TaxTMI 
TaxTMI 
2014 (10) TMI 179
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.... the facts in this behalf are that the assessee received the following gifts as observed by the AO (i) Shri Pramod Garg Rs. 3.00 lacs (ii) Shri Vinod Garg Rs. 2.00 lacs (iii) Smt. Babita Rs. 1.25 lacs (iv) Smt. Varsha Badaya Rs. 3.00 lacs The AO asked the assessee to prove the relationship with the donors, genuineness of the gifts and creditworthiness of the donors. The assessee vide letter dated 17-09-2003 replied that Smt. Varsha Badaya was the niece of the assessee and remaining donors were the children of the Accountant working with the assessee which were claimed to be Dharam Bhai and Dharam Bahan of the assessee. The assessee filed copies of bank accounts, confirmation of gifts and income tax record. The AO found that bank accounts reflected that the gifts were immediately preceded by depositing the amount in donors respective accounts. 2.2 The AO asked the assessee to produce the donors and prove their creditworthiness. The donors were produced who confirmed giving of the gifts and their statements were also recorded. According to the AO, there were contradiction in the statements of donors vis-a-vis the transactions of the gifts claimed by the assessee. Th....
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....ing her family problems and rendering services. 2.5 Smt. Babita Ahir stated that the gift was made in lieu of expectation of future reciprocal gifts from the assessee. 2.6 The donors did not know the assessee's exact address to support their statement that they were frequently meeting with the assessee on festival times and on social ceremonies. Besides, they could not give details of their visit and frequency of meeting to the residence of the assessee. 2.7 The AO on the basis of various detailed observations including the above gist of observations came to conclusion that there was neither any intimacy between the assessee and these donors which was essential part of the activity as per their statements nor the donors could establish natural love and affection . The donors did not prove the relationship as claimed with the assessee and gave no details as to how they met with the assessee. The donors also accepted that they do not have current touch or contact with the assessee by telephone or otherwise. 2.8 Smt. Varsha Badya had stated that according to her memory she had given only one gift of cloth about Rs. 2,000/- to her brother on his birthday and too noting ....
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....lso observed that in all cases the deposit slips were found to be filled in by Sh.R.N Garg.who is the accountant of the assessee. Though all of the alleged donors have stated to receive back their own money either from assessee or from her husband and later gift that amount to assessee, but they could not be able to furnish the dates, when the so called money was firstly advanced by them to assessee or her husband or to any other person. Besides this their accounts also does not show their capacity to advance such gifts. On being asked the A.R. could not adduced any other information evidence. 10. From the study of statements of all the donors and donee and the discrepancies / facts as noted above, it can be concluded that neither the assessee tot the donors are very intimate with each other. Thus a relationship intimate enough to give gifts of such large amounts to assessee does not exist. Further there are so many points of contradiction in the statements of donors and donee. Apart from these as narrated above the assessee has not been able to prove the creditworthiness of the alleged donors. The assessee has also not been able to prove the genuineness of the transaction. C....
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....Revenue is before us. Ld. DR vehemently argued that it is a peculiar case of reverse gifts where the donee is a very rich person and the donors are the poor persons. The three donors are the children of the donee's Accountant and one claims to be the distant niece of donee. The AO by demonstrative observation has demolished the claim of the warm relationship as claimed by the donors and assessee. The donors have never been able to tell the exact address of the assessee. Though the donee is a business woman yet the same donee claims that she is a housewife. In normal circumstances, the assessee being a rich lady ought to have provided gift to her niece and other persons out of natural love and affection whereas there is a strange situation in this case inasmuch as poor persons are giving huge amounts of gifts to a rich person which practically wipes out their earning source. It is ironical that money was not lying idle with the donors, they were earning interest thereon and utilizing the earned interest towards meeting out their house hold expenses and taking care of their families which they claimed to be dependent on them. These facts, circumstances of improbabilities, human prude....
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....einabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995] Supp 2 SCC 453'' Further reliance is placed by the Hon'ble Punjab & Haryana High Court in the case of Subhash Chand Verma vs. CIT, 311 ITR 239 wherein it has been held that :- ''The assessee in his capital account claimed a sum to be a gift received from a non-resident Indian friend. The Assessing Officer refused to accept the gift as genuine as claimed by the assessee and included its value in the assessment for the assessment year 1997-98. On appeal, the Commissioner (Appeals) deleted the additions holding that the assessee was aware of the names of the wife and children of the donor, his relative and friends in India. The Tribunal reversed the order and held that the burden of proof to establish the identity of the creditor, his creditworthiness and genuineness of the credit was upon the assessee. It further held that the occasion for making the gift could not be established nor was any document proved on record showing that the gift was made for the treatment of the assessee on account of his ill-health. On appeal contending that once the identi....
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....at gifts are in fact colorable transactions which have been rightly taxed as income by AO. 2.17 The ld. Counsel for the assessee on the other hand reiterated the facts of the case and the written submission filed before the ld. CIT(A) and also relied on the case of CIT vs. Padam Singh Chouhan, 215 CTR 303 (Raj.) wherein the Hon'ble High Court held as under:- ''4. In our view, there is no legal basis to assume, that to recognize the gift to be genuine, there should be any blood relationship, or any close relationship, between the donor and the donee. Instances are not rare, when even strangers make gifts out of very many considerations, including arising out of love, affection and sentiments. In our view when the assessee has produced the copies of the gift deeds and the affidavits of the donors, in the absence of anything to show that the act of the assessee in claiming gift, was an act by of money laundering, simply because he happens to receive gifts, it cannot be said that, that is required to be added in his income.'' The Hon'ble Gujarat High Court in the case of CIT vs. Bhanwar Lal Sharma (Tax Appeal No. 713 of 2102 dated 21-02-2013) is also relied which up....
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....f assessee and uphold his request to delete the addition of entire amount from the computation of his income. 15. We find no perversity in such conclusion so as to hold that this gives rise to any question of law much-less any substantial question of law.'' Therefore, this judgment has no force as a binding precedent before us as peculiar facts are involved in that case. 2.20 It is vehemently countered by the ld. DR that the assessee's story about gifts is full of latches, inconsistencies in the statements and ultimately non-production of the promised evidence to demonstrate material creditworthiness of the donors. 2.21 We have heard the rival contentions and perused the materials available on record. We find merit in the arguments of the ld. DR that the AO has demonstratively narrated the inconsistencies, contradictions in the statements and improbabilities in the impugned transaction of gifts. Mere identity of donors and paper trail cannot be the conclusive factor while accepting the gifts as genuine. For this purpose, we find support from the decision of Hon'ble Punjab & Haryana High Court in the case of Subhash Chand Verma vs. CIT (supra). 2.22 Apropos bu....