TaxTMI 
TaxTMI 
TaxTMI 
1995 (6) TMI 66
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..... Assessee is a specified HUF. For assessment year 1986-87, assessment had been completed by the Assessing Officer vide order dated 27-3-1989 at an income of Rs. 2,71,344 and agricultural income of Rs. 20,374. (2) to (13) These paras are not reproduced here as they involve minor issues. 14. The third ground of appeal is relating to the addition of Rs. 96,496 and addition of Rs. 6,692 on account of two gifts claimed to have been received from two non-resident Indians. Assessee had claimed to have received five gifts in all amounting to Rs. 1,18,188. The three gifts of Rs. 5,000 each from Indians are not in dispute before us. The dispute is relating to the two gifts claimed to have been received from two non-resident Indians. Assessee had furnished confirmatory letters from the non-resident Indians. Assessee had however not disclosed the source of the amount nor had the identity of the donors been established. From these facts, it was held by the revenue that the burden of proof that lay on the assessee had not been discharged to the satisfaction of the Assessing Officer. On appeal, the learned CIT(Appeals) held that the Assessing Officer had called for certain details which were n....
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....the receipt of the money as capital does not preclude the ITP from going into the question whether this is actually so. Where, therefore, an assessee-company represents that it had issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company. The ITO would be entitled, and it would indeed be his duty, to enquire whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the ITO finds that the alleged shareholders do not exist, then, in effect, it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of the words 'may be charged' in section 68 clearly indicated that the ITO would then have the jurisdiction, if the facts so warrant, to treat such a credit to be the income of the assessee. " In view of the decision of the Delhi High Court referred to above, the contention raised on behalf of the assessee is unfounded. We, therefore, confirm the view of the CIT(Appeals) in this regard. 18. With regard to the addition of Rs. 96,496 and Rs. 6,692 claime....
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....D.C. Rastogi (HUF). In connection with these two gifts, the assessee was required to inform the antecedents of these donors, their exact source of income in India/aboard, their addresses in India, information as to how they knew the assessee and their present address abroad and details of their families. In the letter dated2-3-1989filed by the A.R. of the assessee, the information provided is that Sh. Swaraj Paul was working with Shri D.C. Rastogi as a Chemist in M/s. Synthetics & Chemicals,Bareillyin the year 1968 to 1984 after which he migrated toSweden. Regarding the gift of Sh. Thomas Mathew ofLibya, it has been stated that it was learned the FERA authorities (who had raided Shri D.C. Rastogi in November 1986) had investigated that gift and they had found the transaction to be genuine. " 19. From the above findings of the Assessing Officer it is evident that assessee had furnished evidence regarding the receipt of the amounts from abroad. It is, however, evident that assessee had not been able to establish the financial capacity of the donors.The genuineness of the gifts has also not been established. The Delhi High Court in the case of CIT v. Mrs. Sunita Vachani [1990] 184 IT....
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....before the FERA authorities for establishing the genuineness of the receipts. Secondly, for the purposes of income-tax, the mere receipt from abroad is not sufficient to absolve the assessee from the burden of proof, required in respect of gifts. 20. Considering the facts and circumstances of this case and the evidence on record, we are of the view that the onus that lay on the assessee to establish the creditworthiness of the donors and genuineness of the gifts has not been discharged. The Assessing Officer in such circumstances, was justified in invoking section 68 in deeming the receipts as income of the assessee from undisclosed sources. The additions of Rs. 96,496 claimed to have been received from Shri Thomas Mathew ofLibyaand Rs. 6,692 received from Shri S. Paul are accordingly confirmed. 21. The last ground of appeal is as under : " That the learned CIT(Appeals) was wrong in not giving any finding regarding the protective assessment made by the A.C. even though a specific ground was raised. Since the income belonged to the assessee and there is no evidence to the contrary, the assessment may be made substantive in the hands of the assessee. " 22. Assessee had raised gro....
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.... interest income, etc., the receipt of gifts as listed above in all amounting to Rs. 47,095 had been claimed to have been received. Assessee had filed a confirmation from Anil Kumar Sharma regarding the gift of Rs. 5,000. Assessing Officer had issued notices under section 131 to Shri A.K. Jain, A.K. Mukherjee and Anil Kumar Sharma asking the following information : (i) particulars of income from the year in which gifts were made, in case, they were not income-tax assessee ; (ii) the name of the bank and branch in case gift was by cheque ; (iii) a copy of theBankPassbook for one year including period of six months prior to the date of making the gift ; (iv) whether any benefit or consideration was received for the gift made ; (v) particulars of members of family and (vi) particulars of other gifts made during the year. Whereas confirmations were received from these persons, the information called for was not made available to the assessee. Assessing Officer issued fresh notices under section 131 for personal attendance and for furnishing of requisite information. Persons referred to the earlier confirmations sent but did not furnish the requisite information. The Assessing Of....
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....t. In response to this query assessee had filed a letter dated26-12-1988signed by Shri S.B. Gupta, advocate, by virtue of which Assessing Officer was informed that Shri Sharma was an Engineer and Shri D.C. Rastogi was staying atAl-raas,Kuwait. Shri Sharma had met Shri Rastogi inKuwaitbut thereafter he has migrated toUSAand his address was not known. Assessee had further confirmed that there was no correspondence regarding any offer or acceptance except the certificate of Shri Sharma which had been filed. Assessee had further pleaded that the requirement under section 68 was met and as such the gifts should be accepted as genuine. 30. The Assessing Officer did not accept the claim of gifts made to the assessee, for the following reasons : Firstly, only confirmation letters had been filed by the assessee and in the case of B.C. Sharma a photostat copy of the affidavit purportedly signed by Shri B.C. Sharma had been filed. Photostat copy of the bank certificate had been filed but despite being specifically asked the assessee did not produce the original documents. The Assessing Officer further held that it was accepted position of law that assessee had to establish not only the fact ....
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....rily. 35. Similarly in the case of B.C. Sharma, photostat copy of the affidavit has been produced as also the photostat copy of the bank certif icate. Even on demand the original affidavit as also the original bank certificate duly signed by the person was not furnished before the Assessing Officer. The present address of the donor was also not furnished. As has been pointed out in the case of Shri D.C. Rastogi, it is the duty of the assessee to establish the financial capacity of the donor to make the gift and satisfy the Assessing Officer about the genuineness of the gift. In the case of B.C. Sharma the mere fact that the amount is stated to be out of NRE account would not be sufficient to establish the financial capacity of the donor. His capacity could be examined from the copy of the bank account or from any financial statements/bank statements establishing his creditworthiness. Such information was not made available to the Assessing Officer. The possibility of money having been arranged through havala could not be ruled out. As such the Assessing Officer was justified in treating the amounts of gifts claimed to have been received as income from undisclosed sources. 36. Wit....
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....rt from the certificate already filed with the Assessing Officer there was no correspondence with the donor and that the donors was a friend of D.C. Rastogi, son of the appellant having worked with him in Bareilly in 1974-75 and that as and when Shri Rama Krishna came to India he met Shri D.C. Rastogi and that the donor had visited India in 1986 and had gifted the amount to the assessee. Assessee had further stated that for the last one year the donor had not written to the assessee and that the present address was not known. It was further informed to the Assessing Officer that the donor had substantial income inLibya. 42. The Assessing Officer had made an enquiry from the Syndicate Bank, Rajender Nagar and found that on21-3-1986when a cheque for Rs. 50,000 was issued to the assessee, there has been credit balance of Rs. 5271.60 only in the bank account of the donor. On25-3-1986a sum of Rs. 50,000 had been credited in that account by telegraphic transfer and the same amount was debited to this account in the name of the appellant. There was no information about the source of Rs. 50,000. 43. From the evidence referred to above, it is evident that the financial capacity of the don....