Db Income Tax Appeal v. The Commissioner Of Income-Tax Ii

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR DB Income Tax Appeal No.476/2011Smt. Jyoti Jajoo Vs. The Commissioner of Income-Tax II Judgment reserved on 18[th] May, 2016Judgment pronounced on 1st June, 2016 Hon'ble Mr. Justice M.N. BhandariHon'ble Mr. Justice J.K. Ranka Mr. Mahendra Gargiya with Ms. Manisha Surana, counsel for the appellant BY THE COURT (Per: Hon'ble J.K. Ranka, J.) 1.Instant appeal under Section 260A of the Income Tax Act, 1961 (for short, 'Act') is directed against theorder dt.21/08/2007 passed by the Income TaxAppellate Tribunal, Jaipur Bench, Jaipur 'A' Jaipur (forshort, 'Tribunal'). It relates to the assessment year 2002- 03 2.Brief facts noticed for disposal of the appeal arethat the appellant-assessee had received an alleged giftof Rs.5,00,000/- by demand draft No.386511dt.04/03/2002 drawn on Indraprastha Sehkari Bank Ltd.,Model Basti, New Delhi from one Smt. Preeti MaheshwariW/o Sh. Vinod Kumar Maheshwari, resident of 9/6420,Mukherjee Gali, Gandhi Nagar, Delhi. During the courseof the assessment proceedings, a declaration of gift, acertificate and an affidavit was filed stating thereinabout the gift by Smt. Preeti Maheshwari to theappellant. The Assessing Officer (for short, 'AO') being not satisfied with the purported gift of the said amountof Rs.5,00,000/- desired the assessee to prove identity,capacity and genuineness of the so claimed gift by thedonor Smt. Preeti Maheshwari and since compliance wasnot made repeatedly, the AO desired personalappearance of the assessee as also the appellant. TheAO examined the assessee and the assessee stated in thestatements that there is no blood relation of theassessee with the donor Smt. Preeti Maheshwari andthat Smt. Preeti Maheshwari, the donor of the gift, isdaughter of close friend of her grand father-in-law ShriMohan Lalji Jajoo and her grand father-in-law had gifteda set of diamond bangles worth Rs.50,000/- to Smt.Preeti Maheshwari in her marriage in 1975 due to weakfinancial condition of the father of Smt. PreetiMaheshwari and in order to return this obligation, Smt.Preeti Maheshwari has gifted the amount ofRs.5,00,000/- to the assessee on her birthday on01/03/2002. On being questioned that what were thegifts given by the assessee and her family members toSmt. Preeti Maheshwari, the assessee replied that shehas never given any gift to Smt. Preeti Maheshwari.However, an amount of Rs.1,100/- was gifted by hermother-in-law to Smt. Preeti Maheshwari on her lastvisit and shown ignorance of any gift given by her familyeven to Smt. Preeti Maheshwari. On a further questioning about any further gift by the assessee to anyother relative of Smt. Preeti Maheshwari or/and anyevidence to prove the gift given by her grand father-in-law to Smt. Preeti Maheshwari, she showed ignorance.She also replied that none of the family of the assesseeattended the marriage of the daughter of Smt. PreetiMaheshwari in 1997 and no gift was given by theassessee or her family members on the occasion of themarriage of daughter of Smt. Preeti Maheshwari northere was any proof of Smt. Preeti Maheshwariattending the marriage of the appellant. On certainother questions relating to the family background ofSmt. Preeti Maheshwari and the capacity of grandfather-in-law of the appellant of gifting diamondbangles worth Rs.50,000/- in the year 1975, she showedher ignorance. During the course of statement, she alsoinformed to the AO that she will produce Smt. PreetiMaheshwari on the next date of hearing. During thecourse of the assessment proceedings, a letter was filedon 17/01/2005 signed by the appellant where husbandof the assessee, who himself is a Chartered Accountant,offered to surrender of the said amount of Rs.5,00,000/-mentioning therein about the serious differences withthe donor. Another letter dt.25/01/2005 was alsosubmitted reiterating what was stated in letter on17/01/2005 Accordingly, the AO placing reliance on the said surrender added a sum of rs.5,00,000/- asunexplained income and taxed the same under Section68 of the Income Tax Act. 3.Though surrender was made but an appeal came tofiled by the assessee before the CIT(A) and before whoma plea was raised that the assessee was pressurized tosurrender the said amount under duress/coercion whichcannot be said to be justified and the CIT(A) acceptedthis contention and deleted the addition. 4.On an appeal by the Revenue before the Tribunal,the Tribunal went into merits of the case again andupheld the order of the AO reversing the findings of theCIT(A). 5.Learned counsel for the appellant contended thatthe gift was genuine, supported not only by a certificatebut also a declaration of gift duly signed by andbetween the donor and donee and also an affidavit ofSmt. Preeti Maheshwari submited during the course ofthe assessment proceedings. He also contended that acopy of the demand draft as also withdrawal from theaccount of Smt. Preeti Maheshwari was placed on recordand Smt. Preeti Maheshwari in her declaration andaffidavit clearly stated about she being an income taxassessee and out of the love and affection the amountwas gifted. He contended that in a gift, there is nonecessity of having a blood relationship or close 5.Learned counsel for the appellant contended thatthe gift was genuine, supported not only by a certificatebut also a declaration of gift duly signed by andbetween the donor and donee and also an affidavit ofSmt. Preeti Maheshwari submited during the course ofthe assessment proceedings. He also contended that acopy of the demand draft as also withdrawal from theaccount of Smt. Preeti Maheshwari was placed on recordand Smt. Preeti Maheshwari in her declaration andaffidavit clearly stated about she being an income taxassessee and out of the love and affection the amountwas gifted. He contended that in a gift, there is nonecessity of having a blood relationship or close relationship and closeness or even friendship as hasbeen proved on record between the two families issufficient. He further contended that though theassessee had desired Smt. Preeti Maheshwari to produceher but unfortunately it transpired that when they hadgone to south on account of Sunami did not return. Healso contended that copy of the assessment records ofSmt. Preeti Maheshwari alongwith her capital accountall were placed on record to prove identity, capacityand genuineness of the transaction. He furthercontended that the AO put pressure and coercion on theappellant being a lady and there was no alternateexcept to surrender the said amount but the same wasretracted by filing of the appeal against the saidsurrender and once the assessee had filed an appealand the CIT(A) entertained and accepted contention ofthe assessee, the retraction was accepted by theappellate authority and thus the Tribunal has grosslyerred in holding the same to be otherwise. He reliedupon the judgments rendered in the case of PullangodeRubber Produce Co. Ltd. Vs. State of Kerala & anr.:(1973) 91 ITR 0018; Nek Kumar Vs. ACIT: (2005) 274 ITR0574; CIT Vs. Padam Singh Chouhan: (2009) 315 ITR0433; CIT Vs. Arun Kumar Kothari: (2012) 79 DTR (Raj.)0193; Aravali Trading Co. Vs. ITO: (2008) 8 DTR 0199:CIT Vs. Jai Kumar Bakliwal : (2014) 366 ITR 217 (Raj.) and CIT Vs. M. Pyngrope: (1993) 200 ITR 0106. 6.We have heard learned counsel for the assesseeand have perused the impugned order and othermaterial. 7.We have already given the facts of the amounthaving been received by the appellant as alleged giftfrom Smt. Preeti Maheshwari and also some of thequestions put to the appellant and her answers. Fromthe answers given by the appellant to the AO, it can bemade out that there may be a possibility of theappellant and the family of the donor being apparentlyclose but the facts have not been brought on record asto closeness being such which developed into gifting of asizable amount of Rs.5 lac to the appellant in the year2002. Though blood relationship is not necessary prior to01/04/2005 and even a close relationship or even afriendship sufficiently developed over the years can be aground for giving of a gift which should be voluntaryand out of love and affection. However, it is also anadmitted fact as observed by the AO as well as Tribunalthat some serious differences appeared to havehappened in between the two families as observed inthe order of the Tribunal. The Tribunal has observed asunder:- “The assessee was asked to produce thedonor but the same was not produced and noconfirmation on the fixed date of 27.12.2004 from the donor was produced except a bankaccount of the donor and that to for themonth of March, 2002. On 11.01.2005 theassessee furnished a letter that the donorwill reach Jaipur on 11.01.2005 for thereasons mentioned hereinbefore.On17.01.2005 Sh. Sunil Jajoo C.A./AR andhusband of the assessee furnished a letterthat due to serious differences with thedonor, he is not able to furnish the necessaryevidence required by the AO and therefore-the said amount of Rs.5,00,000/ claimed as gift be treated as income of the assesseefrom business.” 8.It is apparent on perusal of the above that there “The assessee was asked to produce thedonor but the same was not produced and noconfirmation on the fixed date of 27.12.2004 from the donor was produced except a bankaccount of the donor and that to for themonth of March, 2002. On 11.01.2005 theassessee furnished a letter that the donorwill reach Jaipur on 11.01.2005 for thereasons mentioned hereinbefore.On17.01.2005 Sh. Sunil Jajoo C.A./AR andhusband of the assessee furnished a letterthat due to serious differences with thedonor, he is not able to furnish the necessaryevidence required by the AO and therefore-the said amount of Rs.5,00,000/ claimed as gift be treated as income of the assesseefrom business.” 8.It is apparent on perusal of the above that there appeared to have been serious differences with thedonor and therefore, the appellant was unable to bringmore material or produce the donor which could havegone in her favour. Merely producing copy of thecomputation of income or bank statement, in our view,is of no avail. Another letter was submitted by theappellant surrendering an amount of Rs. 5 lac during thecourse of the assessment proceedings vide letterdt.25/01/2005 and the salient features of the said letter are reproduced here under:- “The Income Tax Officer,Ward 4(2), Ward 4(2), Jaipur. Sub: Assessment proceedings for Asst. Year2002-03.2002-03. Reg.: Smt. Preeti Maheshwari During last date of hearing i.e. on 11-1- 2005 I have explained to you that Smt. PreetiDidi and her family was on a religious andpleasure trip. I am unable to contact her andrequested you to give me further time, sothat I can produce her, but your Honourshown unwillingness to accept my request. Further to bring a peace of mind and asa moral responsibility towards my sister Didi, who have so kind towards me to gave a gift-of Rs.5,00,000/ I agree to surrender theamount before you on the condition that youwill not levy any penalty on me.” ....... Only on such condition I have deposited-Rs.25,000/. The photocopy of the challan ishere with enclosed, rest of amount I will-deposit in five instalment of Rs.25,000/each. Hence, I hereby further request to not to levy any penalty or issue any notice in use. you consider my requests ofsurrendering the amount & oblige.Thanking you, Yours faithfully, For JAJOO RASHMI REFRACTORIES Sd/- JyotiProp.” 9.It is apparent on perusal of the said letter that notonly the amount was surrendered but alongwith theletter an amount of Rs.25,000/- as tax was alsodeposited towards the said surrender and a copy of thechallan of Rs.25,000/- was also enclosed and it wasassured that she will deposit the balance amount in fiveinstallments of Rs.25,000/- each. In the backdrop of theabove, the argument of the counsel for the appellantthat the assessee was pressurized and coerced tosurrender is wholly unjustified and an afterthought. Itwould also be relevant to observe that the husband ofthe appellant himself is a practising CharteredAccountant was regularly appearing the hearings andwas knowing full well the consequences of the amountto be surrendered. During the course of the assessmentproceedings, on 17/01/2005 Sh. Sunil Jaju, Chartered Accountant and husband of the assessee appeared andfurnished a letter of the assessee surrendering thegifted amount of Rs.5 lac as income of the assessee,the contents of which are being reproduced as under:- Accountant and husband of the assessee appeared andfurnished a letter of the assessee surrendering thegifted amount of Rs.5 lac as income of the assessee,the contents of which are being reproduced as under:- “....Kindly refer to Assessment Proceedingsin progress for the Assessment Year 2002-03.In the aforesaid context I wish to statein progress for the Assessment Year 2002-03.In the aforesaid context I wish to statethat a sum of Rs.5.00 lacs claimed as Gifthaving been received vide DD No.386511dated 4-3-2002 drawn on HDFC Bank maykindly be treated as my income frombusiness as due to serious differences withthe donor, I am unable to furnish necessaryevidence in the matter please.having been received vide DD No.386511dated 4-3-2002 drawn on HDFC Bank maykindly be treated as my income frombusiness as due to serious differences withthe donor, I am unable to furnish necessaryevidence in the matter please. The offer of inclusion of aforesaidamount is made to purchases of peace aslooking to my peculiar family circumstances at Jaipur and the heat generated in the jointfamily I am seriously disturbed.However,the offer to include the amount in income issubject to non-levy of penalty u/s 271(1)(c)of I.T. Act 1961.”family I am seriously disturbed.However,the offer to include the amount in income issubject to non-levy of penalty u/s 271(1)(c)of I.T. Act 1961.” 10.We have already quoted both the letters of the appellant-assessee submitted before the learned AOcoupled with the later letter dt.25/01/2005 where theassessee herself deposited an amount of Rs.25,000/-towards part payment of the tax and prayed for grantingtime for depositing the balance in five installments ofRs.25,000 each. In our view, the said two letters,particularly in the presence of husband Mr.Sunil Jajoowho himself is a qualified Chartered Accountant andappeared before the AO in the proceedings cannot bediscarded. Not a single letter immediately or later wasplaced on record to assert about the pressure orcoercion on the appellant. Neither there is any letter/affidavit moved to the higher authorities aboutany pressure/coercion inflicted during the course of theassessment proceedings nor any assertion later. Theretraction, if any, ought to have been as soon aspossible and not to await till an order is passed. In ourview, the retraction, if any, was required to be made bythe appellant by a duly sworn affidavit supported byconvincing evidence demonstrating that the statementinitially recorded was under pressure/coercion and wasfactually incorrect. 10.1 The contention of counsel for the appellant thatan appeal was filed objecting/challenging the addition,itself proves that the surrender, if any made earlier,stood retracted, however, we are unable to subscribeto this contention. If this plea is accepted, then therewould be no sanctity of a surrender and then tochallenge immediately after the assessment order ispassed. Equally important is the fact that there isneither a specific ground of appeal brought to our noticeabout challenging before the CIT(A) about retraction orotherwise. It is also apparent that before the TribunalRevenue preferred an appeal raising following ground:- “On the facts and in the circumstancesof the case and in law the ld. CIT(A)-II,Jaipur has erred in deleting an addition ofRs.5,00,000/- made on account ofunexplained gift received from Smt. PreetiMaheshwari and surrendering the same atthe time of assessment proceedings” 10.2 It shows that the assessee had duly surrenderedthe same and therefore, the order of the CIT(A) was notproper. However, the plea of retraction was neitherraised before the Tribunal either by way of a crossappeal or cross objection. The Tribunal gave a finding of fact in Para 6 of its order which reads ad-infra:- “On the facts and in the circumstancesof the case and in law the ld. CIT(A)-II,Jaipur has erred in deleting an addition ofRs.5,00,000/- made on account ofunexplained gift received from Smt. PreetiMaheshwari and surrendering the same atthe time of assessment proceedings” 10.2 It shows that the assessee had duly surrenderedthe same and therefore, the order of the CIT(A) was notproper. However, the plea of retraction was neitherraised before the Tribunal either by way of a crossappeal or cross objection. The Tribunal gave a finding of fact in Para 6 of its order which reads ad-infra:- “From the findings of authorities belowand arguments of the parties, we are of theview that the assessee made a surrender ofRs.5,00,000/- and there was no pressure onhim to make the surrender of the saidamount. No retraction in this respect wasmade by the assessee in writing before theAO and even before the CIT(A) except thearguments made by the ld. AR before the ld.CIT(A) no such retraction has been placed onrecord in the paper book pages 1 to 31 filedbefore us. The assessee has made the partpayment of taxes of the surrenders made asis evident from the order of the authoritiesbelow.” 10.3 In the backdrop aforesaid, the argument of the counsel for the appellant does not stand, is contrary tothe material on record and deserves rejection. 11.We may deal with some of the authorities cited bycounsel for the appellant. 12.In the case of Pullangode Rubber Produce Co. Ltd.Vs. State of Kerala & anr. (supra) the assessee hadshown an expenditure of Rs.79680/- to be capitalexpenditure and was also shown in the books ofaccounts and the Apex Court was of the opinion that “itis no doubt true that entries in the books of accounts ofthe assessee amount to an admission that the amount in question was let out or expanded for the cultivation,upkeep or maintenance of immature plants from whichno agricultural income was derived during the previousyear. An admission is an extremely important piece ofevidence but it cannot be said that it is conclusive. It isopen to the person who made the admission to showthat it is incorrect.” There can be no two argument onthe said proposition in so far as making of entires in thebooks of accounts is concerned and they may not berelevant at all. However, in the instant case, theassessee has herself voluntarily surrendered certainamount and has also paid due tax and there is noquestion of any accounting entries being wrong. 13.In the case of Nek Kumar Vs. ACIT (supra), thisCourt found that both the donor and donee knew eachother very well and donor also visited Jaipur so manytimes and stayed in the family of donee and gift wasgiven and on this premise the gift was found to begenuine whereas the admitted fact in the instant case isthat though earlier friendship between grand father-in-law and father of the donor has been stated but there ismerely an assertion unsupported by any affidavit orother material to prove even the so-called friendshipdeveloped in the last several years, neither she went tothe family of the donor nor the donor came and visitedthe donee and except an amount of Rs.1,100/- when Smt. Preeti Maheshwari the donor visited several yearsback, her mother-in-law had given the said amount andeven there is no corroboration of the same and nothingwas exchanged by the two during the last so manyyears. Therefore, the judgment in the case of NekKumar Vs. ACIT (supra) is distinguishable. 14.In the case of CIT Vs. Padam Singh Chouhan(supra), the AO did not find the gifts to be genuine.However, the CIT(A) as well as the Tribunal and the HighCourt found that merely on conjectures the giftedamount cannot be disbelieved. Smt. Preeti Maheshwari the donor visited several yearsback, her mother-in-law had given the said amount andeven there is no corroboration of the same and nothingwas exchanged by the two during the last so manyyears. Therefore, the judgment in the case of NekKumar Vs. ACIT (supra) is distinguishable. 14.In the case of CIT Vs. Padam Singh Chouhan(supra), the AO did not find the gifts to be genuine.However, the CIT(A) as well as the Tribunal and the HighCourt found that merely on conjectures the giftedamount cannot be disbelieved. 15.In the case of CIT Vs. Arun Kumar Kothari (supra),this Court found that the gift was received from the realbrothers and the two appellate authorities weresatisfied about identity, creditworthiness andgenuineness of the gifts and this Court found nosubstantial question of law involved in the case. 16.The cases of Aravali Trading Co. Vs. ITO (supra)and CIT Vs. Jai Kumar Bakliwal (supra) are ongenuineness of cash credits, identity of cash creditorsand on different proposition and are distinguishable onfacts. The judgment in the case of CIT Vs. M. Pyngrope(supra) is on the proposition that if an income is exemptunder the provisions of the Income Tax Act and theassessee did not claim the same in the return of income,on such premise the Court held that if the income is exempt and not liable to tax, the appeal can always befiled and genuine claim available under law ought to beallowed. However, the facts in the instant case, asobserved herein above, relate to surrender of the giftmade during the course of assessment proceedings andthus on a different proposition. 17.Accordingly, in our view, no question of law muchless substantial question of law can be said to arise outof the order passed by the Tribunal so as to call forinterference as the order of Tribunal is based onappreciation of evidence and letters filed by theappellant herself, we find no perversity in the orderimpugned. 18.Consequently, the appeal, being devoid of merit,is accordingly dismissed. [J.K. Ranka],J. [M.N. Bhandari],J. Raghu/p.14/ Certificate:All corrections made in the judgment/order have beenincorporated in the judgment/order being e-mailed.Raghu, Sr. PA.