TMI Blog2012 (5) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... VDIS, 1997, then the onus was on him to establish such a nexus. Not only has he not been able to do so, he has not made any further investigations in that direction. Further, the A.O. passed on the information regarding presumed bogus sale of jewellery to the A.O. of Smt. Mohinder Wati, who reopened her case u/s. 147 of the Act and passed an order with the following remarks : From details filed by the AR it is seen that the assessee has gifted this amount to her son out of amount received from sale of jewellery. After going through the details filed by the AR and on considering the submission made by the assessee is accepted and discussed the case. 3. The grounds of appeal taken by the revenue read as under :- On the facts and circumstances of the case and in law CIT (A) erred in :- i) in deleting of ₹ 10,80,000/- made on account of unexplained cash credit. ii) In accepting the sweeping submission of the assessee which do not stand supported by evidence. iii) In not allowing the opportunity to A.O. to examine the findings which were relied upon by the Ld. CIT (A). iv) Immunity in VDIS cases is available only to the declarant and no third party can der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no such building in lane no.2. The address is nonexistent. 4. 21/12/2005 Randhir Jewels,718 Gurdwara Road, Beadonpur, Karol Bagh New Delhi-05 Old Gold Ornaments One Gold Set (4pcs) 175 gms @ 8400/- 147000 12(ITI report), 9- reply on 1(letter to asso. its reply), 30 and reverse of 30(marks by postal authority as incomplete address) There is no lane number mentioned. The address is nonexistent. 5. 24/12/2005 Dhananjay Jewellry, 1068 Gali Hamdard 2nd Floor, Malliwara, Delhi-06 Old Gold Ornaments 6 pcs bangle 96 gms @ 8390 80544 14(ITI report), 7- reply on 5(letter to Malliwara asso. its reply), 33 and reverse of 31(marks by postal authority as no such firm in this address) Gali Hamdard is not in Malliwara. It is near Ajmeri Gate. The address is nonexistent. 6. 29/12/2005 Randhir Jewels,718 Gurdwara Road, Beadonpur, Karol Bagh New Delhi-05 Old Gold Ornaments One pair gold Kara 2 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order216ITR526(Del) in case of CIT Vs Sita Ram Vijay Kumar ; (286ITR548(PH) in case of Sethi Coton traders);255ITR573(Ker)ITO VsDiz Holdings: b.1) 2011-TIOL-812-HC-P H-IT(CIT Vs Jagtar Singh) : The facts, in brief, necessary for adjudication and as narrated in the appeal, are that the assessee had deposited ₹ 22,80,000/- on 23.6.1999, in his account with the State Bank of India, and ₹ 19,00,000/- on 22.7.1999 and ₹ 17,00,00/- on 2.8.1999 with the Punjab and Sind Bank at Rupnagar. The assessing officer asked him to explain the source of these deposits. The assessee claimed that the said amounts were received by him on account of sale of land and deposited in his accounts. The failure on the part of the assessee to explain the deposits amounting to ₹ 36,80,000/- satisfactorily led to considering his income from undisclosed sources and accordingly assessment was completed on the said amount as well, by the assessing officer vide order dated 26.3.2001. The assessee filed appeal. The Commissioner of Income Tax (Appeals) {in short CIT(A) } accepted the appeal by order dated 27.3.2002 and deleted the addition made by the assessing officer. The Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , viz. the receipt of money and, if he fails to rebut the said evidence, it can be used against him by holding that it was the receipt of income nature. The assessing officer, after noticing that the initial onus which stood on the assessee was not discharged, made addition of ₹ 36,80,000/- under Section 68 of the Act. It was noticed by the assessing officer that two receipts of ₹ 17,00,000/- each, on 21.7.1999 and 2.8.1999, had been the result of an after-thought inasmuch as the assessee could not offer any explanation to justify the said amounts, more particularly, when it was not the part of the sale consideration in the registered sale deeds. Reference was also made to the statement of Sh. Navraj, the vendee where he was asked to explain the facts relating to an amount of ₹ 17,00,000/- handed over to the assessee on 21.7.1999, but he failed to give any satisfactory reply and details in that regard. Similarly, as regards receipt of ₹ 17,00,000/- on 2.8.1999, he had stated that he did not recognise his signature on the receipt in question as the same differed and he would confirm only after seeing the receipt taken from Shri Jagtar Singh, the assessee. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot genuine and such gifts explain assets held by the assessee, the amount has to be treated as undisclosed income of the assessee and liable to be added as income. Thus the decision of the Tribunal relied upon by Shri Sapra is distinguishable on facts. In the said case it Was found that the assessee is not maintaining any books of account and hence no addition can be made under section 68 of the Act. However, in the present case, it is found that since the assessee has furnished his statement of affairs, which can be prepared only on the basis of books of account, the addition can be made under section 68 as well as under section 69 of the Act. b.3)Facts of present case :in Instant case the assessee Jatinder Manchanda has submitted its capital account thus falling u/sec68 as the said amount of ₹ 10. Lacs has been shown in his capital account for Fy 05-06 as gift received from Mrs Mohinderwati b.3.1) Without prejudice to same , if the amount is not assessable undersec68 , the Hon`ble ITAT is duty bound to tax it under the correct head as laid down in 131ITR (SC)451 Kapurchand Shrimals case. The assessee has submitted capital account as on 31/3/06 .(pbk pg18-new pbk ) he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gave the details to assessee Smt Mohinderwati`s counsel Sh Puri as regards sale of jewels through dalal, and later changing that to Smt Anand and earlier prior to this of sale through five jewellers as the submissions are tendered during 148 proceedings of mother Smt Mohinderwati(c) Can a senile dementia patient remember such minute details/ turns of events regarding sale of jewels etc (d) What is the legal sanctity of such submissions , summarily tendered without any backing in law of a medically invalid assessee Can such order obtained through fraud (on account of misrepresentation of vital fact of the assessee Smt Mohinderwati being medically invalid and further suppression of other facts of bogus gifts ) said to attain finality of litigation under law and who authorized the counsel to appear on behalf of Smt Mohindewati(e) Is it probable for 88-90 yrs old lady to bother about temporal matters in such medical conditions , by any humane logical probability?(f) Why did the counsel of assessee Sh J.Manchanda or that of Smt Mohinderwati not produce the fact of his mother being under senile dementia sufferings -failure to understand , speak or walk- as per doctors certificate on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither intended nor had the effect of converting the income belonging to the persons behind the screen into the income of the declarant. The disclosure made by the two ladies and the tax paid thereon was thus of no relevance in establishing either that the money belonged to them or that it did not belong to their respective husbands, who had brought it into the accounts of the assessee-firm. The circumstance was, therefore, not relevant for discharging the burden which lay on the assessee under section 68 of the Income-tax Act, 1961, of explaining the cash credits. As the affidavits had been discarded and the circumstances of disclosure under the Finance (No. 2) Act, 1965, and the payment of tax on the amounts disclosed was not relevant to prove the ownership of money, we are of the opinion that the Tribunal was right in holding that the assessee had failed to discharge the onus which lay on him to explain the source of the deposits e(b)151ITR751(Del) in case of CIT Vs Vishwanath o. 247ITR819(SC) in case of CIT Vs United Trading Co: It is now brought to our notice that this very question has since been decided by this court in ITO v. Rattan Lal [1984] 145 ITR 183. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IOL-195-ITAT-MUM (M/s LILARAM P MULCHANDANI Vs INCOME TAX OFFICER ) 23. It was next argued by the learned counsel that the assessee had declared the diamonds in question under the VDIS and hence his explanation that he had sold them to Shri Trivedi should be accepted. We are not impressed by the aforesaid argument. The declaration of diamonds by the assessee under the VDIS or the nature and source of the acquisition of the said diamonds is not in issue in the case before us. What is in issue before us is whether the diamonds claimed to have been sold were actually sold and, if so, what is the evidence to establish the genuineness of the sale transaction. Therefore nothing turns on the fact that the diamonds in question were declared under the VDIS. Mere declaration of diamonds under VDIS does not necessarily mean possession of diamonds or sale of diamonds also. The limited implication of declarations under the VDIS was that the Departmental authorities were precluded from examining the nature and source of the acquisitions declared under the VDIS. Declaration of diamonds under the Voluntary Disclosure of Income Scheme and de facto possession of diamonds and their sale are altoget ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Mehra was authorized by M/s. First Global Finance Pvt. Ltd. to advance the amount to the assessee and finally, it appears that two of the three demand drafts were not even issued by M/s. First Global Finance Pvt. Ltd. or by Ms. Devina Mehra but by a third party, namely, M/s. Growell Capital Services Pvt. Ltd. In view of the shifting stands and the varying explanations given for the source of ₹ 80 lakhs in the account of the assessee, the authorities under the Act took the view (and were fully justified in doing so) in not accepting the nature of the transaction or the source of the funds or for that matter the genuineness of the transaction itself. The Tribunal has also noted that the assessee's case was that the amount was received from M/s. First Global Finance Pvt. Ltd. but that the accountant of the assessee had wrongly shown that the amount was received from Ms. Devina Mehra. The Tribunal noted that even this explanation is contradictory and unsubstantiated because subsequent repayment of the amount was not made to M/s. First Global Finance Pvt. Ltd. but to Ms. Devina Mehra who had herself stated that the amount was given to the assessee by M/s. First Global Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase where the deposits remained unexplained under section 68 of the Act. g.2)276ITR38(All) : The contention is wholly misconceived. For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. g.3)255ITR401(Del) in Dalmia case : It cannot be an abstract proposition in law that the intangible additions of the previous year are to be taken note of while considering the cash credit. On the facts of each case a specific plea and proof that there was any link between the intangible additions in the previous year and the cash credit has to be established, if that be a fact while tendering the explanation regarding the cash credit it must plainly be stated as a fact that the cash credit concerned did come out of the earlier intangible additions. Unless this is done, there is no requirement to make an enquiry regarding the reasonableness of the explanation. It is not open to the assessee to offer two different explanations by way of alternative pleas. A similar view was expressed by this court in CIT v. Kulwant Kaur [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter it is for the AO to enforce attendance of the depositors/creditors and if they fail to appeal then adverse inference against the assessee cannot be drawn. But where such prima facie case is not made out by the assessee in its favour then onus cannot be put on the department for enforcing the attendance of the depositors. Therefore, where assessee has not discharged the primary onus lying on him it cannot be accepted that money could have come from the depositors. To us confirmations are apparently self-serving documents without they are being any proof of their truthfulness. They can safely be rejected as not being the credible evidences. 8. In view of the above, neither the deposits are proved by the assessee nor the claim of peak is established by him. In fact assessee has also failed to show real destination of the money through bank draft so purchased by him out of the cash deposited in the bank account thereby suppressing material facts in understanding the nature of cash inflow and its destination. Entire transaction of deposits in the bank account remained under crowd of secrecy and, therefore, the explanation furnished by the assessee remained unsatisfactory. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case proper opportunity had not been granted to the assessee to prove the gift. So, from the aforesaid judgments, the position which emerges is as under: (i) Mere identification of donor and showing the movement of gift amount through banking channels is not sufficient. to prove the genuineness of the gift. (ii) Since the claim of the gift is made by the assessee, the onus lies on him not only to establish the identity of the person making the gift but also his capacity to make such a gift. Here in the present case, there is nothing on record to show as to what was the financial capacity of the donors; what was the credit-worthiness of the donors; what kind of relationship the donors had with the assessee; what are the sources of funds gifted to the assessee and whether they had the capacity of giving large amount of gift to the assessee. Further, the assessee was asked to appear in person before the Assessing Officer, however, he never appeared. Since, the assessee did not prove the genuineness of the transaction nor he established the identity of the donor, nor the capacity of donor to make gift, as such the Income-tax Appellate Tribunal was wrong in deleting the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, viz., that he received the money from his wife and minor son, is far from satisfactory . Learned counsel for the assessee has relied upon the following decisions:(1) CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC); (2) CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC); (3) Deputy CIT v. Rohini Builders [2002] 256 ITR 360 (Guj);(4) Nemi Chand Kothari v. CIT [2003] 264 ITR 254 (Gauhati); (5) CIT v. Jauharimal Goel [2008] 296 ITR 263 (All); [2005] 147 Taxman 448. Each of these cases turned on their own facts. As already stated, what explanation would be satisfactory would depend upon the facts and circumstances of each case. It is well-settled that under section 68 the assessee has to prove three conditions, viz., (1) the identity of the creditor, (2) the capacity of such creditor to advance the amount, and (3) the genuineness of the transaction. The second condition, referring to the capacity of the creditor, cannot be said to have been established on the facts and circumstances of the present case, in the absence of the details referred to above, viz., the source from which the non-earning wife and minor son got the money to invest with the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authorities in bringing to tax the sum of ₹ 11,82,000. j) Examination of Source of gift : The examination by assessing officer of jewellers is merely the examination of source of gifts and not of source of source . The source of gift is er Smt Mohinderwati has gifted the sale proceeds of jewels .The source of source of the matter is the examination of the person to whom the jewellers has actually disposed off the jewels of Smt Mohinderwati. In instant case, the assessing officer has merely corroborated the matter with existence of so called jewellers and no further . It s the assessee who has been turning around trying to prolong the link by bringing new purchasers of jewellery. Reliance on 242ITR 719(Mad) in case of Commissioner of Incometax v. K. Palaniappan for proposition that earlier VDIS declaration does not explains the existence of jewellery in FY involved or explains the source of credit entries as gift to assessee J.Manchanda : ., but for the inducement offered by the Govern- ment and, therefore, it is impermissible to rely upon the statement made in the voluntary disclosure scheme. Even assuming that the statement made therein is regarded as a piece o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted, it will open the doors to tax eva- sion and the purpose behind the enactment of section 68 will be easily defeated as it will be open to any one to point out that the credit entry came from some undisclosed and unassessed income of a prior year. When Parliament has placed the onus on the assessee to explain satisfactorily the nature and source of the credit entry, it is for the assessee to prove the source of the credit entry and the courts have held that if the additions were made in the earlier years, that would constitute the source for the subsequent credit entry, and then it is for the Department to prove that the earlier additions were spent away during intervening period. It is not clear from the order of the Appellate Tribunal how the Tribunal came to the conclusion on a perusal of the earlier assessment records that the assessee might have earned the sum which was not disclosed in the earlier assessment proceedings. In our view, the conclusion of the Appellate Tribunal is arrived at only on the basis of its own surmises and conjectures and there is a complete dearth of materials for its conclusion and, in our opinion, it has by cosmeticising it, given an illusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be said that the behaviour of the donor was that of a normal human being. We are also of the view that the burden in respect of a gift is somewhat heavier than the burden in case of a loan as the former is a gratis payment and involves consideration of human conduct. k.1) Credits not proved Earlier order of AO in mother Smt Mohanawatai not valid in law as the assessee`s mother Smt Mohanawatai was under senile dementia-failure to understand , speak or walk- doctors certificate on record produced dated 15/10/2008 during course of assessment proceeding of assessee son Sh Manchanda , thus in case of mother Mohinawati`s assessment case , the shifting stand / theory propounded that jewels were sold to Ms Anand etc after the fact that Revenue had already discovered the on existence of the alleged parties to whom jewels were sold as set out in the assessment order of Sh J.Manchanda is a mere subterfuge to hoodwink Revenue with yet another theory. This even otherwise does not inspire confidence as Smt. Mohindrawati , when her case was reopened under sec147 and proceedings commenced in right earnest was was under senile dementia-failure to understand , speak or walk and hence too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the courtprocess a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation. 6. The facts of the present case leave no manner of doubt that Jagannath obtained the preliminary decree by playing fraud on the court. A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny court even in collateral proceedings In Indian Bank Vs. Satyam fibres (India) Pvt. Ltd. {1996 (5) SCC 550} another two Judges bench, after making reference to a number of earlier decisions rendered by different High Courts in India, stated the legal position thus: Since fraud affects the solemnity, regularity and orderliness of the proceedings of the Court and also amounts to an abuse of the process of Court, the Courts have been held to have inherent power to set aside an order obtained by fraud practised upon that Court. Similarly, where the Court is misled by a party or the Court itself commits a mistake which prejudices a party, the Court has the inherent power to recall its order Therefore, we have no doubt that the remedy to move for recalling the order on the basis of the newly discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. No court or tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim. k.2(iv) New India Assurance Co., Shimla vs Kamla And Ors on 27 March, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity. On facts it was contended that the finding that the order was procured by the appellant by playing a fraud on the Tribunal was not justified and no occasion arose for the High Court to exercise its jurisdiction under Article 215 of the Constitution of India, assuming it had such a jurisdiction to interfere with the earlier orders. On behalf of the State it is contended by learned senior counsel that fraud vitiates everything, that if an order is vitiated by fraud, it does not attain finality and it can be set at naught by a proper proceeding and on the facts and in the circumstances of the case, the High Court was fully justified in setting aside the order of the Forest Tribunal. It is submitted that the High Court has only followed the ratio of the decisions of this Court and there is nothing illegal in the decision rendered by the High Court. On facts, fraud was writ large and this was a case where the High Court ought to have interfered and the interference made was fully justified. Counsel further submitted that since the appellant had come with unclean hands and had obtained a relief by playing a fraud on the court, this was a fit case where this Court should decline to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief causes for interference by a court of equity with the operation of a judgment. The power of courts of equity in granting such relief is inherent, and frequent applications for equitable relief against judgments on this ground were made in equity before the practice of awarding new trials was introduced into the courts of common law. Where fraud is involved, it has been held, in some cases, that a remedy at law by appeal, error, or certiorari does not preclude relief in equity from the judgment. Nor, it has been said, is there any reason why a judgment obtained by fraud cannot be the subject of a direct attack by an action in equity even though the judgment has been satisfied. 13. The law in India is not different. Section 44 of the Evidence Act enables a party otherwise bound by a previous adjudication to show that it was not final or binding because it is vitiated by fraud. The provision therefore gives jurisdiction and authority to a Court to consider and decide the question whether a prior adjudication is vitiated by fraud. In Paranjpe Vs. Kanade [ILR 6 BOMBAY 148], it was held that it is always competent to any Court to vacate any judgment or order, if it be proved t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no basis either in fact or on law. It is therefore clear that the order of the Forest Tribunal was procured by the appellant by playing a fraud and the said order is vitiated by fraud. The fact that the High Court on the earlier occasion declined to interfere either on the ground of delay in approaching it or on the ground that a Second Review was not maintainable, cannot deter a Court moved in that behalf from declaring the earlier order as vitiated by fraud . 20 Thus, we find no merit in the argument that the High Court had exceeded its jurisdiction in setting aside the order of the Forest Tribunal at this distance of time. k.2(vi) Ram Chandra Singh vs Savitri Devi And Ors. on 9 October, 2003: Equivalent citations: 2004 (2) ALT 15 SC, I (2004) BC 187 SC: 18. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. 19. In Derry v. Peek, (1889) 14 AC 337, if was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really aimed at in most cases by this obscure contrast between moral fraud and fraud upon the law, is a contrast between fraud in the individual's intention to commit the wrong and fraud as seen in the obvious tendency of the act in question. 23. Recently this Court by an order dated 3^rd September, 2003 in Ram Preeti Yadav v. U.P. Board of High School Intermediate Education and Ors. reported in JT 2003 (Supp. 1) SC 25 held: Fraud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by words or letter. Although negligence is not fraud but it can be evidence on fraud. (See Derry v. Peek (1889) 14 AC 337) In Lazarus Estate v. Berly [(1956) 1 All ER 341] the Court of Appeal stated the law thus: I cannot accede to this argument for a moment no Court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything . The Court is careful not to find fraud unless it is distinctly pleaded and proved; b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion that despite the superficial documentation in support of the credits, they cannot be considered to be genuine loans taken by the assessee. In CIT v. Durga Prasad More [1971] 82 ITR 540, the Supreme Court observed that the Tribunal would be justified in disbelieving a story which is prima facie fantastic and does not accord with the human probabilities and that the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. In Sumati Dayal v. CIT [1995] 214 ITR 801, the Supreme Court again held that in such cases, a superficial approach to the problem should be eschewed and the matter has to be considered in the light of human probabilities and further that any transaction about which direct evidence is rarely available should be inferred on the basis of the circumstances available on the record. In that case, the majority opinion of the Settlement Commission was approved as it was taken after considering the surrounding circumstances and applying the test of human probabilities. These principles apply to the present case where the documentary evidence prima facie supports the assessee s case but a closer look at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar situation arose. The assessee had contributed monies to the firm in which he was a partner and they appeared in the account books of the firm as credits from him. The assessee was asked to give an explanation as to how he came to possess the amounts. He explained that a part of the amount came from his aunt being given to her by his father and the other part was earned as share income from another firm. Both the explanations were rejected by the Income-tax authorities whose decision was con- firmed by the Tribunal and the High Court. On further appeal by the assessee to the Supreme Court, it was held that there was ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of assessable nature. Whether a receipt is to be treated as income or not must depend very largely on the facts and circumstances of each case. The making of entries in the books of account maintained by the assessee is not a condition precedent for taxing them as the assessee s income. It is the receipt of the monies whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case of the assessees, we find that the amounts in question were alleged to have been received as gifts from the respective donors. The amounts were deposited by the donee assessees in their bank accounts which means that the assessees have not denied the ownership of such amounts found credited in their bank accounts in the financial year relevant to the assessment year under consideration. Regarding the genuineness of the acquisition of the amounts, explained to be gifts, have already been turned down by the Tribunal by holding the transactions to be in genuine. Section 69A provides that such money may be deemed to be the income of the assessee for such financial year. This is a deeming provision under which when the explanation given by the assessees offered regarding acquisitions of the same is rejected then under this deeming provision the same can be added to the income of the assessee. We are further of the opinion that addition made by the tax authorities below merely under a wrong provision of the Income-tax Act, 1961 cannot absolve the assessees from being taxed under the correct provisions of the Income-tax Act, 1961 because the tax authorities below are du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been stressed that the donor has admitted that he has gifted the amount to the assessee and that should have been accepted. We are unable to agree with this proposition because of the fact that we do not hold that in a case where the assessee claims that he received certain money from someone in cash and the other party admits the same had been given by him and the material on record clearly disclosed that the donor had no creditworthiness so as to give the amount, then in that situation the admission contrary to the trustworthy evidence cannot be accepted as binding upon the Assessing Officer. Furthermore, in a case where one claims that he received certain amounts from ex-person and ex-person admits the availability of funds in the bank and it's withdrawal from bank, produces the such bank document in respect of his creditworthiness and from such documentary evidence itself, it is proved, as a matter of fact, that the transaction could not have happened than the admission of the donor is required to be rejected. If the plea as raised by learned counsel for the assessee is accepted than that means admission of such person (donor in this case) is binding upon the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor. But this proposition can apply only when it is proved that the such creditor has creditworthiness, that in fact he has money to give it to the assessee. Suppose if one creditor admits that he has given money to the assessee from his bank account and also submits statement of his bank account wherein there was no money, than whether in that situation the admission of such creditor given on even oath is binding upon the Assessing Officer? The answer would be no. The admission binds the author of admission and operate as estoppel against him but is not binding upon any other persons or authority. 6. Here, in this case the facts clearly indicates that the assessee was the son-in-law of the alleged donor and the donor was in employment and was getting salary and claimed that on different times of donation he was having cash, in total to the tune of ₹ 8.00 lakhs. His contention has been recorded by the Tribunal in para 9 that he gave this gift from the money received on his retirement and from provident fund and gratuity amount. The donor's contention further is that he kept all those money in his bank account and in support of his contention he produced the passbo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer can only proceed to register proceedings against such creditor and can give proper notice to such creditor to explain his income or the source from which he has given money to the assessee. Such plea do not applies in the facts of the case where from trustworthy evidence the Assessing Officer reaches to conclusion that the transaction itself is not genuine so as to have any doubt that the payment has been made by third person to assessee then issuing notice to a third party after taking stand that third party has not given the amount to the assessee will be nothing, but futile and unnecessary exercise.8. In view of the above reasons, this appeal is dismissed. Mii) There is no corroboration on record on files of Smt. Mohinderwati during asstt proceedings (from assessee Smt Mohinderwati) to prove beyond doubt or say with reasonable human probability of the fact that there was (a) any sale of jewels at threshold in view of findings of AO in case of J.Manchanda (b) that alleged jewels allegedly sold are same as that declared under VDIS , more so in backdrop of shifting stance etc(c) the number of years that has lapsed in intregunnum as its not uncommon for ladies to sell j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinder Wati, who was assessed to tax in Income Tax Officer Ward 24(4), New Delhi, having PAN: AANPW7638R. She declared her sources of income in the return of income filed by her and also declared the fact that she had gifted a sum of ₹ 10,80,000/- to her son Sh. Jatinder Manchanda. A copy of declaration of gift was filed in support of the claim. Further, it was also explained to the learned Assessing Officer that, source of gift given by Smt. Mohinder Wati was sale of part of jewellery which she had declared under VDIS 1997. A copy of such certificate under section 68(2) of the VDIS, 1997 issued by Commissioner of Income Tax - VII, New Delhi was also filed before the learned AO during the assessment proceedings. Further the assessee supplied the copies of bills of jewellery sold by Smt. Mohinder Wati and Gift Deed to the learned Assessing Officer and further vide letter dated 01.12.2008 reiterated the fact that the donor had sold jewellery which she declared in VDIS, 1997 and from such money, she gave a cash gift of ₹ 10,80,000/- to assessee. Thus, the source gets proved and there was no requirement in law to prove the source of source of the donor as, she had sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Commissioner of Income Tax (Appeals) held that: In Para 5.4. I am of the opinion that the assessee has clearly discharged his onus by proving the identity of the donor, the genuineness of the gift and also the creditworthiness of his mother, who happens to be his own mother. If it was the case of the AO that the money gifted by Smt. Mohinder Wati to her son, the assessee, is not the same which she obtained by selling her jewellery declared under VDIS, 1997, then the onus was on him to establish such nexus. Not only has he not been able to do so, he has not made any further investigation in that direction. Further, the AO passed on the information regarding presumed bogus sale of jewellery to the AO of Smt. Mohinder Wati , who reopened her case u/s 147 of the Act and passed an order with following remarks: From details filed by the AR it is seen that the assessee has gifted this amount received from sale of jewellery. After going through the details filed by the AR and on considering the submission made by assessee is accepted and discussed the case. In Para 5.5. In view of the above discussion, the addition made by the AO for an amount of ₹ 10, 80, 000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 of LT. Act by stating in the Assessment Order that the Gifts are charged u/s 68/69 r.w.s. 56(1). While doing so he has forgotten that Section 68 and 69 are deeming provisions and not charging Section. So they cannot be read together and this is not a case where Section 56 would apply as the assessee is not having any Income from Other Sources. ii) 171 ITR 532 (P H) Smt. Shanta Devi vs CIT . iii) 141 ITR 67 (Bombay) CIT Poona vs Bhaichand H. Gandhi. iv) 291 ITR 232 (Chennai) CIT vs Taj Borewells. Thus, it is evident from the above judgments that gift received and directly deposited in bank account cannot be added under section 68, as bank account is not books of accounts of the assessee and thus, no addition could be made under section 68 of the Act That further, the assessee proved the source of the gift i.e. from mother Smt. Mohinder Wati and thus, when identity, creditworthiness and genuineness of a transaction has been proved by an assessee, then the assessing authority is not justified in going to the question of 'source of source'. As, the sale of jewellery and giving of gift has been accepted by department in assessment made on Smt. Mohinder Wati. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer that the money emanated from the coffers of assessee, on the contrary the reassessment done in the case of Smt. Mohinder Wati establishes the point that, she actually gifted the amount to assessee. To strengthen this argument, reliance is placed on the following judgment: (i) 307 ITR 334(Del) CIT vs Value Capital Services (P) Ltd. ... the additional burden on the revenue. It must show that even if the applicant does not have the means to make the Investment, the Investment made by the applicant actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee this has not been done insofar as the present case is concerned and that has been noted by the Tribunal also. (ii) 306 ITR 35 (Del) CIT vs. Real Time Marketing P. Ltd That the assessee is the only son of Smt. Mohinder Wati and as such the amount of gift received from a mother needs no particular occasion, as natural love and affection is enough in such cases. For this proposition, assessee would seek to place its reliance on following judgments : (i) 324 ITR 231 (Del) CIT vs Suresh Kumar Kakkar Para 3. Insofar as the identity is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegations, assessee would like to bring the facts about the sale of jewellery clearly as below: (i) Smt. Mohinder Wati had sold the jewellery through a small dalal (commission agent! broker) Mr. Deepak Karmakar and as is customary in the jewellery business, these were sold in cash through him. At the same time, no credit note was obtained as it was not a commercial transaction and the assessee was not aware that any bill etc was to be obtained; (ii) However, when assessment of assessee i.e. Jitender Manchanda was opened, the donor asked for specific evidence for sale of jewellery and for which dalal was contacted, who informed that the jewellery was of gold and was sold at the then prevailing rate and it was not customary to obtain any credit note in cases of personal transactions. However, on being insisted, the dalal gave credit notes in form of bills stating the exact quantity and rate at which jewellery was sold. These were provided to the learned Assessing Officer in the assessee's case. However, as it is apparent that these were just bills given merely for rate purposes, the purchasers/ jewelers were non existent as has been observed by the assessing officer; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade they generally did not reveal the identity of buyers and sellers. Later, Mrs. Mohinder Wati told him that the bills for sale of jewellery were required for official purposes, he revealed her the actual fact that these had been purchased by Mrs. Neeru Anand; and, (vi) So, it would be evident from above that, there is no shifting of stand on part of assessee, as the entire factual matrix explained above would make it abundantly clear that the jewellery was actually sold by Smt. Mohinder Wati and as such she had sufficient funds to give gift to her son Sh. Jitender Manchanda. In fact as far as assessee is concerned, there can be no allegation of shifting of stand. It is submitted that, assessee has always contended consistently that, sums received represents gift from mother and there is no change in such a contention and hence the submission is misconceived. It is no doubt true that earlier it was explained that mother had received the sum by sale of jewellery to certain jewellers though later, it was clarified that, such sale was not made to jewellers, but to Mrs. Neeru Anand. It is submitted that, this fact does not in any manner establish that there is a shifting of stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 has no applicability at all. ii) 304 ITR 259 (Ker) CIT vs Co-op Sugars Ltd. Not at all applicable to the facts of the present case, as in this cited judgment the ITA 43 No.4060/Del./2011 issue involved was of allowability of expenditure u/s 37(1) and no issue is there of gift or of section 68. iii) 82 ITR 540 (SC) CIT West Bengal II vs Durga Prasad More Rather this judgment supports the case of the assessee, the court in this case held that, It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. However, the assessing officer has nowhere in assessee's case has been able to prove that the gift is not real and more so, the reassessment of donor and acceptance of sale of jewellery and giving of gift by her assessing officer, establishes the fact that, the gift was real. iv) 241 ITR 801 (SC) Sumati Dayal vs CIT The proposition laid down in this judgment was that, if surrounding circumstances create doubt then explanation of assess should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found to be false in view of the admitted position that the amount of ₹ 5,00,000 in fixed deposit in the name of Biswanath in Jamnagar bank had been tendered at Burrabazar Calcutta branch of the Central Bank on November 15, 1944, and thereafter was transferred through Bombay head office of the bank to Jamnagar. There were also other circumstances which pointed to the falsity of the above explanation. The falsity of the above explanation of Biwanath, in the opinion of the High Court, did not warrant the conclusion that the amount of ₹ 5,00,000 belonged to the assessee. We can find no flaw or infirmity in the above reasoning of the High Court. The question which arose for determination in this case was not whether the amount of ₹ 5,00,000 belonged to Biswanath, but whether it belonged to the respondent-firm. The fact that Biswanath has not been able to give a satisfactory explanation regarding the source of ₹ 5,00,000 would not be decisive even of the matter as to whether Biswanath was or was not the owner of that amount. A person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the jewellery which was earlier declared by the assessee under the VDIS Scheme. The assessment of Smt. Mohinder Wati was reopened and while making the assessment the Assessing Officer has accepted the fact that Smt. Mohinder Wati has given a gift to her only son, Shri Jatinder Manchanda out of the sale proceedings of her jewellery. Assessee is not shifting the stand but it is his mother s stand which is changed with regard to the sale of jewellery. Existence of jewellery with mother is not doubted. Only the person to whom it is sold is changed. The capital gain of the jewellery has been assessed in her hand. The assessee was the son of the donor, Smt. Mohinder Wati. She was assessed to tax. She has explained the source which has been ascertained by the assessing authority. She was the mother of the assessee. The revenue has failed to brought on record anything which could show that it was assessee s own money which has been deposited in the bank. The immediate source of the gift received is explained. Thus, considering totality of the facts and circumstances including the income-tax assessments of the donor, we find no merits in the revenue s appeal and we dismiss the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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