Income Tax Appeal v. Ms. Monica Oswal

Income Tax Appeal No.49 of 1999 1 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Income Tax Appeal No.49 of 1999 Date of Decision: 29[th] January, 2016 The Commissioner of Income-tax (Central) Ludhiana ..Appellantversus Shri Jawahar Lal Oswal ..Respondent Income Tax Appeal No.48 of 1999The Commissioner of Income-tax (Central), Ludhiana ..Appellant versus Ms. Monica Oswal ..Respondent Income Tax Appeal No.169 of 1999The Commissioner of Income-tax (Central),Ludhiana ..Appellant versus Ms. Ruchika Oswal ..Respondent and GTA No.10 of 2004 Commissioner of Gift-tax, (Central),Ludhianaversus ..Appellant Shri Jawahar Lal Oswal ..Respondent CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLAPresent:Mr. Rajesh Katoch, Advocate, for the appellant. Mr. Sanjay Bansal, Senior Advocatewith Mr. B.M.Monga, Advocate,for the respondent. RAJIVE BHALLA,J. Income Tax Appeal No.49 of 1999 2 The revenue has filed Income Tax Appeal Nos.48,49, 169 of 1999 and GTA 10 of 2004 challenging orders passedby the Income Tax Appellate Tribunal, Chandigarh (for short “theTribunal”). As the controversy and the substantial questions oflaw are common to all appeals, facts are being taken from ITANo. 49 of 1999. The dispute in hand, briefly put, relates to thegenuineness of two monetary gifts received by the assessee forand on behalf of his daughters on the occasion of their marriage.The gifts, as admitted, were received from Dr. O.S.Gill and ShriB.P.Bhardwaj, by demand drafts, while the assessee was inLondon. The Assessing Officer, served a notice under Section143 of the Income Tax Act,1961 (hereinafter referred to as “theAct”), addressed queries to the assessee, obtained informationthrough the Central Board of Direct Taxes, from the InlandRevenue, Great Britain, examined Dr. O.S.Gill but as he was notsatisfied with the explanation proffered by the assessee, on thebasis of material on record, held that the assessee has notbeen able to prove the genuineness of the gifts. The AssessingOfficer, therefore, raised an inference, under Section 69-A ofthe Act and held that the gifts represent the income of theassessee and added these amounts to the income of theassessee. A protective assessment was made in the hands ofMs Monica and Ruchica Oswal. Income Tax Appeal No.49 of 1999 3 The assessee and his daughters filed separate appeals,which were partly allowed by the Commissioner of Income Tax(Appeals) by accepting the gift made by Dr. O.S.Gill but rejecting thegift made by Shri B.P.Bhardwaj. Aggrieved by this order, both the assessee and therevenue, filed separate appeals. The Tribunal, vide the impugnedorders, accepted the appeals filed by the assessee and hisdaughters but rejected the appeals filed by the revenue by holdingthat the assessee has proved the genuineness of the gifts. TheTribunal has held that the revenue has not brought forth any crediblematerial that would raise an inference under the deeming provision ofSection 69-A of the Act that the gifts represent the income of theassessee. The appeal against orders imposing gift tax was decidedin terms of the order passed by the Tribunal. The revenue filed four appeals, one in the case ofJawahar Lal Oswal, two each in the case of his daughters and thefourth pertaining to gift Tax. The appeals came up forconsideration before a Division Bench of this Court. Afterconsidering the questions framed, the Hon'ble Judges comprising theDivision Bench differed in their opinion, with one opinion, allowingthe appeals and the other dismissing the appeals. The appealswere, therefore, placed before a third Hon'ble Judge. Before the third Hon'ble Judge, the revenue urged thatas the Division Bench has not framed the questions of divergence, the matter should be returned unanswered. The respondents, Income Tax Appeal No.49 of 1999 4 The revenue filed four appeals, one in the case ofJawahar Lal Oswal, two each in the case of his daughters and thefourth pertaining to gift Tax. The appeals came up forconsideration before a Division Bench of this Court. Afterconsidering the questions framed, the Hon'ble Judges comprising theDivision Bench differed in their opinion, with one opinion, allowingthe appeals and the other dismissing the appeals. The appealswere, therefore, placed before a third Hon'ble Judge. Before the third Hon'ble Judge, the revenue urged thatas the Division Bench has not framed the questions of divergence, the matter should be returned unanswered. The respondents, Income Tax Appeal No.49 of 1999 4 however, urged to the contrary and prayed that the matter may bedecided by ascertaining and answering the divergence of opinion. After examining the divergent opinion, it was held thatthough points of divergence have not been spelt out, thisdiscrepancy is at best, a technical irregularity and after examiningthe divergent opinion, fresh questions of law can be framed andanswered. A relevant extract from order dated 08.4.2002 reads asfollows:- “ In my opinion, failure of the Bench of two or moreJudges which is entrusted with the task of hearing theappeal in the first instance to state the point of law uponwhich they differ is by itself not sufficient to decline ananswer on the points of law which arise for determination.This omission can, at the best, be treated as a technicalirregularity and the Bench to which the case is referredcan, on its own, frame the point(s) of law on which the twomembers of the Bench have expressed divergent opinion. Hence, it is held that omission on the part of theDivision Bench to state the point of law is inconsequentialand the appeals deserve to be heard with reference to thequestions of law which arise from the order of the Tribunaland the divergent opinion expressed by the Hon'blemembers of the Division Bench. In my view, the following points of law needdetermination by the Court:- (i) Whether the assessee had discharged the onus of Income Tax Appeal No.49 of 1999 5 establishing that gifts of $200,000 made in favour of MsMonica Oswal and Ms Ruchika Oswal through him byShri O.S.Gill and Shri B.P. Bhardwaj were valid? (ii)Whether the amounts gifted by Shri O.S.Gill andShri B.P.Bhardwaj to Miss Monica Oswal and MissRuchika Oswal are to be treated as the income of theassessee under section 69A of the Act?” At this stage, it would be appropriate to point out thatneither the revenue nor the assessee have challenged order dated8.4.2002 and have, in fact, prayed that questions framed vide orderdated 8.4.2002, alone have to be answered. The appeals shall,therefore, be decided by answering the questions of law framed, on08.4.2002. The nature of the questions framed, namely, whetheronus to prove genuineness of gifts, has been discharged andwhether these amounts are to be treated as the deemed income ofthe assessee under Section 69-A of the Act required an appraisal ofthe opinion recorded by the Assessing Officer, under Section 143(2)(i) or Section 143(2)(ii) of the Act, the queries addressed to theassessee, replies etc. material placed by the assessee and materialcollected by the Assessing Officer. The revenue was, therefore,called upon to produce the entire record but expressed its inability totrace the record. Eventually, pursuant to interim directions, therevenue filed a synopsis of relevant facts accompanied by photostatcopies of certain documents, after, admittedly, obtaining them from Income Tax Appeal No.49 of 1999 6 Income Tax Appeal No.49 of 1999 6 Counsel for the revenue submits that the assessee,admittedly, received two gifts, valued at $200,000, each for and onbehalf of his daughters Ms. Monica Oswal and Ruchika Oswal, fromDr. O.S.Gill and Shri B.P.Bhardwaj, respectively, in London. The onusto prove that the gifts are genuine and not a mere devise to evadetax, lay upon the assesssee. The assessee has failed to dischargethis onus by producing any tangible evidence that would evenremotely prove the genuineness of the gifts. The assessee hasfailed to prove that the donors had a close relationship, whetherpersonal or professional with the assessee or his daughters. Thedonors are total strangers to the assessees not being relatedwhether by relationship, business or friendship. The bank draftsbear consecutive numbers and were prepared on 22.3.1994, byMidland Bank, in the United Kingdom. The assessee has not beenable to prove the financial capacity of the donors to gift such a largesum of money. The mere fact that Dr. O.S.Gill appeared before theAssessing Officer and his account in England was verified or he hasan annual income of $120000 is not sufficient to discharge theonus or prove the genuineness of the gifts, particularly in theabsence of any evidence of any relationship, or business dealings.The answers proferred by Mr. Gill to queries addressed by theAssessing Officer are vague and unclear and though Dr. O. S.Gillhas proved that he was drawing an annual salary of $ 120000 andcame all the way from England to depose before the Income TaxOfficer but as he could not disclose his bank account number andKUMAR VIRENDERprove his credit-worthiness, the Assessing Officer was right in2016.02.17 14:46I attest to the accuracy andauthenticity of this docuntHigh Court Chandigarh Income Tax Appeal No.49 of 1999 7 holding that the genuineness of the gift has not been proved. Thefindings recorded by the CIT (Appeals) and the Tribunal that the giftmade by Dr.O.S.Gill is genuine, are perverse and arbitrary. The onuslay upon the assessee to prove the genuineness of the gift but theCIT (Appeals) and the ITAT have shifted the onus to the revenue. As regards Mr. B.P Bhardwaj, the other donor, counsel for therevenue submits that the fact that he did not appear before theAssessing Officer, is by itself sufficient to answer the first questionagainst the assessee. The fact that his account was verified by theInland Revenue Great Britain or that money was received by ademand draft, is not sufficient to raise an inference regarding hisfinancial capacity or the source of these funds or the bona fides ofthe gift, particularly as he stated that money was given to him by oneShri Varinder Sharma, who is an associate of the assessee. A furtherperusal of the statement made by the assessee reveals that there isno reference to any exchange of letters or gifts between theassessee and the donors. Both the Assessing Officer and the CIT(Appeals), therefore, rightly recorded that the assessee has failed todischarge his onus to prove the genuineness of the gift made by Mr.B.P.Bhardwaj but the Tribunal has reversed this finding by assigningperverse and arbitrary reasons namely:- verification from the InlandRevenue Services of Great Britain, which neither proves thegenuineness of the gifts nor the capacity of the donor to make sucha gift or a relationship between the parties. The donors may havestayed with the assessee on two occasions but this merely proves a made, out of love and affection to the daughters on occasion of theirwedding, is too far fetch to believe, as the amounts gifted are toolarge. made, out of love and affection to the daughters on occasion of theirwedding, is too far fetch to believe, as the amounts gifted are toolarge. Counsel for the revenue further submits that the Tribunalignored another significant fact, namely that Shri B.P.Bhardwaj hadstated that the money was given to him by one Shri VarinderSharma. The onus to disclose the relationship between Shri VarinderSharma or at least his address and whereabouts lay upon theassessee. The assessee's simple denial of any relationship withShri Varinder Sharma rightly led the Assessing Officer to raise aninference that the gifts represent the income of the assessee and,therefore, are his deemed income. Counsel for the assessees submits that theCommissioner of Income Tax (Appeals) has rightly accepted thegenuineness of the gift made by Dr.O.S.Gill. The Tribunal has alsoaffirmed this finding and dismissed the appeal filed by the revenue.The Tribunal has recorded detailed reasons after appraising theentire record and as the process of reasoning and the reasonsassigned are legal, valid and plausible, the impugned orders do notcall for interference. Counsel for the assessee submits that Section260A of the Act, confines consideration to substantial questions oflaw. The questions framed, by the revenue, in the grounds of appealor in order dated 8.4.2002 are mere questions of fact that are entirelydependent upon appreciation of evidence. The CIT (Appeals) andthe Tribunal have recorded concurrent findings of fact that theKUMAR VIRENDERassessee has discharged his onus and proved that the gift made by2016.02.17 14:46I attest to the accuracy andauthenticity of this docuntHigh Court Chandigarh Income Tax Appeal No.49 of 1999 9 Mr. Gill is genuine. As these findings are neither perverse norarbitrary, they cannot be set aside by reappreciating evidence. Anappeal under Section 260A of the Act confines consideration toappraisal of impugned orders to ascertain whether the process ofreasoning and the reasons assigned are perverse, arbitrary, contraryto law and give rise to a substantial question of law. The fact thattwo Hon'ble Judges of this Court recorded divergent opinion, on thesame facts, is indicative of the fact that the opinion recorded by theCIT (Appeals) (in the case of Dr. O.S.Gill) and the Tribunal (in thecase of both gifts) is plausible and, therefore, cannot be said to raisea substantial question of law. Counsel for the assessee further submits that Section69-A of the Act is a deeming provision that places the initialonus on the revenue and then if sufficient material is availableshifts the onus to the assessee but if the assessee adducesevidence and proves relevant facts within his knowledge, theonus reverts to the revenue to prove that facts disclosed by theassessee are incorrect or that the material on record issufficient to raise an inference that the gifts reflect the incomeof the assessee. The Assessing Officer based his opinionprimarily on the quantum, his ill conceived perceptions anddrew an inference without referring to concrete facts. TheAssessing Officer held that as B.P.Bhardwaj has stated that theamount was given to him by Shri Varinder Sharma and asVarinder Sharma is an associate of the assessee, the failure of Income Tax Appeal No.49 of 1999 10 Income Tax Appeal No.49 of 1999 10 the assessee to disclose the whereabouts of Varinder Sharmaor disclose his address is sufficient to raise an inference that thegifts are the deemed income of the assessee. The AssessingOfficer has failed to refer to any material that would even prima-facie establish a link between the assessee and Shri VarinderSharma. The onus to probe and prove a link between theassessee and Shri Varinder Sharma lay upon the AssessingOfficer and in the discharge of this onus was required toascertain the address and whereabouts of Shri Varinder Sharmaand only if Shri Varinder Sharma was proved to be an employeeor an associate of Shri Jawahar Lal Oswal, could theAssessing Officer raise an inference that the gifted amount isthe deemed income of the assessee. The Assessing Officercould not call upon the assessee to prove the source of themoney with Shri B.P.Bhardwaj. The learned Tribunal has,therefore, rightly reversed the orders passed by the AssessingOfficer and the CIT (Appeals) and has affirmed the genuinenessof the gift. I have heard counsel for the parties, perused theimpugned orders, the entire paper-book, the synopsis of facts filed bythe revenue and faced, as I am, with two conflicting orders on thesame set of facts and a third order, framing two new questions of law,proceed to answer, as urged by counsel for the parties, the questionsframed vide order dated 8.4.2002 but before answering these Income Tax Appeal No.49 of 1999 11 The Assistant Commissioner of Income Tax, CentralCircle-V, Ludhiana, exercising the power of the Assessing Officer,called upon the assessee to prove the genuineness of gifts receivedfor and on behalf of his daughters. The Assessing Officer addressedvarious queries to the assessee, collected evidence and one of thedonors Dr. O.S.Gill appeared in evidence. The Assessing Officerrejected the explanation and evidence adduced by the assesseeand by invoking Section 69-A of the Act, raised an inference that theamount received as gifts, reflects the deemed income of theassessee. The Assessing Officer also made a protective assessmentin the hands of the daughters. Aggrieved by these orders, the assessees filed appeals.The CIT (Appeals) partly allowed the appeals by accepting thegenuineness of the gift made by Dr. O.S.Gill but rejected the giftmade by Shri B.P.Bhardwaj. Both the assessees and the revenuefiled separate appeals before the Tribunal, with the assesseesasserting that the gift made by Shri B.P.Bhardwaj has been wronglyrejected and the revenue asserting that gifts made by Dr. O.S.Gilland Shri B.P.Bhardwaj have been wrongly accepted. The Tribunal, after referring to the principles for provingwhether a gift is genuine or not held that, the Assessing Officerwas required, at the out-set, to raise a doubt as to thegenuineness of a gift by reference to material available beforehim. The onus, thereafter, shifts under section 69-A of the Act tothe assessee to prove that the money, the jewellary and articles Income Tax Appeal No.49 of 1999 12 etc. received as gifts, are genuine. If thereafter the assesseefails to adduce credible evidence, to prove the genuineness ofthe gifts, the Assessing Officer may legitimately treat the giftsas the deemed income of the assessee, under Section 69-A ofthe Act. If, however, the assessee proffers a credibleexplanation, the onus reverts to the revenue to adduce evidencesufficient to raise an inference, under Section 69-A of the Act,that the gifts reflect the deemed income of the assessee.Counsel for the parties do not disagree with these principles butassert that the assessee has or has not discharged this onus,depending upon which side is addressing arguments. After holding as above, the Tribunal went on to holdas follows:- etc. received as gifts, are genuine. If thereafter the assesseefails to adduce credible evidence, to prove the genuineness ofthe gifts, the Assessing Officer may legitimately treat the giftsas the deemed income of the assessee, under Section 69-A ofthe Act. If, however, the assessee proffers a credibleexplanation, the onus reverts to the revenue to adduce evidencesufficient to raise an inference, under Section 69-A of the Act,that the gifts reflect the deemed income of the assessee.Counsel for the parties do not disagree with these principles butassert that the assessee has or has not discharged this onus,depending upon which side is addressing arguments. After holding as above, the Tribunal went on to holdas follows:- “30Coming to the two “gifts” in question, we will firsttake up the case of Shri O.S.Gill and see the nature ofevidence placed on record which is as under:- 1.Memorandum of Gift dated 22-3-94 written inLondon confirming the gift of $ 200000 to Miss RuchikaOswal, daughter of Shri Jawahar Lal Oswal. 2.Copy of Bank A/c of Miss Ruchika Oswal withAllahabad Bank showing deposit of Rs.6210442/-equivalent of $ 200000. 3. Copy of declaration of inward remittance sent tothe Reserve Bank of India by Miss Ruchika Oswal. 4.Letter dated 14-3-96 sent by Sh. O.S.Gill to the Income Tax Appeal No.49 of 1999 13 A.O along with affidavit sworn by him and dulynotarised confirming the gift and giving all otherrelevant details, i.e., address, details of draft and thebank on which it was drawn. 5.Reconfirmation of the gift vide letter dated 24-5-96 filed by the donor with the A.O. 6.Relevant extract from the Passport of the donorshowing that he was a British citizen. 7.Copy of Special Power of Attorney given by MissRuchika Oswal authorising her father Sh.Jawahar LalOswal to receive the gift on her behalf in London andthe confirmation of this by the donor Shri O.S.Gill. Inaddition, the Inland Revenue also investigated thematter and did not find anything adverse orincriminating. In fact, they were able to contact ShriO.S.Gill and in a communication dated 10-2-97 to JointSecretary, Govt. of India (C.B.D.T.) wrote:- U.K. Statingthe following;- “1 The gift was given to Miss Oswal on theoccasion of her forthcoming marriage. The amountgiven was $ 200000.occasion of her forthcoming marriage. The amountgiven was $ 200000. 2.The amount was given as a gift and was bymeans of a bank draft.means of a bank draft. 3.There is no agreement between D.R. Gill andMiss Oswal on repayment of any of the amountsgiven.”Miss Oswal on repayment of any of the amountsgiven.” Income Tax Appeal No.49 of 1999 14 “30.1 Further, Shri O.S.Gill on a visit to India wasexamined by the AO and his statement was alsorecorded. According to the AO the financial capability ofShri O.S.Gill was not proved as he did not file anyevidence to prove his creditworthiness. The specificreference was to the copy of the bank account andincome tax assessment order. It must be appreciatedthat Shri O.S.Gill was on a visit to India and could not becarrying such documents with him expecting that hewould be asked to file these with the A.O. On beingasked he gave the following specific replies:- “Q 11:Please give name and address/designation ofthe officer with whom you are assessed to income tax inU.K. Ans: I do not have the name of the assessing officer.However, my accountant knows the same. Q.12Please let me know the bank accountmaintained in U.K. Ans:I maintain account with Midland Bank,however, I don't remember the account number which ismaintained by our account department. Q :Have you brought with you the copy of yourbank account out of which gift of 2 lac U.S dollars wasmade and can you produce any evidence in regard withto prove your creditworthiness. Ans. No, I have not got copy of bank account since I was “Q 11:Please give name and address/designation ofthe officer with whom you are assessed to income tax inU.K. Ans: I do not have the name of the assessing officer.However, my accountant knows the same. Q.12Please let me know the bank accountmaintained in U.K. Ans:I maintain account with Midland Bank,however, I don't remember the account number which ismaintained by our account department. Q :Have you brought with you the copy of yourbank account out of which gift of 2 lac U.S dollars wasmade and can you produce any evidence in regard withto prove your creditworthiness. Ans. No, I have not got copy of bank account since I was Income Tax Appeal No.49 of 1999 15 not asked to produce the copy and evidence in regardwith creditworthiness. 30.2 In our opinion, the replies given by Shri O.S.Gillwere those expected from a person placed in hisposition, i.e., a NRI visiting India and deposing before theAO about a gift made to an Indian citizen. The statementhas to be read as a whole and conclusions drawn and inthe present case these cannot be adverse as ShriO.S.Gill has stated all relevant facts on oath reaffirmingthe gift and also indicating amply his financial status, i.e.,annual salary, shifting to a larger residence etc. Nountruth or inconsistency has been pointed out by the AOin the statement vis-a-vis the evidence placed on record.30.3.Even in the case of Shri B.P.Bhardwaj,identical documents were filed the only distinguishingfeature being the non appearance of the said personbefore the AO in India whereas Shri O.S.Gill the other“donor” deposed and his statement was recorded. Asalready stated by us the main fact which weighed in thecase of Sh. Varinder Sharma but we have already dealtwith this aspect of the matter at length earlier in thisorder.” At this stage, it would be appropriate to reproducefindings recorded by the Tribunal with respect to the gift receivedfrom Shri B.P.Bhardwaj:- “28. In the present case, the Inland Revenue, U.K. Income Tax Appeal No.49 of 1999 16 Made enquiries about the two alleged donors andpersonally contacted Shri B.P.Bhardwaj. The additionin respect of his “gift” was made by the AO andsustained by the CIT(A) mainly on the basis of a letterdated 15-10-96 received by the Joint Secretary,Department of revenue, Ministry of Finance, Govt. ofIndia, New Delhi from the Inland Revenue, U.K.Stating the following:- “ a gift of US Dollars 200000 was made to MissOswal' on the occasion of her forthcoming marriage”on or around 22 March 1994. The funds wereprovided by Mr. Varinder Sharma of Flat 184, Building9A, Raminki Moscow. Mr. Sharma arranged the draftand gave it to Mr. Bhardwaj. Mr. Bhardwaj handed itover to Miss Oswal”s father who was at the timepassing through London.” 29. What has weighed with the AO and the CIT(A)is the reply allegedly given by Shri B.P.Bhardwaj thatthe funds were provided by Shri Varinder Sharma ofMoscow. It must be appreciated that neither the AOnor the assessee participated in the enquiry and noneof them had an opportunity to examine Shri VarinderSharma or for that matter the donor ShriB.P.Bhardwaj, although we must mention that Shri Income Tax Appeal No.49 of 1999 17 29. What has weighed with the AO and the CIT(A)is the reply allegedly given by Shri B.P.Bhardwaj thatthe funds were provided by Shri Varinder Sharma ofMoscow. It must be appreciated that neither the AOnor the assessee participated in the enquiry and noneof them had an opportunity to examine Shri VarinderSharma or for that matter the donor ShriB.P.Bhardwaj, although we must mention that Shri Income Tax Appeal No.49 of 1999 17 Varinder Sharma was known to Sh. Jawahar LalOswal as accepted by him in his deposition althoughthe learned counsel contended otherwise but theallegation of the revenue is that he is an employee ofSh. Jawahar Lal Oswal but no material to prove sowas placed on record by them and Shri Jawahar LalOswal denied that Shri Varinder Sharma was hisemployee. The other allegation on the part of therevenue was that Sh. Jawahar Lal Oswal was theManaging Director of certain companies which werecarrying on business with Russia and these were theunaccounted funds of such business which werecoming back in the form of gifts. This allegationaccording to us is entirely in the field of suspicion,surmises and conjectures for which there is no roomwhile invoking a deeming provision which assumes aposition different from what is obvious. No evidencewas placed on record by the revenue. For all intentsand purposes Sh. B.P.Bhardwaj is treated as thedonor as the gift has been given by him and this beingan arrangement between him and Shri VarinderSharma. 29.1 Another allegation on the part of therevenue was that Shri Varinder Sharma was physically Income Tax Appeal No.49 of 1999 18 present in the U.K on the relevant date when the giftwas received by Shri Jawahar Lal Oswal on the basisof the power of attorney but there is no evidence forthis allegation, the assessee Sh. Jawahar Lal Oswaldenying and no such fact emerging from the enquirymade by Inland Revenue, U.K.” A perusal of the impugned orders, particularly theextracts reproduced above, reveal that the Tribunal has, afteran appraisal of the evidence, the questions put and answersproffered by the assessee, the material received from theCentral Board of Direct Taxes, i.e., the bank statements, thedocuments received from the Inland Revenue Service, GreatBritain, the statement made by Dr. O.S.Gill before the authoritiesand statement made by B.P.Bhardwaj before the InlandRevenue, affirmed the deletion made by the CIT (Appeals) onaccount of the gift made by Dr. O.S.Gill and deleted the additionon account of the gift made by Shri B.P.Bhardwaj. The Tribunalhas also recorded findings that the assessee has been able toprove the genuineness of the gifts by holding as follows:- “ 43Coming back to the respective cases in the light ofthe earlier discussion in the case of Shri Jawahar LalOswal, the only connection which he had with the giftswas that he received these in U.K. being authorised to doso by his daughters who were the donees. The moneyswere deposited in the bank accounts of the daughters Income Tax Appeal No.49 of 1999 19 who were majors and there was nothing on record toshow that Sh.Jawahar Lal Oswal was the beneficiary inany way. The entire documentary evidence mentionedthe names or the daughters and there was not an iota ofevidence brought on record by the revenue to prove thatSh.Jawahar Lal Oswal was the “owner” of the funds andwhich it was required to do within the meaning of section69A after the necessary evidence had been placed onrecord by the assessee. The entire addition has beenbased on suspicion and doubt which as already heldshould not find place in a deeming provision. Therevenue did not carry any of its doubts to a logicalconclusion by converting them into hard facts on thebasis of evidence . By no stretch of imagination was the addition warrantedin the case of Sh.Jawahar Lal Oswal. By no stretch of imagination was the addition warrantedin the case of Sh.Jawahar Lal Oswal. “44The CIT(A) has drawn some distinctionbetween the gifts of Sh. O.S. Gill and Sh. B.P.Bhardwajbut even if both of these are considered on thetouchstone of section 69A, the entire addition stands tobe deleted. As regards the distinguishing features, i.e.,the role of Sh.Varinder Sharma and the non appearanceof Shri B.P.Bhardwaj before the A.O. in India, we havealready dealt at length with the effect on the gift. 45In the final analysis, we uphold the action ofthe CIT(A) in deleting the addition in respect of the gift of Income Tax Appeal No.49 of 1999 20 Shri O.S.Gill and further delete the addition in respect ofthe gift of Sh. B.P.Bhardwaj.” The Tribunal has also set aside the protective assessments made in the cases of Ms.Monica and Ruchica Oswal. Before answering the questions posed, it would beappropriate to record that suspicion and doubt may be thestarting point of an investigation but can not, at the final stage ofassessment, take the place of relevant facts, particularly wherea deeming provision is sought to be invoked. The principle thatgoverns a deeming provision is that the initial onus lies uponthe revenue to raise a prima facie doubt on the basis ofcredible material. The onus, thereafter, shifts to the assessee toprove that the gift is genuine and if the assessee is unable toproffer a credible explanation, the Assessing Officer maylegitimately raise an inference against the assessee. If,however, the assessee furnishes all relevant facts within hisknowledge and offers a credible explanation, the onus reverts tothe revenue to prove that these facts are not correct. Therevenue cannot draw an inference based upon suspicion ordoubt or perceptions of culpability or on the quantum of theamount, involved. Any ambiguity or any ifs and buts in thematerial collected by the Assessing Officer must necessarily beread in favour of the assessee, particularly when the question is Income Tax Appeal No.49 of 1999 21 of jurisdiction by the Assessing Officer. The above expositionshall not be misconstrued to restrict the power of the revenue toraise an inference as to the efficacy of material produced by orbefore the Assessing Officer. At this stage, it would also be necessary to deal withthe submissions regarding jurisdiction under Section 260A ofthe Act. The exercise of appellate power under Section 260A ofthe Act is statutorily circumscribed by the word “substantial”,used before the words “question of law”,thus, requiring ananswer to a “substantial question of law”. A question of factmay, however, partake the nature of a substantial question oflaw if the process of reasoning or the reasons assigned areperverse and/or arbitrary or relevant facts have been ignored ormisconstrued. A set of facts may admit, as they often do, to twodifferent and diametrically opposing views but interference underSection 260-A of the Act, would only be warranted, if findingsare so incomprehensible as to be perverse and/or arbitrary. If,however, the findings admit to two views and the view adoptedby the Tribunal is plausible, though debatable, a courtexercising power under Section 260-A of the Act, must desistfrom substituting its own opinion for the opinion of the Tribunal.The quantum of tax or the alleged amount of evasion areirrelevant as what is relevant is the substantial question of lawthat arises for adjudication. The first substantial question of law, as framed, by orderdated 8.4.2002 is, whether the assessee has discharged the onus ofestablishing that the gifts are genuine. Admittedly, the gifts werereceived by the assessee for and on behalf of his daughters, while hewas in London. Alleging that the gifts were the deemed income ofthe assessee, the Assessing Officer called upon the assessee toshow cause why the gifts be not treated as his income. TheAssessing Officer also initiated a protective assessment against thedaughters. The Assessing Officer may have been right in serving anotice and initiating an investigation as these large monetary giftswould raise suspicion about their genuineness but was apparentlyso convinced of the nature of the funds that he forgot that he isdealing with a deeming provision and proceeded to initiate aninquisition instead of an inquiry. The assessee replied to the queries, addressed bythe Assessing Officer, disclosed the identity of donors anddenied that the gifts were his income. The assessee producedDr. O.S.Gill, before the Assessing Officer, who stated that hehad an annual income of $ 12,0000. The Assessing Officer wasdissatisfied and sought information through the Central Board ofDirect Taxes, which, in turn, sought information from the InlandRevenue Service, Great Britain. The information received,confirmed that Dr. O.S.Gill and B.P.Bhardwaj had accounts inMidland Bank, United Kingdom and the demand drafts wereprepared by this bank. The income of Dr.O.S.Gill was verified. Income Tax Appeal No.49 of 1999 23 Dr.O.S.Gill appeared before the Assessing Officer and admittedthe gift. As regards the gift made by Shri B.P.Bhardwaj, thelatter did not appear before the Assessing Officer but hisaccount was verified from the Inland Revenue Service, GreatBritain. The question that arises from an examination of thematerial on record and the findings recorded by the Tribunal,which have been reproduced in detail in preceding paragraphs,particularly in the context of the questions of law framed on08.4.2002, is whether the assessee has discharged his onus toprove that gifts are valid and there cannot be treated as hisdeemed income under Section 69-A of the Act. As alreadyrecorded, the Tribunal has, after examining the entire material,in detail, recorded a finding that the assessee has dischargedonus to prove that the gifts are genuine, thereby affirming theopinion recorded by the CIT (Appeals), as regards the gift madeby Dr. O.S.Gill but reversing the opinion as regards the gift madeby B.P.Bhardwaj. The findings are neither perverse nor arbitraryand may, if at all, be debatable. Dr. O.S.Gill appeared before theAssessing Officer, his income and accounts were verified fromthe Inland Revenue Service, Great Britain but the AssessingOfficer drew an inference against the assessee as Dr. O.S.Gillcould not disclose his account number, his answers were held tobe vague and there does not appear to be any such Income Tax Appeal No.49 of 1999 24 relationship between the parties that would warrant such a largegift. As Dr.O.S.Gill appeared before the Assessing Officer,admitted that it was his money and admitted the gift, hisaccounts and income were verified, his failure to remember hisaccount number, which was already known to the revenue, couldnot justify the raising of an inference against the assessee. Income Tax Appeal No.49 of 1999 24 relationship between the parties that would warrant such a largegift. As Dr.O.S.Gill appeared before the Assessing Officer,admitted that it was his money and admitted the gift, hisaccounts and income were verified, his failure to remember hisaccount number, which was already known to the revenue, couldnot justify the raising of an inference against the assessee. A question may, however, legitimately arise thatsuch a large amount could not be given as a gift on the marriageof the assessee's daughter but this question is speculative andcannot form the basis for raising an inference against anassessee. The Assessing Officer was apparently over-awed bythe amount of the gift and, therefore, proceeded to base hisopinion on his perception that no one would gift such a largeamount. A deeming provision requires the Assessing Officer tocollect relevant facts and then confront the assessee, who isthereafter, required to explain incriminating facts and in case he failsto proffer a credible information, the Assessing Officer may validlyraise an inference of deemed income under section 69-A of the Act.As already held, If the assessee proffers an explanation anddiscloses all relevant facts within his knowledge, the onus reverts tothe revenue to adduce evidence and only thereafter, may aninference be raised, based upon relevant facts, by invoking thedeeming provisions of Section 69-A of the Act. It is true thatinferences and presumptions are integral to an adjudicatory process Income Tax Appeal No.49 of 1999 25 evidence or evidence sufficient to raise an inference. A deemingprovision, thus, enables the revenue to raise an inference against anassessee on the basis of tangible material and not on meresuspicion, conjectures or perceptions. It would also be necessaryto reiterate that it is not perceptions but concrete facts thatunderline quasi judicial determinations and where concrete factsare not available, relevant facts, as would raise a credibleinference of culpability requiring an assessee to rebut theinference so raised. More often than not, revenue authorities, forwant of relevant material, institute “inquisitions”, as opposed toinquiries and by addressing questions that the more inculpatoryin nature, seek to build their case, from answers proffered by anassessee. The findings of fact recorded by the CIT (A) and theTribunal regarding the gift made by Dr. O.S.Gill are plausible,though debatable, do not call for interference. The first questionof law is, thus, answered against the revenue as regards the giftmade by Dr. O.S.Gill. As regards the gift made by B.P.Bhardwaj, a perusalof orders passed by the Assessing Officer and the CIT (Appeals)reveal that the reasons assigned by them for rejecting the giftmade by Shri B.P.Bhardwaj are, firstly, failure to produce ShriB.P.Bhardwaj, secondly that B.P.Bhardwaj stated that the moneywas given to him by Shri Varinder Sharma and other reasonsthat are similar to the reasons assigned in the case of Dr. Income Tax Appeal No.49 of 1999 26 As regards the gift made by B.P.Bhardwaj, a perusalof orders passed by the Assessing Officer and the CIT (Appeals)reveal that the reasons assigned by them for rejecting the giftmade by Shri B.P.Bhardwaj are, firstly, failure to produce ShriB.P.Bhardwaj, secondly that B.P.Bhardwaj stated that the moneywas given to him by Shri Varinder Sharma and other reasonsthat are similar to the reasons assigned in the case of Dr. Income Tax Appeal No.49 of 1999 26 O.S.Gill. The Assessing Officer and the CIT (Appeals) ignoredthe fact that the drafts were prepared from the account of ShriB.P.Bhardwaj and if the Assessing Officer was to rely upon thestatement made by Shri B.P.Bhardwaj that he had received themoney from Shri Varinder Sharma of Moscow, the onus lay uponthe revenue to pursue this lead and trace Shri Varinder Sharmabut, unfortunately, no further enquiry was carried out but insteadthe assessee was asked to disclose the whereabouts and hisconnection with Sh. Varinder Sharma. The assessee denied anyassociation, business or otherwise with Shri Varinder Sharmabut admitted that Shri Varinder Sharma was known to him. Theonus, therefore, shifted to the revenue to prove that ShriVarinder Sharma was an associate or an employee and onlythereafter could the revenue raise an inference that theassessee had routed his funds through Shri Varinder Sharma, inthe garb of a gift drawn in the name of his daughters. A perusalof the record reveals that the Assessing Officer did not pursuethe matter any further and merely based his opinion on anassumed connection between the assessee and Shri VarinderSharma and has failed to refer to any material, howsoeverperfunctory, that would indicate that Shri Varinder Sharma wasan employee or an associate of the assessee. The AssessingOfficer, thus, drew an adverse inference against the assesseefor his failure to “disprove” his relationship with Shri Varinder Income Tax Appeal No.49 of 1999 27 Sharma. An arrangement between a donor and another is anarrangement between the donor and his source of money. Theonus to probe and prove this aspect lies upon the revenue andnot upon the assessee, particularly where the income is beingdealt with under a deeming provision. A person who receives agift, is not required to prove the source of the money of hisdonor. A suspicion may, however, arise that Shri VarinderSharma was in some way connected with the assessee. TheAssessing Officer was required to investigate this matter but forreasons that have not been spelt out or explained whether inthe assessment order or by counsel for the revenue, did notinvestigate the matter any further and raised an inferenceagainst the assessee. The assessee having denied anyconnection or any knowledge about the whereabouts of ShriVarinder Sharma, the onus squarely fell upon the AssessingOfficer to enquire into the matter and then by reference to somematerial establish the link between Varinder Sharma and theassessee, to raise a valid inference that the gifts reflect theincome of the assessee. The revenue may have a credible argument basedupon the fact that Shri B.P.Bhardwaj did not appear before theAssessing Officer or that he has stated that he has received Income Tax Appeal No.49 of 1999 28 The revenue may have a credible argument basedupon the fact that Shri B.P.Bhardwaj did not appear before theAssessing Officer or that he has stated that he has received Income Tax Appeal No.49 of 1999 28 money from one Shri Varinder Sharma, but it was for therevenue, to establish a link between Shri Varinder Sharma andthe assessee, which, as already, recorded, it has failed toestablish. At this stage, it would be appropriate to point out thatto a specific query addressed to counsel for the revenue to pointout any material on record that proves a link between theassessee and Varinder Sharma. The answer by counsel for therevenue is in the negative. A perusal of the assessment orderand the record produced before this Court reveals that it isbereft of any material that could even prima facie prove a linkbetween the assessee and Shri Varinder Sharma. As alreadynoticed, an inference under a deeming provision, has to bebased upon relevant facts. The assessee disclosed the identityof the donors, the Assessing Officer collected information fromthe Inland revenue, B.P.Bhardwaj made a statement thatVarinder Sharma gave him the money, the assessee was askedto disclose the whereabouts of Varinder Sharma but theAssessing Officer rejected the gift by holding that VarinderSharma is an associate of the assessee, without reference toany m