TaxTMI 
TaxTMI 
TaxTMI 
2007 (11) TMI 328
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AO. 2. deleting the addition of Rs. 40,68,450 and Rs. 22,03,850 made on account of claim of gift of property from Shri Ashok Jain and Veena Jain, respectively which were not found genuine by the AO." 4. Before adjudicating these grounds, we consider it proper to narrate the factual background and the orders passed by the Departmental authorities in relation to the main issues involved. The facts of the matter as culled out from the material brought on record, are as under: 4.1. The assessee filed return of her income for the assessment year under consideration declaring total income at Rs. 13,29,090. This income consisted of income from salary, house property, agriculture, fisheries and other sources. The return was filed on6th Aug., 2003. A notice under s. 143(2) was issued by the AO, in response to which necessary details were filed on behalf of the assessee. 4.2 A search was conducted by the officers of Narcotics Control Bureau on6th Aug., 2003, and during the course of search, from the premises belonging to M/s Manu Tours and Travels, a concern, owned by Shri Raj Kumar, the brother of the assessee, some papers of importance to the IT Department were also found. On the st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o observed that it is surprising that the donor made gifts out of the loan taken from this concern. Further, the AO observed that there was no occasion for making the gift as there was no relationship between the donor and the donee. According to him, the gift was an arranged gift and was only an accommodation entry. For disbelieving the gift, he also made reference to the decision in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 (SC) and the decision in the case of Seth Kalekhan Mahomed Hanif vs. CIT (1958) 34 ITR 669 (MP) and the decision in the case of CIT vs. Krishna Mining Co. (1972) 83 ITR 860 (AP). He further, held that the burden of proving the source of the credit entries was on the assessee, and once the entry is found in the books of account of the assessee then she was under legal obligation to explain the nature of such entry and that the AO is not required to specifically prove as to what was the source from which the deposit was made. He further concluded that merely establishing the identity of the creditor is not enough and that the assessee has also to prove the capacity of the creditor as well as the genuineness of the gift. He was also of the opinion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the heads specified in s. 14, items A to E.' In this case there is no doubt that the assessee has received the following amounts during the year under consideration: 1. Cash Rs. 2,00,000 2. Immovable properties worth Rs. 62,72,300 This section clearly states that income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head income from other sources if it is not chargeable to income-tax under the head specified in s. 14, items A to E. The assessee has offered an explanation that since it is a gift it is not chargeable under s. 68 of the IT Act. Sec. 68 of the IT Act, states that where any amount is found credited in the books of an assessee maintained for any previous year..... shall be charged to income-tax as income of the assessee of that previous year. There is no doubt that the amount has been found credited in the books maintained by the assessee for her business activity and, therefore, the cash of Rs. 2,00,000 received by her will be charged to income-tax under s. 68 r/w s. 56(1) of the IT Act. So far as the receipt of the immovable properties is concerned the assessee offered an explanation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee challenged the additions made by the AO before the learned CIT(A). During appellate proceedings, the learned CIT(A) obtained a remand report from the AO to know the net worth of the donors. On the basis of this remand report, the net worth of the three donors whose gifts were not accepted, was found to be as under: (i) Shri Ashok Jain Rs. 1,14,74,817 (ii) Smt. Veena Jain Rs. 1,32,14,312 (iii) Shri Pankaj Jain Rs. 1,36,01,314 4.11 After reproducing the above figures on p. 3 of his order, the learned CIT(A) has observed that net worth of Shri Ashok Kumar Jain, was Rs. 1,14,74,817 who gifted immovable property worth Rs. 40,68,450. Net worth of Smt. Veena Jain was Rs. 1,32,14,312 who gifted Rs. 22,03,850 and net worth of Shri Pankaj Jain was Rs. 1,36,01,314 who made gift of Rs. 2,00,000. 4.12 The learned CIT(A) has considered the entire material in great detail in the appellate order. He has narrated the grounds on which the AO has rejected the creditworthiness of the donors and the genuineness of the gift transaction. He has narrated' the submission of the assessee by making reference to the authorities on which relian....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n on the ground that the donor and donee were not related, but on the other hand the AO in the same assessment proceedings, has accepted the gifts of Shri O.P. Khadaria and Shri Ajay Agarwal where also there was no "occasion" to make gift. The donor and donee were also not related to each other and natural love and affection, between the donor and the donee, arose on account of man made relationship. It is also not a requirement, of either of the GT Act or the Transfer of Property Act that a gift can only be made 'on an occasion' and the donor and the donee must be relatives. I hold so based on the decisions in M.S. Aggarwal vs. Dy. CIT (2004) 83 TTJ (Del) 692 and Asstt. CIT vs. Hansa Chaganlal (2003) 79 TTJ (Visha1cha) 992. In view of the above, I am of the opinion that the gifts received by the assessee cannot be questioned on the ground of no 'occasion' and no 'relationship'. It would also be relevant to mention that the only requirements for gift are that there should be transfer, by one person to another, of any existing movable or immovable property. Further, the transfer should be voluntary, and, should be made without consideration of any money. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 (All) Not only that. I am also of the opinion that when a particular explanation furnished by the assessee and evidence in support thereof is adduced, the onus shifts on the AO to falsify the said material or bring new material on record. Mere rejection of good explanation does not convert good proof into no proof. For this proposition I derive sanction from: Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 (SC) 152 ITR 504 (Del) (sic) Further, the AO's rejection of the explanation offered by the assessee as well as the inference as to the genuineness of the gift and creditworthiness of the donor cannot by itself lead to any inference regarding the non-genuineness of the gift, unless some tangible material, or some evidence is led in support of his claim that the property gifted was assessee's income earned from undisclosed sources. On this count also the AO has failed miserably, compelling me to infer that he has rejected the claim of the assessee without any valid reason. Sarogi Credit Corpn. vs. CIT 1975 CTR (Pat) 1 : (1976) 103 ITR 344 (Pat) Further, as regards applicability of s. 69, I am of the opinion that it is not the assessee who has made the investment. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blished that he has been meeting the assessee, and his family members, on family functions since last so many years. I also find that he has given the gift vide account payee cheque No. 171816, dt.17th Dec., 2002drawn on Andhra Bank for Rs. 2,00,000. I also agree with his submissions that reciprocation of gifts is not mandatory and his creditworthiness has been accepted now by the AO himself in the remand report. I also find that AO has erred in giving a finding that gift was given in 'cash', and also that entire gift was made out of amount received from 'M/s Blue Bell Finance Co.' when in fact the gift has been given through account payee cheque, and out of repayment of deposits of the donor lying with the said M/s Blue Bell Finance Co. In the light of the above, the genuineness of the gift is conclusively established, inasmuch as the identity and capacity of the donor, as well as factum of gift stand established. It is also trite law that once the donee furnishes the gift deeds and affidavits of the donors, they suffice to prove the genuineness of the gift. For this view I rely on the following judicial pronouncements. CIT vs. R.S. Sibal (2004) 187 CTR (Del) 291....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e read together. And this is not a case where s. 56 would apply as the assessee is not having any income from other sources. Keeping in view the totality of facts the addition of Rs. 2,00,000 is also deleted, as the gift is genuine." 5. The learned Departmental Representative has supported the grounds of Revenue for challenging the order of the learned CIT(A) and for this purpose he has mainly placed reliance on the order of AO. 6. The assessee on the other hand has filed paper books which contains copies of various documents which are available on the file of the AO and CIT(A) and case laws. 6.1 The assessee has also filed synopsis of submissions consisting of 17 pages. For supporting the order of the learned CIT(A) the assessee has also placed reliance on the various authorities in support of the written submissions. 6.2 Besides the above, at the time of hearing the learned counsel for the assessee made reference to so many other authorities to show that the assessee had discharged the burden which lay upon her to prove the genuineness of the gift. 7. We have carefully considered the facts and circumstances relating to this matter and the rival submissions. The following fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness of gift of movable and immovable properties, we deem it proper to consider the requirement of law in relation to validity of such gifts. 7.3.1 In this regard we consider it necessary to refer to Chapter VII of the Transfer of Property Act. 1882 which deals with gifts of movable and immovable properties. Sec. 122 defines 'gift' as under: "122. Gift defined 'Gift' is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void" 7.4 Sec. 123 of the Transfer of Property Act deals with the procedure relating to transfer of the property gifted. This provision is as under: "123. For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... own right of the property and creation of the right in another in that property. This concept is in consonance with the definition of gift given in para 355 of the Principles of Hindu Law by Mulla which defines gift as under: "355. 'Gift' defined Gift consists in the relinquishment (without consideration) of one's own right (in property) and the creation of the right of another; and the creation of another man's right is completed on that other's acceptance of the gift, but not otherwise." 7.9 The definition of gift as given in Hallsburry's Laws of England Vol. XVIII p. 364 para 692 is as under: "A gift inter vivos may be defined shortly as the transfer of any property from one person to another gratuitously while donor is alive and not in expectation of death............" 7.10 On the concept of gift we consider it proper to reproduce the observations of Lord Esher, M.R. made in Cochrane (1890) 25 QBD 57, which are as under: "............actual delivery in the case of a 'gift' is more than evidence of the existence of the proposition of law which constitutes a gift, and I have come to the conclusion that it is a part of the proposition it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of Currie vs. Misa (2). Although Indian Contract Act does not say that consideration must be good or valuable to sustain a contract, it has, however always been understood that consideration means something which is of some value and is not illusory. In the light of what I have said above, it is clear that a gift being not for consideration the question of applying the proviso does not apply. The proviso applies only to a transfer which has been made on good faith and for adequate consideration. It is important to note that the expression 'adequate' used before the word 'consideration' also signifies it as to be monetary consideration and not consideration of love and affection otherwise the word adequate would become redundant." 7.13 In view of the above judicial pronouncement it is clear that for all intents and purposes the validity of the gift, whether of movable or immovable property, is to be examined by satisfying the conditions laid down in ss. 122 and 123 of the Transfer of Property Act. From the same it follows logically that for income-tax purpose also the validity of gifts is to be examined in the light of the above referred provisions as has also bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... society and in view of her stature being/may be helpful in future." In reply to question No. 14, he stated as under: "Q. No. 14: Whether any documentary evidence was created at the time of gift? If yes, the reasons there of? Answer: Yes, gift deed executed." 7.15.1 His relationship with the assessee is given in answer to question No. 17, which is as under: "Q. No. 17: Your statement on oath was recorded earlier by Addl. Director of IT (Inv.),New Delhi. I am showing you the same. Do you wish any thing further over and above what was stated there? Answer: I wish to state that I had been meeting with donees at 12,Humayun Road,New Delhiand still regularly meet them at our family function as well as of donee's. I am showing some photographs and ready to submit if required." 7.15.2 Even in his statement recorded by Addl. Director of IT (Inv.) for the first lime, which statement has seen reproduced by the AO on pp. 19 and 20 of the assessment order Sri Jain, in reply to question Nos. 19 and 20 submitted that he has made the gift through cheques, and the cheques of gifted amount were delivered to the donee. To clinch the issue we consider it proper to reproduce questions a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng No. C-58, Inderpuri,New Delhi-The gift deed which is a registered document, has been filed by the assessee in the paper book and is available at pp. 7 to 23. The donor and the donee both have signed this deed. The gift was executed in the presence of two witnesses who have signed the deed. Photographs of donor and donee have been appended. This document is duly stamped and duly registered. Stamp duty of Rs. 1,76,308 and transfer deed of Rs. 1,10,192 has been put for the registration purposes. The gift has been made irrevocable and absolute and once for all. The donor transferred and conveyed the freehold property with all attending rights to the donee by way of gift together with all privileges, easements and advantages appurtenant thereto. Main clauses which relate to the transfer of rights and delivery of possession etc. are as under: "Gift deed For Rs. 22,03,850 Stamp duty @ 8 per cent Rs. 1,76,308 Transfer duty @ 5 per cent Rs. 1,10,192 Rs. 2,86,500 This deed of gift is made atNew Delhion16th Nov., 2002by Smt. Veena Jain w/o Sh. Ashok Jain r/o KD-5, Kavi Nagar, Ghaziabad (UP), the donor, her heirs, successors, executors, administrators, legal represe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the village Naraina in the abadi of an approved colony, Inderpuri,New Delhito the donee. That the donee shall be entitled to cause the mutation of the said property done in the concerned authority in her own name. 3. That the physical possession of the said property has been handed over by the donor to the donee. 4. That the donor states that this gift of the entire freehold property bearing No. C-58, constructed on freehold plot No. C-58, measuring 500 sq.yds., with terrace rights, situated in the area of village Naraina in the abadi of an approved colony, Inderpuri, New Delhi shall he irrevocable and none of her legal heirs, successors, nominee and administrators shall have anything to do with the said property and any objection raised by anyone in respect of this gift and/or the said property in any manner whatsoever shall be null and void. 5. That the donor, after the gift of the said property, shall be left with no rights, interest or lien in the said property, which shall hereinafter become the exclusive property of the donee. 6. That the donee hereby accept the gift of the said property without any condition or reservation." 9.1 The donor Smt. Veena Jain filed affid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the donees? Answer: On personal meetings as well as on telephone. Q. No. 14: Whether any documentary evidence was created at the time of gift? If yes, the reasons thereof? Answer: Affidavit and gift deed executed." 9.3 From the above documentary and oral evidence, it is clear that the donee made the gift of immovable property to the donee voluntarily. The gift was duly registered and, therefore, the requirement of ss. 122 and 123 of the Transfer of Property Act are fully satisfied. 10. Coming to the gift of another immovable property i.e., C-57, Inderpuri, the donor has executed the gift deed on26th Dec., 2002. The gift deed is available at pp. 24 to 52 of the paper book. This document has also been duly stamped and duly registered and bears the signatures of Shri Ashok Jain, the donor and of the assessee, the donee. The witnesses have also signed the registered deed at the time of registration. In this deed also relevant recital are as under: "Gift deed &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entire freehold property bearing No. C-57, constructed on freehold plot No. C-57, measuring 500 sq. yds., with terrace rights, situated in the area of the village Naraina in the abadi of an approved colony, Inderpuri,New Delhi, and in favour of the donee out of his love and affection. The donor transfers the said property to the donee by way of gift together with all the liberties, privileges, easements and advantages appurtenant thereto. 2. That the transfer hereunder include the transfer of all the rights of the donor over in the said entire freehold property bearing No. C-57, constructed on freehold plot No. C-57, measuring 500 sq. yds., with terrace rights, situated in the area of the village Naraina in the abadi of an approved colony, Inderpuri,New Delhi, to the donee. That the donee shall be entitled to cause the mutation of the said property done in the concerned authority in her own name. 3. That the physical possession of the said property has been handed over by the donor to the donee. 4. That the donor states that this gift of the entire freehold property bearing No. C-57, constructed on freehold plot No. C-57, measuring 500 sq. yds., with terrace rights, situated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. 11: Please explain sources of gifts made by you? Answer: I am submitting the details thereof separately. Q. No. 12: What were the circumstances under which the gifts were given by you? Answer: Purely out of love and affection towards the donee. Q. No. 13: Do you have any correspondence with the donees? Answer: Personal meetings as well as on telephone. Q. No. 14: Whether any documentary evidence was created at the time of gift? If yes, the reasons thereof? Answer: Affidavit and gift deed executed." 10.3 On the basis of the above documentary and oral testimony it is our considered view that in the case of this gift also the requirement of law narrated as above is fully satisfied. 10.4 While coming to the above conclusion we find that sufficient evidence was adduced by the assessee before the AO. On going through the assessment order it appears that the AO while drawing adverse inference against the assessee in relation to these gifts was influenced by several other transactions of gift whereas he should have examined the genuineness and validity of these transactions independently on the facts and circumstances of such transactions. He has not recorded any finding....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave also been mentioned by the AO. Shri Ashok Kumar Jain and Smt. Veena Jain have also shown to have given gifts to the assessee and her family members in those years. It was pointed out by the learned counsel for the assessee that in those years gifts were not doubted as non-genuine and no addition had been made to the income of the assessee in the years. This factual position remains uncontroverted. In any case, since the transactions of gifts pertaining to the assessment year under consideration, received by the assessee alone are to be considered. In our view, the AO was not justified in making reference to unrelated transactions like gifts received by the family members. The AO has also to be faulted for drawing adverse inference against the assessee on basis of such transactions. 10.7 So far as three gifts received by the assessee in the assessment year under consideration are concerned, on the basis of which additions in this year have been made, it may be pointed out that while examining such gifts, the AO has considered various aspects which do not bear any significance or relevance. It appears that he has not appreciated the facts correctly. We may point out the followin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her resources or that the loans were later repaid by the assessee at any point of time. 11.4 It may also be pointed out that the property was purchased on16th Nov., 2002and the payments to the seller were made in September, 2002 and loans were taken much earlier i.e. in May, 2002. It appears that the AO has wrongly tried to correlate the borrowings made by the donor in May, 2002 to the purchasing of the property which transaction took place in November, 2002 i.e. after six months from the dates of borrowing. In our view there is no connection between the borrowings made by Smt. Veena Jain and the purchase of the property by her, and thereafter the gift of the same to the assessee. Thus, the observations which have been reproduced above are found to be based upon totally misplaced reasons and misunderstanding of facts on record. Gift made by Shri Ashok Jain 12. As per details recorded by the AO the property i.e. C-57, Inderpuri,New Delhi, worth Rs. 40.68,450 was gifted to Ms. Mayawati on24th Dec., 2002. The position of payment made to the seller of the property prior to the date of purchase is as under: Date Amount 14-11-2002 10,00,000 Paid to Shri Jaideep for purchas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case of the Department that the assessee was the owner of the funds and no addition can be made on suspicion." 12.3 The submission of the assessee that while deciding the genuineness of the transaction of purchases of the property and subsequent gift of the same to the assessee is concerned, the fact of the donor having incurred loan has no relevance. We find much force in this submission. Gift made by Shri Pankaj Jain: 13. The AO has observed that Shri Pankaj Jain made a gift of Rs. 2,00,000 after borrowing the amount from Blue Bells Finance Co. Ltd. The observations of the AO in this regard are as under: "It is seen that the entire gift made by him is out of amount received from M/s Blue Bell Finance Co. It is surprising that the assessee has gifted the amount out of loan taken from this concern. Since there was no occasion for making the gift, the gifted amount is more than the income of the assessee, there is no relation between the donor and the donee I hold that it is only an arranged gift and an accommodation entry." 13.1 This finding of the AO has been found to be incorrect by the learned CIT(A) who has observed that the gift made by Shri Pankaj Jain was not out of m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een drawn by the AO. 15.2 It would not be out of place to point out that the Addl. Director of IT recorded the statement behind the back of the assessee. Vide letters dt.14th March, 2006,25th March, 2006and18th April, 2006, addressed to the AO, the assessee demanded copies of these statements recorded. However, these statements were never supplied to her despite repeated requests. Since the assessee was not confronted with the statement recorded by the Addl. Director of IT, the assessee also took specific grounds to that effect before the learned CIT(A). In the written submission dt.10th Oct., 2006this request has been repeated which is as under: "The appellant thereafter immediately asked the AO vide letter dt. 18th April, 2006, to supply the documents/statements on the basis of which the AO had drawn such inference but the AO did not confront the appellant with any such evidence/statement of donors in complete violation of the principles of natural justice." "The appellant on various occasions asked the AO to supply the copies of the statements given by the donors, however, the same were not supplied to the appellant in clear violations of the principles of natural justice."....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nuineness of the gifts without bringing any cogent material on record to show that the gifts were not genuine or were managed by the assessee herself. The basic elements that the gifts were without any consideration, it were made voluntarily and out of natural love and affection have not been demolished by the AO. The aspect of voluntariness depends upon the mental state. The element of love and affection relate to emotions of a man. One may be impelled by his conscience or may be moved by emotions to part away with his wealth or property and to give the same to a particular person for whom he has developed love and affection. Such a desire can be developed at any time and on any ground. The factors which weigh for executing such desire are best known to the donor. It is not easy to make probe into such human psychology or human emotions which one may carry at the time of making such sacrifices. It has been stated by some of the donors that the assessee was engaged in the welfare of downtrodden and dalit in the society. May be the prompting motive were such appreciable deeds of social welfare of the problem of the weaker sections of the society, which made the donors to make gifts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any question of law arises. The petition is dismissed. No order as to costs." In view of the above decision relationship between the donor and the donee is not necessary and is not an essential condition of gift. 16.1 In a recent case of Mrs. Raryana Katyal vs. Asstt. CIT, ITA No. 1804/Del/2006, dt.11th May, 2007, Tribunal 'F' Bench vide order dt. 11th May, 2007 [reported at (2008) 1 DTR (Del)(Trib) 24-Ed.] has decided a case relating to two gifts of Rs. 2.5 lakhs each from Sudhir Duggal and Satish Kumar Dhingra. The assessee Mrs. Ranjana Katyal who received the gifts was not related to the donors and one of the ground for rejecting the genuineness of the gift that there was no relationship between the donor and the donee. The objections of the Department to the genuineness of the gift was that the assessee was not able to inform even about the whereabouts of the donors. It was pointed out that donors was not related by blood to the assessee hence there was no question of natural love and affection resulting in the gift. Learned Departmental Representative while supporting the case of the Department also placed reliance of the decision of Delhi High Court in the case of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, although the gifts are normally given on many occasions like birthday, marriage anniversary and other events. However, gift may be given at any time as per the wishes of the donor and the donee. Thus, it cannot be said that if a gift is not made on particular occasions on any event then such gift is not a genuine gift. Hence, in our view occasion is not a relevant criteria. 17.1 The learned AO, after making observations regarding creditworthiness of the donors and genuineness of the transaction of the gift has held the impugned gifts to be non-acceptable and non-genuine. We have already dealt with various objections raised by the AO for treating the gifts as non-genuine and have held that such objections are either irrelevant or extraneous to the basic ingredients of the gifts. 17.2 It is a settled legal position that for claiming the benefits of gifts, the assessee is required to satisfy the following conditions: 1. Identity of the donors. 2. Creditworthiness of the donors. 3. Genuineness of the transactions of the gifts. 18. We shall deal with each ingredient separately. 18.1 Identity of the donors: In the instant case all the three donors appeared before the AO and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f sources of the donor or from where he brought the money or the property. In the case of Sreelekha Banerjee vs. CIT, it was held that if the evidence of the assessee was convincing then rejection of the same cannot be done by the Department without bringing some new and cogent evidence. We have also gone through the material on record and find that the CIT(A) was correct in holding the donors had full creditworthiness and were capable of making the gifts from their own sources. 18.3 Genuineness of the transaction of gifts: Once the identity of the donor is established and his capacity is also proved then the only question to be seen is as to whether the transactions of gift was genuine or not. For examining this aspect, the conduct of parties, that is the donor and the donee, and the appreciation of attending circumstances becomes necessary. The conduct can be seen from various angles. If the donee makes his or her own investments for arranging the gift or purchasing the gift or directly or indirectly manages such gifts then such conduct will definitely render the transactions as a colourable one or of dubious nature. Similarly, if the donor makes a gift in lieu of some valuable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... gift in lieu of some tangible benefit derived by them from the assessee by misusing her office of public servant. On the contrary the assessee adduced sufficient evidence to show that the gifts were made voluntarily by the donors without any consideration and out of natural love and affection. All the three donors have repeatedly confirmed the fact that the properties were gifted by them to the donee out of natural love and affection. The aspect of voluntarily giving of gifts has been fully proved in all the three cases. The delivery of possession was given at the time of making gift. The gifts of immovable property in the instant case prove the genuineness of the transactions beyond any shadow of doubt because of the procedure adopted for transferring such properties by way of gift through registered deeds. 18.3.3 It is not uncommon that people give donations and charities to persons in whom they place faith or for whom they have limitless regards. Similarly, gifts are also made of invaluable properties for furtherance of noble objects executed by personages of high eminence. As stated by the donors in their statements recorded by the AO, the donee is a public and political figu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....corded by the Tribunal. It has nowhere been established that the gift had any relation with the service rendered. It may be the basis of acquaintance but cannot be considered as having any link or reference, traceable to the vocation which the assessee was performing as Khadim. In these circumstances, we are of the view that the Tribunal was justified in holding that the sum of Rs. 1,05,000 received by the assessee from Abu Sufian under gift deed dt.22nd June, 1978, was not taxable as the assessee's income from his profession/vocation. The reference is answered in favour of the assessee and against the Revenue. No order as to costs." 18.3.5 In the instant case the Department has not brought any material to question such feelings and desires of the donees and, therefore, the AO was not justified in holding that the gifts were not genuine. 19. Keeping in view of the totality of the facts and circumstances of the case and after considering the entire material available on record we are of the opinion that all the three gifts are not only genuine but also the identity and capacity of the donor to make the gift stands duly and fully established. Hence, we uphold the findings of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er's account in the books maintained by the bank. The bank does not act as an agent of the customer nor can it be said that the banker maintains the pass book under the instructions of the customer (the assessee). 20.5 The relationship between the banker and customer is one of debtor and creditor only. Therefore, a cash credit appearing in assessee's pass book relevant to a particular previous year, in a case where the assessee does not maintain books of account, does not attract the provisions of s. 68. 20.6 In the instant case, in view of the above, neither the gifts relating to immovable properties can be covered under s. 68 nor the gift of Rs. 2,00,000 received by' the assessee can be covered under that provision. Nextly, in view of our findings, recorded above, all the gifts satisfied the requirement of a valid and genuine gift. The assessee has fully explained the same and, therefore, it cannot be said that the addition can be sustained even under s. 69 of the IT Act, as held by the AG, because the source of investment in the properties in question stand fully explained by the assessee in the form of gifts which are found to be genuine by us for the reasons give....