ITO 25(2)(2), MUMBAI V. PRASHANT P. DOSHI, MUMBAI

ITA 853/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48574 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: AJAY R SINGH; DR K SHIVARAM
• Keywords: Unexplained cash credit; Gift; Capital receipt
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI T.R. SOOD ( A.M.) ITA NO. 853/MUM /2010 ASSESSMENT YEAR 2005-06 INCOME TAX OFFICER - 25(2)(2), BLDG. NO. C-11, IST FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (EAST), MUMBAI 400 051. VS. SHRI PRASHANT P. DOSHI, A-103, AMRUT SAGAR, BLDG. NO. 2, OFF S.V. ROAD, BEHIND VIJAY SALES, BORIVALI (WEST), MUMBAI. 400 092. PAN : AAGPOD7006H (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SURENDRA KUMAR RESPONDENT BY : DR. K. SHIVARAM & MR. AJAY R. SINGH O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 12.11.2009 PASSED BY THE LD. CIT (A) FOR THE A.Y. 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND AS SORTMENT/BROKERAGE FROM DIAMONDS AND JEWELLERY. HE FILED RETURN DECLA RING THE TOTAL INCOME AT ` 1,17,180/-. DURING THE COURSE OF ASSESSMENT PROCE EDING, IT WAS INTER ALIA OBSERVED BY THE A.O. THAT THE ASSESSEE H AS RECEIVED A GIFT OF ` 10 LACS FROM ONE SRI ANANTRAI KAMDAR. THE ASSESSEE WAS ASKED TO FILE THE DETAILS OF THE GIFT AND ALSO TO PROVE THE GENUI NENESS AND CREDIT WORTHINESS OF THE DONOR. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 14.11.2008 EXPLAINED AS UNDER (PAGE 3 OF ASSESSMENT ORDER):- ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 2 IN CONNECTION WITH THE ABOVE REFERRED SUBJECT MATTE R AND AS REQUIRED BY YOUR GOODSELF, WE HEREIN BELOW FURNISH FOLLOWING DO CUMENTS/EXPLANATION FOR YOUR KIND PERUSAL:- 1) PHOTOCOPY OF CERTIFICATE OF FOREIGN INWARD REMIT TANCE SPECIFYING PURPOSE OF REMITTANCE AS GIFT. 2) COPY OF GIFT DEED 3) COPY OF NOTICE OF ASSESSMENT OF DONOR MR. ANANTR AI H. KAMDAR JUSTIFYING HIS CAPACITY TO GIVE SUCH GIFT. IT WAS FURTHER EXPLAINED THAT THE GIFT WAS RECEIVED FROM NRE ACCOUNT THROUGH NORMAL BANKING CHANNEL. HOWEVER, THE A.O. O BSERVED THAT THE ASSESSEE DID NOT ESTABLISH THE IDENTITY, FINANCIAL CAPACITY OF THE DONOR AND GENUINENESS OF THE GIFT EXCEPT COPY OF DECLARAT ION AND NOTICE OF ASSESSMENT, NO OTHER SUPPORTING DOCUMENTS WERE FILE D. ACCORDING TO THE A.O. NEITHER THE IDENTITY OF THE DONOR WAS ESTABLIS HED NOR WAS THERE ANY EVIDENCE TO ESTABLISH THE FINANCIAL STATUS OF THE D ONOR OR ANY SATISFACTORY EVIDENCE SUPPORTING THE GENUINENESS OF THE GIFT. TH E A.O. FURTHER OBSERVED THAT THE NATURE AND QUANTUM OF THE GIFT, T HE OCCASION ON WHICH IT WAS MADE, THE RELATIONSHIP BETWEEN THE DONOR AND DONEE, THE FINANCIAL CAPACITY OF THE DONOR AND SURROUNDING FACTS AND CIR CUMSTANCES ARE OF PRIMARY IMPORTANCE. SINCE THE ASSESSEE FAILED TO DI SCHARGE ITS ONUS, IT CAN BE REASONABLY CONSTRUED THAT THIS GIFT IS NOT G ENUINE AND THIS IS JUST A DEVICE TO CHANNELIZE UNACCOUNTED FUNDS INTO THE A CCOUNT OF THE ASSESSEE. IN SUPPORT, THE A.O. ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LT D. 187 ITR 596 (CAL.) AND SUMATI DAYAL VS. CIT 214 ITR 801 (SC) AND ACCOR DINGLY THE A.O. TREATED THE AMOUNT RECEIVED BY THE ASSESSEE AS GIFT , AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE INCO ME TAX ACT, 1961 (THE ACT) AND ADDED TO THE INCOME OF THE ASSESSEE. ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 3 3. ON APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITI ON MADE BY THE A.O. VIDE HIS FINDINGS RECORDED IN PARA 4.3 OF HIS ORDER WHICH IS AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRES ENTATIVE AND THE STAND TAKEN BY THE A.O. IT IS SEEN THAT THE APPELLA NT HAS FILED CERTIFICATE OF FOREIGN REMITTANCE SPECIFYING PURPOSE OF REMITTA NCE AS GIFT, THE COPY OF GIFT DEED AND COPY OF NOTICE OF ASSESSMENT ORDER OF DONOR BEFORE A.O. WITH THE FILING OF THE ABOVE DOCUMENTS, THE INITIAL ONUS CAST ON THE APPELLANT TO PROVE THE GENUINENESS OF GIFT IS DISCH ARGED. IN THE LIGHT OF THE ABOVE EVIDENCES, IT IS ONLY FOR THE A.O. TO PRO VE THE GIFT WAS NOT GENUINE AND THE A.O. HAS NOT UNDERTAKEN ANY SUCH EX ERCISE TO PROVE THAT THE GIFT WAS NOT GENUINE; ON THE OTHER HAND HE OBSE RVED THAT THE IDENTITY AND THE FINANCIAL CAPACITY OF DONOR WAS NOT ESTABLI SHED AND HELD THAT NO SATISFACTORY EVIDENCES SUPPORTING THE GENUINENESS G IFT WAS FILED. HE DID NOT REQUIRE THE APPELLANT TO FURNISH ANY OTHER SUPP ORTIVE EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN TH E CIRCUMSTANCES, I FIND THAT THE APPELLANT HAS DISCHARGED THE ONUS OF PROOF AND THE A.O. IS NOT CORRECT IN ADDING THE ABOVE GIFT AS UNEXPLAINED CASH DEPOSITS WITHOUT PROVING THAT THE GIFT WAS NOT GENUINE. I FIND THAT THE EVIDENCES FILED BY THE APPELLANT BEFORE THE A.O. WERE SUFFICIENT TO PR OVE THAT THE GIFT WAS GENUINE. I, THEREFORE, DIRECT THE A.O. DELETE THE ADDITION. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF AP PEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 10,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I. T. ACT, 1961. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND TO BE SET ASIDE AND THAT OF THE A.O. BE REST ORED. 5. AT THE TIME OF HEARING, THE LD. D.R. WHILE RELYI NG ON THE ORDER OF THE A.O. SUBMITS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF ` 10 LACS MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. HE FURTHER SUBMITS THAT THE ASSESSE E HAS FAILED TO PROVE THE POSITION OF LAW IN THE CASE OF RECEIPT OF GIFT WHICH HAS BEEN LAID DOWN BY THE TRIBUNAL IN THE CASE OF RAJINDER KUMAR MITTA L VS. ASSTT. CIT (2010) 3 ITR (TRIB) 508 (DELHI) AND IN THE CASE OF DCIT V S. ALOK GAUTAM 41 SOT 102(LUCK.). IN THE LIGHT OF THE ABOVE DECISIONS, HE SUBMITS THAT THE ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 4 ASSESSEE HAS FAILED TO DISCHARGE HIS BURDEN, THEREF ORE, THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT BE REVERSED AND T HAT OF A.O. BE RESTORED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT THE DONOR MR. ANANTIRAI H. KAMDAR IS ASSESSEES FAT HERS SISTERS HUSBAND. IN OTHER WORDS, THE ASSESSEE IS NEPHEW OF THE DONOR. HE FURTHER SUBMITS THAT DONOR SHRI ANANTRAI H. KAMDAR IS PARTNER IN THE FIRM VICTORY MERCANTILE CO-OP. SINGAPORE AND CITIZE N OF SINGAPORE. HE FURTHER SUBMITS THAT THE ASSESSEE HAS FILED FOLLOWI NG DETAILS OF GIFTS:- (A) LETTER DATED 14.11.2008 TO THE A.O. SHOWING THE DETAILS OF GIFT. (B) COPY OF PASSPORT OF IDENTITY PROOF OF THE DONOR . (C) COPY OF FIRC (BANK OF INDIA) (TOWARDS GIFT) (D) COPY OF GIFT DEED DT. 24.8.2004 (E) AMOUNT REMITTED BY PAY ORDER BANK OF INDIA SING APORE. (F) ASSESSMENT OF THE DONOR BY INALAND REVENUE AUTH ORITY OF SINGAPORE FOR A.YRS. 2004, 2005, 2006 AND 2007. (G) COPY OF DONORS STATUS IN BUSINESS. APART FROM THIS, ON THE DIRECTION OF THE TRIBUNAL, AN AFFIDAVIT ALONG WITH ANNEXURE DTD. 18 TH JANUARY, 2011 WAS ALSO FILED. IN THE LIGHT OF THE ABOVE, HE SUBMITS THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE DONOR, CREDITWORTHINESS AND GENUINENESS OF GIFT AS PER PRO VISIONS OF SECTION 68 OF THE ACT. HE FURTHER SUBMITS THAT THE A.O. HAS FA ILED TO APPRECIATE THAT THE GIFT WAS MADE BY THE UNCLE TO HIS NEPHEW, A CLO SE RELATIVE AS PROVIDED UNDER EXPLANATION TO SECTION 56(1)(V) OF THE ACT. T HE ASST. ORDER OF INLAND REVENUE AUTHORITY OF SINGAPORE CLEARLY PROVES CREDI TWORTHINESS OF THE DONOR. IN SUPPORT, HE ALSO REFERS PAGE 31 OF THE AS SESSEES PAPER BOOK TO SHOW THE SHARE OF INCOME RECEIVED BY THE DONOR IS 8 9,185 $ (SINGAPORE) WHICH ARE EQUIVALENT TO ` 23 LACS AND ALSO EARNED DIVIDEND AND OTHER ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 5 INCOME DURING THE YEAR 2004. HE FURTHER SUBMITS THA T THE GIFT WAS RECEIVED THROUGH BANKING CHANNEL AND BANKERS OF DON OR HAS CONFIRMED HAVING DEBITED THEIR CLIENTS ACCOUNTS FOR GIFTS GI VEN AS PER BANK CERTIFICATE. THUS THE ASSESSEE HAS DISCHARGED HIS BURDEN. HE, THEREFORE, SUBMITS THAT THE A.O. WITHOUT MAKING ANY ENQUIRIES MERELY ON SURMISES HAS HELD THAT THE GIFT IS INVALID. THE RELIANCE/RE FERENCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS:- 1. MS. ASHA HAMPANNAVAR VS. ITO IN ITA NO. 5319/M/07 F OR A.Y. 2003-04 ORDER DATED 30.1.2008. (ITAT A BENCH MUMB AI) 2. ON APPEAL BY THE REVENUE IN CIT VS. ASHA HAMPANNAV AR IN INCOME TAX APPEAL NO. 1108 OF 2008 DATED 26.9.2008, THEIR LORDSHIPS DISMISSED THE APPEAL.(BOMBAY HIGH COURT) 3. ON SLP BY THE REVENUE IN CIT VS. ASHA HAMPANNAVAR SLP NO. 16370 OF 2009 DATED 14.7.2009 REPORTED IN (2009) 31 9 ITR 5 STATUTE (SC) THEIR LORDSHIPS DISMISSED THE DEPARTME NT SLP. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE A.O. HAS NOT ACCEPTED THE GIFT OF ` 10 LACS ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THAT SUCH GIFT WAS OBTAINED IN THE NATURAL COURSE FROM A PERSON WELL KNOWN TO THE ASSESSEE AND WAS MADE FOR A PARTICULAR PURPOSE OUT OF LOVE AND AFFECTION OR AS A CUSTOMARY GIFT. FURTHER THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS TO ESTABL ISH THE IDENTITY/FINANCIAL CAPACITY OF THE DONOR AND GENUIN ENESS OF THE GIFT. HOWEVER, THE LD. CIT(A) HELD THAT THE EVIDENCES FIL ED BY THE APPELLANT BEFORE THE A.O. WERE SUFFICIENT TO PROVE THAT THE G IFT WAS GENUINE AND HENCE DELETED THE ADDITION MADE BY THE A.O. ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 6 8. FROM THE PAPER BOOK FILED BY THE ASSESSEE, WE OB SERVE THAT THE ASSESSEE HAS FILED THE FOLLOWING DOCUMENTARY EVIDEN CE TO PROVE THE GENUINENESS OF GIFT:- (1) LETTER DATED 14.11.2008 ADDRESSED TO A.O. REGARDING GIFT. (PB PAGE NO. 4) (2) COPY OF PASS PORT AS IDENTITY PROOF OF THE DONOR (P B PAGE NO. 9) (3) COPY OF IDENTITY CARD OF REPUBLIC OF SINGAPORE AS I DENTITY PROOF OF THE DONOR (PB PAGE NO. 10) (4) COPY OF FIRC ISSUED BANK OF INDIA TO SHOW THAT THE AMOUNT OF ` 10 LACS HAS BEEN REMITTED TOWARDS GIFT (PB PAGE NO. 11) (5) COPY OF GIFT DEED OF GIFT ` 10 LACS DULY SIGNED BY THE DONOR AND DONEE (PB PAGE NO. 12) (6) COPY OF AGREEMENT OF HOUSE PROPERTY TO SHOW THE PUR POSE OF GIFT (PB PAGE NO. 13 TO 24) (7) COPY OF NOTICE OF ASSESSMENT OF DONOR BY INLAND REV ENUE AUTHORITY OF SINGAPORE FOR THE YEAR OF ASSESSMENT 2 004, 2005, 2006 & 2007 (PB PAGE NO. 25 TO 28) (8) COPY OF CURRENCY CONVERSION RATE OF SINGAPORE DOLLA R (PB PAGE NO. 39) (9) COPY OF DONORS STATUS OF BUSINESS (PB PAGE NO. 30 & 31) (10) COPY OF SWORN AFFIDAVIT OF DONOR (PB PAGE NO. 46 & 47) (11) COPY OF STATEMENT OF BANK ACCOUNT ISSUED BY BANK OF INDIA, SINGAPORE TO SHOW THAT THE AMOUNT OF 21,739.47 $ S INGAPORE WAS DEBITED (PB PAGE NO. 52-55). IN ORDER TO APPRECIATE THE CONTENTIONS URGED BEFORE US, IT WOULD BE APPROPRIATE TO TAKE NOTE OF SECTION 68 OF THE INCOM E TAX ACT, 1961 WHICH IS REPRODUCED BELOW:- 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, IN THE OPINION O F THE ASSESSING ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 7 OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. A BARE READING OF SECTION 68 OF THE ACT SUGGESTS WH ERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR, THE SAME MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR, IF THE EXPLANATION OFFERED BY THE ASSESSEE AB OUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE A.O., NOT SATISFACTORY. 9 . ON EXAMINATION OF THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN THE LIGHT OF THE ABOVE PROVISION OF LAW, WE FIND THAT THE ASSESSEE HAS RECEIVED THE GIFT OF ` 10 LACS FROM SHRI ANANTIRAI H. KAMDAR OF SINGAPORE WHO IS RELATED TO THE ASSESSEE BEING ASSESSEES FAT HERS SISTERS HUSBAND OR SAY ASSESSEE IS NEPHEW OF THE DONOR AND IN SUPPO RT, THE ASSESSEE HAS FILED GIFT DEED, COPY OF PASS PORT OF THE DONOR, BA NK OF INDIA CERTIFICATE DTD. 18.8.2005 SHOWING THAT THE PURPOSE OF REMITTAN CE AS STATED BY THE REMITTER/BENEFICIARY IS TOWARDS GIFT, COPY OF STATE MENT OF ACCOUNTS OF BANK OF INDIA, SINGAPORE SHOWING DEBIT ENTRY OF SIN GAPORE $ 21739.47 ON 23 RD AUG. 2004 VIDE REF. NO. TM 0408230027, SWORN AFFID AVIT OF THE DONOR IN CONFIRMATION OF THE ABOVE GIFT AND THE AMO UNT OF INCOME OF THE DONOR THAT IN THE CALENDAR YEAR 2004 THE INCOME OF THE DONOR WAS SINGAPORE $ 89,185 EQUIVALENT TO INDIAN ` 23 LACS AND ALSO TO SHOW THAT THE DONOR OWNS RESIDENTIAL AND OFFICE PROPERTIES IN SINGAPORE. APART FROM THIS THE ASSESSEE HAS ALSO PROVED THAT THE GIF T WAS GIVEN TO THE ASSESSEE OUT OF LOVE AND AFFECTION TO HELP THE NEPH EW I.E. ASSESSEE IN ACQUIRING A RESIDENTIAL HOUSE PROPERTY IN MUMBAI. CONSIDERING ALL THESE EVIDENCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED HIS BURDEN IN TERMS OF PROVISIONS OF SECTION 68 OF THE ACT. ONCE THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS WHICH WAS CAST UPON THE ASSESSEE, IT WAS INCUMBENT UPON THE A.O. TO PROVE ON THE BASIS O F COGENT EVIDENCE THAT THE TRANSACTION WAS NOT GENUINE. THERE IS NO SUCH EVIDENCE FORTHCOMING. WE FIND THAT THE CONCLUSIONS ARRIVED A T BY THE A.O. ARE ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 8 MERELY ON CONJECTURAL AND ARE BASED ON SURMISES AND ASSUMPTIONS. SUCH CONJECTURES AND ASSUMPTIONS CANNOT TAKE THE PL ACE OF PROOF, ONCE THE ASSESSEE HAS DISCHARGED THE PRIMARY BURDEN WHIC H HAD BEEN CAST UPON. 10. IN RAJINDER KUMAR MITTAL (SUPRA), THE A.O. MADE THE ADDITIONS OF ` 3 LACS AND ` 392,672/- ON ACCOUNT OF UNEXPLAINED MONEY INTRODUC ED BY THE ASSESSEE IN HIS BANK ACCOUNT IN THE GARB OF GIF TS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM TWO DONORS. THE ADDITIONS WERE CONFIRMED BY THE COMMISSIONER (APPEALS). ON APPEAL TO THE TRIBUNAL, IT HAS BEEN HELD BY THE TRIBUNAL (PAGE 508 HEAD NOTE): - HELD, DISMISSING THE APPEAL, THAT IN THE CASE OF GI FTS THE POSITION OF LAW IS THAT (I) MERE IDENTIFICATION OF DONOR AND SHOWIN G MOVEMENTS OF GIFT AMOUNT THROUGH BANKING CHANNELS IS NOT SUFFICIENT T O PROVE THE GENUINENESS OF THE GIFT; (II) SINCE THE CLAIM OF T HE GIFT IS MADE BY THE ASSESSEE, THE ONUS LIES ON HIM NOT ONLY TO ESTABLIS H THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO SUC H A GIFT. THE ASSESSEE HAS TO PROVE THAT THE MONEY HAS ACTUALLY BEEN RECEI VED AS A GIFT FROM DONOR ; (III) IT IS THE BURDEN OF THE ASSESSEE TO S HOW AND DEMONSTRATE WHAT KIND OF RELATIONSHIP OR WHAT KIND OF LOVE AND AFFECTION THE DONOR HAS FOR THE ASSESSEE, AND TO EXPLAIN CIRCUMSTANCES IN WHICH GIFTS WERE MADE ; (IV) IF THE EXPLANATION AS REGARDS THE CLAIM OF THE GIFT OFFERED BY THE ASSESSEE IS NOT PROPER, REASONABLE AND ACCEPTAB LE, AN INEVITABLE 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 ; (V) THE OPINION OF THE ASSESSING OFFI CER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFAC TORY OR PROPER OR REASONABLE OR ACCEPTABLE IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAIL ABLE ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPL ICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION BY THE ASSESSI NG OFFICER ; (VI) IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE MONEY RECEIVED BY THE ASSESSEE IS NOT SATISFACTORY, THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSE E, VIZ., THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE S AME, AND, IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE ASSESSEE TH AT IT WAS A RECEIPT OF AN INCOME NATURE AND ; (VII) THE BURDEN IS ON THE ASSE SSEE TO PROVE AND ESTABLISH THAT, EVEN IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCE S AVAILABLE ON RECORD DO NOT JUSTIFY THE MONEY RECEIVED BY THE ASSESSEE B EING NOT TREATED AS A ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 9 RECEIPT OF INCOME NATURE. IT WAS THE ASSESSEE WHO H AD MADE A CLAIM THAT HE HAD RECEIVED THE SUM OF RS. 3,00,000 AND RS. 3,9 2,672 BY WAY OF GIFT FROM TWO PERSONS, VIZ., JBM AND YPM RESPECTIVELY. T HUS, THE ONUS LAY ON THE ASSESSEE NOT ONLY TO ESTABLISH THE IDENTITY OF THE AFORESAID PERSONS MAKING THE GIFT BUT ALSO THEIR CAPACITY TO MAKE SUC H A GIFT, THAT THE AMOUNT HAD ACTUALLY BEEN RECEIVED AS A GIFT FROM TH E DONORS, WHAT KIND OF RELATIONSHIP OR LOVE AND AFFECTION THESE DONORS HAD FOR THE ASSESSEE, AND IN WHAT CIRCUMSTANCES THE ALLEGED GIFTS WERE MA DE. IT WAS ONLY AFTER THE ASSESSEE DISCHARGED HIS AFORESAID BURDENS, THE ASSESSING OFFICER WOULD BE REQUIRED TO REBUT THE ASSESSEE'S CASE IN C ASE HE INTENDED TO TREAT THE GIFT AS OF INCOME NATURE. THE NATURE OF T HE GIFT FROM YPM HAD NOT BEEN PROVED. THE ASSESSEE HAD NOT ALSO BEEN ABL E TO SHOW THAT THE SUM WAS IN THE NATURE OF A CAPITAL RECEIPT. THE ASS ESSEE HAD FAILED TO DISCHARGE HIS PRIMARY AND INITIAL ONUS BY ESTABLISH ING CAPACITY OF DONORS TO MAKE A GIFT, AND THAT THE AMOUNT HAD ACTUALLY BE EN RECEIVED AS GIFT FROM THE DONORS. THE ASSESSEE HAD ALSO FAILED TO AS SIGN ANY REASON FOR GIFT OF SUCH A HUGE AMOUNT OF RS. 3,00,000 AND RS. 3,92,672 BY THE DONORS TO THE ASSESSEE AND HAD FAILED TO SHOW WHAT RELATION AND/OR KIND OF LOVE AND AFFECTION THE DONOR HAD FOR THE ASSESSE E SO THAT THE DONORS SHOWERED GIFTS OF ENORMOUS AMOUNTS ON THE ASSESSEE. THERE WAS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE REC EIPT OF MONEY, AND THE ASSESSEE HAD FAILED TO REBUT THE SAID EVIDENCE AND AS SUCH, THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT IT WAS A RECE IPT OF AN INCOME NATURE. 11. IN ALOK GAUTAM (SUPRA), THE FACTS OF THE CASE A RE THAT THE ASSESSEE WAS A DIRECTOR IN A COMPANY, G LTD. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT SUMS OF ` 6 LAKHS AND ` 7.40 LAKHS, RESPECTIVELY, WERE CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE WITHIN A PERIOD OF ONE MONTH. THE ASSESSE E EXPLAINED TO THE A.O. THAT THE AFORESAID SUMS WERE RECEIVED THROUGH CHEQUES AS GIFTS FROM THE DONORS FROM THEIR NRE ACCOUNTS IN BANKS. THE A SSESSEE ALSO FILED TWO LETTERS ON ACCOUNT OF RECEIPT OF GIFTS FROM THE SAID NRE ACCOUNTS. ON THE BASIS OF INDEPENDENT ENQUIRIES CONDUCTED FROM B ANKS, THE A.O. DREW AN INFERENCE THAT EXPLANATION OFFERED BY THE ASSESS EE WAS NOT GENUINE. THE A.O. ALSO DID NOT RELY ON THE ALLEGED CERTIFICA TES ISSUED BY THE DONORS. IN SUCH CIRCUMSTANCES, THE A.O. REJECTED THE ASSESS EES CLAIM OF GIFT AND TREATED THE SUM OF ` 13.40 LAKHS AS THE ASSESSEES INCOME UNDISCLOSED SOURCES. ON APPEAL, THE COMMISSIONER (APPEALS), HO WEVER, DELETED THE ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 10 IMPUGNED ADDITION. ON APPEAL TO THE TRIBUNAL, THE T RIBUNAL OBSERVED THAT (41 SOT 118) :- (I) THERE IS NO RELATIONSHIP BETWEEN THE DONORS AN D DONE. ACTUALLY, DONORS ARE STRANGERS TO THE ASSESSEE. NO EVIDENCE IS FILED AS TO HOW THE TWO ARE KNOWN TO EACH OTHER. (II) THERE IS NO OCCASION FOR MAKING GIFT. (III) THERE IS NO EVIDENCE THAT THERE WAS ANY LOVE AND AFFECTION OR FRIENDSHIP BETWEEN THE DONORS AND DONE. (IV) THERE IS NO EVIDENCE THAT THERE WAS ANY BUSINE SS TRANSACTION BETWEEN THE DONORS AND THE ASSESSEE AND THEREFORE, IT COULD NOT BE BELIEVED THAT HOW A STRANGER WOULD PART AWAY HIS SA VINGS TO GIVE GIFTS TO ANY UNKNOWN PERSONS SACRIFICING HIS CHANCE S OF BETTERING HIS LIVING CONDITIONS WITH THAT MONEY. (V) THERE IS NO EVIDENCE THAT ASSESSEE OR HIS FAMIL Y MEMBERS HAS GIVEN GIFT TO THE MEMBERS OF DONORS FAMILY AT ANY T IME. (VI) IN FACT, THE TWO BELONGED TO DIFFERENT FAITHS/ RELIGION. THE ENTIRE TRANSACTION OF GIFT IS APPARENTLY UNUSUAL AS BEHAVI OUR OF THE DONORS IS QUEER. (VII) THE GIFTS ARE APPARENTLY BOGUS BECAUSE THEY H AVE BEEN GIVEN TO AN ASSESSEE OF MEANS AND HAVING MULTIPLE SOURCES OF IN COME. THE TRIBUNAL AFTER CONSIDERING ALL THE DECISIONS RE LIED ON BY THE PARTIES HAS HELD IN PARA 31 OF ITS ORDER AS UNDER:- 31. THUS, IN THE PRESENT CASE, WE HOLD THAT ASSESSE E HAS NOT BEEN ABLE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE D ONORS. BUT MORE IMPORTANT IS THE GENUINENESS OF THE TRANSACTION WHI CH WAS NOT ESTABLISHED. THE ASSESSING OFFICER HAD RIGHTLY TRE ATED THE SAME AS ASSESSEES INCOME AND THE LD. CIT(A) WAS NOT JUSTIF IED IN DELETING THE ADDITION ON THE REASONS WHICH WERE APPARENTLY EXTRA NEOUS. THE AUTHORITIES REFERRED TO ABOVE CLEARLY SUPPORT THE C ASE OF THE REVENUE, THEREFORE, ORDER OF THE LD. CIT(A) IS REVERSED AND THAT OF ASSESSING OFFICER IS RESTORED. 12. WHEREAS IN THE CASE BEFORE US, THE ASSESSEE FOR THE REASONS AS GIVEN IN PARA NO. 8 & 9 OF THIS ORDER HAS NOT ONLY PROVED THE IDENTITY, CAPACITY, SOURCE AND CREDITWORTHINESS OF THE DONOR BUT ALSO PROVED THE GENUINENESS OF THE TRANSACTION, RELATIONSHIP AND OC CASION OF THE GIFT, ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 11 THEREFORE, BOTH THE DECISIONS RELIED ON BY THE LD. D.R. ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . 13. IN THE ABSENCE OF ANY OTHER CONTRARY MATERIAL P LACED ON RECORD BY THE REVENUE AND KEEPING IN VIEW THE RATIO OF DECISI ON RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE, WE FOR THE REASONS AS MEN TIONED ABOVE HOLD THAT THE ASSESSEE HAS SATISFIED ALL THE INGREDIENTS OF SECTION 68 OF THE ACT AND ALSO PROVED THE GENUINENESS, RELATIONSHIP AND P URPOSE OF GIFT, THEREFORE, WE ARE INCLINED TO UPHOLD THE FINDINGS O F LD. CIT(A) IN HOLDING THAT THE GIFT WAS GENUINE AND IN DELETING THE ADDIT ION MADE BY THE A.O. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, RE JECTED. 14. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.20 11. SD/ - (T.R. SOOD) ACCOUNTANT MEMBER SD/ - (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 29.04.2011. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 35, MUMBA I 4. COMMISSIONER OF INCOME TAX, 25, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 853/M/2010 SHRI PRA SHANT P. DOSHI 12 1 DRAFT DICTATED ON 2 1 .4.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 2 5 .4.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/AP PROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DA TE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS