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2008 (10) TMI 665
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....atement of Shri Pawan Kumar Jain is recorded by the Assessing Officer is extracted hereunder:- "Q.1. Please identify yourself. Ans: I am Pawan Kr. Jain S/o Sh. Suresh Kr. Jain R/o BM-173 West Shalimar Bagh, Delhi. I am 43 years old. Q.3 What is your source of income. Ans: I am Prop. Concern namely Pawan Jai and Sons. It is recognized Export House. It is exporting stainless steel utensils. Q.7 What is your turnover? Ans: Last year it was more than 50 crore. Q.10 Have you made gift during FY, 2000-01. If yes to whom and how much. Ans: Yes. I have gifted Rs. 50,00,000 to Kusum Gupta, through cheque. Q.11 How you know Mrs. Kusum Gupta? Ans: Her husband Mr. Umesh Gupta is my friend and we have family relation for the last 15 years. Q.12 Where Mrs. Kusum Gupta is residing and what type of business she is carrying? Ans; She is residing at 21/40, Shakti Nagar, Delhi. She is house wife and business also. Q.13 Please state what Mr. Umesh Gupta is doing. Ans: Mr. Umesh Gupta is engaged in business of stainless steel at Meera Tower 1st Floor Wazirpur Indl. Area, Delhi. ....
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....c payee's cheques in my name. Q.5 Any gift deed was executed while accepting the gifts. Ans: Yes. Q.7 What was occasion to receive the gifts. Ans: there was no occasion. Q.8 Since when you know to Sh. Sagar Chand Jain and Pawan Kr. Jain. Ans: I know to him for the last 15 to 16 years and they used to visit my house regularly. We have family relations with them. Q.9 Have you any business dealing with Sh. Sagar Chand Jain and Sh. Pawan Kr. Jain. Ans: Yes. It is very nomillaly. Q.11 Please state you have got any relation with Sh. Sagar Chand Jain or Pawan Kr. Jain. Ans: No. We have only family relations. Q.12 Can you identify the names of family of Sh. Sagar Chand Jain. Ans: Yes. Smt. Shanti Devi (wife) Sunita and Sarita (Daughters) Rajinder and Kamal (sons). Q.13 You ever visited to Sagar Chand Jain. Ans: I visit to his house almost once a week. Q.14 why Sh. Sagar Chand Jain and Pawan Kr. Give gift to you. Ans: It was only due to their love and affection with me. Q.15 Please give the details of family members of Sh, Pawan Kr. Jain. Ans: H....
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....sessing Officer on the basis of above statements concluded as under:- "1. The assessee (Pawan Kumar Jain) is engaged in business of export of utensils and having business dealing with Mrs. Kusum Gupta (assessee) and her husband Shri Umesh Gupta. 2. There is no relationship between alleged Donar and alleged Donee. 3. When the gift was made there was a credit balance only of Rs. 47,54,530 and after debiting Rs. 50,00,000 on 12/10/2000 there was a debit balance of Rs. 2,45,469 in the bank account of alleged Donar. 4. No gift was made by the alleged donor except to his younger brother during the year as stated amount of gift to brother has not been disclosed despite being asked. 5. Shri Umesh Gupta the husband of the donee is stated to be friend of donor. 6. No special reason for giving gift to the business associates was stated by alleged donor. 5. Considering all these facts the A.O. concluded thus: It is apparent that the assessee has not been able to prove the genuineness of the gift. Even though the person is existing, the genuineness of transaction has not been established. It sounds unbelievable that a person woul....
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....At the instance of Commissioner(Appeals) the assessee clarified the position regarding bank balances of donors. It was submitted that when gift was given by Shri Pawan Kumar Jain, there was a balance of over Rs. 51 lacs in his accounts. On the same date various other cheques were issued also because of which the balance was reduced to Rs. 47.54 lacs but on the very next day i.e. on 13.10.2000 the credit balance was more than Rs. 32 lacs. An affidavit from Shri Pawan Kumar Jain was also filed. It was also clarified that Shri Sagar Chand Jain has received back the advance given by him to one Shri R.C. Kathuria and after receipt of such advance by Shri Sagar Chand Jain, gift of Rs. 10 lacs was given. The learned CIT(A) held that when Shri Pawan Kumar Jain gave a gift of Rs. 50 lacs on 12.10.2000, the credit balance was to the extent of Rs. 47.54 lacs in his bank account. The learned CIT(A) held that there is no circumstantial evidence to justified that donor because of past relationship with donee had voluntarily made the gift without any expectation of getting back any consideration in lieu of gift. No instances are cited by the donor to prove that he was in touch and involved with t....
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....ce in capital account of over Rs. 20,42 crores. The total turnover by Shri Pawan Kumar is exceeding Rs. 25 crores for financial year 2000-01. Pages 28 and 29 is the bank statement of Shri Pawan Kumar. Shri Pawan Kumar has given gift which was debited in his bank account on 12.10.2000. The balance in his bank account on 11.10.2000 shows credit balance of Rs. 50.60 lacs. Along with the cheque of Rs. 20 lacs to the assessee, he also issued various other cheques. Therefore, when the amount was debited in respect of cheque issued to the assessee, the balance stood reduced to Rs. 47.54 lacs. However, on the very next day i.e. on 13.10.2000, the balance in his account even after debit of cheque of Rs. 50.00 Lacs shows credit balance of Rs. 32.96 lacs. Merely because at particular point of time the balance was marginally short, it cannot be held that the donor did not have sufficient fund to give the gift. All other accounts and cheques reveal that he is a man of means with sizeable capital and huge turnover. 9. As regards gift from Shri Sagar Chand Jain, Shri Aggarwal submitted that the evidence laid in this regard is at pages 5 to 15 of the Paper Book. The statement of Shri Sagar C....
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....nuine. He also relied upon the following decisions in support of contention that the gift is genuine:- (1) Murlidhar Lahorimal vs. CIT, 280 ITR 512 (Guj.); (2) Gouri Prasad Bagaria vs. CIT, 42 ITR 112 (SC); (3) CIT vs. Mrs. Sunita Vachani, 184 ITR 121 (Del); (4) CIT vs. R.S. Sibal, 269 ITR 429 (Del); (5) CIT vs. Prof, P.G.A. Nath, 234 ITR 854 (Del); (6) Parimisetti Seetharamamma vs. CIT, 57 ITR 532(SC); (7) Smt. Bhagwati Devi vs. ITO, 47 ITD 58. As regards decisions relied by the Assessing Officer in the case of ITO vs. Dr. Smt. Daxaben J. Kansagara and Others, 66 ITD 381 he submitted that the same is distinguishable on facts. In the said case the gift was stated to be received by the assessee who was a doctor running ultra modern surgical clinic with lucrative practice and the gifts were received from strangers and illiterate agriculturists who have stated to have given gift out of agricultural income. In such a situation the Tribunal held that where donors were ranked outsiders/strangers and there was no occasion for making huge gifts to relatively well to do donees, genuineness of the gifts cannot be accepted. How....
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....eds to be sustained as the gifts are not genuine:- (1) CIT vs. P. Molianakala, 291 ITR 278 (SC); (2) Rajiv Tandon vs. ACIT, 294 ITR 488 (Del); (3) CIT vs. Anil Kumar, 167 Taxman 143; and (4) Sandeep Kumar (HUF), 293 ITR 294 (Del). 11. In reply Shri Aggarwal submitted that even if the circumstances are against the human probabilities in the opinion of the Assessing Officer, yet when the respective conduct of the donor and donee have been explained and no contrary evidence is found, the opinion of the Assessing Officer is of least importance. Neither the affidavit is proved wrong nor the statements of donors have anything, which suggest that the gift is not genuine. The decisions relied by the learned DR are distinguishable on facts. In the case of CIT vs. Anil Kumar (supra) the Hon'ble Delhi High Court considering their earlier judgments carved out the position that (i) mere identification of donor and showing the movement of gift through banking channel is not sufficient to prove the genuineness of the gift; and (ii) The onus lies on the assessee to establish not only the identity of the donor but also his capacity to make such a gift. If ....
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....ger brother, (iv) Shri Umesh Gupta, husband of the assessee is stated to be friend of the donor, (v) No special reason for giving gift is stated. 13. On the basis of these facts the Assessing Officer held that the gift is not genuine as it sounds unbelievable or it is against human probabilities. The amount was added as unexplained cash credit under section 68 of the Act. We. shall therefore, examine as to whether the provisions of section 68 can be applied or not. Under section 68 where any amount is found to be credited in the books of accounts of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered is not in the opinion of the Assessing Officer satisfactory, such sum may be charged to income-tax as income of that previous year. Time and again various Courts have held that the primary onus to justify the genuineness of the cash credit lies on the assessee. A cash credit is held to be explained provided - (1) The identity of the creditor is established; (2) The creditworthiness of the creditor is established; and (3) The genuineness of the transaction is established. 14. Since the transaction is not simply cash cr....
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.... sufficient funds to give a gift of Rs. 50 lacs. The assessee has filed gift deed signed by Shri Pawan Kumar Jain. During the course of appellate proceedings the assessee was required to obtain an affidavit from Shri Pawan Kumar Jain explaining why the gift was given. Shri Pawan Kumar Jain in his affidavit on oath stated having given the gift out of natural love and affection which he has towards donee for last more than 15 years. He also averred that the assessee is treated as 'sister' in all family functions and festivals. It was also averred that the assessee is instrumental in driving Shri Pawan Kumar into export business of utensils. He also averred that he achieved his goal in his personal life and in society since time he is in relationship with assessee. They also go for vacation jointly. In spite of this specific affidavit, no further enquiry was made. The same was brushed aside as "it sounds unbelievable" or "it is against human probabilities". When the overwhelming evidence is produced by the assessee and which has not been found to be either incorrect or false, the same cannot be treated as no evidence or as non-genuine. A transaction does not become non-genuine....
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....There is also no blanket bar on considering the additional evidence. Since the assessee proved that there was never any opportunity for him to lead the evidence for genuineness of credit in the account of Shri Sagar Chand Jain, the learned Commissioner (Appeals) was required to examine the same and give his finding thereon. At any rate the credit in the bank account of Shri Sagar Chand Jain is not the source of assessee's credit but is the source of the source. Time and again various courts have held that when the assessee is required to prove genuineness of credit, he has to prove only his source and not the source of the source. In view of this evidence it can be concluded that Shri Sagar Chand was a man of huge means who could have given gift of Rs. 10 lacs to the assessee. As regards the genuineness of transaction, there is nothing on record to suggest that the transaction is not genuine. The donor and donee both having confirmed the gift, having signed the gift deed and having established the relationship (though not blood relationship), are sufficient to hold the transaction as genuine as there is no contrary evidence also. Accordingly the transaction of gift of Rs. 10 la....
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....sional services rendered, these amounts could not be brought to tax. On an application to direct reference: Hon'ble Delhi High Court held, that the tribunal had on appreciation of evidence chosen to believe the assessee and the affidavits of the donors filed by the assessee and concluded that the receipts were gifts and not revenue receipts of the assessee. It was purely a finding of fact. No referable question of law arose from the order of the Tribunal. In the case of Lalchand Bhagat Ambica Ram vs. CIT, 37 ITR 288- It was held by the Hon'ble Supreme Court that when a court of fact arrives at a decision by considering material which is irrelevant to the enquiry, or acts on material, partly relevant and partly irrelevant, and it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its decision, a question of law arises: whether the finding of the court of fact is not vitiated by reason of its having relied upon conjectures, surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material. In the case of Gouri Prasad B....
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.... that- The AO has assumed doubts against the donor, merely on the basis of his having deposited certain amounts in his accounts, soon before making of the gifts, and that the assessee had withdrawn the amounts deposited by him, including the amount of the said gifts, in short span of time. With this, the AO has found, that the facts created doubt, that how the assessee as well as his family members are receiving such huge gifts from a person residing abroad, and concluded that it appears, that the gifts are not genuine, and are only a managed affair of the assessee. The CIT(A) has reversed his finding by holding that the assessee had clearly shown from the assessment proceedings that the gifts were made out of love and affection towards the assessee and it is matter of God's Grace to make love and affection between donors and donee, and to have love and affection between two persons, blood relation is not required, and looking to the status of the donors, the amount gifted was very meager. Then, it was found by the CIT(A), that the assessee has also furnished the copies of the gift deeds, and affidavits of the donors. In the opinion of the CIT(A), it is not a case, whe....
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....ioner (Appeals). On further appeal to the Delhi High Court, it has- Held, dismissing the appeal, that the only ground on which the genuineness of the gifts had been doubted was the alleged failure on the part of the assessee to establish relationship between the donor and the donee. Both the lower appellate authorities had recorded a categorical finding that by producing the documents, the assessee had discharged the onus which lay on him with regard to the genuineness of the gifts. The inference drawn by the appellate authorities, on the appreciation of the evidence was factual, giving rise to o question of law much less substantial question of law. In the case of CIT vs. Mrs. Sunita Vacham, 184 ITR 121 (Delhi)- The facts of the case are that the commissioner in revision had set aside an assessment order, because he was of the view that the income tax officer had not gone into the sources of gifts of large sums of money received by the assessee form abroad. On appeal, the appellate tribunal saw the balance-sheets of the donors which had been placed on record and came to the conclusion on merits that the decision of the income Tax Officer to treat the money ....
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....vidence in support of the source from which the funds for making the gift were available with him. The tribunal however held that the motivation for making the gift was not established. It upheld the addition. On reference: Held, that the tribunal failed to note the fact that the identity of the donor was established, the donor having appeared in person before the Assessing officer, the genuineness of the transaction was established, not only by the receipt of the bank draft, but also by the fact of the transaction having borne gift tax once the assessment was framed. The primary onus which rested with the assessee, thus. stood discharged. Thereafter, if the revenue was not satisfied with the source of the funds of the funds in the hands of the donor, it was up to the revenue to take appropriate action. The tribunal considered the motivation for making the gift which was relevant. The addition of Rs. 50,000 was not justified. In the case of CIT vs. P. Mohanakala 291 ITR 278, the Hon'ble Supreme Court observed- A bare reading of section 68 of the Income Tax Act, 1961, suggests that (i) there has to be credit of amounts in the books maintained by the assessee....
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....ry the amounts were not of the nature of income. The commissioner (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two members of the appellate tribunal and the matter was referred to the vice president who concurred with the findings and conclusions of the Assessing officer and the Commissioner (Appeals). On appeal the High Court re-appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court, it has - Held, reversing the decision of the high Court, that the findings of the Assessing Officer, Commissioner (Appeals) and the Tribunal were based on the material on record and not on conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent finding of fact. In the case of Smt. Bhagwati Dem vs. ITO, 47 ITD 58 the Calcutta Bench of the ITAT observed that- In the instant case, the AAC did not deci....