TaxTMI 
TaxTMI 
2010 (5) TMI 612
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shri Dharmashibhai Mavjibhai Lakhani 49,500 2. Shri Ghanshyambhai Savjibhia Lakhani 49,500 3. Shri Tulshibhai Savjibhai Lakhani 32,500 4. Shri Savjibhai Maganbhai Lakhani 49,500 5. Shri Jerajbhai Savjibhai Lakhani 49,500 6. Shri Smt. Diwaliben D. Lakhani 49,500 7. Shri Naresh Jivraj Dhameliya 40,000 8. Jivrajbhai Gopalbhai Dhameliya 35,000 9. Shri Devjibhai Mavjibhai Lakhani 45,500 10. Shri Purshottambhai Dayalbhai Sawani 49,000 11. Shri Hirabhai Jivrajbhai Dhameliya 35,000 12. Shri Ashwinbhai Laljibhai Sawani 1,15,000 13. Shri Ashwinbhai Laljibhai Sawani 70,000 14. Shri Devjibhai Mavjibhai Lakhani 48,000 15. Shri Purshottambhai Dayalbhai Sawani 47,500 Total 7,65,000 That the donors are mostly relatives of the assessee. That the majority of the donors have been produced before the Assessing Officer during the remand proceedings and they have confirmed having given gifts to the assessee. That the donors have disclosed their source of income and also the evidences for agricultural income or salary income etc. Thus, the assessee has duly discharged onus of proving the gift. In support of this contention, he relied upon the followin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat in this case neither the creditworthiness of the donor nor the genuineness of the transaction is proved. He relied upon the details recorded by the Assessing Officer in the assessment order and remand report. He further relied upon the following judicial pronouncements: (i) Oriental Wire Industries (P.) Ltd. v. CIT [1981] 131 ITR 688 (Cal.). (ii) CIT v. Mansurali Valibhai Dudhani [1984] 148 ITR 526/[1981] 7 Taxman 296 (Guj.). (iii) CIT v. Motor General Finance Ltd. [2002] 254 ITR 449/122 Taxman 447 (Delhi). (iv) CIT v. P. Mohanakala [2007] 291 ITR 278/161 Taxman 169 (SC). (v) Sajan Dass & Sons v. CIT [2003] 264 ITR 435/128 Taxman 621 (Delhi). (vi) D.C. Rastogi (HUF) v. Asstt. CIT [1996] 57 ITD 295 (Delhi). He also distinguished the various cases relied upon by the learned counsel and stated that the facts of the case are altogether different than the facts in the cases relied upon by the learned counsel. He also stated that on the above facts, the decisions relied upon by the Assessing Officer in the case of Durga Prasad More (supra) and Sumati Dayal's case (supra) would be squarely applicable. He therefore submitted....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... report from the Assessing Officer. During the remand proceedings, following eight donors were produced whose statements were recorded. 1. Shri Ghanshyambhai Savjibhai Lakhani 2. Shri Tulsibhai Savjibhai Lakhani 3. Shri Devjibhai Mavjibhai Lakhani 4. Shri Hiralal Jivrajbhai Dhameliya 5. Shri Naresh Jivraj Dhameliya 6. Shri Ashwinbhai Laljibhai Savani 7. Shri Purshottambhai Diyalbhai Sawani 8. Shri Jairajbhai Savjibhai Lakhani The following four persons were not produced: 1. Shri Savjibhai M. Lakhani 2. Shri Dharamshibhai Mavajibhai Lakhani 3. Shri Jivrajbhai Gopalbhai Dhameliya 4. Diwaliben D. Lakhani 7. The Assessing Officer has discussed the statement of all the eight persons in the remand report and also the evidences produced in respect of the remaining four persons, the CIT(A) has discussed the same from page Nos. 3 to 9 of his order. The remand report was also given to the assessee for his comments and after considering the remand report ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Srilekha Banerjee v. CIT 49 ITR 112, the burden of proof was on the assessee which has not been discharged. The Supreme Court in the case of CIT, West Bengal-II v. Durga Prasad More 82 ITR 540 has stated that "it is true that the apparent must be considered real until it is shown that there are reasons to disbelief and the taxing authorities are entitled to look into the surrounding circumstances to find out the matter has to be considered by applying the test of human probabilities. In the case of Sumati Dayal v. CIT 214 ITR 801, the Hon'ble Supreme Court stated that the claim of the assessee winning jackpots several times was contrary to the statistical theories and experience of the frequencies and probabilities, it is against all human probabilities that the relatives kept on giving gift when they were much poorer than the appellant and they gave gift to the assessee, his wife, son and daughter year after year on 71 occasions and of such huge sums as Rs. 37,74,571. In view of these reasons, the genuineness of the gifts are not proved and the addition made by the Assessing Officer is confirmed and the ground of appeals are dismissed." 8. At the time of hearing before....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h consecutive serial numbers of the draft. Most of the donors are residing at Bhavnagar but the stamp papers for the purpose of gift were purchased at Surat that too much in advance than the date of the gift. The assessee and his family members have received gifts year after year on seventy one occasions amounting to Rs. 37,74,571 without reciprocating a single gift to anybody. The gift is claimed to have been made by the persons who possess only the bullock cart to the assessee who owns motor car. Thus, it is a case where so many poor persons claimed to have gifted substantial amount to rich person. One donor viz. Naresh Jivarajbhai, is claimed to be assessed to tax. However, no details with regard to filing of the Income-tax returns and whether this gift is shown by him in his capital account/balance sheet, if any prepared by the assessee has been furnished. Even copy of return or acknowledgement for filing of return is not produced. He is claimed to be Government employee. Rut whether any intimation with regard to such gifts is given to the employer is also not furnished. Though he is a Government employee and maintaining bank account, but he claimed to have made the gift by way....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which the funds for making the gift were available with him. The Tribunal however held that the motivation for making the gift was not established. It upheld the addition. On a reference: held, that the Tribunal failed to note the fact that the identity of the donor was established, the donor having appeared in person before the Assessing Officer, the genuineness of the transaction was established, not only by the receipt of the bank draft, but also by the fact of the 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 up to the revenue to take appropriate action. The Tribunal considered the motivation for making the gift which was not relevant. The addition of Rs. 50,000 was not justified. 11. However, we find that in the above case, the donor had filed a return of gift and the assessment of which was completed under section 15(3) of the Gift Tax Act, 1958. In the above case, the assessee had received only one gift from one donor that too was accepted in the original assessment and there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de by deputing any person of the department from the various donors. Apart from the above, the donor had filed affidavits duly notarized, wherein they had explained that they were making the gifts out of love and affection, which they had towards the assessee. They had also explained their source of funds in their affidavits. The Assessing Officer had conveniently ignored the same. Without examining the donors, it was not possible to come a conclusion as to why the drafts were purchased on the same dates or as to why in the absence of any occasion or relationship with the donee, gifts were made by the donors. In other words, the conclusion drawn by the Assessing Officer was mere surmise and the same could not be sustained in the absence of examination of the donors/creditors in question. Where the donors could be examined by the Assessing Officer, any inference drawn by the Assessing Officer without examining the donors would be only a surmise. Therefore, the Commissioner (Appeals) was justified in deleting the addition made by the Assessing Officer. Hence, the appeal was to be dismissed." 14. In the above case, the source of fund was satisfactory explained by the assessee and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be an income-tax assessee not only in the United Kingdom but also in India. .." From the above, it is evident that the facts in the case of the assessee are altogether different than the facts in the above mentioned case. In the above case, the donor was assessed to tax not only in UK but also in India and his worth was about Rs. 20 crores. During the relevant time, he had brought about US 61,60,000 into India through proper channel. Therefore, the ratio of the above decision cannot be applied to the case of the assessee. 16. Another case relied on by the learned counsel is of ITAT, Amristar Bench's decision in the case of M.S. Advance (P.) Ltd. (supra) wherein the issue before the ITAT was relating to the loans taken by the assessee and not of gift. The ITAT accepted the credit because the assessee has produced the evidence that the creditor has sold agricultural land for the amount which was more than the loan given by them. One creditor who has given the loan of Rs. 97,000 has sold agriculture land worth Rs. 1,50,000. The other creditor has sold the agriculture land worth Rs. 3,00,000. The photo copy of the sale deed was produced before the ITAT. On the above facts, the ITAT ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vour of the assessee on the ground that the assessee has produced the evidence in support of credits in the form of certificates from race clubs giving particulars of crossed cheques for the payment of amounts for winning of jackpots. Against the majority view of the Settlement Commission, the assessee filed appeal before the Hon'ble Apex Court which sustained the majority view of the Settlement Commission. Their Lordship of the Apex Court held as under : "This, in our opinion, is a superficial approach to the problem. The matter has to he considered in the light of human probabilities. The Chairmen of the Settlement Commission has emphasised that the appellant did possess the winning ticket which was surrendered to the Race Club and in return a crossed cheque was obtained. It is, in our view, a neutral circumstance, because if the appellant had purchased the winning ticket after the event she would be having the winning ticket with her which she could surrender to the Race Club. The observation by the Chairman of the Settlement Commission that "fraudulent sale of winning tickets is not an usual practice but is very much of an unusual practice" ignores the prevalent malpractice th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny reciprocal gifts from the assessee's side. In view of the above, in our opinion, the decision of Hon'ble Apex Court in the case of Sumati Dayal (supra) would be squarely applicable. Respectfully following the same, we hold that the assessee was unable to prove either creditworthiness of the donors or the genuineness of the transaction. We therefore uphold the order of the CIT(A) and reject various grounds raised by the assessee against the addition of Rs. 7,65,000. ITA No. 2362/Ahd/2005 - assessment year 2002-03 - (Lakhani Ilabeen Labhubhai) 19. Though the assessee has raised several grounds, they are all against the addition of Rs. 7,10,500 made by the Assessing Officer for unexplained gift which was sustained by the CIT(A). At page No. 4 of the assessment order the Assessing Officer has given the details of the gifts received by the assessee during the year under consideration. The same is reproduced below : Sr.No. Name of donor Amount (Rs.) 1. Shri Savjibhai Maganbhai Lakhani 45,000 2. Shri Dharmashibhai Mavjibhai Lakhani 45,000 3. Shri Ghanshyambhai Savjibhai Lakhani 40,000 4. Smt. Diwaliben D. Lakhani 45,000 5. Shri Jerajbhai Savjibhai Lakhani 48,000 6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed discussion therein, we hold that the assessee has not been able to prove either creditworthiness of donors or genuineness of transaction. In view of the above, uphold the order of the CIT(A) and dismiss the assessee's appeal. ITA No. 2569/Ahd/2006 - Assessment year 2003-04: Shri Labhubhai P. Lakhani 22. Though the assessee has raised several grounds, however, they are all against the addition of Rs. 4,68,720 made by the Assessing Officer on account of unexplained gifts which is sustained by the CIT(A). During the accounting year relevant to the assessment year under consideration, the assessee claimed to have received gift of Rs. 4,68,720 from the following persons : Name Date of Gift Amount Shital P. Ghelani 28-11-2002 23,720 Ashvinbhai L. Savani 13-3-2003 1,25,000 Devrajbhai Jivrajbhai 24-3-2003 1,00,000 Devrajbhai Jivrajbhai 25-3-2003 50,000 Manubhai Chhagunbhai Savani 26-3-2003 45,000 Chhaganbhai D Savani 26-3-2003 45,000 Ashokbhai C. Savani 26-3-2003 35,000 Narshibhai Harjibhai Lakhani 26-3-2003 45,000 Total 4,68,720 23. We have heard both the parties and perused material placed before us. Our finding with regard to the each donor is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted by the Assessing Officer with following findings: "Shri Devrajbhai Jevrajbhai: The assessee has not produced him in this office. Personal identity has not been established. The assessee has supplied only 7/12 abstract, which he has been shown to have land of 1.61 hecters (4 acres). The assessee has not supplied any document which shows the earning capacity of the above donor. Shri Manubhai Chaganbhai Savani: The assessee has not produced him in this office. Personal identity has not been established. The assessee has supplied only 7/12 abstract. The assessee has not supplied any document which shows the earning capacity of the above donor. Shri Chhaganbhai Diyalbhai: The assessee has not produced him in this office. Personal identity has not been established. The assessee has supplied only 7/12 abstract. The Shri Ashokbhai Chhaganbhai: The assessee has not produced him in this office. Personal identity has not been established. The assessee has supplied only 7/12 abstract. The assessee has not supplied any document which shows the earning capacity of the above donor. Shri Nareshbhai H. Lakhani: The assessee has not produced him in this office. Personal identity has no....