AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 509
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....ence, deeming the amount credited as the assessee's unexplained income for the relevant year, may stand attracted. Further, that the burden of proof has to be discharged on the parameters of identity and creditworthiness of the creditor, and the genuineness of the credit transaction. The issue is thus primarily factual, so that it is required to be determined in each case whether the burden of proof stands discharged by the assessee in the facts and circumstances of the case, which would be qua each credit. 3.2 It shall be relevant to recount the background facts of the case, credit-wise, as gathered from the assessment order. The assessee, an individual, resident of Thane, Maharashtra, received gifts for an aggregate of Rs. 42.01 lacs during the relevant year from several (nine) persons, as under: Sr. No. Name of Person/donor Amount of Gift (in Rs.) 1. Mohanshyam Mangala (HUF) 3,00,000 2. Anita M. Mangla 1,00,000 3. Jyoti P. Nairi, Santacruz, Mumbai 3,00,000 4. Ram Lakhan Singh, Bhandup 3,50,000 5. Chetan M. Morjaria, Uganda 8,00,000 6. Pawan Churiwala, Dubai (UAE) 7,51,000 7. Ramesh Verma, Mumbai 6,00,000 8. Vijay Verma, Mumbai 3,00,000 9. Gopal Verma, Mumbai....
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....m abroad in the local (Mumbai) bank account of the NRI donor by way of telegraphic transfer by 'Asia Exchange' for Rs. 8.78 lacs, stands acknowledged. There was almost nil balance in account prior to the remittance, received thus for the purpose of making the gift. No evidence, other than stating of good relationship (with the assessee), has been specified by the donor in justification of the gift. The gift was, accordingly, treated as non-genuine. v to vii) Ramesh Verma (Rs.6 lacs) / Vijay Verma (Rs.3 lacs) / Gopal Verma (Rs.7 lacs), Mumbai The facts characterizing these gifts by three members of a family being almost identical, the same are taken together to avoid repetition. The gifts stand acknowledged. The perusal of the respective bank accounts all with the same bank branch, of the donors, as furnished by the assessee - the donors failing to respond to the summons issued by the A.O., revealed them to be enjoying credit facility from the bank, ostensibly for the business purposes, and the gift amount being out of the said borrowing. No relationship with the donors for the gifts or occasion therefor stands specified. The gifts were accordingly treated as not genuine. The ass....
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....nces of each case. The whole premise of the provision (s. 68), it needs to be appreciated, is a satisfactory explanation, i.e., as appeals to a reasonable, prudent person, and which stands clarified by the apex court in P. Mohanakala (supra) to mean a proper, reasonable and acceptable explanation. In case of a gift, we may though mention that the burden of proof, and particularly from the standpoint of the genuineness, is all the more in-as-much as the donor, without any consideration, except ostensibly emotional satisfaction, relinquishes his entire rights in the property being gifted forever, so that the test of human probabilities assumes critical significance (refer: Sumati Dayal [1995] 214 ITR 801 (SC)). The Courts have discountenanced and, in fact, come down heavily on the practice and phenomenon of 'gifts', observed only in the files of the income-tax payers, in complete contradistinction to the experience of every day real life where gifts, even from near and dear ones, are hard to come by, and can be regarded as only rare and exceptional, moved and occasioned by (say) compelling circumstances, as for example a dire need, a medical emergency/bill, etc. of the donee or his/h....
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....stances would not be made to a strangers or relative stranger or perhaps even acquaintance but only to one with whom the donor enjoys a high level of personal relationship and emotional bonding. No relationship, however, has been specified in the instant case for any donor. How the donor/s knows the assessee or his family? How and under what circumstances such close ties, so as to identify with the assessee (or his family) came to be developed? Have the donor/s gifted any sum to the assessee (or his family members) at any time in the past, which would generally start with small sums? Whether any gift has been similarly made to the assessee (or his family members) any time in future? Have the assessee (or even his family members) at any time gifted to the donors (or their families); love and affection being almost certainly a two-way process? Have, in fact, the donor/s gifted like amount to anyone in their own families? These and such like questions, answers to which would form the crux of the assessee's explanation in-as-much as it is the genuineness of the gift that has been doubted, remain completely unaddressed and unanswered. Rather, they even do not stand to be posed in-as-muc....
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....in second appeal. 7. We have heard the parties, and perused the material on record. Without doubt, the penalty for concealment, or furnishing inaccurate, particulars of income, is not automatic and it is open for the assessee to, despite an addition to its returned income in assessment, make out a case for non-levy of penalty u/s.271(1)(c) by furnishing a plausible explanation, eschewing the application of Explanation 1 to section 271(1)(c), which deems the concealment and/or furnishing inaccurate particulars of income in the absence of any explanation, or the explanation being found as false, or being unsubstantiated. The assessee, however, has not furnished any explanation, i.e., which could be regarded as proper or acceptable, from the standpoint of a layman or a reasonable person. The findings with regard to the capacity (of the donors) or the genuineness (of the gifts) being not proved are essentially findings of fact, arrived at in assessment on a consideration of the facts and circumstances of the case and, therefore, have persuasive value in the penalty proceedings as well. No improvement to its case, however, stood made by the assessee at, in fact, any stage of the penalt....