ITO, Jaipur V. SMT. SUMAN DEVI KHANDELWAL, Jaipur

ITA 976/JPR/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7786 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 09-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Income from undisclosed sources; Question of law; Corroborative evidences; Onus to prove
• Section: 133(6)

Judgement Text

ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 976/JP/2011 ASSESSMENT YEARS : 2001-02 PAN : AEDPK 5120 J THE ITO VS. SMT. SUMAN DEVI KHANDELWAL WARD- 4(2) 2/187, NEW VIDHYADHAR NAGAR JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAJESH OJHA ASSESSEE BY : SHRI MANISH AGARWAL DATE OF HEARING: 08-09-2014 DATE OF PRONOUNCEMENT: 26-09-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A)- II, JAIPUR DATED 17-08-2011 FOR THE ASS ESSMENT YEAR 2001-02 WHEREIN THE SOLITARY GROUND RAISED BY THE REVENUE. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 9,25,000/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED GIFT WITHOUT APPRECIATING THE FACTS OF THE CASE AND DEFICIENCIES POINTED OUT BY THE AO. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PROPRIETRESS OF BUSINESS DEALING IN COTTON CLOTH MANUFACTURING AND MANUFACTURE OF REFINED ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 2 LUBRICATING OIL. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, VARIOUS ADDITIONS HAVE BEEN MADE INCLUDING THE IMPUGNED GIF TS. SINCE WE ARE CONCERNED WITH THE ISSUE OF GIFTS ONLY, THEREFORE, THE FACTS IN THIS BEHALF ARE THAT THE ASSESSEE RECEIVED THE FOLLOWING GIFTS AS O BSERVED BY THE AO (I) SHRI PRAMOD GARG RS. 3.00 LACS (II) SHRI VINOD GARG RS. 2.00 LACS (III) SMT. BABITA RS. 1.25 LACS (IV) SMT. VARSHA BADAYA RS. 3.00 LACS THE AO ASKED THE ASSESSEE TO PROVE THE RELATIONSHIP WITH THE DONORS, GENUINENESS OF THE GIFTS AND CREDITWORTHINESS OF TH E DONORS. THE ASSESSEE VIDE LETTER DATED 17-09-2003 REPLIED THAT SMT. VARS HA BADAYA WAS THE NIECE OF THE ASSESSEE AND REMAINING DONORS WERE THE CHILD REN OF THE ACCOUNTANT WORKING WITH THE ASSESSEE WHICH WERE CLAIMED TO BE DHARAM BHAI AND DHARAM BAHAN OF THE ASSESSEE. THE ASSESSEE FILED CO PIES OF BANK ACCOUNTS, CONFIRMATION OF GIFTS AND INCOME TAX RECORD. THE AO FOUND THAT BANK ACCOUNTS REFLECTED THAT THE GIFTS WERE IMMEDIATELY PRECEDED BY DEPOSITING THE AMOUNT IN DONORS RESPECTIVE ACCOUNTS. 2.2 THE AO ASKED THE ASSESSEE TO PRODUCE THE DONORS AND PROVE THEIR CREDITWORTHINESS. THE DONORS WERE PRODUCED WHO CONF IRMED GIVING OF THE ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 3 GIFTS AND THEIR STATEMENTS WERE ALSO RECORDED. ACC ORDING TO THE AO, THERE WERE CONTRADICTION IN THE STATEMENTS OF DONORS VIS- A-VIS THE TRANSACTIONS OF THE GIFTS CLAIMED BY THE ASSESSEE. THE OBSERVATION CAN BE SUMMED UP AS UNDER:- (I) SMT. VARSHA BADAYA STATED THAT THE GIFTED AMOUN T WAS RECEIVED BY HER FROM FATHER WHEREAS THE AO FOUND TH AT THE GIFTED AMOUNT WAS TRANSFERRED FROM THE ACCOUNT OF T HE ASSESSEE. (II) ALL THE DONORS WERE CREDITORS OF THE ASSESSEE EARNING INTEREST FROM THESE LOANS. AFTER RECEIVING THE LOAN S BACK, THE IMPUGNED GIFTS WERE MADE. (III) ACCORDING TO THE AO, THE INTEREST INCOME EARN ED BY DONORS WAS A MAJOR SOURCE OF INCOME TO TAKE CARE OF THEIR FAMILIES. (IV) THE AO ASKED THE DONORS AS TO WHY THEY GIFTED THEIR ENTIRE CAPITAL PRACTICALLY WHEN THEY WERE EARNING H ANDSOME INTEREST THEREON WHICH WAS A MAJOR SOURCE OF THEIR INCOME. HOWEVER, NO SATISFACTORY REPLY WAS GIVEN BY THEM. (V) THE COPIES OF DECLARATION OF GIFTS AS PROVIDED DID NOT CONTAIN THE SIGNATURE OF ANY WITNESSES. CONSEQUENTL Y, ACCORDING TO THE AO, THEY WERE NOT THE VALID GIFT DEEDS. (VI) THERE WAS NO OCCASION OR CEREMONY WHICH OCCASI ONED THE GIVING OF THESE GIFTS TO A RICH DONEE WHO WAS U NRELATED WITH ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 4 THREE DONORS AND A NIECE WHICH COULD NOT ESTABLISH EVEN A WARM RELATIONSHIP. 2.3 THE AO FURTHER FOUND FROM THE STATEMENTS THAT T HE GIFTS WERE NOT MADE VOLUNTARILY BY FOLLOWING OBSERVATIONS. E..(A) SHRI VINOD GARG AND SHRI PRAMOD GARG (DONORS) BOTH GAVE THE ALLEGED GIFTS AS PER THE WIS H OF THEIR MOTHER. AS SUCH THE GIFTS MADE BY THESE TWO D ONORS CANNOT BE SAID TO HAVE BEEN VOLUNTARILY. (B) SMT. VARSHA BADAYA STATED TO MAKE THIS GIFT TO ASSESSEE BECAUSE THE ASSESSEE REQUIRED THE MONEY AN D SHE BEING ASSESSEE'S NIECE HELPED HER IN DIFFICULT TIMES. SO IT CAN BE VERY WELL CONCLUDED THAT THIS GIFT WAS ALSO NOT MADE VOLUNTARILY AND WAS MADE AS PER ASSESSEE'S WISH. (C ) SMT. BABITA AHIR STATED THAT SHE MADE THE ALLE GED GIFTS WITH THE INTENTIONS OF GETTING BIGGER RECIPRO CAL GIFT FROM ASSESSEE. THIS SHOWS THAT ASSESSEE MUST HAVE L URED HER FOR MAKING THE ALLEGED GIFT. THUS SHRI VINOD GARG AND SHRI PRAMOD GARG MADE THE GIFTS NOT BY OWN VOLITION BUT AS PER THE WISH OF THEIR MOTHER IN LIE U OF THE SERVICES RENDERED BY THE ASSESSEE TO THEIR MOTHER. NATURE OF SERVICE S HAS NOWHERE SPECIFIED. THE AO WAS OF THE ALTERNATE VIEW THAT SERVICES REND ERED BY THE ASSESSEE TO THEIR MOTHER FELL UNDER THE INCLUSIVE MEANING OF MONEYS WORTH. THUS THERE WAS QUID PRO QUO. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 5 2.4 SMT. VARSHA BADAYA HAD ALSO MADE THE IMPUGNED G IFT IN CONSIDERATION OF SOLVING HER FAMILY PROBLEMS AND RENDERING SERVIC ES. 2.5 SMT. BABITA AHIR STATED THAT THE GIFT WAS MADE IN LIEU OF EXPECTATION OF FUTURE RECIPROCAL GIFTS FROM THE ASSESSEE. 2.6 THE DONORS DID NOT KNOW THE ASSESSEE'S EXACT AD DRESS TO SUPPORT THEIR STATEMENT THAT THEY WERE FREQUENTLY MEETING WITH TH E ASSESSEE ON FESTIVAL TIMES AND ON SOCIAL CEREMONIES. BESIDES, THEY COULD NOT GIVE DETAILS OF THEIR VISIT AND FREQUENCY OF MEETING TO THE RESIDENCE OF THE ASSESSEE. 2.7 THE AO ON THE BASIS OF VARIOUS DETAILED OBSERVA TIONS INCLUDING THE ABOVE GIST OF OBSERVATIONS CAME TO CONCLUSION THAT THERE WAS NEITHER ANY INTIMACY BETWEEN THE ASSESSEE AND THESE DONORS WHIC H WAS ESSENTIAL PART OF THE ACTIVITY AS PER THEIR STATEMENTS NOR THE DONORS COULD ESTABLISH NATURAL LOVE AND AFFECTION . THE DONORS DID NOT PROVE THE R ELATIONSHIP AS CLAIMED WITH THE ASSESSEE AND GAVE NO DETAILS AS TO HOW THE Y MET WITH THE ASSESSEE. THE DONORS ALSO ACCEPTED THAT THEY DO NOT HAVE CURR ENT TOUCH OR CONTACT WITH THE ASSESSEE BY TELEPHONE OR OTHERWISE. 2.8 SMT. VARSHA BADYA HAD STATED THAT ACCORDING TO HER MEMORY SHE HAD GIVEN ONLY ONE GIFT OF CLOTH ABOUT RS. 2,00 0/- TO HER BROTHER ON HIS BIRTHDAY AND TOO NOTING WAS GIVEN TO ANY OTHER NEAR RELATIVES DURING THE ENTIRE LIFE TIME. SIMILARLY, SHRI PRAMOD GARG, VIN OD GARG AND SMT. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 6 BABITAAHIR DENIED OF MAKING ANY GIFT TO ANYBODY ELS E DURING THEIR LIFE TIME. THE ASSESSEE IN STATEMENT THOUGH ACCEPTED THAT SHE HAD NOT GIFTED ANYTHING TO ANYBODY IN HER LIFE TIME WHEREAS SMT. VARSHA BAD AYA HAD STATED THAT SHE HAD RECEIVED 11,000/- FROM THE ASSESSEE IN THE YEAR 19990. THE AO FOUND VARIOUS INCONSISTENCIES ON THE FACTS OF THE CASE AN D HELD THAT DONORS STATEMENT WERE SKETCHY, CONTRADICTORY AND NOT RELIA BLE. THE GIFTS WERE FURTHER QUESTIONABLE AS THE GIFTED AMOUNTS WERE DEP OSITED JUST PRIOR TO GIFT. 2.9 THE AO ASKED THE DONORS TO FURNISH THE SUPPORTI VE CORROBORATIVE EVIDENCES TO PROVE THEIR CREDITWORTHINESS REGARDING HAVING KEPT THE MONEY WITH THEM. THE DONORS PROMISED TO FURNISH THE SAME, HOWEVER AO AT PAGE 8 IN PARA O OF HIS ORDER HAS GIVEN FINDING OF FACT THAT TILL LAST DATE OF HEARING NO SUCH EVIDENCE WAS PRODUCED EITHER BY THE DONORS OR BY THE ASSESSEE. SMT. BABITA AHIR DEPOSED THAT HER FAMILY WAS ENTIRELY DE PENDENT ON THE ASSESSEE. THIS PROVES THE FACT THAT ACTUALLY THE INTEREST AMO UNT EARNED FROM THE SAID DEPOSIT WAS A MAJOR SOURCE OF INCOME TO SUPPORT HER FAMILY. IT WAS QUITE INCONGRUOUS THAT WHEN HER FAMILY IS ENTIRELY DEPEN DENT ON HER INTEREST INCOME WHEY THEY GIFTED AWAY SUCH A HUGE AMOUNT OF HER CAPITAL TO THE ASSESSEE WHICH WAS AGAINST NORMAL HUMAN CONDUCT. TH E ASSESSEE AND SMT. BABITA AHIR BOTH CLAIMED TO KNOW EACH OTHER VERY WE LL BUT SMT. BABITA AHIR COULD NOT GIVE THE DETAILS OF THE RESIDENTIAL ADDRE SS OF THE ASSESSEE DONEE. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 7 FURTHER MORE, SHE STATED THAT THE ASSESSEE IS A HOU SEWIFE WHERE THE FACT OF THE MATTER AND THE STATEMENT OF THE ASSESSEE IS TO THE EFFECT THAT SHE IS A BUSINESS-WOMAN AND PROPRIETRESS OF THE CONCERNS. T HIS DEMONSTRATES THAT THERE WAS TOTAL CONTRADICTION IN THE STATEMENTS BE TWEEN THE DONOR AND THE DONEE AND THEIR CLAIMS ABOUT THE MUTUAL RELATIONSHI PS WERE FOUND TO BE NON- EXISTENT. 2.10 THE DONORS HAD LIMITED INCOME AND THE INTEREST INCOME WAS THEIR MAJOR SOURCE WHICH THEY PARTED WAY IN FAVOUR A PER SON WHO HAD PRACTICALLY NO DISCERNABLE RELATIONSHIP AND DONOR WAS DISTINCT LY RICHER THAN THE DONEES. ALL THESE OBSERVATIONS AND OTHER DETAILS ARE CITED BY THE AO IN HIS BODY OF THE ORDER AT GREAT LENGTH. THE AO CONCLUDED HIS FIN DINGS AND ADDED THE AMOUNT BY FOLLOWING OBSERVATIONS 9. IT WAS ALSO OBSERVED THAT IN ALL CASES THE DEPOSIT SLIPS WERE FOUND TO BE FILLED IN BY SH.R.N GARG.WHO IS TH E ACCOUNTANT OF THE ASSESSEE. THOUGH ALL OF THE ALLEGED DONORS H AVE STATED TO RECEIVE BACK THEIR OWN MONEY EITHER FROM ASSESSEE O R FROM HER HUSBAND AND LATER GIFT THAT AMOUNT TO ASSESSEE, BUT THEY COULD NOT BE ABLE TO FURNISH THE DATES, WHEN THE SO CAL LED MONEY WAS FIRSTLY ADVANCED BY THEM TO ASSESSEE OR HER HUSBAND OR TO ANY OTHER PERSON. BESIDES THIS THEIR ACCOUNTS ALSO DOES NOT SHOW THEIR CAPACITY TO ADVANCE SUCH GIFTS. ON BEING ASKE D THE A.R. COULD NOT ADDUCED ANY OTHER INFORMATION EVIDENCE. 10. FROM THE STUDY OF STATEMENTS OF ALL THE DONOR S AND DONEE AND THE DISCREPANCIES / FACTS AS NOTED ABOVE, IT CA N BE CONCLUDED THAT NEITHER THE ASSESSEE TOT THE DONORS ARE VERY INTIMATE WITH EACH OTHER. THUS A RELATIONSHIP INTIM ATE ENOUGH TO GIVE GIFTS OF SUCH LARGE AMOUNTS TO ASSESSEE DOE S NOT EXIST. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 8 FURTHER THERE ARE SO MANY POINTS OF CONTRADICTION I N THE STATEMENTS OF DONORS AND DONEE. APART FROM THESE AS NARRATED ABOVE THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS OF THE ALLEGED DONORS. THE ASSESSE E HAS ALSO NOT BEEN ABLE TO PROVE THE GENUINENESS OF THE TRANS ACTION. CONSIDERING CIRCUMSTANCES OF THE CASE AND ALL THE A BOVE NARRATED FACTS AND THE FACT THAT ASSESSEE HAS NOT B EEN ABLE TO BRING ON RECORD ANY THING CONTRARY, I HOLD THESE G IFTS TO BE BOGUS AND ADD THE SAME IN TO THE TOTAL INCOME OF TH E ASSESSEE U/S 68,SINCE SHE HAS FAILED TO PROVE THE CREDITWORT HINESS AND GENUINENESS OF THE TRANSACTION OF ALL THE GIFTS. 2.11 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHERE THE CONTENTIONS MADE BEFORE THE AO WERE REITE RATED. IN THE PROCESS OF GIVING RELIEF TO THE ASSESSEE, SOME OF THE FINDINGS OF THE LD. CIT(A) CAN BE SUMMARIZED AS UNDER:- (I) THE AO HAS UNNECESSARILY EMPHASIZED THE FACT OF THE CREDITWORTHINESS. (II) THE AO TOOK ADVERSE INFERENCE ABOUT THE SOURC E, HOUSE HOLD EXPENSES, OCCASION OF GIFT, INTIMACY BETWEEN T HE DONOR AND THE DONEE AND REGISTRATION OF GIFT DEEDS WERE NOT C ONCLUSIVE TO ESTABLISH THE IMPUGNED GIFTS. THE RELIANCE WAS PLAC ED IN THE CASE OF ITO VS. RAMESH VORA (2010 TIOL-650-ITAT- MU MBAI) . (III) BY FURNISHING THE PHOTOSTAT COPY OF THE BANK STATEMENTS, INCOME TAX ACKNOWLEDGEMENT, BALANCE SHEET, CAPITAL ACCOUNT AND COMPUTATION OF INCOME OF THE DONORS AND DECLARA TION OF GIFTS, THE ASSESSEE HAD DISCHARGED HER ONUS. THE AO S VARIOUS OBSERVATIONS ARE FOUND BY THE LD. CIT(A) INSUFFICIE NT AND IT WAS HELD THAT THE AO HAD NO BASIS TO CONCLUDE THAT THE AMOUNT RECEIVED BY WAY OF LOAN REPRESENTED THE UNACCOUNTED INCOME OF THE ASSESSEE AND IT DID NOT BELONG TO THE DONOR. (IV) FURTHER RELIANCE WAS PLACED ON HON'BLE JURISDI CTIONAL HIGH COURT DECISION IN THE CASE CIT VS. PADAM SINGH CHOUHAN, ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 9 315 ITR 433 FOR THE PROPOSITION THAT BLOOD RELATION WAS NOT REQUIRED BETWEEN THE DONOR AND THE DONEE TO ESTABLI SH THE GENUINENESS OF THE GIFTS. THE GIFTS WERE MADE OUT OF NATURAL LOVE AND AFFECTION WHICH BY ITSELF WAS VALID ENOUG H CONSIDERATION TO ESTABLISH THE GENUINENESS OF THE GIFTS. THE LD. CIT(A) DELETED THE IMPUGNED ADDITION BY FOL LOWING CONCLUSION. RESPECTFULLY FOLLOWING TO ABOVE DECISION AND FACT S OF THE PRESENT CASE, I DIRECT THE AO TO DELETE THE ADDITIO N OF RS 9,25,000/- MADE ON ACCOUNT OF UNEXPLAINED GIFTS SINCE THE APPE LLANT HAD SUBMITTED SUFFICIENT DOCUMENTARY EVIDENCES TO DISCH ARGE THE ONUS THAT LAY ON HER. THE ADDITION MADE BY THE AO ON ACCOUNT OF HYPOTHETICAL OBSERVATION COULD NOT BE SUSTAINED. ACCORDINGLY THI S GROUND OF APPEAL IN ALLOWED. 2.12 AGGRIEVED, THE REVENUE IS BEFORE US. LD. DR VE HEMENTLY ARGUED THAT IT IS A PECULIAR CASE OF REVERSE GIFTS WHERE THE DO NEE IS A VERY RICH PERSON AND THE DONORS ARE THE POOR PERSONS. THE THREE DONORS ARE THE CHILDREN OF THE DONEES ACCOUNTANT AND ONE CLAIMS TO BE THE DISTANT NIECE OF DONEE. THE AO BY DEMONSTRATIVE OBSERVATION HAS DEMOLISHED THE CLA IM OF THE WARM RELATIONSHIP AS CLAIMED BY THE DONORS AND ASSESSEE. THE DONORS HAVE NEVER BEEN ABLE TO TELL THE EXACT ADDRESS OF THE ASSESSEE . THOUGH THE DONEE IS A BUSINESS WOMAN YET THE SAME DONEE CLAIMS THAT SHE I S A HOUSEWIFE. IN NORMAL CIRCUMSTANCES, THE ASSESSEE BEING A RICH LAD Y OUGHT TO HAVE PROVIDED ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 10 GIFT TO HER NIECE AND OTHER PERSONS OUT OF NATURAL LOVE AND AFFECTION WHEREAS THERE IS A STRANGE SITUATION IN THIS CASE INASMUCH AS POOR PERSONS ARE GIVING HUGE AMOUNTS OF GIFTS TO A RICH PERSON WHICH PRACTI CALLY WIPES OUT THEIR EARNING SOURCE. IT IS IRONICAL THAT MONEY WAS NOT LYING IDLE WITH THE DONORS, THEY WERE EARNING INTEREST THEREON AND UTILIZING TH E EARNED INTEREST TOWARDS MEETING OUT THEIR HOUSE HOLD EXPENSES AND TAKING CA RE OF THEIR FAMILIES WHICH THEY CLAIMED TO BE DEPENDENT ON THEM. THESE F ACTS, CIRCUMSTANCES OF IMPROBABILITIES, HUMAN PRUDENCE AND PROBABILITIES T HAT A MIDDLE CLASS PERSON WILL SACRIFICE NOT ONLY THE INCOME BUT ALSO THEIR R ESPECTIVE CAPITAL BY MAKING IMPUGNED GIFTS TO A RICH PERSON MORE SO WHEN THEY D O NOT HAVE ANY PROVEN OSTENSIBLE RELATIONSHIP. A PAPER TRAIL HAS BEEN CRE ATED TO GIVE A CAMOUFLAGE OR FAADE TO TRANSACTION TO SOMEHOW GIVE AN IMPRESS ION OF GENUINENESS TO DUBIOUS GIFT TRANSACTIONS. 2.13 RELIANCE IS PLACED IN THE CASE OF SUMATI DAYA L VS. CIT, 214 ITR 801 WHEREIN IT HAS BEEN HELD THAT IT IS THE BURDEN OF P ERSON CLAIMING THE ADVANTAGE TO PROVE THE TRANSACTION AT THE TOUCH STO NE OF HUMAN CONDUCT, SURROUNDING CIRCUMSTANCES AND PREPONDERANCE OF PROB ABILITIES. THE PERTINENT OBSERVATIONS MADE BY THE AO IN THIS CASE DEMONSTRAT E THAT ALLEGED GIFTS DEFY THE NORMAL CONDUCT, SURROUNDING CIRCUMSTANCES INDIC ATE THAT THESE GIFTS ARE NOT GENUINE AND BY PREPONDERANCE OF PROBABILITIES I T CANNOT BE HELD THAT GIFTS ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 11 ARE GENUINE. IN FIRST APPEAL, THE PROFOUND CONSISTE NCIES RECORDED BY THE AO ARE BRUSHED ASIDE BY THE LD. CIT(A) IN A SUMMARY MA NNER. LD. DR REFERRED TO THE AOS OBSERVATION AT PARA O OF PAGE 8 WHERE THE DONORS PROMISED TO FILE THE CORROBORATIVE EVIDENCE ABOUT THEIR CREDITW ORTHINESS BUT THEY FAILED TO COMPLY WITH THE SAME. THUS THE PROMISED EVIDENCE OF CREDITWORTHINESS IN REAL TERMS REMAINS MISSING FROM THE RECORD. THIS FA CT HAS BEEN CONVENIENTLY IGNORED BY THE LD. CIT(A). 2.14 THE LD. DR FURTHER RELIED ON THE HON'BLE SUPR EME COURT JUDGEMENT IN THE CASE OF CIT VS. P. MOHANKALA, 291 ITR 278 FOR THE PROPOSITION THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE GIFTS R ECEIVED BY THE IT ARE GENUINE AND CONFORM TO THE NORMAL HUMAN CONDUCT AND ATTEND ING CIRCUMSTANCES AND IF THAT BURDEN IS NOT DISCHARGED THEN THE GIFT CAN BE ADDED TO THE INCOME OF THE ASSESSEE. THE HON'BLE SUPREME COURT HAS ALSO R ELIED ON THE CASE OF SUMIT DAYAL VS. CIT (SUPRA) WHEREIN THE RELEVANT FI NDING OF HON'BLE SUPREME COURT IN THE BACKDROP OF THE CASE OF SUMIT DAYAL VS. CIT (SUPRA) IS AS UNDER:- THE ASSESSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTE NDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY TH E SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT O F AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSES SEES. NO ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 12 SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. AL L THE DECISIONS CITED AND REFERRED TO HEREINABOVE ARE REQ UIRED TO BE APPRECIATED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI DAYAL [1995] SUPP 2 SCC 453 FURTHER RELIANCE IS PLACED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SUBHASH CHAND VERMA VS. CIT, 311 ITR 2 39 WHEREIN IT HAS BEEN HELD THAT :- THE ASSESSEE IN HIS CAPITAL ACCOUNT CLAIMED A SUM TO BE A GIFT RECEIVED FROM A NON-RESIDENT INDIAN FRIEND. THE ASS ESSING OFFICER REFUSED TO ACCEPT THE GIFT AS GENUINE AS CLAIMED BY THE ASSESSEE AND INCLUDED ITS VALUE IN THE ASSESSMENT FOR THE ASSESS MENT YEAR 1997-98. ON APPEAL, THE COMMISSIONER (APPEALS) DELETED THE A DDITIONS HOLDING THAT THE ASSESSEE WAS AWARE OF THE NAMES OF THE WIF E AND CHILDREN OF THE DONOR, HIS RELATIVE AND FRIENDS IN INDIA. THE T RIBUNAL REVERSED THE ORDER AND HELD THAT THE BURDEN OF PROOF TO ESTABLIS H THE IDENTITY OF THE CREDITOR, HIS CREDITWORTHINESS AND GENUINENESS OF T HE CREDIT WAS UPON THE ASSESSEE. IT FURTHER HELD THAT THE OCCASION FOR MAKING THE GIFT COULD NOT BE ESTABLISHED NOR WAS ANY DOCUMENT PROVED ON R ECORD SHOWING THAT THE GIFT WAS MADE FOR THE TREATMENT OF THE ASS ESSEE ON ACCOUNT OF HIS ILL-HEALTH. ON APPEAL CONTENDING THAT ONCE THE IDENTITY OF THE DONOR WAS ESTABLISHED A GIFT COULD NOT BE REJECTED MERELY ON THE GROUND THAT THERE WAS NO OCCASION TO MAKE THE GIFT :- _ HELD, _ DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD RECO RDED THAT THERE WAS NO OCCASION FOR THE DONOR TO MAKE THE GIF T AND THE PLEA OF GIFT FOR THE TREATMENT OF THE ASSESSEE ON ACCOUNT O F HIS ILL HEALTH HAD REMAINED UNSUBSTANTIATED. THE TRIBUNAL HAD FURTHER CONCLUDED THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE FINANCIAL CAPACITY OF THE DONOR TO MAKE THE GIFT AFTER ANALYSING THE BANK STATEMENT PLACED ON RECORD. MERE IDENTIFICATION OF THE DONOR OR RECEIPT OF THE AMOUNT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO SATISFY THE REQUIREMENT OF A GENUINE GIFT ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 13 2.15 THE LD. DR SUBMITTED THAT THE LD. CIT(A) FAILE D TO APPRECIATE THE FACTS OF THE ASSESSEE'S CASE AND THE CONTRADICTIONS AND I NCONSISTENCIES NARRATED BY THE AO HAVE NOT ONLY BEEN REJECTED; RATHER THEY HAV E BEEN CONSIDERED AS ASSESSEES JUSTIFICATIONS FOR UPHOLDING THE GIFTS. THE CRUCIAL FACT THAT THE ASSESSEE AND DONORS PROMISED THE AO TO PROVIDE FURT HER EVIDENCE OF MATERIAL CREDITWORTHINESS OF POSSESSION OF MONEYS IN THE INT ERVENING PERIOD WHICH HAS NOT BEEN COMPLIED WIH. THUS ALL THE ABOVE FACTS AND CIRCUMSTANCES DEMONSTRATE THAT THE ASSESSEE HAS FAILED TO DISCHAR GE HER ONUS TO DEMONSTRATE THE GIFTS TO BE GENUINE AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. P. MOHANKALA (SUPRA). 2.16 THE LD. CIT(A) HAS ALLOWED HIMSELF TO BE CARR IED AWAY BY SPECIOUS ARGUMENTS OF THE ASSESSEE THAT A PAPER TRAIL WAS R ELIABLE AND THE GIFTS WERE THROUGH BANKING TRANSACTIONS. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SUBHASH CHAND VERMA VS. CIT (SUPRA) HAS CLEARLY HELD THAT MERE IDENTIFICATION OF THE DONORS AND RECEIPT OF THE GI FT THROUGH BANKING CHANNEL WITH PAPER TRAIL IS NOT SUFFICIENT TO SATISFY THE R EQUIREMENTS OF A GENUINE GIFT. THUS LOOKING AT THE ASSESSEE'S CASE IN THE BACKDROP OF HON'BLE SUPREME JUDGEMENT IN THE CASE OF CIT VS. P. MOHANKALA (SUPR A) AND THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SUBHASH CHAND VERMA VS. CIT (SUPRA), THE FACTS OF THE CASE FALL WITHIN THE PARA METERS LAID DOWN BY THESE ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 14 AUTHORITIES. LD. CIT(A) BY SUMMARY OBSERVATION HAS HELD THE AOS INQUIRIES AND OBSERVATIONS AS WRONG BY LABELING THEM TO BE O VEREMPHASIZING, IRRELEVANT, IMMATERIAL, WITHOUT RECORDING ANY COGEN T REASONS. LD. DR THUS CONTENDS THAT GIFTS ARE IN FACT COLORABLE TRANSACTI ONS WHICH HAVE BEEN RIGHTLY TAXED AS INCOME BY AO. 2.17 THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND REITERATED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A) AND ALSO RELIED ON THE CASE OF CIT VS. PADAM SINGH CHOUHAN, 215 CTR 303 (RAJ.) WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER:- 4. IN OUR VIEW, THERE IS NO LEGAL BASIS TO ASSUME , THAT TO RECOGNIZE THE GIFT TO BE GENUINE, THERE SHOULD B E ANY BLOOD RELATIONSHIP, OR ANY CLOSE RELATIONSHIP, BETWEEN TH E DONOR AND THE DONEE. INSTANCES ARE NOT RARE, WHEN EVEN STRANG ERS MAKE GIFTS OUT OF VERY MANY CONSIDERATIONS, INCLUDING AR ISING OUT OF LOVE, AFFECTION AND SENTIMENTS. IN OUR VIEW WHEN THE ASSESSEE HAS PRODUCED THE COPI ES OF THE GIFT DEEDS AND THE AFFIDAVITS OF THE DONORS, IN THE ABSENCE OF ANYTHING TO SHOW THAT THE ACT OF THE ASSESSEE IN CL AIMING GIFT, WAS AN ACT BY OF MONEY LAUNDERING, SIMPLY BECAUSE H E HAPPENS TO RECEIVE GIFTS, IT CANNOT BE SAID THAT, THAT IS R EQUIRED TO BE ADDED IN HIS INCOME. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHANWAR LAL SHARMA (TAX APPEAL NO. 713 OF 2102 DATED 21-02-2013) IS AL SO RELIED WHICH UPHELD THE RELEVANT ORDER OF THE TRIBUNAL BY FOLLOWING OBS ERVATION. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 15 11. IN THE INSTANCE CASE, AS CAN BE NOTED FROM THE FINDINGS OF THE TRIBUNAL, ASSESSING OFFICER HAD NOT SUMMONED ANY OF THE DONORS. HOWEVER, IT HAD ISSUED THE LETTE RS U/S 133(6) OF THE ACT. ASSESSING OFFICER HAD ALSO CALLED FOR C ONFIRMATION LETTERS WHICH WERE RECEIVED BY IT. THE ASSESSEE ALS O HAD FURNISHED ALL OTHER REQUISITE DOCUMENTS LIKE COPIES OF DD, GIFT DEED, COPY OF PAN CARDS, COPY OF ACKNOWLEDGEMENT OF RETURNS OF THE DONORS ALONGWITH COMPUTATION AND BALANCE SHE ET. IT ALSO FOUND THAT ALL THE DONORS WERE ASSESSED TO TAX EXCE PT ONE WHO WAS BASED AT USA. ON THUS HAVING FOUND IDENTITY OF THE DONORS SO ALSO CREDITWORTHINESS AND GENUINENESS OF THE TRA NSACTION HAVING BEEN ESTABLISHED. TRIBUNAL DID NOT ACCEPT TH E SAY OF THE REVENUE THAT THE GIFTS WERE BOGUS. 2.18 THE LD. DR IN REJOINDER CONTENDS THAT IN CIT V S. PADAM SINGH CHOUHAN (SUPRA) CASE, FACT OF NATURAL LOVE AND AFFE CTION WAS DEMONSTRATED BY THE ASSESSEE WHEREAS IN THE ASSESSEE'S CASE THE ASSESSEE HAS NOT DEMONSTRATED THE FACTS ABOUT NATURAL LOVE AND AFFEC TION. BEFORE ITAT ALSO THE AOS ADVERSE INFERENCES HAVE NOT BEEN COUNTERED BY THE ASSESSEE COUNSEL BY ANY EFFECTIVE ARGUMENTS EXCEPT REITERATING THE A RGUMENTS AND WRITTEN SUBMISSION ON SAME LINES. 2.19 APROPOS HON'BLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. BHANWAR LAL SHARMA (SUPRA), LD. DR CONTENDS THAT IN THIS CASE, IT HAS BEEN ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 16 ONLY HELD THAT THERE WAS NO PERVERSITY IN THE ITAT ORDER. THEREFORE, NO QUESTION OF LAW AROSE BY FOLLOWING OBSERVATIONS. 14. WE ARE CONSCIOUS THAT VARIOUS ASPECTS DISCUSS ED BY BOTH THE ASSESSING OFFICER AND CIT (A) WERE CAUS ING CONCERN TO THOSE AUTHORITIES. GIFTS TO ASSESSEE BY 24 DIFFERENT UNRELATED PERSONS, RESIDING AT DIFFERENT PLACES IN MUMBAI ON THE SAME DAY, WITH THE DRAFT OF HUGE SUM FROM THE S AME BANK AND DEPOSIT WITHIN A SPAN OF 2 TO 3 DAYS WOULD RAIS E THE EYEBROWS. THEIR NON-REPLY OF LETTER U/S 133(6) AND NON- APPEARANCE OF ASSESSEE PERSONALLY MAY FURTHER STREN GTHEN SUCH SUSPICION COUPLED WITH DIFFERENCE IN ECONOMIC STRAT A OF ASSESSEE AND THAT OF THESE PERSONS. YET, THESE QUES TIONS DO NOT CROSS THE REALM OF SUSPICION TO ENTER THE SPHERE OF PROOF, LET ALONE THE ARENA OF CONVINCING EVIDENCE.. TRIBUNAL C OULD WITH THE AID OF COGENT REASONINGS CONVINCE US WHY SUCH M ATERIAL PROOF WAS SUFFICIENT TO ACCEPT THE VERSION OF ASSES SEE AND UPHOLD HIS REQUEST TO DELETE THE ADDITION OF ENTIRE AMOUNT FROM THE COMPUTATION OF HIS INCOME. 15. WE FIND NO PERVERSITY IN SUCH CONCLUSION SO AS TO HOLD THAT THIS GIVES RISE TO ANY QUESTION OF LAW MU CH-LESS ANY SUBSTANTIAL QUESTION OF LAW. THEREFORE, THIS JUDGMENT HAS NO FORCE AS A BINDING PRECEDENT BEFORE US AS PECULIAR FACTS ARE INVOLVED IN THAT CASE. 2.20 IT IS VEHEMENTLY COUNTERED BY THE LD. DR THAT THE ASSESSEE'S STORY ABOUT GIFTS IS FULL OF LATCHES, INCONSISTENCIES IN THE STATEMENTS AND ULTIMATELY NON-PRODUCTION OF THE PROMISED EVIDENCE TO DEMONSTR ATE MATERIAL CREDITWORTHINESS OF THE DONORS. ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 17 2.21 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LD. DR THAT THE AO HAS DEMONSTRATIVELY NARRATED THE INCONSISTENCIES , CONTRADICTIONS IN THE STATEMENTS AND IMPROBABILITIES IN THE IMPUGNED TRAN SACTION OF GIFTS. MERE IDENTITY OF DONORS AND PAPER TRAIL CANNOT BE THE CO NCLUSIVE FACTOR WHILE ACCEPTING THE GIFTS AS GENUINE. FOR THIS PURPOSE, W E FIND SUPPORT FROM THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SUBHASH CHAND VERMA VS. CIT (SUPRA). 2.22 APROPOS BURDEN OF PROOF, WE FIND THAT THE ASSE SSEE FAILED TO DISCHARGE THE ONUS TO EXPLAIN THE GENUINENESS OF THE GIFTS WHICH THE AO HAD RIGHT / POWER TO OBJECTIVELY EXAMINE AND IT CANNOT BE SUBST ITUTED MERELY BY A PAPER TRAIL. THE HON'BLE APEX COURT JUDGMENT IN THE CASE OF CIT VS. P. MOHANKALA (SUPRA) IS APPLICABLE ON THIS ASPECT. 2.23 APROPOS, THE HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF SUMIT DAYAL VS. CIT (SUPRA), APART FROM THE APPLICABILITY OF OTHER JUDGEMENTS, THE IMPUGNED GIFT TRANSACTIONS ARE RIDDLED WITH IMPROBA BILITIES AND DEFY LOGIC OF NORMAL HUMAN NATURE AND CONDUCT IN THE GIVEN CIRCU MSTANCES AND FACTS OF THE CASE. THUS THE GIFTS IN QUESTION SUFFER FROM IM PROBABILITIES WHICH CANNOT BE HELD AS NORMAL HUMAN CONDUCT AND IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE LAWS, WE HOLD THAT THE AO HAD RIGHTLY HELD THESE ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 18 GIFTS TO BE NON-GENUINE AND TAXED AS INCOME. IN VIE W OF FACTS, CIRCUMSTANCES, ARGUMENTS AND CASE LAWS, WE REVERSE THE ORDER OF TH E LD. CIT(A) AND UPHOLD THE ORDER OF THE AO. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26- 09-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 26 TH SEPT 2014 *MISHRA COPY FORWARDED TO:- 1. THE ITO , WARD- 4(2), JAIPUR 2. SMT. SUMAN DEVI KHANDELWAL, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 970/JP/2011) AR ITAT, JAIPUR ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 19 ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 20 ITA NO. 976//JP/2012 ITO VS. SMT.SUMAN DEVI KHANDELWAL 21