TaxTMI 
TaxTMI 
2012 (12) TMI 443
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.... entire transactions were conducted within the present family members of the assessee, who had married in Sonthalia family. 3. The AO disregarded the evidence so placed before him and added the aggregate sum of Rs. 26,83,750/- u/s 68 of the I.T. Act, by quoting the section and holding, "...the explanation offered by him is not, in the opinion of the AO, satisfactory...". 4. The assessee preferred appeal before the CIT(A), who examined each of the impugned transaction and gave independent finding on each of them which is reproduced as under: "Party wise explanation given was as under: Smt. Ambica Sonthalia Rs. 9,00,000/- During the assessment it was categorically explained and clarified that the alleged amount, though appeared in the Balance Sheet under the head Unsecured Loans, was genuinely a gift from Sister-in-law. In fact the amount was received by cheque, not only that a Gift Deed was also executed on a stamp paper of Rs. 100/- at the time of gift on 7th June, 2005. From the said Gift Deed it may be evident that the said gift was made in the presence of two witnesses. In this regard our client had submitted the following documents- Copy of colour Xerox Gift....
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.... was categorically explained and clarified that - (a) Rs. 9,00,000/- out of Rs. 11,96,208/- though appeared in the Balance Sheet under the head Unsecured Loans, was genuinely a gift. In fact the amount was paid by cheque, not only that a Gift Deed was also executed on a stamp paper of Rs. 100/- at the time of gift on 7th June, 2005. From the said Gift Deed it may be evident that the said gift was made in the presence of two witnesses. In this regard our client had submitted the following documents- (a) Color Xerox Gift Deed dated 7.6.2005 (b) Acknowledged copy of Returned of Income, filed on 28.7.2006 (c) Profit and Loss A/c Balance sheet as on 31.3.2006 for AY 2006-2007. (d) Copy of Bank Pass Book of Union Bank of Smt. Anita Sonthalia. (e) Loan Confirmation Letter from her Balance Sheet it is pertinent to note that Rs. 2,42,000/- is clearly appearing in her Balance Sheet on the assets side under the name of our client. The learned AO has rejected the bonafide explanation on the above mainly on the grounds- That the confirmation letter was signed by Accountant, No PAN number was mentioned on the confirmation letter Assessee did not produce original gift deed documents for ....
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.... this amount of interest not paid. However with a view to avoid further litigation our client is offering this amount as income. It is bonafidely believed that no concealment / penalty proceedings would be initiated. (ii) Shri Anju Sonthalia Rs. 2,93,771/- During assessment proceedings following documents filed - 1] Xerox copy of IT return filed on 30.7.2006 2] Balance Sheet, Profit & Loss A/c 3] Loan Confirmation Letter Whether loan is genuine or not following test is applicable Identity The assessee has filed IT return, In IT Acknowledgement name, address, PAN number is appearing, hence identity is proved. Genuineness The done has given gift by cheque. He is having sufficient credit amount in his bank account which proves genuineness. Creditworthiness Anuj Sonthalia is having capital of Rs. 13953278.44 in his Balance Sheet Total assets are Rs. 13998786.44 Out of total capital of Rs. 13953278.44 he has given loan of Rs. 240000/- Thus he has sufficient creditworthiness. From his Balance Sheet it is pertinent to note that he has clearly disclosed Rs. 2,40,000/- at the assets side as receivable from out client. &....
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.... appearing, hence identity is proved. Genuineness The done has given gift by cheque. She is having sufficient credit amount in his bank account which proves genuineness. Creditworthiness Nandini sonthalia is having capital of Rs. 13734449.73 in her Balance Sheet Total assets side of the balance sheet is Rs. 16056861.60-It shows that she is having sufficient creditworthiness at her disposal. In the light of the above it may be appreciated that the alleged transaction was genuine as it was fully verifiable. However, it is respectfully stated that the learned AO was wrong in holding the alleged amount as unexplained cash credit u/s 68 of the Act. On facts and circumstances it is respectfully prayed that the alleged additions may be deleted. Different in balance. Loan as per Balance sheet of Poornima Narsaria 29771 Loan as per Balance Sheet of Nandini Sonthalia 240000 Difference 53771 The amount of interest of Rs. 53771 was provided by our client in earlier period but it was mutually understood after the end of the financial year that the interest payable would be waived and therefore this amount of interest not paid. However with a view to avoid ....
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....n arbitrary manner. The learned AO had not brought any material finding that was contrary to the submissions of our client. In fact the bonafide explanation and submissions have been rejected in arbitrary manner. In this regard we may draw attention to the judgment of the Apex Court in thecase of Roshan Di Hatti vs. CIT [107 ITR 938] (c)Shifting of burden Once confirmation letter, address and PAN no. of the party has been furnished to prove identity and prima facie capacity then in that case burden shifts on the revenue. In other words the assesse is not required to prove the source of source. As per the rule of evidence the burden of showing that the apparent is not real is on the Revenue. In fact the revenue has find out something contrary to disprove the explanation and then only such additions can take place. In this regard reference may be drawn to the judgment- - Of the Apex Court in the case of CIT vs. Orrissa Corporation P. Ltd. [159 ITR 78] - Of the Hon'ble Delhi High Court in case of CIT vs. Real Time Marketing P. Ltd. [305 ITR 35] [d]No addition could be made u/s 68 without taking recourse to an examination of thre loan creditors u/s 131- In case of our client it ....
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....pellant. Thus, I find force in the arguments and submissions of the Ld. Authorized Representative that the gifts are genuine and are from the close relatives mentioned in the exceptions in Sec. 56(2)(v) & (vi) of the IT act 1961 that are exempt from taxation. For the purposes of clarity, the submissions of ld. Aluthorized Representative are reproduced hereunder: "As directed by you, we are furnishing herewith original Affidavit of Mr. Anuj Kashiprasad Sonthalia on Rs. 100/- stamp paper. The relationship of Mr. Anuj Sonthalia is as under:- 1) Mr. Anuj Kashipasad Sonthaldia is hushand of Poornima Shriram Narsaria After Marriage she is known as Poornima Anuj Sonthalia 2) Mr. Rajesh Kashiprasad Sonthalia is the real brother of Mr. Anuj Kashiprasad Sonthalia. 3) Smt. Anita Rajesh Sonthalia is the wift of Mr. Rajesh Kashiprasad Sonthalia 4) Ambica Rajesh Sonthalia is the daughter of Mr. Rajesh Kashiprasad Sonthalia" In view of the above discussion and in the facts and circumstances of the instant case wherein the appellant had already admitted for an addition of Rs. 1,61,750/- pertaining to interest given to 3 persons namely Ms. Anita Sont....