TMI Blog2010 (5) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... not been able to establish the creditworthiness of the donors as well as genuineness of transaction in respect of gifts from viz. S/Shri Devrajbhai Jevrajbhai, Manubhai Chaganbhai Savani, Chhaganbhai Diyalbhai, Ashokbhai Chhaganbhai and Nareshbhai H. Lakhani - the addition made by the Assessing Officer is reduced by Rs. 23,720 and the remaining addition of Rs. 4,45,000 (Rs. 4,68,720 minus Rs. 23,720) is sustained - Appeals are partly allowed - 2361 & 2362 (AHD.) OF 2005, 2569 (AHD.) OF 2006, 373 & 2835 (AHD.) OF 2007 - - - Dated:- 14-5-2010 - G.D. AGARWAL, T.K. SHARMA, JJ. Divyakant Parikh for the Appellant. A.K. Khandelwal for the Respondent. ORDER G.D. Agarwal, Vice-president. These are five appeals by the assessee against the orders of the CIT(A). Surat arising out of the orders of the Assessing Officer passed under section 143(3) of the Income-tax Act, 1961. ITA No. 2361/Ahd./2005 2. In this appeal by the assessee several grounds are raised in the memorandum of appeal. However, at the lime of hearing before us. It is stated by the learned counsel that the only issue involved in this appeal is against the addition of Rs. 7,65,000 made by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decision of the Apex Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. CIT [1995] 801/80 Taxman 89. The facts in the assessee's case are altogether different than the facts in the abovementioned case. Therefore, the above two decisions of the Hon'ble Apex Court are not applicable to the facts of the assessee's case. He therefore submitted that the addition of Rs. 7,65,000 for alleged unexplained gift should be deleted. 4. The learned DR. on the other hand has stated that during the accounting year relevant to the assessment year under consideration, the assessee received total gift of Rs. 7,65,000 from twelve donors. Three donors have given the gift twice during the same year. Total gifts received by the assessee and his family members was amounting to Rs. 37,74,571 complete details of which are given at page Nos. 6 to 8 of the assessment order. Out of large number of the donors, only one donor is assessed to tax. The gift is claimed to have been given by way of demand drafts taken by several persons. All demand drafts are purchased by cash even though some of donors were having the bank account. That the DDs were purchased from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the donors appeared before the Assessing Officer and have also confirmed the gift, therefore, the assessee has duly discharged the onus which lies upon him. He therefore submitted that the addition of Rs. 7,65,000 made by the Assessing Officer and sustained by the CIT(A) may be deleted. 6. We have carefully considered the arguments of both the sides and perused the materials placed before us. During the accounting year relevant to the assessment year under consideration, the assessee has claimed to have received gift of Rs. 7,65,000. The gift was from twelve persons. Out of which three persons have claimed to have gifted the amounts twice. The complete details of which are reproduced in para 2. During the assessment proceedings, the AO asked the assessee to produce the donors as well as the evidences in support of the gift. However, on the date of hearing neither the assessee nor authorized representative appeared before the Assessing Officer. No details were furnished before the Assessing Officer and the donors wore also not produced. Therefore, the Assessing Officer treated the gift of Rs. 7,65,000 as unexplained and made addition therefor. During the appellate proceedings be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor. The appellant has failed to explain as to why the stamp paper on which gift deed has been prepared are in the name of some third party and not in the name of the donors. In all the cases the donors have failed to produce the copy of bank statement to show the genuineness of transaction and creditworthiness. In all the cases the donors have stated that they had cash available with them which was deposited in the bank account from which the D.D. was made. They failed to explain why such huge money was kept at home in cash and not in bank. The major contradiction found is that at a single date two different donors claimed to have given gifts at two different, places. For example the four donors stated that on 22-3-2002 they have gifted amount at Surat and one donor namely Shri Purshottambhai D Lakhani stated that he has gifted amount at Bhavnagar. The same contradiction found for the gifts dated 26-3-2002 as mentioned above. The other matter relates to the months of gifts received. How all these donors inspired to give gift only in the months of February and March of 2002 only and that is also on the same day. Under the circumstances I am of the opinion that the assessee has fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except extract of 7/12 (which is the land revenue record showing the ownership of the agriculture land) is furnished. No evidence of agriculture activity actually carried on by the donors and extent of agriculture income is produced. No sale bills for sale of agriculture produce and the purchase bills for purchase of seeds, fertilizers etc. is produced. Out of twelve donors, eight donors were produced in the remand proceedings, however, even in their statement though they claim of having agriculture income no documentary evidence in support of agriculture income is produced. In the remand report, the Assessing Officer has pointed out that the claim of agriculture income is disproportionate to the agriculture land possessed by them The remand report is reproduced by the CIT(A) from page Nos.3 to 9 of his order. No donor has possessed agriculture equipments like tractor etc. for proper cultivation of land. Most of them have claimed to possess bullock cart and other small instruments for the purpose of agriculture. The land holding of the most of the donors is small one that too un-irrigated. One donor viz. Shri Hirabhai Jivrajbhai Dhameliya claimed to have income, from estate broker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel is the decision of the Hon'ble Apex Court in the case of Orissa Corpn. (P.) Ltd. (supra). However, we find that in the above mentioned case all the creditors were assessed to income-tax and their permanent account numbers were supplied to the AO. In the case under appeal before us, only one donor is assessed to lax and all other donors are not assessed to tax. Therefore, the above decision will have the application only in the case of gift from donor viz. Naresh Jivraj Dhameliya and not in respect of any other donors. 10. Next case relied upon by the learned counsel is that of jurisdictional High Court in the case of Murlidhar Lahorimal (supra). Facts of the case before the Hon'ble High Court was that the assessee, an individual, filed a return of income accompanied by a copy of his capital account in the partnership firm where he was a partner. The capital account contained a credit entry showing a sum of Rs. 50,000 as gift received. The donor had filed a return of gift in respect of the gift of Rs. 50,000 and the assessment came to be completed under section 15(3) of the Gift-tax Act, 1958. Assessment was made accepting the gift but notice was subsequently issued un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in examination on oath recorded by AO; (f) affirmation of the donor in examination on oath recorded; (g) direct reply of the donor to the Assessing Officer confirming the gift; (h) donor is stated to be a friend of assessee's father; (i) donor was doing some finance business; and (j) source of the gift is the receipt through a cheque of Rs. 2,46,000 received by the donor from BT and a cash amount of Rs. 3,500. All these facts establish the fact that a gift was received by the assessee and the sources thereof are satisfactorily explainable and proved putting its genuineness beyond doubt." From the above, it is evident that the source of the gift was established beyond doubt because the donor had received Rs. 2,46,000 by cheque from Balaji Trading Corporation which amount was deposited earlier. The total gift made by the donor was Rs. 2,50,000 and for making the above gift, the cash deposits in the donor's bank account is only Rs. 3,500. As we have mentioned earlier in the assessee's case, none of the donors have given gift by withdrawing the money from their bank account. 13. Next decision relied upon by the learned counsel for the assessee is in the case of Sanjay Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation. The Income-tax Officer is not expected to put blinkers and accept it as it is : it is open to him to probe further and find out whether the apparent is real or not and take a decision on such probing in the light of human probabilities. However, he should not act unreasonably. The donor was worth about Rs. 20 crores and during the relevant time he had brought about US$ 61,60,000 into India through proper channels. The donor had stated that in gratitude for the help rendered by one of the assessee to his father which enabled him to come up to such an exalted position he had made the gifts. All the gifts had come through proper banking channels. The donor appeared on summons by the Income-tax Department and gave all the details. The Senior Vice President, in his concurring order with the AM, had stated that at least by that time, the donor had produced all the materials in proof of his claim. Therefore, it is clear that the assessees have established the identity of the donor namely, the source, the solvency of the donor and his love and gratitude for the family of the assessees, which made him to make the gift. There is nothing on record to show that the gifts relieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is seen that neither the said persons appeared before the Assessing Officer nor are they income-tax assessees nor any source of their income has been shown. As such, addition on this account is sustained." From the above, it is evident that out of the addition of Rs. 3,50,000, the ITAT has deleted Rs. 2,18,000 which was the amount received from the assessees brother in-law and the said amount was shown as withdrawn from his bank account. In the case under appeal before us, the assessee has not shown any amount of gift having been withdrawn by any donor from their bank account. 18. On the facts of the assessee's case, decision of the Hon'ble Apex Court relied upon by the revenue in the case of Sumali Dayal (supra) would be squarely applicable. In that case, the assessee claimed to have received a total amount of Rs. 3,11,831 in the assessment year 1971-72 by way of race winning in jackpot and treble events in races at turf clubs in Bangalore, Madras and Hyderabad. She also claimed to have received a sum of Rs. 93,500 from race winnings in two jackpots at Bangalore and Madras during the assessment year 1972-73. The Income-tax Officer treated this amount as income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view of the Chairman in his dissenting opinion. In our opinion, the majority opinion after considering the surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winnings from races is not genuine (emphasis supplied) it cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence." (p. 808) In the case of assessee also, the assessee and his family members claimed to have received gifts year after year on seventy one occasions and sum total of the gifts was amounting to Rs. 34,74,571. The assessee has claimed to have received the gifts from various relatives on number of occasions, but did not reciprocate a single gift to any of the donors. Except one no other donor is assessed to tax. The financial conditions of the donors were such that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the material placed before us. While considering the case of Shri Lakhani Labhubhai Dharmashibhai ("LLD" for short), husband of the assessee, we have considered similar issue. Out of the above donors to the assessee except two, namely, Dineshhhai Pursotambhai Sawani and Smt. Varshaben D. Dhameliya. our finding in the case of "LLD" in respect of all these donors would be applicable in this case also. First we shall discuss the issue relating to the new donors. Dineshbhai Pursottambhai Sawani ("DPS") and Smt. Varshaben D. Dhameliya ("VDD"). As per the remand report of the Assessing Officer, which is placed at page No. 16 of the assessee's paper book, we find that "DPS'' is not assessed to Income-tax. His only source of income is agriculture income. His total land holding is only 2.51 acres, which is also not irrigated. As per the AO his income from agricultural would be only Rs. 12,000 per annum. The only instrument he owns for the purpose of his agriculture activity is the bullock cart. These facts stated in the remand report have not been controverted before us. Considering these, in our opinion, the creditworthiness of "DPS' for making gift of Rs. 91,500 (Rs. 48,000 on 22-3-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the certificate, Shri Piyush Ghelani is employed with JP MorganChase as Vice-President and his basic salary is $ 108,150.00 per annum. Considering the salary of donor's husband being more than $ 100,000 per annum, the creditworthiness of the donor for a small gift of US $ 500 cannot be doubted. The assessee has also produced the evidence that gift cheque of US $ 500 was issued by a USA Bank and the same was credited in assessee's bank account. Thus, in this case assessee was able to prove identity of donor, credit- worthiness of donor and genuineness of transaction. 25. Shri Ashvin L. Savani has also given the gift to the assessee in the immediately preceding year and while deciding the assessee's appeal for assessment year 2002-03, we have discussed the issue at length and for the detailed discussion therein, we hold that the creditworthiness of Shri Ashvin L. Savani is not proved. 26. The facts relating to other five donors are more or less similar. The only explanation given with regard to the remaining five donors by the assessee before Assessing Officer reads as under : "3. Devrajbhai Jivrajbhai: He is purely an agriculturist. We have produced relevant details vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only evidence produced with regard to their agriculture income is the 7/12 extracts i.e., the evidence of the land holding. No other evidence is produced. No other evidence for carrying out agricultural activity, sale bill for sale of crop is produced. Even what was the amount of agricultural income of each donor is no furnished. They were not produced before the Assessing Officer despite the direction of the Assessing Officer to produce them. Even at the time of hearing before us no further documentary evidences to establish their creditworthiness was furnished. So far genuineness of gift is concerned, facts being similar to assessment year 2002-03, our finding in assessment year 2002-03 would be squarely applicable. Considering the facts of the case, we agree with the findings of the lower authorities that the assessee has not been able to establish the creditworthiness of the donors as well as genuineness of transaction in respect of gifts from viz. S/Shri Devrajbhai Jevrajbhai, Manubhai Chaganbhai Savani, Chhaganbhai Diyalbhai, Ashokbhai Chhaganbhai and Nareshbhai H. Lakhani. Thus, considering the totality of the facts, the addition made by the Assessing Officer is reduced by R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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