Smt. Swaroop Kaur, Meerut V. ACIT, Meerut

ITA 5478/DEL/2010

• Counselvise Citation: 547820114 RSA 2010
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 03-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Assessee Lawyers: O P SAPRAAR
• Keywords: Unexplained cash credit; Gift; Question of law; Block assessment
• Section: 142(1); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, A M ITA NO.5478/D/2010 ASSESSMENT YEAR: 2001-02 SWAROOP KAUR,C/O M/S. JEET CONSTRUCTION CO.,314, ARVIND-PURI, MEERUT CANTT.. VS. ACIT, CIRCLE-2, INCOME TAX OFFICE, NEAR BHASALI GROUND, MEERUT [PAN:A LLPK2669M] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI O.P. SAPRA,AR REVENUE BY SMT. S. MOHANTHY, DR DATE OF HEARING 30-11-2011 DATE OF PRONOUNCEMENT 23-12-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 3 RD DECEMBER, 2010 BY THE ASSESSEE AGAINST AN ORDER DATED 27 TH SEPTEMBER, 2010 OF THE LD. CIT(A)- MEERUT , RAISES THE FOLLOWING :- 1. THAT THE LD. CIT HAS ERRED IN LAW AND FACTS OF CASE IN CONFIRMING/ UPHOLDING THE ASSESSMENT OF THE SUM OF ` 5,00,000/- BEING THE AMOUNT RECEIVED AS GIFT AS INCOME OF ASSESSEE FROM UNDISCL OSED SOURCES AS UNEXPLAINED CASH CREDIT U/S 68 OF IT ACT HOLDING TH E GIFT AS NON-GENUINE, WHICH BEING ERRONEOUS, ARBITRARY AND UNTENABLE BE K INDLY DELETED/EXCLUDED FROM ASSESSMENT. 2. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E ASSESSEE IS NOT JUSTIFIED IN RAISING THE PLEA THAT PROVISIONS OF SECTION 68 D ONT APPLY TO THE FACTS OF THE CASE, WHICH IS A NEW PLEA AT THIS STAGE AND THA T EVEN OTHERWISE THE ASSESSEES CASE IS COVERED UNDER SEC. 68. THE PROVI SIONS OF SEC. 68 BEING INAPPLICABLE IN ASSESSEES CASE, WHICH IS A N O ACCOUNT CASE, THE IMPUGNED ADDITION OF ` 5,00,000/- AS MADE IN THE SEC 68 BEING UNTENABLE, WHICH KINDLY BE DELETED. 3. THAT THE LD. AUTHORITIES BELOW HAVE NOT APPRECIA TED THE DIRECTION OF HONBLE ITAT PROPERLY AND IN RIGHT PERSPECTIVE AND HAVE GONE BEYOND THE DIRECTION IN RELYING ON INFERENCES AND FINDINGS ARR IVED AT AND RECORDED IN COURSE OF ORIGINAL PROCEEDINGS, PARTICULARLY ABOUT THE SURRENDER OF GIFT AMOUNT AND NON-PRODUCTION OF THE DONOR. ITA NO.5478/DEL/10 2 4. THAT THE LD. AUTHORITIES BELOW HAVE FAILED TO AP PRECIATE THE CONTENTIONS, EVIDENCES ADDUCED AND THE BASIC FACTS OF CASE PROPE RLY AND IN THE RIGHT PROSPECTIVE AND THE VARIOUS INFERENCES AS DRAWN AND OBSERVATIONS AS MADE ARE INCORRECT, MISCONCEIVED AND UNTENABLE. THE RELIANCE PLACED BY THEM ON THE CITED CASE LAWS IS MISPLACED BECAUSE OF DISTINGUISHABLE FACTS. 5. THAT THE PENAL INTEREST ` 1,72,618/- CHARGED U/S 234-A, 234-B AND 234-C HAS BEEN WRONGLY CHARGED WHICH BE KINDLY HELD AS NO T CHARGEABLE AND BE KINDLY CANCELLED. 2. ADVERTING FIRST TO GROUND NOS. 1 TO 4 IN THE APP EAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT ASSESSMENT IN THIS CASE WA S COMPLETED ON AN INCOME OF ` 6,41,670/- VIDE ORDER DATED 17 TH MARCH, 2004 IN PURSUANCE TO RETURN DECLARING INCOME OF ` 1,41,670/- FILED ON 3.12.2001. INTER ALIA, AN AMOUN T OF ` 5 LACS WAS ADDED ON ACCOUNT OF UNEXPLAINED GIFT RECEIVED VIDE DD NO. 531207 DATED 20 TH DECEMBER, 2000, THE ASSESSEE HAVING SURRENDERED TH E AMOUNT ON THE GROUND THAT THE DONOR WAS NOT COOPERATING IN PROVIDING THE RELE VANT DETAILS AND PAPERS AND THEREFORE, THE ASSESSEE OFFERED TO PAY THE TAX ON T HE AMOUNT OF ` 5 LAC IN ORDER TO BUY PEACE SUBJECT TO NO PENALTY U/S 271(1)(C) OF T HE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT]. 3. HOWEVER THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A), WHO VIDE ORDER DATED 12.4.2005 ADJUDICATED THE ISSUE IN THE FOLLOWING T ERMS :- 2.2. THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE LD. AR HAVE BEEN CONSIDERED. WHEREAS I AGREE WITH THE LD. AR THAT FI LING OF COPY OF GIFT DEED AFFIDAVIT OF THE DONOR CONFIRMING THE GIVING OF GIF T, FURNISHING PAN AND COPY OF RETURN FORM, ETC. CONSTITUTED EVIDENCE RELEVANT FOR THE PURPOSE OF PROVING THE GIFT, YET THE AO WAS PERFECTLY JUSTIFIED IN REQUIRI NG THE ASSESSEE TO PRODUCE THE DONOR TO FIND OUT THE GENUINENESS OF THE TRANSACTIO N. IT IS QUITE POSSIBLE THAT THE TRANSACTION OF GIFT MAY BE MADE TO APPEAR GENUI NE BY CREATING SUCH EVIDENCES, SUCH AS GIFT DEED AND THE DONORS CONFIR MATION ALONGWITH OTHER PARTICULARS, SUCH AS PAN AND COPY OF THE CAPITAL A/ C, ETC. IN ORDER TO FIND OUT WHETHER THERE WAS NO SAID PRO QUO IN SUCH A TRANSAC TION, IT IS NECESSARY TO EXAMINE THE DONOR. AS THE ASSESSEE HAD FAILED TO DO SO AND THAT THE TRUTH MIGHT COME OUT, SHE, IN ORDER TO CIRCUMVENT THE FUR THER PROBE, MADE A CONDITIONAL SURRENDER ON THE GROUND THAT THE DONOR WAS NOT COOPERATING. SUCH A CONDUCT HAS TO BE SEEN IN THE LIGHT OF HUMAN PROB ABILITIES AND SURROUNDING CIRCUMSTANCES, AS HELD BY THE HONBLE SUPREME COURT , IN THE CASE SUMATI DAYAL VS. CIT 214 ITR 801 (SC). IT IS BEYOND HUMAN PROBABILITIES THAT A PERSON, WHO HAD GIVEN A SUBSTANTIAL AMOUNT AS GIFT AS HIGH AS RS. 5,00,000/- ITA NO.5478/DEL/10 3 WOULD REFUSE TO COOPERATE WITH THE DONEE, WHEN HE I S ASKED TO APPEAR BEFORE THE AO TO TESTIFY THE TRANSACTION OF GIFT. SUCH A C ONDUCT THAT THE DONOR WOULD REFUSE TO COOPERATE IS POSSIBLE IN LOAN TRANSACTION , BUT NOT IN THE CASE OF GIFT TRANSACTION, IF THE GIFT IS REALLY GENUINE. THUS, T HE SURRENDER WAS MADE WHEN THE ASSESSEE FOUND NO ROUTE TO ESCAPE; AND IN SUCH CIRCUMSTANCES, THE ASSESSMENT OF GIFT AMOUNT OF RS. 5,00,000/- WAS PER FECTLY IN ORDER; AND THUS THE ACTION OF THE A.O IS UP-HELD. 4. ON FURTHER APPEAL, THE ITAT VIDE THEIR ORDER DA TED 4 TH AUGUST, 2006 IN ITA NO. 3219/DEL/2005 SET ASIDE THE MATTER TO THE FILE OF AO WITH THE DIRECTIONS TO DECIDE THE MATTER AFRESH SINCE THE AO DID NOT CONSIDER EVIDENC ES ENCLOSED WITH LETTER DATED 9 TH FEBRUARY, 2004 FILED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. IN PURSUANCE TO THESE DIRECTIONS OF THE ITAT, THE AO ISSUED SUMMON U/S 131 OF THE ACT TO THE DONOR SHRI SURENDER MEHTA THROUGH SPEED POST AT THE ADDRE SS PROVIDED BY THE ASSESSEE. HOWEVER, THE SUMMONS WERE RETURNED UNSERVED, THERE BEING NO INFORMATION ABOUT THE RECEIVER EVEN AFTER REPEATED VISIT BY THE POSTA L AUTHORITIES. A NOTICE U/S 133 (6) OF THE ACT ADDRESSED TO SHRI AMENDER KUMAR, PROP. OF M/S. VARDHMAN TRADING AND INVESTMENT, ALLEGED DEBTOR OF THE ASSESSEE, WHOSE U NDATED CONFIRMATION HAS BEEN FILED BY THE ASSESSEE, WAS ALSO RETURNED UNSERVED W ITH THE REMARKS RECEIVER WAS NOT AVAILABLE EVEN AFTER REPEATED VISITS. IN VIEW OF T HIS SITUATION, THE AO ISSUED A NOTICE DATED 16.11.07 U/S 142(1) OF THE ACT, ASKING THE AS SESSEE TO ESTABLISH IDENTITY AND CREDITWORTHINESS OF THE DONOR AS ALSO GENUINENESS O F THE TRANSACTION ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES. THOUGH THE LD. AR ON BEHALF OF THE ASSESSEE APPEARED BEFORE THE AO ON 22.11.2007, HE DID NOT FI LE ANY REPLY, EXPLANATION OR EVIDENCE REGARDING IDENTITY AND CREDITWORTHINESS OF THE DONOR OR GENUINENESS OF THE TRANSACTION AND REQUESTED FOR ADJOURNMENT. THE LD. AR DID NOT FILE ANY SUCH EVIDENCE OR DETAILS EVEN ON THE ADJOURNED DATE OF H EARING I.E. 28.11.2007. IN RESPONSE TO A FINAL OPPORTUNITY, THE LD. AR STATED THAT DONOR WAS AN INCOME TAX ASSESSEE AND EVERYTHING WAS VERIFIABLE FROM THE REC ORD OF DONOR. INTER ALIA, IT WAS POINTED OUT THAT THE GIFTED AMOUNT WAS OFFERED TO TAX IN THE COURSE OF ORIGINAL ASSTT. PROCEEDINGS NOT BECAUSE THE GIFT WAS NOT GENUINE BU T BECAUSE OF SEARCH OPERATION CONDUCTED IN THE PREMISES OF ASSESSEES FAMILY, WHE REIN THE SEARCH PARTY ASSURED THAT NO PENAL ACTION WOULD BE INITIATED IN THE EVEN T OF THE SURRENDER OF THE GIFTED AMOUNT. SINCE THE AO INITIATED PENALTY PROCEEDINGS , THEY HAD PREFERRED AN APPEAL BEFORE THE LD. CIT(A). IN THE LIGHT OF THESE SUBMI SSIONS ON BEHALF OF THE ASSESSEE, ITA NO.5478/DEL/10 4 ESPECIALLY WHEN SUMMONS ISSUED TO THE DONOR WERE RE TURNED BY THE POSTAL AUTHORITIES AND THE ASSESSEE DID NOT ESTABLISH GENU INENESS OF THE TRANSACTION, THE AO CONCLUDED THAT MERE PROVIDING OF PAN WITHOUT ES TABLISHING THE IDENTITY AND EXISTENCE OF THE DONOR CANNOT BE TERMED AS DISCHARG E OF ONUS ON THE PART OF THE ASSESSEE. SINCE THE ASSESSEE FAILED TO ESTABLISH ID ENTITY AND CREDITWORTHINESS OF THE DONOR AS ALSO THE GENUINENESS OF THE TRANSACTION, RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 (SC) THE AO ADDED THE AMOUNT U/S 68 OF THE ACT. 5. ON APPEAL LD. CIT(A) UPHELD THE FINDINGS O F AO IN THE FOLLOWING TERMS :- 6.4 I HAVE CONSIDERED THE AOS ORDER AND THE AR S SUBMISSIONS CAREFULLY, I AGREE WITH THE AR THAT THE FILING OF C OPY OF GIFT DEED, AFFIDAVIT OF THE DONOR CONFIRMING THE GIFT, FURNISHING PAN AND COPY OF RETURN FORM ETC. DO CONSTITUTE EVIDENCE. HOWEVER, I ALSO FIND THAT THE AO DID MAKE HIS EFFORTS TO SATISFY HIMSELF ON THE GENUINENESS OF THE TRANSACTI ON BY ISSUING A SUMMON UNDER SECTION 131 TO THE DONOR BY SPEED POST ON TH E ADDRESS GIVEN BY THE ASSESSEE WHICH CAME BACK UNSERVED WITH THE REMARK O F THE POSTAL AUTHORITIES RETURNED AS NO INFORMATION ABOUT RECEIVER EVEN AFT ER REPEATEDLY VISIT AND ENQUIRY. SIMILARLY THE LETTER UNDER SECTION 133(6) SENT TO M/S. VARDHMAN TRADING & INVESTMENT WHO CLAIMED TO HAVE GIVEN `RS. 3 LAKHS TO THE DONOR ALSO CAME BACK UNSERVED WITH SIMILAR REMARKS OF THE POSTAL AUTHORITIES. THESE FACTS DO CAST A DOUBT ON THE GENUINENESS OF GIFT TR ANSACTION. IT CAN VALIDLY LEAD TO THE CONCLUSION THAT THE SURRENDER MADE EARLIER W AS NOT JUST TO BUY PEACE BUT BECAUSE ALL CIRCUMSTANTIAL EVIDENCES COULD NOT BE ADDUCED TO PROVE THE GENUINENESS OF THE GIFT. I AGREE WITH THE OBSERVATI ONS OF MY PREDECESSOR MADE IN HIS EARLIER ORDER IN APPEAL NO. 75/2004-05 DATED 12.4.2005 THAT THE AO WAS PERFECTLY JUSTIFIED IN REQUIRING THE ASSESSE E TO PRODUCE THE DONOR TO FIND OUT THE GENUINENESS OF TRANSACTION. IT IS QUIT E POSSIBLE THAT A TRANSACTION OF GIFT MAY BE MADE TO APPEAR GENUINE BY CREATING E VIDENCES IN THE FORM OF GIFT DEED ETC. AN EXAMINATION OF THE DONOR MAY BECO ME NECESSARY TO SATISFY THE AO ON THE CORRECTNESS OF THE EVIDENCES. IT IS Q UITE POSSIBLE THAT THE SURRENDER WAS MADE BY THE ASSESSEE TO CIRCUMVENT A PROBE. THE PLEA THAT THE DONOR WAS NOT COOPERATING DOES NOT CUT MUCH ICE. IT IS BEYOND HUMAN PROBABILITY THAT A PERSON WHO GIVES A GIFT OF `RS. 5 LACS WOULD NOT COOPERATE WITH THE DONEE WHEN HE IS ASKED TO APPEAR BEFORE TH E AO TO TESTIFY THE TRANSACTION. SUCH A CONDUCT THAT THE DONOR WOULD RE FUSE TO COOPERATE IS POSSIBLE IN LOAN TRANSACTIONS, BUT NOT IN CASE OF G IFT TRANSACTION, IF THE GIFT IS REALLY GENUINE. THE CONDUCT HAS TO BE SEEN IN THE L IGHT OF HUMAN PROBABILITIES AND SURROUNDING CIRCUMSTANCES AS HELD BY THE HONBL E SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT, 214 ITR 801 (SC). FRO M THE FOLLOWING DECISIONS OF THE HIGHER AUTHORITIES, IT CLEARLY COMES OUT THA T MERELY ADDUCING SOME ITA NO.5478/DEL/10 5 EVIDENCES MAY NOT INVARIABLY LEAD TO THE CONCLUSION THAT A TRANSACTION WAS GENUINE. I. IN THE FOLLOWING DECISIONS OF THE HIGHER AUTHORI TIES, IT HAS BEEN HELD THAT MERELY ESTABLISHING THE IDENTITY OF THE CREDITOR IS NOT ENOUGH : A. SHANKAR INDUSTRIES VS. CIT (1978) 114 ITR 689 (C AL) B. C. KANT & CO. VS. CIT (1980) 126 ITR 63 (CAL) C. PRAKASH TEXTILE AGENCY VS. CIT (1980) 121 ITR 89 0 (CAL) D. ORIENTAL WIRE INDUSTRIES PVT. LTD. VS. CIT (1981 ) 131 ITR 685 (CAL) E. CIT VS UNITED COMMERCIAL & INDUSTRIAL CO. PVT. L TD. (1991) 187 ITR 596, 599 (CAL.) F. CIT VS. KORLAY TRADING CO. LTD. (CAL.) 232 ITR 8 20. II. FURTHER, THE FOLLOWING HIGHER AUTHORITIES HAVE HELD THAT MERE FILING OF CONFIRMATORY LETTERS DOES NOT DISCHARGE THE ONUS TH AT LIES ON THE ASSESSEE : A. BHARATI PVT. LTD. VS. CIT (1978 111 ITR 951 (CAL ) B. CIT VS. W.J. WALKAR & CO. (1979) 117 ITR 690, 69 4 (CAL) C. CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. (P) L TD. (1991) 187 ITR 596, 599 (CAL). III. ALSO, IN THE UNDER NOTED DECISION OF THE HIGHE R AUTHORITIES IT HAS BEEN HELD THAT MERE FURNISHING OF THE PARTICULARS IS NOT ENOUGH. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT N OR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE: A. CIT VS. PRECISION FINANCE CO. PVT. LTD. (1994) 2 08 ITR 465, 470, 471 (CAL) B. CF. NIZAM WOOL AGENCY VS.CIT (1992) 193 ITR 318, 320 (ALL). C. CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. (P) L TD. 187 ITR 596 (CAL.) IN THE LIGHT OF THE FACTS OF THE CASE AS DISCUSSED ABOVE, I HOLD THAT THE AO WAS JUSTIFIED IN ADDING THE SUM OF RS. 5 LAKHS U NDER SECTION 68 OF THE INCOME-TAX ACT, 1961. THE FOLLOWING CASE-LAWS ALSO GO AGAINST THE ASSESSEE: I. SUSHIL KUMAR JAISWAL VS. ITO (ITAT, DEL) 59 TTJ 18 II. CIT VS. S. KAMRAJ PANDIAN (MAD.) 150 ITR 703 III. TRADERS & TRADERS VS. CIT (MAD.) 236 ITR 269. THE GROUNDS ARE DISMISSED. 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ,AT THE OUTSET, CONTENDED TH AT SECTION 68 HAS NO APPLICATION TO ITA NO.5478/DEL/10 6 TO THE FACTS OF THE CASE SINCE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS . SINCE THE AO DID NOT DISCHARGE THE ONUS OF PROVING THAT THE AMOUNT OF ` ` 5 LAC WAS ASSESSEES OWN MONEY, NO ADDITION COULD B E MADE, PARTICULARLY WHEN THE DONOR IS ASSESSED TO TAX AND AMOUNT WAS RECEIVED T HROUGH DD WHILE PAN OF THE DONOR WAS ALSO GIVEN TO THE AO. THE AO COULD VERIFY THE GENUINENESS OF THE TRANSACTIONS FROM THE RECORDS OF THE DONOR AND FROM THE BANK. TO A QUERY BY THE BENCH, THE LD. AR ADMITTED THAT THE DONOR WAS NOT R ELATED TO THE ASSESSEE. HE ADDED THAT REFERENCE MADE BY THE LD. CIT(A) TO THE STATEM ENT OF AFFAIRS ,WAS, IN FACT, TO THE STATEMENT OF AFFAIRS OF DONOR AND NOT OF THE ASSES SEE. INTER ALIA, THE LD. AR RELIED UPON THE DECISIONS IN CIT VS MRS. SUNITA VACHANI, 184 ITR 121 (DEL.), CIT VS. R.S. SIBAL (DEL.),269 ITR 429 AND CIT VS. MS. MAYAWATI,2 43 CTR PAGE 9 BESIDES DECISION IN THE CASE OF CIT VS. SMT. P.K. NOORJAHA N, 123 ITR 3 (KERALA) AFFIRMED IN 237 ITR 570 BY THE HONBLE APEX COURT AND ADDL. CIT VS. BAHRI BROTHERS PRIVATE LIMITED.,154 ITR 244 (PAT) 6.1 ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIN DINGS OF LD. CIT(A) WHILE CONTENDING THAT SINCE DONOR WAS NOT PRODUCED BEFORE THE AO DESPITE SUFFICIENT OPPORTUNITY ALLOWED EITHER IN THE FIRST ROUND OF LI TIGATION OR EVEN IN THE SUBSEQUENT PROCEEDINGS AND THE ASSESSEE HAVING FAILED TO ESTAB LISH IDENTITY AND CREDITWORTHINESS OF THE DONOR AND GENUINENESS OF TH E TRANSACTION WHILE THERE IS NOTHING TO SUGGEST AS REGARDS LOVE OR AFFECTION BETWEEN THE DONOR AND ASSESSEE, FINDINGS OF THE LD. CIT(A) MAY BE UPHELD. INTER AL IA, THE LD. DR FURTHER RELIED UPON THE DECISIONS IN CIT VS. ANIL KUMAR,292 ITR 552(DEL.), SAJAN DASS & SONS VS. CIT,264 ITR 435(DELHI) AND SANDEEP KUMAR(HUF) VS. CIT,293 I TR 294 (DELHI). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPON BY BOTH TH E SIDES. INDISPUTABLY, IN THE FIRST ROUND OF LITIGATION THE ASSESSEE SURRENDERED THE A MOUNT OF ` 5 LAC STATED TO HAVE BEEN RECEIVED VIDE DD NO. 53107 DATED 20 TH DECEMBER, 2000 BY WAY OF GIFT ON THE GROUND THAT THE DONOR WAS NOT COOPERATING WITH THE ASSESSEE IN PROVIDING NECESSARY DETAILS AND PAPERS. HOWEVER, THE ASSESSEE PREFERRED APPEAL AND MATTER WAS ITA NO.5478/DEL/10 7 RESTORED TO THE FILE OF THE AO BY THE ITAT FOR CONS IDERING THE ISSUE IN THE LIGHT OF EVIDENCE ENCLOSED VIDE LETTER DATED 9.2.2004. IN TH E SECOND ROUND OF LITIGATION, IN ORDER TO TEST THE VERACITY OF SAID EVIDENCE ENCLOS ED WITH THE AFORESAID LETTER DATED 9.2.2004, THE AO ASKED THE ASSESSEE TO PRODUCE THE DONOR IN ORDER TO ASCERTAIN HIS CREDITWORTHINESS AND GENUINENESS OF TRANSACTION..HO WEVER, THE ASSESSEE DID NOT PRODUCE THE DONOR WHILE EVEN SUMMONS ISSUED TO THE DONOR WERE RETURNED BY THE POSTAL AUTHORITIES, THERE BEING NO INFORMATION ABOU T THE RECEIVER EVEN AFTER REPEATED VISIT BY THE POSTAL AUTHORITIES AND NOTICE U/S 133 (6) OF THE ACT SENT TO M/S. VARDHMAN TRADING & INVESTMENT, WHO CLAIMED TO HAVE GIVEN ` 3 LAKHS TO THE DONOR ,ALSO CAME BACK UNSERVED WITH SIMILAR REMARKS OF THE POSTAL AU THORITIES. BEFORE THE AO, THE ASSESSEE SUBMITTED CONFIRMATORY LETTERS FROM THE DO NOR & M/S VARDHMAN TRADING AND INVESTMENT APART FROM A COPY OF RETURN FILED BY THE DONOR IN FORM NO.2 D AND HIS BANK ACCOUNT. THE DATE OF FILING OF SARAL FORM NO.2 D IS NOT LEGIBLE. AS POINTED OUT BY THE LD. CIT(A) WHILE REFERRING TO A NUMBER DECISION S, MERE FILING THE CONFIRMATORY LETTERS OR ESTABLISHING THE IDENTITY OF DONOR DOES NOT DISCHARGE THE ONUS LAID DOWN UPON THE ASSESSEE NOR FURNISHING OF THE PARTICULAR S AND PAYMENT BY ACCOUNT PAYEE CHEQUE IS SACROSANCT AND NOR CAN IT MAKE A NON-GE NUINE TRANSACTION GENUINE. ADMITTEDLY, THERE IS NO RELATIONSHIP BETWEEN THE A SSESSEE AND THE DONOR AND NOT EVEN A WHISPER HAS BEEN MADE BEFORE US EITHER IN RE SPECT OF ANY OCCASION OF THE GIFT OR LOVE AND AFFECTION BETWEEN THE ASSESSEE AND THE DONOR. WHERE DONOR IS STRANGER AND THERE IS NO ELEMENT OF LOVE AND AFFECTION BETWE EN NOR WAS THERE ANY OCCASION FOR THE DONOR TO GIFT AND NOR EVEN ASSESSEE EVER RE CIPROCATED BY GIFTING ANY AMOUNT TO THE DONOR OR HIS FAMILY, ADDITION MADE BY THE A O HAS TO BE SUSTAINED. [SUBHASH CHAND VERMA VS. CIT,311 ITR 239(P&H) ;JAI KUMAR JAI N VS. CIT, 311 ITR 339(P&H) ;& CIT VS. VINOD CHUGH,15 TAXMAN.COM 343(P&H)]. TH E MENTION OF WRONG SECTION BY THE AO ,AS PLEADED BY THE LD. AR, DOES NOT MAKE A NON-GENUINE GIFT GENUINE OR INVALIDATE THE ADDITION OR THE ORDER AS OBSERVED IN VR.C.RM. ADAIKKAPPA CHETTIAR V. CIT, 78 ITR 285(MAD.) & HAZARI MAL KUTHIALA V. INCOME-TAX OFFICER, 1961 AIR 200(SC). 7.1 IT MAY BE POINTED OUT THAT GENERALLY, THE GIFT S INVOLVE BIOLOGICAL RELATIVES, SOCIOLOGICALLY CONNECTED OR UNCONNECTED PERSONS, PO LITICALLY OR SPIRITUALLY REVERED ITA NO.5478/DEL/10 8 INDIVIDUALS ETC. IN THE CASE, WHERE THE GIFTS INVOL VE THE BIOLOGICAL RELATIVES, THE GIVING OF GIFTS ARE NORMALLY CONVENTIONAL, TRADITIONAL OR A SOCIAL PRACTICE AND THE MOTIVE IS THE EXPRESSION OF LOVE AND AFFECTION. IN THE OTHER CASES, THE GIFT TRANSACTIONS INVOLVING THE UNRELATED PERSONS AS DONORS ARE ALWAY S A MATTER OF DISPUTE BETWEEN THE REVENUE AND THE ASSESSEE AND THE ASPECT OF IDEN TITY OF THE DONOR, CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS O F THE TRANSACTION BECOME RELEVANT. THIS IS SIMPLY FOR THE REASON AS TO WHY O R WHAT REASON AN UNRELATED PERSON OR NOT SO WELL RELATED PERSON OR GEOGRAPHICALLY SEG REGATED PERSON MAKES GIFTS TO AN UNKNOWN OR UNFAMILIAR DONEE, WHEN THERE IS NO SCOPE FOR LOVE AND AFFECTION OR ANY OTHER EXPRESSIONS OF THAT KIND, WHICH ARE COMMONLY SEEN IN THE TRANSACTIONS OF GIFTS IN GENERAL AND VALUABLE GIFTS IN PARTICULAR. THEREF ORE, THE COMMONSENSE APPROACH OF THE AO IS TO INVESTIGATE INTO OTHER REASONS FOR SUC H VALUABLE GIFTS. SUCH INVESTIGATIONS OF THE AO IN MATTERS OF SUCH TRANSAC TIONS OF GIFTS BETWEEN THE UNRELATED PERSONS REVOLVE AROUND AS TO WHETHER THE RE IS ANY OCCASION FOR GIFT; HOW THE DONOR CAME TO KNOW OF THE DONEE; WHAT ARE THE S OCIAL OBLIGATIONS TO THE DONOR TO GIVE GIFTS RUNNING INTO LAKHS OF RUPEES WORTH TO TH E DONEE; WHAT IS THE GENERAL CONDUCT OF THE DONOR IN MATTERS OF GIFTING OR THE Q UANTUM OF GIFTS GIVEN OR WHETHER THE DONOR IS CAPABLE OF GIFTING AT ALL. IT IS WELL SETTLED THAT THE ONUS IS ON THE ASSESSEE IN THESE MATTERS AS HELD IN SUBHASH GRAND ER SEKHRI VS. DCIT,290 ITR 300 (P&H) AND JASPAL SINGH VS. CIT,290 ITR 306 (P& H) . IT IS ALSO WELL-SETTLED THAT MERE IDENTIFICATION OF DONOR AND SHOWING THE MOVEME NT OF GIFT AMOUNT THROUGH BANKING CHANNEL IS NOT ENOUGH TO PROVE GENUINENESS OF THE GIFT. THE ASSESSEE IS REQUIRED TO ESTABLISH THAT THE DONOR HAD THE MEANS AND THE GIFT WAS GENUINE, FOR NATURAL LOVE AND AFFECTION AS HELD IN LAL CHAND KAL RA V. CIT [1981] 22 CTR 135(P&H), SAJAN DASS AND SONS V. CIT [2003] 264 ITR 435 (DELHI), CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) AND SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC). FOR A GIFT TO BE GENUINE, SURROUNDING CIRCUMSTANCE S, HUMAN PROBABILITIES AND REALITY OF HUMAN LIFE ARE TO BE CONSIDERED FOR DETE RMINING GENUINENESS OF THE GIFTS. THE REALITIES OF HUMAN LIFE IN WHICH A PERSON COULD BE MOTIVATED TO GIVE A GIFT TO ANOTHER INCLUDE THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, AND EMOTIONAL BONDAGES, RECIPROCITY ETC..WHAT IS REQUIRED TO BE S EEN IN ADDITION TO IDENTITY AND CREDITWORTHINESS, IS THE GENUINENESS OF THE TRANSAC TION WHICH IS A JUDGMENT TO BE ITA NO.5478/DEL/10 9 ARRIVED AT BY LOOKING INTO ALL THE SURROUNDING CIRC UMSTANCES AND CONSIDERING THE VERY CRUCIAL TEST WHETHER SUCH TRANSACTION COULD HAPPEN IN REAL LIFE. MERELY BECAUSE THE ASSESSEE HAS BEEN ABLE TO FILE DOCUMENTS SHOWING TH E FORM OF THE TRANSACTIONS SUCH AS AFFIDAVITS, DEEDS, STATEMENTS REGARDING THE GIF T, DOES NOT ESTABLISH THE GENUINENESS OF THE GIFT. IN THIS CONTEXT, IMPORTANC E OF OCCASION OF GIFT CANNOT BE UNDERMINED . IF THERE IS NO OCCASION ON WHICH A PER SON COULD RECEIVE GIFTS FROM FRIENDS AND RELATIVES THEN ONUS IS HEAVIER ON THE A SSESSEE TO SHOW AS TO WHAT PROMPTED THE DONOR TO EXPRESS HIS AFFECTION OR LOVE TOWARDS DONEE UN-OCCASIONALLY AND WHY ONLY STRANGERS GOT PROMPTED TO GIVE GIFT TO THE DONEE?.I N DURGA PRASAD MORE(SUPRA) AND SUMATI DAYAL(SUPRA) IT HAS BEEN HE LD THAT IN ANY SUCH MATTER, PREPONDERANCE OF HUMAN PROBABILITIES AND CIRCUMSTAN TIAL EVIDENCE HAVE TO BE TAKEN INTO CONSIDERATION. AS CONSIDERED BY US HEREIN, THE SE TWO FACETS ARE ALSO WHOLLY AGAINST THE ASSESSEE IN THE PRESENT CASE. 7.2 AS REGARDS DECISIONS RELIED UPON BY THE LD. A R IN CIT V. MRS. SUNITA VACHANI [1990] 184 ITR 121 AND CIT V. R. S. SIBAL [2004] 269 ITR 429 , WHEREIN GIFTS FROM STRANGERS WERE HELD TO BE VALID, WE ARE OF THE OPIN ION THAT THESE JUDGMENTS ARE DISTINGUISHABLE, THE TRIBUNAL HAVING RECORDED IN TH ESE CASES A FINDING THAT THE GIFTS WERE GENUINE, WHICH WAS HELD TO BE A PURE FINDING O F FACT. EVEN OTHERWISE, THE LD. AR DID NOT DEMONSTRATE BEFORE US AS TO HOW THESE DECIS IONS ARE APPLICABLE TO THE FACTS IN THE INSTANT CASE, ESPECIALLY WHEN NEITHER ANY OC CASION OF GIFT HAS BEEN GIVEN NOR NATURAL LOVE AND AFFECTION BETWEEN THE ASSESSEE AND THE DONOR HAS BEEN ESTABLISHED AND NOR EVEN IT IS PROVED THAT SUCH GIFTS ARE CUST OMARY ,KEEPING IN VIEW THE STATUS OF THE ASSESSEE. IN CHAIN SUKH RATHI V. CIT [2004] 270 ITR 368 (RAJ.) THEIR LORDSHIPS IN A CASE OF BLOCK ASSESSMENT WHILE EXAMINING THE C ASE OF GIFT MADE BY FATHER TO HIS SON HELD THAT 'IT IS TRUE THAT RS. 30,000 HAS BEEN PAID BY CHEQUES BY HIS FATHER, BUT THERE IS NO OCCASION FOR THE FATHER TO GIFT THIS AM OUNT TO THE SON. THIS AMOUNT ALSO RIGHTLY TREATED AS UNDISCLOSED INCOME OF THE ASSESS EE, WHICH HAS BEEN RECEIVED IN THE NAME OF GIFT FROM HIS FATHER. 7.21 AS REGARDS DECISION IN MS. MAYAVATI(SUPRA), THE FACTS AND CIRCUMSTANCES IN THE SAID DECISION ARE ALTOGETHER DIFFERENT AND THE LD. AR DID NOT DRAW ANY PARALLEL NOR ESTABLISHED BEFORE US AS TO HOW THIS DECISION IS OF ANY ASSISTANCE TO THE ASSESSEE. IN ITA NO.5478/DEL/10 10 THE SAID DECISION ,HONBLE HIGH COURT CONCLUDED THA T BOTH THE LOWER APPELLATE AUTHORITIES HAVE RECORDED A CATEGORICAL FINDING THA T BY PRODUCING THE AFORE-MENTIONED DOCUMENTS THE ASSESSEE HAS DISCHARGED THE ONUS WHIC H LAY ON HIM WITH REGARD TO THE GENUINENESS OF THE GIFTS. THE INFERENCE DRAWN BY TH E APPELLATE AUTHORITIES, ON APPRECIATION OF EVIDENCE IS FACTUAL, GIVING RISE TO NO QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW.' IN THAT CASE DONOR APPEARED AND ACCEPTED THE TRANS ACTION AND PAID GIFT TAX ALSO. SUCH IS NOT THE SITUATION IN THE PRESENT CASE , WHEN EVEN THE DONOR WAS NOT PRODUCED BEFORE THE AO NOR SUMMONS ISSUED BY THE A O COULD BE SERVED UPON HIM. THUS, RELIANCE ON THE SAID DECISION IS TOTALLY MIS PLACED. 7.22 IN BAHRI BROTHERS PRIVATE LIMITED.(SUPRA), THE ASSESSEE AVAILED OF LOANS WHICH WERE RECEIVED AND REPAID BY ACCOUNT PAYEE CHEQUES, AND THE IDENTITY OF THE CREDITORS WERE DISCLOSED. IN THE INSTANT CASE , ONU S IS IN RELATION TO GIFTS AND NOT ANY CASH CREDITS. THUS, IN OUR OPINION, THE SAID DECISI ON IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES BEFORE US. 7.23 IN P.K. NOORJAHAN(SUPRA) ,RELIED UPON BY THE LD. AR. THE ASSESSEE ,A MUSLIM LADY WHO WAS AGED ABOUT 20 YEARS DURING THE PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR 1968-69. ON NOVEMBER 15, 1967, SHE PURCHASED 16 CENTS OF LAND IN ERNAKULAM AND THE AMOUNT SPENT BY HER, INCLUSIVE OF STAMP AND REGISTRATION CHARGES, FOR THIS PURCHASE OF ` ` 34,628. ON NOVEMBER 27, 1968, SHE PURCHASED ANOTHER 12 CENTS OF LAND AT ERNAKULAM AND THE TOTAL INVESTMENT FOR THIS PURCHASE WAS ` 25,902. THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF THE PURCHASE MONEY FOR THESE INVESTMENTS WAS THAT THE SAME WERE FINANCED FROM OUT OF THE SAVINGS FROM THE INCOME OF THE PROPERTIES WHICH WER E LEFT BY HER MOTHER'S FIRST HUSBAND. THE SAID EXPLANATION OFFERED BY THE ASSESS EE WAS REJECTED EXCEPT TO THE EXTENT OF ` 2,000 BY THE INCOME-TAX OFFICER WHO MADE AN ADDITI ON OF ` 32,628 AS INCOME FROM OTHER SOURCES IN THE ASSESSMENT YEAR 19 68-69 AND AN ADDITION OF ` 25,902 IN THE ASSESSMENT YEAR 1969-70. THE SAID ORD ERS WERE AFFIRMED IN APPEAL BY THE APPELLATE ASSISTANT COMMISSIONER. THE INCOME-TA X APPELLATE TRIBUNAL HOWEVER, HELD THAT EVEN THOUGH THE EXPLANATION ABOUT THE NAT URE AND SOURCES OF THE PURCHASE MONEY WAS NOT SATISFACTORY BUT IN THE FACTS AND CIR CUMSTANCES OF THE CASE IT WAS NOT ITA NO.5478/DEL/10 11 POSSIBLE FOR THE ASSESSEE TO EARN THE AMOUNT INVEST ED IN THE PROPERTIES AND THAT BY NO STRETCH OF IMAGINATION COULD THE ASSESSEE BE CRE DITED WITH HAVING EARNED THIS INCOME IN THE COURSE OF THE ASSESSMENT YEAR OR WAS EVEN IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE TRIBUNAL TOOK THE VIEW THAT ALT HOUGH THE EXPLANATION OF THE ASSESSEE WAS LIABLE TO BE REJECTED, SECTION 69 OF T HE ACT CONFERRED ONLY A DISCRETION ON THE INCOME.-TAX OFFICER TO DEAL WITH THE INVESTM ENT AS INCOME OF THE ASSESSEE AND THAT IT DID NOT MAKE IT MANDATORY ON HIS PART T O DEAL WITH THE INVESTMENT AS INCOME OF THE ASSESSEE AS SOON AS THE LATTER'S EXPL ANATION HAPPENED TO BE REJECTED. ON THAT VIEW, THE TRIBUNAL ALLOWED THE APPEALS OF T HE ASSESSEE AND CANCELLED THE ASSESSMENT MADE BY THE INCOME-TAX OFFICER. THE HON BLE HIGH COURT AGREED WITH THE SAID VIEW OF THE TRIBUNAL AND HAS HELD THAT IN THE INSTANT CASE IT COULD NOT BE SAID THAT THE TRIBUNAL WAS WRONG IN HAVING DIFFERED FROM THE INCOME TAX OFFICE AND THE APPELLATE ASSISTANT COMMISSIONER IN THE MATTER OF E XERCISING JUDICIAL DISCRETION AS TO WHETHER EVEN AFTER REJECTING THE EXPLANATION OF THE ASSESSEE THE VALUE OF THE INVESTMENTS WERE TO BE TREATED AS THE INCOME OF THE ASSESSEE, ACCORDING TO THE HIGH COURT, THE TRIBUNAL HAD NOT COMMITTED ANY ERROR IN TAKING INTO ACCOUNT THE COMPLETE ABSENCE OF RESOURCES OF THE ASSESSEE AND ALSO THE F ACT THAT HAVING REGARD TO HER AGE AND THE CIRCUMSTANCES IN WHICH SHE WAS PLACED SHE C OULD NOT BE CREDITED WITH HAVING MADE ANY INCOME OF HER OWN AND IN THESE CIRC UMSTANCES THE TRIBUNAL WAS RIGHT IN REFUSING TO MAKE AN ADDITION OF THE VALUE OF THE INVESTMENTS TO THE INCOME OF THE ASSESSEE. HONBLE APEX COURT AFFIRMED THIS VIEW . HOW THIS DECISION HELPS THE ASSESSEE, THE LD. AR DID NOT EXPLAIN BEFORE US.. RE LIANCE BY THE LD. AR ON DECISIONS WHICH WERE RENDERED IN DIFFERENT CONTEXT AND CIRCUM STANCES, IS NOT IN ACCORDANCE WITH LAW , IN VIEW OF FOLLOWING OBSERVATIONS OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD., 19 8 ITR 257 : IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OU T A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT O F THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE ' LAW ' DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIO NS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION OF THIS COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYING THE DECISI ON TO A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS ITA NO.5478/DEL/10 12 COURT AND NOT TO PICK OUT WORDS OR SENTENCES FROM T HE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTIONS UNDER CONSIDERATION BY THIS COURT, TO SUPPORT THEIR REASONINGS. IN MADHAV RAO JIVAJI RAO SCINDIA BAHADUR V. UNION OF INDIA [1971] 3 SCR 9; AIR 1971 SC 530, THIS COURT CAUTIONED (AT PAGE 578 OF AIR 1971 SC). 7.24 IN THIS CONTEXT ,HONBLE SUPREME COURT CAUT IONED IN THEIR DECISION DATED 6.3.2009 IN THE CASE OF STATE OF AP VS. M. RADHA KR ISHNA MURTHY,[CRIMINAL APPEAL NO. 386 OF 2002] 6. COURTS SHOULD NOT PLACE RELIANCE ON DECI SIONS WITHOUT DISCUSSING AS TOHOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION O F THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURTS ARE NEITHER TO BE READ AS EU CLID'S THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. TH ESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR TO HAVE BEEN STATED. J UDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STATUTES. TO INTERPRET WORDS, PHRASES AND PROVISIONS OF A STATUTE, IT MAY BECOME NECESSARY FOR JUDGES TO EMBARK INTO LENGTHY DISCUSSIONS BUT THE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRET STAT UTES, THEY DO NOT INTERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUTES; THEIR WORDS ARE NOT TO BE INTERPRETED AS STATUTES . 8. CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES. DISPOSAL OF CASES BY BLINDLY PLACING RELIANCE ON A DECISION IS NOT PROPER. 9. THE FOLLOWING WORDS OF LORD DENNING IN THE MA TTER OF APPLYING PRECEDENTS HAVE BECOME LOCUS CLASSICUS: 'EACH CASE DEPENDS ON ITS OWN FACTS AND A CLOSE SIMILARITY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH BECAUSE EVEN A SINGLE SIGNIF ICANT DETAIL MAY ALTER THE ENTIRE ASPECT, IN DECIDING SUCH CASES, ONE SHOULD AVOID T HE TEMPTATION TO DECIDE CASES (AS SAID BY CORDOZO) BY MATCHING THE COLOUR OF ONE CASE AGAI NST THE COLOUR OF ANOTHER. TO DECIDE THEREFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE IS NOT AT ALL DECISIVE.' *** *** *** 'PRECEDENT SHOULD BE FOLLOWED ONLY SO FAR AS IT MARKS THE PATH OF JUSTICE, BUT YOU MUST CUT THE DEAD WOOD AND TRIM OFF THE SIDE BRANCHES ELSE YOU WILL FIND YOURSELF LOST IN THICKETS AND BRANCHES. MY PLEA IS TO KEEP THE PATH TO JUSTICE CL EAR OF OBSTRUCTIONS WHICH COULD IMPEDE IT.' 7.3 IN THE INSTANT CASE BEFORE US , THE ASSE SSEE INITIALLY SURRENDERED THE AFORESAID AMOUNT OF ` 5 LACS AS HIS INCOME BEFORE THE AO. IN THE SECOND ROUND OF LITIGATION, THE ASSESSEE DID NOT PRODUCE THE DONOR DESPITE SPECIFIC OPPORTUNITY WHILE ITA NO.5478/DEL/10 13 SUMMONS ISSUED TO THE DONOR COULD NOT BE SERVED UPO N SINCE DONOR WAS NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. THE ASSESSEE MISERABLY FAILED TO DISCHARGE THE ONUS LAID DOWN HIM BEFORE THE LOWER A UTHORITIES NOR THE ASSESSEE ESTABLISHED THE GENUINENESS OF THE TRANSACTION. THE UNDISPUTED FACT OF THE GIFT IS THAT IT IS A CASE OF GIFT WITHOUT ANY OCCASION OR AN EVE NT NOR THERE IS ANY MATERIAL TO CONCLUDE THAT MUTUAL LOVE AND AFFECTION EXISTED BET WEEN THE ASSESSEE AND THE DONOR. MERELY FILING COPY OF BANK ACCOUNT OR CAPIT AL ACCOUNT OF THE DONOR DOES NOT ESTABLISH CREDITWORTHINESS OF THE DONOR OR GENUIN ENESS OF THE TRANSACTION .THERE ARE NO REASONS OR OCCASION FOR GIVING GIFT, EXCEPT RELY ING ON CONFIRMATIONS OR COPY OF CAPITAL ACCOUNT/BANK ACCOUNT AND THAT DONOR FILED H IS RETURN IN SARAL FORM. AS OBSERVED BY THE HONBLE SUPREME COURT IN CIT VS. MOHAN KALA,291 ITR 278(SC), THE FACT THAT MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CON SEQUENCE. IN THE INSTANT CASE, THE ASSESSEE NOWHERE ESTABLISHED THE CREDITWORTHINESS O F THE DONOR OR GENUINENESS OF THE TRANSACTION. IN SUNIL SIDDHARTHBHAI V. CIT [19 85] 156 ITR 509 (SC) IT WAS HELD BY THE HON'BLE SUPREME COURT THAT IT IS THE RIGHT O F THE INCOME-TAX AUTHORITIES TO CONSIDER GENUINENESS OF THE TRANSACTIONS AND TO PEN ETRATE THE VEIL AND ASCERTAIN THE TRUTH. IT IS WITHIN THEIR POWER TO CONSIDER WHETHER A PARTICULAR TRANSACTION WAS TO EVADE TAX. IN K. RAMASAMY V. CIT [2003] 261 ITR 3 58 (MAD) IT WAS HELD THAT VEIL CAN BE PIERCED IN EXCEPTIONAL CIRCUMSTANCES. THE IN COME-TAX AUTHORITIES ARE ENTITLED TO LOOK AT THE REALITY OF THE TRANSACTION. THEY ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITIES OF THE TRAN SACTIONS SHOWN TO HAVE BEEN ENTERED INTO BY THE PARTIES. THE OTHER RELEVANT FAC TORS, AS ALREADY STATED, ARE RELATIONSHIP, OCCASION FOR GIVING GIFTS, AND GIFTS NOT GIVEN BY THE DONEE TO THE FAMILY MEMBERS OF THE DONOR ETC. IN THE PRESENT CASE, ALL THESE FACTORS PUT TOGETHER LEAVE NO DOUBT THAT IT IS A FIT CASE WHERE FORM HAS TO BE IGNORED AND ONE HAS TO GO INTO THE REALITIES OF THE TRANSACTION. IF THERE IS NO OCCASI ON, GIFT CANNOT BE ACCEPTED AS GENUINE. IN THE LIGHT OF VIEW TAKEN BY THE HONBLE APEX COURT AND OTHER HIGH COURTS IN THEIR AFORESAID DECISIONS , WE ARE OF THE VIEW T HAT MERE IDENTIFICATION OF DONOR AND SHOWING MOVEMENTS OF GIFT AMOUNT THROUGH BANKING CH ANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF THE GIFT IS MADE BY THE ASSESSEE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLIS H THE IDENTITY OF THE PERSON MAKING ITA NO.5478/DEL/10 14 THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. IT IS THE BURDEN OF THE ASSESSEE TO SHOW AND DEMONSTRATE WHAT KIND OF RELATIONSHIP OR W HAT KIND OF LOVE AND AFFECTION THE DONOR HAS WITH THE ASSESSEE, AND TO EXPLAIN CIR CUMSTANCES IN WHICH GIFT WERE MADE. IF THE EXPLANATION AS REGARDS THE CLAIM OF TH E GIFT OFFERED BY THE ASSESSEE IS NOT PROPER, REASONABLE AND ACCEPTABLE ONE, AN INEVI TABLE CONCLUSION WOULD BE DRAWN THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION, AS THE EXPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION (P. MOHANAKALA 291 ITR 278 ( SC).] IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE OF THE MONEY RECEIVED BY THE ASSESSEE IS NOT SATISFACTORY, THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ, THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME, AND, IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME NATURE. AS ALREADY OBSERVED IN THE INSTANT CASE, EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE GIFT IS NOT SATIS FACTORY BECAUSE CREDITWORTHINESS OF THE DONOR IS NOT PROVED THROUGH INDEPENDENT SOURCES NOR THERE IS ANY OCCASION OR REASONS FOR GIVING GIFT TO THE ASSESSEE. IT IS NOT PROVED THAT DONOR HAD ANY ACQUAINTANCE OR ANY LOVE AND AFFECTION FOR THE ASSE SSEE NOR ANY EVIDENCE AS TO RECIPROCITY OF GIFT HAS BEEN ADDUCED. THE BURDEN OF PROVING THE GENUINENESS OF GIFT IS MORE AND HEAVIER AS COMPARED TO PROVING THE BURDEN IN THE CASE OF CASH CREDIT BECAUSE IN GIFT, DONOR FORGOES LIEN OVER THE MONEY FOREVER, WHEREAS IN THE CASE OF LOAN/CASH CREDIT THE CREDITOR RETAINS THE RIGHT TO RECOVER THE MONEY FROM THE ASSESSEE AND HE MAY HAVE SUITABLE EVIDENCE TO PROVE THAT HE HAS GIVEN CREDIT. THEREFORE, MERELY BY SAYING THAT MONEY IS TRANSFERRED THROUGH BANKING CHANNELS WILL NOT BE SUFFICIENT TO DISCHARGE THE BURDEN LAYING ON THE AS SESSEE. UNLESS SAID BURDEN IS DISCHARGED, AO CANNOT BE ASKED TO ACCEPT THE APPARE NT STATE OF AFFAIRS. AT THE COST OF REPETITION, WE MAY POINT OUT THAT THE ISSUES SUC H AS WHY THE GIFT IS GIVEN AND HOW THE RELATIONSHIP BETWEEN THE DONOR AND DONEE GREW TO THE LEVELS, WHERE THE DONOR HAVE CONSIDERED TO GIVE THE GIFT WITHOUT ANY RECI PROCITY BECOME RELEVANT AND IN THE INSTANT CASE, THESE ISSUES REMAIN UNANSWERED EITHER BEFORE THE REVENUE AUTHORITIES AND EVEN BEFORE US. WHEN THE ONUS IS ON THE ASSESSE E IN THESE MATTERS OF GIFT, IN OUR OPINION, THE AO IS WITHIN HIS JURISDICTION IN REJEC TING THE ASSESSEE' S CLAIM OF GIFTS AND MAKE ADDITION . NEED LESS TO SAY THAT A SIMILAR VI EW TAKEN BY THE HONBLE DELHI HIGH ITA NO.5478/DEL/10 15 COURT IN THE CASE OF RAJEEV TANDON VS. ACIT,294 I TR 488(DEL.) WAS AFFIRMED BY THE HONBLE SUPREME COURT SUBSEQUENT BY DISMISSING THE SLP OF THE ASSESSEE. THE VIEW WE HAVE TAKEN IS ALSO SUPPORTED BY THE DECISIO N OF HONBLE ALLAHABAD HIGH COURT IN RAM LAL AGARWAL VS. CIT,280 ITR 547(ALL.). IN VIEW OF THE ABOVE POSITION OF LAW, WE HAVE NO HESITATION IN CONCLUDING THAT THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE CREDITWORTHINESS OF THE DONOR AND GE NUINENESS OF THE TRANSACTIONS WERE RIGHTLY REJECTED BY THE AO AND THE LD. CIT(A) . CONSEQUENTLY, THE ARGUMENTS PUT FORWARD BY THE ASSESSEE' S COUNSEL ARE REJECTED AND THE ORDER OF THE LD. CIT(A) IS UPHELD. THEREFORE, GROUND NOS. 1 TO 4 IN THE APPEA L ARE DISMISSED. 8. GROUND NO. 5 RELATES TO LEVY OF INTEREST U/ S 234A,234B AND 234C OF THE ACT. THE LD. AR ON BEHALF OF THE ASSESSEE DID N OT MAKE ANY SUBMISSIONS ON THIS GROUND. THE LEVY OF INTEREST U/S 234A,234B A ND 234C OF THE ACT BEING MANDATORY [COMMISSIONER OF INCOME TAX. VS ANJUM M. H. GHASWALA AND OTHERS,252 ITR 1(SC), AFFIRMED BY HON'BLE APEX COUR T IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC)], THIS GROUND IS DISMISSED. 9. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US . 10. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT SD/- SD/- (RAJPAL YADAV) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER COPY FORWARDED TO: - 1. MRS. SWAROOP KAUR,C/O M/S. JEET CONSTRUCTION CO .,314, ARVIND-PURI, MEERUT CANTT.. 2. ACIT, CIRCLE-2,INCOME TAX OFFICE, NEAR BHASALI G ROUND, MEERUT 3. CIT CONCERNED 4. CIT (A)-MEERUT 5. DR, ITAT G BENCH,NEW DELHI 6. GUARD FILE. TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT