TMI Blog2004 (1) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... donor was not produced for cross-examination. However, his address of Thailand was intimated and the assessee also requested that if any further enquiries were to be made, the donor may be contacted at the given address. The assessee also furnished a fax message dt. 21st Oct., 1996 received from Shri Gurvinderpal Singh confirming the gift to Shri Aditya Kumar, minor son of the assessee. The gift had been treated by the AO as bogus and non-genuine on the ground that there was no occasion for the stranger like Mr. Gurvinderpal Singh to make gift of substantial amount. According to the AO, gifts are made to close relatives or friends and the value of the gift depends upon the financial capacity, social status and convention in the society. The AO stated that the donor had no blood relation and it was not verifiable as to whether he has made any such gifts to his own kith and kin in the past. His financial capacity is also not proved and it cannot be believed that he should part with so much amount as a gift without any purpose. The AO opined that the gifts are normally made on reciprocal basis and the assessee did not make any gift to the children of the donor in the past. The AO trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of the donor and it had been established that the donor was a close family friend of the assessee for the last 15 years. It was argued that blood relation was not condition precedent for a valid gift. The assessee also furnished correspondence with the donor and the photocopy of the new year greetings and other material. The assessee also stated that the decisions relied upon by the AO are distinguishable and stated that in the decision of the Hon ble Supreme Court in the case of Juggilal Kamlapat vs. CIT, it had been held that the AO should not proceed with suspicion and doubt to ignore the documentary evidence. As regards the decision of the Hon ble High Court of Punjab Haryana in the case of Lall Chand vs. CIT, it was stated that it stood established that the donors S and B on being examined told that they gifted the amount to the assessee out of income from certain lands owned by them but the Tribunal found that they had no land or income at relevant time. Similarly, in respect of the decision of the Tribunal, Jaipur Bench, relied upon by the AO, it was stated that it helps the assessee and not the Department. After distinguishing the judgments relied upon by the AO, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire any further details from the assessee and nothing had been said against the reliability of those details which implies that the details were factual and correct, and acceptable to the AO and if so, the transaction made through those, cannot be treated as bogus because otherwise, the AO was dutybound to prove as to why and how the apparent was not real. 2.5 The CIT(A) categorically stated that no nexus between the donor and the assessee has been established to suggest that the gift had been arranged to show deposits in the books of accounts of the assessee. He further stated that the donor was managing director, Stylo Group worth as many as 7 shops/branches and establishments at different places as mentioned in the details furnished before the AO. He further pointed out that the financial capacity of the donor had not been specifically questioned by the AO and his deposits in the NRE account had also not been doubted. 2.6 The CIT(A) referred to the judgment of the Delhi High Court in the case of CIT vs. Mrs. Sunita Vachhani (1990) 84 CTR (Del) 18 : (1990) 184 ITR 121 (Del) and the decision of the Tribunal, Calcutta Bench in the case of Smt. Bhagwati Devi vs. ITO (1993) 47 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any gift to the children of the donor in the past. In our opinion, this observation of the AO is against the provisions of law because the amount can be treated as gift if it is given without any consideration and under the natural love and affection. Similarly, the observation of the AO that there was no blood relation and occasion to receive the gift, is also not acceptable because for making the gift, it is not necessary that there should be some blood relation or the gift should be made only to the relatives and not to the friends. 2.10 We may mention here that the Tribunal, Chandigarh Bench in the case of R.K. Syal vs. Asstt. CIT (2000) 66 TTJ (Chd) 656 held that the assessee having produced the affidavits of NRI donors affirming the gifts, addition of amounts representing the gifts could not be made only on the ground that there was no occasion or relationship for making the gift. Similarly, Tribunal, Rajkot Bench in the case of Asstt. CIT vs. Radhey Shyam Bansal (2000) 68 TTJ (Rajkot) 136 held that the gift received by the assessee from a foreign party out of love and affection could not be treated as income of the assessee when the genuineness of the credit (gift) could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chand Chitlangia, to whom a sum of Rs. 1,25,503 was given on loan. He also pointed out that she received lease money from the assessee and as such she was in need of funds for herself. Therefore, the AO opined that there was no occasion to make any gift to the assessee by Smt. Godawari Devi. 3.3 In respect of gift from Shri Ravi Kumar, son of Smt. Godawari Devi, the AO mentioned that no gift was made by him in the past and as such the gift to Shri Vikram Kumar, son of the assessee was arranged by the assessee from his undisclosed income. The AO also pointed out that Shri Yogesh Kumar, who made the gift of Rs. 30,000 to Shri Vikram Kumar, was in debit of Rs. 2 lakhs as on 31st March, 1995 to M/s Hazarimal Suganchand Chitlangia and so it cannot be believed that he would make a gift of Rs. 30,000 to the son of the assessee. Similarly in respect of gift given by Shri Pardeep Kumar to Shri Aditya Kumar, son of the assessee, the AO doubted the financial capacity of Shri Pardeep Kumar. However, he mentioned that the gift was by bank draft and confirmation had been filed by the donor who was assessed to tax. 3.4 In view of the aforesaid observations, the AO treated Rs. 1,20,000 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of the transactions cannot be questioned particularly when the transactions are through bank and no evidence against such transactions has been collected in support of the adverse finding. He also stated that there was no basis to observe that Smt. Godawari Devi was in need of funds. Similarly the reasons assigned for disallowance of gift made by Shri Ravi Kumar were not justified because it was not necessary that there must be reciprocal gifts only. As regards the gift by Shri Yogesh Kumar, the CIT(A) observed that it was not the case of the AO where the donor was having no capital because the balance sheet produced had shown the balance more than Rs. 5 lakhs and he was existing assessee of the income-tax. The CIT(A) further observed that although Shri Yogesh Kumar had taken a loan of Rs. 2 lakhs for investment in different concerns as per balance sheet but the same should not be the ground for rejection of the genuineness of the gift. As regards the gift of Shri Pardeep Kumar, the CIT(A) stated that his personal production for verification of gift was not possible because he was staying beyond 1,000 Kms but all other requirements like identity, source and that the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, we hold that the CIT(A) was fully justified in deleting the addition of Rs. 1,50,000 made by the AO on account of gift from NRI. 4.2 The ground No. 2 of this appeal raised by the Department relates to the deletion of addition of Rs. 40,000 treating the two gifts of Rs. 20,000 as genuine. 4.3 The facts in brief related to this ground of appeal are that Smt. Godawari Devi and Shri Ravi Kumar had certain amounts lying deposited with M/s Hazarimal Suganchand and withdrew Rs. 20,000 each on 10th Feb., 1994 and 12th Feb., 1994 by cheque from their respective account for making the gift. The AO disallowed the gift because those persons were charging interest from the assessee and also receiving lease money on agricultural land and there was no occasion to make the gift to the minor son of the assessee, namely Shri Aditya Kumar. The AO held that those gifts were arranged by the assessee by utilising his undisclosed income, accordingly, addition of Rs. 40,000 was made in the hands of the assessee. 4.4 We may point out that similar gifts had been made by Smt. Godawari Devi, sister of the assessee and Shri Ravi Kumar, son of Smt. Godawari Devi to Shri Vikram Kumar, another minor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee sold certain agricultural land in the same location during the year ending 31st March, 1996 and in respect of that, cost of land was taken at Rs. 33,000 per bigha as on 1st April, 1981 7.2 Before the CIT(A), the assessee submitted that the AO had heavily relied on the report of the Inspector for the estimate, but he had ignored the relevant fact that the Inspector had admitted that the land sold by Shri Sarwan Singh (instance relied upon by the assessee) was situated at different places, i.e., village 1-A whereas the assessee s land was situated at 1-Z. The assessee submitted that both the lands were situated in the same Chak No. 1 and the nature of the two lands and the other aspects including the revenue were absolutely identical. It was submitted that the Inspector had assumed and presumed that the land of Shri Swaran Singh was having commercial utility but in fact there was no distinction in crops and availability of water, etc. in respect of both lands. It was also submitted that the material collected, if any, by the AO for estimating Rs. 27,000 per bigha was not confronted to the assessee and it was a mere estimate. 7.3 The CIT(A) after considering the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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