9911796707
TMI Blog2009 (1) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000, as the income of the appellant herself from undisclosed sources. (3) The ld. CIT(A), while confirming the above additions has not appreciated/ignored the following facts : ( i )That the donors were related to the appellant and the gifts were made out of love and affection by them towards the appellant. ( ii )That the donors had gifted the amounts in question through account payee cheques drawn their respective bank accounts; ( iii )That all the donors maintained regular books of account and were income-tax assessees having substantial income as also shown the gifts in their books of account and returns. ( iv )That all the donors had made declarations of gifts and were duly examined by the ITO, Basti and had duly confirmed those gifts. ( v )That copies obtained by banks which of the gift those gifts of bank accounts of the donors were the ld. ITO directly from the supported the fact and genuineness and the capacity of donors to make to the appellant. (4) The appellant had thus fully discharged her onus in terms of section 68 of Income-tax Act, 1961 by proving the identity of the donors, their creditworthiness and capacity to make the gifts and genuineness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount has now been replaced by new donor Shri Shrawan Kumar Agarwal and Shri Sunil Kumar Agarwal. Further, capital account filed alongwith the return showed that Shri Nand Lal Agarwal has given a gift of Rs. 10,02,000 but later, it was changed to Rs. 5,01,000. The Assessing Officer carried out enquiries under section 133(6). He sent letters to the donors to inform him their relationship with the donee, quantum of gifts, details of assessment and bank accounts from where gifts have flown. As the donors did not comply with the notices sent, the Assessing Officer required the assessee to prove the genuineness of the gifts. Several hearings were given by the Assessing Officer, the details thereof are mentioned in the assessment order. He noted that several such notices and letters remained uncomplied with. Finally, he issued commissions to Assessing Officers who were assessing the donors to record their statement. The statements of the donors were then recorded. The details of all these gifts are described by the Assessing Officer in his order. For the sake of convenience, they are summarized as under : 6. Smt. Asha Agarwal : On enquiry from the bank, Urban Cooperative Bank, Basti, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of this donor in that bank. Later, it was corrected and informed that the account is in Sahahratgarh Branch. There was no assertion about any relationship of this donor with the assessee. 10. Gift by Shri Shrawan Kumar Agarwal - This donor had issued a cheque No. 54644 of Rs. 5,01,000 which was encashed on 26-6-2003 through clearing. Cash deposit of Rs. 6,20,000 was made on 24-6-2003 and Rs. 1,40,000 on 25-6-2003 and Rs. 2,00,000 on 26-7-2003. Gross total income declared by the assessee amounted to Rs. 1,16,024 and Rs. 1,38,060 for the assessment years 2002-03 and 2003-04 respectively. 11. Shri Sunil Kumar Agarwal : This donor has given cheque No. 50684 on 22-7-2003 which was encashed on 25-7-2003. A cash deposit of Rs. 2,10,000 was made on 23-7-2003 and Rs. 1,40,000 and Rs. 2 lakhs on 25-6-2003. Shri Sunil Kumar is claimed to be assessed to tax and for assessment years 2002-03 and 2003-04 for which return of income was filed, he has declared income at Rs. 81,460 and Rs. 74,595 respectively. 12. On the basis of statement recorded and the facts so collected by the Assessing Officer, he drew following inferences : 1.All the donors are not persons of means i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (for payment), creditworthiness of the donor and genuineness of the transaction, this money is to be treated as assessee s income from undisclosed sources under section 68 of the Income-tax Act." 13. Finally, the Assessing Officer concluded that identity, creditworthiness and genuineness of the transactions as required under section 68 has not been discharged. He, accordingly, treated the sum of Rs. 26,55,000 as assessee s income from undisclosed sources. The Assessing Officer relied on the following judgments : Sumati Dayal v. CIT [1995] 214 ITR 801 (SC); Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC); CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465 (SC); CIT v. Biju Patnaik [1986] 160 ITR 674(SC); McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 (SC). 14. Before the ld. CIT(A), it was submitted as under : "(1) All the gifts were made by cheque through bank and details regarding bank accounts of the donors were made available to the Assessing Officer. (2) All the donors are regularly assessed to income-tax; and proof regarding filing of their returns was produced before the Assessing Officer. The gifts were disclosed in the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the gift through banking channel is not enough to prove the genuineness of the gift. ( vii )The assessee was not apparently related to the donors. There was no occasion for the gift. The donors family did not receive similar gift from assessee s family on any occasion, donors never gave any gift to their own relatives. ( viii )Preponderance of probabilities and common course of human things are contrary to the present case. 16. She accordingly, confirmed the addition. 17. Against this, the ld. AR submitted that information about the donors and gift money as given in the return was a clerical mistake and no weightage is required to be given to such mistakes. Secondly, the donors are identifiable. They have appeared before the income-tax authorities. They have given statement and have accepted to have been given gifts. Money has flown from their respective bank accounts. It is not for the assessee to enquire from where the donors have brought the money and deposits in their bank account. In fact, the Assessing Officer has not put any question to the assessee or to the donors as to from where donors have brought cash for depositing the same in the bank account. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has added the amount of gift as assessee s income are summarized by us in para 12. We do not agree that the persons showing income of Rs. 80,000 to Rs. 1,50,000 per annum would be persons of no means or low means. These donors are clearly identifiable and they are assessed to tax. They had appeared before the Assessing Officer and given their statements to the Assessing Officer. Therefore, there cannot be any doubt about their identity. Regarding the capacity of the donors, we hold that the inference of the Assessing Officer about the income of Rs. 80,000 to Rs. 1,80,000 shown by these donors in their return of income is not adequate to hold that they are man of means is not acceptable. They are persons of reasonable means though not earning income in higher category, say Rs. 5 lakhs or Rs. 10 lakhs or more. They have owned the bank a/c from which alleged gift was given and also owned the money deposited in their bank account. During the course of assessment proceedings or appeal proceedings, no question was asked from the donors as to from where they have got cash for depositing in their bank account. Even the assessment of the donors was not reopened for the alleged owning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head notes from that decision as under : "Under section 68, there is no doubt that initial onus lies on the assessee to establish the identity of the creditors and their creditworthiness and genuineness of the transaction. But this onus is not fixed. It is vacillating. It would shift to the Assessing Officer, if the assessee has produced evidence which reasonably explains his case. Onus will again shift to the assessee if, on the basis of material on record, the Assessing Officer finds the explanation not convincing. In the instant case, the Assessing Officer had issued commission to another officer, who himself summoned the creditors and recorded their statements, who admitted to have advanced the money to the assessee by borrowing loans from the market. The Assessing Officer had initiated proceedings under section 148 against the creditors. In those proceedings, necessary evidences of loan raised by the creditors were filed. But the Assessing Officer did not issue any summon or collect any material on his own from the creditors of the creditors so as to show that the claim of the loan made by the two lady creditors was false or not satisfactory. An outright rejection of an exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer before whom they have confirmed to have given gifts and proved that they had source of income and that some of them are related to the assessee. The assessee discharged the onus which now shifted to the Assessing Officer who is supposed now to find out that the explanation given by the assessee is not satisfactory. There is no material on record to suggest that the explanation furnished by the assessee is not satisfactory. Whatever inferences the Assessing Officer has drawn cannot be sustained unless the authorities give a finding that the donors could not have cash at their own and could not have deposited the same out of their own sources and further that the theory of love and affection is only a smoke screen for arranging the gifts. Once the donors are related to the assessee and there is a day-to-day acquaintance with the assessee, as in the present case, unless it is shown that it is only a pretence and not a natural phenomenon, the existence of ingredients of love and affection cannot be ruled out. Love and affection can be reflected by frequent acquaintance, mutual exchanges of gifts, mutual help to each other standing for each other in hours of need, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of these assessee, assessee is not supposed to explain the source of source. For the reasons stated above, we allow grounds of appeal taken by the assessee. 11. Assessee has also relied on the following decisions with regard to the validity of gift : 1. Murlidhar Lahori Mal v. CIT [2006] 280 ITR 512 (Guj.). 2. ITO v. Mada Din Sneh Nath (HUF) [2004] 90 ITD 203 (All.). 3.ITAT Allahabad order dated 11-2-2008 in the case of Anand Prakash Agarwal v. ACIT, Varanasi in ITA 389/All./2007. 4. CIT v. Sunita Vachani 184 ITR 121 (Delhi). 12. Assessee also relied on the following decisions for the proposition that suspicion however so grave cannot be the basis of additions : 1. Dhirajlal Girdhari Lal v. CIT 26 ITR 736 (SC). 2. Dhakeshwari Cotton Mills Ltd. v. CIT 26 ITR 775 (SC). 3. Lalchand Bhagat Ambica Ram v. CIT 37 ITR 288 (SC). 4. Umacharan Shaw Bros v. CIT 37 ITR 271 (SC). 5. Omar Salay Mohamed Sait v. CIT 37 ITR 151 (SC). 13. In the absence of any link between gifts and assessee s income from unexplained sources, in the premises of the facts narrated above, we are of the view that appeal by the assessee is liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee ; such credit has to be of a sum during the previous year ; and the assessee offers no explanation about the nature and source of such credit; or the explanation offered by the assessee is not, in the opinion of the assessing authority, satisfactory, then the sum so credited may be charged to tax as income of the assessee of the previous year. As section 68 of the Act denotes, once there is a credit in the books maintained by the assessee, the primary onus is on the assessee, namely, to offer an explanation as to the nature and source of the credit. An assessee can be asked to prove the source of credit in the books, but cannot be asked to prove the source of the source. The assessee, an individual, filed a return of income accompanied by a copy of his capital account in the partnership firm where he was a partner. The capital account contained a credit entry showing a sum of Rs. 50,000 as gift received. The donor had filed a return of gift in respect of the gift of Rs. 50,000 and the assessment came to be completed under section 15(3) of the Gift-tax Act, 1958. Assessment was made accepting the gift but notice was subsequently issued under section 148 on the ground that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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