TaxTMI 
TaxTMI 
2013 (12) TMI 868
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....onse to this notice, the assessee filed his return of income (ROI) on 10th June, 2008 declaring total income of Rs. 10,57,030 and also disclosed agricultural income at Rs. 8,250. The assessee had filed his original return for asst. yr. 2002-03 in which he had declared total income of Rs. 7,31,650 and had disclosed Rs. 8,250 as agricultural income. The assessment order was finally passed on 29th Dec., 2009 at total income of Rs. 11,82,030. In doing so, the AO has disallowed alleged gifts of Rs. 1,00.000 and Rs. 25,000 on account of personal user of business assets, vide paras 7 and 9 of his order. 2.1 To have a bird's eye view of the reasons for the additions, we extract paras 7 and 9 of the AO as under:- "7. Gifts received during the year During the course of search on 20th Sept., 2007 certain incriminating documents/loose papers were found and seized at the residential premises of Shri Dharampal Dembla, Smt. Neeta Dembla, Shri Vishal Dembla, Smt. Bhoomika Dembla and Smt. Preet Dembla. It was found that certain Annexures such as Annex. A-23 and Annex. A-36 relate to gift deeds and related papers. It was found that the assessee fami....
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....has filed letter dt. 23rd Oct., 2009 wherein it was submitted that:- 1. The assessee has received the gift of Rs. 50,000 from Shri Amit Ramesh Shadija, resident of Ulhasnagar vide draft No. 596762 dt. 21st March, 2002 drawn on Dena Bank under natural love and affection. Shri Amit Ramesh Shadija is real estate agent and assessed with the AO, Ward (4), Kalayan. To prove the identity, creditworthiness of the donor and genuineness of the gift, the following documents are enclosed:- (i) Copy of gift deed (ii) Affidavit dt. 22nd May. 2009 (iii) Copy of bank statement (iv) Copy of IT return and computation of total income for the asst. yrs. 1999-2000, 2000-01, 2001-02 and 2002-03 (v) Copy of balance sheet as on 31st March, 1999, 31st March, 2000, 31st March....
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....h never made gift to the said donor. * The assessee has not submitted any authentic document which can prove the creditworthiness of the donor. The return of income of Shri Amit Sadiia, submitted by the assessee shows following position:- Asst. yr. Total income 1999-2000 43,662 2000-01 67,450 2001-02 71,200 2002-03 67,950 * The income of the donor was just above the exemption limit. This speaks about the lack of the creditworthiness of the donor. * Source of the gift of Rs. 50,000 is not available in the documents filed by the assessee. The source of immediate credit entry of Rs. 67.950 in the bank account of the donor was not explained. * It is interesting to note that the mother .of donor has also gifted on amount of Rs. 50,000 to the daughter of the assessee Similarly the return of income of Smt. Gouri Sadija, Submitted by the assessee shows following position:- Asst. yr. Total income 2000-01 68,850 2001-02 75,450 2002-03 75,150 ....
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....on the part of the assessee to establish relationship between the donor and the donee.' Similarly in another decision of this Court reported as Sajan Doss and Sons us. CIT (2003) 181 CTR (Del) 581 : (2003) 264 ITR 435 (Del), it has been held that:- '......a mere identification of the donor and showing the movement of the amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of 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. Having regard to the inquiries conducted by the AO from the bank, with which the assessee was admittedly confronted and bearing in mind the fact that admittedly said Subhash Sethi was not related to the assessee, we are of the view that the findings recorded by the Tribunal are pure findings of fact warranting no interference. We find it difficult to hold that on the facts of the instant case proper opportunity had not been granted to the assessee to prove the gift.' So, from....
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.... the gift was not genuine:- * Assessee and his family members have received total gifts of Rs. 1.64 crore during the period from financial years 2002-03 to 2005-06. It is also interesting to note that after the financial year 2005-06 no gift was received by any member of the Dembla Family (except one gift of Rs. 1 lac in the case of Shri Vishal Dembla). * There was no occasion on this particular date when the gift has been received. * The credentials and the status of the donor remain unproved in the absence of his examination. * The credentials and the status of the donor at the time of gift remain unproved in the absence of documents of relevant period. * The other relevant factor in this case is the other social ceremony of this family. The only major ceremony which was held during the period of 2001-02 to 2007-08 was the marriage of Shri Vishal Dembla. It was claimed that during the marriage of Shri Vishal Dembla cash gifts of Rs. 1,85,658 were received by the Dembla family f....
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....amount by the donor to the assessee. The donor never visited the home of the assessee. Where was the love and affection ? It was nothing but a subterfuge to avoid income-tax. The transactions were not genuine ones.' It was held by Hon'ble Punjab and Haryana High Court in the case of Tirath Ram Gupta vs. CIT(2008) 304 ITR 145 (PandH) that:- 'A gift is generally given out of natural love and affection and without any consideration, which necessarily denotes the closeness between the donor and the donee. It can be given either on some occasion or to help a relative or friend. To see the genuineness of a gift, the test of human probability is the most appropriate. A gift cannot be accepted as such to be genuine, merely because the amount has come by way of a cheque or draft through banking channel, unless the identity of the donor, his creditworthiness, relationship with the donee and the occasion is proved. Unless the recipient proves the genuineness thereof, the same can very well be treated to be an accommodation entry of the assessee's own money, which is not disclosed for the purpose of taxation' The gift deed....
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....ly; considering the above it is also held that the amount received by gift was actually undisclosed income of the assessee. Addition of Rs. 1,00,000." The AO also made the addition out of the expenses on account of personal in nature by observing as under:- "9. Disallowance for expenditure of personal nature During the course of assessment proceedings, it is noticed that the assesssee is maintaining various vehicles in his prorietorship firm M/s Eklingji Service Centre and the auditor of the said firm has also mentioned in his report at the para relating to 'expenditure of personal nature' that 'some personal use of business assets is not denied by the assessee but the value of the same cannot be determined by us'. In view of the comments of auditor in audit report, considering the possibility of personal use and considering the expenditure incurred during the year under consideration a sum of Rs. 25,000 is hereby disallowed on account of expenditure of personal nature debited to PandL a/c and added to the total income of the assessee. Addition of Rs. 25,000" 2.2 Aggri....
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.... pp. 21 and 22 of this appellate order. On the other hand the appellant's case is that the documents filed in support of such gifts very well proved the identity, creditworthiness and genuineness of the transactions. The capacity of making of such gift is claimed to be proved from the IT return, copies of balance sheet and copy of bank account. Shri Amit Ramesh Sadiza is stated to be cousin brother of Ms. Bhoomika Dembla and such gift of Rs. 1 lac (by Shri Amit Ramesh Sadiza and Smt. Gauri Ramesh Sadiza) was out of natural love and affection. As regards non-production of donors it is claimed the genuineness of the gift transactions cannot be doubted and added to the returned income merely on non-production of the donors. For such proposition the appellant has placed reliance on various case laws as discussed in the written submissions of the appellant (p. 31 of appellate order). As regards the immediate source of credit entry in the bank account of the donors, it is claimed that as per settled principle 'of law the appellant is not required to prove the source of source and for proposition of law reliance has been placed on various case laws as mentioned in the writ....
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....acs to the sons and wife of the assessee (total gift for Rs. 23 lacs). There was no specific occasion for making of such gift. In respect of gift of Rs. 1 lac from Shri Lalit Kumar Srimali and Smt. Jamuna Devi Menaria, the assessee filed copy of gift deed, copy of IT return and copy of computation of income However the appellant failed to produce the bank statement of the donor so as to prove the creditworthiness and genuineness of such gift. These two donors are also not related to the appellant and there was no specific occasion for making of such gifts. It was also noted by the AO that statement of the appellant and their family members was recorded and they were asked to furnish some personal details of such donors but the appellant and family members were not at all aware about the whereabouts of such donors. The appellant and their family members never visited the residence of the donors nor the donors have ever visited the residence of the appellant. Family background of the donors was not known by the appellant and their family members. From these corroborative evidences also such gifts appeared to be of non-genuine nature. As regards these gifts the appella....
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....smukh Salar is stated to be employee of M/s BSNL, Udaipur having annual salary of Rs. 2 lacs. There is no dispute on the identity in as much as copy of IT return was filed. Further copy of gift deed was also filed and from such document it was claimed the gift was proved. However the donor was not produced for examination and bank statement was also (sic-not) produced. The donor was not having any blood relationship as also there was no specific occasion for making such gift. The AO has also referred to return of the donor for asst. yr. 2002-03 for Rs. 64,701 against which deduction on account of s. 88 was claimed for Rs. 9,700. Broadly similar return was shown in respect of asst. yr. 2003-04. In the case of Smt. Premlata Salar from whom gift of Rs. 2 lacs was shown, though the gift deed was filed but the assessee failed to produce Smt. Premlata Salar and her bank statement was also not filed. Smt. Premlata Salar is not assessed to tax, not having any blood relation with the appellant and there was no occasion for making such gift. In respect of such donors also the statements of Dembla family were recorded to ascertain the basic personal details of such donors and in their stateme....
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....aid to be proved. Further the returned income by these persons definitely did not justify making of gift to the extent of Rs. 5 lacs. Accordingly keeping in view the above facts and circumstances as also case laws relied upon by the AO, also discussed in asst. yrs. 2002-03 and 2003-04 it is found that the AO has rightly treated such gifts as of unexplained nature and accordingly addition made by the AO amounting to Rs. 5 lacs is confirmed. The ground of appeal is dismissed. (iv) 2005-06 During this assessment year the appellant has shown gift of Rs. 15 lacs (Rs. 10 lacs from Shri Rajesh Nemichand Agarwal and Rs. 5 lacs from Shri Naveen Veerchand Gala). As regards gifts from these persons the assessee filed copy of gift deed, copy of IT return, copy of balance sheet, copy of capital account and PAN as on 31st March, 2003 and balance sheet as on 31st March, 2003. The gift was received through bank draft/cheque i.e. normal banking channel and accordingly it was claimed that the identity and creditworthiness of the donors was proved and genuineness of the gift transactions was also proved. However the donors were not produced for examinat....
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....As regards the fact that the assessee was having no blood relation or any occasion or reciprocation for receiving such gifts, it is stated that such conditions are not at all necessary and that the gift cannot be rejected on the ground that there was no occasion or reciprocation or blood relation between the donors or donee. On careful consideration of relevant facts it may be noted that the donors are admittedly not at all related with the appellant. The bank accounts of these donors were also not furnished. The donors were not produced for examination and even during the assessment proceedings where inquires were made on their given address such persons were not found available on these addresses. Though it is fact that the appellant has 'filed documents by way of IT return, PAN etc. which prima facie indicated and proved their identity but the gift can be considered as genuine gift only if the identity of the donor, creditworthiness of the donors and genuineness of the gift transaction are proved. The documents filed by the appellant only proved the identity of donors. As regards the claim of the appellant that the gifts were received through bank....
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....ch on the basis of such incriminating documents the appellant himself admitted such gifts as of unexplained nature. Therefore keeping in view facts and circumstances discussed above, the gifts of Rs. 15 lacs cannot be said to be of genuine nature and creditworthiness of donors and genuineness of the transaction is definitely not proved. Therefore, the action of the AO in making the addition of Rs. 15 lacs is accordingly confirmed. The ground of appeal is dismissed." 2.4 The assessee has filed second appeals for all the years under consideration. In asst. yr. 2002-03 following grounds have been raised by the assessee:- "(1) The learned CIT(A) has erred in upholding the order passed by the learned AO which was bad in law bad on facts and contrary to all canons of natural justice. (2) The learned CIT(A) has erred in upholding the action initiated under s. 153A in the case of the appellant. The same is bad in law and bad on facts. (3) The various additions made in the impugned order as sustained by the learned CIT(A) are outside the scope of s. 153A. (4) The learned CIT(A) was not justified in not admitt....
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.... and Ors. vs. Asstt. CIT in ITA No. 2660/Del/2009 order dt, ast Jan., 2010. Thus it has been argued that the assessee had already disclosed all the gifts in the earlier assessment years in the respective returns of income filed prior to the date of search which have become final. 2.7 Per contra, the learned CIT (Departmental Representative) has heavily relied on the orders of the authorities below and has reiterated the reasons given by them for making/sustaining additions. 2.8 It was found for a fact that the assessee had already submitted his returns prior to search which had also attained finality. It is also a fact that no document or incriminating evidence was found during the course of search which could be legally made a basis for disturbing the already settled issues. The decision of the Hon'ble jurisdictional High Court (supra) ordains as under:- "Sec. 153A cannot be read in isolation, in as much as, the same is triggered only on account of any search/requisition under s. 132 or 132A. If any books of accounts or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search, such....
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....r which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under s. 153A is not contemplated, the case in hand has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though s. 153A would be triggered? and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. The argument of the counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under s. 153A is also not borne out from the scheme of the said provision which is essentially in context of search and/or requisition. The provisions of ss. 153A to 153C cannot be....
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....ed before the date of initiation of the search or making of requisition." 2.9 Therefore, by respectfully following the above judgment, we allow ground No. 2, in all the years, in favour of the assessee. The gifts already disclosed by the assessee in the returns of income, which have attained finality, cannot be disturbed. Accordingly, consequential additions are deleted. 3. The ground No. 4 in all the years is regarding admission of supportive evidence in the form of an affidavit of this assessee. This issue was not seriously argued and hence stands dismissed. 4. The main ground in all the years is regarding unexplained gifts. The submissions of the learned Authorised Representative in all these years are as under:- (i) The appellant's daughter Bhoomika Dembla had received gift of Rs. 50,000 from Shri Lalit Kumar Shrimali and further gift of Rs. 50,000 from Smt. Jamana Devi Menaria. (ii) Documents submitted in support of gift from Shri Lalit Kumar Shrimali (pp. 79 to 87):- (a) The complete address of the donor was submitted and he is also regularly assessed to tax; &nbs....
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.... Ground No. 5 (i) The appellant's daughtef Bhoomika Dembla 'had received gift of Rs. 2,00,000 from Smt. Prem Lata Salat; (ii) Documents submitted in support of gift from Smt. Prem Lata Salat (paper book 62 to 68); (iii) The complete address of the donor was submitted and she is also regularly assessed to tax; (iv) She is close family friend and the gift was given through cheques; (v) Copy of gift deed was duly submitted which was also found during search proceedings. The copies of IT returns filed by the donor were also submitted from which also the gift made was fully verifiable. Ground No. 6 (i) The appellant had received one gift during the year under consideration. Gift of Rs. 9,00,000 was received from Shri Hansmukh Salat (paper book 44 to 53); (ii) Shri Hansmukh Salat is a close family friend and was working with Bharat Sanchar Nigam; (iii) The copy of gift deed was submitted to the learned AO and was also found during the course of search proceedings; (iv) No adverse material has been found during the course of search. ....
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....; (c) Copy of gift deed was duly submitted which was also found during search proceedings. The copies of IT returns filed by the donor and copy of balance sheet were also submitted; (iii) Documents submitted in support of gift from Naveen Veerchand Gala:- (a) The complete address of the donor was submitted who was engaged in. the business of real estate. He is also regularly assessed to tax; (b) He is a close family friend and the gift was given through cheques; (c) Copy of gift deed was duly submitted which was also found during search proceedings. The copies of IT returns filed by the donor and copies of balance sheet were also submitted. 5. After considering the aforementioned proof regarding gifts, we are satisfied that these are genuine gifts. The assessee has produced enough evidence to prove the identity of the donors, their creditworthiness and also the genuinity of the gift transactions. The gifts have been given through cheques and stand confirmed by the donors. The donors have also proved the source(s) of their respective gifts.....
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....is residence, the assessee stated that these bills for Rs. 3,96,606 by Shri Vishal Dembla and Smt. Preet Dembla and that such gold was part of the gold found and seized from their residence. As per the assessee these purchases related to Smt. Preet Dembla and such gold was part of the gold found and seized from their residence. As per the assessee, such purchases were made by Smt. Preet Dembla out of accumulated savings and withdrawals. Because the assessee could not file the supporting evidence for this accumulated saving he has added this amount of Rs. 3,96,605. The learned CIT(A) has reduced this addition to Rs. 1,37,805 by observing as under:- "I have carefully considered the submissions of the appellant as also the findings of the AO. The AO's case is that as per pp. 1 to 3 and 7 to 14 of Annex. A-37 certain bills and vouchers of gold purchases were found and seized which indicated purchase of gold ornaments for Rs. 3,96,605 by Shri Vishal Dembla and Smt. Preet Dembla. Though the appellant contended that the gold found and seized from their residence was part of total gold and ornaments found during course of search as also that such purchases were made from ac....
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.... jewellery valued for Rs. 1,37,805 was admittedly purchased by the appellant himself in cash in the name of Shri Vishal Dembla. There is no dispute on the fact- that such jewellery was purchased during the asst. yr. 2004-05 and therefore the source of purchase of such jewellery needs to be examined in respect of asst. yr. 2004-05. The appellant has shown withdrawal of Rs. 2,05,440 and it is contended that such purchases were made out of such withdrawal. Alternatively it is also contended that the gold purchased was ultimately part of total gold ornaments found/seized during course of search. As the withdrawal of Rs. 2,05,440 is only shown for both of household expenses as well as purchase of such jewellery, it is unbelievable that such amount of withdrawal was sufficient for household expenses as well as making such investment. Further it is noted that such gold ornaments were purchased by way of different bills dt. 19th April, 2003, 20th April, 2003, 22nd April, 2003, 13th May, 2003 that means such purchases were made only during the months of April and May, 2003 whereas such household withdrawals are shown for the whole year. The appellant has not furnished any evidence which may....
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.... have heard the rival submissions. Both the parties have reiterated their stand. After considering the submissions of the parties vis-a-vis the evidence on record, we have found that this finding of the learned CIT(A) is not justified being simply ad hoc and without any valid basis. Accordingly, the impugned additions made are deleted. 9. The next issue is that none of the additions are justified as no unexplained asset(s)/expenditure has been found during this search. This ground is also common in all the years. In asst. yrs. 2002-03, 2003-04 and 2005-06 the assessee has taken ground No. 7 and in asst. yr. 2004-05 he has taken ground No. 9 of his appeal. 10. After hearing both the sides, we have found that there is no other unexplained asset or expenditure which can be said to have been found during the search. The additions made are not supported by any unexplained assets or expenditure. On the basis of assets and the expenditure theory the addition so made in the hands of the assessee is apparently uncalled for and deserves to be deleted. Accordingly, all these appeals are partly allowed. Smt Neeta Dembla; asst yrs. 2002-03 to 2006-07 11. In these cases ground Nos. 3....
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.... donor was also submitted during the course of assessment proceedings in which he once again confirmed the gifts so given. (v) The donor also visited India for this purpose and had also confirmed the gift in question in his statement recorded during the course of assessment proceedings. (vi) No adverse material has been found during the course of search. (vii) The copy of current bank account position was also submitted to the learned AO by the donor, Asst. yr. 2004-05; ground No. 5 (i) The appellant had received one gift during the year under consideration. Gift of Rs. 4,00,000 was received from Naresh V. Mehta and gift of Rs. 10,00,000 from one Shri Kishore Dev Chand Jain. (ii) Documents in relation to Shri Kishore Dev Jain:- (a) The complete address of the donor was submitted who is a regular income-tax assessee and his number was duly submitted. &....
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....t the assessee intended to purchase this plot in her son's name but later on it was purchased in her own name. She has also explained the source of investment. However, the AO has relied on the draft agreement. When the draft agreement is pitted against the registered sale deed, both found during search, the sale deed has to be believed. The assessee has explained the source of this investment. Therefore, no addition is called for. We order to delete this entire addition and allow ground No. 6 of the appeal for asst, yr. 2005-06. 16. In the result, all the appeals of Smt. Neeta Devi Dembla are partly allowed. Vishal Dembla 17. These are five appeals filed by Shri Vishal Dembla, for asst. yrs. 2002-03 to 2006-07 which are directed against a common order of the learned CIT(A), Jaipur, dt. ast March, 2013. In these appeals the grounds are almost common to the grounds raised in Shri Dharampal Dembla's case. The requisite details of these appeals are as under:- Asst. yr. Date of issuance of notice u/s. 153A Date of return filed u/s. 153A Returned income u/s. 153A Date of filing of original return Income declared in original return 2002-03 ....
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.... of Rs. 1,63,99,975, gifts amounting to Rs. 74 lakhs were admitted in the name of the appellant as also other family members which were also surrendered for taxation." 19. The assessee has produced the following evidence to prove these gifts:- "Asst. yr. 2002-03; ground No. 5 (i) The appellant had received two gifts during the year under consideration. Gift of Rs. 1,00,000 was received from Shri Ramesh Chandra Jain and Rs. 1,00,000 was received from Shri Man Singh Kothari. (ii) Documents submitted in support of gift from Shri Ramesh Chandra Jain:- (a) The complete address of the donor was submitted who is employed with Hindustan Zinc and has substance, salary and interest income. He is also regularly assessed to tax. (b) He is close family friend and the gift was given through cheques. The gift was duly recorded in the regular books of accounts of the assessee. (c) Copy of gift deed was duly subm....
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....atement recorded during the course of assessment proceedings. (vi) No adverse material has been found during the course of search. (vii) The copy of current bank account position was also submitted to the learned AO by the donor. Asst. yr. 2004-05; ground No. 5 (i) The appellant had received three gifts during the year under consideration. Gift of Rs. 5.00.000 was received from Shri Avdesh Ramdas Verma, Rs.-5,00,000 from Shri Vijay Sharma and Rs. 5,00,000 from Shri Jai Singh Sampat. (ii) Documents in relation to gift received from search. Avdesh Ramdas Verma (62 to 65):- (a) The complete address of the donor was submitted who is a regular income-tax assessee and his PAN was duly submitted. (b) He had made gift through banking channels. (c) A copy of gift deed was duly submitted during assessment proceedings. &nb....