TaxTMI 
TaxTMI 
2015 (4) TMI 595
X X X X Extracts X X X X
X X X X Extracts X X X X
....e u/s.68 of the Act in the assessment order passed u/s. I 53A of the Act without appreciating the fact that no incriminating material or evidence was found in course of search action in respect of addition made u/s.68 more particularly when the assessment for AY 2004-05 was already completed and order passed u/s.143(3) of the Act and the impugned issue duly examined and that the said assessment order did not get abated as the same was not pending as on the date of search action and hence, the addition made u/s.68 of Rs.I.25 lacs in the order passed u/s.153A of the Act is bad in law, unjustified and may be deleted. 2. The learned CIT(A) failed to appreciate that statement recorded of son of appellant in the course of search action cannot be said to be incriminating evidence found in course of search action more particularly when no evidence was found and only general question and answer were asked and hence, the addition sustained in order passed u/s.153A of the Act is without any justification and liable to be deleted. Without prejudice to above, on merits: 3. The Ld. CIT(A) erred in confirming addition made u/s.68 of the Act in respect of Gift received from Shri Kanhaiyalal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...."2.1 The assessee has provided copy of Notarized declaration of gift dated 06-02- 2006. He has further filed photocopies of the following documents. i. A copy of Certificate from Asia Exchange Center, Dubai dt. 20th Nov, 2006 showing the particulars of demand drafts of Rs. 50,00,000/- issued by them. ii. A copy of Certificate from Wall Street Finance Center, Dubai dt. 20th Nov, 2006 showing the particulars of demand drafts of Rs. 75,00,000/- issued by them. iii. A copy of Certificate dt. 18th Nov. 2006 issued by Union Bank of India, Zaveri Bazar Branch confirming deposit of the aforesaid demand drafts and their clearance. iv. A copy of relevant pages of Passport of Shri Kanhayalal Sharma. v. A copy of declaration of gift made by Shri Kanhayalal Sharma on plain paper on 29-01-2004 stated to be made at Dubai." 3.1 The AO, however, observed that the crucial point of natural love and affection was missing between the donor and the donee. The AO further noticed that during the search and seizure action carried out in the premises of the assessee, statement of Shri Ritesh Jain, son of the assessee Shri Amritlal Jain was recorded on 14.11.08. The excerpts of the state....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the assessee and there was no question of love and affection between them. He further concluded that it was unlikely that said Shri Kanhaiyalal Sharma would have made a gift of his hard earned money to the assessee and his family. He therefore held that the assessee had failed to discharge the onus on him to establish that the gift was genuine. He accordingly made the addition of the gift amount of Rs. 1,25,00,000/- into the income of the assessee. 4. The Ld. CIT(A) upheld the additions so made by the AO. The assessee has, thus, come in appeal before us. 5. We have heard the rival contentions of the Ld. Representatives of both the parties and have also gone through the records. After hearing the Ld. Representatives of the parties, we find that in this case, the scrutiny assessment under section 143(3) of the Act was completed on 15.12.06. During the said assessment proceedings, the AO had called for necessary evidences regarding the gift transaction in question. The assessee provided the necessary details such as copy of deed of declaration of gift by the donor, bank account statements, copy of passport of the donor, confirmation from Asia Exchange Center and Wall Street E....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in relation to already concluded assessment under section 143(3) of the Act was not justified. The Special Bench of the Tribunal in the case of "All Cargo Global Logistics Ltd." 137 ITD 257, has held that assessment u/s. 153A can be made on the basis of incriminating material found during the search. The Hon'ble Rajasthan High Court in the case of "Jai Steel (India) v. ACIT" (2013) 259 CTR 281 has held that in case nothing incriminating is found on account of search or requisition, the question of reassessment of the concluded assessment does not arise. Hon'ble High Court rejected the argument of the learned counsel for assessee to the effect that once the notice u/s. 153A is issued, the assessments for six years are at large both for the AO and the assessee. It has been further held by the Hon'ble High Court that the provisions of section 153A to 153C cannot be interpreted to be further innings to the AO and/or assessee beyond the provisions of section 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. The Hon'ble High Court has further observed that the words "assess" or "re-assess"....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee accrued therein. In our view, no tangible incriminating material was found during the search action. Hence, the reassessment made by the AO under section 153A was bad in law. 6. Even on merits, the additions in this case have been based on conjectures and surmises. The gifts were made in this case in assessment year 2004-05 i.e. prior to the insertion of clause (v) to sub section (2) of section 56 vide which the scope of persons from whom the gift received is exempt from tax has been restricted. Prior to the said insertion, there was no embargo on receipt of gift from a friend. Such gifts were exempt from tax . 7. Now coming to the question of validity of the gift transaction, the three essentials for a gift to be valid as per section 122 of the transfer of Property Act are that; (1) The gift must be by one person called donor, (2) The gift must be accepted by the another person called donnee. (3) The acceptance must be made during the life time of the donor and while he is still capable of giving. All the above requirements of a valid gift as per law have been duly complied with in the transaction in question. So far as the provisions of the Income Tax A....