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TMI Blog2008 (10) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... r is extracted hereunder:- Q.1. Please identify yourself. Ans: I am Pawan Kr. Jain S/o Sh. Suresh Kr. Jain R/o BM-173 West Shalimar Bagh, Delhi. I am 43 years old. Q.3 What is your source of income. Ans: I am Prop. Concern namely Pawan Jai and Sons. It is recognized Export House. It is exporting stainless steel utensils. Q.7 What is your turnover? Ans: Last year it was more than 50 crore. Q.10 Have you made gift during FY, 2000-01. If yes to whom and how much. Ans: Yes. I have gifted ₹ 50,00,000 to Kusum Gupta, through cheque. Q.11 How you know Mrs. Kusum Gupta? Ans: Her husband Mr. Umesh Gupta is my friend and we have family relation for the last 15 years. Q.12 Where Mrs. Kusum Gupta is residing and what type of business she is carrying? Ans; She is residing at 21/40, Shakti Nagar, Delhi. She is house wife and business also. Q.13 Please state what Mr. Umesh Gupta is doing. Ans: Mr. Umesh Gupta is engaged in business of stainless steel at Meera Tower 1st Floor Wazirpur Indl. Area, Delhi. Q.14 What is your relationship with Mrs. Kusum Gupta? Ans: I know to her family for the last 15 years and I use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Sagar Chand Jain and Pawan Kr. Jain. Ans: I know to him for the last 15 to 16 years and they used to visit my house regularly. We have family relations with them. Q.9 Have you any business dealing with Sh. Sagar Chand Jain and Sh. Pawan Kr. Jain. Ans: Yes. It is very nomillaly. Q.11 Please state you have got any relation with Sh. Sagar Chand Jain or Pawan Kr. Jain. Ans: No. We have only family relations. Q.12 Can you identify the names of family of Sh. Sagar Chand Jain. Ans: Yes. Smt. Shanti Devi (wife) Sunita and Sarita (Daughters) Rajinder and Kamal (sons). Q.13 You ever visited to Sagar Chand Jain. Ans: I visit to his house almost once a week. Q.14 why Sh. Sagar Chand Jain and Pawan Kr. Give gift to you. Ans: It was only due to their love and affection with me. Q.15 Please give the details of family members of Sh, Pawan Kr. Jain. Ans: His wife name Rekha, Son Amit and a daughter Sarika. The Assessing Officer also required the assessee to produce Shri Sagar Chand Jain. Shri Sagar Chand Jain appeared before the Assessing Officer and his statement was recorded on oath on 4.2.2004. The relevant portion of his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 47,54,530 and after debiting ₹ 50,00,000 on 12/10/2000 there was a debit balance of ₹ 2,45,469 in the bank account of alleged Donar. 4. No gift was made by the alleged donor except to his younger brother during the year as stated amount of gift to brother has not been disclosed despite being asked. 5. Shri Umesh Gupta the husband of the donee is stated to be friend of donor. 6. No special reason for giving gift to the business associates was stated by alleged donor. 5. Considering all these facts the A.O. concluded thus: It is apparent that the assessee has not been able to prove the genuineness of the gift. Even though the person is existing, the genuineness of transaction has not been established. It sounds unbelievable that a person would gift to a business associates such a huge amount part of which finance through over draft from bank. Assessee is a well off person and is not in any kind of crises situation, what was urgency to give the gift at that particular moment when the donor did not have sufficient fund in the bank account. The whole transaction is fake on the human probabilities. It has been held by Hon'ble Madras Bench of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 the credit balance was more than ₹ 32 lacs. An affidavit from Shri Pawan Kumar Jain was also filed. It was also clarified that Shri Sagar Chand Jain has received back the advance given by him to one Shri R.C. Kathuria and after receipt of such advance by Shri Sagar Chand Jain, gift of ₹ 10 lacs was given. The learned CIT(A) held that when Shri Pawan Kumar Jain gave a gift of ₹ 50 lacs on 12.10.2000, the credit balance was to the extent of ₹ 47.54 lacs in his bank account. The learned CIT(A) held that there is no circumstantial evidence to justified that donor because of past relationship with donee had voluntarily made the gift without any expectation of getting back any consideration in lieu of gift. No instances are cited by the donor to prove that he was in touch and involved with the family affairs of the donee. The only reply given is that the gift was out of natural love and affection. Since the bank account did not have sufficient funds and element of love and affection being missed out, the gift from Shri Pawan Kumar Jain was held not to be genuine. As regards gift from Shri Sagar Chand Jai the learned CIT(A) held that there was no relationship b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.60 lacs. Along with the cheque of ₹ 20 lacs to the assessee, he also issued various other cheques. Therefore, when the amount was debited in respect of cheque issued to the assessee, the balance stood reduced to ₹ 47.54 lacs. However, on the very next day i.e. on 13.10.2000, the balance in his account even after debit of cheque of ₹ 50.00 Lacs shows credit balance of ₹ 32.96 lacs. Merely because at particular point of time the balance was marginally short, it cannot be held that the donor did not have sufficient fund to give the gift. All other accounts and cheques reveal that he is a man of means with sizeable capital and huge turnover. 9. As regards gift from Shri Sagar Chand Jain, Shri Aggarwal submitted that the evidence laid in this regard is at pages 5 to 15 of the Paper Book. The statement of Shri Sagar Chand Jain is at pages 5 to 8 of the Paper Book. Page 9 to 12 is the income-tax return filed by Shri Sagar Chand Jain along with his balance-sheet and Profit and Loss account etc. Shri Sagar Chand Jain has declared gross total income of ₹ 22.13 lacs. His capital account reveals credit balance of ₹ 112 lacs. His turnover is exceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Prof, P.G.A. Nath, 234 ITR 854 (Del); (6) Parimisetti Seetharamamma vs. CIT, 57 ITR 532(SC); (7) Smt. Bhagwati Devi vs. ITO, 47 ITD 58. As regards decisions relied by the Assessing Officer in the case of ITO vs. Dr. Smt. Daxaben J. Kansagara and Others, 66 ITD 381 he submitted that the same is distinguishable on facts. In the said case the gift was stated to be received by the assessee who was a doctor running ultra modern surgical clinic with lucrative practice and the gifts were received from strangers and illiterate agriculturists who have stated to have given gift out of agricultural income. In such a situation the Tribunal held that where donors were ranked outsiders/strangers and there was no occasion for making huge gifts to relatively well to do donees, genuineness of the gifts cannot be accepted. However, in the present case the donors are of much more means. They have also established their family relationship of over several years. Therefore, the decision of ITAT Ahmedabad Bench in the said case cannot be applied. The decision of Hon'ble Supreme Court in the case of CIT vs. Dr. R. S. Gupta, 165 ITR 36 the issue involved was whether the gift by book entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer, yet when the respective conduct of the donor and donee have been explained and no contrary evidence is found, the opinion of the Assessing Officer is of least importance. Neither the affidavit is proved wrong nor the statements of donors have anything, which suggest that the gift is not genuine. The decisions relied by the learned DR are distinguishable on facts. In the case of CIT vs. Anil Kumar (supra) the Hon'ble Delhi High Court considering their earlier judgments carved out the position that (i) mere identification of donor and showing the movement of gift through banking channel is not sufficient to prove the genuineness of the gift; and (ii) The onus lies on the assessee to establish not only the identity of the donor but also his capacity to make such a gift. If these are the criteria laid down, the assessee has proved these criteria and hence this judgment on the contrary supports the case of the assessee. In the case of P. Mohankaia (supra) the Hon'ble Supreme Court noted the fact that as per evidence it indicated that donor was to receive suitable compensation from the assessee. On this material the Assessing Officer held that gifts thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We. shall therefore, examine as to whether the provisions of section 68 can be applied or not. Under section 68 where any amount is found to be credited in the books of accounts of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered is not in the opinion of the Assessing Officer satisfactory, such sum may be charged to income-tax as income of that previous year. Time and again various Courts have held that the primary onus to justify the genuineness of the cash credit lies on the assessee. A cash credit is held to be explained provided - (1) The identity of the creditor is established; (2) The creditworthiness of the creditor is established; and (3) The genuineness of the transaction is established. 14. Since the transaction is not simply cash credit but by way of gift, the onus to establish the genuineness of gift is broader than the ordinary cash credit by way of loans. However, the broad criteria shall always be the same as to prove the genuineness of the cash credit. In the present case there is no dispute about the identity of the donor. The donor was examined by the Assessing Officer himself during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing given the gift out of natural love and affection which he has towards donee for last more than 15 years. He also averred that the assessee is treated as 'sister' in all family functions and festivals. It was also averred that the assessee is instrumental in driving Shri Pawan Kumar into export business of utensils. He also averred that he achieved his goal in his personal life and in society since time he is in relationship with assessee. They also go for vacation jointly. In spite of this specific affidavit, no further enquiry was made. The same was brushed aside as it sounds unbelievable or it is against human probabilities . When the overwhelming evidence is produced by the assessee and which has not been found to be either incorrect or false, the same cannot be treated as no evidence or as non-genuine. A transaction does not become non-genuine only by saying so. It was incumbent upon the Assessing Officer to find out if such evidence is either untrue or false. Having not clone so, a good proof cannot be said to be no proof or be treated as non-genuine. In our opinion, the assessee has established the genuineness of the transaction in respect of gift. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d give his finding thereon. At any rate the credit in the bank account of Shri Sagar Chand Jain is not the source of assessee's credit but is the source of the source. Time and again various courts have held that when the assessee is required to prove genuineness of credit, he has to prove only his source and not the source of the source. In view of this evidence it can be concluded that Shri Sagar Chand was a man of huge means who could have given gift of ₹ 10 lacs to the assessee. As regards the genuineness of transaction, there is nothing on record to suggest that the transaction is not genuine. The donor and donee both having confirmed the gift, having signed the gift deed and having established the relationship (though not blood relationship), are sufficient to hold the transaction as genuine as there is no contrary evidence also. Accordingly the transaction of gift of ₹ 10 lacs from Shri Sagar Chand Jain is to be held as a genuine transaction. However, in what fashion the transaction is not genuine is not brought out by the Assessing Officer. What all is made out is that it sounds unbelievable or it is against human probabilities . Such conclusion merely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that the receipts were gifts and not revenue receipts of the assessee. It was purely a finding of fact. No referable question of law arose from the order of the Tribunal. In the case of Lalchand Bhagat Ambica Ram vs. CIT, 37 ITR 288- It was held by the Hon'ble Supreme Court that when a court of fact arrives at a decision by considering material which is irrelevant to the enquiry, or acts on material, partly relevant and partly irrelevant, and it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its decision, a question of law arises: whether the finding of the court of fact is not vitiated by reason of its having relied upon conjectures, surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material. In the case of Gouri Prasad Bagana and Others vs. CIT, 42 ITR 1 12 the facts of the case are that- The income tax officer found the sum of ₹ 72,523 credited in the assessee's account books in the name of his father, When called upon to explain the nature and source of the amount the assessee stated that it represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the AO has found, that the facts created doubt, that how the assessee as well as his family members are receiving such huge gifts from a person residing abroad, and concluded that it appears, that the gifts are not genuine, and are only a managed affair of the assessee. The CIT(A) has reversed his finding by holding that the assessee had clearly shown from the assessment proceedings that the gifts were made out of love and affection towards the assessee and it is matter of God's Grace to make love and affection between donors and donee, and to have love and affection between two persons, blood relation is not required, and looking to the status of the donors, the amount gifted was very meager. Then, it was found by the CIT(A), that the assessee has also furnished the copies of the gift deeds, and affidavits of the donors. In the opinion of the CIT(A), it is not a case, where the assessee had first given such amounts to the donors, and the donor returned back to the assessee by way gift. The CIT(A) had gone through the bank accounts of the donors, copies thereof are on record, and found, that there was sufficient cash balance on the date of gift to the assessee, in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authorities had recorded a categorical finding that by producing the documents, the assessee had discharged the onus which lay on him with regard to the genuineness of the gifts. The inference drawn by the appellate authorities, on the appreciation of the evidence was factual, giving rise to o question of law much less substantial question of law. In the case of CIT vs. Mrs. Sunita Vacham, 184 ITR 121 (Delhi)- The facts of the case are that the commissioner in revision had set aside an assessment order, because he was of the view that the income tax officer had not gone into the sources of gifts of large sums of money received by the assessee form abroad. On appeal, the appellate tribunal saw the balance-sheets of the donors which had been placed on record and came to the conclusion on merits that the decision of the income Tax Officer to treat the money received as gifts was correct and that there was no error committed by the officer as there was nothing more which he could investigate than what he had already done: Held, that the finding of the tribunal that the gifts were genuine was a pure question of fact and no question of fact and no question of law arose from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he donor having appeared in person before the Assessing officer, the genuineness of the transaction was established, not only by the receipt of the bank draft, but also by the fact of the transaction having borne gift tax once the assessment was framed. The primary onus which rested with the assessee, thus. stood discharged. Thereafter, if the revenue was not satisfied with the source of the funds of the funds in the hands of the donor, it was up to the revenue to take appropriate action. The tribunal considered the motivation for making the gift which was relevant. The addition of ₹ 50,000 was not justified. In the case of CIT vs. P. Mohanakala 291 ITR 278, the Hon'ble Supreme Court observed- A bare reading of section 68 of the Income Tax Act, 1961, suggests that (i) there has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sutra of money during the previous year; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the Assessing officer, not satisfactory. It is only then that the sum so cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner (Appeals). On appeal the High Court re-appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court, it has - Held, reversing the decision of the high Court, that the findings of the Assessing Officer, Commissioner (Appeals) and the Tribunal were based on the material on record and not on conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent finding of fact. In the case of Smt. Bhagwati Dem vs. ITO, 47 ITD 58 the Calcutta Bench of the ITAT observed that- In the instant case, the AAC did not decide the issue with an open mind and was perhaps biased that the assessee, a lady, residing in India, could receive gift of ₹ 1 lakh from a foreign resident out of natural love and affection and also without there being any evidence of social interaction between donor and donee namely, the assessee. It could not be understood as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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