9911796707
TMI Blog2020 (11) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of persons was placed before assessing officer. It is noticed that grand-mother, mother, mother-in-law and wife of the assessee from whom he received gift are housewives. They do not have independent source of income except the gift received and savings made out of household expenses. The assessee did not place any evidence proving their independent source of income. Hence, no fault can be found in the action of assessing officer for reopening of assessment. Addition and enhancement made by the Ld. CIT(A) invoking the provision of section 68 - HELD THAT:- Looking to the facts of the present case when the assessee is claiming that the source of investment was from the gifts given by the family members and considering the facts that the assessing officer has verified the factum of gifts received by the assessee and partly granted the relief. There was no credible evidence before the Ld. CIT(A) to rebut the findings of assessing officer. The assessee placed documents related to sale of property by father-in-law and mother-in-law - entire evidence could not be brushed aside without making proper verification. The Ld. CIT(A) was not justified enhancing the income. Therefore, we di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 09.05.2018. First we take the assessee appeal in quantum proceedings in ITANo.86/Ind/2018. The assessee has raised following grounds of appeal: "1.1] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in approving the action of the Ld Assessing officer in issuance of notice U / s 148 of the Act merely on the basis of presumption and on the basis of information received by him in the absence of any tangible material and live link of concealment of income. 1.2] That on the facts and in the circumstances of the case and in law Ld CIT[A] erred in approving the action of the Ld Assessing officer in issuance of the notice U / s 148 of the Act merely on the basis of information as received by him without properly appreciating the facts of the case and submission made before him and without independent applications of his mind prior to the issuance of the notice U / s 148 of the Act 2] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in maintaining the addition of ₹ 31,10,000/- to the total income of the appellant by invoking the provisions of section 68 of the Act merely for the reason that the same w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case and in law the amount of interest as charged u/s 234B and 234C of the Act of ₹ 3,61,774/- and ₹ 32,141/- is either wrong or excessive and the same now requires to be deleted in full or reduced substantially. 9. The appellant reserve his right to add, alter, modify or delete any grounds of appeal on or before the date of final hearing." 2. The facts in brief are that the assessee is an individual and having salary income being employed as Chartered Accountant. He filed his return of income for the A.Y. 2012-13 by way of e-filing on 28.07.2012 declaring total income of ₹ 2,02,437/-. Assessee had purchased an agricultural land at Gram Ahirkhedi Tehsil & Dist. Indore, on 19.10.2011 at sale consideration of ₹ 60,00,000/-. On the basis of the information received from the office of the registrar assessment of the assessee was reopened u/s 147 of the Act, On the ground that the assessee had purchased an agricultural land thereby he made investment of ₹ 64,66,000/-. In pursuance to the notice u/s 148 the assessee filed return of income declaring income at ₹ 33,12,440/- however, during the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order passed under section 143(3) r.w.s. 147 of the Act 34,12,437 8 Date of passing of order under section 250 of the Act by the Ld CIT(A), Ujjain 12-12-2017 9 Amount by which income of the appellant was enhanced by the Ld CIT(A), Ujjain 43,07,300 10 Total assessed income of the appellant after giving effect of the order of Ld CIT(A), Ujjain 77,19,737 A.4] The case of the appellant for the Assessment Year 2012-13 was reopened for verification of source of purchase of agricultural land by the appellant. The appellant categorically explained during the course of reassessment proceedings that source of purchase of the said land was out of gifts/ loan received from relatives/ friend. The appellant also filed ample documentary evidences in support of his contentions. However, the assessing officer did not accept the contentions put forth by the appellant and made the following additions to the total income of the appellant: S. No Particulars Amount [in Rs.] 1 Total income declared in the income-tax return filed under section 139 of the Act 2,02,437 Add Additional income surrendered by assessee/ Addition on account of gifts received from relatives and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [in Rs.] Amount accepted as genuine by AO which was enhanced by Ld CIT(A) [in Rs.] Amount in dispute before the Hon'ble Bench [in Rs.] 1 Addition on account of gifts/ loan received from relatives/ friend 1.1 Shri Gopal Singh Tomar Gift 17,00,000 11,00,000 6,00,000 17,00,000 1.2 Smt Nilima Tomar Gift 5,26,000 3,26,000 2,00,000 5,26,000 1.3 Smt Jasoda Bai Tomar Gift 6,00,000 4,00,000 2,00,000 6,00,000 1.4 Smt Kirti Tomar Gift 4,15,000 2,94,000 1,21,000 4,15,000 1.5 Smt Madhu Bala Rajput Gift 5,00,000 NIL 5,00,000 5,00,000 1.6 Shri Virendra Singh Rajput Gift 7,00,000 NIL 7,00,000 7,00,000 1.7 Shri Awadesh Singh Rajput Gift 3,00,000 NIL 3,00,000 3,00,000 1.8 Shri Ravi Gurjar Loan 9,90,000 9,90,000 NIL 9,90,000 1.9 Opening balance of capital Opening Capital 8,43,150 NIL 8,43,150 8,43,150 Sub-Total [A] 65,74,150 31,10,000 34,64,150 65,74,150 2 Opening balance of capital added twice [Double Addition] Opening Capital 8,43,150 8,43,150 Sub-Total [B] 65,74,150 31,10,000 43,07,300 74,17,300 3 Addition on account of marriage expenses Sub-Total [C] 1,00,000 NIL 1,00,000 Grand Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some additional income, which is not disclosed by him and is invested in purchase of property, then alone the notice under Section 148 of the Act can be issued, and that too, only after recording the basis on which the Assessing Officer has formed his opinion that he has 'reason to believe' that any such income has escaped assessment. 1.4.2] In the facts of the present case, appellant provided details regarding the source of purchase of land to the assessing officer wherein it was categorically mentioned that the land was purchased out of gifts received from relative, loan received from friend and out of past savings of the appellant. However, the assessing officer did not consider the submission made by the appellant and reopened his case for the Assessment Year 2012-13 merely for verification of source of purchase of asset which is not permissible within the garb of reopening under section 147 of the Act. 1.4.3] The reason recorded by the assessing officer prior to reopening of the case of the appellant for the Assessment Year 2012-13 is scanned and reproduced hereunder for your ready reference: Annexure 1. Name and address of the Assessee Shri Mahendra Singh Tomar, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there is no nexus or live link between the material which had come to the notice of the Assessing Officer, and the formation of his belief that there was escapement of income by the assessee which may be assessable to tax. Merely by mentioning the income of the assessee in the assessment year, and the investment made by him for the purchase of residential property, it cannot be concluded that the difference would automatically be the income which had escaped assessment. 20. The submission of Sri E.I.Sanmathi, learned counsel for the respondent-Revenue is that the difference between the investment made by the assessee and his income during the year in question, would be the income which had escaped assessment from tax, is also not worthy of acceptance. Investment is not necessarily to be made from the income derived during one particular year in question. An investment to purchase a residential house or a capital asset, can always be made from the savings in the past years, as well as the savings from the year in question. It could also be from gifts or loans taken from friends and relatives. It was only if there was any definite information that the assessee had some addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d flat for a sum of ₹ 2,50,000. Obviously in the above, there is no question of the Assessing Officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped assessment and that such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts. Under the aforesaid facts and circumstances, we find no merit in the above appeal, hence the same stands dismissed, however, no order as to costs." [Emphasis Supplied] 1.5.3] The Hon'ble ITAT Agra Bench in the case of Shri Raj Singh Vs. ITO- 3(3), Mathura [ITA No. 408/Agra/2018] has held that: "28. Thus, the judicial opinion and mandate of law is clear and loud that proceedings under section 148 cannot be initiated for verification of the sources of investment. Such an action of the AO in respect of the case on hand cannot be approved in law and is therefore, quashed. 29. The text of the reasons recorded do proves that virtually there has been no application of mind by the learned Assessing officer so as to form requisite satisfaction that investment in property is income of current year and which has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 30.03.2016 passed in consequence to notice dated 20.03.2015 for Assessment Year 2008-09 in the present appeal." [Emphasis Supplied] 1.5.4] The Hon'ble ITAT Lucknow Bench 'B' in the case of Shri Chunnilal Prajapati v. ITO-II, Faizabad [ITA Nos. 290 to 293/LUC/2010] has held that: "13. From the above, it is crystal clear that the Assessing Officer acted upon the information received from the Investigation Wing. In the said information, it was stated that the assessee invested a sum of $5,38,860/- in purchase of land situated in 150, Rafi Ahmad Kidwai Nagar Scheme (Eldeco Green), Gomti Nagar, Lucknow. However, it has not been stated that the said investment was out of undisclosed income of the assessee or out of income which escaped assessment. The Assessing Officer also had not mentioned in the aforesaid reasons that he was satisfied that the said sum of $5,38,860/- escaped Income-tax assessment. He simply relied on the information given by the ADIT(Investigation). It is well settled that in case of income escaping assessment, the Assessing Officer is required to issue notice u/s. 148 of the Act to assess the income u/s. 147 of the Act read with section 143(3) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons to suspect that income chargeable to tax has escaped assessment and reopening based on mere suspicion was held to be bad in law and without jurisdiction. It has been reiterated that suspicion against the assessee howsoever strong it may be without any basis and tangible material in possession of the assessing officer could not become reason to believe. 1.7.2] It has also been postulated that there must be a live link or direct nexus between tangible material in possession of the assessing officer and the formation of belief that income chargeable to tax has escaped assessment. It is also well settled that reopening cannot be done for making fishing and roving enquiries. It is also a settled position of law that the assessing officer cannot reopen the case of the assessee merely on the basis of borrowed opinion and he must independently apply his mind to the tangible material in his possession and reach to a conclusion that income chargeable to tax has escaped assessment. 1.7.3] In the facts of the present case, reasons as recorded by the assessing officer quite clearly prove that there was absolutely no application of mind by the assessing officer prior to reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. LakhmaniMerwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this case, the reasons as made available to the Respondent- Assessee as produced before the Tribunal merely indicates information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. However, that material is not further linked by any reason to come to the conclusion that the Respondent-Assessee has indulged in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. 7.2] The interest under these sections is consequential and mandatory in nature. Hence, it is humbly submitted that the assessing officer shall be directed to charge interest as per law on the amount of income that may be finally assessed. 6. On the contrary, Ld. Sr. DR opposed the submission made by the Ld. counsel for the assessee and submitted that admittedly the assessee had purchased immovable property and purchase of immovable property does not commensurate with the income disclosed by the assessee. Therefore, the assessing officer was justified on the opening assessment. She submitted that at this stage it is to be seen whether material was available before AO to form belief that income chargeable to tax has escaped assessment and the case laws relied by the Ld. counsel are distinguishable. 7. We have heard rival submissions and perused the material available on record and gone through the orders of the authorities below. The contention of the assessee is that the assessing officer has not applied his mind before reopening of the assessment. We do not see any merit in this contention of the assessee as the material regarding purchase of property was not avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared at ₹ 33,12,440/- including an amount of ₹ 31,10,000/- which was received as gift/ loan from relatives/ friend but was inadvertently offered for tax in the income- tax return of the wrong advice of the previous consultant. 2.3] It is pertinent to note that the appellant lodged his claim during the course of assessment proceedings itself to exclude the amount of ₹ 31,10,000/- from his total income. Copy of the submission dated 30-10- 2015 as filed before the assessing officer to exclude the amount of ₹ 31,10,000/- as offered for tax in the income-tax return from his total income, has been filed on Page No. 40-47 of the Compilation. RIGHT OF THE ASSESSEE REGARDING EXCLUSION OF INCOME INADVERTENTLY OFFERED FOR TAX IN THE INCOME-TAX RETURN 2.4.1] At the outset, it is pertinent to mention that Article 265 of the Con7stitution of India lays down that no tax shall be levied except by authority of law. Hence only legitimate tax can be recovered and even a concession by a tax-payer does not give authority to the tax collector to recover more than what is due from him under the law. Extract of Article 265 of Constitution of India is reproduced hereunder f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned is not in accordance with such principles, it is open to the assessee to contend that the value as may be determined upon correct application of the law should form the basis of assessment. The revenue authorities, in our view, cannot be heard to say that merely because the assessee has returned a figure which is higher than the annual value determined in accordance with the correct legal principles, such higher amount and not the correct amount should be lawfully assessed. An assessee is liable to pay tax only upon such income as can be in law included in his total income and which can be lawfully assessed under the Act. The law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic). It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. In our considered view, the lower authorities, are not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by the Assessing Officer to assess the income according to law and determined the tax payable thereon. In doing so, the Assessing Officer cannot assess the income of the assessee an amount which is not taxable as per law though shown by the assessee in the return: It is always open to the assessee to take a plea that the taxable income though shown as income is not taxable under law before the higher authorities. The Commissioner of Income-tax (Appeals) without going into the merits of the case held that the Commissioner of Income-tax (Appeals) is not having any power to reduce the taxable income of the assessee at the appellate stage, which is not correct. In the case of Charanjit Jawa (supra) relied upon by learned counsel for the assessee supports the views that the interest received as a result of the order of the hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore it is open to the assessee to bring facts to the notice of the concerned authority on the basis of the return furnished which may have a bearing on the quantum of the refund, such as those the assessee could have urged under section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed an assessee will not be placed in a more disadvantages position than what he would have been, had an assessment been made in accordance with law." [Emphasis Supplied] 2.6] In view of the findings reiterated in the judicial precedents cited supra, it is quite clear that assessee is liable to pay tax only on the amount of taxable income as per law. The assessee cannot be saddled with tax liability merely for the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gift Grandmother N.A. 6,00,000 4 Smt Kirti Tomar Gift Spouse AQLPT1730H 4,15,000 5 Smt Madhu Bala Rajput Gift Mother-in-law N.A. 5,00,000 6 Shri Virendra Singh Rajput Gift Father-in-law AWZPR3103Q 7,00,000 7 Shri Awadesh Singh Rajput Gift Brother-in-law BTAPS4374K 3,00,000 8 Shri Ravi Gurjar Loan Friend BLIPG9820L 9,90,000 9 Opening balance of capital Opening Capital - - 8,43,150 Total 65,74,150 2.9] The assessing officer while passing the assessment order accepted the gifts received from relatives to the tune of ₹ 34,64,150/- as genuine and maintained the additions to the extent of ₹ 31,10,000/-. The Ld CIT(A), Ujjain however enhanced the income of the appellant by the amount of gifts received from relatives and opening balance of capital of ₹ 34,64,150/- which were accepted as genuine by the assessing officer. 2.10] Detail of the amount of addition of ₹ 31,10,000/- as maintained by the assessing officer and further enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend and opening balance of capital is summarized hereunder for your ready referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of making gift to the appellant 90-94 7 Shri Avdhesh Singh Rajput, Brother-in-law of appellant - Gift of ₹ 3,00,000/- 7.1 Confirmation of Gift duly notarized 83 7.2 Sale deed of agricultural land which was the source of making gift to the appellant 84-88 8 Shri Ravi Gurjar, Friend of appellant - Loan of ₹ 9,90,000/- 8.1 Confirmation of accounts 95 2.11.2] In view of the ample documentary evidences as filed before the assessing officer and Ld CIT(A) and as listed hereinabove, it is clearly evident that the appellant satisfactorily discharged the primary onus cast upon him under section 68 of the Income-Tax Act, 1961 to establish the identity and creditworthiness of the donor/ lender and genuineness of the transaction as entered into with them. Hence, it is humbly submitted that addition of ₹ 31,10,000/- as maintained by the assessing officer and further enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend is neither legal nor proper and requires to be deleted in entirety. 2.12.1] The observations of the assessing officer while passing the assessment order along with correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of gift of ₹ 6,00,000/- requires to be accepted as genuine and reasonable 4 Smt Kirti Tomar AQLPT1730H 4,15,000 The assessee has not properly explained the source of gift as given by her to the assessee. Considering the marriage gift and other saving, gift of ₹ 1,21,000/- only was accepted as genuine and balance amount of gift of ₹ 2,94,000/- is considered as unexplained Confirmation of Gift duly notarized was filed before the assessing officer. The PAN of donor was also provided. If the assessing officer was not satisified with the source of gift made by donor, he could have made addition in the hands of the donor but not in the hands of the appellant. Considering the age of spouse of the appellant her past savings and the fact that marriage took place during the year itself, amount of gift of ₹ 4,15,000/- requires to be accepted as genuine and reasonable 5 Smt Madhu Bala Rajput N.A. 5,00,000 The assessee submitted copy of gift deed and in respect of creditworthiness of the relatives, he submitted the copy of sale deed of agricultural land. Considering the documents as filed by the assessee, identity, genuineness and capacity of the gift is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of transaction and credit worthiness of the donor. 2.12.3] With due respect, it is humbly submitted that the observations of the assessing officer and that of the Ld CIT(A) do not hold the field in respect of the following uncontroverted facts involved in the present case: * The identity of the donor/ lender was proved beyond doubt. The assessing officer himself accepted part of the gifts received from father, mother, grandmother and spouse of the appellant as genuine. The assessing officer also accepted the gifts received from father-in-law, mother-in-law and brother-in-law as genuine in totality. There was no such finding that the appellant routed his own unaccounted/ undisclosed income in the names of any bogus parties. * The relationship of the donor with the appellant was duly established. * Confirmation of Gift duly notarized and signed by the donor was filed before the assessing officer and Ld CIT(A). Confirmation of accounts duly signed by the lender was also filed before the Ld CIT(A). These documents were not disproved by any of those authorities. * The complete address and PAN, wherever available were also provided to the assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the modes for gifting amounts of properties cannot be really gone into by the revenue, so long as the identity or relationship is established, which has been done in the present instance. This Court considered the factual matrix. The revenue does not dispute the present relationship between the donor (through Mr. Waney) and Mr. Ashwani Suri. It also does not dispute that the letter in terms of which the initial donation was made to Mr. Ashwani Suri, directed the disbursement of amounts in a particular proportion, which he did. The assessee is also related to Mr. Ashwani Suri. In these circumstances, the underlined transaction whereby the donor directed amounts to be disbursed by Mr. Ashwani Suri to specified or named individuals cannot be treated as unnatural. Both the authorities - the CIT(Appeals) and the ITAT took note of these facts and further noticed that all the gifts were rooted to normal banking transactions. While Section 68 certainly enables the AO to bring to tax amounts which are suspect, in a transaction of the present kind, where the identity and the relationship of the donor are known, the AO in our opinion ought not to have concluded that the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The donor being no other than the assessee's own maternal aunt, is a 'relative' as defined under the explanation to Section 56(2)(v) of the Act and in the light of the plea of the assessee that she was brought up by the assessee's parents, and her daughters having already been married off and in a well-to-do position, it cannot be said that such a gift falls beyond "human probability" test as quite often applied by the Courts. Hence, it is not permissible for the AO to judge the conduct of the donor sitting in his arm chair." [Emphasis Supplied] 2.14.3] The Hon'ble Punjab and Haryana High Court in the case of CIT (Central), Ludhiana v. Jawahar Lal Oswal as reported in [2016] 382 ITR 453 (Punjab & Haryana) has held that: "27. An arrangement between a donor and another is an arrangement between the donor and his source of money. The onus to probe and prove this aspect lies upon the revenue and not upon the assessee, particularly where the income is being dealt with under a deeming provision. A person who receives a gift, is not required to prove the source of the money of his donor. 30. The Tribunal has held that there is no evidence or materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformed the department that the donor was available in India in December 2006 on account of the death of his mother-in-law and the contact details of the donor in India (address and mobile numbers), the department did not bother to contact him and verify the above facts. In this view of the matter, we are of the view that the assessee had discharged the burden cast on him to prove the identity of the creditor, the creditworthiness of the creditor and the genuineness of the transaction. Therefore, the contention of the Revenue that the said sum ought to be added to the income of the assessee cannot be accepted. The finding recorded by the Tribunal is based on appreciation of the material on record and cannot be said to be perverse. In our view, no question of law, much less a substantive question of law arises for consideration in this appeal." [Emphasis Supplied] 2.14.6] The Hon'ble ITAT Gauhati Bench (Third Member) in the case of Smt. Madhu Raitani v. ACIT, Circle-3 as reported in [2011] 10 ITR(T) 91 (Gauhati) (TM) has held that: "20. The ld. A.M. further stated in his proposed order endorsing the observation of CIT(A) that the source of income of the donors does not perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, this observation of the department, which was acceded to by the ld. A.M., without any conclusive material cannot lead to the inference that the amount was not gift but undisclosed income of the assessee. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of Bedi & Co. (P.) Ltd. (supra) and decision of Hon'ble Calcutta High Court in the case of Currency Investment Co. Ltd. (supra), wherein it has been held that when the assessee has disclosed the identity of the parties from whom it purchased shares and to whom it sold the shares, genuineness of the transaction cannot be denied merely because the assessee could not produce the brokers through whom the share were sold." [Emphasis Supplied] 2.14.7] The Hon'ble ITAT Visakhapatnam Bench in the case of Dr. Vempala Bala Manohar v. ITO, Ward-1(3), Visakhapatnam as reported in 2016] 50 ITR(T) 567 (Visakhapatnam - Trib.) has held that: "16. Considering the facts and circumstances of the case and also respectfully following the decision of Hon'ble High Court of Punjab & Haryana High Court and Hon'ble High Court of Delhi, we are of the view that in the absence of anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal in the fact of retaining money for sometime before gifting it even if to the son, since there are various considerations which are involved in making a gift and it is up to the donor to decide when and to whom to make the gift. In the present case the period of retention of the amount for eight months, we find, is not unusually large so as to doubt the genuineness of the same. Considering the fact that the source of the amount with the donor has not been doubted, nor has the Revenue pointed out or brought on record any fact showing the usage of the said amount by the donor prior to gifting, we do not see any reason to hold the said explanation improbable and we find the same acceptable." [Emphasis Supplied] 2.14.9] The Hon'ble ITAT Indore Bench in the case of Vinod Kumar Jain vs. ITO as reported in (2020) 58 CCH 0082 Indore Trib vide order dated 28-01- 2020 has held that: "15. As regards cash gift of ₹ 2,50,00/- received from assessee's father it has been claimed that his father was deriving income from Kirana and Money Lending business. Since his income was below the taxable limit, return of income was not filed. He being a senior citizen it cannot be denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from relatives/ friend and opening balance of capital requires to be deleted in entirety from the total income of the appellant. NO ADDITION IS JUSTIFIABLE TO TOTAL INCOME OF AN ASSESSES IF EXISTENCE OF DONOR/ LENDER WAS NOT IN DOUBT AND SUCH PERSON HAD ADMITTED TO HAVE MADE GIFT/ LOAN TO THE ASSESSEE 2.16.1] It is a well settled position of law that where existence of donor/ lender was not in doubt and he had admitted to have made gift/ loan to assessee, the mere fact that explanation furnished by him about his source of such advancement had not been accepted by revenue authority could not lead to any presumption that source of such advance by donor/ lender emanated from the coffers of the assessee. 2.16.2] It is further well settled that the onus to prove that the apparent is not the real is on the party who claims it to be so. Relevant extracts from few of the landmark judicial precedents which have enunciated the above-mentioned principles are reproduced hereunder for your ready reference: 2.17.1] The Hon'ble Supreme Court of India in the case of CIT v. Daulat Ram Rawatmull as reported in [1973] 87 ITR 349 (SC) has held that: "The onus to prove that the appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of source. 21. Accordingly the Tribunal, and the Assessing Officer had seriously erred and misdirected themselves in law by not correctly appreciating the legal principle about necessity of establishing such nexus once the assessee has discharged his onus by proving the existence of the depositors and the depositors having accepted their deposits with the assessee. Once this onus is discharged the presumption raised under section 68 stands rebutted and it becomes burden of revenue to prove that source of such deposits is traceable to assessee before the same can be treated as undisclosed income of the assessee concerned." [Emphasis Supplied] 2.17.3] The Hon'ble Rajasthan High Court in the case of Kanhaialal Jangid v. ACIT as reported in [2008] 217 CTR 354 (Rajasthan) has held that: "5. The question No. 1 relates to disallowance on account of cash credits found in the books of the assessees. ₹ 16,000 was alleged to have been borrowed to have been by Sri Devendra Sankhla and ₹ 16,000 was allegedly borrowed from one Ramulal. Assessee has produced the confirmation letters from both the creditors and has also produced Sri Devendra Sankhla before the AO. Sri D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the name of Sri Devendra Sankhla cannot be sustained. Such addition of income of assessee has to be deleted from the income of assessee." [Emphasis Supplied] 2.18] Borrowing the ratio from the judicial precedents cited supra, it can be satisfactorily held that onus is on the Department who is alleging that the apparent is not real to prove that money received by the appellant in the form of gifts/ loan actually emanated from the coffers of the appellant and represents his unaccounted/ undisclosed income. If the Department is not able to discharge this onus, addition made to the total income of the appellant on account gifts/ loan has no legs to stand more so when the identity of the donor/ lender is proved beyond doubt and they have accepted to have advanced amount in the form of gifts/ loan to the appellant. 2.19] In view of the above, it is humbly submitted that addition of ₹ 31,10,000/- maintained by the assessing officer and enhancement of ₹ 34,64,150/- made by the Ld CIT(A) was neither legal nor proper and deserves to be deleted in entirety. 3] GROUND NO. 4.2 - CHALLENGING THE ENHANCEMENT MADE BY THE LD CIT(A) ON ACCOUNT OF GIFTS RECEIVED FROM RELA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer as per the provisions of section 2(7A) of the Act. Hence, it can be satisfactorily concluded that provisions of section 68 of the Act can be invoked only upon the satisfaction of the Assessing Officer and not upon the satisfaction of the Ld CIT(A). 3.3] In the facts of the present case, the Ld CIT(A) enhanced the total income of the appellant by an amount of ₹ 34,64,150/- by invoking the provisions of section 68 of the Income-Tax Act, 1961 which is totally illegal and bad in law in view of the fact that CIT(A) is not an Assessing Officer whose satisfaction is mandatory prior to invoking the provisions of section 68 of the Act. Hence, enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) by invoking the provisions of section 68 of the Act is grossly unjustifiable and wholly unwarranted and requires to be deleted in entirety on this count itself. 3.4] The aforesaid view is concurred by the Hon'ble ITAT Jaipur Bench in its landmark judgment in the case of M/s Motisons Entertainment (India) Pvt. Ltd. Vs. The ACIT, Central Circle-2, Jaipur [ITA No. 386 & 387/JP/2017] wherein it has been held that: "12.4 We have heard the rival contentions and perused the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) in his order at para 2.1.4.6 had clearly held that the identity, creditworthiness and genuineness of transactions of these companies cannot be held doubtful and addition by applying the provision of sec 68 of the Act cannot be upheld. The ld. CIT(A) has sustained the addition of ₹ 82.00 lacs without specifying any provision of Income tax Act. No such addition can be sustained without invoking the relevant provisions of the Act. Moreover, the addition has been sustained in the hands of that assessee where cash /DD was deposited at 4th Channel. Hon'ble Rajasthan High Court and other Hon'ble Courts held that assessee cannot be asked to explain the source of the source………………." It may be further noted that the issue raised by the assessee in Ground No.1 of the present appeal is same and the decision taken in the appeal of the assessee in ITA No. 385/JP/2017 for the Assessment Year 2012-13 in the case of Motisons Builtech vs ACIT, Central Circle-2, Jaipur (supra) shall apply mutatis mutandis in the present ground of appeal No. 1 of the assessee. Thus Ground No. 1 of the assessee's appeal in ITA No. 387/JP/2017 is allowed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as summarized hereinabove substantiates the contentions of the appellant that he earned only nominal income being a Chartered Accountant in service. The onus is on the Department to prove the impossible as to how a man with such limited resources and with income ranging between ₹ 2,00,000/- to ₹ 5,00,000/- can have unaccounted/ undisclosed income to the tune of ₹ 65,74,150/- during the previous year 2011-12 relevant to the Assessment Year 2012-13 more so when the appellant had qualified as a Chartered Accountant only in the month of January, 2009. 4.6] The test of human probability and circumstantial evidence as relied upon by the Department in several cases of late should definitely come to the rescue of the appellant in the present case more so when the appellant had satisfactorily discharged the onus cast upon him to establish the identity of the donors/ lender and genuineness of the transaction entered into with them and there was no evidence with the Department that the amount received by the appellant by way of gifts/ loan actually represented his unaccounted/ undisclosed income. 4.7] It is also a well settled position of law that the provision of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and cancelled the assessment made by the ITO. Thereafter the Tribunal at the instance of the revenue referred the question abovementioned to the High Court for its opinion. The High Court has agreed with the said view of the Tribunal and has held that in the instant case, it could not be said that the Tribunal was wrong in having differed from the ITO and the AAC in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances, the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. 3. Shri Ranbir Chandra, the learned counsel appearing for the revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of section 69. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in the month of January, 2009. It was not at all practical for a Chartered Accountant in service with income around 2-2.50 lakhs during the previous year 2011-12 to suddenly have such exorbitant income of ₹ 65,74,150/- in one go and that too only in a particular year without there being any other source of income brought on record by the assessing officer or the Ld CIT(A). If it is considered for a moment that explanation offered by the appellant with regard to source of investment made in land was not found to be satisfactory, even in that case, it is worth noting that provision of section 68 of the Act contains the word 'may' and not 'shall' which in itself implies that the assessing officer is not duty bound to treat the sum so credited in the books of accounts of the appellant as his income more so when the appellant was not a man of means who could have earned income to the tune of ₹ 65,74,150/- in a single year. It is therefore quite evident that the discretion vested in the assessing officer was exercised arbitrarily in the facts of the present case keeping a closed eye towards the living standard of the appellant and his nominal and limited sources of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt rely. The appellant was also requested to explain why part gift is considered as genuine and pan as non-genuine. As per law either gift is genuine or non genuine. There is no concept of part gift as genuine and part gift as non-genuine. The appellant has not furnished the above asked documents in respect of the gift. The appellant only furnished the notarized confirmation of gift only. The other documents asked hay not e n furnished. The appellant failed to establish the genuineness 0f the transaction and creditworthiness of the donor. The AO himself has considered the ₹ 11,00,000/- as non genuine gift There is no reason to consider the gift of ₹ 6,00,000/- as genuine. There is no concept of part genuine and part non-genuine gift. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory, such credits could be charged to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation of gift only. The other documents asked have not been furnished. The appellant failed to establish the genuineness of the transaction and creditworthy mess the donor. The AO himself has considered the ₹ 2,94,OOOl- as non genuine gift. There is no reason to consider the gift of ₹ 1,21,000/- IS genuine. There is no concept of part genuine and part non-genuine gift. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory such credits could he charged to tax as income of the appellant. The principle embodied in section 68 is only a statutory, recognition of what was always understood to be the law based upon the rule that roof is on the taxpayer to prove the genuineness of borrowing or other credits in his books, since the relevant facts are exclusively within his knowledge. The expression "nature and source" bas to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books. Since the relevant facts are exclusively within his knowledge. The expression "nature and source" has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory, the Income Tax Authority can disbelieve the alleged transaction of gift. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the gilt the onus shifts upon the Income Tax Authority and after verification, he can call for further explanation from the appellant and in the process, the onus may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is no satisfactory. The Income Tax Authority can disbelieve the alleged ran action of gilt. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the gift, the onus shifts upon the Income Tax Authority and alter verification he can call for further explanation from the appellant and in the process, the onus may again shift from the Income Tax Authority to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. (5) Smt. Madhubala Rajput Gift of ₹ 5,00,000/- The appellant has allegedly received the gift of ₹ 5,00,000/- from ,Smt. Madhubala Rajput. The AO has not made any addition in this regard. The appellant was requested to show cause why an enhance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the process, the onus may again shift from the Income Tax Authority to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. (6) Shri Virendra Singh Rajput - Gift of ₹ 7,00,000/- The appellant has allegedly received the gift of ₹ 7,OO.OOO/- from Shri Virendra Singh Raj put. The AO has not made any addition in this regard. The appellant was requested to show cause why an enhancement of ₹ 7,OO,OOO/- cannot be made considering the amount as income from undisclosed sources. The appellant was requested to furnish the documentary evidences in support of the claim or the gift like bank statement of Shri Virendra Singh Rajput and corresponding entry in your bank statement, Registered gift deed, Occasion of the gift, source of income of Shri Virendra Singh Rajput and copy of income tax return filed by Shri Virendra Singh Rajput, worthiness of the donor etc. and any other documents on which your rely .Whether the donor is failing in the definition of relative as per Income Tax Act from whom gift can be received. the appellant has not furnished the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary evidences in support of the claim of the gift like bank statement of Shri Awadesh Singh Rajput and corresponding entry in your bank statement, Registered gift deed. occasion of the gift. source of income of Shri Awadesh Singh Rajput and copy of income tax return filed by Sh Awadesh Singh Rajput. creditworthiness of the donor etc. and any other documents 011 which you rely. Whether the donor is falling in the definition of relative as per income Tax Act from whom gift can be received. The appellant has not furnished the above asked documents in respect of the gi n. The appellant only furnished the notarized confirmation of gift only. The other documents asked have not been furnished. The appellant failed to establish the genuineness of the transaction and creditworthiness of the donor. There is no reason to consider the gift of ₹ 3,OO,OOO/- as genuine. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory, such credits could be charged to tax as income of the appellant The principle embodied in section 68 is only a statutory recognition of what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. The supporting evidences of the investment was placed before the Ld. CIT(A) and also the assessing officer. However, the Ld. CIT(A) sustained the addition and in addition to that enhanced the income of the assessee without considering material placed before him. Looking to the facts of the present case when the assessee is claiming that the source of investment was from the gifts given by the family members and considering the facts that the assessing officer has verified the factum of gifts received by the assessee and partly granted the relief. There was no credible evidence before the Ld. CIT(A) to rebut the findings of assessing officer. The assessee placed documents related to sale of property by father-in-law and mother-in-law. Hence, the entire evidence could not be brushed aside without making proper verification. The Ld. CIT(A) was not justified enhancing the income. Therefore, we direct the assessing officer to delete the addition of ₹ 34,64,150/- as made by the Ld. CIT(A). Now coming to the issue about sustaining of the addition of ₹ 31,10,000/- as declared by the assessee in the return of income. It is contended throughout by the assessee that the decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, during the course of assessment proceedings itself assessee had retracted from the income disclosed in the return of income. It is also seen that in response to the notice u/s 148 the assessee has taken stand that substantial source of investment was gift from different persons. If it is proved that the investment is made out of gifts received, admittedly no other source of income is unearthed by the revenue. It is settled law that only the receipt that partake character of income is required to be taxed. If receipt is in the nature of gift which does not partake character of income would certainly be not taxable. Therefore, looking to the peculiarity of the facts of the present case the issue related to gift/loan received from wife, relatives and friend is restored to the file of the assessing officer for verification of veracity of the claim of the assessee. The AO is hereby directed to re-examine the issue of gift and loan of the aforesaid persons. If the claim of the assessee is found correct he would delete the remaining addition made in this respect. The grounds of the assessee are partly allowed in the terms indicated hereinabove. 12. Ground No.5 is against the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital of ₹ 8,43,150/-. This opening capital was out of gift from father and other family members. Ld. CIT(A) ought to have considered this. We find that the Ld. CIT(A) had decided this issue in para 4.8 of the impugned order as under: "Opening Capital -₹ 8,43,150/- The appellant had shown the opening balance of ₹ 8,43,150/-. The appellant was requested to furnish the documentary evidences in support of his claim. The appellant submitted that he is earning from 2004 regularly a semi-qualified and from 2009 as qualified chartered accountant. The appellant has not furnished the documentary evidences like salary certificate and proof of filing of return of income in the earlier years. The appellant failed to establish that he was earning any income and paying taxes. In the absence of any evidences, therefore, the income of the appellant is enhanced by ₹ 8,43,150/-. Penalty proceedings u/s 271(1)(c) are separately initiated on this enhancement. From the above, it is clear that the opening balance was part of the enhancement made by the ld. CIT(A) as we have deleted the enhancement. Therefore, this ground of the assesseee's appeal is allowed. 15. Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's mother had mentioned about this affidavit sworn in January 1996. It was also brought on record that the marriage expenditure in respect of booking the hall was made by Dharmambal Namasivayam Trust. These explanations were accepted by the Tribunal. The addition made by the Assessing Officer is purely a guess work and the Tribunal has rightly deleted the addition made by the Assessing Officer." [Emphasis Supplied] 6.5.2] The Hon'ble ITAT Indore Bench in the case of Shri Rajat Maheshwari v. DCIT as reported in (2019) 34 ITJ 557 (Trib. - Indore) has held that: "8. Ld. Counsel for the assessee contended that the addition is merely estimated because number of guests were much less and the list was a proposed list and not a final list of the invitees who attended the ceremony. On going through the submission made by Ld. Counsel for the assessee before the lower authorities as well as the loose papers impounded during the course of search we observe that at page 1 to57 of BS-4 and page 1 to 97 of BS-12 list of tentative invitees were 1589 persons but in the very same set of seized documents at item 15 of BS-1 there was invoice dated 18.2.2004 for printing of 1000invit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the totality of the facts and circumstances noted above, we do not sustain the additions made by the authorities below. We, accordingly, set aside the orders of authorities below and delete the addition of ₹ 8lacs on account of marriage expenses." [Emphasis Supplied] 6.6] In view of the above, it is humbly submitted that lump sum addition of ₹ 1,00,000/- made by the assessing officer on account marriage expenses was wholly based upon assumptions and guess work and therefore, it requires to be deleted in entirety 16. On the contrary, Ld. Sr. DR opposed the submission made by the Ld. counsel for the assessee 17. We have heard the rival submissions and perused the materials available on record. Looking to the facts of the case, we do not see any infirmity into the finding of the authorities below. The addition made on account of low marriage expenses is hereby sustained. 18. Ground No.8 of the assessee's appeal is against charging of interest is consequential, we hold accordingly. 19. Ground No.9 is general in nature which need no separate adjudication. 20. Now coming to the penalty appeal in ITANo.584/Ind/2018, the assessee has raised following grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable property. He submitted that the requirement of law is not satisfied as the authorities below have not made specific charge whether the assessee was guilty of furnishing of inaccurate particulars of income or concealing of the particulars of income. 24. On the contrary, Ld. Sr. DR opposed the submission and supported the order of the authorities below. Ld. Sr. DR submitted that the authorities below were justified in initiating the penalty proceedings and imposing the penalty. 25. We have heard the rival submissions and perused the materials available on record and gone through the orders of the authorities below. In this case in quantum appeal (ITANo.86/Ind/2018) substantial addition made by the assessing officer has been deleted and rest of the additions made has been set aside for verification of the assessing officer. Under these facts, we hereby set aside the penalty order and direct the AO to delete penalty in respect of additions deleted and additions in respect of issues which have been set aside in ITANo.86/Ind/2018 to the file of Assessing officer for verification. Thus, grounds raised in this appeal are allowed in terms indicated above. 26. In result, both appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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