Mrs. Kumkum Kanodia, New Delhi V. ITO, New Delhi

ITA 4637/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69564 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-11-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 21-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Assessee Lawyers: SALIL AGRAWAL
• Keywords: Reopening of assessment; Gift; Income from undisclosed sources; Charitable institution; Source of fund; Question of law; Accommodation entries; Non compliance; Onus to prove; Reason to believe; Reassessment proceedings
• Section: 142(1); 234B; 133(6); 147; 131; 68; 148

Judgement Text

ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 4637/DEL/2010 ASSESSMENT YEAR : 2002-03 MRS. KUMKUM KANODIA, VS INCOME TAX OFFICER, C-175, PUSHPANJALI ENCLAVE, WARD 25(1), NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL AGRAWAL & ANIL SHARMA RESPONDENT BY : MS SHUMANA SEN, DR O R D E R PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-VIII, NEW DELHI DATED 29.09.2010 FOR AY 2002-03. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE APP ELLANT READ AS UNDER:- 1. THAT THE ID C.I.T.(APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE PROCEEDINGS INITIATED U/S 147 ON THE BASIS OF CERTAIN INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSES SEE HAD TAKEN BOGUS ACCOMMODATION ENTRIES FROM PERSONS, WHO WERE ALLEGEDLY INVOLVED IN PROVIDING LARGE SCALE ACCOMMO DATION ENTRIES. 1.1 THAT THE REASSESSMENT PROCEEDINGS INITIATED U/ S 147 ARE WHOLLY ILLEGAL AND WITHOUT JURISDICTION AS THE AO FAILED ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 2 TO CONDUCT ENQUIRIES TO VERIFY THE TRUTH AND CORREC TNESS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G. 1.2 THAT THE REASSESSMENT PROCEEDINGS INITIATED U/S 147 OTHERWISE TOO, ARE WHOLLY ILLEGAL AS THE ASSESSEE W AS NEVER CONFRONTED WITH ANY EVIDENCE OR MATERIAL TO SHOW TH AT THE GIFTS RECEIVED BY HER MERE ACCOMMODATION ENTRIES. 2. THAT WITHOUT PREJUDICE TO THE ABOVE AND IN THE A LTERNATIVE, THE LD.C.I.T.(APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.25,00,000/- BEING THE AGGREGATE OF FIVE GIFTS RECEIVED BY THE ASSESSEE FR OM S/SHRI KESHO RAM GUPTA, SATISH KUMAR SHARMA, SATISH JAIN, NARENDRA KUMAR GUPTA AND MANOJ KUMAR GUPTA, FAILING TO APPRECIATE THAT THE BURDEN WHICH LAW UPON THE ASSES SEE STOOD DISCHARGED AS THREE DONORS, OUT OF FIVE, APPE ARED BEFORE THE AO AND ACCEPTED HAVING MADE GIFT MADE TO THE ASSESSEE. THE FINDING THAT THE BURDEN U/S 68 WAS NO T DISCHARGED IS WHOLLY INCORRECT AND UNSUSTAINABLE. 2.1 THAT THE FINDING OF THE ID C.I.T.(APPEALS) THAT THERE WAS CONTRADICTION IN THE STATEMENT OF THE DONORS AND TH E MATERIAL ON RECORD EVIDENCING SOURCE OF DEPOSIT IN THE DONOR 'S BANK ACCOUNT, IS WHOLLY UNSUSTAINABLE AS IT HAS NOT BEEN APPRECIATED THAT THE STATEMENT WAS RECORDED AFTER A GAP OF ABOUT 7-8 YEARS FROM THE DATE OF TRANSACTION. 2.2 THAT THE FURTHER FINDING OF THE LD C.I.T.(APPE ALS) THAT THE GIFTS WERE NOT MADE OUT OF NATURAL LOVE AND AFF ECTION AS THERE IS NO BLOOD RELATIONSHIP BETWEEN THE DONORS A ND THE DONE, IS WHOLLY INCORRECT BECAUSE THERE IS NO REQUI REMENT IN LAW OF BLOOD RELATIONSHIP FOR A GIFT. 3. THAT THE ID C.I.T.(APPEALS) HAS ERRED BOTH ON F ACTS AND IN LAW IN UPHOLDING THE LEVY OF INTEREST U/S 234B AND 234C OF THE ACT HOLDING THE SAME TO BE CONSEQUENTIAL. IT IS, THEREFORE, PRAYED THAT THE REASSESSMENT PROCEEDINGS AS UPHELD BE HELD AS ILLEGAL AND WITH JURISDICTION. IN ANY CASE, THE ADDITION AS SUSTAINE D BY THE LD ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 3 C.I.T.(APPEALS) BE DELETED. THE INTEREST AS CHARGED BE CANCELLED. GROUND NO.1, 1.1 & 1.2 3. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD. IN THESE GROUNDS, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER FOR REOPENING OF THE ASSESSMENT. LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) ERRED IN UPHOLDING THE PROCEEDINGS INITIATED BY THE ASSESSIN G OFFICER U/S 147 OF THE ACT ON THE BASIS OF CERTAIN INFORMATION RECEIVED FR OM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE HAD TAKEN BOGUS ACCOMMODATION ENTRIES FROM THE PERSONS WHO ARE ALLEGEDLY INVOLVED IN PROV IDING LARGE SCALE ACCOMMODATION ENTRIES. THE COUNSEL FURTHER SUBMITT ED THAT THE REASSESSMENT PROCEEDINGS WERE WHOLLY ILLEGAL AND WITHOUT JURISDI CTION BECAUSE THE ASSESSING OFFICER HIMSELF FAILED TO CONDUCT INQUIRI ES TO VERIFY THE TRUTH AND CORRECTNESS OF THE INFORMATION RECEIVED FROM THE IN VESTIGATION WING. IT IS ALSO SUBMITTED THAT THE REASSESSMENT PROCEEDINGS WE RE ILLEGAL AND MISCONCEIVED BECAUSE THE ASSESSEE WAS NEVER CONFRON TED WITH ANY EVIDENCE OR MATERIAL TO SHOW THAT THE ALLEGED GIFTS RECEIVED BY THE ASSESSEE WERE ACCOMMODATION ENTRIES. 4. REPLYING TO THE ABOVE SUBMISSIONS, THE DR SUBMIT TED THAT THE ASSESSING OFFICER HAD VERY SPECIFIC AND PRECISE INF ORMATION IN RESPECT OF ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 4 ALLEGED ENTRY PROVIDERS, DATE OF ENTRY, AMOUNT OF M ONEY RECEIVED FROM THE INDIVIDUAL PERSONS WITH CHEQUE AND DRAFT NUMBERS AN D NAME AND BRANCH OF THE BANKERS. THE DR FURTHER SUBMITTED THAT AS PER REQUIREMENT OF STATUTORY PROVISIONS, THE ASSESSING OFFICER MADE A LIMITED VE RIFICATION SO AS TO ENSURE THAT THE INFORMATION IN QUESTION RELATED TO THE ASS ESSEE WAS CORRECT OR NOT. THE DR ALSO SUBMITTED THAT AS NO SCRUTINY ASSESSMEN T WAS MADE WITH REFERENCE TO ORIGINAL RETURN OF INCOME, THEREFORE, AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAD NO OCCASION T O EXAMINE THE CORRECTNESS AND GENUINENESS OF THE DISPUTED TRANSAC TIONS. SUBSEQUENTLY, ON INFORMATION FROM INVESTIGATION WING, THE ASSESSING OFFICER RIGHTLY FORMED A PRIMA FACIE OPINION THAT THIS WAS A CASE WHICH REQU IRED FURTHER INVESTIGATION AND REOPENING OF THE ASSESSMENT. 5. THE DR SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF PHOOL CHAND BAJRANG LAL VS ITO (1993) 203 ITR 456 AND RAYMOND WOOLLEN MILLS LTD. VS ITO (1999) 236 ITR 34(SC) HAS HELD THAT WHILE CONSIDERING THE VALIDITY OF COMMENCEMENT OF REASSES SMENT PROCEEDINGS, IT IS ONLY TO BE SEEN THAT WHETHER THERE WAS SOME PRIMA F ACIE MATERIAL OR INFORMATION ON THE BASIS OF WHICH THE DEPARTMENT CO ULD REOPEN THE CASE. THE HONBLE APEX COURT FURTHER HELD THAT THE SUFFIC IENCY OR CORRECTNESS OF MATERIAL IS NOT A THING TO BE CONSIDERED AT THAT ST AGE BECAUSE IT IS FOR THE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 5 ASSESSEE TO PROVE THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE WAS ERRONEOUS AND BASELESS. 6. THE DR HAS ALSO DRAWN OUR ATTENTION TOWARDS THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF BAWA ABHAI SINGH VS DCIT, 253 ITR 83 (DEL) WHEREIN THEIR LORDSHIPS OBSERVED THAT THERE MUST BE SOME MATERIAL WHICH CAN BE REGARDED A S INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFFICER CAN HAVE REASO N TO BELIEVE THAT THE ACTION U/S 147 IS CALLED FOR. THE HONBLE HIGH COU RT ALSO HELD THAT THE INFORMATION MEANS THE COMMUNICATION OR RECEPTION OF KNOWLEDGE OR INTELLIGENCE WHICH INCLUDED KNOWLEDGE OPTED FROM IN VESTIGATION, STUDY OR INSTRUCTION. THE HONBLE HIGH COURT CLEARLY HELD T HAT THE REASONS WHICH MAY WEIGH WITH THE ASSESSING OFFICER MAY BE THE RES ULT OF HIS OWN INVESTIGATION OR MAY COME FROM ANY SOURCE WHICH THE ASSESSING OFFICER CONSIDERED RELIABLE. THE REVENUE HAS ALSO RELIED O N THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF G. SUKESH VS. DY.CIT(2001) 252 ITR 230 (KERALA) WHEREIN IT WAS HELD THAT THE INFORMATION AT THE TIM E OF ISSUING NOTICE NEED NOT BE COMPLETE OR EVEN ACCU RATE. 7. IN THE PRESENT CASE, THE COUNSEL FOR THE ASSESSE E HAS RELIED UPON A PLETHORA OF JUDGMENTS WHICH INCLUDE THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELA RAM 125 ITR 713 (SC) AND THE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 6 JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF C.I.T. VS ASWINI GUPTA 322 ITR 396 (DEL) , C.I.T. VS BATRA BHATTA CO. 321 ITR 526 (DEL) C.I.T. VS ATUL JAIN 299 ITR 383 ( DEL) AND UNITED ELECTRICAL CO.(P) LTD. VS C.I.T. 258 ITR 317 (DEL). THE LD. COUNSEL OF THE ASSESSEE HAS ALSO RELIED ON THE JUDGMENTS OF HONBL E HIGH COURT OF DELHI IN THE JUDGMENTS IN THE CASES OF SIGNATURE HOTELS P.LTD. VS ITO (2011) 338 ITR 51 (DELHI); C.I.T. VS SIFL STOCK BROCKING LTD. (2010) 325 ITR 295 (DELHI); C.I.T. VS PRADEEP KUMAR GUPTA (2008) 303 I TR 95 (DELHI); AND SARTHAK SECURITIES CO. P. LTD. VS ITO (2010) 329 IT R 110 (DELHI) AND SUBMITTED THAT NEITHER THERE WAS ANY SUCH INVESTIGA TION REPORT NOR WAS THERE ANY SUCH STATEMENT WITH THE ASSESSING OFFICER WHEN HE INITIATED PROCEEDINGS U/S 147 AND 148 OF THE ACT. THE COUNSEL FURTHER SU BMITTED THAT THE ASSESSING OFFICER COULD FORM A REASON TO BELIEVE THAT THE ASS ESSEE HAD ANY SUCH ACCOMMODATION ENTRY ONLY WHEN HE HAS EITHER WITH HI M THE INVESTIGATION REPORT OR THE STATEMENT OF ANY PERSON AND MERELY, A S ALLEGED, THAT LARGE SCALE FIELD INVESTIGATION HAD BEEN CONDUCTED BY THE INVES TIGATION WING TO UNEARTH HUGE RACKET INVOLVING ACCOMMODATION ENTRY PROVIDERS IS NOT A SUFFICIENT BASIS TO FORM A REASON TO BELIEVE THAT THE ASSESSEE HAS ESCAPED INCOME. 8. AFTER CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMI SSIONS AND CONTENTIONS, INTER ALIA PERUSAL OF LEGAL PROPOSITIO NS AND CITATIONS RELIED UPON ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 7 BY BOTH THE PARTIES, WE OBSERVE THAT THE HONBLE JU RISDICTIONAL HIGH COURT OF DELHI IN RECENT JUDGMENT RELIED BY THE REVENUE IN T HE CASE OF C.I.T. VS INDIA TERMINAL CONNECTOR SYSTEM LTD. (2012) 21 TAX MAN.COM 69 (DELHI) , AFTER REFERRING AND CONSIDERING ITS OWN DECISIONS IN THE CASES OF AGR INVESTMENTS LTD. VS ACIT (2011) 333 ITR 146 (DE LHI) , SARTHANK SECURITIES LTD. VS ITO (SUPRA), RAJAT EXPORTS INDIA VS ITO (2012) 18 TAXMAN.COM 311 (DEL) AND ALSO THE DECISION RELIED B Y THE ASSESSEE IN SIGNATURE HOTELS P. LTD. VS ITO(2011) 338 ITR 51(DE LHI) (PARA 11) HAS SETTLED THE ISSUE IN FAVOUR OF THE REVENUE WITH THE FOLLOWING OBSERVATIONS:- 8. WE HAVE ALREADY REPRODUCED THE REASONS GIVEN BY THE ASSESSING OFFICER. THE REASONS GIVEN BY THE ASSESSI NG OFFICER ARE CLEAR AND SPECIFIC. THE INVESTIGATION H AD BEEN CONDUCTED AND ON THE BASIS OF INFORMATION RECEIVED, THE ASSESSING OFFICER FORMED A PRIMA FACIE OR TENTATIVE OPINION THAT THE ASSESSEE HAD RECEIVED BOGUS CREDIT ENTRIES OF RS.42,03,250/- FROM THE PARTIES MENTIONE D IN THE TABLE. THE REASONS MENTION THE NAME OF THE OPER ATOR, THE INSTRUMENT NUMBER, THE BANK ACCOUNT AND THE DAT E ON WHICH THE ENTRY WAS MADE. THE AMOUNT INVOLVED IN RESPECT OF EACH ENTRY WAS MENTIONED. THE ASSESSING OFFICER HAS FURTHER RECORDED THAT THE ASSESSEE COMP ANY HAD INTRODUCED ITS UNACCOUNTED MONEY IN THE BANK BY WAY OF ACCOMMODATION ENTRIES. IN VIEW OF WHAT WAS RECORDED AND STATED IN THE REASONS TO BELIEVE, IT IS NOT POSSIBLE TO AGREE WITH THE FINDINGS RECORDED BY THE TRIBUNAL THAT THE ASSESSING OFFICER HAD FAILED TO STATE/RECORD THAT THE ASSESSEE HAD NOT MADE TRUE AN D FULL DISCLOSURE OF THE MATERIAL FACTS AND THE SAID FACTU M WAS NOT MENTIONED AND CANNOT BE ELUCIDATED FROM THE REASONS. REASONS RECORDED BY THE ASSESSING OFFICER HAVE TO BE READ AS A WHOLE IN ENTIRETY AND IN A HOLISTIC ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 8 MANNER. MERE REPRODUCTION OF THE LANGUAGE OF THE SECTION IS NOT SUFFICIENT. WE HAVE TO READ AND UNDE RSTAND THE REASONS RECORDED AND WHETHER ON THE BASIS OF SA ID REASONS THE ASSESSING OFFICER HAD COME TO THE CONCL USION OR DRAWN AN INFERENCE THAT THE ASSESSEE HAD NOT MAD E FULL AND TRUE DISCLOSURE OF MATERIAL FACTS. AS PER THE REASONS TO BELIEVE MENTIONED ABOVE, THE ASSESSING OFFICER HAD COME TO A PRIMA FACIE OR A TENTATIVE OPINION THAT T HE ASSESSEE HAD INTRODUCED HIS UNACCOUNTED MONEY IN TH E FORM OF ACCOMMODATION ENTRIES. THE NAME OF THE OPERATOR, WHO HAD GIVEN THE ACCOMMODATION ENTRY AND THE AMOUNT THEREOF IS MENTIONED. AT THIS STAGE, A F INAL FINDING OR CONCLUSION IS NOT REQUIRED TO BE RECORDE D BY THE ASSESSING OFFICER. RECORDING OF REASONS IS FOR INITIATION OF THE REASSESSMENT PROCEEDINGS, WHICH I S THE STARTING POINT. REFERRING TO THE SAID ASPECT IN AGR INVESTMENT LIMITED VERSUS ADDITIONAL COMMISSIONER O F INCOME TAX AND ANOTHER , (2011) 333 ITR 146 (DEL.), IT HAS BEEN OBSERVED THAT THE PHRASE REASONS TO BELIE VE WOULD MEAN THE CAUSE OR JUSTIFICATION FOR THE ASSES SING OFFICER TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT. IT DOES NOT MEAN THAT THE ASSESSING OFF ICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL E VIDENCE OR CONCLUSION. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDINGS IS NOT RELEVANT. THE ONLY QUESTION IS W HETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHE R OR NOT THE MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMEN T IS NOT THE ASPECT OR CONCERN AT THAT STAGE BUT THIS AS PECT HAS TO BE EXAMINED SUBSEQUENTLY IN THE REASSESSMENT PROCEEDINGS. FURTHER, WE HAVE TO ASCERTAIN WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFOR MATION AND INDEPENDENTLY ARRIVED AT THE BELIEF ON THE BASI S OF THE MATERIAL WHICH WAS PRODUCED BEFORE HIM. IN AGR INVESTMENT LIMITED (SUPRA), THE DIVISION BENCH HAD REFERRED TO AN EARLIER DECISION IN SARTHAK SECURITIES COMPANY PRIVATE LIMITED VERSUS ITO , 174 (2010) DLT 161(DB). IN THE SAID CASE ALSO REASSESSMENT PROCEED INGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INVESTIGATION REGARDING ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 9 BOGUS/ACCOMMODATION ENTRIES. THE DECISION IN SARTHAK SECURITIES COMPANY PRIVATE LIMITED (SUPRA) WAS ELUCIDATED AND EXPLAINED. 9. WE MAY NOTE HERE THAT THE INFORMATION PROVIDED BY THE DIRECTORATE OF INCOME T AX INVESTIGATION WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE COURSE OF THE FIRST/ORIGINAL PROCEEDINGS. THE SAID INFORMATION CONSTITUTES NEW A ND FRESH EVIDENCE ON WHICH THE ASSESSING OFFICER COULD HAVE DRAWN INFERENCE AND FORMED A PRIMA FACIE OPINION WHETHER OR NOT TO INITIATE REASSESSMENT PROCEEDINGS . IN THE CASE OF AGR INVESTMENT LIMITED (SUPRA), THE DIVISION BENCH IN THE PENULTIMATE PARAGRAPH HAS RECORDED AS UNDER:- 23. THE PRESENT FACTUAL CANVAS HAS TO BE SCRUTINIZED ON THE TOUCHSTONE OF THE AFORESAID ENUNCIATION OF LAW. IT IS WORTH NOTING THAT THE LEARNED COUNSEL FOR THE PETIT IONER HAS SUBMITTED WITH IMMENSE VEHEMENCE THAT THE PETITIONER HAD ENTERED INTO CORRESPONDENCE TO HAVE THE DOCUMENTS BUT THE ASSESSING OFFICER TREATED THEM AS OBJECTIONS AND MADE A COMMUNICATION. HOWEVER, ON A SCRUTINY OF THE ORDER, IT IS PERCEIVABLE THAT THE A UTHORITY HAS PASSED THE ORDER DEALING WITH THE OBJECTIONS IN A VERY CAREFUL AND STUDIED MANNER. HE HAS TAKEN NOTE OF TH E FACT THAT THE TRANSACTIONS INVOLVING RS. 27 LAKHS MENTIO NED IN THE TABLE IN ANNEXURE P-2 CONSTITUTE FRESH INFORMAT ION IN RESPECT OF THE ASSESSEE AS A BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROVIDED TO IT AND REPRESENTS THE UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS REFER RED TO THE SUBSEQUENT INFORMATION AND ADVERTED TO THE CONCEPT OF TRUE AND FULL DISCLOSURE OF FACTS. IT IS ALSO NOTICEABLE THAT THERE WAS SPECIFIC INFORMATION RECE IVED FROM THE OFFICE OF THE DIRECTOR OF INCOME-TAX (INV- V) AS REGARDS THE TRANSACTIONS ENTERED INTO BY THE ASSESS EE- COMPANY WITH A NUMBER OF CONCERNS WHICH HAD MADE ACCOMMODATION ENTRIES AND THEY WERE NOT GENUINE TRANSACTIONS. AS WE PERCEIVE, IT IS NEITHER A CHANG E OF OPINION NOR DOES IT CONVEY A PARTICULAR INTERPRETAT ION OF A SPECIFIC PROVISION WHICH WAS DONE IN A PARTICULAR MANNER IN THE ORIGINAL ASSESSMENT AND SOUGHT TO BE DONE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 10 IN A DIFFERENT MANNER IN THE PROCEEDING UNDER SECTI ON 147 OF THE ACT. THE REASON TO BELIEVE HAS BEEN APPROPRI ATELY UNDERSTOOD BY THE ASSESSING OFFICER AND THERE IS MA TERIAL ON THE BASIS OF WHICH THE NOTICE WAS ISSUED. AS HAS BEEN HELD IN PHOOL CHAND BAJRANG LAL [1993] 203 ITR 456 (SC), BOMBAY PHARMA PRODUCTS [1999] 237 ITR 614 (MP) AND ANANT KUMAR SAHARIA [1998] 232 ITR 533 (GAUHATI), THE COURT, IN EXERCISE OF JURISDICTION U NDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PERTAINING TO SUFFICIENCY OF REASONS FOR FORMATION OF THE BELIEF, CANNOT INTERFERE. THE SAME IS NOT TO BE JUDGED AT THAT STA GE. IN SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI), THE BENCH HAS INTERFERED AS IT WAS NOT DISCERNIBLE WHET HER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF O N THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM THAT THE INCOME HAD ESCAPED ASSESSMENT. IN OUR CONSIDERED OPINION, THE DECISION RENDERED THEREIN IS NOT APPLI CABLE TO THE FACTUAL MATRIX IN THE CASE AT HAND. IN THE C ASE OF SARTHAK SECURITIES CO. PVT. LTD. [2010] 329 ITR 110 (DELHI), THE DIVISION BENCH HAD NOTED THAT CERTAIN COMPANIES WERE USED AS CONDUITS BUT THE ASSESSEE HA D, AT THE STAGE OF ORIGINAL ASSESSMENT, FURNISHED THE NAM ES OF THE COMPANIES WITH WHICH IT HAD ENTERED INTO TRANS- ACTIONS AND THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION AND FURTHER THE REASON RECORDED DOES NOT INDICATE APPLICATION OF MIND. THAT APART, THE EXIST ENCE OF THE COMPANIES WAS NOT DISPUTED AND THE COMPANIES HA D BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSE E- COMPANY THROUGH THE BANKING CHANNEL. REGARD BEING H AD TO THE AFORESAID FACT SITUATION, THE COURT HAD INTE RFERED. THUS, THE SAID DECISION IS ALSO DISTINGUISHABLE ON THE FACTUAL SCORE. 10. RECENTLY THIS BENCH HAD AN OCCA SION TO DEAL WITH THIS QUESTION IN RAJAT EXPORT IMPORT INDIA PRIVATE LIMITED VERSUS INCOME TAX OFFICER , W.P. (C) NO. 8341/2011 DECIDED ON 18TH JANUARY, 2012. THIS COURT AFTER REFERRING TO DECISIONS IN THE FIELD, EL UCIDATED AND EXPRESSED THE RATIO IN THE FOLLOWING WORDS:- ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 11 11. IN THE VIEW WE HAVE TAKEN AS ABOVE, IT IS NOT CONSIDERED NECESSARY TO EXAMINE THE STATEMENT OF VI SHAL AGGARWAL TO FIND OUT WHETHER THE ASSESSEE HAS BEEN IMPLICATED THEREIN IN ANY MANNER AS BEING A RECIPIE NT OF ACCOMMODATION ENTRIES. NOR DO WE DISPUTE THE CONTEN TION TAKEN BEFORE US BY THE LEARNED COUNSEL FOR THE ASSE SSEE THAT THE VALIDITY OF THE REOPENING OF THE ASSESSMEN T SHOULD BE JUDGED ONLY WITH REFERENCE TO THE REASONS RECORDED BY THE ASSESSING OFFICER UNDER SECTION 14 8(2) AT THE TIME OF ISSUE OF NOTICE OF REOPENING AND ANY OTHER MATERIAL SOUGHT TO BE RELIED UPON LATER, WITH A VIE W TO STRENGTHENING OR IMPROVING THE REASONS, CANNOT BE LOOKED INTO BY THE COURT. THAT CONTENTION IS SOUND AND IS SUPPORTED BY AMPLE AUTHORITY BUT IT DOES NOT APPLY TO THE PRESENT CASE. IN THE PRESENT CASE IT CANNOT BE DISP UTED AT ALL THAT THE MATERIAL PRESENT BEFORE THE ASSESSING OFFICER AT THE TIME OF RECORDING REASONS FOR REOPENING THE ASSESSMENT DID SHOW A LINK BETWEEN M/S. SHIVAM SOFT ECH LTD., DESCRIBED AS AN ENTRY PROVIDER, WITH THE PETI TIONER HEREIN. NOT ONLY WAS THERE A LINK BETWEEN THE TWO N AMES, BUT THE MATERIAL ALSO DISCLOSED THE DATE ON WHICH T HE ENTRY WAS TAKEN, THE CHEQUE OR DD NUMBER, THE NAME OF THE BANK AND BRANCH AND THE ACCOUNT NUMBER. WITH SU CH PRECISE MATERIAL BEFORE THE ASSESSING OFFICER, THE EXISTENCE OF WHICH IS BEYOND CHALLENGE, IT CAN HARD LY BE SAID THAT THE ASSESSING OFFICER COULD NOT HAVE HAD EVEN A PRIMA FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HA D ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05. 11. IN THE SAID JUDGMENT, THE DECISION IN THE CASE OF SIGNATURE HOTELS (P) LTD. VS. INCOME TAX OFFICER (2011) 338 ITR 0051 DECIDED ON 21ST JULY, 2011 BY ONE OF U S (SANJIV KHANNA, J.) WAS DISTINGUISHED AND THE FACTU AL DIFFERENCES WERE POINTED OUT. IN VIEW OF THE AFORES AID POSITION, WE ANSWER THE QUESTION OF LAW MENTIONED A BOVE IN NEGATIVE, I.E., IN FAVOUR OF THE REVENUE AND AGA INST THE ASSESSEE. THE APPEAL IS ACCORDINGLY ALLOWED. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 12 9. IN THE CASE IN HAND, THE REASONS RECORDED BY TH E ASSESSING OFFICER PRIOR TO ISSUANCE OF NOTICE U/S 148 OF THE ACT, AS PER PARA 11 OF ANNEXURE 1 APPENDED TO THIS ORDER ARE BASED ON INFORMATION REC EIVED FROM INVESTIGATION WING WHICH CONSISTS OF ALL BASIC DETAILS ABOUT THE ALLEGED ACCOMMODATION ENTRIES AND PARTICULARS OF THE ENTRY PROVIDERS. 10. ON CAREFUL PERUSAL OF THE BASIS OF REOPENIN G OF ASSESSMENT, WE OBSERVE THAT IT CANNOT BE SAID THAT THE INFORMATION RECEIVE D FROM THE INVESTIGATION WING DID NOT RELATE TO THE ASSESSEE AND THERE IS NO STATUTORY MECHANISM TO FIND OUT AS TO WHAT VERIFICATION AND OTHER RELATED EXAMINATION WAS CONDUCTED BY THE ASSESSING OFFICER BEFORE REACHING TO PRIMA F ACIE BELIEF THAT THE ASSESSEE HAS ESCAPED TAXABLE INCOME AND ASSESSMENT. 11. THE DR HAS RELIED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS INDIA TERMINAL CONNECTOR SYST EM LTD. (2002) 21 TAXMAN.COM 69 (DEL) (SUPRA) WHEREIN THEIR LORDSHIPS HELD THAT THE ASSESSING OFFICER REOPENED IMPUGNED ASSESSMENT BY R ECORDING REASONS TO THE EFFECT (I) THAT THE DIRECTORATE OF INVESTIGATIO N CARRIED OUT INVESTIGATION IN RESPECT OF BOGUS/ACCOMMODATION ENTRIES PROVIDED BY CERTAIN INDIVIDUALS/COMPANIES; (II) THAT IN VIEW OF INFORMA TION RECEIVED FROM DIRECTORATE OF INVESTIGATION, IT WAS EVIDENT THAT T HE ASSESSEE HAD INTRODUCED ITS OWN UNACCOUNTED MONEY AMOUNTING TO RS. 42 LAKH IN ITS BANK BY WAY OF ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 13 ACCOMMODATION ENTRIES; & (III) THAT, THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THE INCOME AMOUNTING TO RS. 42 LAKH HAD ESCAPED ASSESSMENT. IN THIS JUDGMENT, SETTING ASIDE THE OR DER OF THE TRIBUNAL IN FAVOUR OF THE REVENUE, THE HONBLE HIGH COURT HELD THAT FOR THE ANNULMENT OF THE REASSESSMENT PROCEEDINGS, IT IS NECESSARY TO HO LD THAT THE ASSESSING OFFICER HAD FAILED TO STATE/RECORD THAT THE ASSESSE E HAD NOT MADE TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS (WHICH WERE NECESS ARY FOR ASSESSMENT). 12. THE COUNSEL OF THE ASSESSEE ALSO PLACED RELIANC E ON THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASES OF C.I.T. VS DAULATRAM RAWATMULL (1973) 87 ITR 349 (SC); C.I.T. VS S.P. JAIN (1973) 87 ITR 370(SC); C.I.T. VS MANNA RAMJI & CO. (1972) 86 ITR ITR 29(SC ); DHIRAJLAL GIRDHARILAL VS C.I.T. (1954) 26 ITR 736(SC) AND SUBMITTED THAT THE COURT WOULD BE ENTITLED TO INTERVENE IF IT APPEARS THAT T HE FACT FINDING AUTHORITY ACTED WITHOUT ANY EVIDENCE WHICH CANNOT REASONABLY BE ENTERTAINED OR THE FACTS FOUND ARE SUCH THAT NO PERSON ACTING JUDICIAL LY AND PROPERLY OR THE FACTS FOUND ARE SUCH THAT NO PERSON ACTING JUDICIALLY OR PROPERLY INSTRUCTED AS THE RELEVANT LAW WOULD HAVE COME TO THE DETERMINATION I N QUESTION. THE DR SUBMITTED IN REPLY THAT THERE IS SUFFICIENT AND COG ENT MATERIAL BEFORE ASSESSING OFFICER. FOR ISSUING NOTICE U/S 147/148 O F THE ACT, THEREFORE, BENEFITS OF THE RATIO OF THESE JUDGMENTS ARE NOT AV AILABLE FOR THE ASSESSEE. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 14 FROM THE PRESCRIBED PROFORMA FOR OBTAINING APPROVAL U/S 151 OF THE ACT, APPENDED TO THIS ORDER AS ANNEXURE-1, WE CLEARLY OB SERVE THAT THERE WAS A DETAILED REPORT BEFORE THE ASSESSING OFFICER RECEIV ED FROM INVESTIGATION WING WITH DETAILS OF TRANSACTIONS AND ACCOMMODATION ENTRIES AND ITS PROVIDERS. THEREFORE, WE ARE UNABLE TO ACCEPT ABOV E CONTENTIONS OF THE LD. COUNSEL OF THE ASSESSEE THAT THE FACT FINDING AUTHO RITY ACTED WITHOUT ANY EVIDENCE. HENCE, WE RESPECTFULLY HOLD THAT THE BEN EFIT OF THE RATIO OF ABOVE MENTIONED DECISIONS OF HONBLE APEX COURT IS NOT AV AILABLE FOR THE ASSESSEE. 13. THE COUNSEL OF THE ASSESSEE POINTED OUT THAT TH E ASSESSING OFFICER GROSSLY ERRED IN OBTAINING APPROVAL U/S 151(2) OF T HE ACT AND THE APPROVAL RELIED BY THE REVENUE IS NOT VALID AS PER STATUTORY PROVISIONS OF THE ACT. THE DR POINTED OUT ANNEXURE-1 AND SUBMITTED THAT THE AP PROVAL WAS OBTAINED PROPERLY AS PER LETTER AND SPIRIT OF SECTION 151(2) AND OTHER RELEVANT PROVISIONS OF THE ACT. FROM A GLANCE AT ANNEXURE 1 , APPENDED TO THIS ORDER, WE OBSERVE THAT THE ASSESSING OFFICER HAS CATEGORIC ALLY MENTIONED DETAILS OF MATERIAL AND EVIDENCE TO FORM A REASON TO BELIEVE T HAT THE INCOME HAS ESCAPED ASSESSMENT AND THEREAFTER THE JCIT, RANGE 2 5, NEW DELHI HAS MENTIONED THAT YES. I AM SATISFIED AND THEN HE H AS ALSO SIGNED ON THE APPROVAL. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER OBTAINED PERMISSION FROM JCIT BY SUBMITTING DETAILS AND RELE VANT MATERIAL WHICH ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 15 FORMED REASON FOR HIS BELIEF TO PROPOSE THE ISSUANC E OF NOTICE U/S 147/148 OF THE ACT AND APPROVAL WAS GRANTED AFTER PERUSAL OF T HE REASONS RECORDED BY THE ASSESSING OFFICER WHICH IS SUFFICIENT FOR ISSUI NG NOTICE U/S 148 OF THE ACT. 14. IN VIEW OF ABOVE, WE ARE UNABLE TO SEE ANY REAS ON TO HOLD THAT THE ASSESSING OFFICER ASSUMED JURISDICTION U/S 147 OF T HE ACT ON ERRONEOUS AND INSUFFICIENT REASONS AND GROUNDS. THE FACTUAL POSI TION OF THE PRESENT CASE AND HAVING REGARD TO THE OBSERVATIONS OF THE HONBL E SUPREME COURT IN THE CASE OF PHOOL CHAND BAJRANG LAL VS ITO (SUPRA) AND RAYMOND WOOLLEN MILLS LTD. VS ITO AND HONBLE HIGH COURT OF DELHI I N THE CASE OF C.I.T. VS INDIA TERMINAL CONNECTOR SYSTEM LTD.(SUPRA), WE ARE OF THE FIRM OPINION THAT THE PROCEEDINGS U/S 147 AND 148 OF THE ACT HAV E BEEN PROPERLY INITIATED BY THE ASSESSING OFFICER AND HE HAS RIGHTLY ASSUMED JURISDICTION ON SUFFICIENT AND VALID GROUNDS TO PROCEED U/S 147 AND 148 OF THE ACT. ACCORDINGLY, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF INDIA TERMINAL CONNECTOR SYSTE M LTD. (SUPRA), REOPENING OF ASSESSMENT INITIATED BY THE ASSESSING OFFICER IS UPHELD. GROUND NO.2, 2.1 AND 2.2 15. APROPOS THESE GROUNDS, THE LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) AS WELL AS THE AS SESSING OFFICER ARE NOT ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 16 CORRECT IN TREATING THE CASH CREDITS APPEARING IN T HE BANK ACCOUNTS AS ALLEGED INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 68 ARE WHO LLY INAPPLICABLE IN RESPECT OF CREDIT ENTRIES APPEARING IN THE BANK ACCOUNT BEC AUSE SECTION 68 COULD BE ATTRACTED IN RESPECT OF CREDIT ENTRIES APPEARING IN THE BOOKS OF ACCOUNTS. THE COUNSEL PLACED RELIANCE ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS BHAI C HAND H. GANDHI 144 ITR 67 (BOMBAY) AND SUBMITTED THAT IT IS A SETTLED PROPOSITION THA T A BANK ACCOUNT CANNOT BE TREATED AS BOOKS OF ACCOUNTS OF THE ASSESSEE. THEREFORE, THE FINDINGS OF THE COMMISSIONER OF INCO ME TAX(A) ARE NOT SUSTAINABLE. REPLYING TO THE ABOVE, LD. DR SUBMITT ED THAT THE AUTHORITIES BELOW ACTED ON COGENT AND RELIABLE EVIDENCE AND THE MONEY DEPOSITED IN THE ASSESSEES BANK ACCOUNT FINALLY FOUND PLACE IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THEREFORE, THE PROVISI ONS OF SECTION 68 OF THE ACT WERE RIGHTLY INVOKED BY THE ASSESSING OFFICER. 16. AFTER CAREFUL CONSIDERATION OF ABOVE LEGAL CONT ENTION OF BOTH THE PARTIES, FROM THE IMPUGNED ORDER, WE OBSERVE THAT T HE COMMISSIONER OF INCOME TAX(A) HAS DEALT THIS ISSUE IN PARA 5.1 OF T HE IMPUGNED ORDER WHICH READS AS UNDER:- 5.1 ON A CAREFUL CONSIDERATION OF ALL THE GROUNDS RAISED BY THE LD. COUNSEL FOR THE APPELLANT, I FIND THAT NONE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 17 OF THEM IS TENABLE. A PERUSAL OF MATERIAL PLACED B EFORE ME REVEALS THAT THE APPELLANT IS ENGAGED IN BUSINESS A CTIVITIES AND IS PROPRIETOR OF M/S CLASSIC INTERNATIONAL AND ALSO ENJOYS PROPERTY INCOME, SHORT TERM CAPITAL GAINS AN D INCOME FROM OTHER SOURCES. THE MONEY RECEIVED FROM THE AFORESAID FIVE PERSONS HAD FINALLY FOUND PLACED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT FOR H ER BUSINESS AND INVESTMENT ACTIVITIES. THEREFORE, IT IS NOT ACCEPTABLE THAT NO MONEY WAS FOUND RECORDED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. IN VIEW OF ABOVE, WE HOLD THAT THE COMMISSIONER OF INCOME TAX(A) RIGHTLY REJECTED THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE ADMITTEDLY IS ENGAGED IN BUSINESS ACTIVITIES AND IS PROPRIETOR OF M/S CLASSIC INTERNATIONAL AND ALSO ENJOYS PROPERTY INCOME, SHORT TERM CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THEREFORE, THE IMPUGNED RECEIPT OF MONEY HAD FINALLY FOUND PLACE IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE AS SESSEE FOR BUSINESS AND INVESTMENT ACTIVITIES, THEREFORE, THE BENEFIT OF TH E RATIO OF THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BHAICHAND H. GANDHI (SUPRA) IS NOT AVAILABLE FOR THE ASSESSEE. 17. APROPOS THESE GROUNDS, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE PROVED THE IDENTITY AND CREDITWORTHINESS O F ALL THE 5 DONORS BY FURNISHING THEIR INCOME TAX AND WEALTH TAX RETURNS AND ALSO THE GENUINENESS OF TRANSACTIONS BUT THE ASSESSING OFFICER WITHOUT M AKING INDEPENDENT INQUIRIES AND WITHOUT EVEN EXAMINING THE EVIDENCE F URNISHED BY THE ASSESSEE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 18 IN THE SHAPE OF MEMORANDUM ON GIFTS, AFFIDAVITS OF DONORS AND THEIR ITR AND WTR MADE THE IMPUGNED ADDITION OF RS.25 LAKH AS THE INCOME FROM UNDISCLOSED SOURCES U/S 68. THE COUNSEL FURTHER S UBMITTED THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X(A) WRONGLY MADE AND UPHELD THE ADDITION ONLY BECAUSE THE DONORS AND THE DONEE-ASSESSEE ARE NOT RELATED TO EACH OTHER AND THE BANK STATEMENTS O F EACH OF THE DONOR SHOWED THAT DURING THE PERIOD UNDER CONSIDERATION, THE DONORS ONLY HAD NEGLIGIBLE BALANCE IN THEIR ACCOUNTS BEFORE MAKING THE GIFT AND THE EQUAL AMOUNT WAS RECEIVED IN THEIR RESPECTIVE BANK ACCOUN TS BEFORE GIVING THE GIFTS TO THE ASSESSEE. THE COUNSEL ALSO SUBMITTED THAT THE DONORS WHO APPEARED BEFORE THE ASSESSING OFFICER STATED THE SO URCE OF MONEY GIFTED TO THE ASSESSEE BUT THE AUTHORITIES BELOW WRONGLY HELD THAT THE DONORS WERE NOT MEN OF MEANS. 18. THE COUNSEL VEHEMENTLY CONTENDED THAT THE ASSES SEE DISCHARGED PRELIMINARY BURDEN TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE DONOR AS WELL AS GENUINENESS OF THE TRANSACTION BY FURNISHIN G NECESSARY EVIDENCE AS STATED ABOVE AND THE DONORS WERE ASSESSED TO INCOME TAX AND WEALTH TAX ALSO PROVE THE CREDITWORTHINESS OF THE DONOR BEYOND DOUB T. THE LD. COUNSEL CONTENDED THAT THE ASSESSING OFFICER DID NOT EXAMIN E THE DETAILED EVIDENCE FILED BY THE ASSESSEE AND DID NOT EVEN FIND ANY FAU LT WITH THE STATEMENT GIVEN ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 19 BY THE THREE DONORS AND THE COMMISSIONER OF INCOME TAX(A) ALSO FAILED TO APPRECIATE THE EVIDENCE AND EXPLANATION OF THE ASSE SSEE PROPERLY. THE COUNSEL POINTED OUT THAT THE ASSESSING OFFICER HAS NOT MADE A SINGLE COMMENT UPON THE EVIDENCE FILED BY THE ASSESSEE NOR HAS FOUND ANY FAULT WITH SUCH EVIDENCE WHICH SHOWS THAT THE EVIDENCE BY THE ASSESSEE SUPPORTED HER CASE. THE COUNSEL ALSO SUBMITTED THAT THE ADDI TION ON ACCOUNT OF BOGUS GIFT WOULD NOT BE JUSTIFIED WHERE THE ASSESSING OFF ICER HAS NOT FOUND ANY FAULT IN REGARD TO THE AFFIDAVITS SHOWN BY THE DONO RS CONFIRMING THE GIFT NOR THE ASSESSING OFFICER HAS FOUND FAULT WITH THE INCO ME TAX RETURNS PRODUCED BY THE DONORS. THE COUNSEL ALSO POINTED OUT THAT T HE ASSESSEE HAS BEEN ABLE TO PRODUCE THREE DONORS BEFORE THE ASSESSING OFFICE R AND THE COPY OF THE INCOME TAX RETURNS OF ALL DONORS WOULD SHOW THAT TH ERE IS A CLOSE FRIENDSHIP/RELATIONSHIP BETWEEN THE ASSESSEE AND TH E DONORS. THE COUNSEL ALSO POINTED OUT THAT IF THE ASSESSING OFFICER HAD DOUBTED THE TRANSACTION OF THE GIFTS AFTER RECEIVING THE EVIDENCES WHICH HAVE BEEN PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS EXPLANATION, IT WAS VERY MUCH OPEN TO THE ASSESSING OFFICER TO DO INDEPENDENT VERIFICATION BU T THIS HAS NOT BEEN DONE BY THE ASSESSING OFFICER. 19. THE COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF COMMISSIONER ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 20 OF INCOME TAX VS SURESH KUMAR KAKAR (2010) 324 ITR 231 (DELHI) AND JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS PADAM SINGH CHAUHAN (2009) 315 ITR 433 (RAJ). THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE JUDGMENT O F ITAT, DELHI A BENCH IN THE CASE OF COMMISSIONER OF INCOME TAX VS UJJAGA R SINGH OBEROI (2009) TTJ (DEL) 228, DECISION OF ITAT AGRA THIRD MEMBER B ENCH IN THE CASE OF KALYAN MEMORIAL AND CHARITABLE TRUST VS ACIT (2009) 124 TTJ (AGRA)(TM) 883 AND JUDGMENT OF ITAT AMRITSAR BENCH IN THE CASE OF DCIT VS VIJAY PRAKASH (HUF) (2009) 120 TTJ (ASR) 429. 20. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT TH E EFFECT OF THE RATIO OF THE JUDGMENT RELIED BY THE ASSESSEE IS NOT AVAILABL E FOR THE ASSESSEE BECAUSE THE FACTS AND CIRCUMSTANCES OF THESE JUDGMENTS ARE CLEARLY DISTINGUISHABLE FROM THE PRESENT CASE. THE DR PLACED RELIANCE ON T HE FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI AND O THER HONBLE HIGH COURTS:- I) COMMISSIONER OF INCOME TAX VS ANIL KUMAR (2008) 167 TAXMAN 143 (DEL) II) TIRATH RAM GUPTA VS COMMISSIONER OF INCOME TAX (200 8) 304 ITR 145 (P&H) III) RAJIV TANDAN VS ACIT (2007) 294 ITR 488 (DEL) IV) SANDEEP KUMAR (HUF) VS COMMISSIONER OF INCOME TAX ( 2007) 293 ITR 294 ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 21 V) SAJJAN DAS & SONS VS COMMISSIONER OF INCOME TAX (20 03) 264 ITR 435 21. LD. DR HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS MOHANAKALA 291 ITR 278(SC) AND SUMATI DAYAL VS COMMISSIONER OF INCOME TAX (1995) 214 ITR 801(SC). 22. THE DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSING OFFICER HAS MADE A DETAILED INQU IRY IN RESPECT OF EVIDENCE SUBMITTED BY THE ASSESSEE AND THE ASSESSING OFFICER ALSO CALLED ALL THE FIVE DONORS BY ISSUING SUMMONS BUT THEIR SUMMONS WERE RE TURNED UNSERVED AND THE ASSESSEE PRODUCED ONLY THREE DONORS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER AFTER RECORDING THEIR STATEMENTS AND EXAMINATION OF THE ORAL AND DOCUMENTARY EVIDENCE RIGHTLY HELD THAT THE DONORS WERE NOT MEN OF MEANS AND THEIR ITRS AND WTRS CLEARLY SHOW THAT THE Y WERE NOT MEN OF MEANS TO PART SUCH A HUGE AMOUNT FOR THE ASSESSEE B ECAUSE THEIR INCOME AS PER RETURNS WERE RANGING ONLY BETWEEN RS.1.13 LAKH TO 1.16 LAKH DURING THE YEAR UNDER CONSIDERATION. THE DR ALSO POINTED OUT THAT IT IS VERY UNNATURAL THAT ALL THE FIVE DONORS FROM DIFFERENT STATUS AND UNRELATED TO THE ASSESSEE DONATED AN EQUAL AMOUNT OF RS.5 LAKH BETWEEN 15.3.2 002 TO 20.3.2002 I.E. WITHIN THE DURATION OF ONLY 6 DAYS ON THE VERGE OF COMPLETION OF THE FINANCIAL ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 22 YEAR 2001-02 IN THE SAME FASHION THAT THE BALANCE W AS NEGLIGIBLE IN THEIR BANK ACCOUNTS BEFORE GIVING GIFT CHEQUES AND A HUGE AMOUNT WAS DEPOSITED TO THEIR BANK ACCOUNTS AND AFTER CLEARANCE OF GIFT CHEQUES, THE BALANCE OF THE BANK ACCOUNT AGAIN REMAINED NEGLIGIBLE. THE LD. DR POINTED OUT THAT THE SOURCES OF FUNDS AS PER PARA 2 OF AFFIDAVITS OF ALL FIVE DONORS IS THAT THE ABOVE GIFT HAS BEEN GIVEN BY ME OF MY OWN FUNDS AND PAST SAVINGS AND MY SOURCE OF INCOME IS BUSINESS, WHICH IS NOT ACCEPTA BLE BECAUSE AN UNRELATED PERSON WHO IS ALSO NOT A MAN OF MEANS CANNOT BE SAI D TO BE A CAPABLE PERSON TO GIFT SUCH A HUGE AMOUNT TO THE ASSESSEE. THE DR SUBMITTED THAT ALL EVIDENCE AND EXPLANATION SUBMITTED BY THE ASSESSEE FOR ALL FIVE DONORS IS PARA MATERIA WHICH IS UNNATURAL AND BEYOND THE AMBI T OF THE TRUTH. 23. THE DR CONTENDED THAT THE ONLY IDENTITY OF THE DONORS BY WAY OF ITRS AND WTRS AND IDENTITY CARD IS NOT SUFFICIENT, THEIR CREDITWORTHINESS AND CAPACITY SHOULD ALSO BE CONSIDERED AND DONORS OF TH E PRESENT CASE WERE NOT MEN OF MEANS AND THE ASSESSEE COULD NOT ESTABLISH T HAT THE DONORS HAD THE CAPACITY TO PAY HUGE AMOUNT OF RS. 5 LAKH EACH OUT OF THEIR MEAGRE INCOME RANGING FROM RS. 1.13 LAKH TO RS. 1.16 LAKH DURING THE YEAR UNDER CONSIDERATION. THE DR SUBMITTED THAT THE TEST OF G ENUINENESS OF THE TRANSACTION IS NOT ONLY THAT THE MONEY IS ROUTING T HROUGH BANKING CHANNELS BUT THE FINANCIAL POSITION OF THE DONOR, GIFT IN LI EU OF CONSIDERATION OR FOR ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 23 TANGIBLE BENEFIT OR FOR PAST OR FUTURE CONSIDERATIO N IS ALSO TO BE SEEN BY THE REVENUE AUTHORITIES. THE DR SUBMITTED THAT ONLY BE CAUSE THE GIFT WERE RECEIVED THROUGH CHEQUES IS NOT A PARAMOUNT CONSIDE RATION OF THE GENUINENESS OF THE TRANSACTION AND WHEN THE DONORS COULD NOT EXPRESS THE RELIABLE SOURCE OF FUNDS OUT OF WHICH THE IMPUGNED GIFTS WERE GIVEN TO THE ASSESSEE, THEN THE GENUINENESS OF THE TRANSACTION C ANNOT BE HELD TO BE PROVED. 24. AFTER CAREFUL CONSIDERATION OF ABOVE RIVAL SUBM ISSIONS, CONTENTIONS AND LEGAL PROPOSITIONS RELIED BY BOTH THE PARTIES A ND A THOUGHTFUL PERUSAL OF THE CITATIONS RELIED BY BOTH THE PARTIES, WE FIND I T APPROPRIATE TO REPRODUCE THE RELEVANT PART OF THE ASSESSMENT ORDER FOR THE S AKE OF CLARITY WHICH READS AS UNDER:- ACCORDINGLY NOTICE U/S 142(1) OF THE I T ACT WAS ISSUED DATED 11/12/2009 FIXING HEARING FOR 17/12/2 009 REQUIRING TO FURNISH AS UNDER:. 1. TO FURNISH COPY OF BANK STATEMENT GIVING NARRATION TO EACH DEBIT/CREDIT ENTRY. 2. DETAILS OF PROFIT ON SALE OF INVESTMENT WITH SUPPORT DOCUMENT. 3. SUMMONS ISSUED TO 5 DONORS HAVE BEEN RECEIVED BACK UNSERVED FROM THE ADDRESS AS SUPPLIED. TO PR ODUCE ALL 5 DONORS FOR VERIFICATION OF GIFT. IT IS NOTED FROM THEIR RESPECTIVE BANK STATEMENT THAT THERE WERE NO CREDIT BALANCE IN THEIR A/C A DAY BEFORE ISSUING THE GIFT CHEQUES TO YOU AND THERE WERE IMMEDIATE CLG ENTRIES AFTER THE SO ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 24 CALLED CHEQUE OF GIFT WERE ISSUED FROM THEIR A/CS W HICH DOES NOT PROVE THEIR CREDITWORTHINESS. IT IS ALSO NOTED FROM THEIR ITRS THAT THEIR INCOME RANGES BETWEEN 1. 13 LAC TO 1.61 LAC DURING AY.2001-02 WHERE THEY HAVE GIVE N AWAY THE GIFT OF RS. 5 LAC TO YOU WHICH IS HIGHLY IMPROBABLE. TO EXPLAIN. 4. THE PROCEEDINGS ARE FIXED FOR 4.12.2009 & IN CASE OF NON COMPLIANCE NON PRODUCTION OF DONOR THE MATTER M AY BE FINALIZED IN ITS MERIT WITHOUT ANY FURTHER OPPOR TUNITY. DURING ASSESSMENT PROCEEDINGS SHRI SATISH KUMAR, SHRI KESHO RAM AND SHRI NARENDER KUMAR GUPTA WHOSE STATEMENTS ON OATH WERE RECORDED. IT WAS NOTED THA T ALL THESE PERSONS WERE NOT MEN OF MEANS. THEIR INCOME RANGED BETWEEN 1.13 LACS TO 1.16 LACS DURING THE YE AR UNDER CONSIDERATION WHEN THE GIFTS WERE GIVEN. ALL THESE DONORS WERE NOT RELATED TO ASSESSEE AND THEREFORE T HERE WAS NO QUESTION OF LOVE AND AFFECTION. FURTHER, NON E OF THE DONOR BROUGHT THEIR RESPECTIVE BANK STATEMENT FOR VERIFICATION WHICH WAS SPECIFICALLY REQUIRED. IT W AS REPLIED DURING STATEMENT RECORDED ON OATH THAT THEI R BANK STATEMENTS FOR FY 2001-02 WERE NOT AVAILABLE WITH T HEM. IT IS PERTINENT TO NOTE THAT IN EACH OF THE DONORS'S B ANK ACCOUNT THERE WAS IMMEDIATE CLEARING CREDIT ENTRY B EFORE GIVING GIFT TO THE ASSESSEE. IN RESPECT OF EACH OF THE CREDIT ENTRY ALL THE THREE DONORS STATED THAT THEY HAD SOL D THE JEWELLERY AGAINST WHICH THE CHEQUE WAS RECEIVED IN CLEARING. FURTHER EACH OF THE DONORS ON OATH STATED THAT THEY DID NOT REMEMBER THE NAME OF THE JEWELLER TO W HOM IT WAS SOLD. ALL THESE DONORS IN THEIR STATEMENT ALSO DEPOSED THAT THEY WERE DOING SMALL TYPE OF JOB DURING THE Y EAR UNDER CONSIDERATION. THE BANK STATEMENT OF KESHO R AM GUPTA, NARENDER KUMAR GUPTA & MANOJ KUMAR GUPTA WERE REQUISITIONED FROM STATE BANK OF PATIALA DARYA GANJ NEW DELHI WHERE THEY HAD MAINTAINED THEIR RESPECTIV E BANK ACCOUNTS DURING THE YEAR, IT IS SEEN THAT ALL OF THESE PERSONS HAVE MADE TRANSACTIONS BETWEEN 60 TO 70 LAC S DURING THE YEAR UNDER CONSIDERATIONS. THE PATRICE I N THEIR RESPECTIVE BANK ACCOUNT SHOWS THEY RECEIVED A CHEQU E ON ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 25 ONE DAY AND AN EQUAL AMOUNT OF CHEQUES ISSUED ON TH E NEXT DATE FROM THEIR A/C. THEREFORE IT GOES ON TO PROVE THAT THEY HAD INDULGED IN GIVING ACCOMMODATION ENTRIES IN TIL E GARB OF GIFTS TO VARIOUS PERSONS. THE AR OF THE ASSESSEE VIDE LETTER FILED DATED 22/12/2009 HAS STATED THAT', SHRI MANOJ KUMAR BATRA IS SUFFERING FROM HEART DECEASE AND THEREFORE THE ASSE SSEE IS UNABLE TO PRODUCE HIM. FURTHER IN RESPECT OF SATISH KUMAR JAIN IT IS STATED THAT HE HAS DIED ON 15/12/2005 AN D THEREFORE CAN NOT BE PRODUCED; WHILE EXAMINING THE DOCUMENTARY EVIDENCE AND DURING REGARDING OF STATEMENT OF THREE PERSONS AND OTHER TWO PERSONS DURING ASSESSMENT PROCEEDINGS THE FOLLO WINGS FACTS ARE NOTED: A) THAT THE DONORS & THE ASSESSEE ARE NOT RELATED T O EACH OTHER. IN THE, ABSENCE OF ANY FAMILY TIES THE CLAIM OF NATURAL LOVE & AFFECTION APPEARS SUPERFLUOUS. B) THE BANK STATEMENT OF THE EACH OF THE DONORS SHOWED THAT PERIOD UNDER CONSIDERATION SHOWED THAT THE DONORS ONLY HAD ONLY NEGLIGIBLE, BALANCE IN THEIR A CCOUNT BEFORE MAKING THE GIFT. AN EQUAL AMOUNT WAS RECEIV ED IN THEIR RESPECTIVE BANK ACCOUNT BEFORE GIVING THE GIF T TO THE ASSESSEE. THEREFORE, AS PER THE BANK STATEMENT IT D OES NOT APPEAR THAT THE DONORS WERE MEN OF MEANS TO HAVE GI FTED THE AMOUNT OF RS. 5,00,000/- EACH. C) IT IS RATHER SURPRISING, NEVERTHELESS PERTINENT TO NOTE THAT EVEN THOUGH THE DONOR WAS NOT RELATED TO THE ASSESSEE IN ANY WAY STILL HE CHOSE TO GIFT A SUM OF MONEY TO THE ASSESSEE OUT OF NATURAL LOVE AND AFFECTION. TH E TERM NATURAL LOVE AND AFFECTION IS COMPLETELY IRRELEVANT IN CASE OF UNRELATED PERSONS. IN THIS REGARD RELIANCE IS P LACED ON THE OBSERVATION MADE BY THE HONBLE CHENNAI HIGH CO URT IN THE CASE OF ADDL.CIT VS C.R. RANGANATHAN CHETTEY (153 ITR 456). LOOK THE WAY THE GIFTS WERE MADE. NOT ONLY WERE THEY MADE TO OTHER PEOPLES CHILDREN, BUT SOME OF ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 26 THEM MADE TO OTHER PEOPLES WIVES. IN ANY PLACE, EXCEPTING IN A TAX COURT, GIFTS TO OTHER PEOPLES W IVES, EVEN IF THEY ARE WIVES OF CO-PARTNERS WOULD RAISE A HOST OF QUESTION AND NOT A FEW EYE-BROWS, EXCEPTING WHEN TH ERE IS A UNDERSTANDING NOD, AH, IT IS ALL FOR PURPOSES OF INCOME- TAX. EVEN OTHERWISE THE FACTS REMAIN THAT IT IS AG AINST HUMAN PROBABILITIES FOR SUCH SUM OF MONEY TO BE GIF TED TO STRANGERS. ASSESSEE WAS UNABLE TO FURNISH ANY EVID ENCE OR ARGUMENT TO COUNTER THESE UNIVERSALLY APPLICABLE AN D COMMON COURSE OF NATURAL HUMAN CONDUCT. IN THIS RE GARD REFERENCE IS MADE TO THE OBSERVATION MADE BY THE AP EX COURT IN THE CASE OF SUMATI DAYAL [214 ITR 801] THA T WHILE EXAMINING SUCH CREDITS, ALL FACTORS IN TOTALI TY HAVE TO BE CONSIDERED BY THE AO. THE TRUTHFULNESS OF STATEM ENTS ADVANCED BY THE ASSESSEE CAN ALSO BE TESTED AGAINST THE HUMAN PROBABILITIES. IF THERE IS SUFFICIENT INDICAT ION BASED ON THE PROBABILITIES OF AN OCCURRENCE TO DISBELIEVE THE STATEMENTS MADE BY THE ASSESSEE, EVEN WHEN ADVANCED WITH PRIMA-FACIE EVIDENCE, THE AO MAY BE JUSTIFIED IN DISBELIEVING THE STATEMENTS. THEREFORE, THE AUTHEN TICITY OF THE GIFTS STANDS DISPROVED. D) FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE TO ESTABLISH CREDITWORTHINESS IT IS NOTED THAT THE DON ORS DID NOT HAVE SUFFICIENT FUNDS. BOTH BEFORE AND AFTER TH E GIFT TRANSACTION THERE WERE HARDLY ANY FUNDS LEFT IN THE ACCOUNTS OF THE DONORS. SUCH CONDUCT OF THE DONORS IS AGAINST HUMAN PROBABILITIES FOR NO PRUDENT PERSON W OULD PART WITH MONEY UNLESS HE HAS SUFFICIENT FUNDS TO T AKE CARE OF HIS AND HIS FAMILY NEEDS. GIFTS, CHARITY, DONATI ONS ETC. ARE NORMALLY MADE OUT OF SURPLUS FUNDS. PERSONS WIT H MINIMUM BANK BALANCE ARE HIGHLY UNLIKELY TO GIVE A WAY LARGE SUMS OF MONEY TO STRANGERS. FROM THE EVIDENCE IN THE FORM OF PASS BOOK OF THE DONOR, THE CREDITWORTHINES S OR THE CAPACITY TO MAKE GIFTS OF HUGE AMOUNTS OF RS.25 LAC STANDS DISPROVED. E) REFERENCE IS ALSO MADE TO THE FINDINGS OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SAJAN DASS & SONS. THE HON'BLE DELHI HIGH COURT IN THE CASE OF S AJAN ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 27 DASS & SONS VS. COMMISSIONER OF INCOME TAX [264 IT R 435} HELD AS UNDER:- 'A MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL S IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT . SINCE THE CLAIM OF GIFT IS MADE BY THE ASSESSEE, THE ONUS LIE S ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MA KING THE GIFT BUT ALSO HIS CAPACITY TO MAKE A GIFT AND THAT IT HAS ACTUALLY BEEN RECEIVED AS A GIFT FROM THE DONOR.' IN VIEW OF THE ABOVE IT IS HELD THAT SUM OF RS. 25 LACS DOES NOT REPRESENT A GIFT. ASSESSEE WAS UNABLE TO P ROVE SUCH SUM AS A BONAFIDE GIFT. THEREFORE, SUCH SUM S TANDS COVERED BY THE PROVISIONS OF SECTION 68. SECTION 68 OF THE L.T. ACT STIPULATES AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. KEEPING IN VIEW THE PROVISIONS OF SEC. 68, IT IS EVIDENT THAT THE ONUS OF EXPLAINING CREDITS APPEARI NG IN THE BOOKS OF THE ASSESSEE LIES SQUARELY ON THE ASSESSEE . BUT THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND TO BE FALSE AND MISLEADING AND WAS DISPROVED IN THE ABOVE PARAS . THEREFORE, IT IS HELD THAT ASSESSEE FAILED TO DISCH ARGE THE PRIMARY ONUS COMPRISING ESTABLISHMENT OF CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITH REGARD TO SUMS FOUND CREDITED IN HIS BOOKS. THE BURDEN IS ON THE ASSESSEE TO EXPLAIN SATISFACTORILY WITH REGARD TO THE AMOUNTS WHICH HAV E BEEN CREDITED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE. THE SOURCE AND THE NATURE OF THE RECEIPT HAS TO BE PROV ED BY ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 28 THE ASSESSEE, AND IF HE FAILS TO PROVE SATISFACTORI LY THE SOURCE AND THE NATURE OF THE AMOUNTS RECEIVED, THE AO IS ENTITLED TO DRAW AN INFERENCE THAT THE RECEIPT IS A SSESSABLE INCOME OF THE ASSESSEE [CIT VS R.S. RATHOD (212 ITR 39O)]. 'THE SUPREME COURT IN COMMISSIONER OF INCOME TAX V MOHANKALA (P) 291 ITR 278 (2007) HAS HELD THA T 'THE INFERENCE OF GENUINENESS OF GIFT DOES NOT REAL LY FOLLOW MERELY ON IDENTIFICATION OF THE DONOR ON RECEIPT OF MONEY THROUGH BANKING CHANNELS. HIS CAPACITY TO MAKE A GI FT IS EQUALLY RELEVANT. IN FACT THE CREDIBILITY OF SUCH G IFT EXCEPT WHERE IT IS PROVED BEYOND DOUBT WOULD APPEAR TO BE RELEVANT.' IN LIGHT OF THE ABOVE, EVEN IF THE IDENTITY OF THE DONOR MAY HAVE BEEN PROVED, THE GENUINENESS AND CREDITWORTHINESS ASPECTS AS ENVISAGED IN THE INTERP RETATION OF THE PROVISIONS OF SECTION 68 REMAINS UNESTABLISH ED. THEREFORE, THE SUM OF RS.25 LACS SHOWN AS GIFT BY T HE ASSESSEE IS TREATED AS UNDISCLOSED INCOME OF THE AS SESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE I.T . ACT. 25. THE ABOVE FINDINGS OF THE ASSESSMENT ORDER HAVE BEEN CONFIRMED BY THE COMMISSIONER OF INCOME TAX(A) WITH THE FOLLOWIN G DISCUSSION, OBSERVATION AND FINDINGS:- 4.1 IN ORDER TO EXAMINE THE CORRECTNESS OF THE DOCUMENTS FILED BY THE APPELLANT, THE LD. AO ISSUED SUMMONS U/S 131 OF THE IT ACT, 1961 ON 25.11.09 TO ALL THE ALLEGED DONORS REQUIRING THEM TO APPEAR BEFORE HIM ON 4.12.09 AND ALSO TO FURNISH RELEVANT DOCUMENTS I N RESPECT OF THE GIFTS. IT IS STATED BY THE LD. AO T HAT ALL THE SUMMONS ISSUED BY HIM WERE RECEIVED BACK WITH THE POSTAL REMARKS NO SUCH PERSONS ON THE GIVEN ADDRES S. THEREAFTER THIS FACT WAS BROUGHT TO THE NOTICE OF T HE APPELLANT AND SPECIFIC REQUIREMENTS IN TERMS OF SEC TION ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 29 142(1) OF THE ACT WERE MADE TO FILE (A) COPY OF BAN K ACCOUNT WITH NARRATION OF EACH DEBIT AND CREDIT ENT RIES (B) SALE OF INVESTMENTS AND (C) TO PRODUCE ALL THE FIVE DONORS ON WHOM THE SUMMONS COULD NOT BE SERVED BY T HE POSTAL AUTHORITIES. ON THE DATE OF HEARING I.E. 4. 12.09, OUT OF FIVE DONORS, THREE DONORS, NAMELY, S/SH. SAT ISH KUMAR SHARMA, KESHO RAM AND SH. NARESH KUMAR GUPTA WERE ONLY PRODUCED BEFORE THE ASSESSING OFFIC ER AND THEIR STATEMENTS WERE RECORDED. ON EXAMINATION OF THESE THREE WITNESSES, THE LD. ASSESSING OFFICER FO UND THAT THEY WERE PERSONS OF NO MEANS, THEIR INCOME HARDLY RANGED BETWEEN 1.13 LACS TO 1.6 LACS DURING THE YEA R UNDER CONSIDERATION AND THERE WAS NO BLOOD RELATION SHIP BETWEEN THE DONEE AND THE DONORS. HE ALSO FOUND TH AT IMMEDIATELY BEFORE ISSUING CHEQUES TO THE APPELLANT THERE WERE CREDITS IN THE ACCOUNTS OF THE DONORS BY WAY O F CLEARING ENTRIES. HE FURTHER NOTICED THAT, THOUGH THE DONORS CLAIMED THAT THE GIFTS WERE MADE OUT OF SALE OF JEWELERY, THEY FAILED TO FURNISH NECESSARY DETAILS AS TO THE NAME OF THE BUYER, DATE OF SALE AND SALES PROCEEDS ETC. RECEIVED BY THEM. THEREFORE, CONSIDERING THE MATER IAL COLLECTED IN THE COURSE OF ASSESSMENT AND THE INFOR MATION RECEIVED FROM THE INVESTIGATION WING, THE LD. ASSES SING OFFICER CONCLUDED THAT THE AMOUNT OF RS. 25 LACS WA S NOT PROPERLY EXPLAINED AND SHE WAS NOT IN A POSITION TO PROVE THAT THE GIFTS WERE GENUINE AND BONA FIDE. ACCORDI NGLY, ADDITION OF RS.25 LACS WAS MADE U/S 68 OF THE IT AC T, 1961. 4.2 BEING AGGRIEVED BY THE AFORESAID ACTION OF THE ASSESSING OFFICER, THE APPELLANT IS CHALLENGING THE SAME BEFORE ME. 4.3 IN THE COURSE OF APPELLATE PROCEEDINGS, SH.ANIL SHARMA, ADVOCATE APPEARED ON BEHALF OF THE APPELLAN T AND MADE DETAILED ORAL AND WRITTEN ARGUMENTS. THE CASE OF LD. COUNSEL IS THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS ALL NECESSARY EVIDENCE INCLUDING CONFIRMATIONS, AFFIDAVITS, MEMORANDUM OF GIFTS AND PHOTOCOPIES OF INCOME TAX RETURNS AND WEALTH TAX RE TURNS ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 30 WERE FILED BEFORE THE LD. ASSESSING OFFICER. THERE FORE, THERE WAS NO REASON TO EITHER DOUBT THE EXISTENCE A ND IDENTITY OF THE DONORS OR THEIR CREDITWORTHINESS AN D GENUINENESS OF TRANSACTIONS. HE FURTHER SUBMITS TH AT U/S 68 OF THE IT ACT, 1961, THE ASSESSEE IS ONLY SUPPOS ED TO DISCHARGE PRIMARY ONUS IN RELATION TO THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F TRANSACTIONS. ACCORDING TO THE LD. COUNSEL, THIS O NUS WAS DULY DISCHARGED BY THE APPELLANT BY FILING THE NECE SSARY EVIDENCE AND ALSO BY PRODUCING THREE DONORS WHO DUL Y CONFIRMED THE MAKING OF GIFTS TO THE APPELLANT. THEREFORE, ACCORDING TO THE LD. COUNSEL, THERE WAS NO REASON TO TREAT THE AMOUNT OF RS. 25 LACS AS BOGUS. IN THIS, THE LD. COUNSEL HAS MADE THE FOLLOWING WRITTE N SUBMISSIONS ALSO:- 1. IN THE PENDING APPEAL PROCEEDINGS, UNDER INSTRUCTIONS FROM THE ASSESSEE, IT IS SUBMITTED THA T THE INSTANT APPEAL HAS BEEN FILED AGAINST THE ASSESSMEN T ORDER PASSED BY THE ITO, WARD 25(1), NEW DELHI U/S 143(3)/147 OF THE I.T. ACT DATED 02.01.2010. IN TER MS OF THE GROUNDS OF APPEAL FILED WITH THE MEMO OF APPEAL , THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT BY TAKING RECOURSE TO THE PROVISIONS OF SECTION 147/14 8 OF THE ACT AND THE ADDITION OFRS.25 LAKHS MADE TO THE DECLARED INCOME AS THE ALLEGED INCOME FROM UNDISCLO SED SOURCES U/S 68 OF THE ACT. THE FACTS OF THE CASE, I N BRIEF, LEADING TO THE FILING OF THE INSTANT APPEAL ARE STA TED IN BRIEF AS UNDER: 2. THE ASSESSEE IS AN INDIVIDUAL AND IS REGULAR INC OME TAX ASSESSEE. THE ASSESSEE DERIVES INCOME FROM PROPRIETORSHIP CONCERN UNDER THE NAME AND STYLE OF M/S CLASSIQUE INTERNATIONAL AND ALSO DERIVES INCOME ASSESSEEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', SHORT TERM CAPITAL GAINS' AND 'INCOME FR OM OTHER SOURCES'. 2.1 FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEE F ILED A RETURN DECLARING AN INCOME OF RS.2,02,930/-, WHICH WAS ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 31 PROCESSED U/S 143( 1) OF THE ACT. . A COPY OF COMPU TATION OF INCOME IS PLACED AT P. 83 TO 84 OF PB. ON 05.11. 2009, THE LD AO SUPPLIED A COPY OF THE REASONS RECORDED T O THE ASSESSEE. A COPY OF THE REASONS RECORDED IS PLACED AT P. 84 OF PB. THEREAFTER, (AS STATED IN THE ASSESSMENT ORDER) ON RECEIPT OF CERTAIN INFORMATION FROM DI(INV.), NE W DELHI THAT THE ASSESSEE HAD TAKEN BOGUS ACCOMMODATI ON ENTRIES FROM KESHO RAM GUPTA, SATISH KUMAR SHARMA, SATISH JAIN, NARENDER KUMAR GUPTA & MANOJ KUMAR BATRA, PERSONS ALLEGEDLY INVOLVED IN PROVIDING LARG E SCALE ACCOMMODATION ENTRIES, THE ID AO AFTER BEING SATISFIED THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT, ISSUED A NOTICE U/S 148 OF THE ACT ON 24.03.2009, SERVED UPON THE ASSESSEE ON 26.03.2009. A COPY OF THE NOTICE U/S 148 AND COPY OF REASONS RECO RDED DATED 23.03.2010, AS SUPPLIED TO THE ASSESSEE, IS P LACED AT P.85 & 86 OF PB. IN COMPLIANCE WITH THE SAID NOT ICE, THE ASSESSEE FILED A LETTER DATED 13.04.2009 STATIN G THAT THE RETURN FILED ON 31.10.2002 VIDE RECEIPT NO. 238 3 BE TREATED AS HAVING FILED IN COMPLIANCE WITH NOTICE U /S 148. THE LD AO ISSUED NOTICE U/S 143(2) AND 142(1) DATED 24.06.2010 (P.87 & 88 OF PB) AND REQUIRED THE ASSES SEE TO FURNISH DETAILS/NATURE OF TRANSACTIONS ENTERED I NTO WITH THE PERSONS WHO HAD GIVEN THE GIFTS AGGREGATING TO RS.25 LAKH TO THE ASSESSEE. IN COMPLIANCE WITH THE ABOVE DIRECTION, THE ASSESSEE VIDE LETTER DATED NIL FILED ON 20.11.2009 (P.89 TO 91 OF PB) FURNISHED ALL NECESSA RY DETAILS AND EVIDENCE (P.L TO 82 OF PB) AND EXPLAINE D THE ENTRIES APPEARING IN HER BANK ACCOUNT AS GIFTS RECE IVED FROM FIVE PERSONS AS PER DETAILS GIVEN BELOW: S.NO. AMOUNT DATE PARTICULARS 1. RS.5,OO,OOO/- 15.03.02 GIFT FROM SHRI KESHO RAM GUPTA RECEIVED VI DE CHEQUE NO.928197 DT.L3.03.2002 DRAWN ON ST. BANK OF PATIALA, DARYAGANJ, NEW DELHI. THE FOLLOWING DOCUMENTS WERE ALSO FURNISHED: (P.L TO L7OF PB) XII PHOTOCOPY OF CHEQUE RECEIVED; XIII AFFIDAVIT OF DONOR; XIV. PHOTOCOPY OF MEMORANDUM OF GIFT; XV. PHOTOCOPY OF ACKNOWLEDGMENT OF ITR FOR ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 32 A.Y. 1998-99, 99-00 & 2001-02 & WT RETURN FOR A. Y. 1999-00; XVI. PHOTOCOPY OF ELECTION IDENTITY CARD XVII. PHOTOCOPY OF RATION CARD OF DONOR XVIII. PHOTOCOPY OF W.T. ORDER U/S 16(3) FOR A.Y. 1999-00 AND INTIMATION U/S 143(1 ); XIX. PHOTOCOPY OF STATEMENT OF AFFAIRS AS ON 31 .3.2000 OF DONOR; XX. PHOTOCOPY OF PAN CARD; XXI. PHOTOCOPY OF BANK STATEMENT OF DONOR; XXII. PHOTOCOPY OF EVIDENCE CONFIRMING SOURCE OF CREDIT IN THE BANK ACCOUNT OF DONOR. 2.2 ON 25.11.2009, THE LD AO ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE FIVE DONORS HOWEVER, IT IS STATE D THAT THOSE SUMMONS WERE RECEIVED BACK UNSERVED WITH THE REMARK BY POSTAL AUTHORITIES 'NO SUCH PERSONS ON THE GIVEN AD DRESS'. THE LD AO ISSUED A NOTICE U/S 142(1) DATED 11.12.20 09 AND ASKED THE ASSESSEE TO PRODUCE THE DONORS. THE ASSES SEE PRODUCED SHRI KESHO RAM GUPTA, SHRI SATISH KUMAR SHARMA AND SHRI NARENDER KUMAR GUPTA, WHOSE STATEMENTS ON OATH WERE RECORDED BY THE LD AO. HOWE VER, THE ASSESSEE COULD NOT PRODUCE SHRI MANOJ KUMAR BAT RA, WHO WAS SUFFERING FROM HEART DISEASE AND SHRI SATIS H KUMAR JAIN AS HE EXPIRED ON 15.12.2005. ALL THE DON ORS IN THEIR STATEMENT ON OATH RECORDED BY THE LD. AO, ADM ITTED HAVING MADE GIFTS TO THE ASSESSEE OUT OF NATURAL AN D AFFECTION AND FROM THEIR OWN RESOURCES OF INCOME. HOWEVER, THE ID AO DID NOT AGREE WITH THE SUBMISSIO NS MADE, EVIDENCE PRODUCED AND DEPOSITION MADE BY THE DONORS AND ADDED THE AMOUNT OF GIFTS AGGREGATING TO RS.25 LAKH AS THE ALLEGED INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. COPY OF STATEMENTS OF THREE DONORS AS R ECORDED BY THE LD. AO ON 16.12.2009, 17.12.2009 AND 24.12.2 009, HAS NOW BEEN OBTAINED AND A COPY THEREOF IS PLACED AT P.92 TO 100 OF PB. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 33 4.4 IN THIS REGARD, THE LD. COUNSEL HAS RELIED UPON THE FOLLOWING JUDGMENTS:- A. COMMISSIONER OF INCOME TAX V BHAI CHAND H.GANDH I 141 ITR 67 (BOM) B. MS. MAYAWATI VS DCIT 113 TTJ 778 (DEL) C. COMMISSIONER OF INCOME TAX VS SURESH KUMAR KAKAR (2010) 324 ITR 231 (DELHI) D. COMMISSIONER OF INCOME TAX VS KUSUM GUPTA ITAT DELHI E. COMMISSIONER OF INCOME TAX VS PADAM SINGH CHAUH AN (2009) 315 ITR F. ACIT VS UJJAGAR SINGH OBEROI 121 TTJ 228 (DEL) G. DCIT VS VIJAY PRAKASH (HUF) 120 TTJ (ASR.) H. KALYAN MEMORIAL AND CHARITABLE TRUST VS ACIT 1 24 TTJ 883 (AGRA) 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT AND HAVE ALSO GONE THROU GH THE FINDINGS RECORDED BY THE LD. ASSESSING OFFICER. TH E APPELLANT IS CHALLENGING THE ADDITION IN QUESTION B ROADLY ON THE FOLLOWING GROUNDS: I) THE CREDITS HAVE BEEN FOUND RECORDED IN THE BANK A/C OF THE APPELLANT WHICH IS NOT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. II )THE ASSESSING OFFICER HAS FAILED TO MAKE ANY IN DEPENDENT ENQUIRIES AND HAS NOT EVEN EXAMINED THE EVIDENCE FU RNISHED BEFORE HIM. III) THE PRELIMINARY BURDEN OF PROVIDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION WAS DULY DISCHARGED BY THE APPELLANT BY FURNISHING THE NECES SARY EVIDENCE IN THE SHAPE OF MEMORANDUM OF GIFTS, AFFID AVITS AND ITR AND WT PARTICULARS OF THE DONORS. IV) THE LD. ASSESSING OFFICER RECORDED THE STATEME NT OF THREE DONORS AND DID NOT FIND ANY FAULTS THEREIN AND THAT EVIDENCE SHOULD HAVE BEEN ACCEPTED AS VALID EVIDENCE. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 34 5.1 ON A CAREFUL CONSIDERATION OF ALL THE GROUNDS RAISED BY THE LD. COUNSEL FOR THE APPELLANT, I FIND THAT N ONE OF THEM IS TENABLE. A PERUSAL OF MATERIAL PLACED BEFORE ME REVEALS THAT THE APPELLANT IS ENGAGED IN BUSINESS ACTIVITIE S AND IS PROPRIETOR OF M/S CLASSIC INTERNATIONAL AND ALSO EN JOYS PROPERTY INCOME, SHORT TERM CAPITAL GAINS AND INCOM E FROM OTHER SOURCES. THE MONEY RECEIVED FROM THE AFORESA ID FIVE PERSONS HAD FINALLY FOUND PLACED IN THE BOOKS OF AC COUNTS MAINTAINED BY THE APPELLANT FOR HER BUSINESS AND INVESTMENT ACTIVITIES. THEREFORE, IT IS NOT ACCEPT ABLE THAT NO MONEY WAS FOUND RECORDED IN THE BOOKS OF ACCOUNT S OF THE APPELLANT. SIMILARLY, I DO NOT AGREE WITH THE A PPELLANT THAT THE ASSESSING OFFICER DID NOT MAKE ANY INDEPEN DENT ENQUIRIES AND DID NOT EXAMINE THE EVIDENCE SUBMITTE D BEFORE HIM. AS STATED EARLIER, THE LD. ASSESSING O FFICER HAS NOT ONLY EXAMINED THE MATERIAL PLACED BEFORE HIM BU T ALSO ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE DONORS AND THE APPELLANT WAS ASKED TO PRODUCE THEM ONLY AFTER THE SUMMONS WERE RETURNED UNSERVED BY THE POSTAL AUTHOR ITIES. THE ARGUMENT THAT THE APPELLANT HAD DISCHARGED HER ONUS U/S 68 BY FILING DOCUMENTS, NAMELY, GIFT DEEDS, AFF IDAVITS AND IT AND WT PARTICULARS OF THE DONORS IS ALSO OF NO AVAIL, BECAUSE THE ASSESSING OFFICER HAS EXAMINED T HESE DOCUMENTS AND DID NOT FIND ALL THE FIVE DONORS OF P ERSONS OF MEANS. IT IS CLEARLY STATED BY THE ASSESSING OF FICER IN THE ASSESSMENT THAT ALL THE DONORS HAD MEAGER INCOM E DURING THE YEAR UNDER CONSIDERATION, HARDLY SUFFICI ENT TO MEET THEIR DAY TO DAY EXPENSES AND THEREFORE IT WAS UNBELIEVABLE AND AGAINST HUMAN NATURE AND BEHAVIOUR THAT SUCH PERSONS COULD HAVE SPARED HUGE AMOUNT OF RS.5 LACS EACH TO DONATE IT TO A PERSON WHO DID NOT HAVE ANY BLOOD RELATIONSHIP WITH THEM. 5.2 FURTHER, DURING THE APPELLATE PROCEEDINGS, I HAVE AGAIN EXAMINED THE DOCUMENTS, NAMELY, STATEMENTS, AFFIDAVITS, IT AND WT RECORDS AND THE BANK STATEMEN TS OF THE DONORS. ON EXAMINATION, I FIND THAT NONE OF TH E DONORS HAS BEEN ABLE TO EXPLAIN THE SOURCE OF GIFTS AND ES TABLISH THE GENUINENESS OF TRANSACTIONS IN QUESTION. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 35 AS PER THE STATEMENT GIVEN BY SH.KESHO RAM GUPTA, THE AMOUNT OF RS. 5 LACS WAS GIFTED BY HIM OUT OF S ALE OF JEWELRY OF RS.5-6 LACS. HOWEVER, A PERUSAL OF STAT EMENT OF AFFAIRS FIELD BY HIM AS ON 31.3.2000 REVEALS THAT T HE TOTAL JEWELRY OWNED BY HIM WAS WROTH LESS THAN RS.1.5 LAC S. THEREFORE, IT IS NOT UNDERSTOOD AS TO HOW IT WAS PO SSIBLE FOR HIM TO SALE JEWELRY WORTH RS.5-6 LACS. FURTHER , AS PER THE GLANCE SHEET FILED ALONG WITH THE RETURN OF INC OME, IT IS SEEN THAT SH. GUPTA HAD TOTAL INCOME OF AROUND RS.1 08000 DURING THE FYS 1999-2000, 2001-02 AND HAD DRAWINGS OF RS.62000-70000 FOR HIS PERSONAL EXPENSES. THUS, HE HARDLY HAD ANY SURPLUS WITH HIM TO MAKE GIFTS ETC. FURTHER, AS PER THE BANK STATEMENT, SH.GUPTA HAD RE CEIVED A SUM OF RS.48000 IMMEDIATELY BEFORE GIVING CHEQUE OF RS. 5 LACS TO THE APPELLANT AND AS PER THE DOCUMENT AVA ILABLE BEFORE ME, THE SUM OF RS.4.80 LACS WAS RECEIVED AS RETURN OF LOAN BY ONE SOHAN LAL HARISHCHAND. THUS, THE CL AIM OF SH.GUPTA THAT THE GIFT OF RS. 5 LACS WAS MADE OUT O F SALE CONSIDERATION OF JEWELRY IS PROVED FALSE BY THE DOC UMENTS FILED BY HIMSELF. SIMILARLY, IN THE CASE OF SH.SATISH KUMAR SHARMA, IT IS CLAIMED THAT HE ALSO MADE THE GIFT OF RS. 5 LACS OU T OF SALE OF JEWELRY. HOWEVER, A PERUSAL OF WT RECORDS IN HI S CASE ALSO REVEALS THAT THE TOTAL JEWELRY AT HIS DISPOSAL WAS WORTH RS.245600 ONLY. FURTHER AS PER HIS INCOME TAX RETU RNS ALSO HIS TOTAL INCOME WAS ALSO RS.108000 APPROXIMAT ELY. FURTHER, IT IS SEEN THAT AS AGAINST THE TOTAL INCOM E OF RS.108000, SH. SHARMA HAD DRAWING OF RS.135000 IN F Y 2000-01, MEANING THEREBY HIS EXPENDITURE WAS MORE T HAN THE TOTAL INCOME. IN THIS CASE ALSO, THERE IS A CR EDIT OF RS.385000 IMMEDIATELY BEFORE MAKING THE GIFT TO THE APPELLANT AND SOURCE THEREOF IS SHOWN AS RETURN OF LOAN BY ONE S.KUMAR AND COMPANY. THUS, IN THIS ALSO THE CL AIM OF THE APPELLANT AND THE DONOR IS PROVED TO BE FALSE B Y THE DOCUMENTS WHICH HAVE BEEN FILED BY THE APPELLANT/TH E DONOR HIMSELF. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 36 NOW, COMING TO THE CASE OF SH.NARENDRA KUAMR GUPTA, HERE ALSO THE STORY IS NO DIFFERENT. IN HIS STATEM ENT RECORDED BEFORE THE ASSESSING OFFICER, HE ALSO CLAI MS TO HAVE MADE GIFT OUT OF SALE OF JEWELRY. HOWEVER, TH E DOCUMENTS AVAILABLE BEFORE ME SUGGEST THAT SH.GUPTA HAD TOTAL JEWELRY WORTH RS.131240 AT HIS DISPOSAL. THE REFORE, THE SALE OF JEWELERY WORTH RS.5 LACS IS UNACCEPTABL E. IN THIS CASE ALSO THE TOTAL INCOME FOR THE FY 2000-01 IS RS.105884 AS AGAINST WHICH THE TOTAL WITHDRAWALS AR E RS.113863, THEREBY LEAVING NO SAVING/SURPLUS WITH S H. GUPTA. FURTHER, IN THIS CASE ALSO IMMEDIATELY BEFO RE THE ISSUE OF CHEQUE TO THE APPELLANT THERE IS A CREDIT OF RS.495000 AND AS PER THE DOCUMENT FILED BY THE APPE LLANT THIS IS AGAIN REPAYMENT OF LOAN BY ONE A-OE INVESTMENT. THEREFORE, IN THIS CASE ALSO THE DOCUM ENTS ON RECORD ITSELF PROVE THE FALSITY OF THE CLAIM OF THE APPELLANT AND THE DONOR. 5.3 IN VIEW OF THE ABOVE FACTUAL POSITION, I DO N OT FIND MYSELF IN AGREEMENT WITH THE APPELLANT THAT SHE HAD DULY DISCHARGED THE BURDEN CAST UPON HER U/S 68 OF THE I T ACT, 1961. 5.4 I FIND IT VERY INTERESTING RATHER STRANGE THA T ALL THE DOCUMENTS FILED BY THE APPELLANT HAVE A STRIKING SI MILARITY IN THE SENSE THAT ALL THE RETURNS FILED IN THE NAME S OF THE DONORS UNDER IT & WT ACTS ARE PREPARED IN IDENTICAL FASHION AND IN ALL THE CASES WT ASSESSMENTS FOR AY 1999- 00 HAVE BEEN COMPLETED U/S 16(3) OF WT ACT, 1957 AN D IN ALL THE CASES THE MONEY IN QUESTION HAS BEEN CREDIT ED TO THE BANK ACCOUNT AS A RESULT OF REPAYMENT OF LOANS ALLE GEDLY GIVEN BY THE DONORS. THIS SIMILARITY ITSELF POINTS OUT/SUGGESTS THAT THE DOCUMENTS HAVE BEEN FABRICATE D, PREPARED AND ARRANGED TO HAVE BEEN FILED WITH THE H ELP OF SOMEONE WHO HAS BEEN OVERSEEING THE AFFAIRS OF ALL THE FIVE PERSONS WITH SOME MOTIVE. THE FACT THAT THE SUMMON S ISSUED BY THE LD. ASSESSING OFFICER HAD COME BACK A ND ALL THE THREE PERSONS WERE PRODUCED BY AND AT THE BEHES T OF THE APPELLANT CLEARLY PROVES THAT THE STATEMENTS GI VEN BY ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 37 THEM WERE TUTORED AND HENCE, CANNOT FORM A VALID PI ECE OF EVIDENCE. 5.5 NOW COMING TO THE JUDGMENTS RELIED BY THE LD. COUNSEL FOR THE APPELLANT, I FIND THAT MOST OF THE JUDGMENTS DO NOT HAVE ANY APPLICATION TO THE FACTS OF THE PRE SENT CASE AS THE FACT SITUATIONS IN THESE CASES ARE AT VARIAN CE. HOWEVER, THE LD. COUNSEL HAS ARGUED THAT THE JUDGME NTS DELIVERED BY THE HONBLE DELHI HIGH COURT IN THEE C ASES OF SURESH KUMAR KAKAR 324 ITR 331 AND COMMISSIONER OF INCOME TAX VS KUSUM GUPTA ITA NO. 831/2010 ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E. THEREFORE, FOR THE SAKE OF CONVENIENCE, THE RELEVAN T PORTION OF THE SAID JUDGMENTS ARE BEING REPRODUCED AS UNDER :- SURESH KUMAR KAKAR, 324 ITR 231 (DELHI) - HELD THAT THE GIFTS WERE MADE BY THE MOTHER TO THE SON. WITH REGARD TO THE CREDITWORTHINESS, THE ASSESSEE HAD BEEN ABLE TO DISCHARGE THE ONUS CAST UPON HIM BY FURNISHING THE BANK STATEMENT OF HIS MOTHER (DONOR) AS ALSO THE CONFIRM ATION CERTIFICATE FROM THE MOTHER CONFIRMING THE GIFTS. ONCE THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS, WHICH WAS CAST UPON THE ASSESSEE, IT WAS INCUMBENT UPON THE ASSESS ING OFFICER TO PROVE ON THE BASIS OF COGENT EVIDENCE TH AT THE TRANSACTION WAS NOT GENUINE. THERE WAS NO SUCH EVI DENCE. THE CONCLUSION OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) WITH REGARD TO THE GENUINENE SS OF THE TRANSACTIONS WERE MERELY CONJECTURAL AND WERE B ASED ON SURMISES AND ASSUMPTIONS. SUCH CONJECTURES AND ASSUMPTIONS COULD NOT TAKE THE PLACE OF PROOF, ONCE THE ASSESSEE HAD DISCHARGED THE PRIMARY BURDEN WHICH HA D BEEN CAST UPON HIM. THE TRIBUNAL HAD CORRECTLY CON CLUDED THAT THE AUTHORITIES BELOW HAD IGNORED THE FACT THA T THERE WAS A BLOOD RELATIONSHIP (MOTHER-SON) BETWEEN THE D ONOR AND THE DONEE; THAT GIFTS WERE NORMALLY MADE BY PAR ENTS TO CHILDREN THROUGH LOVE AND AFFECTION AND DID NOT NEC ESSARILY REQUIRE ANY PARTICULAR OCCASION; THAT THE GIFTS IN THE PRESENT CASE WERE ALL MADE BY CHEQUES AND THROUGH BANKING CHANNELS. THE TRIBUNAL HELD THAT WHEN THE IDENTITY AND THE CAPACITY WERE PROVED BEYOND DOUBT AND ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 38 THE SOURCE OF THE GIFTS WAS THE MOTHER, THERE WAS N O QUESTION OF MAKING THE ADDITION UNDER SECTION 68 OF THE ACT. THE FINDINGS RECORDED BY THE TRIBUNAL DID NOT SUFFER FROM ANY PERVERSITY. COMMISSIONER OF INCOME TAX VS KUSUM GUPTA, ITA NO.831/2010 3. HOWEVER, WE FIND THAT NOT ONLY WAS THE GENUINENESS OF THE TWO GIFTS ESTABLISHED INASMUCH A S REGISTERED GIFT DEEDS WERE PRODUCED BUT ALSO THE ST ATEMENTS OF TWO DONORS ALONG WITH THE ASSESSEE WERE RECORDED . IN FACT, THE TRIBUNAL IN THE IMPUGNED ORDER HAS CONCLU DED ON FACTS THAT THE IDENTITY AND CREDITWORTHINESS OF THE DONORS WAS PROVED BEYOND DOUBT. 4. IN OUR OPINION, AS GIFTS WERE MADE BY WAY OF REGIST ERED GIFT DEEDS AS WELL AS PAYMENTS WERE MADE BY WAY OF ACCOU NT PAYEE CHEQUES AND BOTH THE DONORS ARE INCOME TAX ASSESSES, IT CANNOT BE SAID THAT THE GIFTS WERE NOT GENUINE. RESULTANTLY, THE APPEAL STANDS DISMISSED IN LIMINE BUT WITH NO ORDER AS TO COSTS. 8. WHEN THE FACTS OF THE PRESENT CASE ARE ANALYZED IN THE LIGHT OF THE AFORESAID JUDGMENTS, IT MAY BE SEEN TH AT THE RATIO LAID DOWN IN THOSE CASES DOES NOT HAVE ANY APPLICATION TO THE FACTS OF THE PRESENT CASE. IT I S A MATTER OF RECORD THAT THE GIFTS TO THE APPELLANT HAVE NOT BEEN MADE BY MEANS OF REGISTERED DEEDS. AND, FINALLY AND MOS T IMPORTANTLY, THE STATEMENTS GIVEN BY THE THREE DONO RS ITSELF PROVE THE FALSITY OF THEIR CLAIM OF MAKING GIFTS TO THE APPELLANT. THEREFORE, LOOKING TO THE TOTALITY OF T HE CIRCUMSTANCES AND HAVING REGARD TO THE MATERIAL PLA CED BEFORE ME, I HAVE NO HESITATION IN HOLDING THAT THE ADDITION OF RS.25 LACS HAS RIGHTLY BEEN MADE BY THE LD. ASSE SSING OFFICER AND THE SAME IS THEREFORE BEING SUSTAINED. 26. AFTER CAREFUL CONSIDERATION OF ABOVE RIVAL SUBM ISSIONS AND CONTENTIONS OF BOTH THE PARTIES AND CAREFUL PERUSAL OF THE LEGA L PROPOSITIONS AND CITATIONS ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 39 RELIED BY BOTH THE PARTIES, AT THE OUTSET, WE FIND IT APPROPRIATE TO CONSIDER THE RATIO OF THE DECISIONS PLACED BEFORE US IN THE CONT EXT OF PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE ASSESSEE HA S RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF COMMI SSIONER OF INCOME TAX VS SURESH KUMAR KAKAR (SUPRA) AND DECISION OF COMMI SSIONER OF INCOME TAX VS KUSUM GUPTA IN ITA NO.831/2010 BUT THE COMMI SSIONER OF INCOME TAX(A) IN PARA 5.5 AND 8 OF IMPUGNED ORDER HAS HELD THAT THE RATIO LAID DOWN IN THESE CASES DOES NOT HAVE ANY APPLICATION TO THE FACTS OF THE PRESENT CASE. ON CAREFUL PERUSAL OF OBSERVATIONS OF THE COMMISSIO NER OF INCOME TAX(A), WE RESPECTFULLY HOLD THAT SINCE THE FACTS ARE DIFFE RENT FROM THE PRESENT CASE, THEREFORE, BENEFIT OF THE RATIO OF THE ABOVE DECISI ONS IS NOT AVAILABLE FOR THE ASSESSEE. 27. THE DECISION OF ITAT DELHI BENCH IN THE CASE OF ACIT VS UJAGGAR SINGH OBEROI (SUPRA) RELIED BY THE ASSESSEE IS RELA TED TO THE GIFTS RECEIVED FROM ABROAD AND THE ASSESSING OFFICER MADE ADDITION S WITHOUT MAKING ANY VERIFICATION AND USING VAST POWERS AVAILABLE FOR HI M U/S 131 AND 133(6) OF THE ACT. IN THE PRESENT CASE, THE DONORS ARE NOT F ROM ABROAD AND ASSESSING OFFICER MADE DUE VERIFICATION AND THROUGH ENQUIRY B Y USING POWERS OF SECTION 131 OF THE ACT AND HELD THAT GIFTS WERE NOT GENUINE AND THEIR FINDINGS WERE AGAIN UPHELD BY COMMISSIONER OF INCOME TAX(A), THEREFORE, THE FACTS ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 40 OF THE CASE OF ACIT VS UJJAGAR SIGH (SUPRA) ARE CLE ARLY DISTINGUISHABLE FROM THE PRESENT CASE. 28. THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS PADAM SINGH CHOUHAN ( SUPRA) IS RELATED TO GIFTS FROM ABROAD AND THEIR LORDSHIPS HELD THAT THE RE WAS NO LEGAL BASIS TO ASSUME THAT TO RECOGNIZE THE GIFT TO BE GENUINE, TH ERE SHOULD BE BLOOD RELATIONSHIP OR ANY CLOSE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE AND WHEN THE ASSESSEE HAD PRODUCED COPIES OF THE GIFT D EEDS AND AFFIDAVITS OF THE DONORS AND THERE WAS SUFFICIENT CASH BALANCE IN THE BANK ACCOUNT OF THE DONOR, THEN IN THE ABSENCE OF ANYTHING TO SHOW THAT THE ACT OF THE ASSESSEE IN CLAIMING GIFT WAS AN ACT BY WAY OF MONEY LAUNDERING , SIMPLY BECAUSE THE ASSESSEE HAPPENED TO RECEIVE GIFTS, IT COULD NOT BE SAID THAT THEY HAD TO BE ADDED TO THE INCOME OF THE ASSESSEE. ON CAREFUL PE RUSAL OF ABOVE DECISION, WE ARE OF THE RESPECTFUL OPINION THAT THE RATIO OF THIS DECISION IS NOT AVAILABLE TO THE ASSESSEE IN THE PRESENT CASE. AFTER DETAILE D INQUIRY ABOUT THE EVIDENCE AND EXPLANATION SUBMITTED BY THE ASSESSEE, THE ASSE SSING OFFICER RIGHTLY HELD THAT THE DONORS OF THE PRESENT CASE WERE NOT MEN OF MEANS; THERE WAS NEGLIGIBLE BALANCE IN THE BANK ACCOUNT OF THE DONOR S AND THE SOURCE OF AMOUNT WAS ALSO NOT PROPERLY ESTABLISHED AND PROVED , THEREFORE, THE PRESENT CASE IS CLEARLY DISTINGUISHABLE FROM THE ABOVE CITA TION. ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 41 29. THE DECISION OF THE ITAT AMRITSAR BENCH IN THE CASE OF DCIT VS VIJAY PRAKASH (HUF) (SUPRA), THE GIFT WAS RECEIVED FROM NRI BROTHER, AND THIS IS NOT A POSITION IN THE PRESENT CASE. THE DE CISION OF ITAT AGRA THIRD MEMBER BENCH RELIED BY THE ASSESSEE IN THE CASE OF KALYAN MEMORIAL & CHARITABLE TRUST VS ACIT (SUPRA) IS RELATED TO CASH CREDITS FROM CREDITORS WHICH IS NOT RELEVANT IN THE PRESENT CASE. 30. COMING TO THE DECISIONS RELIED BY THE REVENUE, ON CAREFUL PERUSAL OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT O F DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX VS ANIL KUMAR (SUPRA), W E OBSERVE THAT THEIR LORDSHIPS HELD THAT WHEN THE ASSESSEE FAILED TO SHO W THE FINANCIAL CAPACITY AND CREDITWORTHINESS OF THE DONORS AND SOURCES OF F UNDS GIFTED TO ASSESSEE AND WHETHER DONORS HAD CAPACITY OF GIVING LARGE AMO UNT OF GIFTS TO THE ASSESSEE THEN THE GIFTS CANNOT BE SAID TO BE GENUIN E. 31. THE DR HAS ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SAJAN DAS AND SO NS VS COMMISSIONER OF INCOME TAX (2003) 264 ITR 435 (DELHI) WHEREIN THEIR LORDSHIPS HELD THAT MERE IDENTIFICATION OF DONOR AND SHOWING THE G IFT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE GENUINENES S OF THE GIFT. SINCE THE CLAIM OF THE GIFT WAS MADE BY THE ASSESSEE, THE ONU S LAY ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING GIFT BU T ALSO HIS CAPACITY TO MAKE ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 42 GIFT AND THAT IT HAD ACTUALLY BEEN RECEIVED AS A GI FT FROM DONOR. IN THE PRESENT CASE, HAVING REGARD TO THE DETAILED INQUIRI ES CONDUCTED BY THE ASSESSING OFFICER FROM THE DONORS AND DOCUMENTS REL ATED TO THE DONORS WITH WHICH THE ASSESSEE WAS ADMITTEDLY CONFRONTED AND BE ARING IN MIND THE FACT THAT ADMITTEDLY, THE DONORS WERE NOT RELATED TO THE ASSESSEE, THE FINDINGS RECORDED BY THE ASSESSING OFFICER AND UPHELD BY THE COMMISSIONER OF INCOME TAX(A) WERE BASED ON LOGICAL VERIFICATION AN D EXAMINATION OF THE EVIDENCE, DETAILS AND SUBMISSIONS OF THE ASSESSEE W HICH CLEARLY REVEAL THAT THE IDENTITY OF THE DONORS WAS ESTABLISHED AND THE AMOUNT ROUTED THROUGH BANKING CHANNELS WAS ALSO SHOWN BUT THE DONORS WERE NOT FOUND TO BE MEN OF MEANS AND, AS NOTED ABOVE, DONATION WAS MADE IN THE SAME FASHION WITHIN A SPAN OF SIX DAYS IN THE MONTH OF MARCH ON THE VER GE OF ENDING OF FINANCIAL YEAR. THEREFORE, THE AUTHORITIES BELOW RIGHTLY HE LD THAT THE CREDITWORTHINESS AND CAPACITY OF DONORS COULD NOT BE ESTABLISHED. T HE SAME LEGAL PROPOSITION HAS BEEN REITERATED BY HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE DECISION OF SANDEEP KUMAR (HUF) VS C.I.T. (SUPRA) C ONSIDERING THE RATIO OF ITS OWN JUDGMENT IN THE CASE OF SAJAN DAS & SONS VS C.I.T. (SUPRA) AND ALSO BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TIRATHRAM GUPTA VS C.I.T. (SUPRA) AS RELIED BY THE REVENUE. THE DR FU RTHER PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT IN THE CASE OF R AJEEV TANDON VS ACIT ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 43 (SUPRA) WHEREIN SPEAKING FOR HONBLE JURISDICTIONAL HIGH COURT, THEIR LORDSHIPS HELD THAT THE EXPLANATION THAT THE ASSESS EE NEEDED MONEY AND DONOR WANTED TO HELP HIM IS NOT ONLY UNUSUAL BUT AL SO UNNATURAL AND TAXING AUTHORITIES MUST LOOK AT SURROUNDING CIRCUMSTANCES. IN THIS CASE, THEIR LORDSHIPS HELD THAT THE TWO DONORS HAD ABSOLUTELY N O RELATION OR CONNECTION WITH THE ASSESSEE AND THEY MADE GIFTS TO THE ASSESS EE ONLY BECAUSE HE NEEDED MONEY TO BUY A HOUSE AND THEY (THE DONOR) WANTED TO HELP HIM WAS NOT ONLY QUITE UNUSUAL BUT ALSO QUITE UNNATURAL. THEIR LORD SHIPS ALSO REMARKED THAT IT WAS INCREDIBLE THAT A COMPLETE STRANGER WOULD WANT TO GIFT LAKHS OF RUPEES TO A PERSON ONLY BECAUSE THAT PERSON WANTED THE AMOUNT . HONBLE HIGH COURT POINTED OUT THAT THE TAX AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES WHICH THEY DID AND CAME TO THE CONCLU SION THAT THE GIFTS COULD NOT BE SAID TO BE GENUINE. 32. IN THE PRESENT CASE, ON CAREFUL PERUSAL OF THE ASSESSMENT ORDER AS WELL AS APPELLATE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX(A), WE HOLD THAT THE ASSESSING OFFICER AFTER DETAILED INQU IRY ABOUT EVIDENCE AND SUBMISSIONS OF THE ASSESSEE RIGHTLY HELD THAT THE D ONORS WERE NOT MEN OF MEANS AND THE WAY IN WHICH GIFTS WERE MADE WAS NOT ACCEPTABLE TO BE GENUINE AND THESE FINDINGS WERE RIGHTLY UPHELD BY T HE COMMISSIONER OF INCOME TAX(A) BY PASSING DETAILED AND REASONABLE OR DER. IN VIEW OF ITA NO. 4637/DEL/2010 ASSTT.YEAR: 2002-03 44 DISCUSSIONS MADE HEREINABOVE, WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE W ITH THE FINDINGS OF THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX(A) IN THE IMPUGNED ORDER AND WE UPHOLD THE SAME BY DISMISSING GROUND N OS. 2, 2.1 AND 2.2 OF THE ASSESSEE. GROUND NO.3 33. GROUND NO. 3 IS CONSEQUENTIAL TO THE MAIN GROUN DS. SINCE WE HAVE DISMISSED GROUND NOS. 2, 2.1 AND 2.2 OF THE ASSESSE E, THEREFORE, THE COMMISSIONER OF INCOME TAX(A) RIGHTLY UPHELD THE AC TION OF THE ASSESSING OFFICER REGARDING LEVY OF INTEREST U/S 234B AND 234 C OF THE ACT. ACCORDINGLY, GROUND NO. 3 IS ALSO DISMISSED. 34. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.11.2013. SD/- SD/- ( J.S. REDDY ) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 29TH NOVEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR