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TMI Blog2010 (8) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,000 9. Ms. Forum Vora 18,000 Total 2,74,000 4. The Assessing Officer during the course of assessment proceedings asked the assessee to give details to justify the claim of gifts received from various persons. It was explained by the assessee that he has received loans from the above parties in the preceding years which were reflected in the Balance Sheet. The assessee furnished the photocopies of the bank statement, income-tax acknowledgement, Balance Sheet. capital account as well as computation of total income in respect of the above persons to support the loans taken from the parties in the previous year. It was explained that on 2nd April, 2003 some of the parties have expressed their willingness to gift these amounts and gifted a sum of ₹ 2,74,000 to the assessee. 5. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that gift deeds filed by the assessee suffer from serious manipulations. The gifts were received during the accounting period 1.4.2003 to 31.3.2004 whereas all the gift deeds were prepared in the month of August 2006 i.e., after purchase of franking stamp paper and when the assessee failed to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that in conformity with section 123 of Transfer of Property Act, 1882 the gift of immovable property can be effected by delivery of possession. In other words, oral gifts of immovable properties are permissible in law. Therefore, notwithstanding that the written gift deed recording the oral gift of money to the assessee in the accounting year 2003-04 was executed only on 12th August, 2006, such oral gift of money is legal, valid and binding inasmuch as in the books of account of the assessee all the gift entries have been recorded during the previous year ended 31st March, 2004. However, the Assessing Officer has failed to consider all these facts. Relying on a number of decisions it was submitted that the addition made by the Assessing Officer u/s. 68 was not justified. 9. Based on the arguments advanced by the assessee, the learned CIT(A) deleted the gift from 7 parties (as per Sl. Nos. 1 to 7 at para 3 of this order) amounting to ₹ 2,38,000. However, he confirmed addition of the gift of ₹ 18,000 received from Mr. Vijay Bhayani and ₹ 18,000 from Ms. Forum Vora. While doing so he noted that as far as the first 7 names are concerned the observations and find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,000 and deleted an amount of ₹ 2,38,000. He submitted that although the amount is very small but the way it was done is not correct. Referring to pages 91 and 92 of the Paper Book which is the gift of ₹ 1 lakhs given by Manohar Ganpat Soparkar (HUF), he submitted that the gift is not dated nor was it accepted by the donee. It was not even a certified copy and it has been signed by one Nutan Soparkar who is the constituent attorney for the donor. Referring to page 98 of the Paper Book, he Shri Ramesh N. Vora drew the attention of the Bench to the copy of the acknowledgement of return of Manohar Ganpat Soparkar (HUF) where the HUS has declared the income of only ₹ 9000. He submitted that this is the only return of the HUF and a copy of which was filed and there is absolutely no creditworthiness of the HUF who gave such a huge loan as a gift. Referring to the declaration of gift of ₹ 15,000 by Sonal K. Piparia, a copy of which is placed at Paper Book page 111 and the gift of ₹ 15000 from Akta P. Piparia, a copy of which is placed at page 121 of the Paper Book, he submitted that the facts in these two cases are also identical to that of Manohar Ganpat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Rajasthan High Court in the case of CIT vs. Padam Singh Chouhan reported in 315 ITR 433 he submitted that for accepting a gift blood relation is not required for the donor for giving a gift and natural love and affection is sufficient. He submitted that in the instant case the loan was already lying with the assessee. Book adjustment was already made and it is constructed delivery. Referring to page 71 of the Paper Book he submitted that the gift of ₹ 2,74,000 is already added to the capital account of the assessee. Referring to the copy of the bank account of Manohar Ganpat Soparkar (HUF), a copy of which is placed at Paper Book pages 96 and 97, he submitted that the loan of ₹ 1 lakh given during January, 2000 was out of clearing of two cheques of ₹ 50,000 each on 3rd January, 2000 and the assessee need not give source of the source. Referring to the various pages of the Paper Book he drew the attention of the Bench to various documents produced before the Assessing Officer and the CIT(A) to substantiate the genuineness of the transactions and the capacity of the persons who extended such loans. 13. The learned counsel further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o income-tax as the income of the assessee of that previous year." 16. From the above it is clear that addition can be made u/s. 68 of the Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer. In the instant case an amount of ₹ 2,38,000 was already credited in the books of account by way of loan in the preceding assessment year. Therefore, addition if any could have been made only during the assessment year in which the assessee has accepted the loan. Since during the year the assessee has merely converted the loans into gifts through book entries, we, therefore, do not find any infirmity in the order of the CIT(A) holding that the said gifts were already credited in the books of the assessee in the earlier assessment year in the form of loans and as such could not be treated as unexplained during the year under consideration. In this view of the matter and in view of the detailed order passed by the CIT(A) on this issue, we do not find any infirmity in his ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of various entries Shri Ramesh N. Vora credited in her account, the Assessing Officer held that Ms. Miloni Ramesh Vora has no capacity to give loan to the assessee. 21. The Assessing Officer similarly noted that the loan from Mrs. Kanan Ramesh Vora (wife) shows opening balance of ₹ 14,65,800. During the year the assessee used her loan account as running account for payments made on her behalf for Pune flat and she made the payments on his behalf for Khar flat and other payments on her behalf. Cheques received on sale of shares in her account were transferred to the loan account. The closing balance shown in the books was ₹ 2,78,113. Looking to the multiple debit and credit entries appearing in the bank statement, the Assessing Officer came to the conclusion that the assessee has purchased the shares and transferred the money into her account and in turn the amounts were used for various payments and shown the loans outstanding at ₹ 2,78,113. From the acknowledgement of the return of income of Mrs. Kanan Ramesh Vora the Assessing Officer noted that she had income from business or profession at ₹ 48,400, capital gain of ₹ 30,372 and income from othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmations of the persons concerned and has also demonstrated that all of them were assessed to income tax having their own sources of income. The transactions have also been made through banking channels. On the other hand, the observations and findings of the Assessing Officer are quite superficial. Nothing has been brought on record to show that the appellant introduced his own unaccounted income under the garb of cash credits. The Assessing Officer has not been able to refute the evidences filed. He has not even Shri Ramesh N. Vora bothered to examine any of the creditors in this regard before drawing adverse inference. There is no restriction as such to accept loan from family members. It is, therefore, held that in the absence of any contrary finding by the Assessing Officer, the appellant has been able to prove the identity as well as the creditworthiness of the creditors and also the genuineness of the transaction and thus fulfilled all the three ingredients u/s. 68 of the Act. There is not sufficient basis for treating the loans as unexplained. The addition made is, therefore, deleted." Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loan which has been accepted by the Department which is evident from the ledger account of Ms. Himanshi Ramesh Vora in the books of Ramesh Vora & Co. which are as per Paper Book pages 264 and 265. As regards the loan obtained from Ms. Miloni Ramesh Vora he referred to page 22 of the Paper Book and submitted that Ms. Miloni Ramesh Vora had given the loan during the year out of various deposits in her bank account. The learned counsel for the assessee relied on the submissions made before the CIT(A). In his alternate contention, he submitted that only the loans obtained during the year at best could have been added and the entire loan outstanding at the close of the year could not have been added. 27. The learned DR, in his rejoinder, submitted that nothing has been said about the source of the daughters i.e., Ms. Himanshi Ramesh Vora and Ms. Miloni Ramesh Vora and the assessee is not clear about the source of the deposits. As regards the submission of the learned counsel for the assessee that the Assessing Officer has not issued summons, he submitted that in case of school going minor Shri Ramesh N. Vora girls how the Assessing Officer can issue summons. As regards the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) on this issue and sustain the addition in the case of Ms. Himanshi Ramesh Vora at ₹ 2,00,500 and ₹ 1,32,500 in the case of Ms. Miloni Ramesh Vora. 29. As regards the loan from Ms. Kanan Ramesh Vora we find as against the opening balance of ₹ 14,65,800 the closing balance has been declared at ₹ 2,78,113. It is the submission of the learned counsel for the assessee that since no fresh loan has been taken during the year and the closing balance is less than the opening balance no addition can be made u/s. 68 of the Act. However, the learned counsel for the assessee could not explain the amount of ₹ 2,91,000 give by Ms. Kanan Ramesh Vora to the assessee on 1st April, 2003 especially when the loan creditor has apparently exhausted her entire capital by giving the loan to the assessee which was shown at ₹ 14,65,800 on 1st April, 2003 u/s. 68 of the Act. The assessee is required to explain any sum found credited in her book maintained for any previous year. Since the learned counsel for the assessee was unable to explain the source of ₹ 2,91,000 as on 1st April, 2003, therefore, we in the interest of justice, deem it proper to restore the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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