D.b. Income Tax Appeal v. Income Tax Officer, Ward 4(2), Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 31 / 2015 Smt. Suman Devi Khandelwal W/o Sh. Ashok Khandelwal, aged 57years, R/o 2/187, New Vidhyadhar Nagar, Jaipur. ----Appellant Versus Income Tax Officer, Ward 4(2), Jaipur having its address at New Central Revenue Building, Statue Circle, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Siddharth Ranka with Mr. Muzaffar IqbalFor Respondent(s) : Mr. K.D. Mathur with Mr. Prabhansh Sharma for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 25/10/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has allowedthe appeal filed by the department and reversed the view taken bythe CIT(A) and confirmed the order of AO. 2.This court while admitting the appeal on 7.10.2016 framedfollowing substantial questions of law:- “1. Whether the facts and materialavailable on record the learned ITAT wasjustified in holding that addition ofRs.9,25,000/- made by the AO onaccount of unexplained gift was correctand proper? 2. Whether the learned ITAT was justifiedin relying too heavily on humanimprobabilitiesandcircumstantialevidence by ignoring the requirement ofSection 68 of the Act?” 3.The facts of the case are that the assessee is a proprietressof business dealing in cotton cloth manufacturing and manufactureof Refined Lubricants Oil. During the course of assessmentproceedings, various additions have been made including theimpugned gifts. Since we are concerned with the issue of giftsonly, therefore, the facts in this behalf are that the assesseereceived the following gifts as observed by the AO:- (i) Sh. Pramod GargRs.3.00 lacs (ii)Sh. Vinod GargRs.2.00 lacs (iii)Smt. BabitaRs.1.25 lacs (iv)Smt. Varsha BadayaRs.3.00 lacs 3.1The AO asked the assessee to prove the relationship with thedonors, genuineness of the gifts and creditworthiness of thedonors. The assessee vide letter dt. 17.9.2003 replied that Smt.Varsha Badaya was the niece of the assessee and remainingdonors were the children of the Accountant working with theassessee which were claimed to be Dharam Bhai and Dharam Bhaiof the assessee. The assessee filed copies of bank accounts,confirmation of gifts and income tax record. The AO found thatbank accounts reflected that the gifts were immediately precededby depositing the amount in donors respective accounts. 3.2The AO asked the assessee to produce the donors and provetheir creditworthiness. The donors were produced who confirmedgiving of the gifts and their statements were also recorded.According to the AO, there were contradiction in the statements of donors vis-a-vis the transactions of the gifts claimed by theassessee. 4.Counsel for the appellant contended that the tribunal hascommitted serious error in reversing the view taken by the CIT(A)who observed as under:- 3.2The AO asked the assessee to produce the donors and provetheir creditworthiness. The donors were produced who confirmedgiving of the gifts and their statements were also recorded.According to the AO, there were contradiction in the statements of donors vis-a-vis the transactions of the gifts claimed by theassessee. 4.Counsel for the appellant contended that the tribunal hascommitted serious error in reversing the view taken by the CIT(A)who observed as under:- 5.1 I have duly considered thesubmissions of the appellant. I find that inthe present case, the donors were creditorsin the earlier years and loans received fromthem were accepted as genuine. In theyear under reference, the loans to thecreditors were returned and then acceptedas gifts. Since the donors were assessed totax and loans accepted from them in theearlier years were accepted as genuine,therefore their identity was not in doubt.The donors had appeared in person beforethe AO also. Hence their existence was notin doubt. The fact that loans were returnedand these very amounts were accepted asgifts could well be a reason to accept thecreditworthiness of the donors. Furthergifts were received through bankingchannelsand it established thegenuineness of the transactions inquestion. The initial loan transactionsbetween the assessee and these lendershad a creation of contractual relationbetween them and, therefore, there wasconsideration of performance of mutualpromiseandconsequently,thesetransactionswerenotwithoutconsideration. The repayment obligation ofthe assessee by itself was a considerationfor granting of loan. A transaction of loanimplied an agreement to repay the money.The intention to repay the loan wasestablished by disclosure of loans in thebalance-sheetsupportedbyloansconfirmations submitted by the assessee inearlier years. Therefore these transactionswere with consideration and met all therequirements of general law under section68 of the I.T. Act. The Department hadraised an alternate contention that thesecould not be brought back in the books ofaccount as gifts however it was a feeblecontention. This contention was also liable to be rejected as there was relationshipbetween the appellant and donors howeverthe AO had chosen to ignore the same. TheAO had chosen to ignore the same. The AOhad merely doubted the nature oftransaction for the reason that these wereconverted from loans into gifts and therewere now no repayment obligations.However, this conclusion had been arrivedmerely on the basis of surmises andconjectures ignoring the financial status ofthe donors and their association with theassessee and except for general suspicion,no other material had been brought onrecord which could really support theassumption of the AO as regards financialstatus of the donors. In the case of Smt.Babita Ahir, loans of Rs 1,06,986/- werereturned by the appellant, KhandelwalChemicals and same were credited in herbank account on 12.02.01. Prior to depositof cheque, she had closing balance ofRs.46,523/- in her bank account. Therewere no cash deposits in her bank account.She gave a gift of Rs.1,25,000/- to theappellant on 26.02.01. In the case of Smt.Varsha Badaya, loan of Rs. 2,93,641/- wasreturned by the appellant and same wascredited in her bank account on 12.1.01.Prior to deposit of cheque, she had closingbalance of Rs 8000/- in her bank account.She gave a gift of Rs. 3,00,000/- to theappellant on 17.1.01. In the case of Sh.Vinod Garg, loans of Rs 1,57,238/- werereturned by the appellant, KhandelwalChemicals, Tirupati Industries and samewere credited in his bank account on23.02.01. Prior to deposit of cheque, hehad closing balance of Rs. 79,179/- in hisbank account. There were no cash depositsin his bank account. He gave a gift of Rs2,00,000/- to the appellant on 1.3.01. Inthe case of Sh Pramod Garg, loan of Rs2,00,600/- was returned by the appellantand same was credited in his bank accounton 22.02.01. Prior to deposit of cheque, hehad closing balance of Rs 2,15,814/- in hisbank account. There were no cash depositsin his bank account. He gave a gift of Rs3,00,000/- to the appellant on 26.02.01.The AO had therefore unnecessarilyoveremphasizedthefactofcreditworthiness. The observations of theAO as regards sources of income of the donors, their household expenditure,occasion of gift, intimacy with the doneeand registration of gift deeds were notconclusive. Before the AO, in response toquestion number 16, Smt Babita Ahir, ShPramod Garg and Sh Vinod Garg hadcategorically accepted that the appellantwas their aunt (Chachi). Smt VarshaBadaya had categorically accepted inresponse to question number 16 that theappellant was her aunt (bua). Hence, thecontention of the assessee has to beaccepted that expressed terms andconditions of gifts could not be given adifferent colour without bringing anymaterial on record to support such stand.In the case of ITO Vs Ramesh Vora (2010-TIOL-650-ITAT-Mumbai), the assessee hadreceived loans from the nine parties in thepreceding years which were reflected in theBalance Sheet. The assessee furnished thephotocopies of the bank statement,income-tax acknowledgement, balancesheet, capital account as well ascomputation of total income in respect ofthe above persons to support the loanstaken from the parties in the previous year.It was explained that on 2nd April, 2003some of the parties had expressed theirwillingness to gift these amounts and gifteda sum of Rs.2,74,000 to the assessee.However, the Assessing Officer was notsatisfied with the explanation given by theassessee. He noted that gift deeds filed bythe assessee suffered from seriousmanipulations. The gifts were receivedduring the accounting period 1.4.2003 to31.3.2004 whereas all the gift deeds wereprepared in the month of August 2006 i.e.,after purchase of franking stamp paper andwhen the assessee failed to file the giftdeeds during the course of assessmentproceedings. The gifts were given byforegoing the loan liability. The gifttransaction was arranged by the assesseefrom his distant relatives and familymember in cash and cheques throughcirculating transaction. The gifts were nottaken actually but routed through bookadjustments. The returns of income filedby donor showed income much below thetaxable limit and none of them hadcapacity to give the gift. The gift deedsfiled did not bear the date of acceptance by the assessee. Further the assessee had notgiven any gifts but he was only receivingthe gifts from his clients. The assessingofficer thereafter discussed the individualgift items. Not being satisfied with thevarious explanations given by the assesseeand doubting the genuineness of thetransaction and the capacity of the donorto give the gifts, the Assessing Officerdisallowed the entire gift of Rs.2,74,000 asincome from undisclosed sources U/s.68 ofthe Act. Before CIT(A), it was submittedthat the assessee had discharged the initialand primary onus of establishing andsubstantiating the identity, capacity andgenuineness of the donors by producingpositive,direct,overridingandunexceptionable material and evidencessuch as gift deed, PAN, address of thedonors, copy of bank passbook of thedonors as well as the donee and copies ofincome-tax return, balance sheet and otherdetails of the donor during the course ofassessment proceedings. Based on thearguments advanced by the assessee, theCIT(A) deleted the gifts from 7 donorsamounting to Rs.2,38,000. However, heconfirmed addition of the gift of Rs.18,000received from Mr. Vijay Bhayani andRs.18,000 from Ms. Forum Vora. Whiledoing so he noted that as far as the first 7donors were concerned, the observationsand findings of the Assessing Officer weretoo general to be accepted without anycogent piece of evidence. The assessee hadbeen able to bring on record all relevantevidences which had not been refuted bythe Assessing Officer in a forceful manner.Further the said gifts were already creditedin the books of the assessee in earlierassessment year in the form of loans andas such could not be treated asunexplained during the yar underconsideration. Since the assessee hadproduced evidences to show that all thepersons concerned were duly identifiedincome tax payers in their own right andhad necessary creditworthiness foradvancing funds to the assessee, it wasenough to discharge the initial onus on theassessee. There was no basis with theAssessing Officer to conclude that theamounts received by way of loansrepresented unaccounted income of the assessee and did not belong to therespective persons. Therefore, the verybasis for making the addition in theimpugned assessment year lacked anysubstance. The CIT(A) accordingly deletedthe gifts received amounting toRs.2,38,000 from the seven persons.However, as regards the gift received fromVijay Bhayani and Ms. Forum Vora, herejected the contention of the assessee onthe ground that both of them were notassessed to income-tax nor had anyostensible source of income to establishtheir creditworthiness as the affidavits filedshowed that the said gifts were given outof past savings which remainedunsubstantiated. In such a situation, thecreditworthinessaswellasthegenuineness of the said gifts could not beproved by the assessee. Before Hon'bleMumbai Tribunal, it was argued that therewas no relationship between the donorsand the donee and there was no occasionfor giving or receiving the gifts. Referringto the various gift deeds placed, it wasargued that the stamp papers werepurchased from the Kapol Co-operativeBank Ltd. On the same date and at thesame time. Further the contents of each ofthe gift deed were identical. Thereforewhen six different persons who were notrelated to each other and not related to theassessee went to the same bank andpurchased the stamp papers at the sametime the only inference that could bedrawn was that the documents were mereself serving documents. The counsel for theassessee, on the other hand, submittedthat the gifts were already credited in thepreceding year as loans. Therefore, evenassuming that the gifts were not as per laweven then also it could not be added.Referring to the decision of the Hon'bleRajasthan High Court in the case of CIT Vs.Padam Singh Chouhan (315 ITR 433) itwas argued that for accepting a gift, bloodrelation was not required for the donor forgiving a gift and natural love and affectionwas sufficient. It was argued that in theinstant case the loan was already lyingwith the assessee. The book adjustmentwas already made and it was constructeddelivery. The observations of Hon'bleMumbai Tribunal are reproduced as under: "We have considered the rival submissionsmade by both the sides, perused theorders of the Assessing Officer and theCIT(A) and the Paper Book filed on behalfof the assessee. We have also consideredthe various decisions cited before us. Thereis no dispute to the fact that the assessee,who is a chartered accountant byprofession, has credited an amount ofRs.2,74,000/- to the capital account beinggifts received during the year. There is alsono dispute to the fact that out of the aboveRs.2,74,000/- an amount of Rs.2,38,000/-was received as loan in the precedingassessment year and only Rs.36,000 wasreceived during the year from Mr. VijayBhayani and Ms. Forum Vora. We find theAssessing Officer added the entire amountof Rs.2,74,000/- on the ground that theassessee was unable to prove thegenuineness of the transaction andcreditworthiness of the donor. We find theCIT(A)deletedtheadditionofRs.2,38,000/- out of Rs.2,74,000/- madeby the Assessing Officer on the ground thatthe assessee has discharged the primaryonus and the Assessing Officer has notbeen able to refute the evidences in aforceful manner and that all the gifts werealready credited in the books of theassessee in earlier assessment year in theform of loan and as such could not betreated as unexplained cash credit duringthe year under consideration. We do notfind any infirmity in the observations of thelearned CIT(A). Admittedly an amount ofRs.2,38,000 was received by the assesseefrom 7 persons as loan in the precedingassessment year and these weretransferred to gifts only during the relevantassessment year through book entries. It isclear that addition can be made U/s. 68 ofthe Act where any sum is found credited inthe books of an assessee maintained forany previous year and the assessee offersno explanation about the nature andsource thereof or the explanation offeredby him is not satisfactory in the opinion ofthe Assessing Officer. In the instant casean amount of Rs.2,38,000 was alreadycredited in the books of account by way ofloans in the preceding assessment year.Therefore, addition if any could have beenmade only during the assessment year in which the assessee has accepted the loan.Since during the year the assessee hasmerely converted the loans into giftsthrough book entries, we, therefore, do notfind any infirmity in the order of the CIT(A)holding that the said gifts were alreadycredited in the books of the assessee in theearlier assessment year in the form ofloans and as such could not be treated asunexplained during the year underconsideration. In this view of the matterand in view of the detailed order passed bythe CIT(A) on this issue, we do not findany infirmity in his order deleting theaddition. The ground raised by theRevenue is accordingly dismissed". Respectfully following the above decisionand facts of the present case, I direct theAO to delete the addition of Rs.9,25,000/-made on account of unexplained gifts sincethe appellant had submitted sufficientdocumentary evidences to discharge theonus that lay on her. The addition made bythe AO on account of hypotheticalobservations could not be sustained.Accordingly this ground of appeal isallowed. 5.He further contended that the CIT(A) after considering theevidence on record rightly decided the issue in favour of theassessee. The tribunal while deciding the matter has gone ondifferent point and has wrongly reversed the finding given by theCIT(A). 6.Counsel for the appellant has relied upon the followingdecisions:- 6.1In Commissioner of Income Tax (Central), Ludhiana vs.Jawahar Lal Oswal reported in (2016) 67 taxmann.com 168(Punjab & Haryana), it has been held as under:- 5.He further contended that the CIT(A) after considering theevidence on record rightly decided the issue in favour of theassessee. The tribunal while deciding the matter has gone ondifferent point and has wrongly reversed the finding given by theCIT(A). 6.Counsel for the appellant has relied upon the followingdecisions:- 6.1In Commissioner of Income Tax (Central), Ludhiana vs.Jawahar Lal Oswal reported in (2016) 67 taxmann.com 168(Punjab & Haryana), it has been held as under:- 25.A question may, however, legitimately arisethat such a large amount could not be givenas a gift on the marriage of the assessee'sdaughter but this question is speculative andcannot form the basis for raising an inferenceagainst an assessee. The Assessing Officerwas apparently over-awed by the amount ofthe gift and, therefore, proceeded to base hisopinion on his perception that no one wouldgift such a large amount. A deeming provisionrequires the Assessing Officer to collectrelevant facts and then confront the assessee,who is thereafter, required to explainincriminating facts and in case he fails toproffer a credible information, the AssessingOfficer may validly raise an inference ofdeemed income under section 69-A of the Act.As already held, If the assessee proffers anexplanation and discloses all relevant factswithin his knowledge, the onus reverts to therevenue to adduce evidence and onlythereafter, may an inference be raised, basedupon relevant facts, by invoking the deemingprovisions of Section 69-A of the Act. It is truethat inferences and presumptions are integralto an adjudicatory process but cannot bythemselves be raised to the status ofsubstantial KUMAR VIRENDER 2016.02.1714:46 I attest to the accuracy and authenticityof this docunt High Court Chandigarh evidenceor evidence sufficient to raise an inference. Adeeming provision, thus, enables the revenueto raise an inference against an assessee onthe basis of tangible material and not on meresuspicion, conjectures or perceptions. It wouldalso be necessary to reiterate that it is notperceptions but concrete facts that underlinequasi judicial determinations and whereconcrete facts are not available, relevant facts,as would raise a credible inference ofculpability requiring an assessee to rebut theinference so raised. More often than not,revenue authorities, for want of relevantmaterial, institute "inquisitions", as opposed toinquiries and by addressing questions that themore inculpatory in nature, seek to build theircase, from answers proffered by an assessee. 6.2In Prahlad Bhattacharya vs. Commissioner of Income Tax,Kolkata-XVI, it has been held as under:- 13.The learned Tribunal in coming to its ownconclusion should not only consider everymatter on record having a bearing on thequestions of fact and the reasons given by theCIT(A) in support of the order of deletion butshould also express reasons to hold that thedeletion was not justified. 14.In this case the learned Tribunal has goneon to reject the entire evidence on record bymerely making a bald statement that Beforethe Cl'T(A), there was not even an iota ofevidence that the gifts were genuine.... Fromthe order of the CIT(A) quoted above, it isevident that each donor had offered anexplanation supported by documentaryevidence. Furthermore a donor cannot beexpected to disclose or answer any questionwhich was not specifically put to him in thecourse of proceedings u/s.131. The inspectordeputed by the assessing officer had fullopportunity to make inquiry and the assesseeshould not suffer on account of a lapse on thepart of the inspector. 14.In this case the learned Tribunal has goneon to reject the entire evidence on record bymerely making a bald statement that Beforethe Cl'T(A), there was not even an iota ofevidence that the gifts were genuine.... Fromthe order of the CIT(A) quoted above, it isevident that each donor had offered anexplanation supported by documentaryevidence. Furthermore a donor cannot beexpected to disclose or answer any questionwhich was not specifically put to him in thecourse of proceedings u/s.131. The inspectordeputed by the assessing officer had fullopportunity to make inquiry and the assesseeshould not suffer on account of a lapse on thepart of the inspector. 15. It is no doubt true that in an appealagainst the order of the CIT(A) the Tribunalbeing the final fact finding authority has fullpower to review the evidence and to reach itsown independent conclusion. Neverthelesswhile reversing the order of the CIT(A) theTribunal is duty bound to examine and discussthe reasons given by the CIT(A) to hold oneway or the other and then to dispel thosereasons. If the Tribunal fails to make such anexercise the judgment will suffer from seriousinfirmity. We are supported in our view by thefollowing judgments of the Supreme Court.In Padma Uppal v. State of Punjab, reportedin (1977) 1 SCC 330 wherein the Apex Courtwhile discussing the scope of appellate powerheld as follows:- Moreover, there is a prudent condition towhich the appellate power, generally speakingis subject. A Court of appeal interferes notwhen the judgment under attack is not rightbut only when it is shown to be wrong.(See Special Land Acquisition Officer,Bangalore v. T. Adinarayan Setty [ 1959 Supp1 SCR 404 : AIR 1959 SC 429 : 1959 Cri LJ526] ; Dattatraya Shankarbhat Ambalgiv.Collector of Sholapur [( 1971) 3 SCC 43]and Dollar Company, Madras v. Collector ofMadras [( 1975) 2 SCC 730] .) 16.The Supreme Court in S.V.R. Mudaliar v.Rajabu F. Buhari, reported in ( 1995) 4 SCC15 held as follows:- we have no doubt in our mind that beforereversing a finding of fact, the appellate courthas to bear in mind the reasons ascribed bythe trial court. This view of ours finds supportfrom what was stated by the Privy Councilin Rani Hemanta Kumari Debi v. MaharajaJagadindra Nath Roy Bahadur [ 10 CWN630 : 8 Bom LR 400] wherein, whileregarding the appellate judgment of the HighCourt of Judicature at Fort William as carefuland able, it was stated that it did not come toclose quarters with the judgment which itreviews, and indeed never discusses or evenalludes to the reasoning of the SubordinateJudge. 17.We are thus clearly of the opinion that theTribunal fell into an error in interfering withthe order of the CIT(A) without firstdislodging the reasons given by him.Assuming that another view was possible,that itself would be no ground to interferewith the order of the CIT(A) unless it is shownthat the appreciation of evidence by theCIT(A) was either perverse or untenable andthat in holding in favour of the assessee theCIT(A) either ignored material evidence orthat the view taken by him was patentlyuntenable. 6.3 In Commissioner of Income Tax vs. Ms. Mayawati reported in(2011) 338 ITR 563 (Delhi), it has been held as under:- 62.Further in the case of Mrs.Veena Jain,details of assets proved on record show thatthe total assets of Mrs. Veena Jain were ofRs.1.34 crores & the liabilities were only ofRs.2.11 lacs. We have perused the assetsowned by Mrs.Veena Jain and found that shehad capacity to borrow first, and then to giftas per her desire. The capacity does notmean what you are earning monthly orannually. The capacity includes how muchtotal assets a person own. So is the case ofMrs.Veena Jain here, she had an asset ofRs.1.34 crores, definitely could borrow Rs.20or 25 lacs easily. Second plea regarding 6.3 In Commissioner of Income Tax vs. Ms. Mayawati reported in(2011) 338 ITR 563 (Delhi), it has been held as under:- 62.Further in the case of Mrs.Veena Jain,details of assets proved on record show thatthe total assets of Mrs. Veena Jain were ofRs.1.34 crores & the liabilities were only ofRs.2.11 lacs. We have perused the assetsowned by Mrs.Veena Jain and found that shehad capacity to borrow first, and then to giftas per her desire. The capacity does notmean what you are earning monthly orannually. The capacity includes how muchtotal assets a person own. So is the case ofMrs.Veena Jain here, she had an asset ofRs.1.34 crores, definitely could borrow Rs.20or 25 lacs easily. Second plea regarding Mrs.Veena Jain is that if a person buys anyproperty for her personal use, she willdefinitely not make the gift for the same.Here on perusal of the record it is revealedthat she has stated before the Departmentthat the assessee is a Rakhi sister of herhusband and she is great admirer of theassessee because she is working for theupliftment of the down trodden and poorpersons of the society. Sometimes a persondoes not have to be related to a particulartrust or a charitable institution, but in theirview that trust or institution is doing a greatservice to the particular section of thesociety. Therefore, we do not find any forcein the arguments advanced by the learnedcounsel for the Revenue. Further, it is alsonot necessary that a person should be ahabitual donor. It depends from person toperson, thinking to thinking and situation tosituation. Sometimes a person keepsdonating throughout their life and sometimeshe donates once and sometimes during thelast stage of his life. Therefore, we do notagree with the arguments advanced by thelearned counsel for the Revenue. 68.All the donors appeared before theDepartment, submitted material includingaffidavits on oath, confirms the gifts made,established their old relations with theassessee and proved their capacity to makethe gifts. We have noted that in earlier yearsalso they had made gifts to the assessee andher family members, which were accepted bythe Revenue. We have also noted that twogifts made by Sh.Ajay Aggarwal andSh.O.P.Khadaria, Advocate were of Rs.10 lacsand Rs.1 lac respectively have been acceptedby the Department. The donors are personsof sufficient means. The assessee has fullydischarged her legal obligations by disclosingthe identity of all the donors. Further, donorshave proved their genuineness and capacityto make a gift. All assessee as well as thedonors had appeared before the Registrarand the gifts are duly registered. All gifts areabsolute and without any lien of anyone.There is no evidence on record to prove thatthe assessee has favoured the donor in anymanner whatsoever by acquiring the gifts inquestion. The capacity of any person doesnot mean how much they earn monthly orannually, but the term capacity has vided term and that can be perceived by howwealthy he is. All the formalities, as per laware met by the assessee and donors as well.All the donors have admitted that they aregreat admirer of the assessee as she isworking for the upliftment of poor people. 6.4In Commissioner of Income Tax VI vs. Bhanwarlal SharmaTax Appeal No.713/2012 decided on 21.2.2013, it has been heldas under:- term and that can be perceived by howwealthy he is. All the formalities, as per laware met by the assessee and donors as well.All the donors have admitted that they aregreat admirer of the assessee as she isworking for the upliftment of poor people. 6.4In Commissioner of Income Tax VI vs. Bhanwarlal SharmaTax Appeal No.713/2012 decided on 21.2.2013, it has been heldas under:- 11. In the instant case, as can be noted fromthe findings of the Tribunal, Assessing Officerhad not summoned any of the donors.However, it had issued the letters undersection 133(6) of the Act. Assessing Officerhad also called for confirmation letters whichwere received by it. The assessee also hadfurnished all other requisite documents likecopies of DD, gift deed, copy of PAN cards,copy of acknowledgment of returns of thedonors along with computation and balancesheet. It also found that all the donors wereassessed to tax except one who was based atUSA. On thus having found identity of thedonors so also creditworthiness andgenuineness of the transaction having beenestablished, Tribunal did not accept the sayof the Revenue that the gifts were bogus. 12. Tribunal also relied on the decision of thisCourt rendered in case of MuralidharLahorimal v. Commissioner of Income-taxreported in (2006) 280 ITR 512(Guj.). In thesaid decision also identity of the donor hadbeen established beyond any semblance ofdoubt and genuineness of the transactionwas also established not only by the receiptof bank draft but also by othercontemporaneous record. The Revenuealthough in that case also was not satisfiedwith the source of fund in the hands of donorand yet, the Court held it was for theRevenue to take appropriate steps in thatevent, but, that would not lead to questiongenuineness of transaction. We find that thecase of the assessee respondent in thematter on hand can be largely equated withthe one decided by this Court in case of Muralidhar Lahorimal(supra). However, thosedecisions relied upon by the Revenuediscussed hereinabove have materially andsubstantially different factual aspects. 14. We are conscious that various aspectsdiscussed by both the Assessing Officer andCIT(A) were causing concern to thoseauthorities. Gifts to assessee by 24 differentunrelated persons, residing at differentplaces in Mumbai on the same day, with thedraft of huge sum from the same bank anddeposit within a span of 2 to 3 days wouldraise the eyebrows. Their non reply of letterunder section 133(6) and non appearance ofassessee personally may further strengthensuch suspicion coupled with difference ineconomic strata of assessee and that ofthese persons. Yet, these questions do notcross the realm of suspicion to enter thesphere of proof, let alone the arena ofconvincing evidence. Tribunal could with theaid of cogent reasonings convince us whysuch material proof was sufficient to acceptthe version of assessee and uphold hisrequest to delete the addition of entireamount from the computation of his income. 6.5In Commissioner of Income Tax vs. Padam Singh Chouhan reported in (2009) 315 ITR 433 (Rajasthan), it has been held asunder:- 4. In our view, there is no legal basis toassume, that to recognize the gift to begenuine, there should be any bloodrelationship, or any close relationship,between the donor and the donee. Instancesare not rare, when even strangers makegifts, out of very many considerations,including arising out of love, affection andsentiments. 5. In our view, when the assessee hasproduced the copies of the gift deeds and theaffidavits of the donors, in the absence ofanything to show, that the act of theassessee in claiming gift, was an act by wayof money laundering, simply because hehappens to receive gifts, it cannot be said 6.6In Commissioner of Income Tax vs. R.S. Sibal (2004) 269ITR 429 (Delhi), it has been held as under:- 4. In our view, there is no legal basis toassume, that to recognize the gift to begenuine, there should be any bloodrelationship, or any close relationship,between the donor and the donee. Instancesare not rare, when even strangers makegifts, out of very many considerations,including arising out of love, affection andsentiments. 5. In our view, when the assessee hasproduced the copies of the gift deeds and theaffidavits of the donors, in the absence ofanything to show, that the act of theassessee in claiming gift, was an act by wayof money laundering, simply because hehappens to receive gifts, it cannot be said 6.6In Commissioner of Income Tax vs. R.S. Sibal (2004) 269ITR 429 (Delhi), it has been held as under:- There is no quarrel with the proposition thata mere identification of the donor andmovement of the gift amount throughbanking channels is not sufficient to provethe genuineness of the gift and since theclaim of the amount having been received asa gift is made by the assessed, onus lies onhim not only to establish the identity of thedonor but his capacity to make such a gift.But in the instant case, we find from therecord that though the assessed hadadmittedly produced the bank statements,the Assessing Officer did not raise any querywith regard to the capacity of the donors tomake the gift. From the assessment order,we find that the only ground on which thegenuineness of the gifts had been doubtedwas the alleged failure on the part of theassessed to establish his relationship withthe donors. Admittedly, there is no bloodrelationship between the assessed and thedonors. No such case was even pleaded bythe assessed. The donors had stated in theirdeclarations that they had gifted theamounts to the assessed on account of theirlove and affections for him. Both the lowerappellate authorities have recorded acategorical finding that by producing theafore-mentioned documents the assessedhas discharged the onus which lay on himwith regard to the genuineness of the gifts.The inference drawn by the appellateauthorities, on appreciation of evidence isfactual, giving rise to no question of lawmuch less a substantial question of law. 7.Counsel for the respondent contended that AO as well as thetribunal rightly decided the issue. 2.9 The AO asked the donors to furnish thesupportive corroborative evidences to provetheir creditworthiness regarding having keptthe money with them. The donors promisedto furnish the same, however AO at page 8in para ‘O’ of his order has given finding offact that till last date of hearing no suchevidence was produced either by the donorsor by the assessee. Smt. Babita Ahirdeposed that her family was entirelydependent on the assessee. This proves thefact that actually the interest amount earnedfrom the said deposit was a major source ofincome to support her family. It was quiteincongruous that when her family is entirelydependent on her interest income whey theygifted away such a huge amount of hercapital to the assessee which was againstnormal human conduct. The assessee andSmt. Babita Ahir both claimed to know eachother very well but Smt. Babita Ahir couldnot give the details of the residentialaddress of the assessee donee. Further more, she stated that the assesseeis a housewife where the fact of the matterand the statement of the assessee is to theeffect that she is a business-woman andproprietress of the concerns. Thisdemonstrates that there was totalcontradiction in the statements between thedonor and the donee and their claims aboutthe mutual relationships were found to benonexistent. Further more, she stated that the assesseeis a housewife where the fact of the matterand the statement of the assessee is to theeffect that she is a business-woman andproprietress of the concerns. Thisdemonstrates that there was totalcontradiction in the statements between thedonor and the donee and their claims aboutthe mutual relationships were found to benonexistent. 2.12 Aggrieved, the Revenue is before us.Ld. DR vehemently argued that it is apeculiar case of reverse gifts where thedonee is a very rich person and the donorsare the poor persons. The three donors arethe children of the donee’s Accountant andone claims to be the distant niece of donee.The AO by demonstrative observation hasdemolished the claim of the warmrelationship as claimed by the donors andassessee. The donors have never been ableto tell the exact address of the assessee.Though the donee is a business woman yetthe same donee claims that she is ahousewife. In normal circumstances, the assessee being a rich lady ought to haveprovided gift to her niece and other personsout of natural love and affection whereasthere is a strange situation in this caseinasmuch as poor persons are giving hugeamounts of gifts to a rich person whichpractically wipes out their earning source. Itis ironical that money was not lying idle withthe donors, they were earning interestthereon and utilizing the earned interesttowards meeting out their house holdexpenses and taking care of their familieswhich they claimed to be dependent onthem. These facts, circumstances ofimprobabilities, human prudence andprobabilities that a middle class person willsacrifice not only the income but also theirrespective capital by making impugned giftsto a rich person more so when they do nothave any proven ostensible relationship. Apaper trail has been created to give acamouflage or façade to transaction tosomehow give an impression of genuinenessto dubious gift transactions. 9.Counsel for the respondent has relied upon the decision ofGujarat High Court in Laxmandas Sujandas Dalpat vs. Income Taxofficer reported in (2016) 381 ITR 283 (Guj.) wherein it has beenheld as under:- 7.4 In conclusion, it was submitted thatthus, firstly the burden of establishing thesource of the donor lies on the assessee,which the assessee has failed to prove;secondly the assessee has failed to provethe relationship of natural love and affectionbetween the donor and donee, and thirdly,the gift far exceeds the returned income,under the circumstances, the Tribunal waswholly justified in reversing the order passedby the Assessing Officer. It was, accordingly,urged that no question of law is involved inthe facts of the present case and that theentire matter is in the realm of facts. 10.He also relied upon the decision of this court in Smt. AnjuSamariya vs. The Income Tax Officer, Jaipur Tax AppealNo.635/2009 decided on 21.8.2017. 11.We have heard counsel for the parties. 12.It is a fit case where the tribunal has rightly taken the viewthat no person will take gift from a man who has no money andheld the gifts to be non-genuine and taxed as income. 13.In that view of the matter, reasoning adopted by the tribunalis just and proper. The issues are answered in favour of thedepartment and against the assessee. 14.The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. Brijesh 75.