TaxTMI 
TaxTMI 
2008 (1) TMI 946
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....tated to have received gifts aggregating to ₹ 50 lakhs from the persons viz. (i) Shri Bishanchand, HUF, (ii) Shri K.M.L. Agarwal & Sons, HUF and (iii) Shri Kishan Murarilal Agarwal, by cheques. The AO considered the said gifts as bogus and reopened the case of the assessee for making addition. Considering various submissions made by the assessee by issuing notice under s. 147 of the Act and made addition of ₹ 50 lakhs under s. 68 of the IT Act, 1961 (Act). 3. The assessee preferred appeal before the CIT(A). Besides challenging the addition on merits the assessee also challenged the reopening of assessment. The CIT(A) was of the view that neither the AO could establish that the gifts received were bogus nor the assessee was able to discharge his onus of proving that the gifts transactions were genuine and confirmed the order of the AO. He held the reopening as valid by observing that the AO has recorded very detailed reasons for reopening the assessment, namely; (a) During the search at the premises of Mr. Manoj Agarwal it was found that he had been in the business of providing accommodation entries; (b) The appellant had received gifts from three persons; (c) Enquiry c....
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....as not brought any evidence on record to prove that the donations are merely accommodation entries and not genuine gifts. She has made addition only on the basis of statement given by Shri Manoj Agarwal and on the basis of relations of donors with him. He also observed that the AO has used the evidences and statements of various persons without providing the copies of the same to the assessee; that the AO has heavily relied upon the findings of the case of Mr. Manoj Agarwal, and the fact that said person has admitted that he was engaged in the business of providing accommodation entries, however, there is nothing on record to show that the donors also indulged into the same business or that gifts given to the appellant were also part and parcel of the same business; that there is no corroborating evidence with the AO and whatever the evidences are relied on by her are partly circumstantial and partly not usable as proper opportunity was not provided to the assessee. As the donors are income-tax assessees and have confirmed the gifts, the AO should have made inquiries from the AO of the donors about their capacity of giving such gifts. He however, it is observed that the assessee wa....
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....o determine the validity of gifts received by the assessee. There is no evidence on record to show that gifts had any link whatsoever with Mr. Manoj Agarwal, and that the person who was found to be engaged in granting entries. There was nothing on record to show that the said Manoj Agarwal or any person had stated that bogus gifts or accommodation entries have been given to the assessee. Therefore it is not correct to state that the evidences and the information were available with the AO, which could be sufficient to come to the conclusion that the AO had reason to believe that the income has escaped assessment. Reliance is placed on the decisions of Sheth Brothers vs. Jt. CIT (2001) 169 CTR 519 (Guj); Indian Oil Corporation vs. ITO (1986) 58 CTR (SC) 83: (1986) 159 ITR 956(SC); Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191(SC); ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220: (1976) 103 ITR 437(SC); CIT vs. Ram Lal Manohar Lal (1985) 49 CTR (Del) 124: (1986) 158 ITR 9(Del) 11; and Usha Sales (P) Ltd. vs. State of Bihar (1985) Tax LR 2852 (Pat). If there be the material found in the search in the case of Mr. Manoj Agarwal, the provisions of s. 158BD were applicable and having ....
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....ut on 3rd Aug., 2000 at the office premises as well as at the residence of Shri Manoj Agarwal and others at New Delhi. It is submitted that Shri Manoj Agarwal had been in the business of providing bogus accommodation book entries for consideration. Shri Vijay Kumar Bansal is assessed to tax with Dy. CIT, Circle-1, Bhavnagar. He has filed his return of income-tax for asst. yr. 2000-01 vide receipt No. 194 on 31st Aug., 2000 in which capital receipt of ₹ 50 lacs was shown without any particulars. On inquiry, it is explained that the said capital receipts are gifted from certain persons. Shri Vijay Kumar Bansal claimed gifts from respective bank accounts. It is also noticed that Shri Manoj Agarwal had opened numerous bank accounts in various names, Shri Vijay Kumar claimed following gifts from respective bank accounts. Sr. No. Name of Donor A/c held by donor Amount of gift Description of cheque 1. Shri Bishanchand (HUF) 01190005124, SBI, Daryaganj ₹ 10 lacs 00902838 dt. 26.11.99 2. K.M.L. Agarwal & Sons (HUF) 01190005118 ₹ 10 lacs 00902736 dt. 25.11.99 3. Shri Kishan Murarilal Agarwal 01190005112 ₹ 10 lacs 00902227 dt.....
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.... assessee are bogus in absence of any linkage of such gifts with either Manoj Agarwal or the material found in search thereof in his case. He might have indulged in hawala gifts but how because of this fact the assessee's gifts could be Hawala. Neither assessee's name is found mentioned in any of the statements of Manoj Agarwal nor the allegation that the donors of gifts to the assessee have in association with him given only hawala entries and not the real gifts. Furthermore, there is no link established that the donors have any connection with Manoj Agarwal or they have made gifts through him. 12. In Sheth Brothers vs. Jt. CIT (supra) the Gujarat High Court held that "It is also well-settled that reason to believe is not the same thing as reason to suspect and that belief cannot be based on suspicion". In our opinion there no material in the present case even to suspect that gifts are not genuine. Similarly in the case of Indian Oil Corporation vs. ITO (supra) where the AO had reopened the assessment on the ground that the assessee was debiting excessive head office expenses, while dealing with the issue of the validity of reopening the Supreme Court observed t....
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....ct between the donor and the person from whose account the cheques of gifts were issued. If the material was there in search of Manoj Agarwal depicting the invalidity of the gifts it would have been a case for proceedings under s. 158BD and because of the non obstante clause it could have not have been reopened under s. 147 of the Act and if on the contrary there is no such information for alleging the gifts to be invalid or hawala then the very basis of reopening under s. 147 comes down to surface. 15. In the case of Praful Chunilal Patel (supra), the Gujarat High Court dealt with a situation where there was no dispute about the assessability of capital gain and though the assessee had given particulars at the time of original assessment but the said capital gain remained to be taxed by the mistake of the AO and that was held to be a valid case for reopening. In the present case, on the contrary, the fact that the receipt of gift was income of the assessee itself is in dispute and on the facts and circumstances of the case as aforesaid, there being no material on record to justify that the gifts were bogus the provisions of s. 47 would not be applicable. 16. In the case of P. Mo....