TMI Blog2009 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... this case of the present assessee, a search and seizure operation under section 132 of the Act was carried out. In pursuance of the search conducts under section 132 of the Act, the Assessing Officer initiated assessment proceedings by issuing a notice under section 153A on May 27, 2005. The assessee filed return of income on June 30, 2005 declaring total income at Rs. 1,65,700. The assessee had also filed a copy of acknowledgment of original return of income filed on September 29, 1999 showing therein the total income of Rs. 1,65,700. During the course of search, certain cash and jewellery were found and seized. In response to the notices issued under sections 142(1) and 143(2) along with questionnaire issued by the Assessing Officer, one Shri Atul Aggarwal, chartered accountant, appeared before the Assessing Officer and furnished composite details pertaining to the assessment years 1998-99 and 2004-05. In the light of the facts coming to the notice of the Assessing Officer, the Assessing Officer stated that the assessee had generated certain unaccounted money outside the books of account, which were utilised in purchase of jewellery, ample property and introducing cash in the gar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan, etc. The assessee is the proprietor of M/s. R.K. Trading Co. His family consists of Smt. Manju, wife, and two sons, viz., Shri Manish and Shri Rahul Mittal, and one unmarried daughter Ms. Rachana Mittal. In this appeal, we are concerned with regard to the addition of Rs.3,00,000 and Rs. 3,92,672, made by the Assessing Officer on account of unexplained money introduced by the assessee in his bank account, in the garb of gift claimed to have been received by the assessee from Shri J. B. Malik and Shri Y. P. Malik. With regard to the alleged gift of Rs. 3,00,000, the Assessing Officer has stated that the assessee introduced sum of Rs. 3,00,000 in his bank account in the garb of a gift allegedly received from donors, viz. J. B. Malik, on November 20, 1998. In this respect, the statement of the assessee was recorded on the date of the search. Question 29 of the statement of the assessee is about the alleged gift allegedly taken from Mr. J. B. Malik. Question 29 and its answer given by the assessee are as under : Question No. 29. Who is J. B. Malik Ans. I am not aware about this name. The aforesaid sum of Rs. 3,00,000 was deposited in the assessee s bank account No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had thus taken a view that the essential elements of love and affection between the assessee and J. B. Malik was totally missing, and even in his statement recorded at the time of the search, the assessee failed to identify Shri J. B. Malik. The Assessing Officer therefore, did not accept that the assessee had received a gift of Rs. 3,00,000. The Assessing Officer has treated the claim of the assessee as not genuine. The Assessing Officer, therefore, treated the amount as unexplained cash credit introduced by the assessee in the garb of gift from one Shri J. B. Malik. With regard to the amount of Rs. 3,92,672 claimed by the assessee as a gift allegedly received from one Shri Y. P. Malik, the Assessing Officer noted that the assessee deposited a sum of Rs. 3,92,692 in his bank account No. 37947 with State Bank of India, Majlis Park, Delhi. In support of the source of the aforesaid money deposited in the bank, the assessee filed a copy of confirmation and a photocopy of cheque along with his letter dated February 2, 2006 and submitted before the Assessing Officer that he received a gift of US $ 5715, UK sterling from Shri Y. P. Malik of London and the said amount equivalent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the payment of cash irrespective of the fact that the amount might have been received through transfer from donor s bank account to the assessee s bank account and confirmation to that extent might have been filed by the donor. The Assessing Officer has also observed that the element of love and affection was also missing in the instant case and the creditworthiness of the donor has also not been proved. The Assessing Officer relied upon the decision of the hon ble Delhi High Court in the case of Sajan Dass and Sons v. CIT [2003] 264 ITR 435. For the aforesaid reasons given by the Assessing Officer, the Assessing Officer made the addition of Rs. 3,92,672 as unexplained money introduced by the assessee in the garb of gift allegedly received from Shri Y. P. Malik. Being aggrieved with the Assessing Officer s order in making addition of Rs. 3,00,000 and Rs. 3,92,672 treating this amount as unexplained money introduced by the assessee in the bank account, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). With regard to the addition of Rs. 3,00,000, the assessee submitted before the Commissioner of Income-tax (Appeals) as under : (i) That sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 18, 1999 and then for the period November 1, 1999 to March 31, 2000, though the gift cheque was of date November 18, 1998. With regard to the alleged gift of Rs. 3,92,672, the assessee submitted that the said amount of Rs. 3,92,672 was received by him directly from the bank account of Shri Y. P. Malik as cheque of $ 5715 issued by Shri V. P. Malik was converted in Indian rupees of Rs. 3,92,672 and directly credited in the assessee s bank account. He further stated that a confirmation from Shri Y. P. Malik has been furnished confirming that an amount of Rs.3,92,672 was given by him as irrevocable gift. The addition of Rs. 3,92,672 has also been confirmed by the Commissioner of Income-tax (Appeals) by observing as under : I have considered the facts of the case and arguments taken by Shri Gupta quite carefully. It is an undisputed fact that Shri Y. P. Malik is not related to the appellant. Shri Gupta in his submission is not correct in stating that whenever the money is received from foreign bank account automatically the sources for giving the said gift are explained. It has to be proved by the appellant through necessary evidence regarding identity of the donor, genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quite different to that of the case of Sajan Dass and Sons [2003] 264 ITR 435. He further submitted that in the case of Sajan Dass and Sons [2003] 264 ITR 435, the donor himself has denied of having made any gift to that assessee, though, in the instant case the donor has confirmed the fact that they had gifted the amount to the assessee and no material to the contrary have been brought on record by the Assessing Officer. He further submitted that affidavit filed in the case of Sajan Dass and Sons [2003] 264 ITR 435 was not found to be genuine and correct inasmuch as persons signing the affidavit was not even in India on the day when the affidavit was signed, which is not the case of the present assessee. He also submitted that the decision of the hon ble Supreme Court in the case CIT v. P. Mohanakala [2007] 291 ITR 278 is also not applicable to the present case as an alternative argument has also been made by learned counsel for the assessee that even if the explanation of the assessee about the gift received by the assessee is not found to be genuine, the amount deposited in the bank cannot even otherwise be assessed as income inasmuch as the Assessing Officer has failed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee of that previous year. The expression the assessee offer no explanation means where the assessee offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of gift is made by the assessee, onus lies 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 has actually been received as a gift from the donor. Having regard to the inquiries conducted by the Assessing Officer from the bank, with which the assessee was admittedly confronted and bearing in mind the fact that admittedly said Subhash Sethi was not related to the assessee, we are of the view that the findings recorded by the Tribunal are pure findings of fact warranting no interference. We find it difficult to hold that on the facts of the instant case proper opportunity had not been granted to the assessee to prove the gift. Similarly, in the case of CIT v. R. S. Sibal [2004] 269 ITR 429, the hon ble Delhi High Court has laid down (at page 432 of the report) as under : There is no quarrel with the proposition that a mere identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared. The relationship that the assessee had with the donor and the creditworthiness of the donor were not established by the assessee. 5. Learned counsel for the assessee submitted that as long as relevant documents have been prepared evidencing the gift, the authorities under the Act ought to have accepted the contention of the assessee. 6. We are not in agreement with the view canvassed by learned counsel for the reason that even though the documentation may be in order, if there is enough material to raise a very strong suspicion that there is something not quite right with the nature of transaction, the authorities under the Act may reject the documents and require the assessee to show that the transaction is really one which is above board. On the fact of this case, all the three authorities have rejected the explanation of the assessee. 7. We are not convinced that the transaction is above board. We have in particular considered the quantum of the gifts, the fact that there is inadequate material to show the resources or finances of the Swiss national : there is no apparent reason for the assessee being showered with gift by person who is stated to be only a family fri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee s father was running a coal depot at Budhlada ; (vi) that he was not aware about the age of the assessee and names of the members of the assessee s family ; (vii) that he never visited the house of the assessee at Chandigarh ; (viii) that he has no bank account, (ix) that he has never made any gift to his family members or any one else except the assessee. This statement of Mohinder Singh raises question as to whether Mohinder Singh had the capacity to make a gift of Rs. 98,000 to the assessee who was not his relation and he only knew him through his father and whether the gift was on account of love and affection. The answer is inevitably in negative. A simple identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of gift is made by the assessee, the onus lies 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 has actually been received as a gift from the donor. The financial position of the donor suggests that he was neither in the capacity to make gift nor having the source from where the gift w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation (see CIT v. P. Mohanakala [2007] 291 ITR 278). (v) The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory or proper or reasonable or acceptable is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. The application of mind is the sine qua non for forming the opinion by the Assessing Officer. (vi) In cases where the explanation offered by the assessee about the nature and source of the money received by the assessee is not satisfactory, there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. (vii) The burden is on the assessee to prove and establish that, even if the explanation offered by the assessee is not acceptable, the material and attending circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dura Ltd., Rohini, Delhi-110 085 from my NRE account in favour of Mr. Rajinder Mittal r/o. A-163 Majlis Park, Azadpur, Delhi-110 033. (Deponent) Verification I, above named deponent, do hereby declare that whatever stated above is true and correct according to the best of my knowledge and belief. Place : New Delhi Date : August 24, 2004 (Deponent) In his submissions before the Assessing Officer, the Commissioner of Income-tax (Appeals) and before us as well, the assessee has laid a great emphasis upon the fact that the amount was received through banking channels, and in support thereof he furnished a copy of cheque dated February 15, 2009 issued by J. B. Malik in his favour and his bank statement. It is nobody s case that the amount was not received through banking channels. However, mere movement of the alleged gift amount through banking channels is not sufficient to prove the genuineness of the gift as so well settled vide various decisions referred to above herein. The Assessing Officer has not accepted the assessee s claim for the reason that the assessee has failed to prove the genuineness of the factum of gift on the facts pointed out by him in his order. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that would have gone against the interest of the assessee. Both the authorities below have considered, amongst others, this aspect of the matter while examining the genuineness of the transaction. In the course of hearing of appeal before us, learned counsel for the assessee has not made any comment on this count nor given any explanation as to why the bank statement of relevant date has not been furnished. Therefore, on the basis of these two documents, i.e., confirmation and affidavit of Shri J. B. Malik, it cannot be said that the assessee has been able to discharge its onus to establish the capacity of the donor to make such a gift, and to show what kind of relationship the donor had with the assessee, and what was the occasion for giving such a gift to the assessee, and the amount was actually received as a gift. Since all the essential factors to show the relationship between the assessee and the donor and under what circumstances the amount was given to the assessee as gift were within the specific knowledge of the assessee, the assessee had to prove and establish that the amount given by Shri J. B. Malik to the assessee was actually a genuine gift, and not a payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid simple question. The assessee has not given any explanation as to how and in what manner he was confused about the answer he had given to the aforesaid question at the time of the search. It was never the case of the assessee either at the time of search or immediately thereafter that his statement was recorded in duress or coercion or force by the Departmental authorities. We further find that the subsequent statement made by the assessee before the Assessing Officer has no evidentiary value inasmuch as altogether a different story was made out than what was stated by the assessee initially at the time of the search. It is abundantly clear that it was the assessee s primary and initial burden to prove and establish the capacity of Shri Y. P. Malik to make a gift to the assessee or to prove and establish that the amount received by the assessee was genuine gift given by Shri Y. P. Malik to the assessee out of natural love and affection. Therefore, notwithstanding the fact that the amount has been routed through banking channels as transferred from bank account of Shri Y. P. Malik to the assessee s account, the assessee has failed to prove and establish the relationship or the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had with the donor so that the donor had given an irrevocable gift of Rs. 3,00,000 to the assessee, and till the assessee discharges his initial and primary burden, it is not for the Assessing Officer to prove or establish otherwise. Therefore, the assessee s contention that the Assessing Officer should have rebuted the assessee s case by bringing on record any material to the contrary has no legs to stand. Since the primary and initial onus which lies on the assessee has not been discharged, the Assessing Officer was very much justified in drawing a conclusion that the assessee has been unable to prove and establish that the amount of Rs. 3,00,000 received by him was actually received as a gift from Shri Y. P. Malik, and the same is liable to be assessed as income of the assessee. Having regard to the totality of the facts and circumstances of the present case, we are therefore, of the considered opinion that the assessee has miserably failed to prove that the sum of Rs. 3,00,000 transferred from the bank account of Shri J. B. Malik to the assessee s account represents irrevocable gift given by Shri J. B. Malik to the assessee. The assessee has further contended that the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 3,92,672, we find after considering cumulative facts of the present case, we find that the assessee has not been able to prove and establish that the amount received from Shri Y. P. Malik is actually a genuine gift received from him. The passport issued in the name of Shri Y. P. Malik shows that he is a British citizen. The assessee has produced a copy of passport of Shri Y. P. Malik, a copy of cheque book issued by him in his favour and a confirmation given by him. In support of the assessee s claim that he has received a sum of Rs. 3,92,672 as gift from Shri Y. P. Malik, the assessee has relied upon the cheque issued by Shri Y.P. Malik, which is deposited in India in the assessee s bank account, and also a confirmation letter given by Shri Y. P. Malik. The assessee has not produced or furnished any iota of evidence to show and establish the creditworthiness of the donor, his capacity to make a gift, the resources or finances of the donor, what relationship Shri Y. P. Malik had with the assessee, and in what circumstances the gift was made. There is no apparent reason for the assessee being showered with gift of Rs. 3,92,672 by the said donor, Shri Y. P. Malik, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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