TaxTMI 
TaxTMI 
2006 (5) TMI 159
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...., assessee filed the return on 13-6-1995, declaring gift chargeable to tax at Nil and along with that assessee also furnished a letter dated 27-5-1995 and a note stating that the assessee was filing the return under protest. Assessee also sought for various materials/evidences, which were relied upon by the Assessing Officer for invoking the provisions of section 16 of Gift-tax Act. 4. A letter dated 20-2-1998 along with notice under section 15(2) was issued to the assessee. By this letter the assessee was informed of the reasons for reopening the assessment under Gift-tax Act, though it was known to the assessee already by virtue of assessment order for the assessment year 1992-93 dated 16-4-1996. 5. Assessing Officer records the circumstances leading to the reopening of the assessment under the Gift-tax Act. Assessee, Shri S.K. Jain is the Managing Director of a company known as "M/s. Bhilai Engineering Corporation Ltd., Bhilai". Shri J.K. Jain is one of his employees, Manager. The residential premise of Shri J.K. Jain was searched by CBI on 3-5-1991 in connection with hawala transactions. During the course of search, besides other valuables, some incriminating documents we....
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.... Supreme Court has not dismissed the entries in the diary altogether. It has been held that they may be used as corroborative evidence. There are scores of such evidences which are strewn all over the seized documents. There are verifiable entries in respect of farm land, investment in construction of immovable properties, acquisition of artifacts, amounts spent on travelling etc. There are on record statements of independent witnesses who have verified such entries. Further particulars regarding the expenses as recorded in the seized documents and the statements of various persons are available in orders of assessment passed in the assessee's own case in reassessment proceedings under the Income-tax and Wealth-tax Act. For the sake of brevity they are not repeated here. Suffice it to say that they are equally relevant to the assessment made under the Gift-tax Act also. As held in the said proceedings, there are reasonable ground to conclude that the assessee has, during the accounting period, made huge disbursements of money to several persons, the reason whereof has not yet been disclosed. The extent of such disbursements is available in several seized documents and more particul....
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....R 6 (SC) (4) J.K. Synthetics v. CBDT [1972] 83 ITR 335(SC) (5) Sheo Narain Jaiswal v. ITO [1969] 176 ITR 352 (Pat.) (6) CIT v. T.R. Rajakumari [1974] 96 ITR 78 (Mad.) (7) Chunnilal Onkarmal (P.) Ltd v. ITO [1983] 139 ITR 380 (MP) (8) Yeshwant Talkies v. CIT [1980] 157 ITR 103 (MP). 10. It was further submitted, the transactions are lacking basic facts required to define it as "gift", as defined under section 2(xii) of the GT Act. Gift is a bilateral transaction, existence of donor and donee is a must, property must be transferred from one person to another voluntarily and without any consideration and the property under transaction must be an existing property. In the instant case of the assessee there is neither any cogent material available to this effect nor the Department has placed any material on record. Assessee again relied upon the decision of the Hon'ble Supreme Court in the case of Goli Eswariah v. CCT [1970] 76 ITR 675 and the decision of the Hon'ble Kerala High Court in the case of CGT v. R. Kesavan Nair [1974] 96 ITR 365. 11. Further, it was contended that the recipients have denied any receipt of such gifts, particularly the recipient, Shri P. Sh....
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....ntial conditions-( a) there should be a donor (payer); (b) there should be a donee (recipient); (c) property must have changed hands; and (d) there must be acceptance of gift by the donee. 14. Relying upon the decision of the Hon'ble Supreme Court in the case of Goli Eswariah, CGT(A) held that the transaction is not complete under the Gift-tax Act if the act is unilateral. To this act, there must be two or more persons involved. In the instant case of the assessee, the Assessing Officer has not mentioned as to who are the recipients/donees. In the very assessment order, Assessing Officer has not mentioned any person as direct recipient. There should be an identifiable donee. He has calculated the gift on the basis of a diary marked MR-71/91, where names of some persons have been mentioned in the said diary in code language. He has not specified the names of donees with complete names and addresses. Relying upon the decision of the Hon'ble Kerala High Court in the case of R. Keshavan Nair, wherein it was held "it, therefore, follows that there cannot be a gift in law without vesting of the property gifted in the transferee, and such vesting cannot take place without the consen....
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....ded under section 16(1) of the Gift-tax Act, 1958. 20. The reasons for reopening were recorded on 30-3-1995. There was a search operation by the CBI at the residential premises of Shri J.K. Jain situated at G-30, Saket, New Delhi. Shri J.K. Jain is the Manager of Bhilai Engineering Corporation Ltd. ('BEC' for short). Cash, valuable assets and foreign currency of UK, US, Duchmark, France and Hongkong was seized, also two diaries and files. The seized materials were received by the Officer on 24-3-1995 from CBI through DDI New Delhi, consisting of photocopies of diaries, registers, reports, etc. The materials were scrutinized. It belonged to Jain Group, assessed in Special Range, Bhilai, viz. Shri S.K. Jain, Shri B.R. Jain, Shri N.K. Jain, Smt. Poonam Jain and BEC. The assessee group is engaged in the business of manufacturing of engineering structures, steel, fertilizers, processing of foodstuff etc. The firm, viz. M/s. Bharat Industrial Works, Bhilai in which Jain brothers happen to be partners is engaged in executing contracts of construction of boilers for Thermal Power Plants throughout the country. CBI formed the opinion that they were indulged in hawala transactions for tra....
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..... Jain and Poonam Jain, wife of Shri S.K. Jain etc. It further records "in all probability 'C' may mean 'Commission' received by the persons of the group on account of hawala transactions since in the diary pertaining to the notings of receipt and payment of money on account of hawala transactions does not separately give the figure of commission. It has to be separately assessed in the hands of S/Shri S.K. Jain, B.R. Jain and N.K. Jain in equal proportion for want of correct bifurcation of it as per their memorandum of understanding, since no note found placed in the seized material and it is chargeable to tax for the assessment year 1991-92. Thus Rs. 64,97,900 is assessable in the hands of each". 23. Then it is recorded that Shri S.K. Jain vide letter dated 31-5-1994 addressed to the Enforcement Directorate explained how the foreign articles were received on behalf of Shri S.K. Jain and customs duties were paid. 24. After giving the details as briefly narrated above, it is concluded as follows: "Financial affairs of this group as seen through the seized material appears to be interwing bringing into fold the three brothers viz. S/Shri B.R. Jain, N.K Jain and S.K Jain and....
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....on of the impugned assessment, has been declared illegal and nullity. (4) CGT(A) erred in setting aside the assessment order dated 30-3-1998; whereas he should have quashed the order as such and deleted the additions (Grounds of Appeal Nos. 17 to 21). 27. The learned counsel for the assessee briefly stated the facts as under:- The assessee, an individual, derived income, inter alia, from salary, business and other sources during the relevant period. A search and seizure operation was carried out by the Central Bureau of Investigation (CBI) on 3-5-1991, at the residential premises of one Shri J.K. Jain at G-36, Saket, New Delhi, an employee of M/s. BEC Impex International Private Limited, a company in which the assessee was a Director. From the residential premises of Shri J.K. Jain, some loose sheets/documents and diaries were found, which were seized by CBI. The diaries so seized from the premises of Shri J.K. Jain included one spiral bound diary, which was in the handwriting of Shri J.K. Jain and the same was marked as MR-71/91 by CBI. 28. Pursuant to warrant of authorization issued under section 132A of the Income-tax Act, 1961, CBI handed over photocopies of the sei....
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....999. The CGT(A) set aside the original assessment for fresh assessment with certain specific directions to be followed while redoing the assessment. In fresh assessment vide order dated 23-3-2002, Assessing Officer merely repeated the additions made in the original assessment without complying with the specific directions of the CGT(A). The present cross appeals by the assessee and the Department have been filed against the order of the CGT(A) dated 3-8-1999. 33. With regard to Proposition No. (1), i.e. initiation of proceedings on the dictates of higher ups (Ground No.8), the learned counsel for the assessee submitted as under:- Reassessment proceedings were initiated after receipt of part of the seized documents along with letter dated 20-3-1995 from DDIT (In v.), New Delhi by the Assessing Officer on 24-3-1995 at 5.00 p.m. Prior to the receipt of the aforesaid letter by the Assessing Officer, DDIT (Inv.) had sent a letter dated 28-2-1995/1-3-1995 to CIT, Jabalpur which contained, inter alia, the following documents/statements: (i) Report of CBI; (ii) Statements of the assessee before CBI; and (iii) Report sent by DDIT, Unit I to DI appraising about the documents. ....
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....IT, Jabalpur was directed by the Investigation authorities in Delhi to direct the Assessing Officer of the assessee to initiate reassessment proceedings. On 20-3-1995, the Assessing Officer, surprisingly, writes a letter to the CIT, Jabalpur referring to some letter F.No. CIT/JBP/1/94-95, dated 7-3-1995 informing that he is yet to receive-material from DIT (Inv.), New Delhi. The fact that the Assessing Officer writes the aforesaid letter on 20-3-1995 clearly indicates/establishes that the directions of the Investigations at New Delhi to reopen the assessments, as contained in their letter dated 28-2-1995/1-3-1995, was duly communicated by CIT, Jabalpur to the Assessing Officer, though the Department has, either deliberately or for some other reason, not brought the manner of such communications on record. Under the cover of letter dated 20-31995, the DDIT (Inv.) sent the documents to the Assessing Officer, which was received by the Assessing Officer on 24-3-1995 at 5.30 p.m. In the above letter dated 20-3-1995, DDIT (Inv.) refers to discussions in the matter with CIT, Jabalpur, wherein the Assessing Officer is admittedly absent and requested the Assessing Officer to initiate reasse....
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....ssing Officer did not have all the requisite documents in his possession, keep aside applying his mind to the same. In addition to the aforesaid, in the letter dated 29-3-1995 the Assessing Officer refers to doubt regarding the entity referred to as 'BECO' and states that discussions have been held with Shri P.C. Chhotay, DDI (Inv.) and Shri G.P. Garg, DG on 27-3-1995 and 28-3-1995 and states that necessary action are in full swing. As such, the involvement of DDIT (Inv.) and DG (Inv.) and CIT, Jabalpur is clearly established. 39. Learned counsel further submitted, above all, a critical examination of the reasons recorded (as discussed infra) clearly reveals that there was no application of mind by the Assessing Officer to reopen the gift tax proceedings and the same were reopened merely to comply with the directions of the higher authorities. In the ten pages of the reasons allegedly recorded by the Assessing Officer, valid reason for reopening the gift tax proceedings is conspicuous by its absence. 40. It was further submitted, it is pertinent to mention that the Tribunal in income tax proceedings held, dismissing the contentions of the assessee that there is no material to....
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....isions:- (1) Purtabpur Co. Ltd v. Cane Commissioner of Bihar AIR 1970 SC 1896. (2) State of UP v. Maharaja Dharmander Prasad Singh AIR 1989 SC 997. (3) Arjun Singh v. Asstt. DIT (Inv.) [2000] 246 ITR 363 (MP). (4) Gujarat Gas Co. Ltd v. Jt. CIT [2000] 245 ITR 841 (Guj.). Relying upon the following decisions, learned counsel submitted, initiation of proceedings under section 147 and other sections are clearly illegal and bad in law:- (1) Shea Narain Jaiswal's case (2) Yeshwant Talkies' case (3) T.R. Rajakumari's case (4) Jawahar Lal v. Competent Authority [1982] 137 ITR 605 (Delhi) (5) Rajputana Mining Agencies v. ITO [1979] 118 ITR 585 (Raj.) 43. Learned counsel submitted, the diary is not in the handwriting of the assessee. It is written by Shri J.K Jain. The total gifts treated in the hands of the assessee comes to about Rs. 52 crores; but the persons to whom the payments/gifts made include assessee's own company, assessee's brothers, their wives and children. Can there be a gift to assessee himself? Most of the persons whose names have been deciphered and mentioned by the Assessing Officer in his order have already been acquitted and held as not ....
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....tioned as 30/3. Learned counsel again brought our attention to Paper Book Page 132, copy of the order sheet from 30-3-1995 to 27-11-1998 in respect of the income tax proceedings, particu1arly the noting dated 22-3-1996, wherein he was to proceed to Delhi to get the approval of the order from authorities at Delhi. In this it is further mentioned "in this connection, the CIT, Jabalpur also directed that there is no need in attending the proceedings before the Hon'ble Settlement Commission in Bombay on 3 and 4-4-1996 which was decided to be attended earlier". 45. Replying to the above, the learned standing counsel for the revenue submitted, the same argument was raised in income tax matters before the Tribunal in ITA Nos. 552 to 556/Nag./1997 for the assessment years 1988-89 to 1992-93 and vide its order dated 31-8-2004, the Tribunal dismissed the assessee's contentions, observing as under:- "From the correspondence referred to above as well as the entries in the order-sheet, we do not find any such dictates to reopen as has been alleged on behalf of the assessee" ............................................................... "There is no material available on record to c....
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....---------- Page 2 : You are requested to kindly direct the Assessing Officer of Bhilai to consider the report sent by CBI and take action under Direct Taxes. Page 2/Para 5 : Accordingly, the Assessing Officer has to initiate proceedings to tax the unexplained investment (or expenditure). Page 2/Para 5: The Director General of I.T. (Inv.) North has desired that action ....
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....Sufficiency or insufficiency of that cannot be looked into by the Tribunal. 51. Now coming to the argument of the learned counsel that the decision of the Tribunal in income tax appeal cannot bind the Tribunal, we agree with the above proposition. But at the same time, since the facts are interlinked and ascertained out of the same set of papers, the relevancy or irrelevancy desires to be considered. In the income tax proceedings, after considering the issue elaborately, reopening was upheld by the Tribunal. The stand of the assessee now in these proceedings is that the conclusion arrived at by the Tribunal in income tax proceedings cannot be taken note of for the reason that the Tribunal had not considered the importance and consequence of letter dated 29-3-1995 written by the Assessing Officer, referring to discussions he tad with DDIT (Inv.) and DG and the guidelines were given by DDIT (Inv.) how to proceed. Another argument advanced by the learned counsel is that the Tribunal had not also considered the Order Sheet entry of April 1995 (exact date is not clear), which states that "reopening of the cases - reasons to work out" clearly suggest that as on 30-3-1995 the reasons w....
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....hat the power of the Assessing Officer has been curtailed by a direction. 55. Coming to the decision relied upon by the assessee in the case of Yeshwant Talkies, this decision is also on facts identifiable. This was a case wherein the proceedings were initiated on the basis of audit objection. In the Order Sheet, Assessing Officer recorded that on direction from the Commissioner he was satisfied that income had escaped assessment. There is no such recording in the instant case. The assessee is trying to establish that the reasons were recorded by the Assessing Officer without application of mind and on the basis of the directions of the higher authorities. We have already hereinabove noted that there was no such direction. The CIT was requested to direct the Assessing Officer to initiate proceedings. That does not mean that Assessing Officer has lost his independence to decide. 56. Coming to the decision relied upon by the assessee in the case of T.R. Rajakumari, the facts are clearly distinguishable. This was a case wherein the Assessing Officer was directed by the Commissioner under section 33A(2) of 1922 Act, to delete the additions made for the assessment year 1952-53 and....
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....ason is that the assessee and his brothers are involved in hawala transactions as is evident from the following: --------------------------------------------------- Page References in the Prima facie indication No. reasons recorded that follows --------------------------------------------------- 69. As per CBI report, Indication towards appellant, hawala transactions Shri J.K. Jain and Sh. B.R. Jain were indulging in 'hawala business' and were enjoying 'commission' income. 71. On some pages Indication towards there is working hawala transactions showing conversion ....
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....sactions and definitely not a gift. Learned counsel further submitted, it is also noticed that in the reasons recorded there were reference to transactions being in the nature of sale of scrap as is evident from the following: ------------------------------------------------ Page References in the Prima facie No. reasons recorded indication that follows ------------------------------------------------ Nature of transactions Transactions were stated by J.K Jain related to some as money generation company and not from sale of Scrap the assessee B.R. Jain stated that black money of group &....
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....easoning that led to the belief and such belief should have a rational connection or a live link with the materials on the basis of which the belief was arrived at. Thus, on an examination of the reasons recorded one must be able to reasonably determine that there was application of mind by the Assessing Officer on the material available on record. Further, the conclusion arrived at must reflect honest and reasonable belief based on available material and the proceedings/cannot be initiated on suspicion, gossip or pretence. 63. Construing the expression 'reason to believe', learned counsel submitted, the Hon'ble Supreme Court in the case of Sheo Nath Singh v. AAC [1971] 82 ITR 147 observed: "There can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the ITO may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The ITO would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The Court can always examin....
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....for issuing notice. This requirement necessarily postulates that before the Assessing Officer is satisfied to act under the aforesaid provisions, he must put in writing as to why in his opinion or why he holds the belief that income has escaped assessment. 'Why' for holding such belief must be reflected from the record of reasons made by the Assessing Officer. In a case where the Assessing Officer holds the opinion that because of excessive loss or depreciation allowance income has escaped assessment, the reasons recorded by the Assessing Officer must disclose by what process of reasoning he holds such a belief that excessive loss or depreciation allowance has been computed in the original assessment. Merely saying that excessive loss or depreciation allowance has been computed without disclosing the reasons which lead the assessing authority to hold such a belief, in our opinion, does not confer jurisdiction on the Assessing Officer to take action under sections 147 and 148 of the Act." 66. Relying upon the decision of the jurisdictional High Court in the case of Hindus tan Lever Ltd. v. Wadkar R.B., Asstt. CIT [2004] 268 ITR 332 (Bom.), learned counsel submitted that the reaso....
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.... that the Assessing Officer has prima facie reached a conclusion that certain gifts were given which would have attracted gift tax but on which gift tax has not been paid. Assessing Officer has also seen that before the CBI the assessee has admitted that gifts were sometimes given to bureaucrats and politicians, which statement is corroborated by the assessee's elder brother before the CBI as well before the Assessing Officer. This is reflected in Para 5.2 of the assessment order. It is, therefore, clear that there was sufficient material before the Assessing Officer for him to have a 'reason to believe' that there were gifts which were chargeable to tax but which had escaped assessment. 68. Learned standing counsel further submitted, it is the contention of the assessee that the main focus was on hawala transactions and, therefore, it was not possible to conclude that the payments reflected in the diary were taxable as gifts. It was submitted, the conclusions drawn by CBI are not binding on the Assessing Officer. Assessing Officer is performing a statutory duty on which he is entitled to reach to an independent conclusion, Such a conclusion has been clearly reached by him on th....
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....he reasons primarily focused on escapement of income taxable under the provisions of the Income- tax Act, 1961. Learned counsel vehemently contended that there is no recording of the prima facie belief purported to be entertained by the Assessing Officer that any gift chargeable to tax under the provisions of the Act had escaped assessment in the hands of the assessee. With regard to alleged escapement of gift, in the reasons recorded, there is merely a simple observation, which has been incorporated in the broad propositions filed with the Bench. The said observation could not be regarded as the prima facie belief of the Assessing Officer since the same is vague and ambiguous. The said observation of the Assessing Officer does not reflect any process of reasoning and the application of mind by the Assessing Officer before reopening the gift tax proceedings. There was no prima facie belief entertained by the Assessing Officer prior to reopening the gift tax proceedings and therefore the initiation of reassessment proceedings is bad in law. 71. Learned counsel submitted, the revenue is blowing hot and cold at the same breath by relying upon the statements purportedly recorded by ....
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....issible evidence, being barred by section 162 of the Cr. PC; hence, reliance placed by the Assessing Officer on the statement of Shri J.K. Jain and others for initiation of the proceedings under section 147 is not in accordance with law. This belief of the assessee is to be rejected. After the completion of the original assessment, Assessing Officer came to the conclusion that income has escaped from the tax net, on the basis of information received/statements recorded by CBI. Hence, the assessee's plea that this record cannot be accepted as evidence is to be rejected. On merit, as we have noted above, we may come to a different conclusion, but for the purpose of reopening this is definitely information available with the revenue. From the diary seized from the possession of one of the employees of the assessee, revenue noticed that the assessee made certain payments to some politicians/bureaucrats etc., apparently without any consideration. Even the assessee has admitted to certain extent these facts. Now the assessee is objecting the reopening on the ground that revenue itself is not certain whether the amounts said to be gifted to politicians/bureaucrats etc. were either coming ....
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....ed does not exist or is not material or relevant to the belief required by the section. But the very next sentence, which reads as under, make the point clear that adequacy or inadequacy of the reason cannot be investigated by the Court:- "The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court." Again, the same view has been expressed by the Hon'ble Supreme Court in the case of Ganga Saran & Sons (P.) Ltd. The Hon'ble Supreme Court held "The belief entertained by the ITO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy of sufficiency of the reasons which have weighed with the ITO in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a hearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147(a)". Precisely, assessee is now seeking the same from the Bench. 76. The decision relied upon by the assessee in the case of Hindustan ....
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....fficer on the dictates/directions of the higher authorities, without independent application of mind. The pertinent findings of the Tribunal are given at Para 104, Page 460 onwards. Learned counsel submitted, the following facts primarily noted by the Tribunal, which clearly established the dictates: . DDIT (Inv.) continued to carry out investigations in the matter though not competent to do so. In Para 105 it was noted that DDIT (Inv.), New Delhi issued letters to the assessee calling for explanation and recorded statements though not competent to do so. . In conference held in New Delhi on 22-12-1995, proceedings whereof are borne out by the letter dated 30-1-1996 of the Assessing Officer to CIT, Jabalpur, directions were issued to the Assessing Officer with regard to the manner in which assessment has to be completed. In that letter dated 30-1-1996, Assessing Officer clearly stated that he is acting on directions of the seniors. . Statutory notices were approved by the DDIT (Inv.) though there is no legal requirement to do so. . In letter dated 10-3-1996, Assessing Officer informed DDIT (Inv.) that the assessee is seeking cross-examination and adjournment. Assessing ....
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....x assessment pending till the decision of the Supreme Court in connection with the proceedings initiated by CBI against various bureaucrats and politicians under the Prevention of Corruption Act and IPC for the reason that in the charge sheet filed by. CBI it was alleged that the payment was made for undue/illegal favours. When the gift assessment proceedings were resumed by the new incumbent, he merely followed the findings given in the assessment order dated 16-A-1996, which is evident from the following: (a) In the first show-cause notice dated 20-2-1998, Assessing Officer refers to and rely upon the findings in the assessment order dated 16-4-1996. (b) In the impugned order dated 30-3-1998, Assessing Officer clearly and categorically stated that the findings/conclusions arrived in the income tax assessment order dated 16-4-1996 for the assessment year 1992-93 are being relied upon as under: - Page 2/Para 3 refers to show-cause notice issued to the assessee duly informing that facts and circumstances are similar to income tax proceedings. - Page 3/Para 5.2 Assessing Officer relies upon statements recorded and referred in the assessment order, particulars of expenses ....
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...., learned counsel submitted that the aforesaid facts, even otherwise clearly establish that the fundamental basis of the gift tax assessment was the findings/conclusions/investigations/enquiries conducted to frame the income tax, assessment order dated 16-4-1996. Since the income tax assessment order has been held to be nullity in the eyes of law, the entire basis of the impugned gift tax assessment order has diminished and the impugned order has no legs to stand. The impugned gift tax assessment must, therefore, be held to be nullity even on this count. For the above proposition reliance was placed upon the following decisions:- (1) CIT v. Somani Pilkington's Ltd. [2004] 266 ITR 388 (Punj. & Har.) (2) Farrukhabad Gramin Bank v. ITO [2005] 273 ITR 113 (All.) (3) Assam Co. Ltd. v. Union at India [2005] 275 ITR 609 (Gauhati) (4) Sagar Enterprises v. Asstt. CIT [2002] 257 ITR 335 (Guj.) 82. Replying to the above, learned standing counsel submitted, the assessee has contended that the assessment is invalid as the Assessing Officer has not reached an independent finding but has merely followed the conclusions in the income tax assessment order, which has now been nullifie....
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....eedings cannot be made applicable in the present case. So also there is nothing in the order sheets and the correspondence in the present case to come to any conclusion that the orders of assessment passed in the present case are on the dictates of any higher authorities. The attending circumstances in the income tax assessment proceedings and in the present proceedings are totally different and no parallel can be drawn in this regard. Hence, the standing counsel submitted, this contention of the assessee is also without any basis and deserves to be rejected in limine. 84. In his rejoinder, learned counsel submitted, the gift tax assessment order was also passed on the dictates of the higher authorities. To buttress this proposition, learned counsel submitted, the sequence of events and the recordings in the impugned gift tax assessment order clearly establish that the Assessing Officer had simply followed the findings/enquiries illegally conducted by the authorities, who had no jurisdiction in the matter, as were followed in the income tax order. In the gift tax assessment, the Assessing Officer merely followed the findings/conclusions arrived at in the income tax assessment or....
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....sing Officer informed DDIT (In v.) that the assessee is seeking cross-examination and adjournment. Assessing Officer opined that the assessee should be allowed one month as requested. DDIT (Inv.), New Delhi, however directed the Assessing Officer not to allow further time to the assessee. As directed, Assessing Officer declined further opportunity to the assessee on 25-3-1996." But in the instant case of the assessee, it is gift tax proceedings. This contention was perhaps available to the assessee in the proceedings before the income tax authorities. There is nothing on record to show that this kind of direction was also given in the gift tax proceedings. We are aware that the opportunity for cross-examination to be given or not to be given, and adjournment etc. is at the discretion of the Officer and it cannot be done on the basis of the direction of the higher authorities. But this plea at least is not available to the assessee in the gift tax proceedings. 87. Coming to assessee's contention that DDIT (Inv.) confronted the assessee with various enquiries/investigations illegally conducted by him and relied on the income tax assessment, this is not sufficient to hold that the ....
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....eedings, ipso facto it does not lead to conclusion that there cannot be wealth tax or gift tax proceedings as well. 92. Coming to the decision relied upon by the assessee in the case of Assam Co. Ltd., again, the decision strictly cannot be imported to the case of the assessee. This was a case wherein the assessee filed the return and the assessment was completed. Subsequently reassessment proceedings were initiated on the ground that decision of the jurisdictional High Court in another case showed that assessee's income had escaped assessment. In the decision which revenue relied, viz. Jorehaut Group Ltd. v. Agricultural ITO [1997] 226 ITR 622 (Gauhati), there was no clear finding that cess was allowable only on 60 per cent of income from tea and precisely on this reason the proceedings were initiated by the revenue. Hon'ble High Court held that there was no failure on the part of the assessee to disclose any material facts necessary for assessment. Again, this decision has no applicability in instant case of the assessee. 93. Again, the decision relied upon by the assessee in the case of Sagar Enterprises has no applicability in the case of the assessee. This was a case whe....
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....essee with huge tax liability on the basis of some diary seized from the possession of a third person, viz. Shri J.K Jain, it was incumbent on the Assessing Officer to have established that, firstly, the diary seized belonged to the assessee or not and, secondly, the entries in the diary narrate/record any taxable gifts made by the assessee. It was submitted, the CIT(A) erred in setting aside the impugned gift tax assessment order dated 30-3-19.98 instead of deleting the additions, without appreciating that the diary did not belong to the assessee and/or the ingredients of the gifts were not satisfied. 98. Learned counsel submitted, in the impugned gift tax assessment order there is no finding that the diary seized from Shri J.K Jain was of the assessee. The Assessing Officer clearly ignored the fact that the diary found/seized from Shri J.K Jain was in his handwriting and not the assessee and the assessee denied the ownership of the diary in the statement recorded by the Assessing Officer on 7-2-2003. It was further submitted, in the income tax assessment order, the diary marked MR 71/91 was held to be of the assessee on the basis of the statements of the following persons:- ....
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....ied. Relying upon the decisions in Goli Eswariah's case, CGT v. R. Kesavan Nair [1974] 96 ITR 365 (Ker.) and GTO v. P.J. Kurian [2005] 94 ITD 44 (Coch.)(TM), it was submitted, in addition to identification of donees, consent/concurrence of donee must also exist to constitute a 'gift', which is not there in the instant case of the assessee. 100. Without prejudice, learned counsel submitted, in order to constitute a gift, transfer of property must be either without consideration or without adequate consideration. It was further submitted, the allegations against the assessee were in total contrast to the ingredients which exist in a gift. The circumstances/allegations against the assessee do not in any way point to taxable gift, as is evident from the following:- Proceedings were initiated by the CBI and other authorities against various recipients alleging "bribes", which necessarily involves an element of quid pro quo/consideration. If that be so, the payments cannot be regarded as 'gift'. In the reasons recorded, the Assessing Officer recorded at various places that the entries in the diary pertained to hawala transactions. Again, if that is assumed to be correct, then pa....
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.... basis. It was submitted, normally the Tribunal would not entertain an appeal against remand of a matter for consideration since no prejudice would be caused to the assessee if a fresh look is taken by the Assessing Officer on the basis of the directions given in the remanding order and the material available on record. If according to the assessee, there is no material on record to come to a conclusion that gifts had escaped assessment, then there should be no grievance to them to face the assessment in the light of the directions given by the CIT(A). Standing counsel submitted, further contention of the assessee that the CIT(A) did not appreciate the fact that the diary did not belong to the assessee is totally incorrect. Shri J.K. Jain stated in his deposition before the CBI as under:- "Today, I have been shown two note books and two files marked as (MR-208), 209, 325 & 326/93. The note book and the files mentioned above have been impugned from the search of my house conducted by the CBI/SIC-II, New Delhi on 3-51991. In the note book marked as (M-209/93), the details of credit/ debit have been mentioned from the month of February 1988 to April 1991. This bears my writing. The....
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....r safe custody on my instructions. The aforesaid Shri Anand and Shri Pandey working in BEC, New Delhi since 1985-86 so far I remember. The aforesaid facts can be verified from them." 102. Standing counsel submitted, in various statements given by the assessee before the CBI, he has explained in detail the nature of the entries recorded by his employee, Shri J.K. Jain. It will be clear that most of these entries relate to business dealings of the assessee and even the deposition of the other employees make it clear that these dealings are as per the instructions given by the assessee. Besides this, there are certain entries in respect of payments made which have been admitted to be correct. All these aspects are extensively discussed in the order of the Tribunal in income tax proceedings and it is clear from the discussion therein that the contention of the assessee that the diary did not belong to him is not accepted. A perusal of Paragraph 87 of the order of the Tribunal makes this position very clear. It was further submitted, the last contention of the assessee that the ingredients of the gift have not been satisfied is also without any basis. The ingredients of the gift have....
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.... secondly, the entries in the diary narrate/record taxable gifts made by the assessee. The diary whether exclusively belongs to the assessee or to all the brothers, not necessary to be considered at this stage. The matter was remanded by the CGT(A) and he has not decided the issue on merit. Hence, we reject assessee's this contention to bypass the CGT(A), at this stage. The diary was written by an employee, at the insistence of Managing Director - assessee. It is another matter of getting it approved by other Directors, who are assessee's brothers/relatives. 105. Again, coming to the contention of the learned counsel that the statements recorded by DDIT (Inv.), an authority outside the jurisdiction cannot be utilised in these gift tax proceedings, is to be rejected for the same reasons mentioned hereinabove. Further, the ex parte statements were used against the assessee; all this has to be considered on merit, on an appeal against the decision of the CGT(A) on that point. 106. Coming to the contention of the assessee that no findings were given anywhere in the assessment order that the diary belongs to the assessee and the allegation of the revenue that the diary was written....