TaxTMI 
TaxTMI 
2011 (8) TMI 12
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....ven hereunder:- hereunder:- Srl. No. Doner‟s Name & Address Amount (Rs.) Cheque No. Date Bank 1 Mr.Pankaj Jain R/o KD-5, Kavi Nagar, Ghaziabad 2,00,000 171816 07.12.2002 Andhra Bank, Navyug Market, Ghaziabad 2 Sh.Ajay Agarwal, R/o KF-21, Kavi Nagar, Ghaziabad 10,00,000 921359 07.12.2002 PNB, G.T.Road, Ghaziabad 3 Sh.O.P.Khadaria, R/o B1-D, DDA Flats, SFS Gulabi Bagh, Delhi 1,00,000 592985 15.01.2003 State Bank of India, University Branch, Delhi DETAILS OF IMMOVABLE ASSETS RECEIVED Srl. No. Doner‟s Name & Address Details of property Date Value (Rs.) as per Gift Deed 1 Smt.Veena Jain R/o KD-5, Kavi Nagar, Ghaziabad C-58, Inderpuri, New Delhi 16.11.2002 2203850 2 Sh.Ashok Kumar Jain, R/o KD-5, Kavi Nagar, Ghaziabad C-57, Inderpuri, New Delhi 26.12.2002 4068450 4. Sh.Ashok Jain and Smt.Veena are husband and wife and Sh.Pankaj is nephew of Sh.Ashok Jain. Sh.Ashok Jain is a professional Advocate and Sh.Pankaj is a practicing Chartered Accountant and a partner of M/s P.Jain & Co. 5. We may mention here itself that the Assessee and her family members hav....
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....rpose. She had sold her jewellery for purchase of the house. Therefore, he opined that the creditworthiness of the donor was not proved. 8. Summons under Section 131 of the Income Tax Act was issued to Sh.Ashok Jain. In compliance, Sh.Ashok Jain, Advocate appeared before the Assessing Officer and his statement was recorded by him from which the following facts were revealed:- 1. His sources of income are Tax Consultancy, Salary, dividend, interest, shares, sale and purchase and share income from M/s Bharat Associates, Ghaziabad. 2. He is filing his income tax return since 1971. 3. The details of income declared during the last three years is given as A.Y. Gross Net 2000-01 3,12,000/- 2,77,630/- 2001-02 2,53,950/- 2,28,300/- 2002-03 2,95,770/- 2,70,440/- 2003-04 4,78,000/- 4,78,000/- The family consist of self, wife two sons and one daughter. It is seen that all the family members had given gift to the assessee or her family members. 4. He has never given gift to social organizations, temples and other religious organizations in his individual capacity. 5. The gift was out of pure love and affection as the....
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....ence with the done but stated to be personal meetings were there. 7. The done has never made any gift to the donor and the donee has not received any gift from anyone. 8. When his attention was drawn to the statement recorded by Addl.DI New Delhi, he stated that he had been meeting with the donees at Hanuman Road, New Delhi and still meet them at our family functions as well as of donees. He has photographs to prove his visit and their visits. The phone no. etc, were not remembered by him at that time. 12. The Assessing Officer, after going through the above facts found that during the Assessment Year 2003-04 he had gifted a sum of Rs.17 lacs to her and the family members of the assessee. He had also made gift of Rs.2 lacs in the Assessment Year 2000-01 and in the Assessment Year 2004-05 made a gift of Rs.5 lacs to the assessee. As observed by the Assessment Officer that the entire case made by him is out of amount received from M/s Blue Bell Finance Co. 13. The Assessing Officer recorded in his assessment order that It is surprising that the assessee had gifted the amount out of loan taken from this concern M/s Blue Bell Finance Co. Since th....
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....of amount received from M/s Blue Bell Finance Company, it is surprising that the assessee has gifted the amount out of loan from the concern, since there was no occasion for making the gifts, the gifted amount is more than the income of the assessee, there is no relationship between the donor and the done, I hold that it is only an arranged gift and an accommodation entry. (c) The learned Assessing Officer has held that „since the assessee has not been able to prove the basic parameters as laid down by judicial pronouncements, i.e. the creditworthiness and genuineness of the gifts, the same are held to be arranged gifts and will be added towards the income of the assessee u/s 68 of the Income Tax Act. (d)The learned Assessing Officer has also held that the gifts in comparison to the annual income of donors were beyond comprehension. (e) The learned Assessing Officer has also held that the amount of Rs.2 lacs received from Sh.Pankaj Jain has been found credited in books maintained by the assessee for her business activity and therefore the cash of Rs.2 lacs received by her will be charged under Section 68 of the Income Tax r/w Section 56(1).  ....
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....are proved with documentary evidence. (ii) The conclusion of the Assessing Officer was not substantiated by any material that the donors do not know the whereabouts of the donee. (iii) The occasion for making the gift and relationship with the donor are not very relevant, rather what is relevant is the genuineness of the transaction together with the identity and capacity of the donor. (iv) The Assessing Officer cannot reject the gifts simply on the ground that since there was no occasion of relationship between the donor and the donee, therefore the gifts cannot be accepted. (v) The assessee had duly discharged the onus by filing substantial documentary evidence including gift deeds, copies of bank accounts, IT Returns, sworn affidavit apart from stating on oath and reaffirming the gifts and also indicating amply his financial status. The assessee and all donors have on oath confirmed that the gifts are genuine and were given to the assessee out of natural love and affection. (vi) The onus is not on the assessee to explain how or in what circumstances the third party obtained the money and how or why he/she came to make a deposit o....
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....en only gifted to donee. Thus, stamp duty was also paid twice and no lien of the donor remains on the property. Sh. Ashok Jain has also clarified that the donee has accepted the gift the same has been made without any consideration of money. 26. In spite of such overwhelming facts no evidence at all has been placed on record by the Assessing Officer to prove that the transaction of gift was Sham and Benami. The CIT (A) of the opinion that the genuineness of the gift transactions are conclusively established inasmuch as the identity and the capacity of donor, as well as factum of gift stands established. The CIT(A) came to the conclusion on the settled law that once done furnishes the gift deed and affidavits of the donors, they suffice to prove the genuineness of gift. CIT(A) was of the opinion that once the initial burden of proving the genuineness of the gift and creditworthiness of the donor was discharged by the assessee the onus shifts on the Assessing Officer to prove if he contrary. The Assessing Officer was duty bound to bring new material on record in support of his view, however, mere rejection of good explanation does not convert good proof into no proof.  ....
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....ain and further deleting the addition of Rs.40,68,450/- and Rs.22,03,850/- on account of claim of gift of property from Shri Ashok Jain and Smt.Veena Jain. 32. The ITAT dismissed the aforesaid two appeals vide its order dated 30.11.2007 and thereby confirmed the aforesaid order dated 15.11.2006 passed by ITAT recording the finding that all the three gifts are not only genuine, but also the identity and capacity of donors to make the gift stands duly and fully established. Section 68 has no applicability for the reason that cheque received from Shri Pankaj Jain had been deposited in her bank account. The gift relating to immoveable properties cannot be covered under Section 68 f the IT Act. The additions cannot be sustained even under Section 69 of the IT Act. The grounds taken by the revenue were rejected. 33. The raison d‟eter in the order of ITAT can be traced to the following : As per ITAT the issues of genuineness of gift of movable property and immovable properties. For this purpose it is necessary to refer to Chapter VII of the Transfer of Property Act 1882 which deals with gifts of movable and immovable properties. Section 122 defines „gifts‟ a....
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....ed whenever the question arises there was a gift or not. Regardless of whether the question arises in a suit by a donee to recover possession or in a suit to define his title or in an income tax assessment proceeding it has to be answered with reference to the provisions of section 123 T.P. Act. There is no warrant for saying that the law contained in Section 123 T.P. Act does not apply when an income-tax authority has to decide whether there was a gift or not. Consequently, there has to be a delivery, if a gift is not made by a registered document. A question may arise whether a certain act done by the alleged donor amounts to delivery of property to the alleged donee but is cannot said that delivery is not required at all." 37. The Income Tax Act does not define „gift‟. However, in general terms gift consists in the relinquishments of one‟s 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 in Principles of Hindu Law by Mulla which defines gift as under:- "Gift consists in the relinquishment (without consideration) of one‟s own right (in property) and the c....
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....1994. His net worth as reported by the Assessing Officer to the CIT (Appeal) is Rs.1,36,01,314/-. Keeping the above documentary and oral evidence on record, the requirement of law for establishing a validity executed gift of movable properties are fully satisfied inasmuch as the donor gifted the amount voluntarily to the donee and has delivered the possession to the gifted property to the donee. 40. The ITAT while dealing with the gift of property bearing No.C-58 Inderpuri, New Delhi, the donor and the donee both have signed this deed. This document is duly stamped and duly registered. Gift has been made irrevocable and absolute and once for all. The donor transferred and conveyed the free hold property with all attending rights to the donee by way of gift together with all privilege, easement and advantages appurtenant thereto. 41. The ITAT came to the conclusion from the above documentary and oral evidence that the donor made the gift of immovable property to the donee voluntarily. The gift was duly registered and, therefore, the requirement of Section 122 and 123 of the Transfer of Property Act are fully satisfied. 42. As regards gift of another immovable propert....
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....CIT Vs. Ms. Sunita Vachani 84 CTR Delhi/184 ITR 121 Delhi, wherein the assessee had received gifts from abroad, the commissioner of Income Tax by invoking the provisions of Section 262 set aside the order of ITO and directed him to pass fresh assessment order. In that case CIT was of the view that the order of ITO was prejudicial to the interest of revenue as the ITO had not examined sources of the gifts to satisfy himself about the genuineness thereof. On challenging, the ITAT had quashed the order of CIT(A). Division Bench of this Court observed while upholding the order of ITAT as under:- "In our opinion, the tribunal had, on merits come to the conclusion that the gift were genuine. This is a pure question of fact. The tribunal has examined the evidence which was available on the record and has arrived at the aforesaid finding. Even though it may be surprising as to how large sums of money are received by a family in India by way of gifts from strangers from abroad, unless there is something more tangible than suspicion, it will be difficult to regard the moneys received in India from abroad as representing the income of the assessee in India. On the facts existing on the rec....
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....in law in deleting the addition of Rs.40,68,400/- and Rs.23,03,850/- made by the Assessing Officer by treating the alleged gifts of immovable properties from Sh. Ashok Jain and Smt.Veena Jain on the ground that the genuineness and creditworthiness of the transaction and the donor has not been proved. (b) Whether the ITAT was correct in law in deleting the addition of Rs.2 lacs made by the Assessing Officer by treating this cash gift from Sh. Pankaj Jain as non-genuine and also on the ground that the creditworthiness of the donor has not been proved. (c) Whether the ITAT was correct in law by proceedings on the basis that the genuineness of a gift and the creditworthiness of a donor in respect of an alleged gift is to be examined and accepted merely on the basis of such documents/details, which may be furnished by the Assessee/donor in question, without permitting any investigation in the matter by the Assessing Officer, as was done in the instant case by Ld. CIT (Appeals) in his Order dated 30.11.2007? (d) Whether the ITAT erred in law by failing to draw and sustain a presumption of lack of genuineness, in the context of alleged gift, where the donor and the donee a....
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....e donor Smt. Veena Jain was never repaid and it remains the dispute of genuineness. Creditworthiness stand disputed since she did not have sufficient funds and she had taken loan and sold her jewellery. 51. In regard to the Mr.Ashok Jain, he gifted value of property C-57, Inderpuri, New Delhi is of worth Rs. 40,68,450/-. His source of income are tax consultancy, salary, dividend, interest, shares, sale and purchase of share, income from M/s Bharat Associates, Ghaziabad. He is filing his income tax return since 1971. The details of income declared during the last three years is given as under:- Assessment year Gross Net 2000-01 Rs.3,12,000/- Rs.2,77,630/- 2001-02 Rs.2,53,900/- Rs.2,28,300/- 2002-03 Rs.2,95,770/- Rs.2,70,440/- 2003-04 Rs.4,78,000/- Rs.4,78,000/- 52. The family consists of self, wife, two sons and one daughter. It is not seen that all the family members had given gifts to the assessee or his family members. He has never given gifts to social organization, temples and other religious organizations in his individual capacity. The gift was out of pure love and affection as the assessee puts Rakhi for more than 15 years regularly. Although he does not....
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....and partly irrelevant, or it is based on contentions or surmise or partly on these and partly on evidence or the finding is so perverse or unreasonable or no person acting judicially, instructed on law could have arrived at it. 56. Lastly, he argued that in this case the two donors had absolutely no connection with the assessee and they made gift to the assessee only because she needed money to buy a house and they warranted to help her. He argued that it appeared that this is not only quite unusual but also quite unnatural. It sounds rather uncredible that a complete stranger would want to gift lacs of rupees to a person only because the person wanted amount for purchasing the house. 57. The learned ASG has cited following judgments in support of his arguments:- (i) (2003)264IR 0435-(Delhi High Court) Sajan Dass and Sons Vs. Commissioner of Income Tax "Channels is not sufficient to prove the genuineness of the gift. Since the claim of the gift is made by the assessee, the onus lies on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it has actually been received as a gift from the donor. Ha....
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....ich they did, and came to the conclusion that the gifts could not be said to be genuine. On these facts, we find no reason why a different view should be taken. (iv) (2002) 254 ITR 0225-(Delhi High Court) Commissioner of Income Tax Vs. B.L.Passi "It is submitted by Ms. Bansal that the findings recorded by the Tribunal are perverse inasmuch as there is no material on record to support the same. It is asserted that after the matter had been set aside by the Commissioner of Income-tax (Appeals), fresh notices were sent to the parties, who, according to the assessed, had taken trucks on hire, to produce the books of account and other materials in support of the said claim, but the said notices were received back unserved and, therefore, the Tribunal has misdirected itself in relying on the statement of Vijay Kumar and the affidavit of the director. On the other hand, Mr. Aggarwal has vehemently argued that the findings recorded by the Tribunal are pure findings of fact based on relevant evidence and, therefore, no question of law, arises out of its order. The exercise to distinguish between a question of fact and question of law is normally difficult becau....
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....t findings of the two authorities are perverse and even in this attempt it has failed. He pointed out that CIT (A) had called for a remand report from the Assessing Officer and who had himself submitted this report to the CIT (A) on the basis of which creditworthiness of the donors was fully proved beyond doubt. Even otherwise, this question cannot be raised for the first time in appeal under Section 266(A) when no ground of this nature was raised before the ITAT. 59. Learned counsel for the assessee has placed reliance upon the following judgments:- (i) Commissioner of Income Tax vs. TATA Chemicals Ltd. in ITA No.31/2000 decided on 03.04.2002 wherein it was held that :- "Mr. Desai, learned counsel appearing for the appellant, pressed questions of law framed at serial Nos. (a), (b), (f) and (j) of the appeal memo. These questions read as follows : "(a) Whether the interest which is already capitalised in the books can be claimed as revenue expenditure for the purposes of taxation ? (b) When the three units situated in different places and there is no functional integrity, common accounts, organic unity and further there is an ample evidence borne out by the r....
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....eged gifts when the assessed had not established the relationship between the alleged donors and the donee? c) Whether ITAT was correct in holding that the A.O. was not justified in not treating the gifts as genuine merely on suspicion conjecture and surmises? d) Whether ITAT was correct in law in holding that the assessed had discharged the onus in establishing the nature of the transaction?" 6. We have heard learned counsel for the parties. Assailing the appellate orders, Mrs. Premlata Bansal, learned senior standing counsel for the Revenue, has vehemently urged that both the authorities have failed to appreciate that the assessed had not established the credit worthiness of the donors and their relationship with the assessed. It is asserted that there was no reason why two strangers would make gifts of heavy amounts to the assessed, who has failed to prove donors' love and affection for him. In support of the proposition that mere production of statements of account or identification of a donor is not sufficient to prove the genuineness of the gift, learned counsel has placed reliance on a decision of this Court in Sajan Dass & Sons v. Commissioner of Income-tax, 2003 ....
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....is very gift in the hands of the donor. Despite this factual position, the Tribunal singularly fails to note the fact that the identity of the donor is established, the donor having appeared in person before the assessing officer, the genuineness of the transaction is established, not only by the receipt of the bank draft, but also by the fact of transaction having borne gift tax once the assessment was framed. The primary onus which rested with the assessee, thus, stood discharged. Thereafter, if the revenue was not satisfied with the source of the funds in the hands of the donor, it was upto the revenue to take appropriate action. The Tribunal fails to consider all these aspects. In fact, the donor having filed gift tax return and assessment having been framed on the donor, is not taken into consideration by the Tribunal at all. This was a very strong factor in support of the explanation tendered by the assessee. The Tribunal, to the contrary, goes on to discuss and question as to why the donor should make a gift to the assessee; the size of the donor's family and availability or otherwise of the amount in hands of the donor; the area of the land held by the donor etc. ....
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....hat, on merits the decision of the Income-tax Officer to treat the moneys received as gifts was correct and, secondly there was no error committed by the Income-tax Officer and that there was nothing more which he would investigate into than what he had already done. The order of the Commissioner of Income-tax was accordingly, quashed. In our opinion, the Tribunal had, on merits, come to the conclusion that gifts were genuine. This is a pure question of fact. The Tribunal has examined the evidence which was available on the record and has arrived at the money are received by a family in India by way of gifts from strangers from abroad, unless there is something more tangible than suspicion, it will be difficult to regard the money received in India from abroad as representing the income of assessed in India. On the facts as existing on the record, we are unable to come to the conclusion that any question of law arises. The petition is dismissed. No order as to costs. (vi) Commissioner of Income Tax vs. Orient Enterprises in ITA No.91/1987 decided on 10.01.1990 wherein it is held as under:- Whether the finding of the Tribunal that the assessed discharge....
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....is, accordingly, dismissed. No costs. (vii) Commissioner of Income Tax vs. Orissa Corporation (P) Ltd. being Appeals No.1379 & 1380 of 1974 decided on 19.03.1986 wherein it is held as under:- The question was again considered by this Court in Homi Jehangir Gheesta v. Commissioner of Income-tax, Bombay City [1961]41ITR135(SC) , when this Court reiterated that it was not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income could be said to have been established; but where the circumstances of the rejection were such that the only proper inference was that the receipt must be treated as income in the hands of the assessee, there was no reason why the assessing authority should not draw such an inference. Such an inference was an inference of fact and not of law. It was further observed that in determining whether an order of the Appellate Tribunal would give rise to a question of law the court must read the order of the Tribunal as a whole to determine whether every material fact, for and against the assessee, had been considered fairly and with due care; whether the evidence pro and con had been co....
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....o such appeals as involve a substantial question of law, specifically set out in the memorandum of appeal and formulated by the High Court. Of course, the proviso to the Section shows that nothing shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if the Court is satisfied that the case involves such a question. The proviso presupposes that the Court shall indicate in its order the substantial question of law which it proposes to decide even if such substantial question of law was not earlier formulated by it. The existence of a "substantial question of law" is thus, the sine qua non for the exercise of the jurisdiction under the amended provisions of Section 100 C.P.C. Similarly in a decision of this Court reported as Mahavir Woolen Mills v. C.I.T. (Delhi) [2000]245ITR297(Delhi), meaning of "substantial question of law" has been explained. It was held: The issue raised by the assessed in the appeal cannot be said to involve any question of law, much less a substantial question of law. A question of fact becomes a question of law, if the finding is either with....
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....ft is of Rs.64.72 lacs from three said persons. All the three donors have confirmed giving of gifts on oath in their respective affidavits and also appeared before the Department and gave their statements confirming giving of impugned gifts. All the three donors appeared before the Registrar and executed registered gift deeds since all three have a close relationship of more than 15 years and are family friends of the assessee. The ITAT has recorded exhaustive finding of facts on the identity and capacity and genuineness of the gifts of all the three donors. Even the Assessing Officer has also recorded its finding of its creditworthiness of its three donors in his remand report. The assessee had filed sufficient material showing closeness between the donors and the assessee. Further, learned counsel for the assessee has pointed out as per as the findings of the Tribunal that the statement of donors were not confronted by the assessee. On the other hand, the other two gifts from Mr.Ajay Aggarwal and Mr.O.P.Khadaria, Advocate were accepted by the Assessing Officer and the findings were recorded by the CIT(A), the Tribunal has held that the addition cannot be made under Section 68 as ....
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.... we do not find any force in the arguments advanced by the learned counsel for the Revenue. Further, it is also not necessary that a person should be a habitual donor. It depends from person to person, thinking to thinking and situation to situation. Sometimes a person keeps donating throughout their life and sometimes he donates once and sometimes during the last stage of his life. Therefore, we do not agree with the arguments advanced by the learned counsel for the Revenue. 63. Learned counsel for the Assessee has vehemently argued that the Revenue has relied upon the judgments cited above are not relevant in the facts and circumstances of the instant case. In the case of Sajan Dass and Sons vs. Commissioner of Income-Tax (Supra), the donor was not found related to the assessee, however, in the present case the donors have 15 years old relationship with the assessee as has been proved by the evidence, affidavits on oath and photographs. Therefore, the aforesaid case does not held the Revenue Department. 64. Another case of Anil Kumar (Supra) has also no relevance because in the said case the assessee was asked to explain the capacity and genuineness of the donor, however, t....