Commissioner Of Income Tax, Delhi v. Ms.mayawati

IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Reserved on: 29[th] October, 2010 Judgment Pronounced on: 03[rd] August, 2011 + ITA No.438/2008 COMMISSIONER OF INCOME TAX, DELHI ..... Appellant Through: Mr.Vivek K. Tankha, ASG with Mr.Rishabh Sancheti and Mr.Sumeer Sodhi, Advocates Mr.Rishabh Sancheti and Mr.Sumeer Sodhi, Advocates versus Ms.MAYAWATI ..... Respondent Through: Mr.S.C.Mishra, Sr.Advocate with Dr.Rakesh Gupta, Mr.Shail Divedi, Mr.Ashok Chhabra, Mr.Kunal Varma, Mr.Ashwani Taneja and Mr.Johnson Bara, Advocates Dr.Rakesh Gupta, Mr.Shail Divedi, Mr.Ashok Chhabra, Mr.Kunal Varma, Mr.Ashwani Taneja and Mr.Johnson Bara, Advocates CORAM:HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE SURESH KAIT 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes. see the judgment? Yes. 2. To be referred to the Reporter or not? Yes. 3. Whether the judgment should be reported in the Digest? Yes. SURESH KAIT, J. The present appeal is preferred by the Revenue/Department against the order of Income Tax Appellate Tribunal (Delhi Bench) dated 30.11.2007. The facts of the instant appeal are as under:- ITA No.438/2008 Page 1 of 63 The Income Tax return for the Assessment Year 2003- 04 was filed by the assessee on 06.08.2003 declaring total income of Rs.13,29,090/-. The Assessee enjoys the income from salary, house property and other sources. The Assessing Officer, on perusal of the return, found that during the year under consideration, the assessee had received gifts from the following persons as per details given hereunder:- DETAILS OF IMMOVABLE ASSETS RECEIVED ITA No.438/2008 Page 2 of 63 Sh.Ashok Jain and Smt.Veena are husband and wife and Sh.Pankaj is nephew of Sh.Ashok Jain. Sh.Ashok Jain is a professional Advocate and Sh.Pankaj is a practicing Chartered Accountant and a partner of M/s P.Jain & Co. We may mention here itself that the Assessee and her family members have received gifts from different persons at different times and these gifts have become subject matter of the scrutiny at various levels including Income Tax Department and additions have been made at the ends of the assessee and her family ITA No.438/2008 Page 3 of 63 members in different assessment years. However, so far as the present appeal is concerned, we are concerned only with the aforesaid gifts which Assessing Officer noticed during the year under consideration. Therefore, for the purpose of present appeal, our discussion would confine to these gifts only. We may also clarify that we have gone into the facts as well as material on record pertaining to this aspect only without being influenced by the other gifts purportedly received by the assessee as that is not the scope and domain of the present proceedings. With these introductory remarks we revert back to the issue at hand. The Assessing Officer wanted to examine the genuineness of the aforesaid gifts. For this purpose he summoned the donors. He recorded the statement of Mrs.Veena Jain on 26.12.2004. From the statement of Mrs.Veena Jain, the Assessing Officer brought out the following facts:- 1.She is Graduate. 2.The sources of income are rental, salary, interest, dividend, sale purchase of shares. sale purchase of shares. 3.She is filing her income tax return since 1979 and the details of income declared by her is given hereunder:- details of income declared by her is given hereunder:- ITA No.438/2008 Page 4 of 63 A.Y. Gross Net 2000-01 1,39,910/- 95,330/- 2001-02 1,35,920/- 98,720/- 2002-03 2,10,658/- 1,82,410/- From the statement of Mrs.Veena Jain, the Assessing Officer brought out the following facts:- 1.She is Graduate. 2.The sources of income are rental, salary, interest, dividend, sale purchase of shares. sale purchase of shares. 3.She is filing her income tax return since 1979 and the details of income declared by her is given hereunder:- details of income declared by her is given hereunder:- ITA No.438/2008 Page 4 of 63 A.Y. Gross Net 2000-01 1,39,910/- 95,330/- 2001-02 1,35,920/- 98,720/- 2002-03 2,10,658/- 1,82,410/- 4.She does not pay wealth tax. 5.She is not a director, partner or proprietor in any company or firm or concern. company or firm or concern. 6.She has never gifted any amount to any social organization, temples and other religious organizations. organization, temples and other religious organizations. 7.The gift is stated to be out of natural love and affection. 8.There is no correspondence with the donee and it is out of personal meetings as well as telephonic discussion. personal meetings as well as telephonic discussion. 9.The done has never gifted any amount to Smt.Veena Jain, the donor. the donor. 10.She has never received or given any gift in the past. The Assessing Officer recorded his observation on the creditworthiness, it is seen that she herself had taken loan for purchase of property as she was not having sufficient funds for this purpose. She had sold her jewellery for purchase of the house. Therefore, he opined that the creditworthiness of the donor was not proved. ITA No.438/2008 Page 5 of 63 Summons under Section 131 of the Income Tax Act was issued to Sh.Ashok Jain. In compliance, Sh.Ashok Jain, Advocate appeared before the Assessing Officer and his statement was recorded by him from which the following facts were revealed:- 1.His sources of income are Tax Consultancy, Salary, dividend, interest, shares, sale and purchase and share income from M/s Bharat Associates, Ghaziabad. dividend, interest, shares, sale and purchase and share income from M/s Bharat Associates, Ghaziabad. 2.He is filing his income tax return since 1971. 3.The details of income declared during the last three years is given as is given as The family consist of self, wife two sons and one daughter. It is seen that all the family members had given gift to the assessee or her family members. 4.He has never given gift to social organizations, temples and other religious organizations in his individual capacity. and other religious organizations in his individual capacity. 5.The gift was out of pure love and affection as the assessee puts Rakhi on his hands for more than 15 years regularly. puts Rakhi on his hands for more than 15 years regularly. ITA No.438/2008 Page 6 of 63 6.Although he does not have any correspondence with the done but personal meetings as well as over telephonic discussion were there. done but personal meetings as well as over telephonic discussion were there. 7.He was inquired as to when he had taken the loan for purchase of property which was gifted by him and how he will repay the loans taken by him, he replied that the loan was taken for his self residence which was later on gifted. Since his bank accounts were seized the loan could not be repaid. purchase of property which was gifted by him and how he will repay the loans taken by him, he replied that the loan was taken for his self residence which was later on gifted. Since his bank accounts were seized the loan could not be repaid. 8.It was seen that the net income earned by him during the Assessment Year 2000-01 to 2002-03 was nearly 7,76,000/- only. Assessment Year 2000-01 to 2002-03 was nearly 7,76,000/- only. 7.He was inquired as to when he had taken the loan for purchase of property which was gifted by him and how he will repay the loans taken by him, he replied that the loan was taken for his self residence which was later on gifted. Since his bank accounts were seized the loan could not be repaid. purchase of property which was gifted by him and how he will repay the loans taken by him, he replied that the loan was taken for his self residence which was later on gifted. Since his bank accounts were seized the loan could not be repaid. 8.It was seen that the net income earned by him during the Assessment Year 2000-01 to 2002-03 was nearly 7,76,000/- only. Assessment Year 2000-01 to 2002-03 was nearly 7,76,000/- only. 9.He has not received any gift from anyone nor he has given gift to anybody except to the assessee and her family members. He has not given any gift to social organization, temples and other religious organizations and even to his own real sisters or cousin sisters. gift to anybody except to the assessee and her family members. He has not given any gift to social organization, temples and other religious organizations and even to his own real sisters or cousin sisters. 10.The assessee had taken the loans of more than 32 lacs from different persons to purchase the house which was gifted by him. from different persons to purchase the house which was gifted by him. The Assessing Officer observed that in view of the above, as also the fact that there is no relation between the donor and the donee and the genuineness and creditworthiness is not proved. Sh.Pankaj Jain By profession he is a Chartered Accountant. He is assessed to tax at Ghaziabad. He is partner in P.Jain & Co. His statement on oath was recorded by Addl.DI(Investigation). ITA No.438/2008 Page 7 of 63 The Assessing Officer recorded that his statement revealed as under:- 1.He is a C.A. and is partner in M/s P Jain & Co. and is also doing the business of purchase and sale of shares. doing the business of purchase and sale of shares. 2.The income declared during the last three years is given hereunder. He is filing his income tax return since 1994. A.Y. Gross Net 2000-01 1,90,280/- 1,50,879/- 2001-02 1,96,553/- 1,32,577/- 2002-03 1,81,009/- 1,25,024/- 3.The family consists of self, wife and two dependent children. 4.He has admitted that no substantial amount has been gifted in his personal capacity to social organization, temples and other religious organizations. The sources of gift given to the assessee have been given above. in his personal capacity to social organization, temples and other religious organizations. The sources of gift given to the assessee have been given above. 5.The gift is stated to be out of natural love and affection and regard for work done by her towards down trodden society. regard for work done by her towards down trodden society. 6.He does not have any correspondence with the done but stated to be personal meetings were there. stated to be personal meetings were there. ITA No.438/2008 Page 8 of 63 7.The done has never made any gift to the donor and the donee has not received any gift from anyone. donee has not received any gift from anyone. 8.When his attention was drawn to the statement recorded by Addl.DI New Delhi, he stated that he had been meeting with the donees at Hanuman Road, New Delhi and still meet them at our family functions as well as of donees. He has photographs to prove his visit and their visits. The phone no. etc, were not remembered by him at that time. Addl.DI New Delhi, he stated that he had been meeting with the donees at Hanuman Road, New Delhi and still meet them at our family functions as well as of donees. He has photographs to prove his visit and their visits. The phone no. etc, were not remembered by him at that time. 7.The done has never made any gift to the donor and the donee has not received any gift from anyone. donee has not received any gift from anyone. 8.When his attention was drawn to the statement recorded by Addl.DI New Delhi, he stated that he had been meeting with the donees at Hanuman Road, New Delhi and still meet them at our family functions as well as of donees. He has photographs to prove his visit and their visits. The phone no. etc, were not remembered by him at that time. Addl.DI New Delhi, he stated that he had been meeting with the donees at Hanuman Road, New Delhi and still meet them at our family functions as well as of donees. He has photographs to prove his visit and their visits. The phone no. etc, were not remembered by him at that time. The Assessing Officer, after going through the above facts found that during the Assessment Year 2003-04 he had gifted a sum of Rs.17 lacs to her and the family members of the assessee. He had also made gift of Rs.2 lacs in the Assessment Year 2000-01 and in the Assessment Year 2004-05 made a gift of Rs.5 lacs to the assessee. As observed by the Assessment Officer that the entire case made by him is out of amount received from M/s Blue Bell Finance Co. The Assessing Officer recorded in his assessment order that It is surprising that the assessee had gifted the amount out of loan taken from this concern M/s Blue Bell Finance Co. Since there was ITA No.438/2008 Page 9 of 63 no occasion for making the gift; the gifted amount was more than the income of the assessee; there was no relation between the donor and the done; the Assessing Officer held that it was only an arranged gift and an accommodation entry. In nutshell the Assessing Officer did not accept the claim of the assessee in respect of the aforesaid two immovable properties namely C-57, Inderpuri, New Delhi and C-58, Inderpuri, New Delhi and added the same to the income of the assessee under Section 69 of the Income Tax Act. He also did not accept the gift of Rs.2.00 lac of Sh.Pankaj Jain and made addition of this amount also to the income of the assessee under Section 69 of the Act. However, gift of Rs.1.00 lac of Shri O. P. Khadaria and of Rs.10.00 lacs of Shri Ajay Aggarwal were accepted. In the final assessment order dated 30.03.2006, total income of the assessee was assessed at Rs.79,03,390/-. The assessee preferred an appeal against the order under Section 143(3) dated 30.03.2006 passed by the Assessing Officer. During the course of appellate proceedings, on the written submission of the assessee some clarification was sought from the ITA No.438/2008 Page 10 of 63 Assessing Officer as to the creditworthiness of the donors as well as the financial statement of affairs depicting net worth of Sh.Ashok Jain, Sh.Pankaj Jain and Smt.Veena Jain. In response to the same, the Assessing Officer submitted his Remand Report dated 30.10.2006 and certified the net worth of the donors as on 31.03.2002 as under:- (i)Sh.Ashok Jain : Rs.1,14,74,817/- (ii)Smt.Veena Jain: Rs.1,32,14,312/- (iii)Sh.Pankaj Jain: Rs.1,36,01,314/- On perusal of the above Report, it was seen that Sh.Ashok Jain had gifted immovable property worth Rs.40,68,450/-, Smt.Veena Jain has gifted immovable property worth Rs.22,03,850/- and Sh.Pankaj Jain has made a gift of Rs.2,00,000/. These gifts were seen in the light of the net worth and creditworthiness of the above three donors. The CIT(A) noted that the Assessing Officer had in his impugned order disallowed the gifts of Sh.Pankaj Jain on the following grounds:- ITA No.438/2008 Page 11 of 63 (a)All the persons in Jain group have admitted that they do not know the donees personally and they are not aware about their addresses and other details related to the donees. On perusal of the above Report, it was seen that Sh.Ashok Jain had gifted immovable property worth Rs.40,68,450/-, Smt.Veena Jain has gifted immovable property worth Rs.22,03,850/- and Sh.Pankaj Jain has made a gift of Rs.2,00,000/. These gifts were seen in the light of the net worth and creditworthiness of the above three donors. The CIT(A) noted that the Assessing Officer had in his impugned order disallowed the gifts of Sh.Pankaj Jain on the following grounds:- ITA No.438/2008 Page 11 of 63 (a)All the persons in Jain group have admitted that they do not know the donees personally and they are not aware about their addresses and other details related to the donees. (b)It is seen that the entire gift of Pankaj Jain was made by him out of amount received from M/s Blue Bell Finance Company, it is surprising that the assessee has gifted the amount out of loan from the concern, since there was no occasion for making the gifts, the gifted amount is more than the income of the assessee, there is no relationship between the donor and the done, I hold that it is only an arranged gift and an accommodation entry. by him out of amount received from M/s Blue Bell Finance Company, it is surprising that the assessee has gifted the amount out of loan from the concern, since there was no occasion for making the gifts, the gifted amount is more than the income of the assessee, there is no relationship between the donor and the done, I hold that it is only an arranged gift and an accommodation entry. (c)The learned Assessing Officer has held that „since the assessee has not been able to prove the basic parameters as laid down by judicial pronouncements, i.e. the creditworthiness and genuineness of the gifts, the same are held to be parameters as laid down by judicial pronouncements, i.e. the creditworthiness and genuineness of the gifts, the same are held to be ITA No.438/2008 Page 12 of 63 arranged gifts and will be added towards the income of the assessee u/s 68 of the Income Tax Act. (d)The learned Assessing Officer has also held that the gifts in comparison to the annual income of donors were beyond comprehension. (e)The learned Assessing Officer has also held that the amount of Rs.2 lacs received from Sh.Pankaj Jain has been found credited in books maintained by the assessee for her business activity and therefore the cash of Rs.2 lacs received by her will be charged under Section 68 of the Income Tax r/w Section 56(1). amount of Rs.2 lacs received from Sh.Pankaj Jain has been found credited in books maintained by the assessee for her business activity and therefore the cash of Rs.2 lacs received by her will be charged under Section 68 of the Income Tax r/w Section 56(1). The CIT(A), not agreeing with the said addition made by the learned Assessing Officer in the impugned order, was of the opinion that it deserves to be dropped on the basis of the following reasons: 1.Identity, creditworthiness of the donors had been proved with documentary evidence and coupled with the fact that he has appeared before the with the fact that he has appeared before the ITA No.438/2008 Page 13 of 63 Assessing Officer, confirms the genuineness of the gifts as well. 2.The Assessing Officer‟s claim that the said donor stated that he doesn‟t know the assessee or their whereabouts is not true and is not substantiated by the AO with any material. stated that he doesn‟t know the assessee or their whereabouts is not true and is not substantiated by the AO with any material. 1.Identity, creditworthiness of the donors had been proved with documentary evidence and coupled with the fact that he has appeared before the with the fact that he has appeared before the ITA No.438/2008 Page 13 of 63 Assessing Officer, confirms the genuineness of the gifts as well. 2.The Assessing Officer‟s claim that the said donor stated that he doesn‟t know the assessee or their whereabouts is not true and is not substantiated by the AO with any material. stated that he doesn‟t know the assessee or their whereabouts is not true and is not substantiated by the AO with any material. 3.The Assessing Officer had wrongly claimed that Sh.Pankaj Jain had gifted the said money out of loan from M/s Blue Bell Finance Company, because it was given out of repayment of deposits of the donor and his immediate family lying with the said company. Moreover, the Assessing Officer erred in stating that gift of Rs.2 lacs was received in cash from Sh.Pankaj Jain in spite of the assessee and donor furnishing documentary evidence regarding the payment of Gift through a proper bank cheque. Sh.Pankaj Jain had gifted the said money out of loan from M/s Blue Bell Finance Company, because it was given out of repayment of deposits of the donor and his immediate family lying with the said company. Moreover, the Assessing Officer erred in stating that gift of Rs.2 lacs was received in cash from Sh.Pankaj Jain in spite of the assessee and donor furnishing documentary evidence regarding the payment of Gift through a proper bank cheque. 4.The learned Assessing Officer had failed to appreciate that the gifts cannot be rejected merely on the ground that there was no occasion or appreciate that the gifts cannot be rejected merely on the ground that there was no occasion or ITA No.438/2008 Page 14 of 63 relationship. The occasion for making the gift and relationship with donor are not very relevant, rather what is relevant is the genuineness of the transaction together with the identity and capacity of the donor. CIT (A) held that the Assessee, had duly discharged the onus by filing substantial documentary evidence including gift deeds, copies of Bank Accounts, IT returns, sworn affidavits apart from stating on oath and reaffirming the gifts and also indicating amply his financial status. In this manner the assessee had, thus, proved the identity of all the donors, their source of immediate funds gifted to her, and all the donors have on oath confirmed that the gifts are genuine and were given to the assessee out of natural love and affection for her. Likewise, CIT (A) hold that the assessee had justified that the gifts of Sh.Ashok Jain and Smt.Veena Jain deserved to be accepted on the following grounds:- (i)The donors appeared before the Assessing Officer and confirmed the genuineness of the gifts as well, therefore ITA No.438/2008 Page 15 of 63 the identity, creditworthiness of the donors are proved with documentary evidence. (ii)The conclusion of the Assessing Officer was not substantiated by any material that the donors do not know the whereabouts of the donee. (iii)The occasion for making the gift and relationship with the donor are not very relevant, rather what is relevant is the genuineness of the transaction together with the identity and capacity of the donor. (iv)The Assessing Officer cannot reject the gifts simply on the ground that since there was no occasion of relationship between the donor and the donee, therefore the gifts cannot be accepted. the ground that since there was no occasion of relationship between the donor and the donee, therefore the gifts cannot be accepted. the identity, creditworthiness of the donors are proved with documentary evidence. (ii)The conclusion of the Assessing Officer was not substantiated by any material that the donors do not know the whereabouts of the donee. (iii)The occasion for making the gift and relationship with the donor are not very relevant, rather what is relevant is the genuineness of the transaction together with the identity and capacity of the donor. (iv)The Assessing Officer cannot reject the gifts simply on the ground that since there was no occasion of relationship between the donor and the donee, therefore the gifts cannot be accepted. the ground that since there was no occasion of relationship between the donor and the donee, therefore the gifts cannot be accepted. (v)The assessee had duly discharged the onus by filing substantial documentary evidence including gift deeds, copies of bank accounts, IT Returns, sworn affidavit apart from stating on oath and reaffirming the gifts and also indicating amply his financial status. The assessee substantial documentary evidence including gift deeds, copies of bank accounts, IT Returns, sworn affidavit apart from stating on oath and reaffirming the gifts and also indicating amply his financial status. The assessee ITA No.438/2008 Page 16 of 63 and all donors have on oath confirmed that the gifts are genuine and were given to the assessee out of natural love and affection. (vi)The onus is not on the assessee to explain how or in what circumstances the third party obtained the money and how or why he/she came to make a deposit of the same with the assessee. However, before coming to such a conclusion the department has to be in a possession of sufficient and adequate material. As already been decided in the case of Vishnulal Karwa vs. ITO (1987) 32 Taxman 276 (JP) (MAG) that mere suspicion by itself cannot lead to conclusion that the amount belonged to the appellant. what circumstances the third party obtained the money and how or why he/she came to make a deposit of the same with the assessee. However, before coming to such a conclusion the department has to be in a possession of sufficient and adequate material. As already been decided in the case of Vishnulal Karwa vs. ITO (1987) 32 Taxman 276 (JP) (MAG) that mere suspicion by itself cannot lead to conclusion that the amount belonged to the appellant. As per the CIT(A), it is not necessary as per the Income Tax Act that the donor and donee must be relatives either as per Gift Act or the Transfer of Property Act. The CIT(A) was of the opinion that the gifts received by the assessee cannot be questioned on the ground of no „occasion‟ and no „relationship‟. The requirements of gift are that they should be transferred by ITA No.438/2008 Page 17 of 63 one person to another of any existing moveable and immovable property. The transfer should be voluntary and should be without consideration of any money. The same should be out of natural love and affection and done must also accept the said gift. Main issues were before the CIT(A) were as under:- (i)Whether the Gifts of immovable properties received by the assessee from Shri Ashok Jain and Smt. Veena Jain were genuine? the assessee from Shri Ashok Jain and Smt. Veena Jain were genuine? (ii)Whether the gift received by the assessee of Rs. 2 lac from Shri. Pankaj Jain was genuine. from Shri. Pankaj Jain was genuine. (iii)Whether the assessee is entitled to deduction u/s 16 (1) (iv)Whether the A.O. was right in charging interest u/s 234B. 234B. As regards the issue No. 1 of Sh. Ashok Jain who has gifted Main issues were before the CIT(A) were as under:- (i)Whether the Gifts of immovable properties received by the assessee from Shri Ashok Jain and Smt. Veena Jain were genuine? the assessee from Shri Ashok Jain and Smt. Veena Jain were genuine? (ii)Whether the gift received by the assessee of Rs. 2 lac from Shri. Pankaj Jain was genuine. from Shri. Pankaj Jain was genuine. (iii)Whether the assessee is entitled to deduction u/s 16 (1) (iv)Whether the A.O. was right in charging interest u/s 234B. 234B. As regards the issue No. 1 of Sh. Ashok Jain who has gifted property No. C-57, Inderpuri. Sh. Ashok Jain is a practicing advocate and he is assessed to tad since last so many years. He has placed details of income tax assessment and bank account before Assessing Officer. He has filed an affidavit certifying the above gift and he has also appeared before the Assessing Officer for statement ITA No.438/2008 Page 18 of 63 on oath where also he has confirmed giving of gift out of natural love and affection. He has also brought on record that the assessee is his Rakhi Sister and has relationship for so many years which is even evidenced by photographs of family occasions etc. Sh. Ashok Jain has also submitted that reciprocation of gift not mandatory and his creditworthiness has been accepted by the Assessing Officer himself in the Remand Report. Further, the immovable properties were first transferred and registered in the name of donor and then only gifted to donee. Thus, stamp duty was also paid twice and no lien of the donor remains on the property. Sh. Ashok Jain has also clarified that the donee has accepted the gift the same has been made without any consideration of money. In spite of such overwhelming facts no evidence at all has been placed on record by the Assessing Officer to prove that the transaction of gift was Sham and Benami. The CIT (A) of the opinion that the genuineness of the gift transactions are conclusively established inasmuch as the identity and the capacity of donor, as well as factum of gift stands established. The CIT(A) ITA No.438/2008 Page 19 of 63 came to the conclusion on the settled law that once done furnishes the gift deed and affidavits of the donors, they suffice to prove the genuineness of gift. CIT(A) was of the opinion that once the initial burden of proving the genuineness of the gift and creditworthiness of the donor was discharged by the assessee the onus shifts on the Assessing Officer to prove if he contrary. The Assessing Officer was duty bound to bring new material on record in support of his view, however, mere rejection of good explanation does not convert good proof into no proof. As regards applicability of Section 69, the CIT (A) was of the opinion that it is not the assessee who has made the investment. The donor has paid the stamp duty twice, the assessment of the donor has not been disturbed, the donor and donee are both accepting the factum of gift. Further the gift is also evidenced by documentary evidences like gift deeds, sworn affidavits, declaration before Assessing Officer etc. The donor has also given explanation for immediate source of gift. Therefore, keeping the aforesaid discussion into view the CIT (Appeal) was of the opinion that the donee has discharged not only the burden but also the onus cast on ITA No.438/2008 Page 20 of 63 her. Accordingly, the addition of Rs. 40,68,450/- was deleted. ITA No.438/2008 Page 20 of 63 her. Accordingly, the addition of Rs. 40,68,450/- was deleted. As regards the gift of property No. C-58, Inderpuri, the CIT(A) did not agree with the assessment order passed by the Assessing Officer and addition made by the Assessing Officer of Rs.22,03,850/- was deleted. The basis of this conclusion were almost as in the case of gift made by her husband Mr.Ashok Jain regarding the property No. C-57, by Mr.Ashok Jain. As regards the gift of Rs. 2 lacs received by the assessee from Sh.Pankaj Jain by provision he is a Chartered Accountant and assessed to tax since last so many years. The CIT (A) find that he has placed details of his income tax assessment and bank account and also filed affidavit certifying the above gift. He appeared before the Assessing Officer for statement on oath where he confirmed giving of gift. He has also established that he has been meeting the assessee, and his family members on family functions since so many years. The CIT (A) also found that the gift vide A-C payee cheque no. 17186 dated 17.12.2002 drawn on Andhra Bank for Rs. 2 lacs. The CIT (Appeal), thus, accepted the genuineness of gift ITA No.438/2008 Page 21 of 63 inasmuch as the identity and capacity of the donors was proved and came to the conclusion that factum of gift stood established. He thus, partly allowed the appeal of the assessee. The revenue as well as the assessee filed cross appeals registered as ITA No.279/Del/07 and ITA No.422/Del/07 against the aforesaid order dated 18.11.2006 for A.Y.2003-04 before Ld.Income Tax Appellate Tribunal. The revenue in its appeal ITA No.422/Del/07 took a stand that the Ld. CIT (Appeals) had erred in deleting the addition of Rs.2,00,000/- made on account of gift from Shri Pankaj Jain and further deleting the addition of Rs.40,68,450/- and Rs.22,03,850/- on account of claim of gift of property from Shri Ashok Jain and Smt.Veena Jain. The ITAT dismissed the aforesaid two appeals vide its order dated 30.11.2007 and thereby confirmed the aforesaid order dated 15.11.2006 passed by ITAT recording the finding that all the three gifts are not only genuine, but also the identity and capacity of donors to make the gift stands duly and fully established. Section 68 has no applicability for the reason that cheque received from Shri Pankaj Jain had been deposited in her bank account. The gift ITA No.438/2008 Page 22 of 63 relating to immoveable properties cannot be covered under Section 68 f the IT Act. The additions cannot be sustained even under Section 69 of the IT Act. The grounds taken by the revenue were rejected. The raison d‟eter in the order of ITAT can be traced to the following : As per ITAT the issues of genuineness of gift of movable property and immovable properties. For this purpose it is necessary to refer to Chapter VII of the Transfer of Property Act 1882 which deals with gifts of movable and immovable properties. Section 122 defines „gifts‟ as under:- “Gift” is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.” Section 123 of the Transfer of Property Act deals with the procedure relating to transfer of property gifted for our convenience this provision is reproduced as under:- “For the purpose of making a gift of immovable property, the transfer must be effected by a defines „gifts‟ as under:- “Gift” is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.” Section 123 of the Transfer of Property Act deals with the procedure relating to transfer of property gifted for our convenience this provision is reproduced as under:- “For the purpose of making a gift of immovable property, the transfer must be effected by a ITA No.438/2008 Page 23 of 63 registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfer may be (effected either by a registered instrument signed as aforesaid or by delivery) Such delivery may be made in the same way as goods sold may be delivered.” On perusal of section 123 of the Transfer of Property Act the essential elements of gift are as under:- (i) Donor‟s interest to make a gift. (ii) the gift should be made voluntarily and without consideration by the donor. (iii) Delivery of actual or constructive possession; (iv) Acceptance of the gift by the donee or on his behalf. In addition, gift of immovable property has to be through a registered document and transfer of immovable property has to be effected by a registered instrument signed by on behalf of donor attested by at least two witnesses, whereas in the case of movable property such gift should be effected either by registered instrument or by delivery. The ITAT has relied upon on the case of CIT. U.P. Lko Vs. Shyamo Bibi, Kanpur AIR 1967 (Alld.) 82 wherein the Court has observed that whether the transaction is gift or not has ITA No.438/2008 Page 24 of 63 to be examined in the light of Section 122 and 123 of Transfer of Property Act. The Court has also observed that there is on warrant for the saying that the law contained u/s 123 of Transfer of Property Act does not apply when an Income Tax Authority has to decide whether there was a gift or not. The observation of the Allahabad High Court reads as under:- “Section 123 of the Transfer of Property Act lays down the law governing all gifts made for whatever purpose and it is to be applied whenever the question arises there was a gift or not. Regardless of whether the question arises in a suit by a donee to recover possession or in a suit to define his title or in an income tax assessment proceeding it has to be answered with reference to the provisions of section 123 T.P. Act. There is no warrant for saying that the law contained in Section 123 T.P. Act does not apply when an income-tax authority has to decide whether there was a gift or not. Consequently, there has to be a delivery, if a gift is not made by a registered document. A question may arise whether a certain act done by the alleged donor amounts to delivery of property to the alleged donee but is cannot said that delivery is not required at all.” The Income Tax Act does not define „gift‟. However, in general terms gift consists in the relinquishments of one‟s own right of the property and creation of the right in another in that property. This concept is in consonance with the definition of gift ITA No.438/2008 Page 25 of 63 in Principles of Hindu Law by Mulla which defines gift as under:- The Income Tax Act does not define „gift‟. However, in general terms gift consists in the relinquishments of one‟s own right of the property and creation of the right in another in that property. This concept is in consonance with the definition of gift ITA No.438/2008 Page 25 of 63 in Principles of Hindu Law by Mulla which defines gift as under:- “Gift consists in the relinquishment (without consideration) of one‟s own right (in property) and the creation of the right of another; and the creation of another man‟s right is completed on that other‟s acceptance of the gift, but nor otherwise.” The definition of gift as given in Hallsburry‟s Laws of Englant Volume XVIII page 364 paragraphs 692 is as under “A gift under vivo may be defined shortly as the transfer of any property from one person to another gratuitously while donor is alive and not in expectation of death…………..” On the concept of gift we consider it proper to reproduce the observations of Lord Esher, M.r. made in Cochrane‟s case, (1890) 25 QBD 57 (supra) which are as under:- “…………actual delivery in the case of a „gift‟ is more than evidence of the existence of the proposition itself. It is one of the facts which constitute the proposition that a gift has been made. It is not a piece of evidence to prove the existence of the proposition; it is a necessary part of the proposition, and, as such, is one of the facts to be proved by evidence. The proposition is not that the one party has agreed or promised to give, and that the other party has agreed or promised to give, and that the other party has agreed or promised to accept. In that case, it is not doubted but that the ownership is not changed until a subsequent actual delivery. The giving and taking are not evidence to prove that there has been a gift, but facts to be proved to constitute the proposition that there has been a gift.” In view of the above, the ITAT have examined as to whether ITA No.438/2008 Page 26 of 63 these legal requirements as laid down in Section 122 and 123 of T.P. Act are satisfied in the case of gifts made to the present assessee or not. So far as the gift from Sh. Pankaj Jain is concerned, the transaction was carried out through account payee cheque and reflected in the bank account of the assessee, which is as per S.B. A/c No. 9195 on Union Bank of India, Moti Bagh, New Delhi. The amount of RS. 2 lac is gifted by Sh. Pankaj Jain S/o Sh. P.C.Jain, Kavi Nagar, Ghaziabad. The date of entry is 07.12.2002. Sh. Pankaj Jain has confirmed the transaction of gift and filed affidavit dated 07.12.2002 to this effect. The statement of Sh. Pankaj Jain was also recorded on 30.12.2005 on oath by the ACIT Central Circle-11. The ITAT came to the conclusion that the donor is a Chartered Accountant. He is income tax assessee since 1994. His net worth as reported by the Assessing Officer to the CIT (Appeal) is Rs.1,36,01,314/-. Keeping the above documentary and oral evidence on record, the requirement of law for establishing a validity executed gift of movable properties are fully satisfied inasmuch as the donor gifted the amount voluntarily to the donee ITA No.438/2008 Page 27 of 63 and has delivered the possession to the gifted property to the donee. The ITAT while dealing with the gift of property bearing No.C-58 Inderpuri, New Delhi, the donor and the donee both have signed this deed. This document is duly stamped and duly registered. Gift has been made irrevocable and absolute and once for all. The donor transferred and conveyed the free hold property with all attending rights to the donee by way of gift together with all privilege, easement and advantages appurtenant thereto. ITA No.438/2008 Page 27 of 63 and has delivered the possession to the gifted property to the donee. The ITAT while dealing with the gift of property bearing No.C-58 Inderpuri, New Delhi, the donor and the donee both have signed this deed. This document is duly stamped and duly registered. Gift has been made irrevocable and absolute and once for all. The donor transferred and conveyed the free hold property with all attending rights to the donee by way of gift together with all privilege, easement and advantages appurtenant thereto. The ITAT came to the conclusion from the above documentary and oral evidence that the donor made the gift of immovable property to the donee voluntarily. The gift was duly registered and, therefore, the requirement of Section 122 and 123 of the Transfer of Property Act are fully satisfied. As regards gift of another immovable property i.e. C-57, Inderpuri, the ITAT after going through the record came to the conclusion that these gift also fulfilled the requirement of law and fully satisfied. The ITAT while coming to the above conclusion define that sufficient evidence was adduced by the assessee before ITA No.438/2008 Page 28 of 63 the Assessing Officer. After going through the assessment order the ITAT observed that the Assessing Officer while drawing adverse inference against the assessee in relation to these gifts was influenced by several other transactions of gift whereas he should have examined the genuineness and validity of these transactions. He has not recorded any finding to doubt the identity of the donors. He has not recorded any finding that the gifts were not made voluntarily or that the delivery of the possession of the properties gifted was not given to the donee. He has made absolutely no enquiries which would enable him to conclude that the transaction of gift were sham, false or not genuine. The Tribunal has further observed that the Assessing Officer has not only conveniently ignored the relevant documentary evidences produced by the assessee, but has based his conclusion on extraneous considerations. On going through the assessment order it is found that he has been unduly influenced by the fact that so many persons had made several gifts to the assessee and to her family members not only during the a