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TMI Blog2006 (9) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 00). The Assessing Officer noticed that these persons who made the gifts to the assessee were not related to the assessee. So he asked the assessee to file evidence regarding the creditworthiness of these persons. The assessee filed two gift letters written by the donors of the gift, copy of telegraphic transfer credit advice indicating the receipt of these payments by the assessee, a certificate from M/s. P. S. J. Alexander and Co., the CA of the donor Shri P. B. Bhardwaj, mentioning that Shri P.B. Bhardwaj was a man of substantial wealth, a copy of the bank statement from which the gift amount was claimed to have been paid in support of the creditworthiness of Shri Surender Khoka. After considering these documents and submissions of the assessee the Assessing Officer held these gifts to be bogus as according to the Assessing Officer this was the assessee's own unexplained money routed through these persons to increase the capital of the assessee to purchase a house which was purchased for a sum of Rs. 47.5 lakhs on the reasoning that these donors were not related to the assessee ; that these gifts were not received on any occasion but were received by the assessee because he need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Jawahar Lal Oswal v. Asst. CIT [1999] 71 ITD 324 (Chandigarh) and CIT v. Smt. Sunita Vachani [1990] 184 ITR 121 (Delhi) deleted the impugned addition by making the following observations in his order: "In this case the appellant has filed details of the bank account of Shri Surendra Khoka. They have also filed during the course of appeal the bank account of Shri P. B. Bhardwaj from which he has made the gift. Even though in my opinion the certificate from the auditors whose address and practice number was also given and they had given a certificate to the extent that Shri P. B. Bhardwaj was a man of substantial wealth in London. Copy of the certificate of the tax consultant and business advisor is an accepted piece of evidence. The details of bank accounts from which the cheques were received have also been filed. The appellant has also filed a bank account of Shri P.B. Bhardwaj which shows that he has made a gift of $ 65,000 and from his bank account it can be seen that interest on fixed deposits every six months, i.e., on January 22, 2001, was $ 27,400. Then he again received interest from fixed deposits on February 22, 2001, amounting to $ 22,259. If he has received interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee's case are taken into consideration in which these gifts of exorbitant amount were made by the strangers/donors to the assessee in the light of the principles of human probabilities as laid down by the apex court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 and CIT v. Durga Prasad More [1971] 82 ITR 540, it would be apparent that these gifts given by the donors cannot be treated as genuine gifts. He further contended that merely on the basis of documents filed by the assessee such as certificates of the chartered accountant and uncertified bank account filed by the assessee does not prove the creditworthiness of the donor because the assessee has neither filed the authenticated assessment orders, balance-sheet duly certified or notarized by the authorities as prescribed in that foreign country. Tie learned Departmental representative for the Revenue further contended that on proper analysis of the bank accounts of the donors by the Assessing Officer he is able to establish that the donors are not such men of means who could genuinely afford to part with such huge amounts for making gifts to the assessee who is not related to those donors. Lastly, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements, the Assessing Officer did not raise any query with regard to the capacity of the do to make the gift. The only ground on which the genuineness of the gifts had been doubted was the alleged failure on the part of the assessee to establish his relationship with the donors. Admittedly, there is no blood relationship between the assessee and the donors. No such case was even pleaded by the assessee. The donors had stated in their declarations that they had gifted the amounts to the assessee on account of their love and affection for him. Both the lower appellate authorities have recorded a categorical finding that by producing the documents the assessee has discharged the onus which lay on him with regard to the genuineness of the gifts. The inference drawn by the appellate authorities, on appreciation of evidence is factual, giving rise to no question of law much less a substantial question of law. Accordingly, the appeal is not entertained." —In the case of Jawahar Lal Oswal v. Asst. CIT [1999] 71 ITD 324 (Chandigarh) ; [ 2001] 71 TTJ (Chd) 240, the Tribunal concluded that— "Both the non-resident donors having confirmed the gifts and established their financial status, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Lordships laying down the significance of human probabilities held as under (headnote) "that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self-serving recitals in documents, it was for that party to establish the truth of those recitals the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals." —Their Lordships of the apex court in the case of Sumati Dayal v. CIT reported in [1995] 214 ITR 801 observed as under (headnote) "Dismissing the appeal that the Settlement Commission after considering the surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellants claim about the amount being her winnings from the races was not genuine." —Their Lordships of the jurisdictional High Court of Delhi in the case of Sajan Dass and Sons v. CIT reported in [2003] 264 ITR 435 while considering a case in which gifts were received by the assessee through banking channels laid importance on the capacity of the donor for making the gift and his identit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeing to pay interest at 12½ per cent. whereas he used to charge only 7 to 8 per cent. from P which was quite unnatural and unbelievable against the natural course of human conduct and it was not a conduct exhibited by a person who generally considered his own interest, being a professional man himself. —In Chain Sukh Rathi v. CIT [2004] 270 ITR 368 (Raj); 185 CTR 56, 60 (Raj) ; their Lordships in a case of block assessment while examining the case of gift made by the father to his son held that "It is true that Rs. 30,000 has been paid by cheques by his father, but there is no occasion for the father to gift this amount to his son. This amount also rightly treated as undisclosed income of the assessee, which has been received in the name of gift from his father. Consequently the addition made by the Assessing Officer and affirmed by the Tribunal is confirmed." 10 Their Lordships of the jurisdictional High Court of Delhi in their decisions in the case of R. S. Sibal [2004] 269 ITR 429 and Sajan Dass and Sons [2003] 264 ITR 435 have consistently held that a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but these principles, as discussed above, were never departed by their Lordships in those cases (supra) too. 11 In the case of R. S. Sibal [2004] 269 ITR 429 decided by the hon'ble Delhi High Court relied upon by the learned authorised representative for the assessee we find that the assessee had discharged the primary onus cast upon him with regard to the genuineness of the gift but the Assessing Officer simply doubted the genuineness of the gift because the assessee failed to establish his relationship with the donor. 12 Similarly, in the case of Jawahar Lal Oswal [1999] 71 ITD 324 decided by the Income-tax Appellate Tribunal, Chandigarh Bench, the Tribunal did not treat the amount received by the assessee as its unaccounted money because the donors confirmed the gifts and established their financial status and nothing beyond that was required to be taken into consideration by the Tribunal in that case. 13 The decision of the Gauhati High Court in the case of Nemi Chand Kothari [2003] 264 ITR 254 relied upon by the learned authorised representative for the assessee is not on the issue under consideration before us and hence is of no help to the assessee. 14 Similarly the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee from other sources. 17 On the other hand, the Commissioner of Income-tax (Appeals) without properly and carefully analyzing the bank statements held that the donor Shri P. B. Bhardwaj had been receiving interest on the fixed deposits amounting to £ 27,400 and also received deposit on February 22, 2001, amounting to £ 22,259 and further because the auditor had furnished a certificate that this donor was a man of substantial wealth in London and therefore was financially sound. Similarly, the other donor was also held to be financially sound on the basis of his bank account statement because even after gift of £ 10,000 he was left with £ 13,000 and further presuming that the donor must be having other bank accounts which were not disclosed before the Assessing Officer. 18 We are of the opinion that unless the bank statements are supported by any other corroborative evidence to establish the financial capacity of the donors the bank statements do not prove the creditworthiness of the donors for showing that they were financially sound for making such gifts because the bank statements merely indicate the movement of the funds and not the creditworthiness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orroborative evidence, cannot be accepted for treating the donor to be financially so sound that he can give an amount of Rs. 30,04,300 as gift to an Indian assessee who is not even related to him. 22 Similarly, in the case of the other donor Shri Surinder Khoka we find that except the bank statement placed at page 18 of the paper book for the period September 1, 2002, to December 1, 2003, no other document has been filed on record to prove the creditworthiness. Even on going through the copy of the bank account of Shri Surinder Khoka we find that there are deposits and withdrawals of small amounts and the maximum balance in his account was £ 23,036 out of which he made a gift of £ 10,000 to the assessee who was not related to him and even £ 10,000 withdrawn on February 12, 2001, for making the gift were again deposited in the account on February 22, 2001. As we have already mentioned that this donee except filing the copy of the -bank account has not filed any other document to prove his creditworthiness, though the -bank account is not a proof of creditworthiness of the donor, but, even if assuming it could assist the assessee in showing the creditworthiness of the donor to any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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