOLLOWING OBSERVATION:- 7. THE GROUND TAKEN BY THE ASSESSEE WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF VARIOUS GIFTS RECEIVED BY THEM A ND THEIR CHILDREN, FROM THE RECORD WE FOUND THAT COPY OF GIF T DEED AND OTHER DOCUMENTS RELATING TO THE GIFTS WERE SEIZED BY THE AUTHORIZED OFFICIAL DURING THE COURSE OF SEARCH AND THESE DOCUMENTS WER E SEIZED VIDE ANNEXURE NO.LP-4/A-2, LP 6/A-43. THE ASSESSEE SUBM ITTED THAT THE AO SUMMONED THE DONORS AND RECORDED THEIR STATEMENT IN THE PROCEEDINGS U/S 131 OF THE ACT AND THE DONORS FURNI SHED THEIR BANK STATEMENTS, FINANCIAL STATEMENTS LIKE BALANCE SHEET S OF THEIR FIRMS, COPY OF INCOME TAX RETURNS FOR THE LAST SIX YEARS F OR DEMONSTRATING THE CAPACITY FOR MAKING GIFTS. IT WAS FURTHER SUBM ITTED THAT THE DONORS DULY DISCLOSED THE NATURE OF RELATIONSHIP WI TH THE FAMILY AND EXPLAINED THE REASONS FOR GIVING GIFTS TO THE APPEL LANT AND HIS MINOR CHILDREN. THE ASSESSEE ALSO SUBMITTED THE COPY OF STATEMENTS OF BOTH THE DONORS RECORDED BY THE AO. THESE STATEMENTS AR E SAID TO HAVE BEEN RECORDED BY THE AO AROUND SIX TO NINE MONTHS B ACK BEFORE PASSING THE ASSESSMENT ORDER ON 8.11.2007. THE ASS ESSEE SUBMITTED THAT THE COPIES OF THE STATEMENTS WERE NEVER CONFRO NTED TO THE ASSESSEE BY THE AO INSPITE OF HIS SPECIAL REQUEST M ADE BY HIM IN RESPONSE TO SHOW CAUSE NOTICE ISSUED BY THE AO BEFO RE PASSING THE ASSESSMENT ORDER. THE ASSESSEE PLEADED THAT THE AD DITION MADE ON ITA-3523/D/2008 & 41/D/2009 7 ACCOUNT OF GIFT IS TOTALLY ARBITRARY AND THE SAME I S MADE ON SUSPICION ONLY. BEING NOT SATISFIED WITH THE REPLIES OF THE ASSESSEE, THE ADDITION WAS MADE BY THE AO AND THE SAME WAS CONFIR MED BY CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH RESPECT TO THE VARIOUS ADDITIONS MADE IN THE HANDS OF DIFFERENT ASSESSEES ON ACCOUNT OF GIFTS RECEIVED BY THEM. FR OM THE DETAILS OF THE FACTS BROUGHT ON RECORD BY THE AO IT IS VERY CL EAR THAT THE ASSESSEE IS IN THE HABIT OF SHOWING GIFTS IN LARGE SUMS IN HIS NAME AND IN THE HANDS OF OTHER FAMILY MEMBERS. IT HAS B EEN CONCLUSIVELY ESTABLISHED BY THE AO THAT THE TWO DONORS BY NAME S H.NARESH JAIN AND SH.ANIL JAIN ARE ONLY A NEIGHBOURS WITHOUT ANY RELATIONSHIP WITH THE FAMILY OF THE APPELLANT. IT IS TOTALLY UNIMAGI NABLE TO THINK THAT THE NEIGHBOURS COULD GIVE MILLIONS OF RUPEES TO UNK NOWN PERSONS WITHOUT ANY CONSIDERATION. GIFTS USUALLY FLOW FROM CLOSE BLOOD RELATIONS AND CHILDHOOD FRIENDS. THAT TOO ONLY ON AN IMPORTANT OCCASIONS. MOSTLY THESE GIFTS ARE PREVALENT AMONG RELATIONS AND THEY ARE RECIPROCAL IN NATURE. MOST OF THESE GIFTS ARE IN KIND AND CASH GIFTS DO EXISTS BUT THEY ARE IN SMALL DENOMINATION. SELDOM WE SEE HUGE SUMS OF LANDS OF RUPEES AS GIFTS ESPECIALLY TO MINORS. IN THIS CASE THE APPELLANT HAS CLARIFIED THAT HE HAS NOT GI VEN GIFTS TO ANY OF THESE PERSONS EARLIER OR IN SUBSEQUENT PERIOD. HEN CE THE CONCEPT OF RECIPROCATION IS TOTALLY LACKING IN THE INSTANT CAS E. IT IS ARGUED THAT OUT OF INDEBTEDNESS TO SH. DINESH JAINS FATHER THE GIFTS WERE GIVEN. BUT NO FURTHER DETAILS WERE PRODUCED HOW THESE TWO DONORS WERE INDEBTED TO FAMILY OF THE APPELLANT. FURTHER THE F INANCIAL CAPACITY TO GIVE LAKH OF RUPEES ALSO LACKING IN THIS CASE. MER E FACT THAT THE AMOUNTS WERE ROUTED THROUGH BANK ACCOUNT DOES NOT I PSE FACTOR PROVES THE CREDITABILITY OF THE DONORS BEYOND DOUBT . TO GIVE LAKHS OF RUPEES AS GIFTS TO NEIGHBOURS THE PERSON SHOULD HAVE BEEN WORTH CRORES OF RUPEES HAVING INCOME OF SUBSTANTIAL NATUR E. NO SUCH CONFIRMATIONS ARE FORTHCOMING TO ESTABLISH THE FINA NCIAL SOUNDNESS OF THESE TWO DONORS. ANOTHER FACT TO BE SEEN HERE IS NEITHER THE DONORS GIVEN GIFTS TO OTHERS NOR THE ASSESSEE RECEIVED GIF TS FROM OTHER CLOSE RELATIONS. IT ONLY FRUCTIFIES THE BELIEF THAT THE GIFTS ARE NOTHING BUT ASSESSEES OWN INCOME WHICH ARE PLOUGHED BACK AS GI FTS THROUGH OTHER PERSONS. BY REFERRING TO THE VARIOUS DECISIO NS REPORTED AT 109 ITD 288, 165 TAXMAN 505, 270 ITR 368 AND 292 ITR 55 2, THE AUTHORITIES BELOW CAME TO THE CONCLUSION THAT GIFTS ARE NOTHING BUT ASSESSEES OWN MONEY RECEIVED BACK UNDER THE GUISE OF GIFTS FROM UNKNOWN PERSONS. IN THE CASE OF ANIL KUMAR 292 I TR 552, THE HON'BLE DELHI HIGH COURT HAS CATEGORICALLY HELD THA T THE ONUS LIES ON ASSESSEE TO ESTABLISH THE IDENTITY AS WELL AS THE F INANCIAL CAPACITY OF DONOR. IN THE CASE OF CHAIN SUKH RATHI 270 ITR 3 68, ALTHOUGH GIFT WAS GIVEN BY FATHER TO THE SON, STILL IT IS HELD TH AT UNDISCLOSED INCOME ITA-3523/D/2008 & 41/D/2009 8 OF THE ASSESSEE IN THE ABSENCE OF ANY OCCASION. TH E CIT(A) HAS ALSO FORTIFIED THE FINDINGS OF THE AO BY OBSERVING THAT CONSISTENTLY THE COURTS ARE OF THE OPINION THAT APART FROM IDENTITY AND CREDITWORTHINESS, THE GENUINENESS OF THE TRANSACTIO N IS OF VITAL ISSUE IN GIFTS. UNLESS OCCASION AND RELATIONSHIP IS ESTABLISHED, THE GIFTS CANNOT BE HELD AS GENUINE. FROM THE PERUSAL OF FAM ILY DETAILS IT CAN BE SEEN THAT A NUMBER OF CLOSE RELATIONS ARE AVAILA BLE BUT NONE OF THEM HAD GIFTED ANY SUMS TO THE ASSESSEE. HOWEVER, ASSESSEE COULD RECEIVE SUBSTANTIAL AMOUNTS AS GIFTS FROM A REMOTEL Y CONNECTED PERSONS. ASSESSEE ALSO COULD NOT CONFIRM TO THE FA CT THAT HE KNEW THE DONORS INTIMATELY. THIS TYPE OF ONE-SIDED GIFT S OF SUBSTANTIAL AMOUNTS NOT ASSOCIATED WITH ANY OCCASION FROM RELAT IVELY UNKNOWN PERSONS IN SUCCESSIVE YEARS DEFIES ANY AMOUNT OF LO GIC. AS DISCUSSED IN PRECEDING PARAS THE WHOLE TRANSACTION IS DESIGNED TO SHOW HUGE AMOUNTS AS GIFTS WITHOUT ANY LIABILITY OF PAYING TAXES. THE FINDINGS SO RECORDED BY THE LOWER AUTHORITIES C OULD NOT BE CONTROVERTED BY THE LEARNED AR BY BRINGING ANY MATE RIAL, MUCH LESS A COGENT MATERIAL SO AS TO PERSUADE US TO DEVIATE F ROM THE ALLEGED FINDING. WE THEREFORE DO NOT FIND ANY REASON TO IN TERFERE IN THE ORDER OF THE LOWER AUTHORITIES IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF BOGUS GIFTS. IN THE RESULT, THE GROUNDS TAKEN BY A LL THE ASSESSEES WITH REGARD TO GIFTS IN VARIOUS YEARS, ARE BEING DISMISS ED. 9. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR A RE SAME, WE UPHOLD THE ACTION OF THE LOWER AUTHORITIES FOR MAKING ADDITION ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE AND HIS MINOR CHILDREN. 10. WITH REGARD TO GROUND TAKEN FOR CHARGING OF INT EREST U/S 234B, THE TRIBUNAL HAD TAKEN THE FOLLOWING VIEW IN ITS ORDER DATED 30. 9.2009:- 8. WITH REGARD TO GROUND TAKEN BY THE ASSESSEE FOR CHARGING OF INTEREST U/S 234B, IT WAS HELD BY THE COORDINATE BE NCH IN THE CASE OF DINESH JAIN BELONGING TO THE SAME GROUP OF ASSESSEE S VIDE ORDER DATED 27.2.2009 IN ITA NO.2139/D/2009, THAT INTERES T U/S 234B IS TO BE CALCULATED FROM THE DATE OF ORDER U/S 143(1) OR 153A WHICHEVER IS LATER. ITAT HYDERABAD BENCH OF ITAT RENDERED IN TH E CASE OF SRINIVASA RESORTS LTD. VS. ACIT, CIRCLE-3(2), HYDER ABAD VIDE AN ORDER DATED 20.4.2007 PASSED IN ITA NO.1063/HYD/200 4 WHEREIN IT WAS HELD THAT INTEREST U/S 234B HAS TO BE LEVIED FR OM THE DATE ON WHICH THE TOTAL INCOME WAS DETERMINED U/S 143(1) TI LL THE DATE ON ITA-3523/D/2008 & 41/D/2009 9 WHICH THE ASSESSMENT WAS COMPLETED AFTER REOPENING. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE UPH OLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) DIRECTING THE AO TO CHA RGE INTEREST U/S 234B FROM THE DATE OF ORDER U/S 143(1) TILL THE DAT E OF ORDER PASSED U/S 153A. 11. RESPECTFULLY FOLLOWING THE ABOVE PROPOSITION, W E DIRECT THE AO TO CHARGE INTEREST U/S 234B FROM THE DATE OF ORDER U/S 143(1) TILL THE DATE OF ORDER PASSED U/S 153A. WE DIRECT ACCORDINGLY. 12. IN THE APPEAL FILED BY THE REVENUE, GROUND HAS BEEN TAKEN FOR PART RELIEF GIVEN BY CIT(A) IN RESPECT OF INVESTMENT IN THE PRO PERTIES. AS DISCUSSED HEREINABOVE IN PARAGRAPH 6 & 7, THE GROUND OF THE R EVENUE IS DISMISSED. 13. WITH REGARD TO GROUND TAKEN REGARDING CHARGING OF INTEREST U/S 234B(3) INSTEAD OF 234B, WE HAVE ALREADY DEALT WITH THE ISS UE AT PARAGRAPH 10 HEREINABOVE. THE AO IS DIRECTED TO FOLLOW THE SAME. 14. WITH REGARD TO DELETION OF ADDITION OF RS.15 LA KHS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELLERY, WE FOUND THAT AS AGAINST THE JEWELLERY FOUND DURING THE COURSE OF SEARCH, THE ASSESSEE SURRENDER ED IN TERMS OF VALUATION PART OF THE JEWELLERY AMOUNTING TO RS.16,25,000/- BEING THE DIFFERENCE BETWEEN JEWELLERY ACTUALLY FOUND AND VALUE ASSESSED BY REGISTERED VAL UER AT THE TIME OF SEARCH. THE ASSESSEE HAS REVISED THE RETURN OF INCOME BY DECLAR ING DIFFERENCE AMOUNT TO THE TUNE OF RS.16,25,000/-. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS DIRECTED TO RECONCILE ITEM WISE THE JEWELLERY F OUND PHYSICALLY AND ALSO INVENTORIED VIS--VIS THE JEWELLERY FOUND REFLECTED ON THE JEWELLERY PURCHASE BILLS (ESPECIALLY FOUND ON PAGE 30 TO 38 OF ANNEXURE A-14 REFERRED IN SHOW CAUSE NOTICE DATED 26.10.2007) AND ALSO IN REFERENCE TO T HE JEWELLERY FOUND REFLECTED IN THE WEALTH TAX VALUATION REPORTS. THE AO OBSERVED THAT THE ASSESSEE MADE AN ATTEMPT WHILE DISCUSSING THE CASE BUT WAS UNABLE TO RECONCILE FULLY AND ITA-3523/D/2008 & 41/D/2009 10 SATISFACTORILY. BY STATING THAT ASSESSEE WAS UNABL E TO RECONCILE THE JEWELLERY ITEM WISE, THE AO MADE AN ESTIMATED ADDITION OF RS.15 LA KHS TO TAKE CARE OF POSSIBLE DISCREPANCIES IN THE DESCRIPTION OF JEWELLERY. THE CIT(A) DELETED THE SAME BY OBSERVING THAT THE ADDITION MADE BY THE AO IS ABSOL UTELY CONTRARY WITH REFERENCE TO THE SHOW CAUSE NOTICE AND HIS OWN CONTENTION THA T JEWELLERY TO THE TUNE OF RS.64.94 LAKHS VIS--VIS JEWELLERY VALUED AT RS.81. 19 LAKHS FOUND DURING THE COURSE OF SEARCH. THE BASIS OF MAKING ADDITION, SA YING THAT ITEMS OF JEWELLERY WERE NOT RECONCILED, COPY OF PURCHASE BILLS AND SOU RCE OF THEIR ACQUISITION WERE NOT EXPLAINED, IS CONTRARY TO THEIR REPLY TO THE SH OW CAUSE NOTICE NOVEMBER 2007 IS PURSUED. THE FINDINGS IN THE ASSESSMENT ORDER A RE CONTRARY TO POINT NO.14 OF THE SHOW CAUSE NOTICE WHEREIN THE AO HIMSELF ACCEPTED T HAT THE ASSESSEE HAS PURCHASED JEWELLERY OF MORE THAN RS.90 LAKHS. THE C IT(A) ALSO CALLED FOR THE REMAND REPORT AND STATED THAT IN THE REMAND REPORT, THE AO DID NOT MAKE ELABORATE COMMENTS ON THE SUBMISSIONS OF THE ASSESSEE AND SUB MITTED THAT THE ADDITION OF RS.15 LAKHS HAS BEEN MADE AS THE ASSESSEE COULD NOT EXPLAIN ITEM WISE RECONCILIATION OF JEWELLERY FOUND AND FOR PROTECTIN G THE INTEREST OF THE REVENUE AD- HOC ADDITION OF RS.15 LAKHS HAS BEEN MADE. THE CIT (A) ALSO RECORDED A FINDING TO THE EFFECT THAT THE ASSESSEE IS ABLE TO ESTABLISH T HE EXISTENCE OF JEWELLERY AS PER BOOKS WHICH WERE PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBERS. ON THE OTHER HAND, THE ADDITION WAS MADE ON PRETEXT THAT I TEM WISE RECONCILIATION OF JEWELLERY WAS NOT PROVIDED AND ON THE GROUND THAT P OSSIBILITY OF ASSESSEE HAVING DISPOSED OFF PART OF THE JEWELLERY THUS NOT OFFERIN G CAPITAL GAINS, NOT RULING OUT FRESH ACQUISITIONS BY ASSESSEE AND TO TAKE CARE OF POSSIBLE DISCREPANCIES AND REVENUE LOSS ETC., IT IS CLEAR THAT THE ADDITION WA S MADE ON AD-HOC BASIS BUT NOT ON ANY MATERIAL/EVIDENCES. BEFORE MAKING ADDITION, TH E AO SHOULD HAVE QUANTIFIED THE EXCESS JEWELLERY OR BRING ON RECORD THE SALE OF JEWELLERY INSTANCES NOT RECORDED IN THE BOOKS OF ACCOUNTS. IN THE INSTANT CASE PURE LY ON ASSUMPTIONS AND SURMISES AN AD-HOC ADDITION WAS MADE WITHOUT ANY IOTA OF EVI DENCE TO SUPPORT SUCH ESTIMATED POSSIBLE REVENUE LOSS. THE CIT(A) HAS AL SO OBSERVED THAT ON VERIFICATION OF THE QUANTITATIVE TALLY NO ADDITION IS WARRANTED UNDER JEWELLERY ITA-3523/D/2008 & 41/D/2009 11 ACCOUNT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION MADE ON ACCOUNT OF JEWELLERY. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND R EVENUE ARE ALLOWED IN PART, IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2009. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27.11.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-3523/D/2008 & 41/D/2009 12