TMI Blog2004 (8) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... he business of manufacturing of velvet cloth. A survey operation under section 133A of the Act was carried out at the assessee s business premises. The facts in relation to the first ground are that the Assessing Officer noticed two payments of Rs. 72,400 and Rs. 68,400 to M/s. Rama Textiles, Old Gohana Road, Panipat and to M/s. Vivek Textiles respectively, the two concerns operating from the same address. The payments were debited under the head labour and dye expenses. M/s. Rama Textiles was a proprietorship concern of Smt. Pooja Chugh, wife of assessee s brother Shri Vinod Chugh. The proprietor of M/s. Vivek Textiles was Smt. Satya Devi, mother of the assessee. The Assessing Officer has disallowed the impugned payment as being fictitious. The reasons weighing with the Assessing Officer were that the addresses of the two concerns were vague; that the assessee had failed to substantiate that any job work was done by these two concerns; that the return for the impugned year was filed in Form No. 3 of Smt. Satya Devi and in Form No. 2A by Smt. Pooja Chugh proving that both these ladies had no business activities and were deriving income only by way of "other sources". That in the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption that every payment made to sister concerns has to be viewed with suspicion and necessarily disallowed. In my opinion, the ld. Assessing Officer should have opted to relate his estimate to some evidence or material on the record as it is now settled that if the profits shown by the assessee in his return are not accepted, it is for the taxing authority to prove that the assessee made more profits. In the facts and circumstances of the case, it is not possible to discover any basis from the impugned order. The impugned disallowance of Rs. 1,40,800 is deleted." 5. Against the aforesaid backdrop, we have heard the rival parties. Admittedly, the primary reason weighing with the CIT(A) in allowing the impugned expense is the necessity of incurring such expenditure in respect of the goods manufactured by the assessee. After hearing the ld. DR, we do not find that the aforesaid observation has been rebutted by the department. After considering the objections of the Assessing Officer, we find that the same has been adequately met by the CIT(A) as is evident from the discussion found in the order of the CIT(A), a portion of which has been extracted by us earlier. The understated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means so as to make the impugned gift. The Assessing Officer also recorded a statement of the assessee during the course of assessment proceedings. According to the Assessing Officer, in his deposition, the assessee could not tell as to how long the donor was known to him; as to when the so-called family friend visited his native village; as to the details of the other family members of the donor etc. The Assessing Officer, on this basis, found fault with the explanation offered by the assessee. 7. The explanation offered by the assessee was on the following lines. That the amount was remitted in foreign exchange from outside India through normal banking channels and was credited in the NRE account from where the gift was made to the assessee; that the factum of the gift having come through the banking channels was not disputed and, therefore, the identity and the genuineness of the transaction stood established; that the origin of money stood demonstrated and therefore, the assessee claimed that he had discharged the primary onus by filing the gift deed; affidavit of the donor, confirmation in respect of the inflow of foreign exchange, etc. 8. The assessee requested the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of sufficient foreign exchange into his NRE account with the Bank in India. The genuineness of the transaction also stands proved since the gifted money has travelled from the donor s NRE account to the account of the appellant through normal banking channels." 10. In this manner, the CIT(A) concluded that the onus cast on the assessee vis-a-vis section 68 with regard to the impugned transaction was discharged. Hence, the deletion. 11. Before us, against the aforesaid background, the ld. DR has vehemently defended the order of the Assessing Officer. It was submitted that there was no evidence of any direct relationship of the donor with the assessee; that no person will make such a huge gift without any consideration; that all the circumstantial evidences were against the assessee and therefore, the doctrine of human probabilities has to be taken into consideration. Reliance in this regard was placed on the decision of the Apex Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 and Sumati Dayal v. CIT [1995] 214 ITR 801 (SC). In addition, the ld. DR placed heavy reliance on the decision of the Punjab Haryana High Court in Lal Chand Kalra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign inward remittances into the NRE account and the passport of the donor. The order of the Assessing Officer also reveals that certain inquiries were got made by the Inspector in this regard. We have already discussed the manner and the result of the inquiries in the earlier part of the order. We find that the assessee, time and again, has objected, both before the Assessing Officer and the CIT(A), that the name of the wife of the donor was not Mrs. Banso Devi. We do not find any material with the department to negate the same. In any case, we find that the Assessing Officer has been influenced by the report of the Inspector. Admittedly, the said report containing inter alia the statement of Smt. Banso Devi was neither confronted to the assessee nor was she produced for cross examination by the assessee. Therefore, reliance placed by the Assessing Officer on such evidence is misplaced having regard to the decision of the Apex Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713. In this regard, the plea of the Assessing Officer that whatever material gathered by him in the shape of information relating to the antecedents of the donor and his family emanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises, we find ourselves constrained to uphold the stand of the CIT(A), and thereby, the stand of the assessee. 15. The Revenue has also made another addition related to the above addition. The Assessing Officer presumed that the assessee would have paid a commission for getting the aforesaid gift of Rs. 10 lakhs. The commission was estimated at Rs. 2 lakhs resulting in the said addition. The CIT(A) has deleted the addition by noticing that the same is not based on any evidence but merely by taking cognizance of a generalized knowledge that hawala business was in vogue in India. We find that having sustained the order of the CIT(A) in deleting the addition under section 68 in relation to the impugned gift from Shri Sukhchain Ram Sallan, we do not find any reason to justify the addition of Rs. 2 lakhs which has been purely made on conjectures and surmises. Therefore, we sustain the order of the CIT(A) in deleting the said addition. 16. In the result, the appeal of the Revenue is dismissed. ITA No. 6406/DEL./98 17. The only ground preferred by the revenue in this appeal is identical to the first ground in ITA No. 6405/D/98. The assessee in this appeal is related to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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