TaxTMI 
TaxTMI 
2017 (6) TMI 451
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....nion that this pertained to capital expenditure. The Assessing Officer observed that the expenditure was incurred on moulds to change them into a permanent affixture is a capital expenditure, having enduring benefits, and is in the nature of capital asset and, accordingly, the expenses incurred by the assessee to the tune of Rs. 1,39,297/- were added to the income of the assessee. Further, during the year, the assessee had shown gifts received to the tune of Rs. 62,91,297/- and the same was credited to the capital account of the assessee. It was submitted by the assessee that the gift related to the realization of SBI's India Millennium Deposits vide documents executed on 21.07.2004 which was received by the assessee from Shri Subhash Chand, an NRI. However, the Assessing Officer was of the opinion that although the India Millennium Deposit was transferable freely between an NRI and the Indian resident, the assessee had failed to substantiate his claim about the creditworthiness, identity of the owner and the genuineness of the transaction. The Assessing Officer observed that even though the mode of transfer of the gift was through banking channels, the identity of the person who m....
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....ived gift of two certificates of India Millenium Deposit of 50,000/- US$ on 21.7.2004 which were received from a close family friend Shri Subhash Chand who was an NRI. It was further submitted that the India Millenium Deposits were issued in 2000 and that only the non-resident individuals of Indian nationality or origin were eligible to subscribe to the same. It was submitted that Shri Subhash Chand had subscribed to these deposits in the year 2000 and these certificates were issued on 5.01.2001 and the same were gifted to the assessee on 21st July, 2004. Ld. AR also submitted that copies of the certificates, bank certificate confirming the transaction of the gift as well as intimation thereof along with other details were duly submitted before the Assessing Officer at the time of assessment proceedings but the Assessing Officer did not consider the explanation of the assessee to be true and observed that the whole story of the alleged gift from the NRI was a cover up and the entire amount of Rs. 6,29,12,79/- was, in fact, the income of the assessee from undisclosed sources. It was further submitted that the explanation of the assessee was rejected by the Assessing Officer without ....
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....though the gift was transferred through normal banking channels, the assessee had failed to establish the creditworthiness, genuineness and the identity of the donor and the direct nexus between the donor and the donee. 5.1 The AO has further observed that it has not been established that the assessee had met the donor either before or after receiving the gift and also whether the donor and the donee knew each other from before. The AO also observed that it has not been established that the bonds were received by the assessee in person or through some other source. The AO has also observed that it has not been established as to whether the assessee and the donor had any business connection. Further, the AO noted that there was no evidence to show that all formalities and banking regulations before making the gifts were followed in right spirit or not. These observations, in our considered opinion, have no relevance to the issue involved. 5.2 Further, as per the AO, the assessee had failed to satisfy the conditions laid down in section 68 of the Act. The AO has further noted that the assessee - * failed to produce documentary evidence regarding the identity of the person making t....
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....of Rs. 62 lakhs to even a friend. Thus, the Ld. CIT (Appeals) apparently disbelieves the contention of the assessee on suspicion. 5.4 The ITAT Delhi bench in the case of DCIT versus Anil Kumar in ITA No. 4923/Del/1991 reported in 58 TTJ (DEL) 340 while examining the genuineness of a gift, held in paragraph 6 of the order as under - "....We have considered the rival submission and have gone through the material available on record. In this case we find that the assessee had shown a gift from Sh. Mohan Lal Aggarwal. The gift was received by account payee cross cheque drawn on his S.B. account number 22107 in Canara Bank, Agra. The assessee had filed copy of gift tax, dated 29th of February, 1988 showing payment of gift. He has filed a confirmatory letter and affidavit. On assessee's instance the donor was examined under section 131. From his statement it is clear that he has confirmed making of gift in favour of assessee. In his statement he has also mentioned that he had regular source of income from preparing account books and from interest. The gifted amount was deposited in the S.B. account. All these evidence on record show that the burden which lay upon the assessee to prove ....
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.... the assessee in India. 5.8 The Hon'ble Allahabad High Court in the case of Kanchan Singh versus CIT reported in 221 CTR 456 held that there was no reason to doubt the genuineness of the gift by K to the assessee. The Hon'ble High Court held that in any view of the matter, the assessee was able to establish the nature and source of the money. The nature and source of the money found deposited in the bank account of the assessee was the maturity amount of four bonds which were purchased by K on 01/10/1998. Therefore, so far as year under consideration was concerned, the nature and source were fully established. The Hon'ble High Court held that there was no evidence to show that the deposit in the bank account was the income from other sources of the assessee for the year under consideration. The Hon'ble Court went on to hold that amount found deposited in the assessee's bank account in assessment year 2004 - 05 having been explained by the assessee as representing maturity amount of four Resurgent India Bonds purchased by one K, an NRI, on 01/10/1998, and gifted to the assessee on 10/07/1999, could not be added in the hands of the assessee under section 69 of the Act. 5.9 It is se....
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....is surprise and dissatisfaction over the amount gifted to the assessee, the Assistant Commissioner had not led any iota of evidence to prove that the gift was collusive or a dubious device or a subterfuge to evade tax......". Although, this order of ITAT Kolkata was rendered in 1993, the observations of the Bench are still relevant. In the instant case the Ld. CIT (Appeals) has himself accepted that the assessee has produced all the necessary documentary evidence and it is only on the premise of incomprehension and im-probability that the addition made has been sustained. It is undisputed that the assessee has placed on record an affidavit dated 28/11/2007 of the donor which has been disbelieved by the Ld. CIT (A) only on the ground that there was an age gap of seven years between the donor and the donee and, thus, the averment of the donor that the donor and done were almost of the same age was incorrect. This, in our considered opinion, cannot be a valid ground for discarding the affidavit in its entirety. Further, there is another affidavit on record dated 30/03/2010 of the donor reiterating the averments of the earlier affidavit but this affidavit has not even been considered b....