TaxTMI 
TaxTMI 
2012 (4) TMI 361
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....der. The Assessing Officer asked the assessee to furnish the necessary evidence and material in support of the loans taken by the assessee. The Assessing Officer noted that in case of Sona Traders the assessee could not produce bank account. Therefore, the creditworthiness of the said party has not been established. In addition to that, the Assessing Officer noticed that the assessee filed a copy of account for F.Y. 2005-06 in the books of accounts of Sona Traders which has been reproduced by the Assessing Officer at page no.4 of his order. The Assessing Officer has also reproduced copy of account of Sona Traders in the books of account of the assessee at page no.5 of Assessment Order. From both the accounts the Assessing Officer noticed that the party Sona Traders is lender of the creditor. Both the parties have shown that there was an opening balance which was squared up during the year. The assessee has shown repayment of the loan through cheques whereas Sona Traders has shown repayment through demand draft. The Auditor has also reported that the assessee has taken fresh loan of Rs. 18,24,950/-. The Assessing Officer further noticed that the audit report and books of account of ....
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....ing balance. We noticed that the entire confusion arose on account of reporting of the auditor which has been subsequently rectified as per the order of CIT(A). It appears from the facts on record that there was an opening balance of Rs. 18,24,950/- in the account of Sona Traders. Against the said opening balance, the assessee received amount of Rs. 18,24,950/- during the year and the account has been squared up so nil balance as at the end of the year. Since there is no contrary material or facts available on record nor the Ld. Departmental Representative pointed out any such contrary material to the finding of the CIT(A), in the light of the facts, order of the CIT(A) is confirmed. 5. In the result, appeal of the Revenue is dismissed. ITA No.39/Agr/2011 by the Assessee for A.Y. 2006-07 6. The assessee raised as many as 4 grounds in his appeal which is pertaining to Addition of Rs. 15,40,000/- made under section 68 of the Act by the Assessing Officer in respect of Gift received from Smt. Anjali Consul. 7. Brief facts of the issue are that during the assessment proceedings, the Assessing Officer noticed that the assessee credited Rs. 15,40,000/- in the capital account. ....
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....a) Not only that, neither such gift was shown in the return of Smt. Anjali Consul (as mentioned by Assessing Officer in assessment order because he was also assessing the case of Smt. Anjali Consul) nor the assessee mentioned any note to that effect even in his return or in the accompanied computation of income or accounts. 7.3(b) Apart from the fact that such a huge gift is certainly unusual and also that creditor cannot be examined (which makes the credit entry difficult to be verified); I do not find any good reason to admit such submission/evidence at this state. Thus I hold that the Assessing Officer was correct in making addition of Rs.15,40,000/- u/s 68." 8. Ld. Authorised Representative submitted that the assessee received gift of Rs. 15,40,000/- from his real sister Smt. Anjali Consul. He further submitted that at the time of assessment the assessee submitted copy of bank account of Smt. Anjali Consul from which gift cheque was given. Copies of cheques received from UTI and copy of FDRs received by Smt. Anjali Consul, to prove the credit entry in the bank account, were also submitted before the Assessing Officer. The assessee also submitted copy of Income Tax return,....
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....hed before him. The Assessing Officer has failed to make any enquiry. The gift was given by the assessee's sister for the children of her brother after the death of her father on 23.03.2005. 10. Ld. Departmental Representative, on the other hand, relied upon the order of Revenue Authorities and submitted that the assessee failed to furnish any explanation. The Assessing Officer is empowered to make addition under section 68 of the Act in respect of non-genuine gifts. Ld. Departmental Representative in support of his contention relied upon the decision of I.T.A.T. Delhi Bench in the case of ACIT v. Rajeev Tandon, 108 ITD 560 (Delhi) which has been confirmed by the Delhi High Court reported in Rajeev Tandon v. ACIT, 294 ITR 488 (Delhi). 11. We have heard the ld. Representatives of the parties and records perused. In the case under consideration the issue is in respect of gift of Rs. 15,40,000/- from younger sister of the assessee. To examine the issue let us see what is meaning of the gift. The ordinary meaning of the gift is a transfer by one person to another of any existing movable or immovable property made voluntarily or without consideration of money or money worth. In le....
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.... if the same is credited as gift. What is clear, however, is that section 68 clearly permits an Income-tax Officer to make enquiries with regard to the nature and source of any or all the sums credited in the books of account of the company irrespective of the nomenclature or the source indicated by the assessee. In other words, the truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of account can be gone into by the Income-tax Officer. There is no quarrel with the proposition that a mere identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift and since the claim of a gift is made by the assessee the onus lies on him not only to establish the identity of the donor but his capacity to make such a gift. The assessee is required to prove three important conditions, namely, (i) the identity of the creditor, (ii) the capacity of the creditor to advance the money, and (iii) the genuineness of the transaction. What evidence would be sufficient to establish the said conditions or what material would be relevant in a particular case, would....
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.... the case, the learned Income-tax Appellant Tribunal is legally justified in concluding that burden of proof cast on the appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present? (c) Whether in the facts and circumstances of the case, the conclusion of the Tribunal that the claim of gift is not genuine is reasonable and based on relevant material and not perverse ?" 11.3 The dispute in all these appeals relates to the addition made by the Assessing Officer in respect of several foreign gifts stated to have been received by the assessees from one common donor namely Sampath Kumar. The gifts received were from one Ariavan Thotan and Suprotoman. It is during the enquiry by the Revenue it is asserted that they were the aliases of Sampathkumar. These gifts were made to A. Srinivasan and his wife, Smt. S. Kalavathy, his son, S. Balaji Manikandan and to one of his brothers, Rajendran and Smt. Mohanakala.In all the aggregate gifts received by the assessees is to the extent of Rs. 1,79,27,703. The Assessing Officer did not accept the explanation offered by the respective assessees....
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....wn by any other name other than Sampathkumar, he stated that "no evidence. Only Mr. Srinivasan used to call me as Suprotoman." 11.4 The Assessing Officer in the circumstances came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the assessee as the income of the assessee. On appeal the Commissioner of Income-tax concluded that the story set up by the assessee is unacceptable and hard to believe and the "preponderance of probabilities, the common course of human livings point to the contrary". The appeals were accordingly dismissed. The ITAT concurred with the findings and conclusions arrived at by the Assessing Officer and the Commissioner of Income-tax. The Tribunal noticed that the letters exchanged "by the per- son who had sent foreign exchange to the assessee only indicate that there is no love and affection between them and that he is clearly materialistic and his statement of accepting a reciprocation is also an indication to the fact that he is not doing anything free but clearly the compensation was a roundabout manner of showing of he having been compensated either in India or abroad." The T....
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....nterfering in the matter since the authorities below failed to draw a proper and logical inference from the proved facts. We are unable to persuade ourselves to accept the submission. The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence." No question of law much less any substantial question of law had arisen for consideration of the High Court. The High Court misdirected itself and committed an error in disturbing the concurrent findings of fact." 11.6 Delhi High Court in the case of Rajeev Tandon v. ACIT, 294 ITR 488 (Delhi) held as under :- "Having heard learned counsel for the assessee, we find that the Tribunal considered the entire case law on the....
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.... been wasted. Therefore, Rs. 30,000/- is imposed as costs on the appellant. The amount shall be deposited by the appellant within 45 days from today failing which the income-tax authorities shall recover it from him as arrears of income-tax." 11.8 In the light of above law laid down by the Apex Court in the case of CIT v Durga Prasad More 82 ITR 540 (SC), in the case of Commissioner of Income-tax v. P Mohanakala 291 ITR 278 (SC) and other decisions as discussed above If we consider the facts of the case under consideration and the surrounding circumstances, prevailing practice/customs in the society, we find that in the case under consideration claim of the assessee to receive gift from younger sister which is against whole philosophy, tradition and recognized social custom and religious. In India it is old age accepted fact that elder brother never takes anything from his younger sister, even drinking water from his younger sister. Relation of brother and sister is holly relation and brother is always protecting sister an all aspect of the matter including financial matter but gift from younger sister is an unusual circumstances which is unbelievable. It may be an old customs b....
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....e date of maturity of the said VCC was 10.10.2005 for Rs. 9,07,067/- which has been credited in assessee's Savings Bank account on 15.10.2005 Rs. 9,06,167/-. The other VCC of which copy has been placed at page no.10 of assessee's Paper Book which bearing no.33339 36160, the date of maturity of this VCC was 07.11.2004 for Rs. 3,07,589/- whereas in bank account the entry is dated 09.11.2005 VCC 42551 for Rs. 3,07,744/-.. In this entry, neither the date of maturity nor the VCC or amount is tallied as per the entry in S.B. account and a copy of VCC which has been placed in the Paper Book at page 10. The assessee did not point out any explanation in respect of these discrepancies. In respect of entry dated 17.11.2005 for Rs. 17,770/-, it was explained that it was income tax refund but no evidence has been furnished. The assessee has failed to explain entry of Rs. 2,96,949.26 dated 19.11.2005. However, the assessee pointed out that this is out of maturity amount from Unit Trust of India of which copy placed at page no.9 of assessee's Paper Book. On perusal of page no.9 of Paper Book, we noticed that the unit which was amounting Rs. 96,949.26 of which issue date is 07.11.2005 and valid up....
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....The gift letter executed on a letter head of hotel, Hotel Rajhans how donor and donee both were available on same place in India on 15.12.2005, no relevant satisfactory explanation is on record. Therefore, if all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. In such type of cases recipients made cash payments or incurred expenditures on behalf of NRI while the NRI visited India and against that amount received through DDs. or cheques in India. Under the circumstances it is not unreasonable to take note of the common phenomenon that gift received in this manner is common mode of money laundering. Under the alleged circumstances gift received by the assessee is not a genuine gift. When gift is not genuine, the addition....