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2012 (9) TMI 1170

..... y: Smt. Banita Devi, Sr. DR. ORDER I.C.Sudhir, In these appeals first appellate orders have been questioned by the assessee on the following grounds: 1. The authorities below erred both in law and facts in re opening the case and confirming in Appeal, with applying mind to facts and laws. 2. That Authorities erred in not summoning all the concerned persons u/s 131, inspite of specific and written request made by appellant. 3. I.T.O. & CIT appeal grossly erred in not enforcing the attendance of Mr. Deepak Jain, CA, who was named as the man of knowledge of facts. 4. That the CIT appeal erred in not adjudicating the legal issues raised by the applicant. 5. That the CIT (appeal) fails to appreciate that there was no evidence to disapprove t .....

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..... unts to the account no. 3755 with the same bank and issued drafts to the said parties under so called gifts. On receipt of this information from ITO in his letter no. 164 dated 21.1.2008, the AO initiated reassessment proceedings u/s 147 of the Act. The AO framed the assessment by making addition of ₹ 1 crore each in the hands of sh.Ramesh Chawla (HUF) and Ms. Kanika Chawla with this finding that the gifts received by the assessees were not genuine. The aggrieved assessees questioned the said action of the AO before the Ld. CIT (A) mainly on two grounds, firstly questioning the validity of re-opening u/s 147 of the Act and secondly, on the genuineness of the gifts. 6. The contention of the Ld. AR is that the Ld. CIT (A) has not adjudi .....

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..... cepted that entry was accommodation entry and ITO was justified in adding the same to the income of Mr. Harish Kumar. But no notice u/s 131 was ever issued by the ITO to other persons, whose names appeared in the bank account of Mr. Harish Kumar, neither he enforced their attendants nor made any investigation in relation to the gifts given by Mr. Harish Kumar to Mr. Ramesh Chawla (HUF) or Ms. Kanika Chawla, the assessees herein. The Ld. AR pointed out further that the AO while issuing notice u/s 148 completely ignored that the IT Act has got amended w.e.f. A.Y. 2005-06 by Finance Act (No. 2) 2004, where the gift to the person other than relatives is taxable as income from other sources u/s 56 (2) (v). In the present case reopening is legall .....

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..... n of law that for invocation of the provisions u/s 147 the requirement is a prima facie belief of the AO that there is escapement of assessable income in the hands of an assessee. Under these circumstances we do not find substance in the contention of the Ld. AR that the provisions u/s 147 of the Act were not validly invoked by the AO to acquire jurisdiction to frame assessment u/s 147 read with 143 (3) of the Act. The issue is thus decided against the assessee. The related ground nos. 1 to 4 are thus rejected. Issue no. -2 9. We have already discussed the relevant facts hereinabove in previous paragraph under issue no. 1. The contention of the Ld. AR remained that the assessees had received gift of ₹ 1 crore each from Mr. Harish Kuma .....

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..... Ld. AR referred page nos. 18 to 26 of the paper book wherein copy of statements of Mr. Harish Kumar along with copy of typed version has been made available. He pointed out that the assessee was directed to produce Mr. Harish Kumar, donor. The assessees contacted Mr. Harish Kumar at his address and requested him to appear before the authority below but he turned down the request on the basis that he has been already assessed by his ITO and huge demand has been raised. He specifically mentioned that he has been taxed on all his bank transactions. He also asserted that he had already executed gift deeds and affidavits in support of gifts given by him to the assessees. He also informed the assessee that he had never stated that the assessees h .....

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..... oney involved therein was the money of the assessees which came to him and in lieu thereof he had issued cheques of gift amount. The assessees were also not given opportunity to cross-examine Mr. Harish Kumar. It is an established proposition of law that statement of a person without affording opportunity to cross-examine him by the affected person cannot be relied upon and used against the said person. Thus keeping in mind the above discussed facts and in the absence of a positive evidence beyond doubt that the gifts amount were actually of the assessees, there was no reason to doubt the genuineness of the gifts in question. Besides, it also remained to examine by the AO that the donor had already paid tax on the amount gifted to the asses .....

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