2004 (9) TMI 576 - AT - Income Tax

Summary

Issues Involved:
1. Re-opening of assessment under section 147.
2. Addition of Rs. 1,15,000 made to the declared income on the ground of unexplained gift.
3. Service of notice under section 148.
4. Genuineness of the gift and the donor's capacity.

Detailed Analysis:

1. Re-opening of Assessment under Section 147:
The assessee disputed the re-opening of the assessment under section 147, arguing that the Assessing Officer issued the notice without proper application of mind and merely followed directions from CIT, Rohtak. The assessee contended that the notice was based on a statement from Shri Subhash Sethi, which was not authenticated. The Tribunal held that the Assessing Officer had recorded reasons before issuing the notice and had obtained the necessary approval. The sufficiency or adequacy of the material could not be questioned, referencing the judgment of the Hon'ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34.

2. Addition of Rs. 1,15,000 on the Ground of Unexplained Gift:
The assessee received Rs. 1 lakh by cheque from an NRE account, allegedly as a gift from Shri Subhash Sethi. The Assessing Officer found that the donor had denied making any gifts and stated that the funds in the NRE account were locally managed. The Tribunal noted that the assessee failed to produce substantive evidence to substantiate the claim of having received the gift. The Tribunal referenced the judgment in Sajan Dass & Sons v. CIT [2004] 264 ITR 435, which emphasized that mere identification of the donor and movement of the gift amount through banking channels were insufficient to prove the genuineness of the gift. The Tribunal upheld the addition, concluding that the assessee had not satisfactorily explained the gift.

3. Service of Notice under Section 148:
The assessee argued that the notice under section 148 was not properly served, as it was a photocopy and not an original. The Tribunal held that the service of notice by affixture was valid and that the photocopy did not render the proceedings void. The Tribunal found that the notice was served within the prescribed time, and the subsequent proceedings were not vitiated.

4. Genuineness of the Gift and the Donor's Capacity:
The assessee argued that the donor had executed an affidavit and a memorandum of gift, and the payment was made through a bank. However, the donor later denied making any gifts. The Tribunal held that the primary onus to establish the genuineness of the gift was on the assessee. The Tribunal found that the NRE account was used to give sham gifts to different persons, and the donor's subsequent denial carried more weight. The Tribunal concluded that the assessee had not discharged the burden of proof to establish the genuineness of the gift, referencing the judgment in Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), which emphasized considering surrounding circumstances and applying the test of human probabilities.

Conclusion:
The Tribunal dismissed the appeal, upholding the re-opening of the assessment, the addition of Rs. 1,15,000, the validity of the notice under section 148, and the finding that the gift was not satisfactorily explained.