TaxTMI 
TaxTMI 
2007 (1) TMI 208
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....ious gifts. The details of such gifts assessee-wise are as under: Sr. No. Name of the assessee Name & Address of the donor Amount of Gift (Rs.) Date of Gift 1. Sh. Quamruzama Rana (i) Mr. Abdul Javed S/oShri Gafoor R/o 3342, Kucha Rehman, Delhi-6 2,00,000 2-12-2000 (ii) Mr. Mohd. Ahsan S/o Shri Mohd. Hafizur Rehman R/o 3342, Kucha Rehman, Delhi-6 1,00,000 14-12-2000 (iii) Mr. Azhar Mohd. S/o Shri Mohd. Hafiz R/o 294, Matya Mahal, Delhi-6 2,00,000 30-3-2001 Total 5,00,000 2. Sh. Abdul Quadir Rana (i) Sh. Rafiq Ahmad S/o Sh. Mohd. Hafiz, 294 Matya Mahal, Delhi-6 2,00,000 2-12-2000 (ii) Sh. Abdul Arshad S/o Abdul Gafoor, 3342, Kucha Rehman, Delhi-6 1,00,000 14-12-2000 (iii) Kum. Neelofar D/o Mohd. Yusuf Ali, 5205, Balli Maran, Chandni Chowk, Delhi-6 2,00,000 2-12-2000 Total 5,00,000 3. Sh. Noor Salim Rana S/o Late Sh. Liyakat Ali, 36, Krishnapuri, MZR (i) Shri Rafiq Ahmad S/o Mohd. Hafiz, 294, Matya Mahal, Delhi-6 2,00,000 2-12-2000 (ii) Shri Shakil Ahmad S/o Mohd. Hafiz, 294, Matya Mahal, Delhi-6 1,00,000 6-12-2000 (iii)....
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....-2000 (ii) Sh. Rafiq Ahmad S/o Mohd. Hafiz, 394, Matya Mahal, Delhi 6 2,00,000 26-3-2000 (iii) Shakil Ahmad S/o Mohd. Hafiz, 294, Matya Mahal, Delhi-6 1,00,000 16-12-2000 (iv) Mohd. Hafiz S/o Iliyas Ahmad, 294, Matya Mahal, Delhi-6 1,00,000 2-12-2000 Total 5,00,000 11. Smt. Intikhab Rana W/o Shahnawaz Rana, 36, Krishnapuri, M. Nagar (i) Shri Azhar Mohd. S/o Sri Mohd. Hafiz, 294, Matya Mahal, Delhi-6 2,00,000 6-12-2000 (ii) Shri Azhar Mohd. S/o Sri Mohd. Hafiz, 294, Matya Mahal, Delhi-6 1,00,000 15-12-2000 (iii) Sh. Mohd. Yusuf S/o Shri Mushtak Ali R/o, 5205, Balli Maran, Chandni Chowk, Delhi-6 2,00,000 26-12-2001 Total 5,00,000 Grand Total 52,00,000 All these appellants have filed the details of the gifts received donor-wise, since an individual donor has given gifts to various appellants before us which is as under: Sr. No. Name of the Donors Name of the Donees/Assessees to whom gift made Date of Gift Amount of Gift (Rs.) 1. Mohd. Ahsaan 1. Zakir Ali Khan 14-12-2000 1,00,000 2. Saida Begurn 2-12-2000 2,00,000 3. Shamia Zeenat 6....
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.... deeds. Meanwhile, the then assessing officer got conducted discrete enquiries through it Inspector regarding the identity and creditworthiness of the donors residing at Delhi at the addresses given in the Photocopy of the gift deed. The discrete enquiry of the Inspector was not in support of the genuineness of the alleged gifts. The assessee was asked to substantiate the claim of having received gift of Rs. 5 lakhs by producing the donors so that the genuineness of the gift, creditworthiness of the donor and reason and occasion for giving and receiving the gift may be ascertained. On the date fixed for 4-12-2003, the donors were not produced but Shri Dinesh Mohan counsel for the assessee sought adjournment. On change of incumbent, the undersigned issued a notice under Section 142(1) on 1-1-2004 requesting the assessee to make compliance of the requirements made earlier and also to furnish the original gift deeds and to produce the donors for recording their statement as well as the donee for the same purposes. The authorized representative of the assessee vide letter dated 9-2-2004 filed original gift deed dated 1-12-2000, 14-12-2000 and 26-3-2001 along with an affidavits which....
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....ed in 57 ITD 295 decided by D Bench of ITAT, Delhi vide order dated 28-6-1995 wherein it has been held that the onus lies on the assessee to establish the creditworthiness of the donor and genuineness of the gift, which the assessee has failed in this case by not producing the donors and donee for cross examination. (e) History of the Rana group of cases is that in earlier years gifts were also received by the other members of the group and whenever, they need, unaccounted money is introduced in the form of gifts. On these facts and circumstances of the case and in the light of the case laws mentioned above, the genuineness of the gifts regarding the basic four elements i.e., identity of the donor and donee, creditworthiness of the donors, the relationship between the donors and donee to establish that there is a natural love and affection, and reason and occasion of accepting the gift have been remained unexplained and unestablished. The genuineness of the gift is, therefore, not accepted and treated as undisclosed income of the assessee under Section 68 of the Income Tax Act, 1961. This gives an addition of Rs. 5,00,000." 4. The counsel for appellants submitted tha....
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.... these appeals. The learned Counsel for the assessees Shri O.P. Sapra submitted that the additions are made under Section 68 of the Act. Since the assessee is not maintaining any books of account, no additions can be made under Section 68 of the Act. For this purpose, he relied upon the decision of ITAT, New Delhi in the case of Brij Mohan & Sons v. Income Tax Officer (IT Appeal No. 762 (Delhi) of 2004, dated 4-8-2006). He submitted that though the assessee has prepared his statement of affairs, the same do not amount to maintaining books of account. Thus, in absence of any books maintained by the assessee, addition under Section 68 is not sustainable. He thereafter referred to balance sheet of all the donors. He selected one sample case of Smt. Naushaba Rana for the purpose of arguments. He submitted that the assessee Smt. Naushaba Rana received gifts from Shri Rafiq Ahmed, Shakeel Ahmed, Mohd. Yusuf and Mohd. Hafiz. Shri Rafiq Ahmed has total capital of Rs. 15.47 lakhs, Shri Shakeel Ahmed has total capital of Rs. 21.82 lakhs and Shri Mohd. Yusuf has capital of Rs. 19.68 lakhs. Their identity is proved as they are assessed to income-tax. All of them have signed declaration of g....
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....ay of receipt of gifts. Thus alternatively provision of Section 69 can be applied. He strongly relied upon the decision of ITAT Ahmedabad in the case of Income Tax Officer v. Dr. Jagdish J. Kansangara (1998) 66 ITD 381 wherein the Tribunal held as under: We have considered the rivals submission and perused the fact on record. Here are assessees who belong to do family Doctors by profession, running an ultra modern surgical hospital having very lucrative practice at Rajkot. It is strange that they approached some illiterate/semi-literate agriculturists for getting donations for their personal ends. All the donees are undisputedly wealthier in education, reputation, earthly belongings vis-a-vis the donors who are rank outsiders and simple natured agriculturists who at the instance for the assessee did appear before the GTO and confirmed of having made gift to the assessee. The donors also filed gift tax returns obviously at the instance of the assessee but the GTO completed the assessment on protective basis. This queer behaviour and cannot be ignored off. It is well-settled law that the taking authority can take note of surrounding circumstances CIT v. Durga Prasad More [19....
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....d and the case laws cited. As rightly contended by the learned Counsel for the assessee, whether the gift is genuine or not, is a question of fact and the circumstances in each case will determine the same. However, it is to be noted that these are not the simple case of cash credit but by way of gifts from strangers. It is not disputed by the assessee that they were asked to produce the donors. It is also not in dispute that the appellants denied their ability to produce donors. It is surprising to note that the assessee who is able to receive huge gifts and has been able to receive the gift deed and affidavit along with income-tax records of the donor could not produce the donors for verification. It is also surprising to note that an these donors who can oblige the assessee by giving gifts in such huge sum and also filing their letters etc. made themselves unavailable for verification of such fact. Thus it is to be held that everything is not well either with the donors or with the donees. Mere filing of certain papers do not prove the genuineness of a transaction particularly when the assessing officer requires the presence of the parties to the transaction. No circumstances ar....
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....ailable instantly but whey and in what circumstances he will not come forward to tell & truth should be demonstrated. None of the donors has stated any reason as to why they are not available for examination. The assessee has not been able to produce any such reason. Thus all the circumstances put together lead us to hold that the gifts are not genuine. 7. A question is when the assessee is not maintaining any books of account, whether addition can be made under Section 68 of the Act? In the present case it is seen that the assessee has prepared his statement of affairs. A statement of affairs is nothing but a balance-sheet of a person as on a particular date. Such statement can be prepared only from the books of account. Thus firstly it is incorrect on the part of the assessee to contend that he is not maintaining any books of account. The statement of affairs prepared is testimony of the same. Such statement also includes the receipt of gift. Thus once it is found that the gifts are not 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 Tribuna....