TMI Blog2009 (11) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of additional evidence filed under rule 46A. 2. On perusal of the assessment order, it is found that the assessee had shown receipt of three gifts of Rs. 2.51 lakh, Rs. 10 lakh and Rs. 1.51 lakh from Shri Raj Kumar Aggarwal, Shri Rajesh Kumar Jain and Smt. Ranjana Gupta. A large number of opportunities were given to produce evidence in support of genuineness of the gifts. It was submitted that the gifts were received through banking channels and those were supported by declarations of the donors in which it was stated that the gifts were voluntarily made out of love and affection. The sources of the donors were also explained. In case of Shri Raj Kumar Aggarwal, it was submitted that the gift of Rs. 2.51 lakh was from the amount received from a person to whom an advance was made in past. Such advance was made out of past savings. Further, in case of Shri Rajesh Kumar Jain, it was submitted that the gift of Rs. 10 lakh was made from the amount received from a person to whom it was earlier advanced as loan and Rs. 12,000 was deposited in the bank account in cash from past savings. It was also submitted that in case of Smt. Ranjana Gupta, the gift of Rs. 1.51 lakh was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and acknowledgement of returns of income for the relevant year. The Assessing Officer did not make any enquiry in the sources of funds of the donors. The gifts were not accepted to be genuine primarily on the grounds that there was no relationship between the assessee and the donors, there was no occasion to make such gifts and the creditworthiness of the donors was not proved. However, no adverse evidence was brought on record in respect of lack of creditworthiness. In the course of remand proceedings, the Assessing Officer examined the bank accounts and found that the gifts from Smt. Ranjana Gupta and Shri Rajesh Kumar Jain stood explained as to their sources. However, in the case of Shri Raj Kumar Aggarwal, it was found that there were two credit entries of Rs. 1 lakh and Rs. 1.51 lakh on 21-9-2001 in his account and on the same date a cheque of Rs. 2,51,502 was issued to the assessee. On making direct enquiry from the bank, it was found that no such account was maintained although it was informed that a cheque No. 204722, dated 21-9-2001 for a sum of Rs. 2.51 lakh was issued in favour of the assessee from the bank. 3.2 The ld. CIT (Appeals) referred to the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2? The explanation of the assessee was that the gifts were received on the occasion of the marriage in the family. The explanation and the evidence were furnished only in respect of three drafts of Rs. 6,000, Rs. 12,000 and Rs. 10,000, whereas there was no explanation whatsoever for the other entries. The contention of the assessee was that the findings recorded by the authorities were perverse. The explanation furnished by the assessee regarding receipt of gifts at the time of the marriage should have been believed. Although some affidavits were placed on record to support this plea, neither the relationship nor the occasion of the gifts was mentioned. In these factual background, the Court came to the conclusion that the findings were in the nature of finding of fact and no question of law, much less a substantial question of law, arose for consideration of the Court. Thus, the appeal was dismissed. 4.2 Further, reliance was placed on the decision of Hon ble Punjab Haryana High Court in the case of Jaspal Singh v. CIT [2007] 290 ITR 306 . The main question before the Court in that case was whether, on the facts and in the circumstances of the case, the ITAT was justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case, the ITAT was correct in law to accept the principle of preponderance of probabilities in holding that the claim of the appellant that the sum of Rs. 15,62,500 received by him by way of gifts through normal banking channels was not genuine and that it was liable to be assessed under section 68 of the Income-tax Act, 1961? In that case, there was no dispute that the payments in respect of gifts were made by instruments issued by a foreign bank and credited in the assessee s account by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on Citi Bank NA, Singapore. The family members of the assessee had also received similar gifts. Shri A. Srinivasan was the main person who deposed to the effect that he knew Sampath Kumar for last 20 years and he had been helping him prior to 1985 by paying Rs. 100 to Rs. 200 every month as at that point of time he had no source of income to get himself educated. The donor, Shri Sampath Kumar, had stated in his statement that he was in Indonesia up to the year 1992 and employed as an engineer. Thereafter, he shifted to England and started consultancy profession. In the year 1994-95 he joined New C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on record to show as to what was the financial capacity of the donor; what was the creditworthiness of the donor; what kind of relationship donor had with the assessee; what were sources of fund gifted to the assessee and whether he had capacity of giving large amount of gift to the assessee. The assessee also never appeared before the Assessing Officer. In these facts, it was held that the assessee did not prove the identity, the capacity of the donor and the genuineness of the transaction. 4.5 Reliance was also placed on the order of Delhi Bench of the Tribunal in the case of Asstt. CIT v. Rajeev Tondon [2007] 294 ITR 219 (Delhi) (AT). In that case, after examining the bank statement of the donors, the Assessing Officer found that they did not have financial capacity to make gifts of huge amounts. The assessee was also not related to them. Therefore, he treated the gift amounts as income of the assessee. The Tribunal found that the assessee was not able to establish creditworthiness of the donors. It also found strange that the donors parted with huge amounts by way of gifts to the same person out of love and affection, depicted through letters, while neither there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was placed on the decision in the case of Sajan Dass Sons ( supra ). The Hon ble Court mentioned that there is no quarrel with the proposition that mere identification of the donor and movement of gift amount through banking channels are not sufficient to prove genuineness of the gift. Since the amount is claimed to have been received by the assessee, onus is on him to establish not only the identity of the donor but also his capacity to make such a gift. The assessee had admittedly produced bank statement and the Assessing Officer did not raise any query with regard to capacity of the donor to make the gift. From the assessment order, it is seen that the only ground on which genuineness of the gifts has been doubted is the failure of the assessee to establish relationship with the donor. It is an admitted fact that there is no blood relationship between the donors and the assessee. They had gifted amounts to the assessee on account of their love and affection for him. Both the authorities below have recorded a finding that by producing the aforesaid documents, the assessee has discharged the onus which lay on him in regard to genuineness of the gift. In this view of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by way of instrument drawn on banks and collected through the banking channels, it was argued that the transactions were genuine. 5.4 Apart from relying on the decision in the case of R.S. Sibal ( supra ), reliance was placed on the order of F Bench of Delhi Tribunal in the case of Mrs. Ranjana Katyal v. Asstt. CIT [2008] 113 TTJ (Delhi) 479 . In paragraph 7.1 of the order, it was mentioned that each case has to be decided on its own facts. However, the general principle which could be culled out from various authorities is that it is for the assessee to lead evidence to prove the identity, creditworthiness of the donor and genuineness of the gift. No single factor can be said to clinch the issue in favour of the assessee or against him and the entire evidence is to be assessed on a wholesome basis. In the case of Anil Kumar ( supra ), there was gift of Rs. 20 lakh from the NRE accounts of the donors and the assessee could not prove genuineness of the transactions, the identity or the capacity of the donors to make the gifts. He merely relied on the fact that the gifts passed through banking channels. This was considered to be insufficient by the Hon ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the gifts were held to be genuine and the addition made of Rs. 60 lakh was deleted. 6. In the rejoinder, the learned DR reiterated that all the three conditions have to be proved by the assessee. The gift is not a commercial transaction and the money is received without consideration. Therefore, a stricter burden lies upon the assessee to prove the three conditions. It was also mentioned that in the case of Smt. Ranjana Katyal, donee had expired when assessment proceedings were under way and it was difficult for his wife, the legal heir, to gather evidence in support of the gift. Such factor does not exist in the case of the assessee. 7. We have considered the facts of the case, the orders of lower authorities and the submissions made before us. The facts are that the assessee had shown receipt of three gifts aggregating in amount to Rs. 14.02 lakh, which were added to the total income of the assessee by the Assessing Officer. The learned CIT(A) deleted the addition to the extent of Rs. 11.51 lakh in respect of gifts from Shri Rajesh Kumar Jain and Smt. Ranjana Gupta. The addition in respect of gift received from Shri Raj Kumar Aggarwal was upheld on the ground that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gift was stated to have been made. She also filed a declaration dated 13-3-2002, designated as affidavit but not notarized, stating that she had given a gift of Rs. 1.51 lakh to the assessee out of natural love and affection, which was made out of her own funds and past savings. It was explained to the ld. CIT(A) that the credit in the bank account of the donor was on account of a receipt of Rs. 1.09 lakh from M/s. Vinner International, to whom she had given a loan of Rs. 1 lakh. A further sum of Rs. 36,000 was credited in the account which represented director remuneration from M/s. Third Eye Education Management Consultants (P.) Ltd. These facts showed that her identity was established along with her creditworthiness. The gift was genuine and, therefore, there was no reason to make addition of the amount of gift to the total income of the assessee. 7.3 We may consider the definition of the gift furnished in section 122 of the Transfer of Property Act, 1882. The gift is defined as transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajeev Tandon ( supra ), although the gifts were made through banking channels, but on analyzing the balances in the accounts, the Assessing Officer came to the conclusion that the assessee could not establish that donors had financial capacity to make gifts of such huge amounts in a circumstance when the assessee was not related to them. The Tribunal came to the conclusion that in absence of any relationship and occasion, making of such large gifts defied the human probabilities, i.e., it was against the behaviour of a normal human being. On consideration of these cases, we are of the view that it is for the assessee to establish identity and financial capacity of the donors, and he has also to establish the fact that the gift was genuine. In arriving at conclusion regarding genuineness of the gift, attendant circumstances as past conduct of the donors of having received or given gifts to others, including gifts received from the present donee, relationship, occasion, etc., have to be considered and an opinion has to be formed as to whether it could be said that the behaviour of the donor was that of a normal human being. We are also of the view that the burden in respect of a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had filed gift deeds and affidavits of NRI donors. The Hon ble Rajasthan High Court held that in absence of any evidence of money laundering, the amount of gift cannot be added as income on account of receiving gift. We find that the ratio of this case is somewhat in contradiction with the decision of Hon ble Delhi High Court in the case of Sajan Dass Sons ( supra ), a part of which is extracted below : "That a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to prove the genuineness of the gift. Since the claim of the gift was made by the assessee, the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it had actually been received as a gift from the donor. Having regard to the enquiries conducted by the Assessing Officer from the bank with which the assessee was admittedly confronted and bearing in mind the fact that admittedly the donor was not related to the assessee, the findings recorded by the Tribunal were pure findings of fact warranting no interference. The appeal was liable to be dismissed." This case makes it ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also not produced before the Assessing Officer for examination either in assessment proceedings or in the remand proceedings. In such a situation, circumstances surrounding the gift become of equal importance in order to test whether the gift was genuine or not. Both the donors made substantial gifts when compared with their incomes. They never received similar gifts either from the assessee or from any one else. They also did not make any gift to any one else except the assessee. The assessee also neither received or made any gift except the instant gifts ostensibly received to purchase an immovable property. The failure of the persons to appear before the Assessing Officer for examination in assessment proceedings or remand proceedings tilts the scales in favour of the revenue for giving a finding that the gifts were not genuine. In doing so, we may reiterate that the mere establishment of identity and movement of gifts through banking channels are not enough. The financial affairs of both the donors do not evoke confidence that they could have made the gift of large amounts compared to their incomes in a circumstance when their monies were locked up elsewhere. They themsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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