1999 (1) TMI 53 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of gifts received by Shri Jawahar Lal Oswal's daughters.
2. Financial capability and identity of donors.
3. Applicability of section 69A and section 68 of the Income-tax Act, 1961.
4. Burden of proof and onus of proving the source of money.
5. Validity of protective assessments.

Summary:

Taxability of Gifts:
The primary issue pertains to the taxability of Rs. 1,24,24,864, equivalent to US $ 4,00,000, received as gifts by Shri Jawahar Lal Oswal's daughters, Monica Oswal and Ruchika Oswal, from donors Shri B. P. Bhardwaj and Shri O. S. Gill, respectively. The Assessing Officer (AO) concluded that the gifts were not genuine and treated the amount as 'unaccounted money' u/s 69A, adding it to Shri Jawahar Lal Oswal's taxable income as 'concealed income'.

Financial Capability and Identity of Donors:
The AO questioned the financial capability of the donors and conducted enquiries through the CBDT and Inland Revenue, U.K. Shri O. S. Gill was examined and confirmed the gift, but no documentary evidence was provided to prove his financial capability. Shri B. P. Bhardwaj was not produced, and it was found that the funds were provided by Mr. Varinder Sharma, leading the AO to conclude that the donors were not genuine.

Applicability of Section 69A and Section 68:
The CIT(A) examined the gifts separately, confirming the AO's view regarding Shri B. P. Bhardwaj but accepting the gift from Shri O. S. Gill based on his identification, financial capacity, and the absence of incriminating evidence from the Inland Revenue, U.K. The CIT(A) allowed relief for the gift from Shri O. S. Gill but upheld the addition for the gift from Shri B. P. Bhardwaj.

Burden of Proof and Onus of Proving the Source of Money:
The Tribunal emphasized that the onus of proving the source of money lies on the person treated as the owner. The evidence provided by the assessee, including the identity of donors and the movement of funds, was deemed sufficient. The Tribunal noted that the AO's conclusions were based on suspicion rather than concrete evidence.

Validity of Protective Assessments:
In the cases of Monica and Ruchika Oswal, the AO made protective additions u/s 68, which were deleted by the CIT(A) on the grounds that the source of the drafts was explained as received through their father. The Tribunal upheld the CIT(A)'s decision, stating that entries in the bank passbook cannot be equated with entries in the books of account for invoking section 68.

Final Judgment:
The Tribunal allowed Shri Jawahar Lal Oswal's appeal, deleting the addition made u/s 69A. The Tribunal also dismissed the revenue's appeals in the cases of Monica and Ruchika Oswal, upholding the relief given by the CIT(A). The Tribunal concluded that the revenue's approach was based on suspicion and did not provide sufficient evidence to substantiate the additions.