TMI Blog2010 (8) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,000 5. Mrs. Dimple N. Shah 15,000 6. Mrs. Nutan Soparkar 18,000 7. Mrs. P.M. Soparkar 59,000 8. Mr. Vijay Bhayani 18,000 9. Ms. Forum Vora 18,000 Total 2,74,000 4. The Assessing Officer during the course of assessment proceedings asked the assessee to give details to justify the claim of gifts received from various persons. It was explained by the assessee that he has received loans from the above parties in the preceding years which were reflected in the Balance Sheet. The assessee furnished the photocopies of the bank statement, income-tax acknowledgement, Balance Sheet. capital account as well as computation of total income in respect of the above persons to support the loans taken from the parties in the previous year. It was explained that on 2nd April, 2003 some of the parties have expressed their willingness to gift these amounts and gifted a sum of ₹ 2,74,000 to the assessee. 5. However, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rances of probabilities. 8. It was further submitted that the loan transaction except item Nos. 8 and 9 pertain to the earlier assessment year and consequently in any view of the matter the impugned cash credits are not Shri Ramesh N. Vora assessable in the year under appeal i.e., A.Y. 2004-05 and the addition should have been deleted on this ground alone. It was submitted that in conformity with section 123 of Transfer of Property Act, 1882 the gift of immovable property can be effected by delivery of possession. In other words, oral gifts of immovable properties are permissible in law. Therefore, notwithstanding that the written gift deed recording the oral gift of money to the assessee in the accounting year 2003-04 was executed only on 12th August, 2006, such oral gift of money is legal, valid and binding inasmuch as in the books of account of the assessee all the gift entries have been recorded during the previous year ended 31st March, 2004. However, the Assessing Officer has failed to consider all these facts. Relying on a number of decisions it was submitted that the addition made by the Assessing Officer u/s. 68 was not justified. 9. Based on the arguments advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a chartered account and although the alleged gifts were received during the financial year 1.4.2003 to 31.3.2004 the gift deeds were prepared in the month of August, 2006. There is no relationship between the donors and the donee and there was no occasion for giving or receiving the gifts. Out of ₹ 2,74,000 the learned CIT(A) has sustained the addition of only ₹ 36,000 and deleted an amount of ₹ 2,38,000. He submitted that although the amount is very small but the way it was done is not correct. Referring to pages 91 and 92 of the Paper Book which is the gift of ₹ 1 lakhs given by Manohar Ganpat Soparkar (HUF), he submitted that the gift is not dated nor was it accepted by the donee. It was not even a certified copy and it has been signed by one Nutan Soparkar who is the constituent attorney for the donor. Referring to page 98 of the Paper Book, he Shri Ramesh N. Vora drew the attention of the Bench to the copy of the acknowledgement of return of Manohar Ganpat Soparkar (HUF) where the HUS has declared the income of only ₹ 9000. He submitted that this is the only return of the HUF and a copy of which was filed and there is absolutely no creditwor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation and if the Assessing Officer did not receive any reply then the assessee requested to take necessary action under the Act. However, the Assessing Officer has not issued a single summon to any of the donors. Refuting the allegation of the learned DR regarding the deficiency in gift deed, he submitted that it is only a declaration and not a gift deed. Referring to the decision of the Hon'ble Rajasthan High Court in the case of CIT vs. Padam Singh Chouhan reported in 315 ITR 433 he submitted that for accepting a gift blood relation is not required for the donor for giving a gift and natural love and affection is sufficient. He submitted that in the instant case the loan was already lying with the assessee. Book adjustment was already made and it is constructed delivery. Referring to page 71 of the Paper Book he submitted that the gift of ₹ 2,74,000 is already added to the capital account of the assessee. Referring to the copy of the bank account of Manohar Ganpat Soparkar (HUF), a copy of which is placed at Paper Book pages 96 and 97, he submitted that the loan of ₹ 1 lakh given during January, 2000 was out of clearing of two cheques of ₹ 50,000 each on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh book entries. 15. We find the provisions of section 68 read as under; 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 16. From the above it is clear that addition can be made u/s. 68 of the Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer. In the instant case an amount of ₹ 2,38,000 was already credited in the books of account by way of loan in the preceding assessment year. Therefore, addition if any could have been made only during the assessment year in which the assessee has accepted the loan. Since during the year the assessee has merely converted the loans into gifts through book entries, we, therefore, do not find any inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edits in her bank account. The assessee was unable to explain the source of her income. Therefore, the Assessing Officer held that Ms. Himanshi Ramesh Vora does not have the capacity to give the loan. 20. In the case of Ms. Miloni Ramesh Vora the Assessing Officer noted that the opening balance was shown at ₹ 2,27,000, new loan availed during the year at ₹ 1,32,5080 and the closing balance was shown at ₹ 3,59,500. The loans of ₹ 12,500, 5,000, 1 lakh and ₹ 1,50,000 given on different dates were out of immediate transfer of equivalent amount into her account from the assessee himself. Since the assessee was unable to explain the source of various entries Shri Ramesh N. Vora credited in her account, the Assessing Officer held that Ms. Miloni Ramesh Vora has no capacity to give loan to the assessee. 21. The Assessing Officer similarly noted that the loan from Mrs. Kanan Ramesh Vora (wife) shows opening balance of ₹ 14,65,800. During the year the assessee used her loan account as running account for payments made on her behalf for Pune flat and she made the payments on his behalf for Khar flat and other payments on her behalf. Cheques received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returns by the loan creditors filed before the Department. If such a step is not resorted to by the Assessing Officer so as to cross check the capacity of the loan creditors, the assessee cannot be made to suffer for the lapse and tardiness of the Assessing Officer. 24. On the basis of the arguments advanced by the assessee and the decisions cited before him, the CIT(A) deleted the addition of ₹ 11,62,474 by holding as under; 10. I have carefully considered the above facts. It is quite evident from the foregoing discussion that the appellant has been able to discharge the primary onus in the matter in a conclusive manner. The appellant has furnished confirmations of the persons concerned and has also demonstrated that all of them were assessed to income tax having their own sources of income. The transactions have also been made through banking channels. On the other hand, the observations and findings of the Assessing Officer are quite superficial. Nothing has been brought on record to show that the appellant introduced his own unaccounted income under the garb of cash credits. The Assessing Officer has not been able to refute the evidences filed. He has not even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, on the other hand, submitted that the assessee has discharged the onus cast on him by filing the various details and the onus is now shifted to the Department. If the Assessing Officer fails to do anything the assessee cannot be blamed. Referring to the loan statement of Ms. Kanan Ramesh Vora, he submitted that it is a running account and no fresh loan has been taken during the year. As regards the loan obtained from Ms. Himanshi Ramesh Vora the learned counsel for the assessee referred to page 206 of the Paper Book and submitted that on 1st April, 2004, the loan creditor has become a major and signed the confirmation letter. Further the assessee has subsequently repaid the loan which has been accepted by the Department which is evident from the ledger account of Ms. Himanshi Ramesh Vora in the books of Ramesh Vora Co. which are as per Paper Book pages 264 and 265. As regards the loan obtained from Ms. Miloni Ramesh Vora he referred to page 22 of the Paper Book and submitted that Ms. Miloni Ramesh Vora had given the loan during the year out of various deposits in her bank account. The learned counsel for the assessee relied on the submissions made before the CIT(A). In his alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceedings as well as before us, we find the minor daughters do not have adequate known source of income to extend loan of ₹ 2,00,500 and ₹ 1,32,500, respectively. We find the CIT(A) without appreciating the facts of the case properly has deleted the entire addition. Since the assessee was unable to Shri Ramesh N. Vora explain the source of the income of minor daughters even before us, the loans advanced by the minor daughters has to be added u/s. 68 of the Act. However, such addition has to be restricted to the loans taken during the year and not the opening balances which relate to other assessment years. We, therefore, set aside the order of the CIT(A) on this issue and sustain the addition in the case of Ms. Himanshi Ramesh Vora at ₹ 2,00,500 and ₹ 1,32,500 in the case of Ms. Miloni Ramesh Vora. 29. As regards the loan from Ms. Kanan Ramesh Vora we find as against the opening balance of ₹ 14,65,800 the closing balance has been declared at ₹ 2,78,113. It is the submission of the learned counsel for the assessee that since no fresh loan has been taken during the year and the closing balance is less than the opening balance n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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