AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 1106
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....eived from Sanjay Mohan Agarwal as bogus Gift. 5. That the addition as made and confirmed is arbitrary, uncalled for and illegal. 6. That the assessment completed u/s 148/143(3) on 15.09.2006 is barred by limitation and kindly be annulled." 3. Facts of the case in brief are that the assessee filed the return of income on 29.10.2001 declaring an income of Rs. 85,010/- which was assessed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 23.02.2004 at the returned income of Rs. 85,010/-. Later on, on the basis of the information received from Addl. DIT(Inv.), Meerut dated 31.03.2005 that the assessee had received a bogus Gift of Rs. 5 lacs during the year under consideration a notice u/s 148 was issued to the assessee. The AO also noted that a summon was issued to Sh. Sanjay Mohan Aggarwal, New Delhi in the context of Rs. 5 lacs Gift received by the assessee from him but the said person did not attend the proceedings but informed through his Counsel that on an inquiry of the CIT, Meerut, the transaction had been confirmed by him. He also furnished copies of his Income Tax Return, capital account, balance sheet and account with Vijaya Bank, Ansari Road....
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....he relevant findings have been given in paras 12 to 16 which read as under: "12. I have given careful thought to the submission of the parties. In large number of cases through investigations and inquiry, the department has found that many companies and individuals indulge in hawala transactions. On the basis of admission/statement or other information, cases of the assessees having credit entries from name lenders or hawala dealers are reopened to add back hawala entries. These cases broadly fall in the two categories: 1) where statement or admission of name lenders/hawala dealers are 'general' that they carried only bogus transactions. Such information is sent to different officers to take action/proceedings u/s 147/148 of the Incometax Act on the basis of such statements and confession. For illustration, may refer to case of Chhugamal Rajpal Vs S.P. Chaliha & Others 79 ITR 603 (S.C.) where action was initiated on the basis of Circular issued from the Office of Commissioner of Income Tax, Bihar and Orissa which stated that three persons named in that Circular were merely name lenders and therefore, transactions carried by them were bogus and proper investigation regarding loa....
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....n cannot work to the advantage of the revenue where information is the basis of assessment rather than reopening of assessment proceedings. In fact, stronger evidence is needed to justify addition on merit against evidence for action u/s 147/148. The reopening of proceeding u/s 147/148 in this case has not been challenged as it was done after amendment of Section 147 w.e.f. 1.4.89. Therefore, I proceed to consider the case on merit of the addition. 14. The Assessing Officer had quoted letter from DDI who advised him to take proper action u/s 148 of the I.T.Act. The contents of letter of DDI were not challenged before me and therefore I cannot doubt that the said Shri Sanjay Mohan Agarwal might have indulged in hawala transaction as held by the Assessing Officer and other revenue authorities. However, it is not shown that said Shri Sanjay Mohan made any statement regarding the Cheque given to the assessee for Rs. 3 lakh. There is no material on record to show that the cheque was bogus and only a hawala entry. It is an admitted position that said Cheque was realized and credited to the bank account of the assessee. Therefore, prima facie, the genuineness of the entry is clearly est....
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....e cannot be taken as disproved. 16. There is another controversy between the parties whether the amount given was a gift or a loan. The assessee claimed it to be interest free loan which was returned to Shri Sanjay Mohan Agarwal. The revenue, on the other hand, has contended that it was a fictitious gift made to the assessee in return for receipt of equal amount plus commission in cash. In my opinion, if credit entry is proved as genuine, the controversy loses its significance. Moreover, the revenue has not established that the assessee paid cash to obtain gift. Even the assessee is not shown to have been examined. The Assessing Officer further refused to give basis for action against the assessee as the same was belatedly sought from him. As regards entry in the books of account, it has been found that the credit is neither recorded as loan nor gift in the books of account of the assessee. The books of account are also not made in the regular course of business. In fact, assessee carries on no business and in the relevant period had income from salary, interest etc. In such circumstances, no adverse inference can be drawn against the assessee. On the other hand, the case of the ....