TaxTMI 
TaxTMI 
1997 (12) TMI 651
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....ottam Gulabani Rs. 10,000 6. Mrs. Kamle Purshottam Gulabani Rs. 10,000 7. Poonam B. Ahuja Rs. 5,000 8. Niren Laxmandas Chawla Rs. 10,000 9. Pahlaj L. Chawla Rs. 5,000 The earlier income-tax records of the assessee relating to the assessee showed that during the assessment years 1978-79 and 1979-80 also the assessee had received gifts of varying sums of Rs. 90,500 and Rs. 95,000 respectively. Thus, with the gifts said to have been received by it in the accounting year in question the total gifts received by the assessee-HUF up to 31-3-1981 amounted to Rs. 2,45,000. Out of the six donors, the assessee filed gift declarations from 5 donors. Some of the donors were near relatives of the assessee. The relationship of the donors to the donee was revealed and duly recorded by the ITO in his first assessment order dated 11-10-1985. The gifted amounts were received through account-payee cheques from the donors. Further, the donors, who had gifted Rs. 10,000 each to the assessee, filed gift-tax returns and they were also assessed to gift-tax. The donors, who had gifted only Rs. 5,000 each, were not liable to pay any gift-tax and, therefore,....
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....de clear to indicate that the personal attendance of the witnesses was intended, although this has been mentioned on the back of the summons. Having regard therefore to the totality of the facts and circumstances of the case and for proper dispensation of justice, I am inclined to set-aside the assessment on this point with instructions to the ITO, to redo the same after examining these six parties who made the gifts of Rs. 5,000 each. In case, the ITO is able to collect material to establish beyond reasonable doubt that such gifts are arranged gifts, he is free to do so, but he will give a definite finding with reference to the material in his possession. If he is unable to gather such material, he will verify the financial credentials of these six donors in an attempt to find out if they were financially capable of making the gifts without questioning the validity of the gifts in view of the documentary evidence filed on his record. The ITO is also directed to allow a right of cross-examination to the appellant before taking any adverse view of the statement of the witnesses. The ITO will also allow a reasonable opportunity of being heard to the appellant before making re-assessm....
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....s. 62,920. That means, out of the total gifts of Rs. 60,000 claimed by the assessee, only Rs. 35,000 worth of gifts were accepted and the remaining sum of Rs. 25,000 representing gifts from 5 parties was rejected. While passing the order dated 30-3-1986, the ITO observed that a second appeal with regard to the gifts of Rs. 30,000 was pending with the ITAT. This appeal is said to be a departmental appeal in ITA No. 5345/Bom./85, whereby the department questioned the legality of the deletion of Rs. 30,000 from out of the total gifts of Rs. 60,000. The order of E-Bench of the Tribunal dated 22-12-1989 relating to the disposal of the said appeal is furnished at pages 14-15 of the paper compilation filed on behalf of the assessee. As can be seen from that order, the Tribunal had dismissed the departmental appeal and thus the genuineness of the gifts for Rs. 30,000 stood confirmed. It is not the case of the department that the Tribunal's order was taken in reference to the High Court or that the Tribunal's order did not reach finality. 5. Now, against the order dated 30-3-1986 passed by the ITO, the assessee went in appeal before the CIT (A) XI, Mumbai. The ld. CIT(A), by his order da....
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.... her husband Shri C.N. Udani, was working as Accountant in the said Bank and the account held by her was a joint account. To a question that on 25-3-1981 a cash deposit of Rs. 5,000 was made in her account and when she was called upon to explain the source of such income, she stated that it represented her personal savings. She admitted to have given a gift to Shri Atmaram, the head of the assessee-family. She stated that she gave the gift in the month of March 1981. She does not know the names of the wife or children of Shri A.J. Manghirmalani. She stated that Shri Manghirmalani is her husband's friend and he also used to give gifts to her children on various occasions and, therefore, she gave a gift of Rs. 5,000 to him. She also stated that she has three children and her husband was drawing a salary of Rs. 2,500 p.m. and she did not see Shri Manghirmalani at any time. The only reason for rejecting her evidence was that either on the date of the gift or one day before the gift the sum of Rs. 5000 was deposited in her bank account. But for this deposit there would not be any sufficient balance in her account to make a gift to the assessee-HUF. The ITO expected that Mrs. Udani shoul....
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....rsuance of the summons issued to him under section 131 and had stated in his statement that he had given a sum of Rs. 5,000 to the assessee. 12. Now, let me consider the gifts said to have been proceeded from the following 3 donors :- 1.Deomal T. Talreja 2.Pahlaj L. Chawla 3.Poonam D. Ahuja. No doubt, each of them made a gift declaration and their declarations are furnished at pages 19, 21 and 23 and the account-payee cheques issued on 19-3-1981 on Bank of India, on Punjab National Bank on 10-3-1981 and on Bank of India on 19-3-1981 are furnished at pages 18, 20 and 22 respectively of the paper book. However, none of the three donors made their appearance, even though summons were issued several times both at the time of the original assessment and also at the time when the matter came up again for consideration in pursuance of the AAC's order. 13. On behalf of the assessee, it was strongly contended that the donee has no duty to prove the credit-worthiness of the donors. In support of this contention, he strongly relied upon the following decisions : 1.Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723 (Bom.). 2.Nanak Chandra Laxman Das v. CIT [1983] 140 ITR ....
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....ther positive evidence falsifying the assessee's case. The true view is that, while the Income-tax Officer is not bound to accept as true any possible explanation which the assessee may put forth, he cannot also arbitrarily reject the assessee's explanation". [Emphasis supplied] In Nanak Chandra Laxman Das's case (supra), the Allahabad High Court surveyed the position in law as to burden of proof in cases of cash credits and Their Lordships held the following ratio as can be seen from part of the headnote obtaining at pages 151-152 : "Where any sum is found credited in the books of the assessee the initial onus is on the assessee to offer an explanation of the nature and source of a cash credit. If the explanation is not found satisfactory or reasonable, the ITO can treat such money as the assessee's income from undisclosed sources. It is not necessary for the ITO to locate the exact source of the credits. The assessee can prove the genuineness of the credits by establishing from some plausible evidence the identity of the creditor and his credit-worthiness. Irrespective of the fact that a credit entry is in the name of a third party, the burden lies upon the assesse....