TaxTMI 
TaxTMI 
2014 (1) TMI 934
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....lakhs as interest payment to M/s. Rajpal credit & capital Ltd., against income offered of RS.10 lakhs as unexplained investment in M/s. Gemini Distilleries Pvt. Ltd. As income chargeable to tax has escaped assessment within the meaning of Section 147 of the LT. Act, notice u/s.148 was issued on 26.3.2004. The same was served on 29.3.2004. Consequently, an order u/s.143(3) r.w.s. 147 was passed on 21.03.2005 making the following addition/disallowance: a) Gift from Sri Gurmeet Ajit Singh Rajpal treated as unexplained cash credit u/s.68 of the LT. Act amounting to Rs. 45 lakhs. b)Disallowance of interest of Rs. 4,20,000/- as it is not allowable either u/s.37(1) or u/s. 57(iii) of the LT. Act. 3. Aggrieved against the order dated 21.03.2005 passed by the AO, the assessee preferred an appeal before the CIT(A). The CIT(A) after discussing the issues elaborately and after considering all the facts and circumstances of the case dismissed the assessee's appeal. 4. The assessee filed further appeal before the ITAT. The ITAT vide its order in ITA No.577/H/06, dated 24/10/2008, set aside the orders of the lower authorities on the above two issues and restored the ....
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....ion of acceptance of gift in the hands of the assessee comes he changed his stand and doubted the capacity of the donor, his relationship and identity. The assessee has also filed copies of the audited balance sheet and P&L account of the donor, various deposits held by him overseas, copy of his passport, copies of the gift declaration wherein he has categorically stated that the amount is given as gift for the business purpose of the assessee and moreover the fund is transferred through draft from proper banking channels. He also contended that by doing so, and filing all the above documents, the assessee has established the fact of gift received by him. 9. The contentions of the assessee however did not find favour with the CIT(A), who sustained the addition made by the Assessing Officer u/s 68 of the Act as well as the disallowance of interest payment of Rs. 4,20,000/-. 10. As regards ground No. 2, the learned AR submitted before us that the donor who has gifted the amount is a nonresident Indian and a close relative of the assessee. It was submitted that the assessee has proved all the ingredients, Viz; identity of the person who has made gift his creditworthiness and also ge....
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....his Tribunal remitted the issue back to the Assessing Officer for examining it fresh in the light of the decision of the Apex Court in case of CIT Vs. P. Mohankala (supra) and other decisions of the High Court and Tribunal. It is a fact on record that the gift of Rs. 45 lakhs received by the assessee from his cousin Sri Gurmeet Ajit Singh Rajpal, an NRI has been treated as unexplained cash credit u/s 68 of the Act by the Assessing Officer and such addition has been confirmed by the CIT(A). A careful scrutiny of the order passed by the CIT(A) reveals the fact that she has disbelieved the assessee's contention of gift broadly due to the following reasons: i) The assessee has not explained the reason as to why the gift of Rs. 45 lakhs was given in two instalments of Rs. 22 lakhs and Rs. 23 lakhs within a short span of 9 days, which otherwise indicates that the amounts were intended to profit credit entries for donees benefit in his books on those particular dates. ii) It is not possible on the part of a distant cousin of assessee to keep on giving gifts to the assessee and his family members for business purpose without any consideration from the assessee. ....
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....f any corroborative material brought on record, doubting of genuineness of transaction on mere conjectures and surmises is legally unsustainable. The reasons shown by the CIT(A) does not conclusively prove that the gifts are not genuine in absence of supporting evidence. Whether a particular credit in the books of account of the assessee is genuine or not in terms of section 68 of the Act is purely a question of fact and has to be decided on the basis of facts and materials available on record. The ratio laid down in a decision cannot be made applicable uniformly de-hors the facts involved in a particular case. The jurisdictional High Court in case of RB Mittal Vs. CIT, (246 ITR 283) held as follows: "Section 68 of the Act gives statutory recognition to the principle that cash credits, which are not satisfactorily explained, may be assessed as income. Section 68 seeks to bring to tax any cash credits appearing in the books of accounts which are not satisfactorily explained as the income of the previous year. Judicial opinion even prior to the enactment of Section 68 for the first time under the Income-Tax Act, 1961 was that in the event of credit entry in the books of....
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....editors and genuineness of the transactions will be heavier in relative terms than in a case where the creditors are the outsiders. Therefore, the contention of the learned Counsel for the petitioner that under Section 68 of the Act the assessee is not expected to establish the capacity of the creditors to advance money and genuineness of the transactions is not acceptable to us, and we hold that the assessee is expected to establish proof of identity of his creditors, capacity of his creditors to advance money and genuineness of the transactions in order to discharge the onus imposed on him under Section 68 of the Act." 15. Therefore, considered in the light of the ratio laid down as above by the jurisdictional High Court the assessee having established the identity of the creditor his creditworthiness and also genuineness of the transaction (having been routed through banking channels) with supporting evidence, the conclusion arrived at by the revenue authorities disallowing the claim of the assessee on mere conjectures and surmises cannot be sustained. That besides it is a fact on record that the coordinate bench of this Tribunal in assessee's own case for AY 2001-02 while cons....