TaxTMI 
TaxTMI 
TaxTMI 
2012 (5) TMI 790
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....er jewellery declared under VDIS, 1997, then the onus was on him to establish such a nexus. Not only has he not been able to do so, he has not made any further investigations in that direction. Further, the A.O. passed on the information regarding presumed bogus sale of jewellery to the A.O. of Smt. Mohinder Wati, who reopened her case u/s. 147 of the Act and passed an order with the following remarks : "From details filed by the AR it is seen that the assessee has gifted this amount to her son out of amount received from sale of jewellery. After going through the details filed by the AR and on considering the submission made by the assessee is accepted and discussed the case." 3. The grounds of appeal taken by the revenue read as under :- "On the facts and circumstances of the case and in law CIT (A) erred in :- i) in deleting of ₹ 10,80,000/- made on account of unexplained cash credit. ii) In accepting the sweeping submission of the assessee which do not stand supported by evidence. iii) In not allowing the opportunity to A.O. to examine the findings which were relied upon by the Ld. CIT (A). iv) Immunity in VDIS cases is available only to the declarant and no ....
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....stent. 5. 24/12/2005 Dhananjay Jewellry, 1068 Gali Hamdard 2nd Floor, Malliwara, Delhi-06 Old Gold Ornaments 6 pcs bangle 96 gms @ 8390 80544 14(ITI report), 7- reply on 5(letter to Malliwara asso. & its reply), 33 and reverse of 31(marks by postal authority as no such firm in this address) Gali Hamdard is not in Malliwara. It is near Ajmeri Gate. The address is nonexistent. 6. 29/12/2005 Randhir Jewels,718 Gurdwara Road, Beadonpur, Karol Bagh New Delhi-05 Old Gold Ornaments One pair gold Kara 2 Nos 125 gms @ 8375/- 104688 12(ITI report), 9- reply on 1(letter to asso. & its reply), 30 and reverse of 30(marks by postal There is no lane number mentioned. The address is nonexistent. authority as incomplete address) a.1) Doubting the transaction of gift per se -genuineness of transaction not established: Its difficult to imagine and against all human probabilities to assume that such shifting stand would inspire and establish genuineness of transactions and thus onus cast on assessee not discharged: No prudent person would give details of alleged sale in such fantastically detailed manner(to varied no of non existent dealers of jewellers of kaol bagh setting out Rs a....
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....o explain the deposits amounting to ₹ 36,80,000/- satisfactorily led to considering his income from undisclosed sources and accordingly assessment was completed on the said amount as well, by the assessing officer vide order dated 26.3.2001. The assessee filed appeal. The Commissioner of Income Tax (Appeals) {in short "CIT(A)"} accepted the appeal by order dated 27.3.2002 and deleted the addition made by the assessing officer. The Department feeling not satisfied with the order of the CIT(A) preferred appeal before the Tribunal. The Tribunal concurred with the view of the CIT (A) and accordingly dismissed the appeal of the Department vide the order under appeal. The Revenue is in appeal assailing the orders of the CIT(A) and the Tribunal. We have heard learned counsel for the Revenue and have perused the record. Learned counsel for the Revenue submitted that the CIT (A) and the Tribunal erred in placing initial onus upon the Revenue to establish that the deposits made by the assessee were the undisclosed income of the assessee. According to the learned counsel, the total deposits made by the assessee were of ₹ 60,80,000/-, out of which only ₹ 24,00,000/- on accou....
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....xplain the facts relating to an amount of ₹ 17,00,000/- handed over to the assessee on 21.7.1999, but he failed to give any satisfactory reply and details in that regard. Similarly, as regards receipt of ₹ 17,00,000/- on 2.8.1999, he had stated that he did not recognise his signature on the receipt in question as the same differed and he would confirm only after seeing the receipt taken from Shri Jagtar Singh, the assessee. He was unable to explain the source of this payment as well. Further, the sale deeds did not specify that there was something more than the land that was alienated and there was no mention of any other thing like crops, popular trees, tube-wells and buildings etc. Still further, it was recorded that the agricultural land, at the time of sale, was vacant and the agricultural produce was sold out in 1996-97 and 1997-98 and the agricultural income was shown in the return. The amount deposited on the basis of these alleged receipts, thus, could not be held to be substantiated by the assessee as relating to the sale of the land. However, the CIT(A) and the Tribunal wrongly placed the initial onus on the Revenue and had allowed the appeal of the assessee. ....
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....ount thus falling u/sec68 as the said amount of ₹ 10. Lacs has been shown in his capital account for Fy 05-06 as gift received from Mrs Mohinderwati b.3.1) Without prejudice to same , if the amount is not assessable undersec68 , the Hon`ble ITAT is duty bound to tax it under the correct head as laid down in 131ITR (SC)451 Kapurchand Shrimals case. The assessee has submitted capital account as on 31/3/06….(pbk pg18-new pbk ) hence the entry of gifts depicted in capital account as stated therein evidenced also in bank pass book will come within the ambit of sec 68. c)Fraud: The reliance on the assessee on varied bills and ultimately tendering the theory of sale of alleged jewels declared under VDIS by mother Smt Mohinderwati is fraught with misrepresentation and fraud as the lady aged around 88-86 years of age then was stated to have was under senile dementia-failure to understand , speak or walk- as per doctors certificate on record produced dated 15/10/2008 (refer pbook -- )during the course of assessment proceedings of Sh Jatinder. Its difficult to accept that in such a state of health the assessee`s mother could have remembered such minutest details of first having....
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....er law and who authorized the counsel to appear on behalf of Smt Mohindewati(e) Is it probable for 88-90 yrs old lady to bother about temporal matters in such medical conditions , by any humane logical probability?(f) Why did the counsel of assessee Sh J.Manchanda or that of Smt Mohinderwati not produce the fact of his mother being under senile dementia sufferings -failure to understand , speak or walk- as per doctors certificate on record produced dated 15/10/2008 to Assessing officer of Smt Mohinderwati via his counsel or directly to AO (of Smt Mohinderwati), or to CIT(A) of Sh Manchanda in all fairness as it had / has legal repercussions on the matters under evaluation per se. Can such a fraudulent order be relied upon to give benefit to Sh Manchanda (the assessee) as regards acceptance of a valid gift as has been done by the CIT(A) without appreciating the circumstantial evidences as set out in the written submissions. d) VDIS immunity available to Smt Mohinawati qua jewels declared in VDIS letter and NOT as regards availability of alleged cash arising there from sale proceeds of alleged sale of jewels : The assessee has failed to appreciate the legal position that VDIS declar....
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....e the ownership of money, we are of the opinion that the Tribunal was right in holding that the assessee had failed to discharge the onus which lay on him to explain the source of the deposits…" e(b)151ITR751(Del) in case of CIT Vs Vishwanath o. & 247ITR819(SC) in case of CIT Vs United Trading Co:" It is now brought to our notice that this very question has since been decided by this court in ITO v. Rattan Lal [1984] 145 ITR 183. In the said decision it has been held that the immunity enjoyed by a declarant under section 24 of the Finance (No. 2) Act, 1965, under the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. It was further held that there is nothing in section 24 of the Finance (No. 2) Act which prevents the Income-tax Officer, if he is not satisfied with the explanation of the assessee about the genuineness of sources of amounts found credited in his books to add them to the assessee's income amount in spite of these having already been made the subject-matter of the declaration made by the depositors/creditors. He is entitled to in....
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....VDIS. Mere declaration of diamonds under VDIS does not necessarily mean possession of diamonds or sale of diamonds also. The limited implication of declarations under the VDIS was that the Departmental authorities were precluded from examining the nature and source of the acquisitions declared under the VDIS. Declaration of diamonds under the 'Voluntary Disclosure of Income Scheme' and de facto possession of diamonds and their sale are altogether different from each other in law. Be whatever it may, mere declaration under the VDIS does not lead us to presume either directly or indirectly that they were subsequently sold to shri Trivedi when Shri Trivedi himself denies to have physically purchased any diamond from anyone. What is thus required to be proved is the fact in issue before us, i.e., genuineness of sale transaction and not the fact or issue which is not before us, i.e., declaration of diamonds under the VDIS……" Further it reads :" We given our serious consideration to all the facts and circumstances of the case in light of the materials and arguments placed before us. As observed by Lord Templeman in R.V. Inland Revenue Commissioners, 215 ITR 487 (HL), every....
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....amount was received from M/s. First Global Finance Pvt. Ltd. but that the accountant of the assessee had wrongly shown that the amount was received from Ms. Devina Mehra. The Tribunal noted that even this explanation is contradictory and unsubstantiated because subsequent repayment of the amount was not made to M/s. First Global Finance Pvt. Ltd. but to Ms. Devina Mehra who had herself stated that the amount was given to the assessee by M/s. First Global Finance Pvt. Ltd. The explanations for the amount are riddled with serious doubts. All the authorities under the Act have found against the assessee in view of the discrepancies. …" f.1) Shifting stand coupled with assessee address found non existent: (a)earlier the assessee stated to have sold jewels to five parties(b)this theory was later changed to a small dalal "Deepak karmarkar" who stated to have sold the jewels of Smt mohinderwati to some other buyer in lieu of which he gave Mrs Mohinderwati rough credit notes on draft bills just stating the description of pieces of jewellery and rates thereof (which runs couner to bills submitted before assessing officer of 5 jewelers) (c) again this theory of giving rough credit no....
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....be a fact while tendering the explanation regarding the cash credit it must plainly be stated as a fact that the cash credit concerned did come out of the earlier intangible additions. Unless this is done, there is no requirement to make an enquiry regarding the reasonableness of the explanation. It is not open to the assessee to offer two different explanations by way of alternative pleas. A similar view was expressed by this court in CIT v. Kulwant Kaur [1980] 121 ITR 914. But if any unexplained cash credit can reasonably be related to the amount covered by the intangible addition made in the past, or in the very year, necessary set off is not impermissible. But as. observed by the Supreme Court in CIT v. Manick Sons [1969] 74 ITR 1, it is not permissible to give credit for intangible additions, without indication of the reasons as to why credit can be given. The question whether a particular cash credit can be covered by the intangible addition is essentially one of fact. It is within the domain of taxing authorities to consider whether a particular cash credit, or unexplained expenditure or investment can reasonably be attributed to intangible additions, if materials are placed....
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.... claim of peak is established by him. In fact assessee has also failed to show real destination of the money through bank draft so purchased by him out of the cash deposited in the bank account thereby suppressing material facts in understanding the nature of cash inflow and its destination. Entire transaction of deposits in the bank account remained under crowd of secrecy and, therefore, the explanation furnished by the assessee remained unsatisfactory. Even the benefit of withdrawal through ATM mentioned as above cannot be given importance because they are apparently for household purposes and cannot be said to be available for redeposit in absence of any other evidence of meeting out household expenditure by the assessee. We apparently uphold the contentions of Revenue that entire sum of ₹ 17,48,500/- deserves to be confirmed. As a result, we uphold the order of AO setting aside the order of ld. CIT(A). Appeal filed by the Revenue is allowed whereas the Cross Objection filed by the assessee is dismissed.9. In the result, appeal filed by the Revenue is allowed whereas the Cross Objection filed by the assessee is dismissed. i) Bogus gift: reliance on294ITR488(Del) in case o....
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....e sources of funds gifted to the assessee and whether they had the capacity of giving large amount of gift to the assessee. Further, the assessee was asked to appear in person before the Assessing Officer, however, he never appeared. Since, the assessee did not prove the genuineness of the transaction nor he established the identity of the donor, nor the capacity of donor to make gift, as such the Income-tax Appellate Tribunal was wrong in deleting the addition of ₹ 20 lakhs on account of gift alleged to have been received by the assessee." i(iii) 311ITR239(PH) S.C.Vema Vs CIT: "…..The bank account filed at this stage does not establish the financial credentials of the donor. The bank statement placed on record reveals that the said account was opened on 10th July, 1995 with the deposit of ₹ 1,00,300. A sum of ₹ 8,42,250 has been deposited on 9th Nov., 1996 by draft. Two cheques of ₹ 2 lakhs each have been issued on 13th Dec., 1996. The said bank account does not establish the financial status of the alleged donor. Since the assessee had failed to discharge the onus in regard to the financial capacity and status of the donor as also the occasion for ....
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....section 68 the assessee has to prove three conditions, viz., (1) the identity of the creditor, (2) the "capacity" of such creditor to advance the amount, and (3) the genuineness of the transaction. The second condition, referring to the "capacity" of the creditor, cannot be said to have been established on the facts and circumstances of the present case, in the absence of the details referred to above, viz., the source from which the non-earning wife and minor son got the money to invest with the assessee. Thus, generally but not always, depending upon the facts and circumstances, when the credits have been received by an assessee from such close relatives, the explanation to be furnished under section 68 would require to disclose the facts necessary to establish the "capacity" of the creditor as above. In the circumstances, the question referred is answered as above by holding that on the facts and circumstances of the present case, when the credits were received by the assessee from close relatives like his nonearning wife and minor son, the explanation to be furnished under section 68 in order to qualify as "satisfactory" would require to ....
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....to prolong the link by bringing new purchasers of jewellery. Reliance on 242ITR 719(Mad) in case of Commissioner of Incometax v. K. Palaniappan for proposition that earlier VDIS declaration does not explains the existence of jewellery in FY involved or explains the source of credit entries as gift to assessee J.Manchanda : "…., but for the inducement offered by the Govern- ment and, therefore, it is impermissible to rely upon the statement made in the voluntary disclosure scheme. Even assuming that the statement made therein is regarded as a piece of evidence the assessee must be able to prove the statement made by him in the disclosure scheme corrobo- rated by some independent materials as the assessee has come under the regular assessment channel and it is for him to satisfy the authorities that the onus placed on him under section 68 of the Act is discharged. The second reasoning given by the Appellate Tribunal is also based on the probabilities of the case. The view of the Appellate Tribunal that the assessee could not have earned ₹ 50,000 in one year is not based on any material and further, the reasoning of the Appellate Tribunal is against the teeth of the pro....
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....r additions were spent away during intervening period. It is not clear from the order of the Appellate Tribunal how the Tribunal came to the conclusion on a perusal of the earlier assessment records that the assessee might have earned the sum which was not disclosed in the earlier assessment proceedings. In our view, the conclusion of the Appellate Tribunal is arrived at only on the basis of its own surmises and conjectures and there is a complete dearth of materials for its conclusion and, in our opinion, it has by cosmeticising it, given an illusion that it has arrived at findings of fact, on the basis of materials, and the ultimate inference drawn on the basis of the above reasonings, in our view, is not sustainable on the facts of the case. The Income-tax Officer as well as the Commissioner of Income-tax (Appeals) has clearly found that the assessee has not explained the source of the credit entry and the assessee had not let in any new evidence before the Appellate Tribunal and only on the basis of the plea raised before the Appellate Tribunal that the said amount could have been the undisclosed income of the earlier years and it would not represent the income of the previous ....
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....se , the shifting stand / theory propounded that jewels were sold to Ms Anand etc after the fact that Revenue had already discovered the on existence of the alleged parties to whom jewels were sold as set out in the assessment order of Sh J.Manchanda is a mere subterfuge to hoodwink Revenue with yet another theory. This even otherwise does not inspire confidence as Smt. Mohindrawati , when her case was reopened under sec147 and proceedings commenced in right earnest was "was under senile dementia-failure to understand , speak or walk" and hence too this new stand given by assesses mother in her own case does-not stand judicial scrutiny and is an order obtained through fraud/ misrepresentation as medical certificate states. Its against all human probabilities to rationally accept a situation wherein a assessee medically incapicaitated can recollect the facts of sale of jewels to Ms Anand or the fact of contacting the dalal to procure details etc Burden of proof on assessee not discharged: k.2)Reliance by CIT(A) on Smt. Moinawati`s order erroneous: (a)Refusal of the assesses counsel to place the fact of assessee Smt. Mohinawati being under Senile dementia (regretfully) to knowledge....
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....proach the court. He can be summarily thrown out at any stage of the litigation. 6. The facts of the present case leave no manner of doubt that Jagannath obtained the preliminary decree by playing fraud on the court. A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chunilal Sowcar. He had, on his own volition, executed the registered release deed (Ex. B-15) in favour of Chunilal Sowcar regarding the property in dispute. He knew that the appellants had paid the total decretal amount to his master Chunilal Sowcar. Without disclosing all these facts, he filed the suit for the partition of the property on the ground that he had purchased the property on his own behalf and not on behalf of Chunilal Sowcar. Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the court...." k.2(iii) United India Insurance Co. Ltd vs Rajendra Singh & Ors, on 14 Marc....
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.... the Court has the inherent power to recall its order…………… Therefore, we have no doubt that the remedy to move for recalling the order on the basis of the newly discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. No court or tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim." k.2(iv) New India Assurance Co., Shimla vs Kamla And Ors on 27 March, 2001 Appeal (civil) 2387 of 2001,Appeal (civil) 2388 of 2001,Appeal (civil) 2389 of 2001) "…….. The observation of the Division Bench of the Punjab and Haryana High Court in National Insurance Co. Ltd. vs. Sucha Singh (supra) that renewal of a document which purports to be a driving licence, will robe even a forged document with validity on account of Section 15 of the Act, propounds a very dangerous proposition. If that proposition is allowed to stand as a legal principle, it may, no doubt, thrill counterfeiters the world over as they would be encouraged to manufacture fake documents in a legion.....
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....e case, the High Court was fully justified in setting aside the order of the Forest Tribunal. It is submitted that the High Court has only followed the ratio of the decisions of this Court and there is nothing illegal in the decision rendered by the High Court. On facts, fraud was writ large and this was a case where the High Court ought to have interfered and the interference made was fully justified. Counsel further submitted that since the appellant had come with unclean hands and had obtained a relief by playing a fraud on the court, this was a fit case where this Court should decline to exercise its discretionary jurisdiction under Article 136 of the Constitution of India, sought to be invoked by the appellant. It was submitted that the appeals deserve to be dismissed. 10. It is true, as observed by De Grey, C.J., in Rex Vs. Duchess of Kingston [ 2 Smith L.C. 687] that: "'Fraud' is an intrinsic, collateral act, which vitiates the most solemn proceedings of courts of justice. Lord Coke says it avoids all judicial acts ecclesiastical and temporal". In Kerr on Fraud and Mistake, it is stated that: "in applying this rule, it matters not whether the judgment....
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....judgment obtained by fraud cannot be the subject of a direct attack by an action in equity even though the judgment has been satisfied." 13. The law in India is not different. Section 44 of the Evidence Act enables a party otherwise bound by a previous adjudication to show that it was not final or binding because it is vitiated by fraud. The provision therefore gives jurisdiction and authority to a Court to consider and decide the question whether a prior adjudication is vitiated by fraud. In Paranjpe Vs. Kanade [ILR 6 BOMBAY 148], it was held that it is always competent to any Court to vacate any judgment or order, if it be proved that such judgment or order was obtained by manifest fraud. In Lakshmi Charan Saha Vs. Nur Ali [ ILR 38 Calcutta 936], it was held that the jurisdiction of the Court in trying a suit questioning the earlier decision as being vitiated by fraud, was not limited to an investigation merely as to whether the plaintiff was prevented from placing his case properly at the prior trial by the fraud of the defendant. The Court could and must rip up the whole matter for determining whether there had been fraud in the procurement of the decree. …" Furth....
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....o merit in the argument that the High Court had exceeded its jurisdiction in setting aside the order of the Forest Tribunal at this distance of time." k.2(vi) Ram Chandra Singh vs Savitri Devi And Ors. on 9 October, 2003: Equivalent citations: 2004 (2) ALT 15 SC, I (2004) BC 187 SC: " 18. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. "……19. In Derry v. Peek, (1889) 14 AC 337, if was held: In an 'action of deceit the plaintiff must prove actual fraud. Fraud is proved when it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false. A false statement, made through carelessness and without reasonable ground for believing it to be true, may be evidence of fraud but does not necessarily amount to fraud. Such a statement, if made in the honest belief that it is true....
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....aud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by words or letter. Although negligence is not fraud but it can be evidence on fraud. (See Derry v. Peek (1889) 14 AC 337) In Lazarus Estate v. Berly [(1956) 1 All ER 341] the Court of Appeal stated the law thus: "I cannot accede to this argument for a moment "no Court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything". The Court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved it vitiates judgments, contracts and all transactions whatsoever." "…..30. It was further held: "The judiciary in India also possesses inherent power, specially under Section 151 CPC, to recall its judgment or order if it is obtained by fraud" on Court, In the case of fraud on a party to the suit or proceedings, the Court may direct the affected party to file a separate suit for setti....
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....ls have to judge the evidence before them by applying the test of human probabilities. In Sumati Dayal v. CIT [1995] 214 ITR 801, the Supreme Court again held that in such cases, a superficial approach to the problem should be eschewed and the matter has to be considered in the light of human probabilities and further that any transaction about which direct evidence is rarely available should be inferred on the basis of the circumstances available on the record. In that case, the majority opinion of the Settlement Commission was approved as it was taken after considering the surrounding circumstances and applying the test of human probabilities. These principles apply to the present case where the documentary evidence prima facie supports the assessee's case but a closer look at the same in the light of the surrounding circumstances and applying the test of human probabilities reveal that the documentary evidence cannot be accepted. The learned Commissioner of Income-tax (Appeals), with respect, did not approach the case from this angle and seems to have been guided merely by the documentary evidence. In this, he fell into an error. He ought to have given a wholesome treatment to t....
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.... Both the explanations were rejected by the Income-tax authorities whose decision was con- firmed by the Tribunal and the High Court. On further appeal by the assessee to the Supreme Court, it was held that there was ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of assessable nature. Whether a receipt is to be treated as income or not must depend very largely on the facts and circumstances of each case. The making of entries in the books of account maintained by the assessee is not a condition precedent for taxing them as the assessee's income. It is the receipt of the monies which entitles the Income-tax authorities to examine their taxability. In Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC), the assessee had disclosed in a statement that she had received certain amounts from the Maharani of Baroda 'out of natural love and affection'. A part of the gifts was received in the form of jewellery. Cheques had also been received by the assessee which were credited in her acco....
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..... Regarding the genuineness of the acquisition of the amounts, explained to be gifts, have already been turned down by the Tribunal by holding the transactions to be in genuine. Section 69A provides that such money may be deemed to be the income of the assessee for such financial year. This is a deeming provision under which when the explanation given by the assessees offered regarding acquisitions of the same is rejected then under this deeming provision the same can be added to the income of the assessee. We are further of the opinion that addition made by the tax authorities below merely under a wrong provision of the Income-tax Act, 1961 cannot absolve the assessees from being taxed under the correct provisions of the Income-tax Act, 1961 because the tax authorities below are duty bound to tax the undisclosed income of the assessees under the provisions of the Income-tax Act, 1961. For the reasons stated above, the order of the Commissioner of Income tax (Appeals) in treating the impugned gift amounts as non-genuine gift transactions and consequently treating the same as undisclosed income of the assessees is upheld, however, we add that the impugned additions are to be made u....
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....t the donor had no creditworthiness so as to give the amount, then in that situation the admission contrary to the trustworthy evidence cannot be accepted as binding upon the Assessing Officer. Furthermore, in a case where one claims that he received certain amounts from ex-person and ex-person admits the availability of funds in the bank and it's withdrawal from bank, produces the such bank document in respect of his creditworthiness and from such documentary evidence itself, it is proved, as a matter of fact, that the transaction could not have happened than the admission of the donor is required to be rejected. If the plea as raised by learned counsel for the assessee is accepted than that means admission of such person (donor in this case) is binding upon the Assessing Officer even if such admission (which is also only an evidence and may be evidence of an interested person) has such high evidentiary value which can reject even trustworthy documentary and other evidence produced by the assessee himself or such donor himself. If so is held as argued by the learned counsel than it will ultimately lead to holding that after admission of the such person (donor in this case) no ....
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.... is binding upon the Assessing Officer? The answer would be no. The admission binds the author of admission and operate as estoppel against him but is not binding upon any other persons or authority. 6. Here, in this case the facts clearly indicates that the assessee was the son-in-law of the alleged donor and the donor was in employment and was getting salary and claimed that on different times of donation he was having cash, in total to the tune of ₹ 8.00 lakhs. His contention has been recorded by the Tribunal in para 9 that he gave this gift from the money received on his retirement and from provident fund and gratuity amount. The donor's contention further is that he kept all those money in his bank account and in support of his contention he produced the passbook of his two bank accounts, one of S.B.I, Asansol and another S.B.I. Nirsa. Asansol bank account was opened in the month of December, 2001 and from this account total withdrawal was ₹ 24,95,880/-, out of which ₹ 21,93,380/ is either transferred entries or Demand draft entry and only ₹ 3,02,500/- was withdrawn in cash. In another account of the S.B.I. the total amount found withdrawn in cash ....
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....een made by third person to assessee then issuing notice to a third party after taking stand that third party has not given the amount to the assessee will be nothing, but futile and unnecessary exercise.8. In view of the above reasons, this appeal is dismissed. Mii) There is no corroboration on record on files of Smt. Mohinderwati during asstt proceedings (from assessee Smt Mohinderwati) to prove beyond doubt or say with reasonable human probability of the fact that there was (a) any sale of jewels at threshold in view of findings of AO in case of J.Manchanda (b) that alleged jewels allegedly sold are same as that declared under VDIS , more so in backdrop of shifting stance etc(c) the number of years that has lapsed in intregunnum as its not uncommon for ladies to sell jewels in old age -infact they are given as family heirlooms to grand children , daughter-in-law etc as per human probability (d)the revenues finding of assessing officer in case of J.Manchanda of this being a bogus case of alleged sale of jewels being presented as source of (bogus ) gift to assess Sh J.Manchanda has not been adverted to, examined on judicial principles by assessing officer of Smt Mohinderwati and ....
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....ource of gift given by Smt. Mohinder Wati was sale of part of jewellery which she had declared under VDIS 1997. A copy of such certificate under section 68(2) of the VDIS, 1997 issued by Commissioner of Income Tax - VII, New Delhi was also filed before the learned AO during the assessment proceedings. Further the assessee supplied the copies of bills of jewellery sold by Smt. Mohinder Wati and Gift Deed to the learned Assessing Officer and further vide letter dated 01.12.2008 reiterated the fact that the donor had sold jewellery which she declared in VDIS, 1997 and from such money, she gave a cash gift of ₹ 10,80,000/- to assessee. Thus, the source gets proved and there was no requirement in law to prove the source of source of the donor as, she had sufficient funds with her to give gift of ₹ 10,80,000/-. The learned Assessing Officer vide order dated made an addition of ₹ 10,80,000/- on account of unexplained cash credits under section 68. In doing so, he gave following findings: i) Sale of jewellery is false and assessee has not produced any statement to say that in absence of sale of jewellery Smt. Mohinder Wati will have sufficient funds of ₹ 10,80,000/....
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.... by selling her jewellery declared under VDIS, 1997, then the onus was on him to establish such nexus. Not only has he not been able to do so, he has not made any further investigation in that direction. Further, the AO passed on the information regarding presumed bogus sale of jewellery to the AO of Smt. Mohinder Wati , who reopened her case u/s 147 of the Act and passed an order with following remarks: "From details filed by the AR it is seen that the assessee has gifted this amount received from sale of jewellery. After going through the details filed by the AR and on considering the submission made by assessee is accepted and discussed the case." In Para 5.5. In view of the above discussion, the addition made by the AO for an amount of ₹ 10, 80, 000/- u/s 68 of the Act is hereby deleted." Aggrieved against the aforesaid order of the learned Commissioner of Income Tax (Appeals) revenue has preferred this appeal before Your Honour's against deletion of the said unexplained cash credit u/s 68 amounting to ₹ 10,80,000/- . It is also submitted that, the learned DR during the course of hearing before Hon'ble Bench has made following submissions: ....
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....ombay) CIT Poona vs Bhaichand H. Gandhi." iv) 291 ITR 232 (Chennai) CIT vs Taj Borewells. Thus, it is evident from the above judgments that gift received and directly deposited in bank account cannot be added under section 68, as bank account is not books of accounts of the assessee and thus, no addition could be made under section 68 of the Act That further, the assessee proved the source of the gift i.e. from mother Smt. Mohinder Wati and thus, when identity, creditworthiness and genuineness of a transaction has been proved by an assessee, then the assessing authority is not justified in going to the question of 'source of source'. As, the sale of jewellery and giving of gift has been accepted by department in assessment made on Smt. Mohinder Wati. Thus, doubting the source of source in assessee's case is highly improper and based on mere suspicion. For, this proposition assessee seeks to place its reliance on following judgments: i) 177 Taxman 331 (Del) CIT vs Diamond Products Ltd . Para 5. We have heard the learned counsel for the assessee and have examined the findings returned by the Tribunal as well as those returned by the Commissioner of Income-tax (....
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....cant does not have the means to make the Investment, the Investment made by the applicant actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee this has not been done insofar as the present case is concerned and that has been noted by the Tribunal also." (ii) 306 ITR 35 (Del) CIT vs. Real Time Marketing P. Ltd That the assessee is the only son of Smt. Mohinder Wati and as such the amount of gift received from a mother needs no particular occasion, as natural love and affection is enough in such cases. For this proposition, assessee would seek to place its reliance on following judgments : (i) 324 ITR 231 (Del) CIT vs Suresh Kumar Kakkar "Para 3. Insofar as the identity is concerned, that is an admitted position that the gifts were made by the mother to the son. With regard to the creditworthiness, the assessee has been able to discharge the onus cast upon him by furnishing the bank statement of his mother (donor) as also the confirmation certificate from the mother confirming the said gifts. Once the assessee has discharged the primary onus, which was cast upon the assessee, it was incumbent upo....
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.... any bill etc was to be obtained; (ii) However, when assessment of assessee i.e. Jitender Manchanda was opened, the donor asked for specific evidence for sale of jewellery and for which dalal was contacted, who informed that the jewellery was of gold and was sold at the then prevailing rate and it was not customary to obtain any credit note in cases of personal transactions. However, on being insisted, the dalal gave credit notes in form of bills stating the exact quantity and rate at which jewellery was sold. These were provided to the learned Assessing Officer in the assessee's case. However, as it is apparent that these were just bills given merely for rate purposes, the purchasers/ jewelers were non existent as has been observed by the assessing officer; (iii) Further, the dalal was again contacted during the reassessment proceedings of Smt. Mohinder Wati and it was specifically requested by her that not only the purchase vouchers but also the exact names and addresses of the buyer is required for income tax purposes. To this, dalal informed that the jewellery were sold to Mrs. Neeru Anand, resident of D - 1, Model Town - 1, New Delhi - 09, PAN: AALPAI276B, who had purcha....
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....ndantly clear that the jewellery was actually sold by Smt. Mohinder Wati and as such she had sufficient funds to give gift to her son Sh. Jitender Manchanda. In fact as far as assessee is concerned, there can be no allegation of shifting of stand. It is submitted that, assessee has always contended consistently that, sums received represents gift from mother and there is no change in such a contention and hence the submission is misconceived. It is no doubt true that earlier it was explained that mother had received the sum by sale of jewellery to certain jewellers though later, it was clarified that, such sale was not made to jewellers, but to Mrs. Neeru Anand. It is submitted that, this fact does not in any manner establish that there is a shifting of stand by the assessee. The stand of the assessee continues to be that, gift was received by the assessee from mother who had received the sum from sale of jewellery. It is submitted that, sale of jewellery was to jewellers or Mrs. Anand does not lead to an assumption that, there is a shifting of stand and in any case, such alleged shifting of stand, if there is any is that, of the mother and, not of the assessee. However, once the s....
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.... reasons to believe that the apparent is not the real." However, the assessing officer has nowhere in assessee's case has been able to prove that the gift is not real and more so, the reassessment of donor and acceptance of sale of jewellery and giving of gift by her assessing officer, establishes the fact that, the gift was real. iv) 241 ITR 801 (SC) Sumati Dayal vs CIT The proposition laid down in this judgment was that, if surrounding circumstances create doubt then explanation of assess should not be accepted. However, in assessee's case, this ratio cannot be applied, as test of surrounding circumstance is favour of assessee, as the fact that jewellery was sold and gift was given has been established by assessment carried on by assessing officer on Smt. Mohinder Wati's case. (v) 294 ITR 488 (Del) Rajeev Tandon vs ACIT Not applicable to the facts of the impugned case, as this cited judgment is with regard to gifts from strangers, whereas in impugned matter, the gift directly came from mother, thus there was no need to prove the occasion for giving the gifts. vi) 296 ITR 249 (Del) Bharti Telecom Finance Ltd. vs ACIT Not applicable to the facts of the c....
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.... Biswanath has not been able to give a satisfactory explanation regarding the source of ₹ 5,00,000 would not be decisive even of the matter as to whether Biswanath was or was not the owner of that amount. A person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money is found to be not correct. From the simple fact that the explanation regarding the source of money furnished by A, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to B. There would be in such a case no direct nexus between the facts found and the conclusion drawn therefrom." (Emphasis supplied) Reliance is also placed on the following judicial pronouncements to submit that inability of the assessee to explain source of source or origin of origin cannot be basis to invoke section 68 of the Act: (i) 103 ITR 344 (Patna) Saraogi Credit Corporation CIT (ii) 59 ITR 632 (Assam) Tola Ram Daga v CIT (iii) 49 ITR 273 (Mad) S. Hastimal v CIT (iv) 151 ITR 150 (Pat) Additional CIT, Bihar v Hanuman Aggarwal (v) 154 ITR 244 (Pat) Add....