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TMI Blog2013 (11) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative referred a copy of gift deed. A question was asked that in the gift deed it is stated that the gift was given out of love and affection, therefore, what evidences have been filed by the assessee. The ld. Authorised Representative failed to point out any material or evidence in this regard that the gift was given out of love and affection. Apart from the above, I find that the CIT(A) has given his finding that there is no relationship between the donor and donee assessee. There is no occasion for giving of gift. The donor is neither produced by the assessee for examination, nor is traceable at the given address by the A.O. to verify the correctness of the gift deed and affidavit purported to have been issued by him, which is only a photocopy as filed by the assessee. During the assessment proceeding, creditworthiness of donor as well as the genuineness of the gift is not established. The CIT(A) held that, this amount is correctly added by the A.O. in the income of the assessee holding it his unaccounted money under the garb of bogus gift entry and therefore, he confirmed the addition of ₹ 1,00,000/- made in the assessment order. As regards to addition of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and law of the case. 3. The brief facts of the case are that the case of the assessee was reopened under section 147 of the Income Tax Act, 1961 ('the Act' hereinafter) after recording following reasons:- (Page no.1) An information has been received from the Addl. Commissioner of Income Tax, Range-1, Agra vide letter F. No. LTCG/Addl. CIT/R-1/Agra/2007-08/1933 dated 20-3-2008 regarding bogus entries of Long Tem/Short Term Capital Gain and bogus gifts etc. has been found bogus as a result of enquiries made by the Inv. Wing. On enquiries it has been found that the bank accounts from which money has been transferred to various beneficiaries have been operated by certain stock brokers who have been providing entries to the beneficiaries by showing them transaction made by them in purchase and sale of shares of certain companies, gifts from certain persons, which in fact never took place. The assessee is also one of the beneficiaries figuring in the list supplied as stated above and an amount of ₹ 1,00,250/- has been remitted to the assessee from Lal Chand. The said amount is found credited in the account no.45 of Shreyash Gramin Bank, Ram B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he genuineness of transaction. At the present conditions of the society when no person would part with even a small amount as gift without any reason, occasion and even relationship, how it can be accepted that a person in Delhi can give gift to the strangers having no relationship or consideration? The AO held that it is a clear cut example of a tax avoidance, which is not permissible as per the decisions of the Hon'ble Supreme Court mentioned above. 6. The A.O. made addition as under:- In view of the above Court decision and the facts of the case that the assessee has introduced his unaccounted money to the tune of ₹ 1,00,000/- under the garb of bogus gift entry and the same is, therefore, added under section 68 of the I.T. Act, 1961 under the head Income from Other Sources to the income of the assessee from undisclosed sources. Since it has been held that the assessee has taken gift entries, a commission @ 2% amounting to ₹ 2,000/- is also being added to the income of the assessee. Penalty proceedings u/s.271(1)(c) are also initiated for this act of the assessee separately. 7. Before the CIT(A) reopening was challenged by the assessee which was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation Wing and other officers of the Income Tax Department was held to be valid:- 1. Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 450 (SC) 2. ITO v. Purshottam Dass Bangur 224 ITR 362 (SC) 3. Brij Mohan Agarwal v. ACIT [2004] 268 ITR 400 (All.) Here, it may also be noted that the initial return filed by the assessee (appellant) for the relevant assessment year was only processed u/s. 143(1)(a) and no scrutiny of this return was carried out by the department u/s. 143(3). Therefore, the genuineness of the gift ₹ 1,00,000/- claimed to have bean received by the assessee from Shri Sanjeev Goyal could not be examined before the receipt of the above information. It has already been held by the Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhavery Stock Brokers Pvt. Ltd. (2007) 161 Taxman 316that the return processed u/s. 143(1)(a) is not an assessment order and therefore, there being no assessment u/s. 143(3), question of change of opinion about this receipt being valid gift or not does not arise. Therefore, I do not find any force in the contention of the appellant raised in Ground no.1 that the initiation of proceedings u/s. 147 is bad in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding u/s.147 is that whether the AO was justified in reopening the proceeding after receiving information from Addl. CIT, Range-1 and whether the contention raised by the appellant in this regard that the reasons recorded are on untrue facts is correct or not. In this regard also, I rely on the judgment of the Hon'ble Supreme Court in case of ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) in which the Hon'ble Supreme Court has analyzed the scope of newly substituted section 147 in the Income Tax Act, 1961 w.e.f. 01.04.89. The relevant portion of this decision is reproduced as under :- The scope and effect of section 147 as substituted with effect from 1.4.89, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was gathered by the Income Tax Department on the basis of investigation carried out by its investigation wing that certain brokers were found involved in giving entries of bogus capital gain and bogus gift and the name of the assessee (appellant) was also found from their records as beneficiaries of such entry. Therefore, the principle laid down by the Hon'ble Supreme Court for reopening of the assessment u/s. 147 in case of ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) is found to be more appropriate in the present case because the Supreme Court has held in this decision that if the AO for whatever reason (here the reason with the AO is that he got information from the Investigation Wing through his Range Addl. CIT that this assessee has received an entry showing payment of ₹ 1,00,250/- from the bank account maintained by such brokers who were found involved in giving entry of bogus capital gain and bogus gift) has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. In the above cited case of the ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra), the Hon'ble Supreme Court has also analyzed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be substantiated by him because of his failure to produce the donor as well as to explain his relationship with the donor and occasion of receiving the gift and found to be just entry as per the information of the Investigation Wing. Therefore, such information on the basis of which this case was reopened cannot be said to be untrue at least in substance, though there may be slight mistake in recording the name of the person in whose name the alleged bank account existed from where the alleged money was paid claimed to be gift by the assessee (appellant). At the time of recording the reasons, the AO was not required to make all the enquiries and the information given in the report of the Investigation Wing was sufficient for him to draw such conclusion that the amount shown to have been received by the assessee as not declared in the return of income, was in form of entry of gift received from such brokers engaged in providing such entries because the information provided by the Investigation Wing was based on the enquiries conducted by the officers of the Income-tax Department and it was a sufficient prima facie material for him to reopen a case u/s. 147, more particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifts of ₹ 1,00,000/- shown by the appellant is not genuine gift and hence, they are receipt of money of an income nature as held by the Hon'ble Supreme Court in the case of CIT v. P. Mohankafa (supra) and hence, this amount is correctly added by the AO in the income of the assessee (appellant) holding it his unaccounted money under the garb of bogus gift entry and therefore, I confirm the addition of ₹ 1,00,000/- made in the assessment order. 6.11 As regards to addition of ₹ 2,000/- on account of commission paid for obtaining the entry of gift challenged in Ground No.2 is concerned, I have confirmed the decision of the AO holding receipt of ₹ 1,00,000/- in the hand of the appellant as unexplained gift being his unaccounted money, I find that the AO has made this addition because he found that the gift of ₹ 1,00,000/- shown by the appellant was not a real gift but a receipt of money in form of income and such entries are given by the entry giver only after charging of some commission. Though there is no direct evidence against the appellant that she has paid commission for obtaining this entry but on the facts and circumstances of this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of ₹ 1,00,000/- and ₹ 2,000/- as challenged in Ground No.2 has been confirmed by me as discussed above, the Ground No.2 is dismissed. 9. The ld. Authorised Representative submitted that the assessee was not dealing in shares. The details given in reasons recorded and finally addition made is different. The ld. Authorised Representative submitted that wrong/incorrect reasons have been recorded. The ld. Authorised Representative submitted that reasons cannot be supplemented. The ld. Authorised Representative submitted that there is no reason to believe, therefore, reopening itself is bad in law. The ld. Authorised Representative in support of his contention relied upon following decisions:- (1) NDT Systems v. ITO [W.P No. 2710 of 2012, dated 4-12-2012] (2) Jai Bharat Maruti Limited vs. CIT, 223 CTR page269 Delhi (3) Arvind Poly Cot Limited vs. ACIT, 222 ITR page 280 Gujarat (4) Tin Mfg. Co. of India v. CIT [1996] 222 ITR 323 (All.) (5) CIT vs. P.R. Ganpathy 2012 254 CTR SC page 336 (6) CIT vs. Arun Kumar Kothari 2012 254 CTR Rajasthan 648 10. On merit, the ld. Authorised Representative submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2001-02. It was alleged in para 6 of the petition that the main source of income of the petitioner is from house property. The assessee enjoys income from the house property which is said to be commercial premises. It is alleged in para 7 of the petition that during financial year 1999 the petitioner purchased 8,400 shares of M/s. Charismatic Trade links Ltd. and the purchase of these shares was duly shown in the relevant income-tax return for that year. It is alleged in para 8 of the petition that during assessment year 2001-02, the aforesaid shares were sold to one M/s. Yadav Co. In para 9 of the petition it is stated that this sale of shares was duly shown in the return of income. Subsequently, the assessee received a summons from the Addl. Director of IT (Investigation) Unit-I, New Delhi, vide summon dated 17th Jan., 2002 by means of which certain information was required from the assessee. Thereafter the assessee again received a summons dated 14th/15th Feb., 2002 by which certain more information was required. However, the assessee was surprised to receive the impugned notice under section 148 of the Act. On 14th Feb., 2003 the assessee received notice under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. by the concerned company. Merely on the basis of the statement of a third person, reassessment proceedings cannot be initiated against the petitioner. It is alleged in para 22 of the writ petition that the sale value of shares have been disclosed and has been accepted and there is no dispute in respect of sale value of the shares. The complete sale value has been shown in the original return of income filed by the petitioner and hence it cannot be said to be a case of escaped assessment. In para 8 of the counter-affidavit, it is stated that the assessee further indulged in bogus transactions in purchase also whereby he purchased shares on bogus transaction from M/s. J.R.D. Stock Broker (P.) Ltd. The director of M/s. J.R.D. Stock Broker (P.) Ltd. Mr. Ashok Gupta has admitted in his statement that he was engaged in providing bogus accommodation entries in exchange of cash/cheques for certain commission. The copies of the statement of Mr. Ashok Gupta are Annex CA-5, 7 and 8 to the counter-affidavit. In para 10 of the counter-affidavit it is stated that the petitioner is the recipient of several lakhs of rupees arising from the bogus transactions entered into through Yadav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 1 was an honest and reasonable belief on the material which he had received from the Investigation Wing of the Department. In Ranbir Engg. Mills Store v. ITO [1980] 126 ITR 512 (Punj. Har.), consequent upon craids conducted by the Income-tax Department on certain brokers and examination of the books of a certain person, it was found that many of the transactions recorded in the books of the assessee as loans were accommodation entries in which no moneys had passed and the so-called lenders were name-lenders only. It was held that the proceedings under section 148 by the Assessing Officer had been validly initiated. Similar view has been taken in Frontier Trading Co. v. P.N. Chaudhry , ITO [1982] 136 ITR 503 (Punj. Har.), Jash Bhai F. Patel v. CIT [1982] 136 ITR 799 (Punj. Har.), Kripa Ram Ramji Dass v. ITO [1982] 135 ITR 68 (Punj. Har.), M. Varadarajulu Naidu v. CIT [1978] 111 ITR 301 (Mad.) and Hazi Amir Mohd. Mir Ahmed v. CIT [1977] 110 ITR 630 (Punj. Har.). Thus there is no merit in this petition and it is dismissed. Purushottam Das Bangur (supra) The brief facts of this case are that during the accounting year relevant to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment for the relevant assessment years. The notices were, therefore, quashed. On appeal to Supreme Court held as under :- The High Court has proceeded on the basis that the said letter of Shri Bagai did not contain any information and that there was neither evidence of manipulation nor evidence of collusive transactions referred to in the letter and that no inquiries were made by the ITO after the receipt of the letter so as to constitute information. We are unable to agree with the said view of the High Court. The contents of paragraph 2 of the letter of Shri Bagai refer to the statement containing financial information regarding Maharaja Shree Umaid Mills Ltd. which was annexed to the letter of Shri Bagai. The said statement contained information derived from the Bombay Stock Exchange Directory about the financial condition of Maharaja Shree Umaid Mills Ltd. during the period 1965-70 which indicated that during this period, the company has prospered and that the book value per equity share had arisen from ₹ 318.55 for the year ending 31-12-1965 to ₹ 401 for the year ending 31-12-1970, the earning per share rose from ₹ 8.37 per share to &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sale of shares and addition made on different account of gift, is different because in the reasons recorded it is clearly stated about both types of transactions bogus entries of long term/short term capital gain and bogus gifts. It is also relevant to state that information received from Addl. Commissioner of Income, Tax Range-1, Agra and after applying mind the A.O. found that there is escapement of income. The information was received on 20th March 2008 and the A.O. issued notice under section 148 on 26.03.2008. Thus, there was sufficient time with the A.O. to apply his mind. The Hon'ble Apex Court in the case of Purushottam Das Bangur (supra) held that notice issued on next day after receipt of letter from Deputy Director, the notice issued under section 148 was a valid notice. Similarly the Hon'ble Allahabad High Court in the case of Brij Mohan Agarwal (supra) held that the A.O. has an honest and reasonable belief on the material which had received from the Investigation Wing. Therefore, notice issued under section 148 of the Act was a valid notice. The facts of the case under consideration are identical to the facts of the case of Brij Mohan Agarwal (supra). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stly the persons from whom money is alleged to have been received actually existed or not. Secondly depending upon the facts of each case, the Income-tax Officer may even be justified in trying to ascertain the source of the depositor, assuming he is identified, in order to determine whether that depositor is a mere name lender or not. Be that as it may, it is clear that the Income-tax Officer has jurisdiction to make enquiries with regard to the nature and source of a sum credited in the books of account of an assessee and it would be immaterial as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of gift. The use of the words 'any sum found credited in the books' in section 68 indicates that the said section is very widely worded and an Income-tax Officer is not precluded from making an enquiry as to the true nature and source thereof even if the same is credited as gift. What is clear, however, is that section 68 clearly permits an Income-tax Officer to make enquiries with regard to the nature and source of any or all the sums credited in the books of account of the company irrespective of the nomencla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. 18. I would also like to refer one more judgment of Hon'ble Apex Court in the case of P. Mohanakala (supra). In this case, following questions have been answered by the High Court in favour of the assessees and against the Revenue :- (a) Whether, in the facts and circumstances, the Income-tax Appellate Tribunal was correct in law to accept the principle of preponderance of probabilities in holding that the claim of the appellant that the sum of ₹ 15,62,500** received him by way of gifts through normal banking channels was not genuine and that it was liable to be assessed under section 68 of the Income-tax Act, 1961 ? (b) Whether, in the light of the law established and based on the facts and in the circumstances of the case, the learned Income-tax Appellant Tribunal is legally justified in concluding that burden of proof cast on the appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present ? (c) Whether in the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned in England. As far as his Indian income is concerned, he stated that he filed the returns for the assessment years 1996-97 and 1997-98 before the Income-tax Officer, Ward 1(4), CBE only on October 23, 1997. His investment in Indian companies according to him will be around ₹ 5 crores and made out of his income earned in the foreign countries. He did not reveal the details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence as regards his financial status. He stated from 1972-73 he knew Srinivasan, Rajendran and their families. His father was a taxi driver, and was very poor. Srinivasan and his family members were supporting him when he was in India. To a pointed query as to whether there is any evidence to show that he was also known by any other name other than Sampathkumar, he stated that no evidence. Only Mr. Srinivasan used to call me as Suprotoman. 20. The Assessing Officer in the circumstances came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs circumstances have been relied upon by the Assessing Officer to reject the explanation offered by the assessees. The Commissioner of Appeals confirmed the findings and conclusion drawn by the Assessing Officer. The Tribunal speaking though its Senior Vice President concurred with the findings of fact. The findings in our considered opinion are based on the material available on record and not on any conjectures and surmises. They are not imaginary as sought to be contended. Relying on the decisions of this court in Bejoy Gopal Mukherji v. Pratul Chandra Ghose, AIR 1953 SC 153 and Orient Distributors v. Bank of India Ltd. AIR 1979 SC 867, Shri Iyer, learned senior counsel contended that the issue relating to the propriety of the legal conclusion that could be drawn on the basis of proved facts gives rise to a question of law and, therefore, the High Court is justified in interfering in the matter since the authorities below failed to draw a proper and logical inference from the proved facts. We are unable to persuade ourselves to accept the submission. The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of the gift is not established. The CIT(A) held that, this amount is correctly added by the A.O. in the income of the assessee holding it his unaccounted money under the garb of bogus gift entry and therefore, he confirmed the addition of ₹ 1,00,000/- made in the assessment order. As regards to addition of ₹ 2,000/- on account of commission paid for obtaining the entry of gift, the CIT(A) held that since he has confirmed the decision of the A.O. holding receipt of ₹ 1,00,000/- in the hands of the assessee as unexplained gift being his unaccounted money, the CIT(A) found that the A.O. has made this addition because he found that the gift of ₹ 1,00,000/- shown by the assessee was not a real gift but a receipt of money in the form of income and such entries are given by the entry giver only after charging of some commission. The CIT (A) held that that the amount of ₹ 1,00,000/- received by the appellant is not a real gift and it is an entry of bogus gift, now the question arises whether such entry would be given by someone without charging any commission. As per human conduct and common market practice of giving of entry, it is not possib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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