TaxTMI 
TaxTMI 
2012 (4) TMI 241
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....licut and the son-assessee at Ahmedabad on 12-10-2000, and which continued upto 13-10-2000. The appeals raising common issues, we shall deal with each of the issues raised in seriatim. The principal issue raised is the assessment of the credits in respect of gifts claimed to be received by the assessees as undisclosed income for the block period at Rs. 10,20,756/- and Rs. 8,65,300/- for the father and son respectively. The first appellate authority has deleted the same on the basis that, firstly, the same cannot be said to be undisclosed and, secondly, no material to impugn the genuineness of the credits or gifts was found during the search. 3.1 It would be relevant to recount the background facts of the case. The primary facts, which have not been disputed, are that the assesses were receiving gifts from the relatives and friends on a regular basis, so much so that a printed memorandum of gift was in use, i.e., for being executed by the donor while giving the 'gift', and which were found not only in the case of the assesses, but also their family members. A specimen copy thereof stands made a part of the assessment order/s by the Assessing Officer (AO), being Dy. CIT, Central C....
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....e suspicion. The addition/s was directed to be deleted by him. 4. We have heard the parties, and perused the material on record. 4.1 Clearly, two issues arise for consideration, even as rightly identified by the ld. CIT(A), as:-a) whether the credits could be considered as undisclosed income in terms of 158B(b)?; b) whether, even so, the assessee has to establish the genuineness of the gifts? 4.2 We may, before we proceed to discus the said two issues, review the law in the matter. It is well settled that the assessment of income under Chapter XIV-B could only be on the basis of evidence found as a result of search or material or information available with the AO relatable to such evidence (s. 158BB). Clearly, if the evidence, and which would include the material/information gathered through post search enquiries, came to be found only as a result of search, where in respect of past transactions, or the conduct shows that such evidence, representing wholly or partly income, would not have been disclosed but for the search (i.e., even though the date of filing the return of income may not have lapsed), could it be said that the same has not been or could not have been discl....
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....furnished by the assessee from year to year. The AO is categorical in the matter; the same rather forms the basis of the Revenue's case, and which has, in fact, not been, as afore-noted with reference to the legal argument adopted by the assessee, disputed by the assessee/s, and which, even if so, could only be with reference to and on the basis of some material, complete absence of which is observed by us. In fact, the AO expresses a surprise, suggesting a deliberateness in the said non disclosure, in view of the complete and meticulous record having been kept by the assessee in respect of the financial transactions, none of which, of course, accompanied their returns. 4.4 We may, at this stage, consider the assessee's legal argument, i.e., of their being no legal requirement of disclosure of the gifts received by the assessee during the previous year/s, so that the assessee could not be faulted with on that score. The argument is not without any merit, as if the assessee has complied with the law, an incidental non-disclosure ought not to be impugned for want of disclosure. However, sub clause (i) of clause (d) of Explanation to s. 139(9) clearly requires the assessee to furni....
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....ransactions, i.e., as a matter of fact. Whether the non-disclosure is bona fide or not so, which is in substance the import of the assessee's legal argument made with reference to s. 139(9), would not alter the factum of non-disclosure. Further, in our view, the same, apart from the interpretation of the legal requirement per s. 139(9), would also involve a definite finding as to the non-disclosure of the fact of maintenance of accounts by the assessee per the return/s of income. We, therefore, leave the matter here, there being admittedly, and as a matter of fact, not an iota of evidence per the returns filed, from year to year, to indicate receipt of gifts by the assessee/s, which came to the knowledge of the Revenue only on the search, so that there was no disclosure for the purpose of the Act in terms of s. 158B(b). Further, though it is claimed, and again de hors any material, that the gifts stand disclosed per the wealth tax returns upto A.Y. 1994-95 in the case of Dwarkaprasad Malpani, the same cannot be considered as disclosure for the purpose of the Act, which is a complete code in itself. 4.5 The assessee's reliance on the decision in the case of L.R. Gupta (supra) is,....
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....e Act must be read holistically and harmoniously, and in the manner which makes them workable. It is only as a result of search that the impugned credit transaction/s stood found, and which the assessee was found unable to satisfactorily explain by the AO. The scope of assessing the same under the regular assessment proceedings does not arise, even though that again is not by itself a determinative factor (refer: Cas Card Finance Ltd. (supra). In fact, this is precisely what makes the second question posed as above (refer para 4.1) relevant in the block assessment proceedings. We shall, however, and without prejudice to the foregoing, also show that the information discrediting the credits, being gifts, as genuine, came to the possession of the Revenue as a result of search. In other words, these two relevant considerations would be examined by us side by side. 4.7 Continuing further, the very fact that the gifts are being received from year to year is itself a very incriminating piece of information, though without doubt not conclusive in itself, and which came to light only on search. This is as gifts of hard earned money are very difficult to come by, and by their very nature....
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....ult of conscious effort, is unmistakable; (d) no occasion marks the gifts, which, barring few, are from 'friends', for meeting investments and other outgoings by the assessee/s, even despite which there is admitted cash deficit for most of the years; (e) the gifts consist only a fraction (1/3rd) of the assessee's undisclosed income, i.e., at Rs. 10.2 lakhs, out of undisclosed income at Rs. 32.84 lakhs, which is for most part not disputed, in the case of Shri Dwarkaprasad Malpani. For his son, Shri Vishal Malpani, gifts (Rs. 8.65 lakhs) comprised almost the whole of his undisclosed income of Rs. 8.78 lakhs, which exceeds his income per the returned income of Rs. 7.10 lakhs for the block period. Gifts are generally also exchanged between close friends and relatives on important occasions, as new borns in the family; landmark birth anniversaries; weddings; etc. It is noteworthy that no gifts have been given by both the assessees to any of their 'close friends and relatives', including those from whom gifts are being regularly received over the years. 4.8 Further, none of the donors were produced for examination before the AO. Though the assessee was....
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....so, the taking the totality of the facts and circumstances in view, we are clearly unable to uphold the view of the ld. CIT(A) that the genuineness of the gifts stands proved or satisfactorily explained, in terms of s. 68, drawing support from the following decisions by the apex court, laying down the law in the matter, and decide accordingly, upholding the addition, so that the Revenue succeeds:- A. GovindaRajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC) Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1(SC) CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) CIT v. Biju Patnaik [1986] 160 ITR 674/26 Taxman 324 (SC) Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89 (SC) CIT v. P. Mohanakala [2007] 291 ITR 278/161 Taxman 169 (SC) 5. The other issue arising for consideration is the addition in the sum of Rs. 1,06,000/-, being the value of 250 gms. of gold jewellery, assessed in the hands of Shri Dwarkaprasad Malpani. 1856 gms. (net weight) of gold ornaments were found in the locker owned jointly by him and his wife. The same was explained to be belonging to the assessee's wife, giving the break-up thereof. The said bre....