TMI Blog1997 (12) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Ganeshdas H. Punjabi ₹ 5,000 4. Deomal T. Talreja ₹ 5,000 5. Purshottam Gulabani ₹ 10,000 6. Mrs. Kamle Purshottam Gulabani ₹ 10,000 7. Poonam B. Ahuja ₹ 5,000 8. Niren Laxmandas Chawla ₹ 10,000 9. Pahlaj L. Chawla ₹ 5,000 The earlier income-tax records of the assessee relating to the assessee showed that during the assessment years 1978-79 and 1979-80 also the assessee had received gifts of varying sums of ₹ 90,500 and ₹ 95,000 respectively. Thus, with the gifts said to have been received by it in the accounting year in question the total gifts received by the assessee-HUF up to 31-3-1981 amounted to ₹ 2,45,000. Out of the six donors, the assessee filed gift declarations from 5 donors. Some of the donors were near relatives of the assessee. The relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation that these gifts are arranged ones. He has simply acted on a pure conjecture and presumption. Presumption however strong cannot be a substitute for fact. Even the statement of Smt. P.C. Udani recorded under section 131 has not been put to the appellant for rebuttal. In fact, the ITO has gone against the due process of law by not giving a right of cross- examination to the appellant with regard to the statement of Smt. P.C. Udani. The other donors have admittedly not been examined owing to certain confusion arising out of improper issue of summons where the language of the terms of summons has not been made clear to indicate that the personal attendance of the witnesses was intended, although this has been mentioned on the back of the summons. Having regard therefore to the totality of the facts and circumstances of the case and for proper dispensation of justice, I am inclined to set-aside the assessment on this point with instructions to the ITO, to redo the same after examining these six parties who made the gifts of ₹ 5,000 each. In case, the ITO is able to collect material to establish beyond reasonable doubt that such gifts are arranged gifts, he is free to do so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 17-3-1988 and the assessee was asked to produce the other donors on 23-3-1988. The assessee was also requested to produce such evidence which would prove their financial credentials. However, the assessee is said to have failed to comply with the directions in the summons. By the date the consequential order giving effect to the AAC s order was passed, a second appeal was said to be pending before the ITAT with regard to the gifts. However, the order of the ITO giving effect to the AAC s order was passed in order to save limitation and under this order dated 30-3-1986, the revised total income of the assessee was determined at ₹ 62,920. That means, out of the total gifts of ₹ 60,000 claimed by the assessee, only ₹ 35,000 worth of gifts were accepted and the remaining sum of ₹ 25,000 representing gifts from 5 parties was rejected. While passing the order dated 30-3-1986, the ITO observed that a second appeal with regard to the gifts of ₹ 30,000 was pending with the ITAT. This appeal is said to be a departmental appeal in ITA No. 5345/Bom./85, whereby the department questioned the legality of the deletion of ₹ 30,000 from out of the total gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have heard Shri S.S. Phadkar, the ld. counsel for the assessee, and Shri V.G. Gore, the ld. Departmental Representative. The assessee filed a paper book of 25 pages on the date of hearing. Reference to the paper book will be made during the course of this order as and when it is required. 9. Out of the 5 gifts which stand for my consideration, let me examine the acceptability or otherwise of the gifts one after the other. The first of the donors is Mrs. P.C. Udani. She was examined under section 131 of the Act not only at the time of original assessment but she was also present in pursuance of the summons issued to her and filed her bank statement second time before the ITO as is mentioned in his order dated 30-3-1986. She stated mainly in her statement that she is a house wife and there is no regular source of income to her, that she was having A/c. No. 14214 with Bank of India, Sion Branch, Mumbai, that her husband Shri C.N. Udani, was working as Accountant in the said Bank and the account held by her was a joint account. To a question that on 25-3-1981 a cash deposit of ₹ 5,000 was made in her account and when she was called upon to explain the source of such income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order dated 30-3-1986. He cannot disregard the directions of the appellate order [See Lakshman Prakash v. CIT [1963] 48 ITR 705 (All.)(FB)]. See also CIT v. S.V. Divakar [1993] 201 ITR 914 (Ori.). 11. Next, let me take up the gift of Rajiv S. Tipnis. As far as he is concerned, copy of his gift declaration is provided at page-17 of the paper book and the account-payee cheque issued by him on 19-3-1981 in favour of Shri A.J. Manghirmalani is provided at page-16 of the paper compilation. The bank statement was, no doubt, not filed. But, no evidence whatsoever was gathered by the ITO to the effect that either he had no bank account or the account-payee cheque was not given by him and it was only an arranged gift. In the absence of any definite evidence in the possession of the ITO in that regard, according to the directions of the AAC, his gift must be accepted, especially in view of the fact that he had turned up in pursuance of the summons issued to him under section 131 and had stated in his statement that he had given a sum of ₹ 5,000 to the assessee. 12. Now, let me consider the gifts said to have been proceeded from the following 3 donors :- 1.Deomal T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The burden will then shift on to the department to show why the assessee s case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the department has to be in possession of sufficient and adequate material. In Sriram Jhabarmull (Kalimpong) Ltd. s case (supra), Their Lordships of the Calcutta High Court have the following to say about the burden of proof in cases of cash credit : The burden of proving that a cash credit entry appearing in the assessee s account books does not represent income of the assessee is on the assessee and, though the burden may shift to the department in some circumstances, it is not correct to say that the Income-tax Officer is not entitled to reject the explanation of the assessee without some other positive evidence falsifying the assessee s case. The true view is that, while the Income-tax Officer is not bound to accept as true any possible explanation which the assessee may put forth, he cannot also arbitrarily reject the assessee s explanation . [Emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent the assessee s income in the absence of any material to indicate that they belong to the assessee. The department never produced any evidence whatsoever to prove that the gifted amounts, in fact, represent the assessee s income relating to the accounting year in question. Therefore, the learned counsel for the assessee argued that even in the cases of the other donors who did not appear in pursuance of the summons issued under section 131, the amounts cannot be held to represent the assessee s undisclosed income. The learned Departmental Representative, in an attempt to counter the arguments advanced on behalf of the assessee, merely relied upon the orders of the lower authorities. 14. After hearing both sides and also after going through the ratios of the decisions cited above, which clearly support the case of the assessee, I hold that there is no evidence in the possession of the department to hold that the gifted amounts from these three parties represent the assessee s undisclosed income. Therefore, the total of the gifted amounts from these three parties cannot be added as the undisclosed income of the assessee. Thus, the whole addition is to be deleted. 15. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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