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TMI Blog2010 (6) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... ove some element of bounty - In the result the Appeal of assessee is dismissed - ITA No. 400/Mum/2008 - - - Dated:- 4-6-2010 - SHRI A L GEHLOT (ACCOUNTANT MEMBER) SHRI V D RAO (JUDICIAL MEMBER) Assessee by : Shri Pradip Kedia Department by : Shri Keshave Saxena ORDER Per A L GEHLOT (AM) This is an appeal filed by the Assessee against the order of Ld. CIT(A)-XXIV, Mumbai, dated 19.10.2007, relating to the assessment year 2004-05. 2. The effective grounds of appeal raised by the assessee reads as under: - 1) The Learned Commissioner (Appeals) erred in confirming the order of the Assessing Officer by treating genuine gift of Rs.30,00,000/- received from Mrs. Chandra Hingorani as nongenuine and upholding the addition u/s.68 of the Income Tax Act. 2) The Learned Commissioner (Appeals) erred in concluding that the donor and donee were strangers, not remotely connected and the element of natural love and affection was missing in the case. 3) The Learned Commissioner (Appeals) erred in concluding that appellant failed to prove that the gift was genuine for natural love and affection. 3. Brief facts of the case are that the assessee received a gift of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is a well off lady and wanted to make this gift out of love and affection for our family. Q.6. When you do not have any interaction with Smt. Chandra Hingorani almost for 26 years now and she has her own sons and grand sons, how is it that she has made such a huge gift to you without any apparent consideration or love and affection for you and your family members and that too when you claimed that you have never visited her house and you and your parents have no social link with them as none of you made any gifts to her or her family even on the marriages of her 4 sons and on birthdays and other social functions of her grand children? Ans. Whatever gift if any made to the family of the donor were made by my parents without my knowledge, however I confirm that I have never visited donors house, her children nor have I attended any function in her family. I have never given any gifts to her and her family members. And I do not know about any gifts made by my parents. Q.7. Did the donor ever visit you or your family at any social occasion? Ans. No. No gifts were received from her family. Q.8. What was the mode of receipt of gift made by you? Ans. The gift was received thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the sales were declared at Rs.20,75,000/-. These facts coupled with the facts that the donor has declared the income of about Rs.64 lakhs from interest, dividend and gains on sales of investment (Rs.48.67 lakhs) conclusively proves that the donor was simply avoiding to attend the proceedings to avoid the truth to come out. A person running a business, making sales of Rs.20 lakhs and earning other income of Rs.64 lakhs cannot claim exemption on the ground of old age specially when she is living in Bandra (West) and the Income-tax office is located at Bandra (East). It is relevant to mention here that Mrs. Chandra Hingorani is not in any way connected to the assessee or to her family. There was no occasion for such huge gifts to the assessee. The donor has simply made lame excuse not to attend proceedings. The apparent is that only fake documents of gift were prepared on consideration and, the donor and the donee is avoiding the truth to come out and are accordingly avoiding the presence. I have, therefore, no alternative but to conclude that this is a case of bogus gifts and the assessee has introduced her concealed income in the form of alleged gift from any unknown lady, who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng gift of Rs.30,00,000/-. The Ld. AR submitted that the advance tax on 30 lacs on 21.03.2003 and the capacity of the gift given is a major. He submitted that the gift was given at the time in the case of second baby of the assessee on 2nd Feb., 2003. 9. The Ld. AR submitted that assessee herself has declared substantial taxable income of Rs.28.71 lacs. There no allegation of generation of cash. No allegation that the alleged cash has been given to donor in return. He submitted that without considering the facts namely the Assessing Officer held that the gift is unproved while referring page 11 of the paper book. Ld. AR submitted that the donor reiterated that the donor is family friend of the assessee. The Ld. AR submitted close relationship and occasion is not legally necessary. Ld. AR supported on his contentions relied on the decision of ITAT, Chandigarh Bench in the case of R.K. Syal vs. CIT reported in 66 TTJ 656, R.S. Sibal 269 ITR 429 (Del.) and Murlidhar Lahorimal 280 ITR 512. 10. Ld. AR further submitted that instances are not rare, when even strangers make gifts out of very many considerations, including arising out of love, affection and sentiments. The Ld. AR relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he beneficial interest intended to be conferred, and of which making it. Donor gives gift in money or money s worth and taking love and affection from donee. To examine the issue from point of view of the provisions of Income Tax Act we are to see the nature of the transaction. Gift, Its nature is credit in the hands of the donee because donee credited gift amount his/her capital account and being treated as own money/capital. Normally such credit entry in capital account can be made only of the transition which has been processed through the provisions of the Income Tax Act. It appears from reading of section 68 of the Act that whenever a sum is found credited in the books of account of the assessee then, irrespective of the colour or the nature of the sum received which is sought to be given by the assessee, the Income-tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount. When an explanation in regard thereto is given by the assessee then, it is for the Income-tax Officer to be satisfied whether the said explanation is correct or not. It is in this regard that enquiries are usually made in order to find out as to whether, firstly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Apex Court in the case of CIT v Durga Prasad More 82 ITR 540 (SC) wherein the Court held that Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. It has been further held as under:- It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive assessee s account by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on Citibank, N.A. Singapore. The Assessing Officer dealt with the controversy as regards the cash credit entries received from the foreign donor. He noticed that the gifts have been sent in the name of Ariavan Thottan and received by A. Srin ivasan and others who are all his family members. Each one of them is an individual assessee. All the assesses were summoned and their statements have been recorded by the Assessing Officer. Srinivasan who is the key person in his statement said that he knew Sampathkumar for the last 20 years and he had been helping Sampathkumar prior to 1985 by paying Rs. 100 to 200 every month as he had no source of income to get himself educated. Sampathkumar in his own statement stated that he was in Indonesia up to the year 1992 and employed as an engineer. Thereafter, he shifted to England and started consultancy profession there. Later in the end of the year 1994-95, he joined New Century Machinery Ltd., Cheshire, SK 16 4xS and became its director in 1996. It is in his statement that he is paying taxes in England from his income earned in Engla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have failed to draw the only conclusion that is possible legally and logically. The Apex Court held as under: explanation offered was not satisfactory. The assessees did not 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 to be treated as a receipt of an income nature. The burden in this regard was on the assessees. No such attempt has been made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995] Supp 2 SCC 453. Whether the High Court was justified in interfering with the concurrent finding of fact arrived at by all the authorities including the Tribunal? The Assessing Officer found that all the so-called gifts came from Ariavan Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not real in nature. Various surroundings circumstances have been relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o knowledge about the family of the donor, she never visited their house. She never attended any social function or normal get together with the family of the donor. She was never invited by the donor family and the same was the case with the assessee as the donor family had no link whatsoever with the assessee. That Donor, Mrs. Chandra Hingorani is not in any way connected to the assessee or to her family. There was no such occasion for such huge gifts to the assessee. Under the alleged circumstances gift received by the assessee is not a genuine gift. When gift is not genuine, the addition u/s 68 is warranted. Further, as said above those two elements are essential in the gift, giving and taking. In the case under consideration, the assessee has failed to establish second part of that element i.e. giving any love and affection to donor. One of the aspect of the gift is that unless it is in favour of a relative, a disposition can be said to operate as a gift only if it can be shown to contain some element of bounty. In the case under consideration gift is not given to relative, therefore, the burden is on the assessee to prove some element of bounty. But the assessee has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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