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TMI Blog2016 (5) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative (AR) reiterated the submission that are part of the petition and the affidavit. The Department Representative (DR) left the issue to the discretion of the Bench. We find that there is a delay of 150 days in filing cross objections. The assessee is a lady and is advised by her husband in the tax matters, she had claimed that after getting proper legal advice she decided to file the cross objections. Considering the totality of facts and circumstances we are condoning the delay and we are of the opinion that there was reasonable cause for not filing the cross objections in time . Brief facts : 3. During the course of assessment proceedings, the AO found that the assessee had filed her return of income on 27. 10. 2004 declaring income of Rs. 28. 71 lacs, that she had received a gift of Rs. 30 lakhs from one Mrs. Chandra Hingorani, that the donor was not in any way connected to the assessee or her family. He directed her to prove conclusively the genuineness of the gift occasion and purpose of the gift. After considering the submission of the assessee the AO added Rs. 30 lakhs to the total income of the assessee under the head unproved gift. An addition of Rs. 1. 00 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings were distinct from the assessment proceedings, that the AO had not made any further inquiry of the impugned gift during penalty proceedings to be bogus especially when the donor had not denied the impugned gift, that the AO could have suo-motu examined the donor, that the AO and the FAA had simply rejected the claim of the assessee, that the assessee's case was covered by the ratio of Hon'ble Apex Court delivered in the case of Reliance Petro Products Private Limited. He further held that the AO had made no independent enquiries from the donor, that it was not proved conclusively that the gift had been purchased by the assessee from the donor and that the AO was not justified in levying the penalty u/s. 271(1)(c)of the Act. 6. During the course of hearing before us the DR stated that the Tribunal had confirmed the additions made during quantum appeal, that assessee had not proved the genuineness of the gift, that the Explanation to section 271 (1)(c ) was applicable. The AR supported the order of the FAA and relied upon the case of Miter Sain (HUF) (26 Taxmann. com 67). 7. We have heard the rival submission and perused the material before us. Before proceeding further w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer has to make enquiries with regard to the nature and source of a sum credited in the books of account of an assessee and it would be immaterial as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of gift. The use of the words 'any sum found credited in the books' in section 68 indicates that the said section is very widely worded and an Income-tax Officer is not precluded from making an enquiry as to the true nature and source thereof even if the same is credited as gift. What is clear, however, is that section 68 clearly permits an Income-tax Officer to make enquiries with regard to the nature and source of any or all the sums credited in the books of account of the company irrespective of thenomenclature or the source indicated by the assessee. In other words, the truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of account can be gone into by the Income tax Officer. There is no quarrel with the proposition that mere identification of the donor and showing the movement of the gift amount through banking channels is not suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue: "(a) Whether, in the facts and circumstances, the Income-tax Appellate Tribunal was correct in law to accept the principle of preponderance of probabilities in holding that the claim of the appellant that the sum of Rs. 15, 62, 500/- received him by way of gifts through normal banking channels was not genuine and that it was liable to be assessed under section 68 of the Income-tax Act, 1961 ? (b) Whether, in the light of the law established and based on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is legally justified in concluding that burden of proof cast on appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present? (c) Whether in the facts and circumstances of the case, the conclusion of the Tribunal that the claim of gift is not genuine is reasonable and based on relevant material and not perverse ?" The dispute in all these appeals relates to the addition made by the Assessing Officer in respect of several foreign gifts stated to have been received by the assessees from one common donor namely Sampath Kumar. The gifts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence as regards his financial status. He stated from 1972-73 he knew Srinivasan, Rajendran and their families. His father was a taxi driver, and was very poor. Srinivasan and his family members were supporting him when he was in India. To a pointed query as to whether there is any evidence to show that he was also known by any other name other than Sampathkumar, he stated that "no evidence. Only Mr. Srinivasan used to call me as Suprotoman. " The Assessing Officer in the circumstances came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the assessees as the income of the assessees. On appeal the Commissioner of Income-tax concluded that the story set up by the assessees is unacceptable and hard to believe and the preponderance of probabilities, the common course of human livings point to the contrary". The appeals were accordingly dismissed. The ITAT concurred with the findings and conclusions arrived at by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any conjectures and surmises. They are not imaginary as sought to be contended. Relying on the decisions of this court in Bejoy Gopal Mukherji v. Pratul Chandra Ghose, AIR 1953 SC 153 and Orient Distributors v. Bank of India Ltd. AIR I 979 SC 867. Shri lyer, learned senior counsel contended that the issue relating to the propriety of the legal conclusion that could be drawn on the basis of proved facts gives rise to a question of law and. therefore, the High Court is justified in interfering in the matter since he authorities below failed to draw a proper and logical inference from the proved facts. We are unable to persuade ourselves to accept the submission. The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the process of ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is dismissed. " 7. 1. We find that the FAA has held that penalty proceedings were distinct from the assessment proceedings, that the then AO had not made any further inquiry of the impugned gift during penalty proceedings, that the AO could have suo motu examined the donor, that the AO and the then FAA had simply rejected the claim of the assessee, that the assessee's case was covered by the ratio of Hon'ble Apex court delivered in the case of Reliance Petro Products Private Limited. He further held that, that it was not proved conclusively that the gift had been purchased by the assessee from the donor and that the AO was not justified in living the penalty u/s. 271(1)(c)of the Act. We would like to deal with all the issues raised by the FAA. 7. 2. As per the settled principles of taxation jurisprudence a gift is a voluntary act, by a person who out of love and affection transfers money or a movable or immovable asset to another person. The element of personal and close relationship between the two is the motivating factor as the donor parts with and transfers what belongs to him to someone, whom he or she loves and cares. This mandates and requires a close associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t through banking channels, unless the identity of the donor, his creditworthiness, relationship with the donee and the occasion are proved. Unless the recipient has proved the genuineness thereof, the gift can very well be treated to be an accommodation entry of the assessee's own money, which is not disclosed for the purpose of taxation. The gift was found to have been made without any occasion or out of love and affection and was rightly considered by the AO as not genuine. 7. 4. The assessee had not, during the penalty proceedings, filed any explanation about the genuineness of the gift. The FAA surprisingly states that the AO had not made any new material or did not make inquiries. In our opinion, he was shifting the burden of proof from the assessee to the AO. We agree that assessment and penalty proceedings are different proceedings, but it does not mean that the assessee is absolved of filing an explanation rather a plausible explanation about the claims made by him in the return that have been questioned by the AO. Explanation 1 to Sec. 271(1)(c) of the Act, raises a presumption of concealment, when a difference is noticed by the AO, between the reported and assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion justifies invoking of the provisions of section 271(1)(c)of the Act. 7. 5. Lastly, we would like to refer to the case of Zoom Communication, delivered by the Hon'ble Delhi High Court(327ITR510)wherein the Court has held as under: "20. The court cannot overlook the fact that only a small percentage of the Income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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