TMI Blog1996 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (i) Shri Itwarilal 20,000 (ii) Shri Kishorilal 16,000 (iii) Shri Lalta Prasad 16,000 (iv) Shri Ram 20,000 (v) Shri Madanlal 20,000 (vi) Shri Suraj Prakash 20,000 All the above six persons are brothers-in-law of the assessee, Shri Sushilkumar Jaiswal. 3. The ITO called upon the assessee to produce the evidence for all the above gift amounts and also of the income of Rs. 10,000 said to be earned by him from scrap business by his order sheet entries dt.20th March, 1990, and2nd May, 1990. In compliance, the assessee filed a written reply dt.15th May, 1990, along with declaration of gifts from the aforementioned six persons. According to the ITO all the declarations are found to be undated. The declarations read that out of the donors, Shri Itwarilal had allegedly made one gift and the remaining persons had made two gifts each. Further, as regards income derived from scrap business the ITO found that the assessee was not having any regular dealings in scrap and during the relevant accounting period, the ITO observed, that the assessee had made small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lal for consideration. In his statement Shri Madanlal stated that he was running a sweetmeat shop from which he earns Rs. 700 to Rs. 800 p.m. His family consists of himself, his wife and 7 children. He stated that he had got a bank account in which his savings could be found to be about Rs. 3,000. But, this account had to be closed leaving a balance of Rs. 60 only for want of funds. This person also stated that he had gifted Rs. 20,000 in two instalments to his brother-in-law. The ITO stated that the testimony of this person is to be viewed in the light of the fact that his monthly income is only Rs. 800, he has a family of 9 members and he could not continue his savings account in the bank for want of funds. There is no evidence whatsoever that previously any gifts were made by him in favour of the assessee. The ITO, therefore, came to the conclusion that the amount of Rs. 20,000 introduced by the assessee in his capital account in the name of Madanlal is his own income from undisclosed sources. Thus, he added a sum of Rs. 20,000. 5.1 As already observed, the other four donors were not produced for examination though a specific notice dt.10th Jan., 1991, was given to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad was not in a position to gift the sum of Rs. 16,000 to the assessee. He confirmed the order of the ITO. Even with regard to the deposition of Shri Madanlal, after critically examining it, the CIT(A) agreed with the ITO s conclusion and held that the amount of gift is nothing but the income of the assessee from undisclosed sources and it has been rightly subjected to tax by the ITO. 8. As regards to the other 4 donors, firstly, the learned CIT(A) held that the ITO had already offered sufficient opportunity to the assessee to produce the parties but they were not produced. The contention of the assessee that he was not given adequate opportunity was rejected. The learned CIT(A) further held that it was not sufficient for the assessee to produce merely confirmation letters of the parties. It was equally necessary to satisfy about the capacity of the donors in question. He held that all the 6 donors have chosen to give sizeable amounts to the assessee almost around the same period of time. In order to lend support to the alleged source of gift most of the parties have procured receipts showing sale of silver to the same party almost around the same time and dates. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own savings of Shri Itwarilal. It is significant that Shri Itwarilal was neither present nor examined by the ITO or the CIT(A). (ii) Coming to Shri Kishorilal, he appeared to have made two gifts, one on6th Oct., 1980, of Rs. 10,000 and another of Rs. 6000 on19th Jan., 1989. Rs. 10,000 is stated to have come out of his self earned income, whereas Rs. 6,000 came out of the sale of silver ornaments. The gift papers are marked pp. 19 and 20, respectively. At p. 21 of the paper book is a certificate purported to have been issued on25th Sept., 1989. It is significant to note that on20th Sept., 1988, itself he has realised Rs. 9,901 from the sale of silver ornaments. That means even on the date of his first gift dt.6th Oct., 1988, he has money realised out of the sale of silver ornaments. If that is true, there is no reason why he did not make the gift of a consolidated sum of Rs. 16,000 even on6th Oct., 1988, itself and what is the reason for him to wait upto19th Jan., 1989to make the second gift of Rs. 6,000. Further, Shri Kishorilal was not examined. (iii) As regards Shri Lalta Prasad who stated to have given Rs. 16,000 and Shri Madanlal who stated to have given Rs. 20,000 are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was having fully Rs. 20,000 on 30th Sept., 1988, itself with him, we do not know for what reason he made a gift of Rs. 10,000 only and waited three more months for making another gift of Rs. 10,000 on 24th Dec., 1988. It is significant that Shri Madanlal is one of the persons examined by the ITO on behalf of the assessee but he never stated anything about the sale of silver ornaments or realising Rs. 13,212 out of sale proceeds. Thus, we completely agree with the lower authorities and hold that Shri Madanlal had no capacity to lend Rs. 20,000 to the assessee and there is ample evidence on record in support of this view. When he himself is on hand to mouth existence, it is highly improbable that he would give not (sic) an inconsiderable sum of Rs. 20,000 to his brother-in-law to start a new business. The probabilities of the case are certainly to be taken into account while deciding the truthful nature of the advances said to have been received by the assessee. In the case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC), dismissing the appeal against the order of the Settlement Commission, the Hon ble Supreme Court held the following: "Held, dismissing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the ITO and confirmed the version of the assessee. However, in the case before us it is not the case but it is the case of one time outright gifts of cash. Therefore, whether the donor has capacity to gift such heavy amounts, as claimed by them, is definitely a question to be taken into consideration and simply because two of the donors were examined that does not mean that their versions should, without critical scrutiny, he taken as true, while judging the veracity of the evidence, the broad probabilities and the human conduct and behaviour should also be taken into consideration according to the Supreme Court decision already cited above. Shri Lalta Prasad s family consists of 8 persons. He was able to marry his daughter from borrowing funds from his relatives and the total cost of the marriage performed was only Rs. 20,000 to Rs. 22,000. His earnings are Rs. 600 to Rs. 1,000 p.m. The question is that a person having such a big family, would it be possible for him to give Rs. 16,000? The evidence on record is correctly sifted and appreciated by the lower authorities and their appreciation is perfectly on sound lines and the conclusion of the learned authorities does not wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deep involvement brought about by the raid and the fastening of huge tax liability by order passed under s. 132(5) a need arose to bring money into the books to pay the tax, and with a view to provide evidence for the money that was being brought into the books, the credits were introduced. This appears to be the sequence of events or the historical sequence of evidence that must have taken place." In this case also, the donors are none other than the brothers-in-law of the assessee. A substantial sum of Rs. 1,12,000, which forms part of Rs. 6,92,555 which went into the construction of the factory, remained unexplained and in order to escape the tax liability the necessity to invent the theory of gifts arose to the assessee. The gift documents first of all should be proved and they are only to be considered as prima facie evidence and not conclusive evidence. Here, in this case, they were not even proved, leave alone the other important aspect that donees are capable of giving the hefty amounts to their brother-in-law as gifts. 12. In reply, the learned counsel for the assessee relied upon the decision of Delhi Bench of Tribunal Raj Vikas Quarries Industries (P) Ltd. vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee. 15. Now, let us take up the 4th and 5th grounds of appeal. The subject matter of these grounds is 11 cash credits. It is the case of the assessee that towards the investment of the new unit, loan from UPFC was delayed and, therefore, assessee was compelled to borrow the amounts from other persons. The names of the persons and the amounts borrowed as loan are furnished as under: . Name Amount Rs. (1) Sri Sagheer Ahmed 17,000 (2) Sri Krishan Lal 18,000 (3) Shri Ajai Kumar Tandon 10,000 (4) Smt.OmWati Devi 10,000 (5) Sri Anwar Hussain 13,000 (6) Sri Ramesh Chand 19,000 (7) Sri Raj Kumar Gupta 19,000 (8) Shri Ram Prakash 17,000 (9) Shri Ram Naresh 18,000 (10) Sri Ram Kishore 15,000 (11) Smt. Usha Srivastava 10,000 . . 1,66,000 The ITO had accepted the deposit of Rs. 10,000 in the name of Sri Ajai Kumar Tandon but the other deposits were rejected as they were held to be unproved cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dismissed the appeal filed before him. 18. Against dismissal of the appeal by the CIT(A) the assessee came in second appeal before this Tribunal and thus, the matter stands for our consideration. The assessee has already furnished the list of names from whom the cash credits were borrowed and respective amounts taken from each of them. After going through the records and also after going through the details filed in the paper book at pp. 41 to 53 the arguments on both the sides, we are of the opinion that the disallowance of cash credits is perfectly justified. The following are our reasons for the conclusion which we have reached: (i) None of the cash creditors are produced or examined before the AO or before the CIT(A). The only reason for not producing them, if at all, offered by the assessee is found in the reply to show cause notice, dt.10th Jan., 1991, a portion of which is extracted at p. 5 of the paper book which is as follows: "Regarding the presence of all those persons, it is very much difficult to produce all the persons before you particularly because of the fact that some of them reside outsideBareilly. But, still if you feel the presence of those persons are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an income-tax assessee. In such a case provisions of this section clearly apply. Copies of confirmatory letters were never provided in the paper book filed before us. Even according to the assessee it is only the confirmatory letters which contain the addresses of the depositors or cash creditors. At p. 7 of the paper book the following is submitted before the CIT(A): "It is not correct at all the identity of depositors is not given. The evidence on file enclosed shows the complete identity of depositors." What is filed before this Tribunal is only the ledger copies of the cash credits. In the ledger copies Sri Bhai Sagheer Ahmed s address is stated to be Mataki Chowki, Bareilly, the address of Bhai Kishan Lal is given as Kalicharan Marg Mohalla, Subhash Nagar, Bareilly, Smt. Om Wati s address is given as w/o Shri Brij Mohan, resident of 152 Biharipura Kashgaran, Bareilly income-tax assessee. The address of Bhai Anwar Hussain is stated as 699, Civil Lines,Bareilly. The address of Bhai Rameshchandra is given as M.M. 402 Kushmaran,Bareilly. Address of Bhai Rajkumar Gupta is stated as 409 Kashgaran,Bareilly. Address of Bhai Ramprakashji was stated as Nekpur,Bareilly. Address of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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