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TMI Blog2012 (9) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... d that:- It is a settled preposition of law that the AO can examine the genuineness of gift, the capacity and identity of the donor. The assessees had informed the Assessing Authority that donors are their uncles and they reside in Nepal. It cannot be believed that the assessees did not know the full address of the donors. The address given by the assessees is Krishna Nagar, Nepal. Nepal is a country which has several districts. It was not sufficient on the part of the assessees merely to show that the donors are citizens of Nepal. Hence the identity of the donors was not established. As far as the capacity of the donors is concerned, it was also not proved - Merely because the assessees have shown the receipts by demand drafts from Nepal, it cannot be presumed that the gifts are genuine - against assessee. - INCOME TAX APPEAL No. - 124 of 2001, 136 of 2001 - - - Dated:- 13-9-2012 - Sunil Ambwani, Aditya Nath Mittal, JJ. Appellant Counsel : - Krishna Agarwal Respondent Counsel : - Shambhu Chopra (Delivered by Hon'ble Aditya Nath Mittal, J.) 1. Both these appeals contain common questions of law regarding gifts to both the assessees by same donors, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afts, initially burden has been discharged by the Assessee inasmuch as, there was any legal justification in treating a sum of Rs.45,000.00 as unexplained deposit?" 4. Both the appellants are doctors by profession and are husband and wife. On 5.3.1992, a search under Section 132(1) of the Income Tax Act, 1961 (the Act) was conducted at their residence and Nursing Home, in which certain documents regarding unexplained investments were found. The appellants house was under construction, in which they had shown the investments of Rs.4,45,000/- upto 31.3.1992, while as per rough diary found at the residence of the appellants during search, it showed investments of Rs.7,10,229/-. The matter was referred to Departmental Valuer, who valued the cost of construction at Rs.5,04,100/-. 5. Apart from it, the assessees had claimed to have received following gifts from the following persons, who are citizens of Nepal:- Dr. Ram Autar Agarwal Smt. Rashmi Agarwal Sl. No. Name of the Donor Amount Name of the Donor Amount 1 Sri Ramji Lal Kanodia, Krishna Nagar, Nepal Rs.50,000/- Sri Ramji Lal Kanodia, Krishna Nagar, Nepal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has relied upon the Circular No.96 dated 25.11.1972 issued by Central Board of Direct Taxes. 13. A new Section 55A was inserted in the Income Tax Act enabling the Income Tax Officer to refer the question of valuation of any capital asset to the Valuation Officer with a view to ascertain the fair market value of such capital asset. The Income Tax Officer was authorized to make a reference to the Valuation Officer under Section 55A(b)(ii). The jurisdiction of the Valuation Officer is defined in Rule 3A of the Wealth Tax Rules. The circular provides that the Valuation Officer will exercise the same jurisdiction for income tax purposes. It is further provided in the circular that in cases covered by the provisions of Clause (a) and (b)(i) of Section 55A, it will be incumbent on the Income Tax Officer to refer the question of valuation of the assets to the Valuation Officer, and it will not be open to him to decide the question of valuation on his own. 14.In the present case the appellant had shown the investment of Rs.4,45,000/- in the construction of the house, while as per diary found during the search the total details were of Rs.12,43,085/-. It was also found that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an enquiry by him. 17. In CIT v. Vinod Danchand Ghodwat (Bombay), (2001) 247 ITR 448, in which the facts are close to the facts of the present case, the Bombay High Court, in the matter of a search in which the material was found in respect of unexplained gold ornaments, investment in bungalow, and unexplained household goods. While deciding question no.3 the Bombay High Court held as follows:- "Question No. 3 reads as follows : Question No. 3: Whether in law, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 2,49,350 made on account of unexplained expenses in construction of the residential bungalow at Jaysingpur, when the same was properly made by the assessing officer. The said question refers to addition of Rs. 2,49,350 made on account of unexplained expenses in construction of residential bungalow by the assessee. Here also, Chapter XIV-B has no application. The Tribunal, rightly, found that the addition is made on the basis of the report of the department Valuer, According to the assessing officer, during the search, it was found that the assessee, had constructed a bungalow. It was found that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. did not have powers to refer the value point to the District Valuation Officer in proceedings of scrutiny under Section 143 (3). 21. For the reasons stated above, question nos.1 and 2 in Income Tax Appeal No.124 of 2001 are decided in favour of the assessee and against the revenue. Questions No.3 and 4 of Income Tax Appeal No.124 of 2001 and Questions No.1 and 2 of Income Tax Appeal No.136 of 2001 22. The assessee Dr. Ram Autar Agarwal had claimed that he had received a gift of Rs.50,000/- from Sri Ramji Lal Kanodia resident of Krishna Nagar, Nepal. Smt. Rashmi Agarwal also claimed gifts from Sri Ramji Lal Kanodia, Sri Vishnu Prasad Kanodia and Sri Rajendra Kanodia residents of Krishna Nagar, Nepal. The assessees were required to furnish necessary details to ascertain the genuineness of the gifts, which they failed to provide. Accordingly, the amount of gifts were treated as unexplained money of the assessees. 23. It is a settled preposition of law that the Assessing Authority can examine the genuineness of gift, the capacity and identity of the donor. The assessees had informed the Assessing Authority that donors are their uncles and they reside in Nepal. It cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. The assessees received foreign gifts form one common donor. The payments were made to them by instruments issued by foreign banks and credited to the respective account of the assessees by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on the Citibank, N.A. Singapore. The evidence indicated that the donor was to receive suitable compensation from the assessees. On this material the Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the account books of the assessees as their income applying section 68 of the Income- tax Act, 1961. The assessees did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the matter was referred to the Vice President who concurred with the findings and conclusions of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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