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Nilesh Jhaveri (HUF) Versus Income Tax Officer, Range - 21 (1) (3) , Mumbai

Addition of income being gift of India Millennium Deposit received as unexplained credit u/s 68 - Held that:- We are bound by the positive evidences which are available on record and form a complete chain of events. Here, we accept this gift as genuine because the identity and the creditworthiness of the donor have been established on record. The reason for making this gift is also stated and its genuinity stands proved. Entire evidences, which have been referred to above like the declaration of .....

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tant Member Appellant by : Shri Vijay Mehta, A.R. Respondent by : Shri Shivaji B. Ghode, D.R. ORDER Per Shailendra Kumar Yadav, J. M. This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-32, Mumbai, dated 04.07.2014 for A.Y. 2006-07 on following grounds: 1. The learned CIT (A) has erred in law and in facts in confirming the addition of income of ₹ 68,66,375/- being gift of India Millennium Deposit received as unexplained credit under section 68 o .....

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shown as gift received and the same were claimed as exempt under the provisions of Section 10(15)(iid)(c) of the Act. Assessing Officer during course of assessment proceedings asked the assessee to furnish necessary evidences to establish the genuineness of transactions, identity and creditworthiness of the donor. Assessing Officer also asked to give details of gift received and taxability of the same in view of the provisions of section 56 of the Act. 2.1 Assessing Officer stated that on the r .....

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the information received from the bank, the date of transfer of IMDs to Shri Sunil Kumar Gandhi were 15.09.2004 and 23.10.2004 and subsequently to the assessee was on 26.09.2005. Assessing Officer accordingly observed that the date of transfer shown by assessee was not in connection with the date of transfer as recorded in the State Bank of India. He observed that the certificates were not even transferred from the first holder to Shri Gandhi till 31.08.2004 and that under these facts the trans .....

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f the Act. Assessing Officer observed that the contention of assessee was that IMDs were received on 31.08.2004 were not acceptable as information from the bank has established that the date of transfer of IMDs were 26.09.2005. Assessing Officer further under the captions IMD's not being any sum of money', taxability of interest amounting to ₹ 23,65,467/- of IMD's, genuineness of gift, discussed the facts of the case and pointed out towards and observed that ₹ 68,66,378/- .....

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Assessing Officer without prejudice to the above, mentioned that even if for a belief sake the amount of IMD gifted was in any way believed to be outside purview of definition of "any sum of money", the whole amount of ₹ 68,66,378/- needed to be taxed as unexplained credit u/s.68 of the Act for the reason of the same being in the nature of Hawala transaction and brought into the books by assessee for which the antecedents cannot be proved to be love and affection by the donor. 2. .....

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and Gandhi and not on 26.09.2005 as alleged by the Assessing Officer. ii. It was submitted that these IMDs were repaid / matured on 29.12.2005 and the assessee received the total amount of ₹ 68,66,378/- on maturity of IMDs comprising of principal amount of ₹ 45,00,911/- and interest amount of ₹ 23,65,467/- and that the said amount was claimed as non taxable by the assessee. iii. It was further submitted that the IMD certificate is not "any sum of money" and therefore .....

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ily occasions. vi. It was contended that interest amount of ₹ 23,65,467/- is exempt u/s.10(15)(i) of the Act. vii. It was further submitted that the copies of IMDs certificate clearly reveal that the donor was previous holder of IMDs before passing them to the assessee by way of gift. viii. It was also submitted that the donor Shri Sunil Kumar K Gandhi was having annual income of US$ 15,00,000/- and therefore the gift of US$ 1,00,000/- to a close family friend was not unusual. ix. The cred .....

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ed Representative also relied on the decision of ITAT, Agra Bench (Third Member) in case of Avnish Kumar Singh vs. ITO [2010] 126 ITD 145 (Agra)(TM), wherein third Member observed that in the instant case, following facts were not in dispute: (a) the identity of the donor was not in doubt; (b) gift was given by a declaration deed; (c) donor had given an affidavit affirming the making of the gift; (d) there was a confirmation through post of gift per demand draft; (e) affirmation of the assessee .....

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t was received by assessee and the sources thereof are satisfactorily explainable and proved putting its genuineness beyond doubt. The adverse facts as pointed out by the Accountant Member: (i) that the assessee or his father never made any gift of any amount to anybody; (ii) that the gift was not on any occasion or function; (iii) that the donor visited his house one or two times though never beyond the drawing room; (iv) that the donor was a person of low financial status having monthly income .....

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party. The donor had appeared in person before the Assessing Officer and confirmed the making of the gift and the reasons which persuaded him to make the gift, he being the friend of the assessee s father who helped him in past. Sec. 68 provides for charging the sum credited in assessee s books of account as income of assessee if assessee offers no explanation about the nature and sources of sum so credited or if the explanation offered by assessee thereof was not satisfactory. On the facts and .....

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Member. 2.6 In this background, assessee claimed that they had received the gifts totaling to USD1,00,000/- equivalent to approximate ₹ 68,66,378/- from one person, namely, Shri Sunil kumar K Gandhi on 31.08.2004 and the said IMDs were encashed by assessee on 29.12.2005 including interest totaling to ₹ 68,66,378/-. In regard to issue of taxability of gifts the assessee's main stand has been that section 56(2)(v) of the Act mentions the word "any sum of money" and accord .....

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y sum as envisaged in Section 56(2)(v) of the Act. 2.7 Further, ld. Authorized Representative relied on the relevant portion of ITAT in Avinash Kumar Singh (supra) held as under: 7. When there are two possible views one in favour of the assessee and the other in favour of the Revenue, which view should be accepted is a million dollar question before us. The view in favour of the assessee is fortified with numerous evidences which forms a complete chain of events, as has been discussed above. The .....

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he source of gift has also been explained with the help of possible and feasible evidences which are available on the record. Against that are pitted the inferences of learned AO that this is not proved that is not proved and other whys and wherefores. In these circumstances, it would be too harsh and too illogical to decide against the assessee who has produced entire evidences desired, required and insisted on by learned AO and that would result in an illegality and injustice. We have to go by .....

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