TaxTMI 
TaxTMI 
2025 (6) TMI 1628
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....is written submissions, the same is reproduced here in below :- 1. Appellant had received gift of Equity shares of M/s Krishnaping Alloys Pvt Ltd from 20 different persons (hereinafter referred to as "Donors "). 2. However, the Ld. A.O. while passing the assessment order has made addition of the gift received from 20 donors u/s 56(2)(vii)(c) of the I. T. Act, 1961 amounting to Rs. 1,03,78,600/- in respect of 1,03,786 shares received by the appellant from 20 donors. 3. The list of such 20 donors who had gifted shares of M/s Krishnaping Alloys Pvt Ltd to appellant are as under :- Sr No. Name of Doner No. of Shares Paper book Page no. 1 Aarti Sachdev 4,235 36-47 2 Dinesh Kumar Soni 4,529 48-59 3 Hemant Kumar Sahu 4,328 60-71 4 Hitesh Patel 2,714 72-83 5 Ishwar Nimje 5,680 84-95 6 Ishwar Ninawe 7,051 96-106 7 Jaganath Chakole 8,496 107- 118 8 Lalit Kumar Chandak 8,692 119- 130 9 Laxmi Devi Nagdev 3,917 131- 133 10 Mahesh Kumar Soni 4,235 134- 145 11 Sangeeta Dadasena 4,407 146 - 157 12 Sanjay Kumar Nagdev 4,3....
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.... to the transfer of shares, effected as gift in favour of the assessee. 6. Further the shares were gifted by the donor to the appellant on 09/04/2009 itself, as per the letters of the donors as referred above. Now, the provisions of section 56(2)(vii)(c) of the I. T. Act, 1961 were introduced for the first time w.e.f., 01.10.2009 i.e. FY 2009-10 (AY 2010-1 1) and the shares were already gifted in the name of the appellant by the donors prior to that. Thus, the provision of section 56(2)(vii)(c) of the I. T. Act, 1961 is not applicable to the Appellant so far, the above-mentioned gifts are concerned. It is only because the gift deed was executed on stamp paper on 18.09.2010 at the request of the company the Ld. AO has initiated re-assessment for AY 2011-12. However, the Ld. AO has himself stated in his order that the gift deed was made on 30.04.2009 [Ref. pg. 10 of AO]. However, nowhere has the Ld. AO mentioned that the gift deed was not made on 30.04.2009 or that the gift deed was invalid, etc. It is in this background the appellant has challenged the action of the Ld. AO in making an addition u/s 56(2)(vii)(c) in the hands of the Assessee for AY 201 1-12. 7. In t....
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.... in simply rejecting the claim of the appellant and thereafter making an addition in her hands for AY 2011-12. Without prejudice to the above if the stand of the Ld. AO is accepted that the shares were transferred in the name of the appellant on 18.09.2010, even then as per the doctrine of relating back the same would be seen as transferred from 30.04.2009 i.e., in AY 2010-11. 6. Despite the request of the appellant before the Ld. A.O., the Ld. A.O. has chosen not to conduct any further enquiry on the correctness or validity of the gifts. Now, the appellant cannot be saddled with tax liability if the Ld. A.O. failed to perform his duty. In the present case, the Ld. A.O. has not at all made any further enquiry as regards the submissions made by the appellant that the transfer took place during AY 2010-11. In such a situation, the submission made by the appellant-should have been accepted [Ref. CIT v/s Gangeshwari Metal P. Ltd - (2014) 361 ITR 10 (Delhi), PCIT v/s Jatin Investments P. Ltd - ITA No.43 of 2016 Delhi High Court, PCIT v/s Laxman Industrial Resources Ltd- ITA 169 of 2017 Delhi High Court, CIT v/s ARL Infratech Ltd - (2017) 394 ITR 383 (Rajasthan), CIT v/s Jalan H....
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....82 158 - 160 13 Sunil Kumar Nagdev 4,328 161 - 172 14 Mahesh P. Jain (HUF) 5,141 173 - 175 15 Pankaj C. Jain 4,015 176 - 178 16 Rajkumar Jain 7,100 179 - 181 17 Ramna Swami 8,100 182 - 184 18 Ruchi Jain 3,133 185 - 196 19 Indra Kumar Jain 5,141 197 - 207 20 Gulabi Devi Kumhar 4,162 208 - 210 4. A detailed chart outlining the sequence of events pertaining to the shares gifted to the appellant, along with the corresponding actions undertaken by the company for the execution of the share transfer, is provided below: Sr. No. Particulars Date Refer page no. of Paper book 1. Letter by M/s Krishnaping Alloys Pvt Ltd. informing the shareholders that, shares were allotted. 31/03/2009 39, 51, 63, 75, 87, 99, 110, 122, 131, 137, 149, 158, 164, 173, 176, 179, 182, 188, 200, 208 2. Donor had written letter to Krishnaping Alloys Pvt Ltd showing their willingness to gift shares held by them to Mrs. Prema Jhalani (appellant) out of love and affection and to deliver the shares to the assessee at their address. 09/04/2009 40-41, 52-53, 64- 65, 76-77, 88-89, ....
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.... Oil for Food programme under the supervision of UNO. As per the information, the assessee has made payments to the Iraq Government, under the head ASSF and Inland Transportation fee which was considered as illicit payments made in the shape of kickback. These payments were made directly to the Iraq control banks of the front companies outside Iraq and these payments did not got the escrow account which was maintained for oil transactions under the Government. Accordingly, these payments made under the head ASSF and Inland Transportation fee to the Iraq Government, were termed as illicit payments forming the part of the kickback by the UNO and therefore, these were not as allowable expenditure. As per the information, the assessee has made the following payments in USD. ASSF-17276 USD Inland Transportation fee - 1200 USD Since these payments were declared as illicit payments by the UNO under whose program the export of goods were made, therefore, the amount to the extent mentioned above has not been included in the profit declared by the assessee on the export of goods to Iraq as the remittance received against the export made to the Iraq were re....
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....August through the office of the Additional Commissioner of Income-tax, Srinagar Range, Srinagar. The information was titled as under: "Information in the case of Shri Mohd. Yousuf Wani, Forest Contractor, s/o Shri. Mohd. Ramzan Wani, r/o Shopian presently at Raj Bagh, Srinagar and reflection of the unaccounted assets of Shri Mohd. Yousuf Wani." The information supplied by the Vigilance Organisation was constituted of two pages (in letter form) photo of fourteen (14) cash certificates/fixed deposits in the name of Shri Mohd. Yousuf Wani and its other family members. After analysing the entire information it was noticed that the assessee has purchased the following cash certificates/FDRs from J&K Bank, Pulwama on the dates shown each and proceedings under the Income- tax Act as mentioned below were initiated in respect of the relevant assessment year: Sl. No Date Type Amount (Rs.) 1. 19.08.2003 Purchase of FDR / CC No. (0870833) 5,00,000 2. 17.11.2003 Interest on FDR / CCR 6832 5,06,832 As per records the assessee has not filed his return of income for the said assessment year an....
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....d to other issues. This fact alone shows that the so-called reasons recorded by the Assessing Officer were made without application of mind by the Assessing Officer. In our considered view, reliance placed by the Assessing Officer on the letter of Vigilance Department was not sufficient to make a belief that the income of the assessee escaped assessment. In the present case, the reasons for formation of belief was only the information received from the Vigilance Organisation. In our opinion, the so-called reasons recorded by the Assessing Officer could not be held the reasons for proceedings under section 147/148 of the Act, since it was only an information and was not at all discernible as to whether the Assessing Officer has applied his mind to the information and independently arrived at a belief, on the basis of material which he had before him, the income of the assessee had escaped assessment. While taking such a view, we are fortified by the ratio laid down in the judgment of the hon'ble Delhi High Court in the case of CIT v. SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Delhi) wherein it has been held as under (page 289): 'After having heard the counsel for t....
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....ncome had escaped assessment. Consequently, we find that the Tribunal has arrived at the correct conclusion on the facts. The law is well-settled. There is no substantial question of law which arises for our consideration. The appeal is dismissed.' From the above, it is clear that the Hon'ble Delhi High Court has also considered the decision of the Hon'ble Supreme Court rendered in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC) and after considering the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri (supra) the Delhi High Court concluded that the Assessing Officer has not applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment. In the instant case also, it is crystal clear that the Assessing Office has not applied his mind and also not independently arrived at a belief that on the basis of the material he had before him, income has escaped assessment, and therefore, we allow ground Nos. 1 to 4 of the appeal and quash the reassessment order." 7. We find that the Tribunal aft....
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....per book page No. 213 to 214 are undated which itself proves that the AO has not applied his mind. Secondly the same are founded on incorrect facts and reflects a manifest non-application of mind. It appears that AO had not made any positive enquiries as the reasons cited rely solely on 'uncorroborated and unconfronted information', without any independent verification or inquiry. Furthermore, the assumption that the entire amount of Rs.100 per share (comprising Rs.10 face value and Rs.90 share premium paid by the donors) constitutes taxable income in the hands of the appellant is in gross contravention of Section 56(2)(vii)(c) of the Income Tax Act and such an interpretation is legally untenable. 10. Now we analyze as to whether the additions could have been made during the year under consideration or not? After evaluating and appreciating the facts, we noticed that the shares were gifted and transferred by the donors to the assessee on 09.04.2009 as per the respective letters of the donors and also as per gift deed dated 30.04.2009, wherein the donor had 'gifted and transferred' all the rights of the shares in favour of assessee along with other supporting documents. 11. Ho....