TaxTMI 
TaxTMI 
2023 (8) TMI 151
X X X X Extracts X X X X
X X X X Extracts X X X X
....om Shri Dhwanil P Shah as unexplained cash credit since the assessee had failed to prove creditworthiness of donor i.e., Shri Dhwanil P Shah to advance the money as "Gift". (ii) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in relying on the claim of assessee that he had furnished requisite documents like certified copy of certificate of Hong Kong based auditor and financial statements of M/s Ankit Gems Hong Kong Ltd. during assessment proceedings to prove the creditworthiness of donor i.e., Shri Dhwanil P Shah, even though after giving ample opportunities, he had failed to furnish such details during the assessment proceedings. (iii) The findings of Ld. CIT(A) is inconsistent with material on record as the assessee had failed to furnish original signed certified certificate of Hong Kong based auditor for the year under consideration as well as earlier two years along with copy of balance sheet of Ankit Gems Hong Kong Ltd., copies of relevant books of account of D P Shah showing the amount due to him for Ankit Gems Hong Kong Ltd., details of transactions which led to accumulation of funds with Ankit Gems on behalf of or as due to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....15/-. It was observed by the Assessing Officer that on account of low returned income and low comparative balance sheet (assets), the creditworthiness of the assessee's son, who has given loan to him of Rs. 1,23,60,145/- was not established. Despite ample and adequate opportunity, no further documents with regard to creditworthiness of Shri Dhwanil P Shah was furnished besides the weak balance sheet of one year. Even three years` balance sheets were not filed despite specifically being asked for and bank statement of Shri Dhwanil P Shah for the whole year has also not been furnished but only the page just before the transactions of money / gifts have been furnished through specifically asked for by the assessing officer, as on 26.12.2016. One final opportunity was given by Assessing Officer to furnish all these documents latest by 29.12.2016. The assessee has furnished with letter dated 28.12.2016 a copy of certificate of some Hong Kong Auditors showing outstanding balances in the name of Shri Dhwanil P Shah with a Hong Kong based firm M/s Ankit Gems Hong Kong Ltd. 6. The assessee was asked to produce the original certificate of the said creditor issued at Hong Kong, for this ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Aggrieved by the order of Ld. CIT(A) the Revenue is in appeal before us. 9. Learned DR for the Revenue, argued that despite ample and adequate opportunity, given by the assessing officer, during the assessment stage, none of details and documents have been submitted by assessee to prove creditworthiness of Shri Dhwanil (Doner). The onus in this regard continues to lie with the assessee and such onus has not shifted from him. Therefore, ld DR stated that creditworthiness of the giver of gift has not been established. The ld DR pointed out that assessee has not submitted copy of signed certificate from 'Certified Public Accountants of Hong Kong' duly reflecting the receivables balance of the donor, i.e, assessee son's in the company Ankit Gems (Hong Kong) Ltd. Therefore, it is clear that the assessee has falsely claimed that he has furnished such documents during assessment proceedings. The assessee submitted copy of confirmation dated 24.10.2013 which could not be cross verified by the assessing officer and the Income Tax Return and the other financial statements of Dhwanil P Shah could not establish the creditworthiness of the doner to advance the money. Therefore, the onus cont....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... totaling to Rs. 1,60,66,513/- on 26-02-2014 and 18-03-2014 respectively from his son Sh. Dhwanil P Shah. The Assessing Officer further noted that these two gifts received in the form of foreign remittance through the HSBC Account of Sh. Dhwanil P. Shah. While holding the gift as non-genuine, the Assessing Officer noted that the donor had no capacity to make gift of Rs. 1,60,66,513/- to the assessee as he had meager income of Rs. 9,515/- only. Therefore, the Assessing Officer being not satisfied with the assessee's submissions and supporting evidences produced by the assessee to prove the genuineness of the transaction, treated the total gift of Rs. 1,60,66,513/- as unexplained u/s 68 of the Act by observing that the assessee failed to prove the creditworthiness of the donor and to establish the genuineness of the transaction. 12. Before ld CIT(A), the assessee submitted copy of gift deed, copy of confirmation of donor, copy of income proof, copy of balance sheet and capital account, source of gift etc. to establish the identity and creditworthiness of the donor and to establish the genuineness of the transaction. Considering the facts of the assessee`s case and documentary ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....opy of bank statement of the assessee duly reflecting the gift received from the assessee's son. (iv) Certificate from Certified Public Accountants of Hong Kong, duly reflecting the receivables balance of the donor, i.e. assessee son's, in the company Ankit Gems (Hong Kong) Ltd. (v) Copy of balance sheet and confirmations of Ankit Gems (Hong Kong) Ltd, for the year under consideration, duly reflecting the amount due to Dhwanil Shah by the company. (vi) Copy of confirmations of Ankit Gems Hong Kong Ltd. Based on the above documents and evidences, the ld CIT(A) observed that Sh. Dhwanil P Shah has been working with Ankit Gems Hong Kong Ltd, a Hong Kong based company engaged in the business of import and export of Polished Diamond, operating from branch office at Dubai where Sh. Dhwanil P Shah is posted/worked. There is no dispute that Sh. Dhwanil P Shah is son of the assessee, Sh. Pravin Pannalal Shah. Though Sh. Dhwanil P Shah had meager income in India but he has sufficient earning from his employer Ankit Gems Hong Kong Ltd, which fact is also confirmed by Ankit Gems Hong Kong Ltd. From audited accounts of Ankit Gems Hong Kong Ltd and confirmat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y from the said creditor and it came from the coffers of that very creditor. The Division Bench of Delhi High Court in the case of CIT vs. Kamdhenu Steels and Alloys Ltd. 361 ITR 220 (Del.) held that when the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Once these documents are produced, the onus cast on the assessee can be said to have been satisfactorily discharged. This proves the genuineness of the transaction. We agree with the above findings of ld CIT(A) that assessee has proved three ingredients namely: the capacity and creditworthiness of the donor to give gifts to the assessee and genuineness of the transaction. 15. We note that followings judicial precedents supports the case of the assessee, which were relied on by ld CIT(A), wherein it is categorically held that where the assessee has brought sufficient evidences to establish the genuineness of gift received, no addition can be made u/s 68 of the Act. (i) In the decision in the case of DCIT Vs. Prakash H. Shroff reported in 3 SOT 171, the Hon'ble ITAT Ahemdabad Bench held that: "the assessee received....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... basis of surmises and conjectures. Relationship or occasions for the gift are not in any case essential elements as engrained in the definition of gift under the Gift-tax Act." (v) The Hon'ble Allahabad Bench of ITAT in the case of ITO vs. Matadin Snehlata (HUF) - reported in 90 ITD 203 observed: "In this case, the evidence on record clearly shows that the gift was made by the donor to the donee without any consideration and the gift is accepted by the donee by delivery. For the movable property, the affidavit and declaration was also effected though it was not required. Therefore, all the ingredients of gift have been specifically proved by the assessee. It also observed in this case, the assessee has accepted the gift from the donor. The subject matter is money which was transferred by Banking channel and the delivery of the money is accepted. No consideration is proved by the revenue." (vi) The Hon'ble Calcutta Bench of ITAT in the case of Smt. Bhagwati Devi Vs. ITO - reported in (1993) 47 ITD 58 - observed: "It is evident from the discussions extracted by us above from the impugned order that the A.O. did not decide the issue with an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... if any sum is found credited in the books of account maintained by the assessee and no satisfactory explanation is offered in respect of the sum so credited." (vii) The Hon'ble Rajkot Bench of ITAT in the case of Asstt. Commissioner 'vs. Radheyshyam Bansal - reported in 68 TTJ 136 - observed: "During the course of hearing, the learned counsel produced before us copy of letter dated 25th December, 1987, written by Shri R. Chawla of USA to the assessee wherein he has mentioned the draft number for US $ 5,000 and has also stated that the same is being sent to the assessee through Shri Harischandra Goya, Shri Goyal informed the assessee, vide letter dated 27th December, 1987, that he had received F.D.D. for US $ 5000- issued by NBG International, Coral Cables (Miami) Florida bearing No.003244: 061000256: 00001880, dated 7th Jan., 1988, for and on behalf of the assessee. He has also stated that he is forwarding this draft to the assessee, which is a gift from Shri R. Chawla. In view of the documents, the genuineness of the gift cannot be doubted. The identity of the donor is established. In view of the above documents, the transaction cannot be doubted". ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....abilities while observing that no such gifts were made by late Smt. Sua Bai to her grandsons or grand-daughters whereas preponderance of human probability is a circumstantial evidence, and if direct evidence is placed on one scale and human probabilities on the other, direct evidence is bound to carry more weight. It also observed: "Again, purpose and occasion are not the essential ingredients of gift". (x) The Hon'ble High Court of Rajasthan in the case of Nek Kumar vs. ACIT - reported in 274 ITR 575 - allowed the appeal and accepted the claim of gift of Rs. 1 lac by him and by his cousin from Smt. Asha Devi Singhi of Gangtok as genuine. The addition sustained by the Tribunal was deleted. The Hon'ble High Court referred to the relevant observation of CIT (Appeals): "It may also be stated that the amounts were withdrawn from the bank account of Shri Ramesh Singhi, the son of the donor, and if certain deposits are made in the bank account of Shri Ramesh Singhi and the persons from whom such deposits have come are not traceable or found to be non-existent, adverse inference, if any, is to be drawn with reference to such deposits in the hands of Shri Ramesh S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "An arrangement between a donor and another is an arrangement between the donor and his source of money. The onus to probe and prove this aspect lies upon the Revenue and not upon the assessee, particularly where the income is being dealt with under a deeming provision. A person who receives a gift, is not required to prove the source of the money of his donor" (xii) The addition has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessee income only. This cannot be the basis of making an addition under a deeming provision, section 68 in the present case. The Hon'ble Punjab and Haryana High Court in the case of Jawahar Lal Oswal (supra) has dealt with the said issue as follows: "A deeming provision requires the Assessing Officer to collect relevant facts and then confront the assessee, who is thereafter, required to explain incriminating facts and in case he fails to proffer a credible information, the Assessing Officer may validly raise an inference of deemed income under section 69-A of the Act. As already held, If the assessee proffers an explanatio....