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TMI Blog2007 (7) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Mittal advocate was not present on behalf of the donee at the time of recording of these statements of Smt. Sukhdev Kaur, donor as is clear from the oath taken by Smt. Sukhdev Kaur before the recording of the statements, so the finding of the CIT(A) is against facts and law. 5. That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in giving the findings that the reasonable opportunity was given to the assessee after the filing of the affidavit dt. 2nd Dec., 2005 by Smt. Sukhdev Kaur, donor. 6. That on the facts and the circumstances of the case and in law, the learned CIT(A) erred in giving the findings that the AO was justified in rejecting the affidavit of the donor dt. 8th Jan., 2003. 7. That on the facts and circumstances of the case and in law the learned CIT(A) erred in giving the finding that Smt. Sukhdev Kaur, donor does not have the capacity to give the gift in question and gift is also not genuine. 8. That in any case, the gift in question is not only genuine but also the donor has the capacity to give the gift in question. 2. The facts are that the assessee HUF is a partner with the firm M/s Yogesh Kumar, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Annex. 'A' to the assessment order. From the said statement of Smt. Sukhdev Kaur, the AO observed that she was not a person of means; that she lives a poor life; that she had not got issued any cheque book from her bank; that the cheque used for the alleged gift was a local cheque obtained from the bank, a loose leaf cheque; that she had stated that she had never deposited ₹ 10 lakhs in her bank account on 8th Jan., 2003; that she had stated that the manager of the bank had taken her signature on some papers, stating that the same were required for her bank account; that she stated that being a uneducated lady, she was not aware of the contents of the affidavit and the blank cheque got signed by the manager of the bank on 8th Jan., 2003; and that she was prepared to state so even before either the AO or any authority. 4. Smt. Sukhdev Kaur also filed an affidavit before the AO in support of her statement that she had never given any cash to anybody even remotely connected with the assessee. This affidavit is at Annex. 'B' of the assessment order. The AO observed that the photocopy of the affidavit of Smt. Sukhdev Kaur, filed by the assessee, also suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance in this regard on the following case law : (1) ITO vs. Mukesh Kumar (2002) 172 CTR (P H) 535 : (2002) 254 ITR 409 (P H); (2) Kunj Behari vs. ITO (1983) 139 ITR 73 (P H); (3) P.N. Sasikumar Ors. vs. CIT (1988) 69 CTR (Ker) 78 : (1988) 170 ITR 80 (Ker); (4) P.V. Doshi vs. CIT (1978) 113 ITR 22 (Guj); (5) Vijay Kumar Jain vs. CIT (1975) 99 ITR 349 (P H); (6) 244 ITR 141 (sic) 9. The learned counsel for the assessee has further contended that the cash credit was in the name of the firm and not in the assessee's name and so, addition, if any, was to be made in the hands of the firm and not in the assessee's hands. 10. Relying on the assessment order, on the other hand, the learned Departmental Representative has argued that the reassessment is entitled to be maintained, since it was only in response to notice under s. 148 that the assessee filed the return of income and since it had also participated in the assessment proceedings. 11. We have heard the parties on the issue and have perused the material on record. In this regard, the contention of the assessee is that the requirement of s. 282 is that notice under the Act has to be served on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inference of the relinquishment or a known right or privilege . 14. In the present case, the assessee undisputedly filed its return of income in response to the notice under s. 148. It also actively participated in the assessment proceedings thereafter. It, therefore, by its conduct, abandoned the right to claim non-service of the notice under s. 148, as envisaged under s. 282. The assessee intentionally and voluntarily relinquished and abandoned such right. Thereby, the assessee conceded to the jurisdiction of the AO to make assessment for the year under consideration. As such, the alleged non-service of notice on the assessee rendered merely an irregularity which got cured by the subsequent conduct of the assessee, as aforesaid. The consequences of such waiver, undoubtedly, are binding on the assessee. In CIT vs. K.M.N.N. Swaminathan Chettiar (1947) 15 ITR 430 (Mad), after division in a joint family, notice was issued to the former Karta thereof without describing him as Karta. The addressee, by the act of his making the return in response to such notice, was held to have waived all irregularities. No doubt, in that case, the notice was served on the addressee. Herein, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for reassessment, issuance of valid notice is a condition precedent. There is no denial to this settled legal position. In the present case, the position is not otherwise. Here also, a valid notice under s. 148 was issued to the assessee. 21. In P.V. Doshi vs. CIT (supra), it was held that in a reassessment, the conditions to be fulfilled are mandatory and cannot be waived, acquiesced in or estopped, and that consent cannot give jurisdiction. Again, there is no denial to the aforesaid legal proposition. However, the facts attending that case are entirely different from those present herein. There, the Tribunal remanded the matter to the ITO. The Hon'ble High Court held that the order of the Tribunal could not give jurisdiction where it did not exist. Evidently, such are not the facts before us. Here, the assessee, by his conduct, had filed the return in response to the notice under s. 148 and had also actively participated in the assessment proceedings, thereby intentionally, consciously and voluntarily waiving the right to claim that the notice under s. 148 was not received by the assessee. Accordingly, the facts clearly show that the assessee was in the knowledge of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en stated that from the oath taken by Smt. Sukhdev Kaur before recording of the statement, it is amply clear that Shri V.K. Mittal, advocate was not present on behalf of the assessee/donee at the time of recording of the statement. 28. The learned Departmental Representative, on the other hand, has refuted such claim of the assessee. Attention has been drawn to the answer to question No. 13 at p. 5 of Annex. 'A' (supra) to the assessment order. 29. We have heard the rival submissions on this score. The grievance of the assessee is totally misconceived. Firstly, the assessment order shows that the assessee did not produce Smt. Sukhdev Kaur for examination before the AO, despite having been repeatedly asked by the AO to do so. It was only thereafter that the AO summoned the donor by issuance of summons under s. 131 of the IT Act. The donor was examined at the time of assessment. 30. Further, the argument that the oath taken by the donor at the time of recording of the statement shows that Shri V.K. Mittal, advocate, was not representing the assessee, does not have any legs to stand on. As pointed out by the learned Departmental Representative, the answer to this obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as adjourned to 10th Oct., 2005. 33. In this regard, the learned CIT(A) has made, inter alia, the following observations : ......... The AO in the remand report has mentioned that the statement of Smt. Sukhdev Kaur was recorded in the presence of Shri Vinod Mittal, counsel for the assessee and her husband Shri Gamdoor Singh. The statement was recorded in the presence of Shri Vinod Mittal, advocate, duly authorised by the assessee. Shri Vinod Mittal, advocate attended the assessment proceedings from time to time and at no time the assessee has withdrawn his power of attorney....... The arguments of the counsel have no force since the counsel of the assessee Shri V.K. Mittal was present when the statement of the donor was recorded. Moreover, the AO supplied a copy of the statement of Smt. Sukhdev Kaur vide his letter dt. 2nd Dec., 2005, which was served on the assessee on 7th Dec., 2005 asking the assessee to file written submissions/objections. The appellant could have filed his objections or even could have requested for cross-examination of Smt. Sukhdev Kaur. The counsel for the appellant cannot take a plea that the statement has been recorded at his back. This ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The donor also filed an affidavit to support her statement. It was in these facts that the AO rejected the affidavit dt. 8th Jan., 2003 put forth by the assessee as an affidavit of the donor. These facts have been duly considered by the learned CIT(A) while rejecting the assessee's ground in this regard. 41. As such, finding no error in the order of the learned CIT(A), the same is confirmed and ground No. 6 stands rejected. 42. As per ground No. 7, the learned CIT(A) erred in observing that Smt. Sukhdev Kaur, donor did not have the capacity to give the gift in question and the gift was not genuine. 43. Apropos ground No. 7, the facts are that the AO made the addition of ₹ 10 lakhs by treating the gift of such amount claimed to have been received by the assessee from Smt. Sukhdev Kaur as unexplained cash credit of the assessee under s. 68 of the IT Act. In this regard, the AO observed that according to the data given by the bank in the account of the assessee, the assessee had received the said gift from a lady living in a village, having no blood relation with the assessee. There was also no occasion for such gift. It was seen that during the period 1st M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derance of human probabilities and the circumstantial evidence was also not in favour of the assessee and that the gift was nothing but an unexplained cash credit of the assessee. 45. Before the learned CIT(A), the assessee pleaded that the land of Shri Gurdial Singh, father of the donor, had been acquired by the Government, for a refinery in village Kanakwal (Raman); that the compensation in this regard was paid to the donor and her mother, Smt. Parsin Kaur; that Smt. Parsin Kaur'Rs. 15,93,007 + ₹ 4,61,210; that Smt. Sukhdev Kaur, donor received ₹ 15,93,007 + ₹ 4,61,210 that the first compensation of ₹ 15,93,007 each was received by the said ladies in March, 1998; that the second compensation was received in July,1999; and that they both received compensation of ₹ 41,08,434. The assessee filed before the learned CIT(A) photocopies of the bank account of Smt. Sukhdev Kaur and cheques received in March, 1998 and the cheque issued by Smt. Sukhdev Kaur and the affidavit dt. 8th Jan., 2003, alleged to have been given by Smt. Sukhdev Kaur. The assessee averred that in view of these facts and documents which had also been filed before the AO, the dono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke out any case to persuade us to differ from the categorical findings of fact recorded concurrently by both the taxing authorities. 49. Sec. 68 of the IT Act reads as follows : 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 50. Thus, if in the opinion of the AO, the explanation of the assessee regarding any sum credited in the assessee's books, is not satisfactory, the AO may charge such sum as the income of the assessee. In the present case, the assessee claims to have received the cash credit of ₹ 10 lakhs as gift from Smt. Sukhdev Kaur. 51. In CIT vs. P. Mohanakala (2007) 210 CTR (SC) 20 : (2007) 291 ITR 278 (SC), it was observed as follows : A bare reading of s. 68 of the IT 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 sum of money during the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a difference of opinion between the two Members of the Tribunal and the matter was referred to the Vice President who concurred with the findings and conclusions of the AO and the CIT(A). On appeal the High Court reappreciated that evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjectures and suspicion. The Hon'ble Supreme Court held, reversing the decision of the High Court, that the findings of the AO, the CIT(A) and the Tribunal were based on the material on record and not on any conjectures and surmises; and that the fact that money came by way of bank cheques and was paid through the process of banking transactions was not by itself of any consequence. 52. P. Mohanakala (supra) governs the present case directly. In the present case, the opinion of the AO against the assessee has not been proved to be not formed objectively with reference to the material on record. While forming such opinion, the AO has duly applied his mind. The onus to prove his explanation satisfactorily to the AO was on the assessee. The assessee miserably failed to discharge such onus. The chie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to rebut this evidence. Thus, the said receipt of ₹ 10 lakhs was rightly held by the AO to be the unexplained cash credit/income of the assessee. 56. The assessee has not been able to prove the ingredients of a valid gift. The alleged capacity of the donor to make over the gift in question, as discussed hereinabove, has been disproved by the statement of the donor herself. No occasion for making the gift was also proved by the assessee. Considering the facts in their totality, the preponderance of human probabilities and circumstantial evidence is also heavily against the assessee, as discussed hereinabove. It is unlikely, if not impossible, for an alleged donor who is not related to the donee by blood, to make any such gift without any occasion. Once the donor is proved not to have had the capacity to make the gift of a huge amount of ₹ 10 lakhs, her having made such gift is rendered but an impossibility. Then, the bank account of the assessee showed that it made only a single transaction of ₹ 2,262 from the period 1st March, 2002 to 31st March, 2004. Further, the conduct also gives rise to reasonable suspicion, when the amount of ₹ 10 lakhs was depo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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