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TMI Blog1995 (6) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... s a specified HUF. For assessment year 1986-87, assessment had been completed by the Assessing Officer vide order dated 27-3-1989 at an income of Rs. 2,71,344 and agricultural income of Rs. 20,374. (2) to (13) These paras are not reproduced here as they involve minor issues. 14. The third ground of appeal is relating to the addition of Rs. 96,496 and addition of Rs. 6,692 on account of two gifts claimed to have been received from two non-resident Indians. Assessee had claimed to have received five gifts in all amounting to Rs. 1,18,188. The three gifts of Rs. 5,000 each from Indians are not in dispute before us. The dispute is relating to the two gifts claimed to have been received from two non-resident Indians. Assessee had furnished confirmatory letters from the non-resident Indians. Assessee had however not disclosed the source of the amount nor had the identity of the donors been established. From these facts, it was held by the revenue that the burden of proof that lay on the assessee had not been discharged to the satisfaction of the Assessing Officer. On appeal, the learned CIT(Appeals) held that the Assessing Officer had called for certain details which were not filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of the money as capital does not preclude the ITP from going into the question whether this is actually so. Where, therefore, an assessee-company represents that it had issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company. The ITO would be entitled, and it would indeed be his duty, to enquire whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the ITO finds that the alleged shareholders do not exist, then, in effect, it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of the words 'may be charged' in section 68 clearly indicated that the ITO would then have the jurisdiction, if the facts so warrant, to treat such a credit to be the income of the assessee. " In view of the decision of the Delhi High Court referred to above, the contention raised on behalf of the assessee is unfounded. We, therefore, confirm the view of the CIT(Appeals) in this regard. 18. With regard to the addition of Rs. 96,496 and Rs. 6,692 claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri D.C. Rastogi (HUF). In connection with these two gifts, the assessee was required to inform the antecedents of these donors, their exact source of income in India/aboard, their addresses in India, information as to how they knew the assessee and their present address abroad and details of their families. In the letter dated2-3-1989filed by the A.R. of the assessee, the information provided is that Sh. Swaraj Paul was working with Shri D.C. Rastogi as a Chemist in M/s. Synthetics Chemicals,Bareillyin the year 1968 to 1984 after which he migrated toSweden. Regarding the gift of Sh. Thomas Mathew ofLibya, it has been stated that it was learned the FERA authorities (who had raided Shri D.C. Rastogi in November 1986) had investigated that gift and they had found the transaction to be genuine. " 19. From the above findings of the Assessing Officer it is evident that assessee had furnished evidence regarding the receipt of the amounts from abroad. It is, however, evident that assessee had not been able to establish the financial capacity of the donors.The genuineness of the gifts has also not been established. The Delhi High Court in the case of CIT v. Mrs. Sunita Vachani [1990] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced before the FERA authorities for establishing the genuineness of the receipts. Secondly, for the purposes of income-tax, the mere receipt from abroad is not sufficient to absolve the assessee from the burden of proof, required in respect of gifts. 20. Considering the facts and circumstances of this case and the evidence on record, we are of the view that the onus that lay on the assessee to establish the creditworthiness of the donors and genuineness of the gifts has not been discharged. The Assessing Officer in such circumstances, was justified in invoking section 68 in deeming the receipts as income of the assessee from undisclosed sources. The additions of Rs. 96,496 claimed to have been received from Shri Thomas Mathew ofLibyaand Rs. 6,692 received from Shri S. Paul are accordingly confirmed. 21. The last ground of appeal is as under : " That the learned CIT(Appeals) was wrong in not giving any finding regarding the protective assessment made by the A.C. even though a specific ground was raised. Since the income belonged to the assessee and there is no evidence to the contrary, the assessment may be made substantive in the hands of the assessee. " 22. Assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year. Whereas confirmations were received from these persons, the information called for was not made available to the assessee. Assessing Officer issued fresh notices under section 131 for personal attendance and for furnishing of requisite information. Persons referred to the earlier confirmations sent but did not furnish the requisite information. The Assessing Officer accordingly asked the assessee to produce the donors. In response to this direction the assessee pleaded that confirmations from the parties had been furnished, enquiries from them had also been made and they had confirmed the making of gifts and it was, therefore prayed that the matter may be decided on the basis of material on record. The Assessing Officer accordingly proceeded to decide the issue on the basis of material on record. In the case of Anil Kumar, a sum of Rs. 5,000 had been claimed to have been received as gift. The donor was found to be the employee/accountant of Shri D.C. Rastogi, the father of the minor assessee. 26. In the case of A.K. Jain, Assessing Officer on making enquiries found that he was ex-employee of M/s. Indcon Engg. P. Ltd., a business concern of Shri D.C. Rastogi. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and in the case of B.C. Sharma a photostat copy of the affidavit purportedly signed by Shri B.C. Sharma had been filed. Photostat copy of the bank certificate had been filed but despite being specifically asked the assessee did not produce the original documents. The Assessing Officer further held that it was accepted position of law that assessee had to establish not only the fact of receipt of gifts but also genuineness of the gifts as also the capacity of the donors to make the gift. In this connection Assessing Officer relied upon the decision of the Tribunal in the case of S.A. Joshi v. Bharat Nariman [IT Appeal Nos. 571 to 574 dated27-7-1982(Bom.)]. 31. In respect of Shri A.K. Jain, the Assessing Officer held that making of gifts by these persons to their employer's children was unbelievable. 32. With regard to birthday gifts from friends and relatives of Rs. 6,400, the Assessing Officer has rejected the claim of the assessee for want of evidence. 33. The CIT(Appeals) has confirmed the additions on the ground that assessee had failed to discharge the onus regarding the genuineness of the gifts. 34. We have discussed in detail the onus that lies upon the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account or from any financial statements/bank statements establishing his creditworthiness. Such information was not made available to the Assessing Officer. The possibility of money having been arranged through havala could not be ruled out. As such the Assessing Officer was justified in treating the amounts of gifts claimed to have been received as income from undisclosed sources. 36. With regard to claim of the assessee of birthday gifts we feel that the claim of the assessee deserves acceptance as it is common knowledge that cash gifts on the occasion of birthday are received by well-to-do families. The amount of Rs. 6,400 is not substantial, therefore, the amount be accepted as genuine. 37. A claim of savings from pocket money amounting to Rs. 4,695 is not acceptable in the absence of confirmation from the father of the assessee that substantial amount of pocket money was paid to him out of the earnings of Shri D.C. Rastogi. In that event not only the savings but the amounts spent by the assessee shall have to be considered as an expenditure in the case of Shri D.C. Rastogi. Since there is no evidence on record to suggest that substantial amount was shown by Shri D.C. Ras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, there has been credit balance of Rs. 5271.60 only in the bank account of the donor. On25-3-1986a sum of Rs. 50,000 had been credited in that account by telegraphic transfer and the same amount was debited to this account in the name of the appellant. There was no information about the source of Rs. 50,000. 43. From the evidence referred to above, it is evident that the financial capacity of the donor is not established nor is genuineness of the gift established. The finding in the case of D.C. Rastogi share in application in this case also. Considering the circumstances, of this case are of the view that the Assessing Officer was justified in not accepting the gift as genuine. 44. The only other ground in this appeal is relating to the amount having been assessed on protective basis. The issue is connected with the appeal of Shri D.C. Rastogi. The Assessing Officer is directed to decide this issue afresh on the basis of the decision in the case of Shri D.C. Rastogi. 45. In the result, appeal is partly allowed. I.T.A. No. 8868/Del. of 1992 46. The only issue involved in this appeal is relating to the income assessed on protective basis on the ground that the income ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or drafts. This contention of the assessee has been rejected by the CIT(Appeals). We have also dealt with this issue elsewhere in this order and have not found favour with the contention raised on behalf of the assessee. The additions on account of Rs. 1,56,521 and Rs. 40,000 claimed to have been received from non-resident Indians have been confirmed by the CIT(Appeals). We have dealt with the receipts from the non-residents elsewhere in this order. The facts are similar. The creditworthiness of the donors have not been established. Genuineness of the gifts have also not been established. The present whereabout of the donors have also not been made available to the Assessing Officer so that proper enquiry could be made. We are, therefore, not inclined to interfere in the order of the CIT(Appeals). The CIT(Appeals) has set aside the addition of Rs. 10,000 for verification and the revenue is not in appeal. 50. In the case of Smt. Sushma Arora, the gift of Rs. 5,000 has been treated to be as not genuine as the lady has not been found to be a lady of means. As has already been pointed out the donor is claimed to be widow unable to support her family. In these circumstances, the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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