9911796707
TMI Blog2024 (1) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 46A(3) of the Income Tax Rules, 1962. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 10,93,00,000/- made on account of unexplained credits in the guise of gifts u/s 68 of the Income Tax Act, 1961. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) has failed to appreciate the fact that Assessing officer has made the addition as the assessee has not discharged his onus to prove the identity, creditworthiness and capacity of the donor and also genuineness of transaction. 4. It is therefore prayed that the order of the Ld. CIT(A) may kindly be set aside and that of the Assessing Officer be restored. 5. The assessee craves leave to add, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing of die appeal." 3. The facts of the case which can be stated quite shortly are as follows: The assessee before us is an Individual and filed his return of income for the year under consideration, on 27.02.2018, declaring total income of Rs. 2,83,40,520/-. The notice u/s 143(2) of the Income-Tax Act dated 27.09.2019, was issued and duly served upon the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Girdharbhai Gajera is established, you are to show cause why the credit claimed as gift should not be considered unexplained and added to income...." 4. In response to the notice, the assessee furnished submissions before the assessing officer. During the Year, as an explanation of increase in capital, the Assessee has claimed to have received Gift of Rs. 10,93,00,000/- from certain Sh. Girdharbhai H. Gajera. Upon inquiry, in response uploaded on 11.11.2019, the Assessee submitted as follows: "(1) Details of Gift received from Girdharbhai H. Gajera: I hereby enclose following documents for your ready reference, (A) The creditworthiness of donor: Particulars Documents/Evidences submit for your verification PAN: AAWPG3525A Copy of Aadhar Card Address 1, Vrushal Nagar Society, Opp. Katargam Police Station, Katargam road, Surat. Return of Income Acknowledgement of return filed Annual accounts Copy of Capital account and balance sheet (B) Nature and source of income donor: The assessee's real brother Mr. Girdliarbhai H Gajera is a NRI. Mr. Girdharbhai H Gajera earned income in his personal capacity there. Mr. Girdharbhai H Gajera transferred his earned fund in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons: (i) The so-called 'Gift' from abroad is not genuine because of the reasons discussed above. (ii) The donor lacks capacity to give the huge sum of Rs. 10,93,00,000/- as 'gifts'; (iii) There has been no occasion or reasons for the 'gifts' to the assessee and a number of other persons; (iv) The source of the donor is unknown and there is no evidence that the source possesses any creditworthiness to part with more than Rs. 10 Crores as gifts; (v) The balance sheet of the donor reflects the complete absence of capacity to give gifts worth Crores of rupees; (vi) There is no evidence or information about the source of the gifts for verification of capacity of the party/parties; (vii) Bank statements of the source have not been furnished for examination with the Foreign Tax and Tax Research (FT&TR) Division (FT&TR) of the CBDT for exchange of Information. (viii) Applying the ratio of Aiyub Umarji Patel v. ITO, [2014] 42 taxmann.com 471 (Gujarat) since the assessee has received huge amount from NR account of his brother but he could not give any further details of either source or creditworthiness thereof; the sums are assessable in hands of the assessee. (ix) As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey into his overseas bank account maintained with Emirates NBD Bank in Dubai from company 100% owned by him- Amazone Gems DMCC. Further, it is seen that the books of accounts of Amazone Gems DMCC funded are audited. The Gift is given into assessee's savings bank account No. 915010022021254 maintained with Axis Bank. Therefore, ld CIT(A) observed that genuiness, creditworthiness and identity of the transaction is established and therefore ld CIT(A) allowed the appeal of the assessee for statistical purposes. 7. Aggrieved by the order of ld.CIT(A), the Revenue is in further appeal before us. 8. Learned CIT-DR for the Revenue relied on the findings of the assessing officer and argued that payment by account payee cheque is not sufficient to establish the genuineness of transaction. Hence, Ld. CIT(A)'s observation in this case that the amount has been routed through banking channels to prove the genuineness is not acceptable. It is also observed that, assessee has offered gift to other family members also. It is the duty of assesses to explain the source of income of donor to make such gifts. The assessing officer has made the addition on the ground that the assessee has fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays the Bench that addition made by the assessing officer may be upheld. 9. On the other hand, the Ld. Counsel for the assessee defended the order passed by the ld. CIT(A) and argued donor earned money in his 100% owned company, which gave dividend and remuneration to the donor. From donor's overseas bank account, how he transferred funds into his NRE account maintained in India, and finally, how funds received in NRE bank account were eventually transferred into the assessee's bank account and this clearly prove through bank statements and various documentary evidences. Foreign Balance Sheet of the donor is clearly demonstrating his formidably high capital thus complete identity, creditworthiness and traceability of the donor have been proved, therefore, ld Counsel contended that order passed by ld CIT(A) may be upheld. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The assessing officer observed that no verifiable address of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has submitted the confirmations from the doner that he has given gift to the assessee. Furthermore, in the instant case, there is a notarized gift deed dated 30.03.2017, wherein Girdhar bhai Gajera gifted Rs. 10,93,00,000/- to his brother Chunibhai Haribhai Gajera This establishes the Identity of the donor. (ii) Creditworthiness of donor: The ld CIT(A) noted that the Assessing Officer in the assessment order has stated that there is a poor capital in balance sheet of Girdhar bhai Gajera. This stand of the assessing officer appears to be have taken by looking at the Indian Balance Sheet and Indian Tax Return filed by the Girdhar bhai Gajera. On perusal of the details submitted by the assessee it is seen that the donor in this case i.e; Girdhar bhai Gajera is neither an Indian Citizen nor an Indian Resident. Most of his assets are situated outside India. In foreign Balance Sheet of Amazone Gems DMCC - a company 100% owned by Girdharbhai Gajera is perused (Annexure X3) Capital balance works out to Rs. 86.12 crore as on 31-12-2016. On 31.12.2016 Girdhanrbhai Gajera had a profit of Rs. 114.48 Crore (USD 16,874,148) and after payment of dividend to him of USD 4.2 Million had a closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harbhai Haribhai Gajera transferred money into his overseas bank account maintained with Emirates NBD Bank in Dubai from company 100% owned by him- Amazone Gems DMCC. Further, it is seen that the books of accounts of Amazone Gems DMCC funded are audited. The Gift is given into assessee's savings bank account No. 915010022021254 maintained with Axis Bank. For the reasons mentioned above, the genuiness of the transaction is also established. In addition to the above, the ld CIT(A) relied on the judgment of Hon`ble Gujarat High Court in the case of Smt. Neelemaben Gopaldas Agrawal vs. Income tax Officer [2015] 57 taxmann.com 176 (Gujarat), wherein the similar issues were came before the Hon'ble High Court of Gujarat. The Hon`ble Court held that where assessee received certain amount as gift from NRI through cheque and they produced bank certificate and gift deed regarding same, addition as unexplained income under section 68, was not justified. Based on these facts, ld CIT(A) allowed the assessee`s appeal for statistical purposes. On a careful reading of the order of ld CIT(A) and the findings thereon, we do not find any valid reason to interfere with the decision and findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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