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TMI Blog2009 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... said additions made under section 68." In this case of the present assessee, a search and seizure operation under section 132 of the Act was carried out. In pursuance of the search conducts under section 132 of the Act, the Assessing Officer initiated assessment proceedings by issuing a notice under section 153A on May 27, 2005. The assessee filed return of income on June 30, 2005 declaring total income at Rs. 1,65,700. The assessee had also filed a copy of acknowledgment of original return of income filed on September 29, 1999 showing therein the total income of Rs. 1,65,700. During the course of search, certain cash and jewellery were found and seized. In response to the notices issued under sections 142(1) and 143(2) along with questionnaire issued by the Assessing Officer, one Shri Atul Aggarwal, chartered accountant, appeared before the Assessing Officer and furnished composite details pertaining to the assessment years 1998-99 and 2004-05. In the light of the facts coming to the notice of the Assessing Officer, the Assessing Officer stated that the assessee had generated certain unaccounted money outside the books of account, which were utilised in purchase of jewellery, amp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer on account of unexplained money introduced by the assessee in his bank account, in the garb of gift claimed to have been received by the assessee from Shri J. B. Malik and Shri Y. P. Malik. With regard to the alleged gift of Rs. 3,00,000, the Assessing Officer has stated that the assessee introduced sum of Rs. 3,00,000 in his bank account in the garb of a gift allegedly received from donors, viz. J. B. Malik, on November 20, 1998. In this respect, the statement of the assessee was recorded on the date of the search. Question 29 of the statement of the assessee is about the alleged gift allegedly taken from Mr. J. B. Malik. Question 29 and its answer given by the assessee are as under : "Question No. 29. Who is J. B. Malik Ans. I am not aware about this name." The aforesaid sum of Rs. 3,00,000 was deposited in the assessee's bank account No. 13329 with UCO Bank, Sabzi Mandi, Delhi. The assessee was requested by the Assessing Officer vide letter dated February 3, 2006 to explain the above credit in the said bank account. The assessee filed its reply stating that the confirmation of the gift copy of cheque, his bank statement, copy of passport of Shri J. B. Malik, copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000. The Assessing Officer has treated the claim of the assessee as not genuine. The Assessing Officer, therefore, treated the amount as unexplained cash credit introduced by the assessee in the garb of gift from one Shri J. B. Malik. With regard to the amount of Rs. 3,92,672 claimed by the assessee as a gift allegedly received from one Shri Y. P. Malik, the Assessing Officer noted that the assessee deposited a sum of Rs. 3,92,692 in his bank account No. 37947 with State Bank of India, Majlis Park, Delhi. In support of the source of the aforesaid money deposited in the bank, the assessee filed a copy of confirmation and a photocopy of cheque along with his letter dated February 2, 2006 and submitted before the Assessing Officer that he received a gift of US $ 5715, UK sterling from Shri Y. P. Malik of London and the said amount equivalent to the Indian Rs. 3,92,672 was directly deposited in the assessee's bank account being transferred from the bank account of Shri Y. P. Malik. The assessee also furnished the copy of cheque dated February 15, 1999 given by Shri Y. P. Malik to the assessee in his favour and also the copy of his own bank statement with the State Bank of India. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditworthiness of the donor has also not been proved. The Assessing Officer relied upon the decision of the hon'ble Delhi High Court in the case of Sajan Dass and Sons v. CIT [2003] 264 ITR 435. For the aforesaid reasons given by the Assessing Officer, the Assessing Officer made the addition of Rs. 3,92,672 as unexplained money introduced by the assessee in the garb of gift allegedly received from Shri Y. P. Malik. Being aggrieved with the Assessing Officer's order in making addition of Rs. 3,00,000 and Rs. 3,92,672 treating this amount as unexplained money introduced by the assessee in the bank account, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). With regard to the addition of Rs. 3,00,000, the assessee submitted before the Commissioner of Income-tax (Appeals) as under : (i) That sum of Rs. 3,00,000 was deposited by the assessee in his bank account and not in the books of account, so that section 68 of the Act is not applicable to the aforesaid deposit of Rs. 3,00,000. (ii) That affidavit of donor namely Shri Y. P. Malik has been filed before the Assessing Officer confirming that he had gifted the sum of Rs.3,00,000 vide cheque No. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Indian rupees of Rs. 3,92,672 and directly credited in the assessee's bank account. He further stated that a confirmation from Shri Y. P. Malik has been furnished confirming that an amount of Rs.3,92,672 was given by him as irrevocable gift. The addition of Rs. 3,92,672 has also been confirmed by the Commissioner of Income-tax (Appeals) by observing as under : "I have considered the facts of the case and arguments taken by Shri Gupta quite carefully. It is an undisputed fact that Shri Y. P. Malik is not related to the appellant. Shri Gupta in his submission is not correct in stating that whenever the money is received from foreign bank account automatically the sources for giving the said gift are explained. It has to be proved by the appellant through necessary evidence regarding identity of the donor, genuineness of the gift transaction and capacity of the donor for making the gift under consideration. In the present case neither in the assessment proceedings nor in the appellate proceedings any such evidence could be given regarding identity of the donor and capacity of the donor to make the said gifts. Apparently there is no reason that why totally unrelated persons sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary have been brought on record by the Assessing Officer. He further submitted that affidavit filed in the case of Sajan Dass and Sons [2003] 264 ITR 435 was not found to be genuine and correct inasmuch as persons signing the affidavit was not even in India on the day when the affidavit was signed, which is not the case of the present assessee. He also submitted that the decision of the hon'ble Supreme Court in the case CIT v. P. Mohanakala [2007] 291 ITR 278 is also not applicable to the present case as an alternative argument has also been made by learned counsel for the assessee that even if the explanation of the assessee about the gift received by the assessee is not found to be genuine, the amount deposited in the bank cannot even otherwise be assessed as income inasmuch as the Assessing Officer has failed to prove and establish that the aforesaid amount is actually the income of the assessee. Learned counsel for the assessee urged that the orders of the authorities be reversed, and the additions made by the Assessing Officer be deleted. The learned Departmental representative on the other hand, supported the orders of the authorities below. He further submitted that the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature." In this case of CIT v. P. Mohanakala [2007] 291 ITR 278 (and other appeals), the assessee received various gifts from one common donor, payments were made to them by instruments issued by foreign banks and credited to the respective account of the assessee by negoti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iries conducted by the Assessing Officer from the bank, with which the assessee was admittedly confronted and bearing in mind the fact that admittedly said Subhash Sethi was not related to the assessee, we are of the view that the findings recorded by the Tribunal are pure findings of fact warranting no interference. We find it difficult to hold that on the facts of the instant case proper opportunity had not been granted to the assessee to prove the gift." Similarly, in the case of CIT v. R. S. Sibal [2004] 269 ITR 429, the hon'ble Delhi High Court has laid down (at page 432 of the report) as under : "There is no quarrel with the proposition that a mere identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift and since the claim of the amount having been received as a gift is made by the assessee, the onus lies on him not only to establish the identity of the donor but his capacity to make such a gift. But in the instant case, we find from the record that though the assessee had admittedly produced the bank statements, the Assessing Officer did not raise any query with regard to the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... canvassed by learned counsel for the reason that even though the documentation may be in order, if there is enough material to raise a very strong suspicion that there is something not quite right with the nature of transaction, the authorities under the Act may reject the documents and require the assessee to show that the transaction is really one which is above board. On the fact of this case, all the three authorities have rejected the explanation of the assessee. 7. We are not convinced that the transaction is above board. We have in particular considered the quantum of the gifts, the fact that there is inadequate material to show the resources or finances of the Swiss national : there is no apparent reason for the assessee being showered with gift by person who is stated to be only a family friend and that the same family friend has showered gifts of an enormous amount on several other persons as well. 8. In view of the above, we do not find any perversity shown in the conclusion arrived at by the Tribunal on the facts of this case no substantial question of law arises in this regard." The hon'ble High Court of Punjab and Haryana in the case of the Yash Pal Goel v. CIT sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h raises question as to whether Mohinder Singh had the capacity to make a gift of Rs. 98,000 to the assessee who was not his relation and he only knew him through his father and whether the gift was on account of love and affection. The answer is inevitably in negative. A simple identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of gift is made by the assessee, the onus lies on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it has actually been received as a gift from the donor. The financial position of the donor suggests that he was neither in the capacity to make gift nor having the source from where the gift was made. No reason whatsoever has been assigned for gifting such a huge amount by the donor to the assessee. Thedonor never visited home of the assessee. Where was the love and affection? It was nothing but a subterfuge to avoid income-tax. The transactions were not genuine ones." This court further observed and held as under (page 81 of 310 ITR) : "17. The so called gift setup by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. The application of mind is the sine qua non for forming the opinion by the Assessing Officer. (vi) In cases where the explanation offered by the assessee about the nature and source of the money received by the assessee is not satisfactory, there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. (vii) The burden is on the assessee to prove and establish that, even if the explanation offered by the assessee is not acceptable, the material and attending circumstances available on record do not justify the money received by the assessee being not treated as a receipt of income nature. In the present case, it is the assessee who has made a claim that he had received the sum of Rs. 3,00,000 and Rs. 3,92,672 by way of gift from two persons, viz., (1) Shri J. B. Malik and (2) Shri Y. P. Malik respectively. Thus, the onus lies on the assessee not to establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax (Appeals) and before us as well, the assessee has laid a great emphasis upon the fact that the amount was received through banking channels, and in support thereof he furnished a copy of cheque dated February 15, 2009 issued by J. B. Malik in his favour and his bank statement. It is nobody's case that the amount was not received through banking channels. However, mere movement of the alleged gift amount through banking channels is not sufficient to prove the genuineness of the gift as so well settled vide various decisions referred to above herein. The Assessing Officer has not accepted the assessee's claim for the reason that the assessee has failed to prove the genuineness of the factum of gift on the facts pointed out by him in his order. Thus, the assessee's contention that as the amount was routed through banking channels, the assessee has been able to establish and prove that the amount was received by way of gift has no force, and on that count alone the assessee's claim cannot be accepted. In the confirmation given by Shri J. B. Malik, he has merely stated that he had given a sum of Rs. 3,00,000 vide cheque No. 274892 dated November 18, 1998 drawn on Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, on the basis of these two documents, i.e., confirmation and affidavit of Shri J. B. Malik, it cannot be said that the assessee has been able to discharge its onus to establish the capacity of the donor to make such a gift, and to show what kind of relationship the donor had with the assessee, and what was the occasion for giving such a gift to the assessee, and the amount was actually received as a gift. Since all the essential factors to show the relationship between the assessee and the donor and under what circumstances the amount was given to the assessee as gift were within the specific knowledge of the assessee, the assessee had to prove and establish that the amount given by Shri J. B. Malik to the assessee was actually a genuine gift, and not a payment otherwise. Further, the assessee has been all along relying upon an affidavit given by Shri J. B. Malik, a copy of which has also been placed before us and the extract thereof has already been reproduced above. On perusal of the same, we find that a nomenclature of "affidavit" has been used in the said document, one Shri Jai Bhagwan Malik has stated in the said document that he has solemnly affirmed the statement, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee before the Assessing Officer has no evidentiary value inasmuch as altogether a different story was made out than what was stated by the assessee initially at the time of the search. It is abundantly clear that it was the assessee's primary and initial burden to prove and establish the capacity of Shri Y. P. Malik to make a gift to the assessee or to prove and establish that the amount received by the assessee was genuine gift given by Shri Y. P. Malik to the assessee out of natural love and affection. Therefore, notwithstanding the fact that the amount has been routed through banking channels as transferred from bank account of Shri Y. P. Malik to the assessee's account, the assessee has failed to prove and establish the relationship or the bond under which alleged amount was given to the assessee. What has now been submitted by the assessee that the statement given at the time of search is to be ignored as it was given under force, duress, coercion or under confusion, is nothing but is an afterthought concocted story without being supported by any iota of evidences just to fill up lacunas or remove flaws in the assessee's claim that he had received the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mary and initial onus which lies on the assessee has not been discharged, the Assessing Officer was very much justified in drawing a conclusion that the assessee has been unable to prove and establish that the amount of Rs. 3,00,000 received by him was actually received as a gift from Shri Y. P. Malik, and the same is liable to be assessed as income of the assessee. Having regard to the totality of the facts and circumstances of the present case, we are therefore, of the considered opinion that the assessee has miserably failed to prove that the sum of Rs. 3,00,000 transferred from the bank account of Shri J. B. Malik to the assessee's account represents irrevocable gift given by Shri J. B. Malik to the assessee. The assessee has further contended that the amount has not been credited in any book of account of the assessee but amount was credited in the assessee's bank account, and, therefore, no addition can be made under section 68 of the Act. Without going into the question as to whether the addition of Rs. 3,00,000 made by the Assessing Officer can be made within the meaning of section 68 of the Act or not, we find that the assessee has deposited the sum of Rs. 3,00,000 in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by him in his favour and a confirmation given by him. In support of the assessee's claim that he has received a sum of Rs. 3,92,672 as gift from Shri Y. P. Malik, the assessee has relied upon the cheque issued by Shri Y.P. Malik, which is deposited in India in the assessee's bank account, and also a confirmation letter given by Shri Y. P. Malik. The assessee has not produced or furnished any iota of evidence to show and establish the creditworthiness of the donor, his capacity to make a gift, the resources or finances of the donor, what relationship Shri Y. P. Malik had with the assessee, and in what circumstances the gift was made. There is no apparent reason for the assessee being showered with gift of Rs. 3,92,672 by the said donor, Shri Y. P. Malik, who has no family or blood relation with the assessee. At the time of search, a statement of the assessee was recorded, and in that statement, the assessee categorically stated that his chartered accountant, Shri Praveen Aggarwal had arranged some foreign gift for him and his son against cash payment. Though the assessee subsequently retracted from the aforesaid statement, the assessee has not been able to establish and prove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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