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TMI Blog2015 (12) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the financial capacity to gift such huge sums of money. Clearly therefore, the assessee has failed to prove the creditworthiness of the donors. Even the donors who appeared before the Assessing Officer clearly did not have the capacity to make such gifts. In relation to the gifts received from the NRI donors, except for the fact that such amount was received from banking channel and their confirmations were filed, no other supporting material had been produced by the assessee to prove the identity of the donors, the genuineness of the gifts and the creditworthiness of the parties Insofar as the submission advanced by the learned counsel for the assessee that in the light of the finding recorded by the Tribunal that the original passports of the NRI donors had not been produced, the matter is required to be restored to the file of the Tribunal, in the opinion of this court, in the absence of any cogent material having been brought on record by the assessee to prove the financial capacity of the NRI donors or the genuineness of the gifts, no case has been made out for restoring the matter to the file of the Tribunal. - Decided in favour of the revenue and against the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Rabari ₹ 50,000/- [6] Mahavir Prasad Prajapati ₹ 50,000/- [7] Vinod Jugraj Dungar ₹ 51,000/- [8] Pankajkumar Jain ₹ 51,000/- [9] Amit B. Solanki ₹ 50,000/- 4. The assessee had filed declaration of gift from the above persons. The Assessing Officer called upon the assessee to furnish the source of capital introduced and also directed him to produce persons from whom gifts were received to verify the identity, creditworthiness and genuineness of the gifts made by various persons. Out of the above nine persons, the assessee produced two persons, viz., Shri Niranjan Chhotalal Kshatriya, who had made a gift of ₹ 1,00,000/- and Shri Piraram Chelaram Rabari, who had made a gift of ₹ 50,000/-. Their statements under section 131 of the Act came to be recorded. According to the Assessing Officer, these persons did not have the capacity or source of making such gifts and that, before issue of cheque or gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the appellant as the appellant has furnished the address of the donor and the financial capacity of the donor. Two of the donors have admitted before the Assessing Officer and confirmed the fact that they have given the gift to the appellant. Shri Piraram Rabari has stated in reply to question No.9 that he has made cash deposits in his bank account and has given the gift from his savings of salary. Similarly, Niranjan Kshatriya has confirmed in his statement that the cash deposits in his bank account were from his savings. The gift of ₹ 1,00,000/- from Niranjan Kshatriya has been reflected in his capital account filed as annexure to his return of income filed on 27.5.2002 with ITO Ward 12(3), Ahmedabad. It has been held that ITAT Jodhpur Bench in the case of DCIT v. Ramdeo Kumar Chitlangia (89 TTJ 346) (Jodhpur) that blood relationship is no condition precedent for making a valid gift. In view of the above facts and details submitted by the Authorized Representative in support of the creditworthiness of the donors, the addition of gift of ₹ 7,02,000/- made by the Assessing Officer is held to be not justified and the same is not deleted. 5. Against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was in the knowledge of the revenue that the said creditors were income-tax assessees, if the revenue did not make any effort to pursue the so-called alleged creditors, the assessee could not do anything further and the assessee had discharged the burden that lay on it. It was for the revenue to examine the source of income of the alleged creditors to find out their creditworthiness. Mr. Divatia, accordingly, submitted that it was for the revenue to pursue the so-called creditors and find out their creditworthiness and the burden could not have been thrown on the assessee. 6.2 The learned counsel further placed reliance upon the decision of this court in the case of Commissioner of Income-tax-VI v. Bhanwarlal Sharma, [2013] 214 Taxman 122 (Gujarat), wherein the court noticed that the Assessing Officer had not summoned any of the donors. However, he had issued letters under section 133(6) of the Act and had also called for confirmation letters which were received by him. The assessee had furnished all other requisite documents like copies of DD, gift deed, copy of PAN cards, copy of acknowledgment of returns of the donors along with computation and balance sheet. It was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal that it was for the assessee to produce the parties as the same was necessary to establish identity and to enable the Assessing Officer for examination and further investigation regarding genuineness of persons and creditworthiness, it was submitted that all relevant details with regard to the said persons had been furnished to the Assessing Officer and hence, the Assessing Officer could have summoned the said persons on his own. It was submitted that the Commissioner (Appeals) after duly considering the material on record, had rightly held in favour of the assessee and that the Tribunal was not justified in reversing the same. It was, accordingly, urged that the decision of the Tribunal is required to be reversed and the order passed by the Commissioner (Appeals) deserves to be restored. 7. Vehemently opposing the appeal, Mr. Nitin Mehta, learned senior standing counsel for the respondent submitted that the findings recorded by the Tribunal are findings of fact and re-appreciation of evidence and substitution of findings by the High Court is impermissible. It was submitted that once the explanation offered by the assessee is found to be unsatisfactory, the sums credited in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the assessee. It was submitted that both the Assessing Officer as well as the Tribunal have made a detailed analysis of each donor and have come to the conclusion that the genuineness of the gifts as well as creditworthiness of the said persons have not been established. Moreover, except for the two persons who were produced before the Assessing Officer, even the identity of the other donors has not been established. Referring to the findings recorded by the Commissioner (Appeals) wherein he has recorded that the donors had given the gifts from their accumulated income, it was submitted that the same is not supported by an iota of evidence on record and is therefore, without any basis. It was submitted that the Commissioner (Appeals) while reversing the order passed by the Assessing Officer, has cursorily made reference to the evidence and without any detailed analysis in respect of each donor, by simply placing reliance upon certain decisions on which reliance had been placed by the assessee, deleted the additions. It was pointed out that as regards the two NRIs, all that was produced by the assessee was their confirmations. It was submitted that the confirmations could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence to show whether the alleged donors had adequate funds in their respective accounts to make these purported gifts in Singapore Dollars which was almost running into more than five lakhs. Mr. Mehta submitted that therefore, the financial capacity of the donor has to be established by the assessee and merely submitting tax returns is not sufficient and that the passbooks of the bank accounts should also be produced to show the financial capacity of the donors. The learned counsel further placed reliance upon the decision of this court in the case of Commissioner of Income Tax v. Mira S. Khurana, (2011) 333 ITR 488 (Gujarat), wherein the court has observed that the Tribunal had failed to appreciate that the Assessing Officer had granted opportunity to the assessee to prove the genuineness of the gift and creditworthiness of the donor, but the assessee had failed to adduce any proof in this regard. The onus then could not have been shifted to the Assessing Officer without dealing with the findings recorded by the subordinate authorities. Reliance was also placed on the decision of this court in the case of Kaushal H. Patel v. Income Tax Officer, [2014] 365 ITR 383 (Guj), with pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the facts of the case to point out that Shri Niranjan Chhotalal Kshatriya, had in the statement recorded under section 131 of the Act, stated that he had deposited the cash and given the gift and that such amount is duly deposited in the capital account. Referring to the return of income filed by the said assessee, it was submitted that the return of income of the said assessee was duly submitted. As regards Shri Rupchand Ramlal Prajapati, it was pointed out that his return of income for the year 2000-2001 had been produced on record along with PAN card, xerox copies of balance sheet, statement of income, xerox copy of bank passbook, statement etc. As regards donor Shri Piraram Chelaram Rabari, it was pointed out that in his statement under section 131 of the Act, he has stated that he had deposited such amount out of his savings from his salary. It was submitted that thus, the source of the gifts has been duly established by the assessee by producing sufficient material on record. As regards two NRI donors, it was submitted that the payments have been made through Emirates India International Exchange and through Thomas Cook Exchange Company. The amount has gone by Pay Order iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the question in the light of what was stated in the said decision and does not in any manner come to the aid of the respondent. 8.1 Mr. Divatia further submitted that the decisions of the Delhi High Court as well as the Punjab and Haryana High Court, on which reliance has been placed by the learned counsel for the revenue for the purpose of contending that the gift should be made out of natural love and affection, would not be applicable to the facts of the present case in the light of the view taken by this court in the case of Murlidhar Lahorimal v. Commissioner of Income Tax (supra). Reliance was placed upon the decision of the Rajasthan High Court in the case of Commissioner of Income Tax v. Padam Singh Chouhan, [2008] 3 DTR (Raj) 190 = 315 ITR 433, for the proposition that there is no legal basis to assume, that to recognize the gift to be genuine, there should be any blood relationship, or any close relationship, between the donor and the donee. Instances are not rare, when even strangers make gifts, out of very many considerations, including arising out of love, affection and sentiments. It was submitted that the said decision would be squarely applicable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the donors had the financial capacity to make such gifts. The Commissioner (Appeals) has also observed that Shri Piraram Chelaram Rabari has stated that he had deposited cash in his bank account and had given the gift from his salary. In this regard, the statement of Shri Piraram Chelaram Rabari recorded under section 131 of the Act reveals that he was working as a watchman (chowkidar) and two years prior thereto, he used to earn ₹ 2,500/- and presently, was earning ₹ 3,200/-. In answer to the query as to whether he had any income other than the salary income in the previous five years, he has stated that he used to get ₹ 500/- for cleaning the shop. He has also stated that he has not deposited any money anywhere in the last five years and does not have any interest income. He is stated to have gifted ₹ 50,000/- to the assessee. As regards his relationship with the assessee, he has stated that he has no relationship and that he had met him at Chandkheda on many occasions. On the other hand, the assessee has stated that Shri Piraram Rabari used to bring customers for his scheme and they used to give some discount to such members and it is possible that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was any business relationship. We have to appreciate that AO has looked into the facts of the case as to whether a watchman has given substantial amount of gift to builder? Facts clearly raise question of proper inquiry. In the absence of clear facts to substantiate, burden on the assessee is of higher degree, inasmuch as, he has to establish as to how a watchman can have financial capacity to gift substantial amount to assessee who is much prosperous. Inconsistencies to replies of both the persons i.e. assessee and Rabari and the fact that Mr. Rabari utterly failed to establish his creditworthiness, gifts in question cannot be accepted. AO has rightly treated the same as undisclosed income of the assessee. CIT (A) except some reference to case laws, has made no objection consideration. [ii] Shri Niranjan Chhotalal Kshatriya : He is only an accountant having earning of ₹ 5,500/- per month, who is having household expenses of ₹ 3,500/- and has given a gift of ₹ 1,00,000/- to the assessee. In the assessment, he could not tell about any family members of the assessee and the reasons of friendship is only meeting at some Advocate s office. When a ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily members and local addresses of Shri Vinod Meghani at Ahmedabad, he had not contacted him by mail or telephone since last six to seven years. In view of these glaring deficiency and proper establishment of identity of the donors in the form of original passport and their proper existence, relationship as alleged by the assessee, we are unable to treat this gift as genuine gift as identity and creditworthiness could not be proved by assessee in terms of section 68. Coming to remaining donors, they could never be produced by the assessee, as already held by the Hon ble Delhi High Court in the case of Sajan Dass and Sons v. CIT, 264 ITR 435 showing movement through banking channels is not sufficient. Onus lies on the assessee to establish identity of the person s capacity. In the instant case, it was for the assessee to produce these parties as same was necessary to establish identity and to enable AO for examination and further investigation regarding genuineness of persons and creditworthiness could have been carried out. In the eventuality of assessee having failed to prove its burden, onus does not shift on the AO to accept gifts valid only on the basis of confirmations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessees in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income tax as the income of the assessees of that previous year. The expression the assessees offer no explanation means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessees as not satisfactory is required 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. The court after referring to its earlier decision in the case of CIT v. Smt. P. K. Noorjahan, [1999] 237 ITR 570, observed that in cases where the explanation offered by the assessee about the nature and source of sums found credited in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having borne gift tax once the assessment was framed. The primary onus which rested on the assessee, thus, stood discharged. The court, on facts, found that the donor had produced evidence in support of the source from which the funds for making the gift were available with him and the revenue had not disputed any of these facts. Placing reliance upon its earlier decision in the case of CIT v. Pragati Co-operative Bank Ltd., (supra) the court held that the assessee can be asked to prove the source of credit in the books, but cannot be asked to prove the source of the source. Adverting to the facts of the present case, the assessee has even failed to prove the source of the gift, inasmuch as, the financial capacity of the donors has not been duly established. 15. In the light of the above discussion, on the evidence which has come on record, it is not possible to state that the impugned order passed by the Tribunal is based on conjectures or surmises. The Tribunal, on the contrary, has considered all the relevant material and based its conclusions on the findings recorded by it after appreciating the material on record. From the findings recorded by the Tribunal, there is nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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