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TMI Blog2008 (2) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee appeared through his counsel before the assessing officer 7.7:2003 : notice issued under Section 142(1) 25.7.2003 another notice under Section 143(1) issued 18.8.2003 assessment made under Section 143(1), in pursuance of the order-sheet entry reading as (disposed of under Section 143(1)) English version. should have held that the 'appellant' had duly been subjected to regular assessment on 18-8-2003 and second order dated 29-3-2005 captioned as 'order under Section 143(3)' was void and ab initio. It was contended by Shri Garg that the said chronology of various dates is based on the assessment records of the assessee and in support of the said assertion, he invited our attention to the opening para of the assessment order dated 29-3-2005, which reads as under: The assessee is engaged in business of handling of coal and earns commission and supervision charges besides trading of coal. The return showing total income at Rs. 51,70,600 was filed on 17-10-2002 which was processed as such under Section 143(1) on 18-8-2003. The case was taken up for scrutiny by issue of first notice under Section 143(2) dated 3-12-2002 duly served on 4-12-2002 by the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 229 ITR 46 (All) (ii) CIT vs. K.V. Mankaram & Co. (2000) 162 CTR (Ker) 357 : (2000) 245 ITR 353 (Ker) (iii) Apogee International Ltd. vs. Union of India & Anr. (1997) 137 CTR (Del) 93: (1996) 220 ITR 248(Del). He went on to submit that the assessing officer, as was evident from the chronology of dates and events as is contained in the ground No. 1 itself, had duly issued notice under Section 143(2) within the stipulated period of one year and he was well within his right to make regular assessment vide Order dated 29-3-2005 under Section 143(3). 4. In rejoinder, Shri Garg pointed out that all these case law relate to intimations issued under Section 143(l)(a) under which the assessing officer was armed with the power to make "adjustment" to the income returned by the assessee and to raise a demand if the income is understated in the return or to issue refund, if due on the basis of such an adjustment. The said procedure has been done away with effect from 1-6-1999 and the power of the assessing officer to make adjustment to the income shown in the return has been taken away. As per the revised procedure of assessment which is applicable from 1-6-1999, the communication dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant's son Shri Mohit Agarwal (ITA No. 282/A11/2006) for the assessment year 2000-01. to facilitate disposal of the present appeal and for the sake of convenience, the learned Senior Departmental Representative was allowed to make his submissions with reference to the order passed by the Tribunal in the case of Shri Mohit Agarwal, son of the assessee. On such a permission being granted, he submitted that Shri Anand Prakash Agarwal, the appellant here has adopted the modus operandi of introducing unaccounted money through gifts received from strangers in the name of himself, his wife Smt. Usha Agarwal and his son Shri Mohit Agarwal. In particular, he read out the following passages from the said Order dated 22-12-2006 (supra): Therefore, the assessing officer has gathered that appellant and his family members had received total gift of Rs. 95 lacs from Ashok Kumar Lohia and his wife within the period of four years. When the donor Shri Ashok Kumar Lohia, individual and HUF and his wife Smt. Shashi Lohia were asked to furnish copy of their bank accounts for the period between 1-4-1996 to 21-3-2003 they have challenged the jurisdiction of issuing notice and have not furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Ashok Kumar Lohia challenged the jurisdiction of the assessing officer in asking questions to him. It cannot in any way help the cause of the assessee. All these donors have no relationship with the assessee. There is no occasion for the gift, before and after gift their capital was meager and bank balance is deplete, most of them had practically transferred their entire capital in the form of gift, three donors for one person or the other did not appear before the assessing officer, that donors had taken loan for giving gift leave no doubt in our mind that it is a fit case where form has to be ignored and has to go into the substance of the whole transaction and the substance is that they are not genuine gifts but unaccounted money has flown in the form of gifts to the assessee. As the assessee is the beneficiary of this money, it is safely presumed that it was his unaccounted money which has come back to him in the form of gift to inflate the capital without paying taxes. 8. The learned Senior Departmental Representative further pointed out that Shri Ashok Kumar Lohia is a common donor, who had gifted a sum of Rs. 4 lakhs to Shri Mohit Agarwal in the assessment year 2000-01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. As the name of Shri Ashok Kumar Lohia appeared in the list of 13donors in the case of Shri Anand Prakash Agarwal, the appellant before us for the assessment year 2002-03, we put a direct question to the learned Counsel for the appellant as to how he proposes to defend the gift transaction in the case of this particular donor. In reply, the learned Authorised Representative Shri Garg submitted that first of all, the said order dated 22-12-2006 has not yet attained finality as the matter is sub judice before the Hon'ble High Court wherein an appeal has been preferred by Shri Mohit Agarwal under Section 260A of the Act. Notwithstanding the same, the learned Authorised Representative pointed out that the said observations cannot be said to be having any bearing on the issue involved in the present appeal, as the factual matrix is entirely different. In the year under appeal, Shri Ashok Kumar Lohiah as made a gift of Rs. 6 lakhs to the appellant which finds debited in his capital account as appearing in the book of his proprietary concern namely "Jai Deo Ashok Kumar", Varanasi, copy of the capital account appearing at p. 60 of the paper book showed that even after making the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect kindly note as under: 1. At the request of Shri Anand Prakash Agarwal, resident of D-53/97, A-3, Parwatipuri Colony, Varanasi regarding my presence in Income-tax proceedings, I have to reiterate that I had handed over a sum of Rs. 6,00,000 to him by way of gift through cheque No. 644789 dated 28-4-2001 of Indian Bank, Godowlia, Varanasi from my saving bank account No. 5042 with the said bank. Necessary documents in support of the said gift have already been sent from my end and according to the information given to me by Shri Anand Prakash Agarwal, such documents have been placed on records also. 2. As I am not in a position to present before your goodself owing to certain unavoidable reasons, I request that in case any further information is called for, the same may very kindly be collected from the assessing officer having jurisdiction in my case (whose particular has already been made available) or directly from my banker. 1 undertake to extend all the co-operation in the matter. 12. On the strength of the said material, it was pleaded that so far as the assessment year 2002-03 (year under appeal) is concerned, the facts are materially different. The donor was a man of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que in favour of Shri Anand Prakash Agrawal through the bank account maintained by donor. (v) Copy of verification of PAN by IT department (vi) Acknowledgement of Income-tax returns (vii) Balance sheet and P&L a/c (viii) Bank statement from where cheque has been issued in favour of your assessee (ix) Copy of confirmation letter of gift The said information which is available on record clearly shows that the gifts had been made by the donors to the donee without any consideration and the gifts accepted by the donee, the appellant here, by delivery. The declarations were made by the donors and such declarations were in full conformity with the information available on their respective income-tax records. Acceptance of the gift by the donee, the appellant here, is also proved from the fact that the instruments through which the gifts had been received were tendered by the donor to his bank, who had duly collected the same on behalf of the donor. Therefore, all the ingredients of the 'gift' have been specifically proved by us. In the present case criterion of a valid gift has been fully satisfied and, therefore, the same deserves to be accepted and view to the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, there is no law which goes on to say that unless the person concerned is produced for examination, the transaction entered into with him, shall not be treated as genuine. Reliance in this regard was placed on an unreported decision of Hon'ble Allahabad High Court in IT Appeal Nos. 89/159/1999 in the case of CIT v. Himalaya Hide Company a copy of which was made available to us. 17. Coming to the statement said to have been given by Shri Nathmal Lohia on 20-1- 2005 before the Investigation Wing at Kolkata (copy of which along with its typed copy are available at pp. 184 to 192 and thereafter at pp. (a) to (i)) it was argued by the learned Counsel for the appellant that the said statement was not worthy of reliance, for the simple reason that only a few days before, in his statement, Shri Nathmal Lohia had categorically stated on oath on 28-12-2004 that he was well known to Shri Anand Prakash Agarwal, his wife Smt. Usha Agarwal and he himself and his wife Smt. Sita Lohia had given gifts to the appellant and his wife, copy of the said statement appears at pp. 248 to 262 of the paper book and typed copy thereof is available at pp. (a) to (o) as appearing thereafter in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22-12-2006 (supra). It was vehemently argued that even if the format of gift related transaction is found to be complete in all respects, still the appellant cannot be granted any relief as the conduct of the donors as also of the donee (the appellant) is beyond all human probabilities. Very heavy reliance was again placed on the above referred decision of the Allahabad Bench of the Tribunal in the case of Mohit Agarwal (supra) appellant's son. 21. We have carefully considered the rival submissions and perused the records as have been placed before us in the form of assessee's compilation. It is established beyond doubt that the donors were possessed of the funds and they were well and sufficiently entitled to alienate the same by way of gift or otherwise. We have examined each and every case and find that even after making the gifts in question, they were left with sufficient fund. In this respect, the facts in this year are entirely different. There are other dissimilarities also, on facts as well as on perception of law, which shall be taken note of by us in the subsequent part of this order. The order dated 22-12-2006 passed by our learned Brothers in ITA No. 282/A11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the gift of movable asset is concerned, the mode of transfer by way of gift has been given in Section 123 of Transfer of Property Act. The crux of the said enactment, in this respect is, that; (a) there should a transfer of asset from one person called as 'donor', in favour of another 'person' called as 'donee'; (b) such 'person' should relate to the asset belonging to the transferor, i.e., the 'donor'; (c) the transfer should be voluntary and it should be without consideration; (d) in the case of movable asset, transfer can be effected even by delivery also; within this premise, we proceed to examine the issue involved before us step by step. 23. There is no dispute that all the 13 persons who are the transferors and donors were existing persons and subject-matter of transfer is the 'movable asset' available with them in the form of credit balances in their respective bank accounts. The transfer was voluntary as no coercion of any kind has been alleged. All the transferors/donors have given their confirmatory letters to this effect and further stated the same on oath through sworn evidences. All of them had sent confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afiyabai Ibrahim AIR 1988 Bom 361 : 1987 Mah 725 : 1987 Bank J 552.". The said evidence has not been refuted by the other side, even through a whisper, what to talk of rebuttal by bringing cogent material on record. All that can be said about the allegation of the revenue, is that the same is merely based on their suspicion; the Hon'ble Allahabad High Court has held in the case of Hazari Lal Roop Chand v. CIT (1967) 65 ITR 488 (All) that suspicion however grave cannot take the place of proof. The learned Commissioner (Appeals) while deciding the issue before him has not appreciated the material and information available on record and allowed himself to be persuaded by the statement said to have been given by Shri Nathmal Lohia on 20-1-2005 before the Investigation Wing at Kolkata. In our considered opinion, the said statement loses its credibility and reliance worthiness, in view of the fact, that only a few days before the said statement, he himself had stated on oath before the Investigation Wing on 28-12-2004 (certified copy available at pp. 248-262 of the paper book) that he was well known to his wife Smt. Usha Agarwal and his husband Sri Anand Prakash Agarwal (the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned. 7. In case, the view to the contrary is still entertained by Your Honour, I request that in view of culpable nature of statement referred to in the notice under reply, Shri Nathmal Lohia may kindly be summoned at Varanasi as a witness of the department so that I may get an opportunity to cross-examine him. Side by side the Income-tax authorities who had administered oath to Shri Nathmal Lohia and has recorded his statement under reference may also be called as a witness so that he too may be put to cross-examination. Your Honour will be pleased to appreciate that unless such an opportunity to cross-examine the persons as aforesaid is given, it cannot be ascertained as to whether they themselves had some axe of their own to grind or they have been carrying any animus or ill-will against the appellant. This contention of mine is based on the salutary principle of observing the natural justice as has been expounded by the Hon'ble Supreme Court in a large number of cases. For the purposes of these submissions I beg to refer the decision of Apex Court in the case of State of Kerala v. K.T. Shaduli 1977 CTR (SC) 260. Relevant extract of the said judgment is reproduced hereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to the general rules, the said sum may be treated as income of an assessee, in case he is not able to give a satisfactory explanation about the nature and source of such credit. In case the said principle is applied to the facts of the present case, it will be seen that all the three ingredients of cash credit as envisaged in Section 68 stand fully satisfied. The identity of the donors stands fully, established even with reference to their income-tax particulars and the letters written by them directly to the assessing officer, the remittances had originated from their own bank accounts wherein sufficient funds were found already credited. The genuineness of the transaction is not only supported by the said bank statements but also by the certificates issued by the bankers concerned which are construable as evidence under Section 5 of the Bankers' Evidence Book, 1891. Thus, on the facts of the present case, the provisions of Section 68 also cannot be applied to the sums aggregating Rs. 47 lakhs. 27. Allahabad Bench of the Tribunal ITA No. 1346/A11/1995 in the case of ITO v. Matadin Snehlata (HUF), dated 25-7-2003 (2004) 90 ITD 203 (All-Trib)), has held as under: 5. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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