TMI Blog2005 (4) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The assessee carried the matter to the Ld. CIT(A) and stated that notice issued under section 148 was not valid notice because all the facts were disclosed in the return of income filed which was duly processed on 23-11-1990 under section 143(1)(a) of Income-tax Act, 1961. It was stated that the gifts were received by cheque and were given to M/s. Hari Chand Pawan Kumar, Commission Agent, Kaithal by cheque. It was further stated that the Assessing Officer never asked Shri Om Parkash Narwania, the donor who was produced before the Assessing Officer either about the gift-tax return filed by him or the affidavits submitted by him. 5. Ld. CIT(A) asked for the comments of the Assessing Officer who stated as under: "(i) That while completing gift-tax assessment on 20-3-1991 in the case of Shri Om Parkash Narwania, donor, it was held that the gifts made by him to the daughters of the assessee, Shri Ashok Kumar Narwania were bogus. Actually, this amount of Rs. 20,200 was assessee's own income which escaped assessment and the notice under section 148 was rightly served on the assessee. (ii) The contention that the gifts were received through cheque had already been rejected by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is hereby confirmed." Now the assessee is in appeal. 7. Ld. counsel for the assessee reiterated the submissions made before the authorities below. He vehemently argued that the assessee produced donor before the Assessing Officer. The gifts were received through cheques and the donor was directly related to the donees since he is the uncle of the assessee and made gifts to the minor daughters of the assessee who used to serve food to him and to his wife. Therefore, gifts were made under love and affection only and not for any consideration. It was further stated that the gifts were made on the occasion of Karan Bedhan Sanskar. So, there was an occasion when the gifts were made. He further submitted that the gifts were given through account payee cheque and were deposited in the bank accounts of the minors and then given as loan to M/s. Hari Chand Pawan Kumar, Commission Agent, Kaithal on interest for the benefit of the minors. It was argued that no evidence had been brought on record that the aforesaid genuine gifts were the undisclosed income of the assessee. However, the additions had been made by the Assessing Officer only on the basis of assumptions and the Ld. CIT(A) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Shri Ashok Kumar Narwania did not serve him but only his small daughters came and sometime gave tea or water etc. From the above facts, it was clear that minor daughters were serving the assessee by giving tea or water etc. and in those circumstances, it cannot be said that there was no natural love and affection of the donor towards the minor daughters of the assessee. In the instant case, from the above discussion, it would be clear that the donor in his statement before the Assessing Officer had admitted that the minor daughters of the assessee were serving him by giving tea or water etc. and the gifts had been made through account payee cheques. The Assessing Officer had not brought any material on record that the amount deposited in the bank account of the donor, was the income earned by the assessee. In that view of the matter, he was not justified in stating that gifts were undisclosed income of the assessee. Considering the totality of the facts as narrated hereinabove, we are of the view that Ld. CIT(A) was not justified in confirming the action of the Assessing Officer without appreciating the facts in right perspective. We, therefore, delete the addition made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This notice under section 148 is not valid as the facts of the case are not covered under section 147. Assessee disclosed all the material facts in the return of income filed which was duly processed on 23-11-1990 under section 143(1)(a). The detailed facts are that one Sh. Om Parkash gifted Rs. 20,200 to the daughters of the assessee by cheque (10,100 X 2). The assessee further gave these amounts to M/s. Hari Chand Pawan Kumar, Commission Agent, Kaithal by cheque. The Assessing Officer even did not accept gifts which were made by cheque. If at all the bank payments are treated as benami, than the real beneficiary is M/s. Hari Chand Pawan Kumar, C/A Kaithal. On this account addition cannot be made in assessee income. Rather it should be in hands of M/s. Hari Chand Pawan Kumar C/A Kaithal, the ultimate beneficiary. Further in our case, the Assessing Officer never asked Shri Om Parkash who was produced before him either about gift-tax return filed by him or affidavit submitted by him. Actual position is that Shri Om Parkash wanted to say that he had not gifted any amount except stated in gift-tax return and affidavits filed already. Keeping in view above-stated facts addition made m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not proved as he was not having sufficient sources to make such gifts, these gifts were not treated as genuine. Actually, it was the income of the assessee, the character of which was tried to be changed by the assessee by showing gifts through Sh. Om Parkash Narwania, a distant relation. This amount was given as loan to M/s. Hari Chand Pawan Kumar and the same was treated as genuine in the bank account of minor daughters and have filed evidence. It may be mentioned here that in the case of firm money/loan was given and evidence was produced but in the case of assessee Sh. Om Parkash, donor, was not in a position to make gifts and the assessee had utilized his own income by changing the character through gifts by Sh. Om Parkash, donor. Therefore, the loan in the hands of that firm was treated as genuine and at that time proceedings against the donor and assessee were contemplated. So assessee's this contention has got no force. (iii) In the third para the assessee stated that the Assessing Officer never asked Sh. Om Parkash who was produced before him about gift-tax return filed by him or affidavit submitted by him actual position is that Sh. Om Parkash wanted to say that he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee?" THIRD MEMBER ORDER Per Shri Vimal Gandhi, President.- On account of difference between the Hon'ble Members of Income-tax Appellate Tribunal, B-Bench, the following question has been referred to me under section 255(4) of the Income-tax Act:- "Whether, on the facts and in the circumstances of the case, the Assessing Officer was justified in making the addition of Rs. 20,200 on account of gifts claimed to have been received by the minor daughters of the assessee?" 2. The facts of the case briefly stated are that one Shri Om Parkash Narwania is stated to have made two gifts of Rs. 10,100 each to minor daughters of the assessee, aged between 4-1/2 to 6 years in the period relevant to assessment year 1990-91. The said Shri Om Parkash Narwania filed gift-tax return in respect of above gifts. In those proceedings, the Gift-tax Officer recorded the statement of Shri Om Parkash Narwania in which Shri Om Parkash Narwania denied having made any gift. It was otherwise recorded that said Shri Om Parkash Narwania had no capacity to make any gift. Accordingly, gifts made were not accepted. As minor daughters of the assessee had no independent source of income, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved came up in appeal before the Appellate Tribunal. After considering the submissions of both the parties, the ld. Accountant Member accepted the gifts and deleted the addition. He held in his proposed order that in the instant case, it was not in dispute that the gifts had been received through cheques. It was not the case of Assessing Officer that undisclosed income of the assessee was deposited in the account of the donor and then gifts to assessee's daughters were made. The donor was related to the donees and gifts had been made at the lime of Karan Bedhan Sanskar. So, there was also an occasion. For making a gift it was not necessary that there should be a blood relation and very very close relationship. In that view of the matter, the Assessing Officer was not justified in considering the gifts as non-genuine on the basis that the donor had not made any gifts to his sister or sons or daughters. The Assessing Officer had not appreciated the fact that neither the sister nor the sons or the daughters were living with the donor. The Assessing Officer in the assessment order dated 5-10-1992 at para 2 had stated that the contention of the assessee before him was that the donor an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the donor had agricultural income as submitted by the assessee and noted by the Assessing Officer at page 2 in para 3 of the assessment order. He argued that there was no justification to reject affidavit of the donor and gift-tax return filed by him. As regards statement of the donor that he did not make any gift to anybody, the ld. Counsel explained that this remark pertains to any other gifts made in the last four years, the information which is required to be given as per the Gift-tax Act and did not relate to the gifts in question. The ld. Counsel further argued that the Assessing Officer while examining Shri Om Parkash Narwania should have drawn his attention to the affidavit and gift-tax return filed by Shri Om Parkash Narwania. The ld. Counsel accordingly argued that gifts made were established on record to be genuine and there was no justification to make addition in the hands of the assessee. The ld. Counsel further submitted that addition, if any, should have been made in the hands of M/s. Hari Chand Pawan Kumar, Kaithal where the amounts in question were deposited as cash credits. The ld. Counsel for the assessee supported the order of the ld. Accountant Member. 9. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income but placed no evidence to show agricultural or other income from any source of Shri Om Parkash Narwania from which gifts could be made. This was necessary as Shri Om Parkash Narwania had denied having made any gift to the children of the assessee. He had stated that there was no money with him to make gift to anybody not even to his real sister. Without material to the contrary and in the light of statement of Shri Om Parkash Narwania, the assessee's claim of gifts to his minor daughters could not be accepted as established. Likewise, affidavit of Shri Om Parkash Narwania and the gift-tax return are of no help to the assessee, as the return stood rejected for good reasons and contents of affidavit contradicted in the statement on oath. 11. The assessee operated accounts on behalf of minor daughters and made investment of alleged gifted amounts in concern M/s. Han Chand Pawan Kumar, Kaithal, Commission Agent, Kaithal. The minors, admittedly, have no independent source of income. Therefore, on facts and circumstances of the case, a reasonable inference could be drawn that money utilized for investment with M/s. Hari Chand Pawan Kumar, Kaithal was assessee's money from "undis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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