TMI Blog2024 (1) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... identity of the doner is not established and there is no verifiable address of the done. AO has failed to make any correspondence on the given address but has taken a mere stand that the address of the donor is not verifiable. Apart from this the assessee 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 wherein donor gifted to his brother - This establishes the Identity of the donor. Creditworthiness of donor - CIT(A) noted that the AO in the assessment order has stated that there is a poor capital in balance sheet of Donor as taken by looking at the Indian Balance Sheet and Indian Tax Return filed by - On perusal of the details submitted by the assessee it is seen that the donor in this case is neither an Indian Citizen nor an Indian Resident. Most of his assets are situated outside India. In foreign Balance Sheet of a company 100% owned by donor Capital balance works out to Rs. 86.12 crore as on 31-12-2016. On 31.12.2016 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 capital balance of USD 12,674,346 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision and findings of the CIT(A), therefore grounds raised by the Revenue are dismissed. - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Appellant : Shri Ritesh Mishra, CIT(DR) For the Respondent : Shri Hiren Vepari, CA ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short the ld. CIT(A) ], National Faceless Appeal Centre (in short the NFAC ), Delhi, dated 30.08.2023, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 16.12.2019. 2. The grounds of appeal raised by the Revenue are as follows: 1. On the facts and circumstances of the case and in law, the ld.CIT(A) has violated the principles of natural justice while admitting the additional evidences and not providing opportunity of being heard to the Assessing Officer as per the provisions of section 250(2) of the Income Tax Act, 1961 and Rule 46A(3) of the Income Tax Rules, 1962. 2. On the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fers made into the account of Sh. Girdharbhai Gajera [Source of the source -Source of Sums which have been passed on as Gift to the assessee] is requested to be explained with evidences and documentary proof. The following details of such source of Sh. Girdharbhai Gajera is requested to be furnished with establishment of the Identity-Genuineness- Creditworthiness of the source: (i) P. A. No. and copy of PAN card for establishment of Identity, and (ii) Present address of the claimed creditor, and Copy of Return of income of the claimed creditor, and (iv) Copy of P L and Balance sheet of the claimed creditor for establishment of Creditworthiness.., In reply, it is submitted that the creditor Sh. Girdharbhai Gajera is an NRI and income has been earned outside INDIA. No evidence regarding the same has been furnished. The return of income and capital account so furnished do not establish the creditworthiness of creditor. Only an excerpt of transaction receipt is furnished. The bank account statement has to be furnished for the entire year under consideration. Unless the genuineness of the transaction and creditworthiness of Sh. Girdharbhai Gajera is established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Girdharbhai H. Gajera is a businessman with operations in Dubai. The details and extent of such operations have not been established. The case and matters need to be examined under the scenario of tax paradigm. The claimed base of the donor (Dubai) and not Belgium - is a tax-free territory. Hence, the any sums claimed to have been earned are not questioned nor taxed. Under such facts and circumstances, the pernicious practice of round-tripping of unaccounted sums via Dubai in guise of gifts is a potential abuse scenario. There has been failure on part of the recipient assessee to establish the business, net worth, capacity of the so-called donor. Hence, the assessee has failed to explain the genuineness of the sums received by him. Also, that, it is a scenario of double non-taxation where the income (If at all earned in Dubai which is tax-free) as well as the transfers have been shown and claimed as non-taxable. The donee-assessee has failed to establish that the claimed donor has accounted and shown income and profits which have been transferred to India. The assessing officer also mentioned that account statement of the claimed donor, which is mentioned in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he apparent is not the real. The assessee has not been able to satisfactorily explain the genuineness, accountability and Creditworthiness of the source of such credits being gifts. Therefore, the assessing officer made addition of Rs. 10,93,00,000/- as unexplained credit and bogus gift under section 68 of the Act. 6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the Assessing Officer. The ld CIT(A) observed that the source of amount in USD flowing into Girdharbhai Haribhai Gajera's Emirates NBD Bank, Dubai is primarily from Amazone Gems DMCC where Girdharbhai Haribhai Gajera is 100% shareholder. Amount credited into Girdharbhai Haribhai Gajera has been out of Remuneration and dividend which have been offset against loan given by Amazone Gems DMCC-a 100% owned company of Girdharbhai Haribhai Gajera. To substantiate this, claim the assessee has submitted the copies of minutes of the ordinary general meeting dated 29th November, 2016 to show the Amazone Gems DMCC as (Annexure X7). The amount was gifted by Girdharbhai Haribhai Gajera from his NRE bank accounts maintained with Ax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce evidences to counter the requirement and prove the genuineness of the transaction. In this case, assessee has produced only bank statement, Gift deed, which is not sufficient. A bare reading of Section 68 of the Act suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be a sum during the previous year and if the assessee offers no explanation about the nature and source of such credit or the explanation offered is not satisfactory, then the sums so credited can be treated as income of the assessee for that previous year. The expression 'no explanation is offered' or 'the explanation offered is not satisfactory' puts an onus on the assessee to offer a lucid, reasonable and acceptable explanation before the Assessing Officer and thereupon the Assessing Officer should form an opinion accepting or rejecting the explanation based upon appreciation of facts/materials and other attending circumstances. Section 68, of the Act was examined in Govindarajulu Mudaliar (A.) versus CIT, (1958) 34 ITR 807 (SC) observing that there were ample authorities for the proposition that where an assessee fails to prove satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd affection. The Foreign Balance Sheet of the donor clearly demonstrating his high capital, and complete identity, creditworthiness and traceability of the donor have been established. 11. The assessing officer while making additions has observed that there is an absence of Verifiable Address/identity of the claimed Donor, No Verifiable Address of the Donor, Absence of Creditworthiness and Capacity of Donor and absence of Genuineness of Transaction. Each issue has been discussed by ld CIT(A) as follows: (i) Identity of the donor: The ld CIT(A) observed, on perusal of the details submitted by the assessee, during assessment and assessee proceedings, it is seen that the Girdharbhai Gajera who is a doner in this case, is a Belgian National who has taken an Emirati Residency. In fact, the assessee vide letter dated 30/11/2019 (Annexure X-12) has given the Dubai Address of the donor along with electricity and water bills to the Assessing Officer as Villa-47, PK 11997 (Nr. PK 3968), 397 Al thanyah fifth, Premise Number 393260038 Dubai. The above facts have been not brought on record by the assessing officer and has merely stated that the identity of the doner is not established an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhar bhai Gajera's NRE bank account maintained with Axis Bank. It entails particulars of cheque number, date of giving of gift, donee, amount gifted. Source of gift of amount in rupee terms immediately credited before giving gift on credit side of the bank statement where amount in US $ are stated in narration in the bank statement. The assessee has also stated that the source of amount in USD flowing into NRE bank accounts of India from overseas foreign bank account maintained with Emirates NBD Bank, Dubai by the Girdharbhai Haribhai Gajera. Further the assessee stated that the source of amount in USD flowing into Girdharbhai Haribhai Gajera's Emirates NBD Bank, Dubai is primarily from Amazone Gems DMCC where Girdharbhai Haribhai Gajera is 100% shareholder. Amount credited into Girdharbhai Haribhai Gajera has been out of Remuneration and dividend which have been offset against loan given by Amazone Gems DMCC-a 100%, owned company of Girdharbhai Haribhai Gajera. To substantiate, this claim the assessee has submitted the copies of minutes of the ordinary general meeting dated 29th November, 2016 to show the Amazone Gems DMCC as (Annexure X7). The amount was gifted by Girdhar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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