TMI Blog1998 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... A) of I.T. Act are not applicable to the facts of this case is unjust, illegal, arbitrary and against the facts and circumstances of the case." 2. Since ground No. 1 (a) and ground No. 3 are inter-related, these are first taken up and disposed of. 3. Facts in brief are like this that the return of income of Rs. 4,65,100 was filed on3-12-1993. During the year under consideration assessee has received income from house property and income from other sources. The income of assessee's minor sons. Master Suvrat Batra and Master Samegh Batra are also clubbed with the income of the assessee. During the year assessee's son Master Suvrat Batra is shown to have received gift of Rs. 25 lakhs from one Shri Jagjit Singh Kochar an NRI. In support of the same, the assessee filed before the Assessing Officer a copy of cheque No. 030030 drawn on Bank of America,New Delhidated19-5-1992. The case of the assessee is that this gift has been given by Shri J.S. Kochar out of personal consideration and love and affection. That he is a close family friend. The assessee had submitted further personal details regarding Shri Kochar and also stated that : (a) Shri J. S. Kochar was Non-Resident Indian. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cheque of the same date. It has been credited to Master Suvrat's account inIndiaon20-5-1992. The Assessing Officer has also observed that the so-called gift has come at a time when huge investments were made in the shares of Trident Projects Ltd. The Assessing Officer thus noted that the amount claimed to have been received by the assessee is : (a) Isolated in nature. (b) One way. (c) Between persons who are not related. (d) Made in undue haste. (e) At a time when assessee and his family had to make huge investments. The Assessing Officer concluded that the onus lay on the assessee to establish credit-worthiness of the donors and genuineness of the gifts had not been discharged. He has therefore, invoked section 68 in deeming the receipt of Rs. 25 lakhs as the income of the assessee from undisclosed sources as the income of Master Suvrat Batra is clubbed with the income of the Assessee. 5. The assessee preferred appeal against the order of Assessing Officer and pleaded before the first appellate authority that Shri J. S. Kochar has remitted Rs. 25 lakhs from Dubai to India through banking channels and this amount was paid to Suvrat Batra by cheque. That the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived a gift of Rs. 25 lakhs from one Shri J. S. Kochar. Shri Kochar is not a relative. Further it has been claimed that said Shri Kochar made a gift of Rs. 25 lakhs to the HUF of assessee's father M/s. S. L. Batra Sons. And further Shri Kochar made a gift of Rs. 11 lakhs to M/s. Sanjeev Batra, HUF in assessment year 1990-91. No other gifts stated to have been made by Shri Kochar to any of his own relatives. It is difficult to accept the preposition that huge gifts did come to the Batra family from Shri Kochar in the facts and circumstances of the case. It could be anything but certainly not a gift. The so-called gift of Rs. 25 lakhs from Shri Kochar is in undue haste and at a time when the Batra family had to make huge investments in Trident Group as elaborately discussed by the Assessing Officer. Besides the appellant has failed to establish the gift as claimed. Mere submission is no evidence. In the facts and circumstances of the case and the elaborate discussion as made by the Assessing Officer in the assessment order. I hold that the Assessing Officer has rightly invoked the provisions of section 68 and clubbing to tax the sum of Rs. 25 lakhs in the hands of the assessee as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as application were given to opposite parties and both the parties have shown no resistance for admission of additional evidence. Rather they have conceded that additional evidence as led by them should be admitted. 11. We have considered the request of both sides on admission of additional evidence and also looked into the nature of documents sought to be admitted. After looking into the details of the documents, we are convinced that these are necessary for the disposal of appeal in hand and there is no objection from either of the sides for admission of these documents. Therefore, we admit additional evidences of both the parties in this case. 12. The learned counsel for the assessee reiterated the submissions as made before the authorities below and further submitted that addition of Rs. 25 lakhs was made without giving adequate opportunity to the assessee. It was further submitted that from the order of the Assessing Officer it is observed that the assessee has not been able to establish the financial capacity of the donor and genuineness of the gift had also not been established. At page 4 of his order it was observed that it was also necessary for the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is a limited liability Co. engaged in trading activities having a turn over in excess of Rs. one crore a day. He has been leading and setting the prices for bean crop intoSpainand also asofetida intoRussia. Mr. Kochar comes toIndiararely (probably once a year). 13. It was further submitted that no query was made from the assessee to establish the financial capacity of the donor at assessment stage or at appellate stage. The assessee has produced all relevant papers in order to establish that gift made is genuine and the donor had the capacity to make such gift. The donor being NR1 had a vast business empire in foreign country. As per documents filed, he had the capacity to make gifts at one point in the amount of Rs. one crore as per financial backgrounds certified by the bankers of the donors. The donor had family relations with the father of the assessee and at the time of birth of second son of the assessee he made a gift of Rs. 25 lakhs out of love and affection and the gift has been received through banking channels, confirmation has been given by the that donor and long family relations have been established in this case in order to justify the gift. It was also plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any documentary evidence. So addition made is unwarranted. It was further pleaded that in the case of gift from NRI the assessee is required to establish that the amount had come through banking channels which has since been established by the assessee. So no addition could be made. Assessee's counsel further relied upon number of judgments and further emphasised that the assessee is not required to prove source of source and addition made is required to be deleted. It was also pleaded that in another case of Rakesh Aggarwal, HUF where same donor had made a gift of Rs. 11 lakhs and the same has been accepted by the Assessing Officer in the assessment year 1993-94 vide order under section 143(3) dated 15-2-1996. Therefore. it was pleaded that in the case of the assessee addition needs to be deleted. Assessee placed reliance on the following judgments of Delhi High Court and various orders of Tribunal and notification etc. on gifts : 1. Smt. Shama Suri [IT Appeal No. 3089 (Delhi Bench 'C') of 1987] assessment year 1982-83, dated28-9-1990. 2. Ms. Sunita Vachani [IT Appeal No. 1474 (Delhi Bench 'A') of 1986] assessment year 1982-83, dated17-3-1987. 3. Master Nikhil Nanda etc. [I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kesh Aggarwal (HUF) by the same donor is concerned, it was submitted that in this case gift has been accepted by ACIT, Co. Circle 1 (3), New Delhi vide order dated 15-2-1995 and as regards other amounts to other parties and bank transactions details of which were filed by department and copy supplied to assessee. The learned counsel for the assessee submitted that he has no comments to offer as transactions pertained to donor and not to assessee. 16. TheId.DR, on the other hand, submitted that despite specific opportunity granted to the assessee to prove genuineness of the gift as well as financial capacity of the donor during assessment proceedings the assessee failed to do so. Therefore, Assessing Officer was fully justified in not accepting the gift amount as gift and rightly added the same in the income of the assessee. It was also pleaded that gift of such a big amount of Rs. 25 lakhs is against normal human conduct and all probabilities especially when donor is admittedly not related to assessee. It was also pointed out that the said donor has not only gifted Rs. 25 lakhs to the minor son of the assessee but also made further gifts of Rs. 25 lakhs and Rs. 11 lakhs to two HU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Indian and has given a gift of this amount on the birth of second son of the assessee and this amount has been given out of NRE account of the said alleged donor Shri J. S. Kochar and remittances in this NRE account is stated to have been made by Shri J. S. Kochar in foreign exchange. It is also the case of the assessee that said Shri J. S. Kochar has substantial funds to his credit in the NRE account and he has gifted this money of Rs. 25 lakhs to a known and close person. This is also the case of the assessee that said alleged donor is a man of means having paid the amount through cheque and the said gift is stated to have been accepted properly. So there was no occasion for any addition to be made in the income of the assessee. Assessee has claimed before the Assessing Officer that in view of evidence as mentioned above the amount by way of alleged gift accepted by the assessee on behalf of his minor son is in order and assessee has been able to establish the financial capacity of the alleged donor and genuineness of the gift had also been established. It was also pointed out by the assessee's representative that in spite of all the material and evidence as led by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness of the donors and genuineness of the so-called gift had not been discharged and by invoking the provisions of section 68, the receipt of the amount was treated as income of the assessee from undisclosed sources as income of Master Suvrat Batra is clubbed with the income of the assessee. Against the invoking of section 68 assessee relied upon various judgments and pleaded that this provision is neither applicable nor can be invoked in the case of the assessee. 19. We after having heard both sides and considering the contentions as raised and booking into the relevant documents, case laws and other materials, are of the view that the Assessing Officer was fully justified in treating the amount of Rs. 25 lakhs received by the assessee on behalf of his minor son from Shri. J. S. Kochar as income of the assessee because he has not been able to conclusively prove that there is any valid and apparent source of income of so-called donor Shri. J. S. Kochar. None of the documents produced by him show that he has conducted any business and has earned or generated any income whatsoever. Despite specifically asking for establishing the genuineness and financial capacity of the so-ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhotia do 03003930-10-9221,00,000 33. Mr. Jamna Datlani do 03004109-11-924,00,000 34. Prakash C. Lokhotia do 03004211-11-9210,00,000 35. Suvrat Batra do 03004325-4-9315,000 36. Ramji Sarany do 03004525-5-9325,00,000 37. Kewal Krishan Juneja do 03004629-7-935,00,000 38. Mr. R.C. Juneja do 03004824-8-935,00,000 39. Mr. R.C. Juneja do 0300491-10-935,00,000 40. Sanjeev Kumar Juneja do 03005008-11-9310,00,000 41. S. L. Batra Sons(HUF) do 03002620-4-9225,00,000 Besides these, there are number of other transactions as per copy of bank statements filed by revenue with respect to J.S. Kochar and Rubinder Kochar a/c No. 19912-012, Bank of America and also ANZ Grindlays Bank a/c No. 01SEP 1437600 with respect to J.S. Kochar. Apart from it, another gift of Rs.11 lakhs was made by this donor as per record furnished by revenue in the name of R.K. Aggarwal(HUF). But we are only concerned with amount of Rs. 25 lakhs and shall confine overselves to that only. 20. It is also a fact that the assessee had received this amount when Batra family had made a huge investment in Trident Group as elaborately discussed by the Assessing Officer. All the documents furnished by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian. Permanently residing atDubai. 2. That I am maintaining Non-Resident External (NRE) account No. 013-34-19912 with Bank of America, Hansalaya Building, Barakhamba Road, New Delhi, India. 3. That I made a gift of Indian Rs. 2,500,000 (rupees two million five hundred thousand) by cheque No. 030030 dated 19th May, 1992, drawn on NRE a/c No. 012-34-19912 with Bank of America, Hansalaya Building, Barakhamba Road, New Delhi, India to Master Suvrat Batra, s/o Mr. Sanjeev Batra, C-466, Defence Colony, New Delhi 110024 India out of my love and affection for him. sd/- (Jagjit Singh Kochar)." Letter of donor to father of the assessee dated31-1-1997is as under : Jagjit Singh Kochar 31st Jan. 97 Dear Respected Batra Uncle Namestkar With due respects. This has reference to the discussions between us on18th January, 1996. I am very sorry to note about the interference of Income-tax people and that my gift of Rs, 2,500,000 to Suvrat is subject to income-tax. I once again confirm that I made the gifts to various persons in your family due our cordial family relations and at the instance of my great late father who had been very close to you and respected you like his br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of gift amount in the order under section 143(3) reliance on such order is of no help to the assessee. 23. Now we come to the case law as relied upon by assessee's counsel to support the case of the assessee and in the decision of ITAT, 'C' Bench for the assessment year 1982-83, dated 28-9-1990 in the case of Smt. Shama Suri (supra) we find that the source of the donor has been explained but in the case in hand no such explanation or evidence to establish the source of amount is there. So in the case of Mrs. Sunila Vachani (supra) the case was remanded back as to verify the credit-worthiness and genuineness of the transaction and this case is also of no help to the assessee. In the case of Master Nikhil Nanda (supra) the credit-worthiness and genuineness of the gift was duly proved. In the case of Narinder Suri (supra) the matter was remanded back for fresh adjudication and to find out the genuineness of the mode of gift from donor. The case of D.C. Rastogi (supra) rather supports the ease of the revenue and has been heavily relied upon by the revenue. Assessee also relied upon CBDT circular No. 302 dated 2-5-1981, Double Taxation Agreement between India and U. A. E. dated 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere fact that money has been received inIndiain foreign exchange from abroad would not be sufficient to absolve the assessee from burden of establishing the identity, financial capacity of the donor and the genuineness of the gifts. In this case we find only a confirmation from parties that the gift has been made. There is evidence that money has been received by draft from abroad. In such circumstances no enquiry could be conducted by the Assessing Officer to verify the claim of the assessee. There is no such evidence on record to establish the financial status of the donor nor is there satisfactory evidence supporting the genuineness of the gift." Appeal of the assessee was dismissed by the Tribunal vide order dated28-6-1995in the above case. Similarly, in case of Mrs. Jyotsna Suri {supra) vide order dated 3-1-1997 while discussing and deliberating upon similar issue Tribunal has dismissed the appeal of the assessee and upheld the order of the CIT(A) with regard to gifts. While deciding the above-noted two cases reliance was placed on the decision of Hon'ble Delhi High Court in the case of Sophia Finance Ltd. {supra) and action of the Assessing Officer in invoking section 68 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Place Rs. 46,118. The income from other source shown is Rs. 37,760. Further, the income of son Master Samegh Batra included in the total income of the assessee. Such income is arising out of rent of Rs. 1,50,000 from house property, 10-D, Sagar Apartments, and basement No. 36, Sagar Apartment rent Rs. 36,000 total rent Rs. 1,86,000. There is shown other income of Master Samegh at Rs. 28,071. With all this incomes and assets, the assessee has shown withdrawal of Rs. 10,434, as personal expenses. The case is that the assessee lives in a joint family and withdrawals of his father are of Rs. 64,000 during the year. Having regard to the income level, status and size of the family, I do not consider it necessary to interfere with the Assessing Officer's action in making the addition on account of low withdrawals, at Rs. 48,000. The addition is confirmed." 29. The learned counsel for the assessee reiterated the submissions as made before the first appellate authority and further pleaded that since household expenses are being incurred by the father of the assessee and assessee is being residing in joint family with his father and mother, he was very much justified in making withdrawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law and in view of judgments of various courts as noted in the documents submitted in the paper book and detail as given below it was pleaded for cancellation of charging of interest: Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723 (Bom.), S. Hastima v. CIT [1963] 49 ITR 273 (Mad.), Denamani Atha v. CIT [1978] 112 ITR 837 (Ori.), Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC), Bahri Bros. (P.) Ltd. 154 ITR 244 (Pat.), Hazari Lal Roop Chand v. CIT [1967] 65 ITR 488 (All.).UnionofIndiav. Playworld Electronics (P.) Ltd. [1990] 68 Comp. Cos. 582 (SC), Fakhri Automobiles v. CIT [1980] 126 ITR 417 (Raj.), CIT v. S. P. Jain [1973] 87 ITR 370 (SC), Tolaram Daga v. CIT [1966] 49 ITR 632 (Assam), Daulat Ram Ravalmull 87 ITR 349 (sic), Sarogi Credit Corpn. 103 ITR 344 (Pat.), (sic). In the case of Ratan Chand Krishan Lal, Gauri Shankar Sita Ram, 18 TTJ 329, Mulak Raj Bimal Kumar (JK High Court) 7 TLR 97, Urmila Devi 12 Current Tax Bulletin, 462, Khoharam Om Prakash 1983 Taxation 76(6) 30, Gwalior Cloth Agencies Shree Durga Traders; Punjab Auto Enterprises; M. G. Bros. v. ACIT [1985] 154 ITR 695 / 20 Taxman 90 (AP), Patel Engg. Co. Ltd. v. C. B. Rathi [1985] 151 ITR 542 / 22 Taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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