TMI Blog2008 (1) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... gating to ₹ 50 lakhs from the persons viz. (i) Shri Bishanchand, HUF, (ii) Shri K.M.L. Agarwal Sons, HUF and (iii) Shri Kishan Murarilal Agarwal, by cheques. The AO considered the said gifts as bogus and reopened the case of the assessee for making addition. Considering various submissions made by the assessee by issuing notice under s. 147 of the Act and made addition of ₹ 50 lakhs under s. 68 of the IT Act, 1961 (Act). 3. The assessee preferred appeal before the CIT(A). Besides challenging the addition on merits the assessee also challenged the reopening of assessment. The CIT(A) was of the view that neither the AO could establish that the gifts received were bogus nor the assessee was able to discharge his onus of proving that the gifts transactions were genuine and confirmed the order of the AO. He held the reopening as valid by observing that the AO has recorded very detailed reasons for reopening the assessment, namely; (a) During the search at the premises of Mr. Manoj Agarwal it was found that he had been in the business of providing accommodation entries; (b) The appellant had received gifts from three persons; (c) Enquiry conducted by the AO revealed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the donations are merely accommodation entries and not genuine gifts. She has made addition only on the basis of statement given by Shri Manoj Agarwal and on the basis of relations of donors with him. He also observed that the AO has used the evidences and statements of various persons without providing the copies of the same to the assessee; that the AO has heavily relied upon the findings of the case of Mr. Manoj Agarwal, and the fact that said person has admitted that he was engaged in the business of providing accommodation entries, however, there is nothing on record to show that the donors also indulged into the same business or that gifts given to the appellant were also part and parcel of the same business; that there is no corroborating evidence with the AO and whatever the evidences are relied on by her are partly circumstantial and partly not usable as proper opportunity was not provided to the assessee. As the donors are income-tax assessees and have confirmed the gifts, the AO should have made inquiries from the AO of the donors about their capacity of giving such gifts. He however, it is observed that the assessee was also not able to discharge onus on it as he wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. There is no evidence on record to show that gifts had any link whatsoever with Mr. Manoj Agarwal, and that the person who was found to be engaged in granting entries. There was nothing on record to show that the said Manoj Agarwal or any person had stated that bogus gifts or accommodation entries have been given to the assessee. Therefore it is not correct to state that the evidences and the information were available with the AO, which could be sufficient to come to the conclusion that the AO had reason to believe that the income has escaped assessment. Reliance is placed on the decisions of Sheth Brothers vs. Jt. CIT (2001) 169 CTR 519 (Guj); Indian Oil Corporation vs. ITO (1986) 58 CTR (SC) 83: (1986) 159 ITR 956(SC); Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191(SC); ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220: (1976) 103 ITR 437(SC); CIT vs. Ram Lal Manohar Lal (1985) 49 CTR (Del) 124: (1986) 158 ITR 9(Del) 11; and Usha Sales (P) Ltd. vs. State of Bihar (1985) Tax LR 2852 (Pat). If there be the material found in the search in the case of Mr. Manoj Agarwal, the provisions of s. 158BD were applicable and having not invoked the same there is an acceptance of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at the residence of Shri Manoj Agarwal and others at New Delhi. It is submitted that Shri Manoj Agarwal had been in the business of providing bogus accommodation book entries for consideration. Shri Vijay Kumar Bansal is assessed to tax with Dy. CIT, Circle-1, Bhavnagar. He has filed his return of income-tax for asst. yr. 2000-01 vide receipt No. 194 on 31st Aug., 2000 in which capital receipt of ₹ 50 lacs was shown without any particulars. On inquiry, it is explained that the said capital receipts are gifted from certain persons. Shri Vijay Kumar Bansal claimed gifts from respective bank accounts. It is also noticed that Shri Manoj Agarwal had opened numerous bank accounts in various names, Shri Vijay Kumar claimed following gifts from respective bank accounts. Sr. No. Name of Donor A/c held by donor Amount of gift Description of cheque 1. Shri Bishanchand (HUF) 01190005124, SBI, Daryaganj ₹ 10 lacs 00902838 dt. 26.11.99 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have actually given the gifts to the assessee contrary to what has been stated in affidavits. As the AO has only relied upon the search assessments of Mr Manoj Agarwal where nothing has been found to suggest that the gifts were bogus, the resort to s. 147 is not warranted and is contrary to the provisions of the Act. 11. Simply because Manoj Agarwal was searched and it was found that he was indulging in hawala entries of making bogus gifts by opening numerous bank accounts in fictitious names cannot be valid ground to hold or even suspect that gifts received by the assessee are bogus in absence of any linkage of such gifts with either Manoj Agarwal or the material found in search thereof in his case. He might have indulged in hawala gifts but how because of this fact the assessee's gifts could be Hawala. Neither assessee's name is found mentioned in any of the statements of Manoj Agarwal nor the allegation that the donors of gifts to the assessee have in association with him given only hawala entries and not the real gifts. Furthermore, there is no link established that the donors have any connection with Manoj Agarwal or they have made gifts through him. 12. In She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but from other persons who had admitted to have given gifts to the assessee. There is no statement or record of Mr. Manoj Agarwal that he has given any gifts to the assessee, which were mere entries. 14. The fact that the account numbers through which these gifts have been received are not in the name of the donors would not (make) much difference so long as the donors have confirmed the gifts. A donor may give gift by a cheque drawn from his account or the from account of the other person as it would be his private arrangement with him under a privity of contract between the donor and the person from whose account the cheques of gifts were issued. If the material was there in search of Manoj Agarwal depicting the invalidity of the gifts it would have been a case for proceedings under s. 158BD and because of the non obstante clause it could have not have been reopened under s. 147 of the Act and if on the contrary there is no such information for alleging the gifts to be invalid or hawala then the very basis of reopening under s. 147 comes down to surface. 15. In the case of Praful Chunilal Patel (supra), the Gujarat High Court dealt with a situation where there was no dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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