SHIVKUMAR DEVIDUTT SARAF HUF, MUMBAI V. ITO 14(2)(2), MUMBAI

ITA 7092/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88564 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 19-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPDR
• Assessee Lawyers: V G GINDE; SRIRAM BAJAJ
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Source of fund; Additional evidence; Assessment record; Onus to prove
• Section: 143(3); 142(1); 68; 69

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.7092/MUM/2011 ASSESSMENT YEAR:2004-05 SHIVKUMAR DEVIDUTT SARAF HUF, 50, CHHOTALAL BHAVAN, 418, KALBADEVI ROAD, MUMBAI-400002 / VS. INCOME TAX OFFICER-14(2)(2), 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 ( /ASSESSEE) ( / REVENUE) P.A. NO. AAAHS9816G / ASSESSEE BY): SHRI V.G.GINDE & SHRI SRIRAM BAJAJ / REVENUE BY SHRI NEIL PHILIP-DR / DATE OF HEARING : 09/02/2015 /DATE OF ORDER 04/03/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 26/08/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.45,15,884/- MADE BY THE AO U/S. 68 OF THE ACT, I N SHIVKUMAR DEVIDUTT SARAF HUF 2 RESPECT OF THE GIFT RECEIVED FROM MR. ARUN KUMAR JA TIA, NEPHEW (SISTER'S SON) OF THE KARTA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE LEARNED AO OUGHT TO HAVE PASSED THE FRESH ASSESSMENT PURSUA NT TO THE TRIBUNAL'S ORDER WITHIN THE CONFINES OF THE DIR ECTIONS OF THE HON'BLE TRIBUNAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LEARNED CIT(A) ERRED IN GOING INTO THE ISS UE OF GENUINENESS OF THE GIFT, WHEREAS THE LIMITED ISSUE RESTORED TO THE AO WAS TO ADJUDICATE CREDITWORTHINESS OF THE DONOR BASED ON THE ADDITIONAL EVIDENCE ADMITTED BY THE HO N'BLE TRIBUNAL IN THAT REGARD. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE AO DID NOT CONSIDER THE EVIDENCE PRODUCED BY THE APPELLANT TO SUBSTANTIATE CREDITWORTHINESS OF THE DONOR, AND INS TEAD, INSISTED ON CERTAIN SPECIFIC EVIDENCE CONTRARY TO T HE CLEAR DIRECTIONS OF THE HON'BLE TRIBUNAL, WHEREBY THE AO TRANSGRESSED HIS POWERS IN A SET ASIDE MATTER ON SP ECIFIC ISSUE. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL F OR THE ASSESSEE, SHRI V.G. GINDE ALONG WITH SHRI SHRIRAM B AJAJ, CONTENDED THAT MAKING THE ADDITION U/S 68 OF THE IN COME TAX ACT, 1961(HEREINAFTER THE ACT) AND FURTHER CONFIRMI NG THE SAME BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS QUITE UNJUSTIFIED AS THE AMOUNT OF RS.45, 15,884/- WAS RE CEIVED FROM ARUN KUMAR JATIA (SISTERS SON) OF THE KARTA OF THE ASSESSEE HUF OUT OF LOVE AND AFFECTION. IT WAS CONTENDED THAT T HE ASSESSING OFFICER WAS EXPECTED TO PASS THE ORDER, AS DIRECTED BY THE TRIBUNAL AND THUS THE ASSESSING OFFICER EXCEEDED HI S JURISDICTION. IT WAS SUBMITTED THAT THE AUTHORITIE S WERE NOT EXPECTED TO GO INTO THE GENUINENESS OF THE GIFT AS THE TRIBUNAL DIRECTED TO ADJUDICATE WITH RESPECT TO THE CREDITWO RTHINESS OF THE SHIVKUMAR DEVIDUTT SARAF HUF 3 DONOR AND THUS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) COULD NOT APPRECIATE THE FACT THAT THE ASSESSING OF FICER DID NOT CONSIDER THE EVIDENCE PRODUCED BEFORE HIM WITH RESP ECT TO THE CREDITWORTHINESS OF THE DONOR. 2.1. ON THE OTHER HAND, SHRI NEIL PHILIP, LD. DR, S TRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE DID NOT FURNISHED THE NECESSARY DETAILS AND TO SUBS TANTIATE ITS CLAIM WAS EXPECTED TO SATISFY THE ASSESSING OFFICER WITH RESPECT TO IDENTITY, GENUINENESS OF THE TRANSACTION AND ALS O CREDITWORTHINESS OF THE DONOR. IT WAS ASSERTED THA T THE ASSESSEE NEITHER FURNISHED NECESSARY DETAILS FROM THE DONOR NOR PRODUCED HIM BEFORE THE ASSESSING OFFICER. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT ORIGINAL ASSESSMENT WAS MADE IN THIS CASE ON 21/11/2006 U/S 143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER THE ACT) MAKIN G ADDITION U/S 68 OF THE ACT WITH RESPECT TO THE AMOUNT OF RS. 45,15,884/-, CLAIMED TO BE RECEIVED AS GIFT, FROM ONE SHRI ARUN JATIA, (SON OF THE KARTAS SISTER), WHO IS RESIDING IN SINGAPORE. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORDER DATED 24/09/2007 CONFIRMED THE ADDITION, AGAINST WHICH TH E ASSESSEE PREFERRED BEFORE THIS TRIBUNAL. THE TRIBUNAL DATED 17/11/2009 (ITA NO.7033/MUM/2007) RESTORED THE ISSUE TO THE FI LE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE WITH RESP ECT TO CREDITWORTHINESS OF THE DONOR ON THE BASIS OF ADDIT IONAL EVIDENCE FURNISHED BEFORE THE TRIBUNAL. THE TRIBUNAL DIRECT ED THE ASSESSING OFFICER NOT TO INSIST ON THE BALANCE SHEE T OR CAPITAL SHIVKUMAR DEVIDUTT SARAF HUF 4 ACCOUNT OF THE DONOR AND MAY COME TO A CONCLUSION O N CREDITWORTHINESS OF THE DONOR BASED UPON OTHER DOCU MENTS, THAT MAY BE PRODUCED BY THE ASSESSEE BEFORE ASSESSING OF FICER. PURSUANT TO THE DIRECTION OF THE TRIBUNAL, THE ASSE SSING OFFICER ISSUED NOTICE U/S 142(1) OF THE ACT ON 16/06/2010 A SKING FOR SOURCE OF INCOME OF ARUN JATIA, STATEMENT OF BANK A CCOUNT FROM WHERE FUNDS WERE TRANSFERRED TO THE ASSESSEE. THE ASSESSEE ALSO FURNISHED THE COPY OF THE BANK STATEMENT FOR THE PE RIOD FROM 01/04/2002 TO 31/03/2004. A COPY OF THE ANNUAL REP ORT OF PUDUMJEE PULP AND PAPER MILLS LTD. IN WHICH THE DON OR WAS A PROMOTER/DIRECTOR. THEREAFTER, THE ASSESSING OFFICE R ISSUED ANOTHER NOTICE CALLING FOR INFORMATION WITH RESPECT TO CREDITWORTHINESS OF THE DONOR AND GENUINENESS OF TH E TRANSACTION AND ALSO THE TAX ASSESSMENT RECORD OF THE DONOR. AG AIN, NOTICE DATED 16/06/2010 WAS ISSUED U/S 142(1) OF THE ACT T O SUBMIT THE AFOREMENTIONED DETAILS. THE ASSESSEE MERELY FU RNISHED THE BANK CERTIFICATE DATED 17/10/2006 AND COPY OF THE P AN OF ARUN JATIA. FINALLY, THE ASSESSING OFFICER FRAMED ASSES SMENT U/S 143(3) READ WITH SECTION 254 OF THE ACT DATED 30/12 /2010 CONFIRMING THE ADDITION. 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), THE ADDITION MADE BY THE ASSESSING OFFIC ER WAS AFFIRMED AGAINST WHICH THE ASSESSEE IS IN FURTHER A PPEAL BEFORE THIS TRIBUNAL. THE FACTUAL FINDING/CONCLUSION RECO RDED/DRAWN IN THE IMPUGNED ORDER IS REPRODUCED HEREUNDER FOR READ Y REFERENCE:- 5. AFTER HAVING HEARD THE CONTENTIONS OF THE LD. A .R. IN ORAL AS WELL AS WRITTEN AND ON PERUSAL OF MATERIALS ON RECO RD AND DULY SHIVKUMAR DEVIDUTT SARAF HUF 5 CONSIDERING THE APPLICABLE LEGAL POSITION AND ALSO FACTUAL MATRIX OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ASSE SSEE'S CLAIM LACKS CREDENCE AND DID NOT INSPIRE ANY CONFIDENCE. IT IS UNDISPUTED THAT THE ASSESSEE HAD NOT PRODUCED BANK STATEMENT O F ACCOUNT FROM WHICH THE IMPUGNED FUND WAS TRANSFERRED. SIMILARLY, IT IS ALSO TRUE THAT PROOF OF SOURCE OF INCOME OF THE SAID DONOR WA S NOT PRODUCED DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDIN GS OR ORIGINAL ASSESSMENT PROCEEDINGS. EVEN DURING THE COURSE OF A PPELLATE PROCEEDING ALSO THE ASSESSEE COULD NOT FURNISH THE SAME, INSPITE OF EXPIRY OF 4 YEARS FROM THE ORIGINAL ASSESSMENT ORDE R. IT IS DIFFICULT TO UNDERSTAND WHY THE ASSESSEE IS NOT PRODUCING THE EVIDENCE AS TO SOURCE OF DONOR UNDER THE REASON OF DELICATE ISSUE. A PERSON CANNOT DENY TO DISCLOSE HIS SOURCE OF INCOME AND IT S EVIDENCES IF HE CLAIMS THAT HE HAD GIVEN A GIFT TO A PERSON. IF A P ERSON IS EXEMPTED FROM GIVING EVIDENCES AS TO COMMENSURATE VALID AND DISCLOSED SOURCE OF INCOME AND EVIDENCES AS TO FLOW OF FUND, IT WILL OPEN GATEWAYS / FLOOD GATES FOR LAUNDERING MONEY IN THE GARB OF GIFTS. IN THIS CASE, THE FLOW OF SO CALLED GIFT IS AGAINST NATURAL BEHAVIOUR IN THE SENSE THAT GIFT IS CLAIMED TO BE RECEIVED FR OM NEPHEW TO MATERNAL UNCLE. SIMILARLY, SO CALLED GIFT IS WITHOUT ANY OCCASION. THE ASSESSEE IS UNABLE TO PRODUCE THE DONOR OF THE GIFT, SO THAT TH E OTHER EVIDENCES AS TO GIFT GIVEN BY THIS DONOR TO OTHER P ERSON AND VICE VERSA CANNOT BE EXAMINED. IT IS THE DUTY OF A PERSO N, WHO RECEIVES A SUM OF MONEY TO EXPLAIN THE GENUINENESS THEREOF B EYOND DOUBT. THE ESSENTIAL INGREDIENT OF SECTION 68 IS THE CREDI TWORTHINESS OF DONOR FOLLOWED BY GENUINENESS OF TRANSACTION. DURIN G THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE WAS ASKED TO PROVIDE INCOME TAX RETURN OF THE SAID DONOR SO THAT HIS SOU RCES CAN BE EVALUATED. IF THE ASSESSEE CLAIMS THAT DONOR IS THE NEPHEW, THERE CANNOT BE ANY DIFFICULTY IN GETTI NG SUCH EVIDENCES, IF THE SO CALLED GIFT WAS GENUINE. THE A O HAS RIGHT TO EXAMINE THE CREDITWORTHINESS OF THE DONOR FROM ALL ANGLE IN CASE OF SUCH AN HUGE GIFT AND IN PARTICULAR WHICH IS AGAINST NATURAL BEHAVIOUR AND HUMAN PROBABILITY SO AS TO ENSURE THAT OWN MONEY IS NOT LAUNDERED BY WAY OF DUBIOUS D EVICE. MERE PRODUCING PAN AND COPY OF ANNUAL REPORT OF THE COMP ANY, IN SHIVKUMAR DEVIDUTT SARAF HUF 6 WHICH THE ASSESSEE IS A PROMOTER DID NOT ESTABLISH THE GENUINENESS OF SO CALLED GIFT AND FINANCIAL CAPACITY TO GIVE GI FT FROM VALID AND DISCLOSED SOURCE OF INCOME. IT IS KN OWN THAT PAN IS AVAILABLE EVEN TO A PERSON, WHO HAD NO TAXABLE INCO ME. ANNUAL REPORT OF A COMPANY ESTABLISHES STRENGTH OF THAT CO MPANY. IT CANNOT ESTABLISH THAT ITS PROMOTER HAD GIFTED A HUG E AMOUNT FROM VALID AND DISCLOSED SOURCE OF INCOME. EVEN AFTER EXPIRY OF 7 YEARS FROM RECEIPT OF GIFT, NO PERMANEN T AND TRACEABLE ADDRESS OF THE DONOR IN INDIA IS GIVEN AND EFFORT I S MADE TO PRODUCE THE DONOR. AVAILABLE RECORDS SHOWS THAT HE IS RESIDENT OF SINGAPORE AND THE AO CANNOT ENFORCE ANY PROVISION O F LAW UPON THE DONOR. IN THE PASSPORT, ADDRESS OF SINGAPORE IS SHOWN AND BIRTH PLACE IS SHOWN MYANMAR. SINCE THE A SSESSEE IS RECIPIENT OF NON-RETURNABLE HUGE AMOUNT, ONUS LIES ON HIM ONLY. THE AO IS NOT BOUND TO ASCERTAIN FINANCIAL CAPACITY OF THE DONOR ON THE BASIS OF EXTRANEOUS MATERIAL. THE CONSISTENT DENIAL OF THE ASSESSEE AND DONOR TO PROVIDE REQUIRED BASIC EVIDEN CES LEADS TO A CONCLUSIVE INFERENCE THAT THE SAME REPRESENTS A MON EY LAUNDERING DEVICE TO INTRODUCE UNACCOUNTED INCOME I N BOOKS OF ACCOUNT IN GARB OF GIFT. IN THIS REGARD, THE OBSERV ATION OF THE AO ARE WORTH TO CONSIDER WHICH ARE REPRODUCED AS BELOW :- 6 IN THE WAY OF THE ASSESSEE TO GET A COPY OF BANK ACCOUNT OF THE DONOR AND DONOR COULD NOT HAVE FOUND ANY EMBARRASSMENT TO PROVIDE THE COPY OF HUNK ACCOUNT T O THE ASSESSEE HAD THE GIFT BEEN GENUINE. IT IS SURPRISING TO NOTE THAT THE ASSESSEE COULD NOT GET THE COPY OF BANK ACCOUNT OF THE DONOR EVEN AFTER LAPSE OF FOUR YEARS INSPITE THE FA CT THAT HONBLE ITAT IN ORDER DOTED 17/11/2009 HAS WAIVED THE REQUIREMENT OF PRODUCING BALANCE SHEET AND CAPITAL ACCOUNT. 7. THE ASSESSEE COULD NOT PRODUCE BASIC DOCUMENT T O PROVE THAT IT IS A GIFT FROM SAID DONOR. THIS FACT CERTAI NLY CAST A DOUBT ON THE GENUINENESS OF ENTIRE TRANSACTION AS WELL AS ON THE CLOSE RELATIONSHIP BETWEEN THE ASSESSEE AND DONOR, IT LOOKS VERY STRANGE THAT A FOREIGN SETTLED NEPHEW FOR THE LAST 20 YEARS IN SINGAPORE WOULD HAVE SUCH GREAT LOVE AND A FFECTION FOR HIS OLD MAMAJI SO AS TO PART WITH SUCH A HUGE A MOUNT OF RS. 45,14,884/- BY WAY OF GIFT WHEN NOT EVEN A PENN Y WAS GIFTED TO THE OTHER BROTHER AND SISTER OF THE ASSES SEE WHO ALSO HAD THE SAME RELATIONSHIP WITH THE DONOR. THE ASSES SEE HAS SHIVKUMAR DEVIDUTT SARAF HUF 7 MATERNAL UNCLE OF DONOR AND IN HINDUS, THE GIFTS AR E USUALLY RECEIVED FROM AND NOT GIVEN TO MAMA. BESIDE, THE AS SESSEE IS FAIRLY OLD PERSON. USUALLY ON THE OCCASION OF SILVE R JUBILEE ANNIVERSARY ONLY SOME CEREMONIAL GIFT IS EXPECTED A S PER THE HINDU CUSTOM. THERE IS NO EVIDENCE TO SHOW THAT THE DONOR WAS HAVING EXTRA ORDINARY LOVE AND AFFECTION TOWARD S ASSESSEE IN CONTRAST TO THIS OTHER MAMAJI. NO EVIDE NCE HAS BEEN FILED TO SHOW THAT THE APPELLANT HAD RECEIVED GIFTS FROM THE SAID DONOR ON EARLIER OCCASION ALSO. 8. IN THE CIRCUMSTANCES, THE TEST OF HUMAN PROBABIL ITIES IS APPLIED AND ALL THE SURROUNDING FACTS AND CIRCUMSTA NCES ARE CONSIDERED, 1 AM NOT CONVINCED WITH THE GENUINENESS OF THE GIFT. THE APEX COURT IN THE CASE OF CIT VS DURGAPRA SAD MORE, 82 ITR 540 (SC), HELD AS UNDER .- 'IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE (IRE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTA BLISH THE TRUTH OF THOSE RECITALS, OTHER-WISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO H AVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEF T WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS. ' RESPECTFULLY RELYING ON THE AFORESAID JUDGMENT, 1 A M OF THE VIEW THAT IN A REAL LIFE SITUATION, GIFT OF SUCH A HUGE AMOUNT FROM A FOREIGN SETTLED NEPHEW JUST OUT OF NATURAL L OVE AND AFFECTION WAS NEVER POSSIBLE IN THE FACTS AND CIRCU MSTANCE OF THE CASE. IN THIS PARTICULAR CASE, THE SURROUNDING FACTS THAT NO EVIDENCE HAS BEEN PRODUCED BY ASSESSEE TO SUBSTANTIATE TO TH E VISIT OF DONOR IN INDIA PARTICULARLY TO THE ASSESSEE IS LAST 15 YEARS HAS CAST DOUBT ON THE GENUINENESS OF THE GIFT. FURTHER , NO CORRESPONDENCE BETWEEN THE DONOR AND DONE BEFORE OR AFTER THE EFFECTING SO CALLED GIFT HAS TAKEN PLACE. WE CANNOT ALSO LOSE SIGHT OF THE VERY IMPORTANT FAC T THAT IT WAS A SHIVKUMAR DEVIDUTT SARAF HUF 8 GIFT WITHOUT ANY OCCASION. NORMALLY THE GIFT IS GIV EN IN INDIA AS ON CERTAIN OCCASION SUCH AS BIRTHDAY, MARRIES CEREM ONY, MARRIES ANNIVERSARY, ETC. FURTHER, IT IS ALSO ANOMALY IN THE HINDU CUSTOM OR TRADITION THAT NO GIFT IS GIVEN BY A PERSON TO THE ELDER I.E. NEPH EW TO MAMA WHICH SHOWS FLOW OF THE GANGES RIVER INTO REVERSE D IRECTION, IT IS TOTALLY UNBELIEVABLE & COMPRESSIBLE. ' 6. FURTHER, CERTAIN JUDICIAL PRONOUNCEMENTS ALSO IN MY HUMBLE VIEW SUBSTANTIATE THE ACTION OF THE AO, WHICH ARE REPROD UCED BELOW FOR EASE OF REFERENCE. 1. CIT VS. P. MOHANAKALA (291 ITR 278) (SC) INCOME - CASH CREDITS - EXPLANATION OFFERED NOT SAT ISFACTORY - OPINION OF ASSESSING OFFICER - HAS TO BE FORMED OBJ ECTIVELY ON PROPER APPRECIATION OF MATERIAL- REMITTANCES RECEIV ED FROM FOREIGN PLACES BY BANK INSTRUMENTS - EVIDENCE THAT DONOR WAS TO RECEIVE COMPENSATION - TREATMENT AS INCOME - PERMIS SIBLE - PLEA THAT EVEN IF EXPLANATION OF ASSESSEE NOT SATIS FACTORY MATERIAL CANNOT LEAD TO CONCLUSION THAT RECEIPT IS OF INCOME NATURE - BURDEN OF PROOF - ON THE ASSESSEE - INCOME -TAX ACT, 1961, SS. 68, 69. HELD, THAT THE MONEY CAME BY WAY OF BANK CHEQUES AN D WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. 2. ACIT VS. RAJEEV TANDON (294 ITR (AT) 219) (DEL.) (103 ITD 560) CONFIRMED BY HIGH COURT (294 ITR 488) INCOME FROM UNDISCLOSED SOURCES - GIFTS FROM ABROAD - CREDIT WORTHINESS OF DONOR - DONOR CAN PRODUCE CERTIFIED / NOTARIZED COPY OF RETURN ACCOMPANIES BY BALANCE-SHEET INDICAT ING HIS CAPITAL BASE AND ASSETS OWNED BY HIM - BANK STATEME NT FURNISHED BY ASSESSEE NOT EVEN PERTAINING TO NAME O F DONOR - CERTIFICATE ISSUED BY TAX CONSULTANT UNACCOMPANIED BY ANY SHIVKUMAR DEVIDUTT SARAF HUF 9 CORROBORATIVE EVIDENCE - BANK STATEMENT NOT SHOWING DONOR IN POSITION TO ADVANCE HUGE MONEY TO ASSESSEE WHO WAS NOT RELATED TO HIM - ASSESSING OFFICER JUSTIFIED IN TREATING GI FTS AS NOT GENUINE AND ADDING GIFT AMOUNTS TO INCOME OF ASSESS EE - INCOME-TAX ACT, 1961 - S.68. TO HOLD THAT GIFT AMOUNTS RECEIVED BY THE ASSESSEE ARE GENUINE THE ASSESSEE MUST ESTABLISH THE IDENTITY OF THE DON OR, HIS FINANCIAL CAPACITY TO MAKE SUCH GIFT, AS WELL AS TH E GENUINENESS OF THE GIFT TRANSACTION. THE GENUINENESS OF THE GIF T TRANSACTION CANNOT BE DETERMINED WITHOUT LOOKING INTO THE ASPEC T OF HUMAN PROBABILITIES, RELATIONSHIP OF DONOR AND DONEE, OCC ASION FOR MAKING THE GIFT AND EXISTENCE OF RECIPROCITY, IF AN Y. IN CASE THE ASSESSEE FAILS TO ESTABLISH ANY ONE OF THESE, THE A MOUNTS RECEIVED BY THE ASSESSEE CAN BE TREATED AS THE ASSESSEE'S IN COME FROM UNDISCLOSED SOURCES REPRESENTING THE ASSESSEE'S OWN MONEY, INTRODUCED IN THE GARB OF A GIFT BY THE ASSESSEE. HELD, ALLOWING THE APPEAL, THE UNLESS THE BANK STAT EMENTS WERE SUPPORTED BY OTHER CORROBORATIVE EVIDENCE TO ESTABL ISH THE FINANCIAL CAPACITY OF THE DONORS THE BANK STATEMENT S DID NOT PROVE THE CREDITWORTHINESS OF THE DONORS FOR SHOWIN G THAT THEY WERE FINANCIALLY SOUND FOR MAKING SUCH GIFTS B ECAUSE THE BANK STATEMENTS MERELY INDICATED THE MOVEMENT OF TH E FUNDS AND NOT THE CREDITWORTHINESS OF THE ACCOUNT HOLDER. 3. CIT VS. ANIL KUMAR (DEL.) 392 ITH 552 INCOME - CASH CREDITS- ALLEGED GIFTS - MERE IDENTIF ICATION OF THE DONOR AND MOVEMENT OF GIFT AMOUNT THROUGH BANKING C HANNELS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF GIFT - O NUS LIES ON THE ASSESSEE NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE THE GIFT - A SSESSEE IS SAID TO HAVE RECEIVED TWO GIFTS OF RS. 10 LAKHS EACH FROM N R (E) ACCOUNTS OF TWO DONORS - THERE IS NOTHING ON RECORD TO SHOW THE FINANCIAL CAPACITY OF THE ALLEGED DONORS, THEIR REL ATIONSHIP WITH THE ASSESSEE OR THE SOURCE OF FUNDS GIFTED TO THE A SSESSEE - SINCE THE ASSESSEE DID NOT PROVE THE GENUINENESS OF THE T RANSACTIONS OR SHIVKUMAR DEVIDUTT SARAF HUF 10 ESTABLISH THE IDENTITY OF THE DONORS OR THE CAPACIT Y OF THE DONORS TO MAKE GIFTS, ADDITION OF THE AMOUNT OF GIFTS ALLE GEDLY RECEIVED BY THE ASSESSEE WAS JUSTIFIED . IN VIEW OF FACTS AND CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, I AM CONSIDERED VIEW THAT IMPUGNED GIFT IS NOT GENUINE A ND IT REPRESENTS UNEXPLAINED CASH CREDIT WITHIN THE MEANI NG OF SECTION 68 OF THE I.T. ACT 1961. IN OTHER WORDS , IT REPRESENTS THE CONCEALED INCOME OF THE ASSESSEE, AS THE FINANCIAL CAPACITY OF THE DONOR TO MAKE SUCH A HUGE GIFT IS NOT PROVED AT ALL AND ALSO GENUINENESS OF THIS G IFT IS NOT PROVED. ON THE CONTRARY, ALL THE CIRCUMSTANTIA L EVIDENCES PROVE OTHERWISE I.E. IT DISPROVES THAT IT WAS A GENUINE GIFT. ACCORDINGLY, THE ADDITION MADE BY TH E AO IS CONFIRMED AND ALL GROUNDS OF APPEAL ON THE ISSUE ARE REJECTED. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT OR DER, LEADING TO ADDITION U/S 68 OF THE ACT, CONFIRMATION OF THE SAME BY THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNE D ORDER, MATERIAL AVAILABLE ON RECORD AND THE ASSERTIONS MAD E BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, THE WHOLE ISSUE PERTAINS TO GENUINENESS OF THE IMPUGNED GIFT RECEIVED FROM THE BHANJA (SISTERS SON) BY THE KART A (MAMA) OF THE ASSESSEE HUF. WE ARE OF THE VIEW, THAT UNDER T HE FACTS AVAILABLE ON RECORD FOR CLAIMING SUCH GIFT, THE ASS ESSEE HAS TO OFFER A REASONABLE EXPLANATION ABOUT THE SOURCE OF SUCH CREDIT MADE IN THE BOOKS OF ACCOUNTS. IF THE ASSESSEE DOE S NOT OFFER SATISFACTORY EXPLANATION THEN THE SUM, SO CREDITED, MAY BE SHIVKUMAR DEVIDUTT SARAF HUF 11 CHARGED TO TAX AS INCOME OF THE ASSESSEE, THE EXPRE SSION THE ASSESSEE OFFERS NO EXPLANATION MEANS WHERE THE ASS ESSEE OFFERS NO PROPER, REASONABLE AND LEGALLY ACCEPTABLE EXPLAN ATION WITH REGARD TO THE SUMS FOUND CREDITED IN THE BOOKS MAIN TAINED BY THE ASSESSEE. AT THE SAME TIME, THE OPINION OF THE ASSESSING OFFICER IN NOT ACCEPTING THE EXPLANATION, OFFERED B Y THE ASSESSEE, AS NOT SATISFACTORY, IS REQUIRED TO BE BASED ON PRO PER APPRECIATION OF MATERIAL FACTS AND OTHER ATTENDANT CIRCUMSTANCES AVAILABLE ON RECORD, MEANING THEREBY, THE ASSESSING OFFICER IS REQUIRED TO FORM SUCH SATISFACTION OBJECTIVELY AFTE R DUE APPLICATION OF MIND. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE APEX COURT IN P.MOHANKALA (2007)(291 ITR 27 8)(SC). A CLOSE READING OF SECTION 68 AND 69 OF THE ACT MAKES IT CLEAR THAT IN THE CASE OF SECTION 68, THERE SHOULD BE CREDIT E NTRY IN THE BOOKS OF ACCOUNT WHEREAS IN THE CASE OF 69 THERE MA Y NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WELL SET TLED, THE ONUS OF PROVING THE SOURCE OF A SUM, FOUND TO BE RECEIVE D BY AN ASSESSEE, IS ON HIM AND WHERE IT IS NOT SATISFACTOR ILY EXPLAINED, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW T HAT INCOME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSE SSEE FAILED TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF SUCH CREDIT, THE REVENUE IS FREE TO MAKE THE ADDITION. THE PRINCIPL E LAID DOWN IN GANPATI MUDALIAR (1964) 53 ITR 623/A. GOVINDA RAJUL U MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DURGA PRA SAD MORE (72 ITR 807)(SC) ARE THE LANDMARK DECISIONS. THE RA TIO LAID DOWN THEREIN ARE THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. THE RATIO LAID DOWN IN DAULAT RAM RAWATM AL 87 ITR SHIVKUMAR DEVIDUTT SARAF HUF 12 349 (SC) FURTHER SUPPORTS THE CASE OF THE REVENUE. IN THE CASE OF A CASH ENTRY, IT IS NECESSARY FOR THE ASSESSEE TO P ROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECORD. A H ARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE INCOME TAX ACT WILL BE THAT APART FROM ESTABLIS HING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLI SHED THE GENUINENESS OF THE TRANSACTION WAS WELL AS THE CRED ITWORTHINESS OF THE CREDITORS. IN CIT VS KORLAY TRADING COMPANY LTD. 232 ITR 820 (CAL.), IT WAS HELD THAT MERE MENTION OF FILE N UMBER OF CREDITOR WILL NOT SUFFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATELY BY THE ASSESSEE (CIT VS R.S. RATHAORE) 2 12 ITR 390 (RAJ.). THE HONBLE GUWAHATI HIGH COURT IN NEMI CH ANDRA KOTHARI VS CIT (264 ITR 254)(GAU) HELD THAT TRANSAC TION BY CHEQUES MAY NOT BE ALWAYS SACROSANCT. IN THE PRESEN T APPEAL, THE ASSESSEE NEITHER FULFILLED THE CONDITIONS ENSHR INED U/S 68 OF THE ACT NOR PRODUCED THE DONOR BEFORE THE ASSESSING OFFICER FOR HIS EXAMINATION REGARDING THE GENUINENESS OF CLAIME D GIFT. 2.5. THE BENCH ASKED THE LD. COUNSEL FOR THE ASSES SEE AS TO WHY THE NECESSARY DOCUMENTS WERE NOT PRODUCED BEFORE TH E ASSESSING OFFICER TO FULFILL THE REQUIREMENT OF SEC TION 68 OF THE ACT, IT WAS CLAIMED THAT THE DONOR IS THE SISTERS SON OF THE KARTA OF THE ASSESSEE AND DUE TO CERTAIN UNAVOIDABLE CIRC UMSTANCES, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO PRODUCE REQUIR ED DOCUMENTS/DONOR AND FURTHER ADDED THAT THE ASSESSIN G OFFICER WAS TO MAKE THE ENQUIRIES ONLY LIMITED TO THE DIREC TION OF THE TRIBUNAL CONTAINED IN THE ORDER DATED 17/11/2009. IF THIS ISSUE SHIVKUMAR DEVIDUTT SARAF HUF 13 IS ANALYZED WITH THE PREVAILING CUSTOMS NORMALLY MA MA IS NOT EXPECTED TO TAKE ANY GIFT FROM BHANJA (SISTERS SON ) RATHER THE MAMA MAY GIVE GIFTS, IF ANY, TO THE SISTERS SON. IF THE DONOR IS SO CLOSE TO THE ASSESSEE TO MAKE A HUGE GIFT TO THE AS SESSEE THEN HE IS ALSO EXPECTED TO PROVIDE THE DOCUMENTS TO THE AS SESSEE, AS REQUIRED BY HIM. THE ASSESSEE WANTS RELIEF MERELY O N TECHNICALITIES WHICH, IN OUR VIEW, IS NOT PERMISSIB LE UNDER THE LAW AS THE ASSESSEE HAS TO FULFILL THE THREE INGREDIENTS/REQUIREMENT OF SECTION 68 OF THE ACT. THE ASSESSEE NEITHER FURNISHED THE INCOME TAX RETURNS OF THE DON OR TO PROVE HIS CAPACITY NOR ANY CONFIRMATION LETTER FROM HIM T O PROVE THE GENUINENESS OF THE TRANSACTION. EVEN THE SOURCE OF INCOME OF THE DONOR WAS NOT PRODUCED. IT IS ALSO SEEN THAT THE M AMA NEVER GAVE ANY GIFT TO THE BHANJA (DONOR) MORE SPECIFICAL LY WHEN AS PER THE CUSTOMS, THE MAMA NORMALLY DO NOT RECEIVE ANY G IFT FROM BHANJA. NO PROOF WAS PRODUCED BY THE ASSESSEE AS T O WHETHER THE DONOR VISITED INDIA TO HIS MAMA IN THE LAST FIF TEEN YEARS. EVEN OTHERWISE, THE GIFT IS NORMALLY GIVEN IN ROUND FIGU RES SAY 45 LAKH BUT IN THE PRESENT APPEAL, THE ALLEGED GIFT AMOUNT IS RS.45,14,884/- WHICH CLEARLY INDICATE THAT IDENTICA L AMOUNT WAS GIVEN TO THE DONOR BY THE ASSESSEE, WHICH WAS RECEI VED BACK UNDER THE GARB OF THE GIFT. IT SIMPLY SEEMS TO BE A DEVICE TO GIVE A COLOUR OF GIFT RATHER IT IS CLEARLY UNEXPLAINED M ONEY WITH THE ASSESSEE. NORMALLY, EVEN OTHERWISE, THE GIFTS ARE GIVEN TO THE YOUNGER PERSON I.E. MAMA TO BHANJA OR TO HIS SISTER (MOTHER OF THE DONOR) BUT IN THE PRESENT APPEAL, THE NATURAL C OURSE IS OTHERWISE, WHICH IS HARDLY BELIEVABLE. THE ASSESSE E DID NOT PRODUCE THE BANK STATEMENT OF THE DONOR FROM WHERE THE IMPUGNED AMOUNT WAS TRANSFERRED TO THE ACCOUNT OF T HE SHIVKUMAR DEVIDUTT SARAF HUF 14 ASSESSEE, LIKEWISE THE PROOF OF INCOME OF THE DONOR WAS NOT PRODUCED DURING SET-ASIDE PROCEEDINGS. EVEN BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OR BEFORE US N O SUCH PROOF WAS FURNISHED BY THE ASSESSEE THAT TOO AFTER EXPIRY OF SO MANY YEARS. AS MENTIONED EARLIER, THE ASSESSEE NEVER PR ODUCED THE DONOR BEFORE THE ASSESSING OFFICER CERTIFYING THAT HE GAVE THE GIFT TO THE ASSESSEE. AT PAGE-4 (PARA-5) OF THE IMPUGNE D ORDER, THERE IS MENTION THAT DURING APPELLATE PROCEEDINGS, THE A SSESSEE WAS ASKED TO PROVIDE INCOME TAX RETURN OF THE DONOR SO THAT HIS SOURCE CAN BE EVALUATED. HOWEVER, THE ASSESSEE DID NOT PRODUCE SUCH DOCUMENTS. IN OUR VIEW, IF THE DONOR WAS SO C LOSE TO THE ASSESSEE, BEING BHANJA (SISTERS SON) THERE SHOULD NOT HAVE BEEN ANY DIFFICULTY IN GETTING SUCH DOCUMENTS, THUS, UND ER THE FACTS NARRATE HEREINABOVE, AND HUMAN PROBABILITY IT SEEMS THAT OWN MONEY WAS LAUNDERED BY A DUBIOUS DEVICE/GIFT. PAN IS AVAILABLE TO A PERSON EVEN WHO ARE HAVING NO TAXABLE INCOME. THERE IS FURTHER FINDING THAT, AS PER THE PASSPORT, THE ADDR ESS OF THE DONOR IS OF SINGAPORE AND HIS BIRTHPLACE IS SHOWN I N MYANMAR. THE CONSISTENT DENIAL OF THE ASSESSEE TO FURNISH TH E REQUISITE EVIDENCES/DOCUMENTS RAISES DOUBTS ABOUT THE GENUINE NESS OF THE TRANSACTIONS, WHICH GOES AGAINST THE ASSESSEE. THE RATIO LAID DOWN IN ACIT VS RAJEEV TANDON 294 ITR (AT) 219 (DEL .), WHICH WAS CONFIRMED BY HONBLE HIGH COURT , IN 294 ITR 48 8, SUPPORTS THE CASE OF THE REVENUE. IDENTICAL RATIO WAS LAID DOWN IN CIT VS ANIL KUMAR 392 ITR 552 (DEL.), WHEREIN IT WAS HELD THAT MERE IDENTIFICATION OF THE DONOR AN MOVEMENT OF GIFT THR OUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF GIFT. KEEPING IN VIEW, THE TOTALITY OF FACTS, ATTENDANT CIRCUMSTA NCES, HUMAN PROBABILITIES, AND IN THE ABSENCE OF PLAUSIBLE EXPL ANATION BY THE SHIVKUMAR DEVIDUTT SARAF HUF 15 ASSESSEE, RELEVANT MATERIAL, AND NON-FULFILLMENT OF INGREDIENTS ENSHRINED IN SECTION 68 OF THE ACT, WE FIND NO INFI RMITY IN CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED . . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 04.03.2015 . SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 04/03/201 5 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI 5. ./0 )1 , + %& %12 , / DR, ITAT, MUMBAI 6. 03 4 / GUARD FILE. / BY ORDER, *.& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI