TaxTMI 
TaxTMI 
2018 (6) TMI 1056
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....under section 143(1) of the Income Tax Act, 1961 ('the Act' for short) without scrutiny. The assessee was subjected to search operation by the Income Tax department. The Assessing Officer passed block assessment order for the block period between 01.04.1996 to 12.09.2002. Main issue discussed by the Assessing Officer in such order was the onmoney received by the assessee through sale of land. Assessing Officer also examined whether this undisclosed income was routed into the assessee's bank accounts through gifts which were nongenuine. In the block order of assessment dated 30.09.2004, the Assessing Officer made detailed observations with respect to these two issues. We would take note of the contents of this order at a later stage. For the present, it would be sufficient to note that in such order, he had held that the undisclosed income through sale of land was already taxed in the hands of the partnership firm of whom the assessee was the partner and therefore it was not necessary to tax the assessee separately. He also held some of the gifts to be genuine and the rest as nongenuine. 4. After this block assessment order was passed, the Assessing Officer issued not....
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....sing Officer. Hence this appeal, in which, following substantial questions of law were framed: "A. Whether the Appellate Tribunal was right in law and on facts in deleting addition of Rs. 50,00,000/made u/s.68 of the I.T. Act being the disallowance of claim of gift? B. Whether the Appellate Tribunal was right in law and on facts in holding that proceedings u/s.148 are bad in law?" Tax Appeal No.543 of 2008 7. This appeal is filed by the Revenue against the assessee Atul D. Sheth. For the assessment year 2000-01, in the return filed, the assessee had shown to have received a gift of Rs. 50 lakhs from his motherinlaw Bhartiben Kotak. The return was accepted under section 143(1) of the Act. This assessee was also subjected to search operations leading to the Assessing Officer framing block assessment, in which, like in the previous cases, he examined the question of onmoney receipts which would have been routed to his accounts through gifts. After the block assessment order was passed, notice of reopening of assessment came to be issued giving rise to the reassessment order in which, the Assessing Officer made addition of the gift amount under section 68 of the....
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....l H. Patel v. IncomeTax Officer, reported in [2014] 365 ITR 383 (Guj). IV. In case of Rajeev Tondon v. Assistant Commissioner of IncomeTax, reported in [2007] 294 ITR 488 (Delhi). 12. On the other hand, learned counsel Shri Soparkar opposed the appeal contending that the entire issue of genuineness of the gifts was examined by the Assessing Officer in the block assessment proceedings, majority of the gifts were held to be genuine. This was after detailed inquiry where the statements of the donors were also recorded. It was thereafter simply not permissible for the Assessing Officer to examine the same question again in the regular assessment proceedings. He further submitted that even otherwise the gifts were genuine. The Commissioner of Income Tax (Appeals) and the Tribunal have come to concurrent findings which cannot be stated to be perverse. The donors were foreign based NRIs. The transaction of money was through banking channels. Identity of the donors was not in doubt. The donors had appeared before the Assessing Officer and confirmed the gifts. Their creditworthiness was also duly established. Counsel relied on following judgments: I. In case of Commissi....
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....m non relatives, without any occasion of such gesture, without any reciprocation by the assessee and for no valid substantial reason. Though the donors have admitted of extending gifts to the assessee for various reasons, but it is noticed that they are on relatively lower financial plan than that of the assessee and the reasons shown by them are general in nature. It is also seen that, a number of local gifts are routed through a local financier viz., National Shroff whose partner Shri Ranjitsinh Vaghela, on different occasions gave contradicting statements. Hence it indicates that the assessee has received on money. Nevertheless, the onmoney aspect has already been discussed and taxed in the hands of the firm M/s.Silver Stone Corporation, hence, no addition is made again in respect of the gift." 14. Few things need to be culled out from this order at this stage. Important is that the Assessing Officer while framing the block assessment seem to have accepted some of the gifts as genuine. Remaining gifts were found to be nongenuine and tracing the trail to the undisclosed income of the assessee through sale of land. 15. After this order was passed, the Assessing Offi....
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....ficer proceeded on the basis that whatever the onmoney income the assessee has received, was routed through the bogus gifts. We are informed that during such block assessment proceedings, the Assessing Officer had carried out detailed inquiry with respect to the gifts. In fact, the donors were summoned, they appeared before the Assessing Officer and the statements were recorded, in which, they owned up the gifts and also cited reasons for giving such lavish gifts. The Assessing Officer having come to definite conclusion in this respect after such detailed inquiry, it can be safely concluded that these amounts of gifts were part of the block assessment proceedings and could therefore not have been made part of the regular assessment all over again. Whether in such assessment, the Assessing Officer had found the gift to be genuine or nongenuine is of no consequence. Once the gifts were assessed in the block assessment proceedings, could not be subject matter of assessment in the regular assessment. 17. In the present case, as noted, some of the gifts were held to be genuine. Allowing the Assessing Officer to examine the same issue in the regular assessment and as in the present ca....