9911796707
TMI Blog1999 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... posits were gifts received from NRIs. AO referred to the statement of Shri Bhangu recorded on oath during search on 8th Sept., 1995. Shri Bhangu was asked as to whether he had given any gift, in foreign exchange to any of his relatives in India in the last five years or in his lifetime. He replied in negative, mentioning specifically not to relatives'. A further question was put to him as to whether he had given any gift to any other person. He replied that he had given gift of Rs. 25 lakhs to the assessee within last one year. On a further question with reference to the occasion on which the gift was given, Shri Bhangu replied that: "The work and development Shri R.K. Syal, Chairman of GFIL, doing all over India is very impressive to me and I thought in good faith and social development he is doing in the remote areas. I offered this gift. The gift was given from my NRI Account No. 218 with Punjab and Sind Bank, Sector 17, Chandigarh'. With reference to source of deposit in the NRI account 218, Shri Bhangu replied that money was repatriated in his account with State Bank of India, Los Angeles in Artisia. With reference to a further question about consideration for giving this gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -96 from undisclosed sources to be taxed at 60 per cent. 3.2. With reference to gift of Rs. 5 lakhs received from Shri Manmohan Singh on 23rd Nov., 1994, AO observed that it was received from NRI a/c of Shri Manmohan Singh. He referred to para. 4 of the assessment order relating to gift from Shri Bhangu and observed that the assessee had routed unaccounted money through NRI a/c of Shri Bhangu and it was a very strong piece of evidence which raised doubt regarding the genuineness of this gift also which had been received from Shri Manmohan Singh. He, therefore, added this amount of Rs. 5 lakhs also to the income of the assessee for asst. yr. 1995-96. 3.3. With reference to gift of Rs. 45 lakhs received by the assessee on 1st June 1995, from NRI a/c of Shri Navtej Singh Bains, AO again referred to para. 4 and observed that 'it is clear that Shri R.K. Syal had routed unaccounted money through NRI a/c of Shri Bhangu. There is a very strong piece of evidence which raise doubts regarding the genuineness of this gift also which has been received from Shri Navtej Singh Bains. As identity of donor and genuineness of payment is not verifiable and/nor established, therefore, Rs. 45 lakhs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the amount has been genuinely received by the assessee from the three donors, who had given demand drafts/cheques which were deposited in the SB a/c of the assessee. He referred to the dichotomy of the Department in treating these gifts as income. He submitted that there were two facets of the issue as to whether the assessee is being taxed on receipt of the amounts or on the alleged compensatory payment, i.e. the alleged payments by the assessee to the three donors. He submitted that the Department had taxed the assessee on the basis that he has paid back the amount out of undisclosed sources available with him. He referred to the findings of AO as given in para. 4 onward. He pointed out that AO has concluded that the assessee has; routed his unaccounted money through NRI a/cs of three donors by paying them adequate compensation for giving an entry and at the same time has observed that the gifts appeared to be genuine-a concession by AO. He submitted that AO has proceeded on the assumption that identity/capacity of the donors had not been proved. Learned counsel referred to the statement of Shri Bhangu, as reproduced at p. 2 of assessment order and referred to questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in USA for mobilising NRI funds and coming to the conclusion that the assessee had assured of adequate compensation equivalent to the amount of gift to Shri Bhangu and, therefore, the gift was invalid. He referred to copy of fax placed in the assessee's paper book and submitted that Shri Bhangu informed the assessee that no bank entertained individual company unless it was approved by the World Bank or Government of that country. He referred to the portion of the fax message, wherein it is mentioned that no deposit could be invited from any foreign company/financial institution for the purpose of business, as GFI was an Indian company. Learned counsel submitted that the said fax message only shows close relations between the assessee and Shri Bhangu and that it cannot be treated as evidence for repayment of money by the assessee to Shri Bhangu. He stressed that the programme for future being discussed by the assessee and Shri Bhangu cannot be the basis for treating the gifts as income of the assessee. He submitted that AO did not put any question or confirmation from the assessee regarding repayment of money even after assessment. Learned counsel further referred to the affidav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) there should be a transfer by one person to another of movable/immovable property situated either in India or outside India; (ii) it should be voluntary, i.e. without any duress, coersion or computation; and (iii) it should be without consideration in money or moneys worth, i.e. the donor should not have got anything in exchange which could be measured in money or money worth. The assessee relied on the decisions reported in K.L. Agarwal vs. CIT (1991) 190 ITR 303 (Del), Prakash Textiles Agency vs. CIT (1980) 121 ITR 890 (Cal) and Oriental wires Industries (P) Ltd vs. CIT (1991) 20 CTR (Cal) 264 : (1980) 131 ITR 688 (Cal). The assessee also relied on the decision of the Tribunal in the case of Smt. Purnima Mehta etc. wherein it was held that AO cannot make any roving enquiry about assets and liabilities of past years of the donor and AO should verify that the amounts really belong to the donor, that it was really gifted and it was available on the relevant day in credit in the bank a/c of the donor. The Tribunal also observed that AO is entitled to make investigation to rule out the possibility of deposit of own money of the assessee in the bank a/c of the donors and the money b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if required he was prepared to give his statement before AO. He also filed second affidavit, wherein it is mentioned that 'since the purpose for which the amounts were given has not been fulfilled by Shri R.K. Syal and the money stands seized by the IT Department, hence the said amount is refundable to me by him which he has assured to refund and is due from him as on date'. Learned counsel submitted that even in the second affidavit, there is a positive assertion regarding making of gifts by Shri Bhangu. Learned counsel submitted that he was relying on all the judgments as mentioned in the said note. Learned counsel further submitted that AO has not indicated the provisions of the IT Act under which the impugned additions have been made. With reference to the legal aspect of the issue involved in these gifts, learned counsel stressed that no defect has been found by AO, vis-a-vis direct evidence available with the Department in the form of original affidavits and NRE a/cs from which money has been given by the donors. He submitted that the explanation regarding genuineness of gifts and source thereof has been given inasmuch as money has been received, genuineness/identity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fts and that such circumstances can only be seen when the source of gifts or the financial standing of the donor is in doubt. The Tribunal observed that in the case of Lal Chand Kalra, the gifts had been made by strangers out of their alleged savings from agricultural income and the Tribunal recorded a finding of fact that the source of savings was doubtful, which finding was not disturbed by the High Court. The Tribunal held that in the present case, the donors clearly explained the source, i.e. their personal account and the gift were made by the account payee cheques out of savings bank a/c of the donors and that the donors have been assessed to income-tax. The Tribunal, therefore, held that there was nothing to doubt the genuineness of the gifts and the assessee had discharged his onus in all respects. Learned counsel also referred to an article on foreign remittances-Income-tax in the hands of donee- by Shri D.S. Walia in (1993) 113 CTR (Art) 51. He submitted that the said article also elaborately deals with the case of Lal Chand Kalra. It has been observed by the author at p. 53 that the High Court found itself unable to vitiate the finding of the Tribunal and agreed that bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guishable inasmuch as one of the donors was a total stranger. Secondly, in the case of foreign remittance gifts are sent from foreign lands in foreign currency and there is also documentary evidence in the form of foreign drafts and/or certificates from the collecting bank to the effect that credit entry represents proceeds of a foreign draft. He has also observed that it is not feasible for a person to a sneak out of the country with foreign exchange, purchase a draft and send it to himself in India. It is against the law of the land and involves great risk and substantial expense. The gift cannot be held as ingenuine in the face of documentary evidence in the form of copy of bank draft and bank certificate. He has further observed that 'there is no justification for labelling the gift as compensatory payment. The rule of law is that he who alleges a thing has to prove it. As such, the onus is on AO to bring material on record to show that in lieu of the foreign remittance received, the recipient compensated the remitter in cash or kind. The onus for doing so squarely lies on the Department. Unless the onus is discharged, the Department is not, entitled to claim that these are com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch that no person acting judicially or properly instructed as to the relevant law could come to such a finding1. Learned counsel mentioned that sources of income of the assessee are from salary plus interest from FDRs out of gifts and agricultural income in the names of minors. He referred to pp. 65-66 of assessee's paper book, where copies of acknowledgments of returns filed by the assessee for asst. yrs. 1994-95 & 1995-96 are placed. He also referred to the statement of total income for asst. yr. 1995-96 at p. 69 assessee's paper book. He, therefore, concluded that the assessee could not have earned so much of income so as to pay back the amounts to the donors with reference to gifts received by him. He submitted that the assessee is not a beneficiary in relation to gifts received by him and that the real beneficiaries are Shri A.L. Syal and Smt. Pamila Syal, whom loans out of amounts of gifts have been given to the extent of Rs. 14 lakhs. 4.1. With reference to second gift of Rs. 5 lakhs received by the assessee from Shri Manmohan Singh, learned counsel submitted that AO has proceeded only on doubt and treated the gift as ingenuine. He referred to p. 41 assessee's paper book, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits are possible in NRE a/cs from local funds. 4.3. In view of the foregoing, learned counsel urged that addition of Rs. 76 lakhs as made by AO ought to be deleted. 5. Learned Departmental Representative, Shri P.S. Puniha, mentioned in brief facts of the case as found by the AO. He submitted that there are four affidavits with respect to the three gifts in question. He pointed out that two gifts were made by Shri H.S. Bhangu amounting to Rs. 20 lakhs and Rs. 6 lakhs. He submitted that these two gifts were made on 17th Aug., 1994 and 12th Dec, 1994. He further submitted that in between this period another gift of Rs. 5 lakhs was made by Shri Manmohan Singh Virdi and after another six months or so an other gift of Rs. 45 lakhs was made by Shri Navtej Singh Bains. He stressed that findings of AO are clear at p. 3 of assessment order, where he has concluded that Shri R.K. Syal had routed his unaccounted money through NRE a/c of Shri Bhangu by paying him adequate compensation for giving an entry which on the face of its appears to be genuine gift. Learned Departmental Representative referred to first affidavit of Shri Bhangu, wherein he has stated that a gift of Rs. 20 lakhs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Bhangu made gifts to stranger- Shri R.K. Syal. He further referred to p. 38 assessee's paper book, where Shri Bhangu stated that he was offered a joint venture project share by Shri R.K. Syal and he was also assured of adequate compensation equivalent to the amount of gift and that was the consideration/attraction which allured him and he accepted the proposal and gifted the amount. In view of the foregoing, learned Departmental Representative emphasised that there were contradictions in the stand taken by Shri Bhangu, as initially he mentioned that the gifts were on account of love and affection and subsequently he changed his stance and ultimately mentioned about joint venture project share. Learned Departmental Representative, therefore, urged that the gift was not without consideration, as is clear from the statement of Shri Bhangu, wherein he has been taken a flip, flop and flip stand. Learned Departmental Representative submitted is there any method in this madness of the donor-Shri Bhangu. He submitted that the affidavits of the donor are self-serving evidence. Learned Departmental Representative pointed out that Shri Bhangu was not an NRI on the date of making the gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was shown in the capital account in the books. For asst. yr. 1972-73, she claimed receipts of Rs. 93,500 as race winnings in two jackpots at Bangalore and Madras and the said amount was credited in the capital account in the books. The ITO included these amounts as income from other sources and assessed as such. The AAC confirmed the order. The assessee referred the matter to the Settlement Commission, which held by a majority decision that the explanation of the assessee was not genuine, as the assessee's knowledge of racing was very meagre, a jackpot is a stake of five events in a single day and one can believe a regular and experienced punter clearing a jackpot occasionally but the claim of the assessee of having won a number of jackpots in three or four seasons not merely at one place but at three different centres appeared prima facie to be wild and contrary to statistical theories and experiences of frequencies and probabilities and the assessee's books did not show any drawings on race days or on the immediately preceding days for the purpose of jackpot combination tickets. On appeal, the apex Court held that the Settlement Commission after considering the surrounding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasional stay of J with the assessee in Nepal turning intimacy into friendship of degree which prompted J to donate substantial amount at no auspicious occasion got no corroborative support even from assessee's own affidavit, circumstances attending on alleged transaction as also conduct and behaviour of parties were clearly such as went against genuineness in transaction. Learned Departmental Representative thus stressed that the gifts received from the other two donors, i.e. Shri Manmohan Singh and Shri Navtej Singh Bains were gratuitous in nature and these two persons have no connection with the assessee, as they are NRIs and never lived in India for more than 180 days and the chance of meeting with the assessee is extremely limited. Learned Departmental Representative referred to the decision in the case of Saraogi Credit Corporation vs. CIT 1975 CTR (Pat) 1 : (1976) 103 ITR 344 (Pat) for the proposition that there is difference m burden of proof when parties are close relations of assessee and other parties who are strangers. He referred to the gifts made by Shri Bhangu, who allegedly is an employee of the assessee and submitted that the onus is on the assessee to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the form of affidavits had been credited. On a further query as to any question put to Shri Bhangu on the payment of money back to him by the assessee, learned Departmental Representative did not react though submitted that where gifts are received from close relatives degree of suspicion would be less. With reference to the letter written by the assessee to the AO to summon the donors, learned Departmental Representative submitted that the offer came too late as assessment was to be completed by 30th Sept., 1996, within the period of limitation. With reference to decision in the case of Roshan Di Hatti, as relied upon by learned counsel, learned Departmental Representative submitted that right perspective is whether donor had so much spare funds to make gifts and not the capacity of Shri R.K. Syal to repay the amounts. He submitted that it is not the duty of the Department to seek source of the assessee for repaying the amount and that onus is on the assessee to prove that receipts by way of gifts are not his income. With reference to the plea of learned counsel regarding utilisation of money and taxing the beneficiary owner learned Departmental Representative submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Departmental Representative has accepted that s. 69 is applicable he was not advancing any arguments with reference to the provisions of s. 68 of the Act. He further submitted that the provisions of s. 69 are deeming provisions as against the provisions of s. 68. He also submitted that the deeming provisions of s. 69 have been elaborately examined by the Tribunal in the case of Smt. Neena Syal in ITA No. 1163/1996 dt. 21st Sept., 1998. He submitted that in the said case the Tribunal had considered the decisions in Asstt. CIT vs. Rajeshbhai Jagjivandas Thakkar (1996) 56 TTJ (Ahd) 288 : (1996) 58 ITD 283 (Ahd), Pushkar Narain Saraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (AH), and CIT vs. Shivakami Co. (P) Ltd. (1986) 50 CTR (SC) 10 : (1986) 159 ITR 71 (SC) and came to the conclusion that AO failed to comply with basic conditions stipulated in s. 69. The Tribunal also observed in para 5.1 of the order that onus of establishing a condition of taxability must be fulfilled by the Revenue, as held in (1986) 50 CTR (SC) 10 : (1986) 159 ITR 71. Learned counsel submitted that the case of Department is that the assessee had unaccounted money which was passed to the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting out to the fact that entry is not fictitious the initial burden lying on the assessee can be said to have been duly discharged and it will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make advance of the money as a loan to the assessee. It is also observed that once such identity is established and the creditors have pledged their oath that they have advanced the amount in question to the assessee the burden immediately shifts on the Department to show as to why the assessee's case should not be accepted. Learned counsel, therefore, urged that the assessee is not required to explain source of source. He therefore, referred to NRE bank a/cs of the donors and submitted that the gifts have come out of said a/cs and no money could flow in the said bank a/cs of the donors out of local funds. Learned counsel submitted that the provisions of s. 69 are also applicable with reference to other gifts of Rs. 5 lakhs and Rs. 45 lakhs as given by Shri Manmohan Singh and Shri Navtej Singh Bains and the same proposition of law applies to such gifts. He also submitted that Rs. 46 lakhs ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Bhangu with the assessee. He also submitted that love and affection could be spontaneous, as mentioned in first affidavit of Shri Bhangu. He submitted that there are no compensatory payments by the assessee as alleged by the Department and there is no evidence with it in this behalf. He referred to the definition of 'gift' as given in s. 2(xii) and submitted that the gift is without consideration, as mentioned in the said definition and the Department has only made the allegations without any proof/evidence that there is compensatory payment. He urged that even if the gifts are treated as ingenuine, the sources of receipt of money by the assessee are genuine for the purpose of s. 69 of the IT Act. With reference to plea of learned Departmental Representative that affidavits are self-serving evidence, learned counsel stressed that evidence has to be self-supporting and it is for the Department to prove that the submissions/averments made therein are wrong and the same are facade. He urged that the affidavits are good evidence and contain assertion of fact and the Department has no material to prove that the facts mentioned therein are wrong. With reference to plea of learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the said case is under s. 68 and gifts were received from strangers and illiterate agriculturists who were less wealthier in education and reputation and the Tribunal considered the judgments including the case of Lal Chand Kalra. He submitted that the said case is distinguishable on facts. With reference to decision in (1997) 59 TTJ (Pat) 655 (TM) : (1997) 63 ITD 87 (Pat)(TM), learned counsel submitted that the said case was under s. 68 and creditworthiness of the donors could not be properly proved by the assessee and, therefore, the same is distinguishable on facts. With reference to the decision in (1994) 121 CTR (Cal) 20 : (1994) 208 ITR 465 (Cal), learned counsel submitted that the same is under s. 68 and relates to cash credit and is distinguishable on facts. Learned counsel thus concluded his reply by submitting that the identity of the donors, their sources and capacity are established and that there is no material with the Department to hold that the compensatory payments have been made by the assessee to the donors. He again referred to the decision in (1998) 62 TTJ (Mumbai) 357 : (1998) 67 ITD 289 (Mumbai), wherein it has been held that where gifts were given by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade addition of Rs. 76 lakhs on account of these three gifts without referring to the relevant section of the IT Act under which the additions have been made. Learned Departmental Representative accepted during hearing that s. 69 is applicable in relation to these additions. It is provided in s. 69 that where the assessee has made investments in the financial year which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the AO satisfactory, the value of the investment may be deemed to be the income of the assessee of such financial year. It is observed that during search, affidavits of three donors have been found wherein they have specifically stated that they have made the impugned gifts to the assessee. The reasons for making the gifts are stated to be love and affection, which is a common reason given by all the donors and the forestry and environmental work being done by the assessee and this reason has been given by Shri Bhangu in his affidavit dt. 14th Sept., 1996. It is also observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracts from NRE a/cs of Shri Manmohan Singh Virdhi and Shri Navtej Singh Bains have been filed before us, as enquired by the Bench during hearing. The said NRE a/cs have been perused by us and it is observed that these are running accounts and moneys have been deposited therein from time to time. It is not disputed that only deposits in the foreign exchange are permissible in such a/cs, It is thus clear that source of deposits in these NRE a/cs is in foreign exchange through the donors. There is no proof that the money of the assessee has been routed through donors into these accounts from where the gifts have been made to the assessee. 7.1. Now taking up the plea of learned Departmental Representative regarding application of principle of human probabilities, the plea looks attractive on the face of it. It really looks strange as to how any person can part with huge sums of money in favour of other person without cogent reasons. Such transactions thus create doubt/suspicion and one starts assuming that something is fishy about these transactions and probably the donors m such cases must have got the money equivalent to gifts or something equivalent or more in money's worth in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO which is a case under s. 69A. It has been held by the Hon'ble President of the Tribunal that where gifts have been given by account payee cheques and the donors filed affidavits confirming said gifts, in the absence of any evidence in possession of Department to the contrary, gifts amounts could not be added as undisclosed income of the assessee. (ii) CIT vs. Mrs. Sunita Vachani. In the said case, the CIT had set aside an assessment order because he was of the view that the ITO had not gone into the sources of gifts of large sums of money received by the assessee from abroad. On appeal, the Tribunal examined the balance sheet of the donors and came to the conclusion on merits that the decision of the ITO to treat the moneys 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. On reference, the High Court held that the finding of the Tribunal that the gifts were genuine was a pure question of fact. It observed that 'even though it may be surprising as to how large sums of money are received by a family in India by way of gifts from strangers from abroad, unless ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on by the assessee at Lahore was a reasonably large business though its extent could not be verified by any reliable material produced by the assessee; there was no material on which it could be said that the ornaments, jewellery and cash brought by the assessee and kept in the sealed truck were of the value of only Rs. 1 lakh and no more. It further observed that the utter improbability amounting almost to impossibility of the assessee having earned such a large amount of Rs. 2,33,414 as profit within a few months in the disturbed conditions which then prevailed in India was a circumstance which ought to have been taken into account by the Tribunal and the Tribunal had failed to do so. (v) CIT vs. Daulat Ram Rawatmull. In the said case, it was observed at p. 360 that the approach of the Tribunal was manifestly erroneous because it is a common feature of commercial and other transactions that securities are offered by other persons to guarantee the payment of the amount which may be found due from the principal debtor The concept of security and ownership are different and it would be a wholly erroneous approach to hold that a thing offered in security by a third person to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case law relied upon by learned Departmental Representative and we feel that the same is distinguishable on facts as under: (a) Shyam Sunder Gupta. In the said case, the assessee received a gift of Rs. 25,000 from J resident of London. He failed to furnish address of the donor in India as also his relationship with the donor. AO rejected the assessee's contention that J had gifted the amount out of love and affection resulting from a month long stay together at Kathmandu. The assessee filed the affidavit and the Tribunal held that bare assertion of an occasional stay of J with the assessee in Nepal turning intimacy into friendship of degree which prompted J to donate substantial amount at no auspicious occasion got no corroborative support even from assessee's own affidavit. The Tribunal, therefore, took into account the circumstances attending on alleged transaction as also conduct and behaviour of parties and held that the transaction was not genuine. It is clear that the Tribunal went into other circumstances and conduct and behaviour of the parties in the absence of any other evidence (including affidavit of the donor confirming the gift). (b) CIT vs. Precision Finance (P) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal (Asr Bench) in its order dt. 31st March, 1992 has discussed the case of Lal Chand Kalra. After noting the facts in the said case and the decision of the Tribunal that there was no satisfactory evidence on record to prove that the donors owned land measuring 40 acres and 20 kanals or that their net income was in fact Rs. 30,000 or Rs. 18,000 as alleged by them and therefore, the donors were not men of means and that High Court held that the Tribunal was justified in holding that there was no evidence to show the extent of annual income as stated by the donors, Bench observed that the aforesaid judgment does not in anyway lay down that the genuine gifts can be rejected merely on the ground that there was no occasion or relationship for making the gifts. The Bench further observed that such circumstances could only be seen when source of gift or the financial standing of the donors was in doubt. These observations of the Tribunal are echoed in the article of Shri D.S. Walia in (1993) 113 CTR (Art) 51, wherein in para. 5 at p. 52 it is mentioned that there is no condition attached that the transferred property from the donors to the donee should be on some specific occa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onship or occasion for making the gift do not flow from the definition of gift as given in s. 2(xii) of the GT Act. The only conditions laid down in the definition are that there should be transfer by one person to another of any existing movable or immovable property, the transfer should be voluntary and it should be made without consideration of any money or money's worth. Thus, the elements of close relationship and occasion relate to the realm of human probabilities and are in the nature of circumstantial evidence which may have to be looked into if the direct evidence relating to making of gift is found wanting. Here, we may also mention that Government of India has been floating schemes from time to time for inviting remittances in foreign exchange from NRIs and granting immunity from the provisions of the GT Act including immunity from the provisions of IT Act, etc. During the period when such immunity schemes are in force, the question of dose relationship between the donor and the donee and occasion for making the gift are given a go-by. It may be argued that these elements are not considered because of immunity granted for specific purpose and in public interest. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that p. 5 of item A-20 seized on 7th Sept., 1995 at the residence of Smt. Pamila Syal and Shri A.L. Syal related to purchase of land by various family members at Mirpura in the month of August, 1995. He also observed that in the case of the assessee there were three lands purchased, i.e. plots of 16.07 bighas registered on 31st Aug., 1995 for an amount of Rs. 4,08,750; 1.05 bighas registered on 24th Aug., 1995, for Rs. 3,81,250; and 16 bighas registered on 24th Aug., 1995, for Rs. 4 lakhs. He also observed that total consideration paid for the said plots was Rs. 10,66,858; Rs. 9,95,062; Rs. 10.44 lakhs: aggregating to Rs. 31,05,920. He referred to balance sheet of the assessee as on 7th Sept., 1995, and observed that it showed only one land having registration value of Rs. 4,08,750 was reflected in balance sheet of Smt. Bimla Syal on 7th Sept., 1995 instead of Shri R.K. Syal. Similarly, he observed that the land having registration value of Rs. 4 lakhs was shown in balance sheet of Smt. Pamila Syal, sister of Shri R.K. Syal. He, therefore, considered all the three plots of land at Mirpura, whose registration had been done in the name of the assessee, in the hands of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned that land at Mirpura has been purchased in the name of Shri R.K. Syal on 31st Aug., 1995. In cash flow statement placed at p. 77 of assessee's paper book, the amount of Rs. 4.35 lakhs is shown with reference to (w.r.t.) land at Mirpura in the name of Shri R.K. Syal. He further referred to assessment order in the case of Smt. Bimla Syal at p. 78-79 and submitted that the addition w.r.t. the said land has been made in the case of Smt. Bimla Syal on protective basis, as she provided the funds. He further submitted that the sellers of the land, Shri Rachpal Singh and Shri Chanan Singh were summoned under s. 131 and they denied receipt of any on-money w.r.t. sale of the said land. He referred to letter dt. 18th April, 1986, written to the assessee at p. 61 of assessee's paper book, wherein AO mentioned in para. 3 that as per documents seized during search land in Mirpura had been acquired and where registration has been done in August, 1995, total consideration for three pieces of land was Rs. 10,66,858; Rs. 9,95,060; and Rs. 10.44 lakhs respectively and that the assessee may explain the above transactions and nature and source of investment in the said lands at Mirpura. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Pamila Syal including written submissions may be taken as his arguments advanced in this case also. 9. We have carefully considered the rival submissions and have perused order of AO and various papers placed in the assessee's paper book as also the Departmental paper book to which our attention was invited during the course of hearing. We have also seen the case law relied upon by both the parties. It is observed that AO while making impugned addition of Rs. 19,15,920 has mainly relied on document A-8 p. 14 seized from the residence of Shri Vinod Viyogi. He has also referred to document A-20 p 5 seized from the residence of Smt Pamila Syal and Shri A.L. Syal. AO asked the assessee to explain the source of investment in the impugned lands at Mirpura and the assessee filed a detailed reply placed at pp. 64-65 of assessee's paper book. The assessee clarified that the alleged amounts of consideration in relation to three plots had nowhere been mentioned either in the seized documents or in the registration deeds. From assessment order, it is clear that AO has observed that seller of land Shri Rachhpal Singh was summoned under s. 131 and he denied receipt of any payment over and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case AO did not comply with the conditions stipulated in s. 69, which are mandatory in nature and are relevant for assessment made under s. 143(3)/158BC of the Act. It may be mentioned that under s. 158BB(2), the provisions of ss. 68, 69, 69A, 69B and 69C have been made applicable for the purpose of computing undisclosed income of the block period. It is also observed from the decision of the Tribunal in Asstt. CIT vs. Rajesh Bhai Jogjivandass Thakkar that 'the fiction enacted under s. 132(5) for the limited purpose cannot be extended while completing the assessment under s. 143(3) and, therefore, the burden of proving that the assessee was the owner of the gold ornaments in question in the face of his spontaneous statements and statements of the family members lies on the taxing authority'. We may also refer to the decision in (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All), wherein it was held in the context of s. 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. s. 12B(2), proviso (i) of, Indian IT Act, 1922, was to remedy a social evil and should be read broadly and should be so read that the object is fulfilled; yet the onus of establishing a condition of taxability must be fulfilled by the Revenue. 9.1. We have also considered the written submissions filed by learned Departmental Representative in the case of Smt. Pamila Syal in ITA No. 1168/1996. It is observed that learned Departmental Representative has submitted that the issue of payments for purchase of immovable property by the assessee in the name of Ms Madhulika Syal over and above the registered amount was duly confronted to the assessee as per question No. 4 of the questionnaire dt. 18th April, 1996, issued by AO and placed at p. 6 of the paper book. In the said written submissions, it has been further stated that presuming that the documents mentioned in items A-5 and A-8 of the Panchnama drawn at the residence of Shri Vinod Viyogi were not confronted, it is prayed that the case may be referred back to the file of AO for fresh adjudication. In this connection, the Department has relied on the decisions in the cases of Kapurchand Shrimal vs. CIT (1981) 24 CTR (SC) 345 (19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to avoid abuse of the exercise of powers and it is not available to the assessing authority so that it may improve upon its finding and come to a conclusion after rectifying his lapse and after rectifying legal and mandatory directions to be followed by him. It is observed that these issues have already been considered by the Tribunal in the case of Smt. Neena Syal. The Tribunal elaborately discussed the issue of restoring the matter to the file of AO in para. 5.2 in the light of the provisions of new Chapter XIV-B. It analysed the said provisions and observed at p. 32 that it will be seen that the new provisions are more stringent inasmuch as the assessee is liable to pay tax at 60 per cent in relation to undisclosed income, assessment order is to be made by an officer not below the rank of Asstt. CIT and with the previous approval of the CIT. We, therefore, feel that the provisions of the new Chapter have placed a greater-burden on the Departmental authorities to comply with the essential provisions of law and that these provisions have to be construed strictly. Thus, in a situation where AO has failed to comply with the basic provisions of s. 69/69B, whereunder the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en paid is not mentioned and it is not clear as to whether fees have been actually paid and for what period. He further submitted that though AO has drawn inference but he has not proved that the amount mentioned in the seized paper is undisclosed income of the assessee. He submitted that AO has not examined withdrawals of the past years as also withdrawals made by the wife of the assessee. He also submitted that AO has not proved that withdrawals of the assessee and his wife were insufficient to meet these expenses. He urged that some material should have been brought on record to show that the expenses have actually been incurred. He, therefore, urged that the document in question was not conclusive and it was not proved to the logical end. He relied on the decision in the case of Raj Kumar Jain vs. Asstt. CIT (1944) 49 TTJ (All) 558 (TM). (1994) 50 ITD 1 (TM)(All). 10.3. Learned Departmental Representative relied on order of AC. He further submitted that the paper has been found from the residence of the assessee and it is not necessary that it should have been signed by anybody He referred to the provisions of s. 132(4) and submitted that there is a presumption that the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O as also various documents placed in the paper books to which our attention was invited. It is not disputed before us that the document in question was found from the residence of the assessee. In view of the provisions of s. 132(4A), it is presumed that the said document belonged to the assessee. Details of various expenses have been given in the said document under caption 'Fee details of Nikhil Syal-Cl. IX'. The details consist of admission fee, caution money, building fund, annual charges, fee, computer fee, books and stationery, extra coaching and pocket money aggregating to Rs. 20,488 (actually Rs. 20,788). Though it is admitted by learned Departmental Representative that AO did not put any specific query to the assessee and proceeded to draw the inference that the amount of Rs. 25,938, as mentioned in the said document, is undisclosed income of the assessee, yet at the same time the submissions made by learned counsel are general in nature and do not explain the entries made in the seized document. We, therefore, feel that the onus placed on the assessee to explain the said entries is not discharged and the addition has to be sustained. 12. In the result, the appeal is all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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