TMI Blog2008 (2) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable 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 confirmation letters, directly to the AO and in such confirmation letters they have urged that the information about the gifts is available in the records of the AOs (having jurisdiction in their respective cases) and the same may be called for, if such further verification is considered necessary. It is also very relevant to mention here that for a 'gift' in order to be valid, should not necessarily emanate from a relative. Under the IT Act, no such condition has been laid down. On the other hand, if we probe into the legislative intent, it will become clear that a ceiling of ₹ 25,000 had been imposed on acceptance of gifts from non-relative by insertion of cl. (xii) in sub-s. (24) of s. 2 of the Act and by corresponding insertion of cl. (v) in sub-s. (2) of s. 56 effective from 1st Sept., 2004. As the said section is prospective, it can safely be infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal is partly allowed as stated above and announced in the open Court. - DR. SATISH CHANDRA J.M. AND B. C. MEENA A.M. For the Appellant : S. K. Garg Ashish Bansal For the Respondent : Suresh Chandra Anshu Prakash ORDER 1. The present appeal has been filed by the assessee against the Order dt. 12-6-2007 passed by the learned Commissioner (Appeals), Varanasi, for the assessment year 2002-03. 2. In ground No. 1 the appellant has challenged the very validity of the assessment Order dated 29-3-2005, as had been passed by the Deputy Commissioner, Central Circle, Varanasi. For the sake of discussion on this legal ground, the said ground itself is reproduced hereunder: 1. Because the Commissioner (Appeals) on a due consideration of the chronology of relevant dates and events as given below: 17.10.2002 return filed under Section 139(1) 3.12.2002 notice issued by the assessing officer under Section 143(2) 4.12.2002 above notice served on the assessee 6.1.2003 assessee appeared through his counsel before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted by the concerned assessee, or for an assessment being conducted and concluded thereon by the assessing officer (PB 215). Proceeding further, learned Authorised Representative submitted that on the facts of the present case, the only conclusion that can be drawn is that after making enquiries the assessing officer chose to accept the income shown in the return, as correctly computed. The assessment order made subsequently which is captioned as order under Section 143(3) dated 29-3-2005 is null and void as there is no provision of law to make two assessments for the same assessment year, unless the procedure laid down in Section 147 is followed and the earlier assessment is set aside by the Commissioner in exercise of his revisionary jurisdiction under Section 263. On this reasoning, he pleaded that the said assessment order dated 29-3-2005 is liable to be declared as null and void. 3. Shri Anshu Prakash, learned senior Departmental Representative, vehemently opposed the said contention, as has been put forth on behalf of the appellant. He submitted that the communication dated 18-8-2003 was just an intimation under Section 143(1) and the same cannot be treated as regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to make regular assessment under Sub-section (2) of Section 143. The converse is not available; a regular assessment proceeding having been commenced under Section 143(2), there is no need for a summary proceeding under Section 143(l)(a). The said proposition of law is fully applicable to the facts of the present case and consequently we hold that even after issuing intimation under Section 143(1), the assessing officer was not precluded to pass an order under Section 143(3). It is not in dispute that the order dated 29-3-2005 has been passed within the limitation period, as prescribed under Section 153. Hence, there is no legal infirmity in the said order. Therefore, this ground fails along with the subsequent ground Nos. 2 and 3 which are merely extension of the ground No. 1. 6. On merits, the grounds Nos. 4, 5, 6, 7, 8, 9 and 10 are related to the issues as to whether the authorities below were justified in treating the gifts aggregating Rs. 47 lakhs stated to have been received from 13persons, as assessee's own income from undisclosed sources or not. 7. Before the counsel for the appellant initiated his argument, the learned Sr. Departmental Representative sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree donors appearing before the assessing officer had accepted to have given gifts to the assessee. So far as the form of these transactions is concerned, it is almost complete. If one has to merely look at what is shown by the assessee, then practically all the attributes of Section 68 are put into play except when one makes little effort to peep through the screen created by the assessee and assemble various cracks together, then one finds that it is only a smoke screen and a facade to build up capital by routing unaccounted money. Though individual parameters like relationship, occasion, not giving gifts by the donors to his kiths and kins, donee not giving any help or gift to the donee any time, the donors are men of petty means whereas the donee is a rich person etc, may not carry much weight individually but when they are put together and viewed as a whole, then one discovers the reality. The picture that emerges is that it is only a make belief affair and gifts are not genuine. One donor, namely, Ashok Kumar Lohia, avoided the revenue authorities in explaining how he and his wife were able to make a gift of Rs. 95 lakhs to the assessee and his family or that how he was able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved the same on 23-4-1999 and 24-4-1999 though it was claimed that it was return of money from one Amitabh Chandra, HUF and AC Agency as loan repayment but no evidence was given as to when loan was advanced and whether the same was reflected in the balance-sheet passed by Shri Lohia. When assessing officer required the donor to show evidence, he challenged the jurisdiction of the assessing officer and thus avoided to produce evidence about his transaction. Though it was claimed that he is doing money-lending business but no evidence thereof was submitted in the form of total amount of capital invested and details thereof. There is apparently no source of giving gift of Rs. 95 lakhs to the family of the assessee. It seems that this donor is doing the business of 'entry giving' as neither he has so much of capital to give gift of Rs. 95 lakhs nor income. If his declared income is Rs. 2 lakhs and presuming that it is so far every year, then it will practically take 50 years to accumulate capital of Rs. 1 crore and give gift to the family of Mohit Agrawal. If money is taken on loan, then there is charge of interest and the income of the donor would reduce considerably and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2004?giving sources of deposit in his saving bank a/c. before issuance of cheque, address of his assessing officer, PAN etc. 52 (ii) Copy of affidavit of Shri Ashok Kumar Lohia duly notarized before R.P. Jaiswal on 28-04-2001. 53 (iii) Photocopy of cheque through which gift has been received by your assessee. 54 (iv) Bank certificate regarding issuance of cheque in favour of Shri Anand Prakash Agrawal through the bank account maintain by donor. 55 (v) Copy of verification of PAN by IT Dept. * 56 (vi) Acknowledgement of IT return of Shri Ashok Kumar Lohia for assessment year 2001-02 and assessment year 2002-03. 57-58 (vii) Balance sheet and P L a/c of Shri Ashok Kumar Lohia for the year ended 31-03-2002 (relevant to assessment year 2002-03) 59 60 (viii) Bank statement from Indian Bank, Godowlia, Varanasi, saving bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lationship between the donors and donee (b) there is no occasion for making such gifts; (c) no prudent persons shall make away such gifts; which are not germane to the decision of the issue involved before the authorities below. Whereas the term gift has not been defined under the Income Tax Act, 1961, the said term had been given the following meaning: gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer or conversion of any property referred to in Section 4, deemed to be a gift under that section; as per clause (xii) of Section 2 of the Gift Tax Act, 1958 (since repealed), the said definition is in pari materia with the definition given in Section 122 of the Transfer of Property Act, 1882 which reads as under: 122. 'Gift' defined' 'Gift' is the 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 of the donee. 14. Thus, necessary ingredients of a valid gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t took us through the voluminous information as was available in the paper book with regard to each and every donor. From the said information, the transfer of movable asset from the donors to the donee stood fully proved. It was further submitted by the learned Counsel for the appellant that even if the receipts in question are treated to be the cash credits as envisaged in Section 68 of the Act, even then no addition was called for. In order to come out of the ambit of Section 68, the assessee has to prove prima facie three ingredients viz. (i) identity of the person concerned; (ii) his capacity and (iii) genuineness of the transaction. From the information placed on record, all the three ingredients stand fully satisfied. The assessing officer has nowhere disputed, nor it could be so, that the donors are fully identified by their respective income-tax particulars, their capacity is self-proved as the remittances have been made out of credit balances appearing in the bank accounts standing in their names and operated by them in their own right. The genuineness of the transactions also remains undisputed as the same are through demand drafts in the case of outstation parties and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er directly to the assessing officer, copy of which appears at p. 84 of the paper book. The said letter is dated 18-1-2005 and it was despatched on 19-3-2005. In the said confirmatory letter he had categorically admitted that he had gifted a sum of Rs. 10 lakhs to Shri Anand Prakash Agrawal, the appellant here, through cheque No. 110899 dated 24-4-2001 issued on his saving bank account No. 26096 with Canara Bank Gadowlia Branch, Varanasi. 18. Shri Garg further stressed that the Commissioner (Appeals) has even violated the principles of natural justice, by placing reliance on the statement dated 20-1-2005, said to have been given by Shri Nathmal Lohia before the Investigation Wing, Kolkata. It was a statement of culpable nature and the same could not have been referred to and relied upon by the revenue, unless the affected person, i.e., the appellant in the present case, is given an opportunity of being heard. As per his letter dated 28-5-2007 addressed to the learned Commissioner (Appeals), the assessee categorically stated that the witness be summoned at Varanasi at his, cost so that he may cross-examine him. The learned Commissioner (Appeals) could not have rejected such a leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here as per the principle laid down by the Apex Court in the case of CIT v. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) wherein their Lordships have observed and held as under: It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court., to support their reasonings. In Madhav Rao Jivqji Rao Scindia Bahadur v. Union of India (1971) 3 SCR 9 : AIR 1971 SC 530, this Court cautioned (at p. 578 of AIR 1971 SC: It is not proper to regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion letters they have urged that the information about the gifts is available in the records of the assessing officers (having jurisdiction in their respective cases) and the same may be called for, if such further verification is considered necessary. The transfer has taken place through delivery of demand drafts/cheques and the donee Shri Anand Prakash Agarwal, the appellant here, has duly accepted such a transfer as is evident by this fact that he has tendered such drafts /cheques in his bank account where the proceeds of such drafts/cheques had been collected also. It is also not in dispute that such a transfer has taken place without consideration. In fact absence of consideration has been taken as a ground by the authorities below, for rejecting the genuineness of the transaction. The manner in which the term 'gift' has been understood in the Gift Tax Act and also in the contemporariness legislation, the Transfer of Property Act, it leaves no doubt in our mind that a gift in order to be valid has to be without consideration. From this it also follows that event of such transfer has also no essence or significance in determining whether a particular transaction amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while to take not of the relevant questions and answers by reproducing the same hereunder: Qu-17 Do you know Smt. Usha Agarwal ? If yes, please fell about her ? Ans. Yes, I know Smt. Usha Agrawal, she is wife of Anand Prakash Agarwal, residing at Varanasi. At the moment I am not recollecting the Mohalla where she resides. However, I have gone to her resident 5 to 7 times during last five years. She is about 50 years of age, I myself and my wife Smt. Sita Lohia have given gift of Rs. 4 to 5 lakhs during financial years 2001-02 and 2002-03. This amount of Rs. 4 to 5 lacs has been given as gift to her by me. My wife Smt. Sita Lohia has also given gift of Rs. 4 to 5 lakhs to her during last 4/5 financial years on two occasion. The gift has been given without any occasions. In view of such a categorical averments made by Shri Nathmal Lohia on 28-12-2004, his complete turn around on 20-1-2005 before the Investigation Wing is wholly inexplicable. Moreover, the later statement dated 20-1-2005 (as has been referred to by the learned first appellate authority) could not have been relied upon without giving the appellant an opportunity to cross-examine him, particularly when the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a return has been submitted the assessee should be given a reasonable opportunity to prove the correctness or completeness of such return. The opportunity to prove the correctness or completeness of the return would necessarily carry with it the right to examine witnesses and that would include equally the right to cross-examine witness examined by the Sales Tax Officer'. (para 5)(p. 1628) Such a request could not have been turned down by the learned Commissioner (Appeals) by saying that Shri Nathmal Lohia was the witness of the assessee and the assessee if he so chose, could examine him at Kolkata itself. This is contrary to the letter as well as principles of natural justice. 25. Section 122 of the Transfer of Property Act defines the gift as under: Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called donor, to another, called the donee and accepted by or on behalf of donee. Therefore, necessary ingredients of the valid gift would be; (i) Absence of consideration (ii) The donor (iii) The donee (iv) Subject-matter (v) The transfer (vi) Acceptance. 26. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record and the evidences filed in the paper book. We find from the observation of the authorities below that out of the ten donors, the assessing officer has directed to produce three donors who were produced before the assessing officer and their statements have been recorded on oath in which they have confirmed their transactions with the assessee as well as gift given to the assessee. In all the cases, the evidence of gift like declaration/affidavit, gift-tax returns were filed. The assessing officer referred all these documents to the concerned assessing officer at Calcutta for verification, but the assessment order shows that the assessing officer has not received any reply, therefore, in such circumstances, the assessee cannot be said to be in default in' any of the circumstances. All the evidences of the gift have been produced before the assessing officer. The assessment record further shows that the assessing officer has given certain brief reasons, which are not connected with the gifts in question. The assessing officer observed that for a valid gift relationship is required, occasions are required and the identity and financial status of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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