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2009 (9) TMI 676 - AT - Income TaxUnexplained investments in immoveable properties - search and seizure operations u/s 132 - as per AO annual rent yield on this property was very high as compared to the normal return of investment, accordingly applying the rent capitalization method, the AO has arrived at the fair market value - CIT(A) held that in his opinion the valuation of the property can reasonably be taken at a rate which was higher than the value disclosed by the assessee. Accordingly, part relief was given by the CIT(A). HELD THAT:- In view of the fact that no material was found indicating anything paid over and above the registered sale price of the property so acquired, keeping in view of the decision of Hon’ble Supreme Court in the celebrated judgment of K.P. Varghese’s case [1981 (9) TMI 1 - SUPREME COURT] wherein it was held that onus lies on the department to prove that some consideration over and above the consideration stated in the sale deed have been invested, no addition can be made on presumptions and suspicions. In the latest case of CIT v. Smt. Shakuntala Devi [2009 (3) TMI 5 - DELHI HIGH COURT], Hon’ble Delhi High Court held "it may be relevant to note that a Division Bench of the court comprising Dr. Arijit Prasayath and Justice D.K. Jain, as their Lordships then were retreated that there must be a finding of the revenue that the assessee had received amounts over and above the consideration stated in the sale deed, following the ratio of K.P. Varghese’s case (supra). The Division Bench of Hon’ble Delhi High Court in CIT v. Ashok Khetrapal [2007 (7) TMI 36 - HIGH COURT , DELHI] observed that by referring to the report of valuation officer in the absence of any incriminating documents found in the course of a search no addition could be made by treating investment as undisclosed on the basis of any DVO’s report. Hence, we do not find any merit in the addition made by AO under the head ‘Unexplained investment’ on account of various properties purchased by the assessee during the block period on the basis of fair market value as estimated by the AO. All these additions are directed to be deleted. Addition made on account of gifts received by them and their children - HELD THAT:- Gifts usually flow from close blood relations and childhood friends. That too only on an important occasions. Mostly these gifts are prevalent among relations and they are reciprocal in nature. Most of these gifts are in kind and cash gifts do exists but they are in small denomination. Seldom we see huge sums of lakh of rupees as gifts especially to minors. In this case the appellant has clarified that he has not given gifts to any of these persons earlier or in subsequent period. Hence the concept of reciprocation is totally lacking in the instant case. Mere fact that the amounts were routed through bank account does not ipso facto proves the credibility of the donors beyond doubt. To give lakh of rupees as gifts to neighbours the person should have been worth crores of rupees having income of substantial nature. No such confirmations are forthcoming to establish the financial soundness of these two donors. Neither the donors given gifts to others nor the assessee received gifts from other close relations. It only fructifies the belief that the gifts are nothing but assessee’s own income which are ploughed back as gifts through other persons. By referring to the various decisions in Smt. Naushaba Rana v. Asstt. CIT [2007 (1) TMI 208 - ITAT DELHI-C], Gurbachan Singh Jaggi v. CIT [2007 (9) TMI 632 - PUNJAB AND HARYANA HIGH COURT], Chain Sukh Rathi v. CIT [2003 (9) TMI 12 - RAJASTHAN HIGH COURT] and CIT v. Anil Kumar [2007 (3) TMI 223 - DELHI HIGH COURT], the authorities below come to the conclusion that gifts are nothing but assessee’s own money received back under the guise of gifts from unknown persons. Unless ‘occasion’ and ‘relationship’ is established, the gifts cannot be held as genuine. From the perusal of family details it can be seen that a number of close relations are available but none of them had gifted any sums to the assessee. However, assessee could receive substantial amounts as gifts from a remotely connected persons. Assessee also could not confirm to the fact that he knew the donors intimately. This type of one-sided gifts of substantial amounts not associated with any occasion from relatively unknown persons in successive years defies any amount of logic. the whole transaction is designed to show huge amounts as gifts without any liability of paying taxes. The findings so recorded by the lower authorities could not be controverted by the learned AR by bringing any material, much less a cogent material so as to persuade us to deviate from the alleged finding. We therefore do not find any reason to interfere in the order of the lower authorities in respect of the addition made on account of bogus gifts. In the result, the grounds taken by all the assessees with regard to gifts in various years, are being dismissed. Charging of interest u/s 234B - it was held by the Co-ordinate Bench in the case of Dinesh Jain belonging to the same group of assessee’s vide order, that interest u/s 234B is to be calculated from the date of order u/s 143(1) or 153A whichever is later. Respectfully following the decision referred, we direct the AO to recompute the interest u/s 234B as directed hereinabove. In the result, all the appeals of the assessee and, revenue, are allowed in part, in terms indicated hereinabove.
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