Ita/101/2004 Of Commissioner Of Income Tax v. Manoj Kumar Sekhri

ITA No. 101 of 2004| IN THE HIGH COURT OF PUNJAB & HARYANAAl CHANDIGARH ITA No. 101 of 2004 (O&M) |Date of Decision: 29.01.2014 Tne Commissioner of Income Tax(Central), Ludniana VS, ... Appellant Sh. Manoj Kumar Sekhri ... Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON ' BLE MRS, JUSTICE ANITA CHAUDHRY, Present: Mr. Vivek Sethi Advocatefor the appellant. Mr. Rajiv Sharma, Advocate for Mr. S.K. Mukhi, Advocate for the respondent. | 666 ANITA CHAUDHRY, J.. 1.The revenue has approacned tnis Court by filing tneappeal under Section 260-A of the Income Tax Act, 1961 (forshort, ‘the Act’) laying challenge to the order dated 13.11.2003passed by the Income Tax Appellate Tribunal, Amritsar Bench,Amritsar (for brevity, the Tribunal) in ITA No. 619(ASR)/ 1997 inrespect of assessment year 1994-95. 2.Tne appellant nas claimed that the following questionof law would emerge from the order of the Tribunal fordetermination by this Court:- “Whether, on the facts and in the circumstancesof the case, the Tribunal was correct in law indeleting the addition’ o<1,85,000/- andi'61,788/- allegealy received by the assesseeas foreign gifts? ITA No. 101 of 20049) ‘3Briefly, the facts of the case are that, for theassessment year 1994-1995, respondent-assessee filed thereturn on 30.10.1995 snowing his income to be “1,20,280/-. Asper computation sheet the assessee showed interest income fromM/s Subnasn Chander & Sons, Nurmanal on nis old deposits,besides, interest on FDRs, saving funds account and interestearned on KVPs. However, the Assessing Officer called upon theassessee to render explanation in respect of some entries,including cash entries otf=1,85,000/- made on 16.08.1993 and of|61788/- dated 24.02.1994 in the account of the assessee.During the course of assessment proceedings, the assesseereplied to the questionnaire and furnished explanation. Withregard to the aforesaid cash entries, he submitted that hereceived $6000 and $2000 as foreign gift from Mohinder SinghHanda, his uncle and $2450 from one Piara Singh Johal.According to the assessee potn these persons were residingabroad. Ine assessee also furnisned the copies of cashierscheques and fax letters sent by the creditors regarding sendingthe amount to the assessee. The Assessing Officer doubted theexplanation put forth by the assessee. The Assessing Officer tooknotice of the fact that Moninder Handa was a aistant relation oftne assessee while Piara Singh Jonal was found to be not relatedin any manner. The Assessing Officer also noted that the parentsof the assessee were residing in USA and they had not made anygifts, hence, the alleged creditors had no occasion to make thegift in favour of the assessee. The Assessing Officer vide orderdated 27.02.1997 held that since the assessee failed to establishthe source and capacity of the persons making the gift, therefore, ITA No. 101 of 20043 ITA No. 101 of 20043 ordered that the said amount be added to be income of theassessee on account of his income from undisclosed sources, as itwas bogus gift re-routed as a foreign remittance. Tne AssessingOfficer also gave directions for initiating penalty proceedings asprescribed under Section 271(1)(c) of the Income Tax Act.4 The assessee appealed before the Commissioner ofIncome Tax (Appeals), Jalandhar(to be referred as, ‘the CIT(A))by filing an appeal, challenging the addition of amount of|1,85,000/- and =61788/-, besides some other additions orderedby the Assessing Officer. The CIT(A) vide order dated3.9.1997,wnhile noticing the fact that the amount of“1,85,000/-was credited into the account of the assessee by way of proceedsof foreign draft, coupled with the confirmation from MohinderSingh Handa and his employer certificate, certifying about theemployment of Moninder Singh Handa in General Motors, Canadawith gross income of $57,524/-, concluded that the assessee hasnot only proved the identity of creditor, but his capacity also andsince the remittance of money was through banking channel, thegenuineness of tne transactions could not be raised. Witn regardto entry of |61,788/- the CIT(A) concluded that the assesseereceived the cheque of $2000 on 24.02.1994, which was sent tothe bank for collection on 04.04.1994 and tne amount wascredited into the assessees account on 20.05.1994, therefore,|the same did not pertain to the accounting period. Consequently,CIT(A) ordered deletion of both the amounts from the income ofthe assessee. The revenue, dis-satisfied with the findings of CIT(A), preferred an appeal before the Tribunal raising its grouse as ITA No. 101 of 20044 to the deletion of above amount of.=1,85,000/- and |=61,788/-from tne income of the assessee on account of foreign gifts.Certain otner additions were made by the CIT(A), nowever, thesame are not relevant for the adjudication of this appeal andhence they are not being referred herein. 5.The revenue thereafter filed an appeal before theTribunal and the solitary effective ground raised was that tne CIT(A) has erred both in law and on facts in deleting the addition of|1,85,000/- and|61788/- made by the Assessing Officer onaccount of foreign gifts. 6,Tne Tribunal with regard to gift of ©|1,85,000/-received from Mohinder Handa, held that it was through properbanking cnannel and Assessing Officer nad made the additionwithout rebutting the assessee's explanation and the AssessingOfficer had not adversely commented upon the evidencefurnished by the assessee. The Tribunal also noted that MohinderHanda had made a gift to Narinder Kumar Sekhri which becamesubject matter of consideration of the Tribunal and afterconsidering the facts of tne case, addition was deleted and therewas no distinguisning feature and following the precedent, theorder was conf;rirmec J.With respect to the deletion of =61,/788/-, the Tribunathough did not agree with the findings of CIT(A) regarding theperiod under assessment, but on merits, applying the sameanalogy, as adopted in the case of foreign gift received fromMohinder Handa, viz. the failure of the Assessing Officer todisapprove the assessee's contention and evidence in support ofthe genuineness of the gift, the Tribunal upheld the deletion and ITA No. 101 of 20045 dismissed the appeal. J.With respect to the deletion of =61,/788/-, the Tribunathough did not agree with the findings of CIT(A) regarding theperiod under assessment, but on merits, applying the sameanalogy, as adopted in the case of foreign gift received fromMohinder Handa, viz. the failure of the Assessing Officer todisapprove the assessee's contention and evidence in support ofthe genuineness of the gift, the Tribunal upheld the deletion and ITA No. 101 of 20045 dismissed the appeal. 8.We have heard the learned counsel for the appellant-revenue as well as for the respondent and nave perused thepaper-book carefully.Q,In the instant case, two casn entries in favour ofassessee-respondent by way of foreign gifts i.e. one of|1,85,000/- and other of|61,788/- made by Mohinder Handa andPiara Singh Johal respectively are in dispute. Though, theAssessing Officer doubted both the entries, but CIT(A) and theTribunal held the same to be genuine. It is relevant to mentionnere that in ITA No. 250 of 2006, titled as Commissioner ofIncome Tax, Jalandnar-II Vs. Manoj Kumar Seknri, decided on4.10.2007, a Division Bench of this Court upneld the decisionrendered by the Tribunal holding as genuine the foreign giftreceived by Manoj Kumar Sekhri (respondent-assessee herein)from Mohinder Handa, whose foreign gift is also in dispute in thepresent case, while following the principle of consistency as laiddown by the Hon ble Apex Court inBerger Paints India Ltd.Vs. CIT, (2004) 266 ITR-99. —Tnus, following the rule ofconsistency as enunciated in Berger's case (Supra), the gift infavour of assessee by Mohinder Handa cannot be considered tobe bogus and there is no ground to interfere with respect of thisgift. 10.So far as the matter relating to gift made by PiaraSingh Johal is concerned, it is a NRI gift from a stranger and itcannot be said to be genuine or valid nor out of love andaffection. In ITA No. 12 of 2000, titled as The Commissioner ofIncome Tax, Jalandhar Vs. M/s Udham Singh & Sons, Goraya| ITA No. 101 of 20046 decided on 20.12.2013,this Court while dealing with a situationwhere a gift was received by the assessee from a non-residentIndian with wnom the assessee had no relationship, while relyingupon various decisions rendered on tne issue, held as under:- “QTne matter of receipt of foreign gifts evenearlier had engaged attention of the courts. ThisCourt InLal Chand Kalra Versus CIT (1981) 22CTR 135nad held that NRI gift from a stranger wasneither genuine nor valid. This judgment was followedin|Jaspal Singh Versus CIT (ITA No.256 of 2006)decided on 15.9.2006 by this Court as also judgmentIn|Sajan Dass and Sons Versus CIT (2003) 264ITR 435by Hon ble Delni High Court. Recently, thisCourt in ITA No.498 of 2005 decided on 7.2.7011titledCommissioner of Income fax, KarnalVersus Puneet Singnnad taken tne same viewholding as under: “We are of the view that the Assessing Officerand the CIT (A) were justified in holding thatthe gift in question was bogus and the Tribunalcommitted patent error in accepting the gift asgenuine. Admittedly, the donor had _ norelationsnip with the assessee. He had nooccasion to give the gift. He was not produced.His financial capacity was not established. Hisbank statement was not produced. The Tribunalfailed to appreciate these facts. It, thus,committed patent error of law in holding thattne assessee discharged onus on him to provethe genuineness of the gift. Its order is, thus,perverse. In identical situation, this Court neilthat NRI gift could not be accepted as genuineunless the assessee was able to prove naturallove and affection and financial capacity of thedonor. Observations of this Court In |Jaspal ITA No. 101 of 2004wi Singhare:- ITA No. 101 of 2004wi Singhare:- “It is well settled that mere identificationof donor and snowing the movement ofgift amount through banking channel isnot enougn to prove genuineness of thegift. The assessee was required toestablish that the donor had the meansand the gift was genuine, for natural loveand affection. Reference in this regardmay be made to the judgment of thisCourt InLai Chand Kalra v. CIT, 22 CIR135, judgment of Delhi High Court inSajan Dass and Sons v. CIT,(2003)264 ITR 435,CIT, West Bengal ITI vDurga Prasad More,(1971)82 ITR 540andSumanti Dayal v. CIT,(1995) 214of donor and snowing the movement ofgift amount through banking channel isnot enougn to prove genuineness of thegift. The assessee was required toestablish that the donor had the meansand the gift was genuine, for natural loveand affection. Reference in this regardmay be made to the judgment of thisCourt InLai Chand Kalra v. CIT, 22 CIR135, judgment of Delhi High Court inSajan Dass and Sons v. CIT,(2003)264 ITR 435,CIT, West Bengal ITI vDurga Prasad More,(1971)82 ITR 540andSumanti Dayal v. CIT,(1995) 214 ITR 801oo 1Q.|Even this Bencn InITA No.72 of 1999titledSnri Hanuman Dass Versus The Commissioner ofIncome Tax, Jalandhar and anotherdecided on 22.11.2013 neld as under: VTaking up the case in hand, even when thedonor had the means to make the gifts, therebeing neither any relationship nor there beingany circumstance to show natural love andaffection of tne donor for the donee nor therebeing any occasion to make such gifts to theassessee and the authority of jurisdictional HighCourt being against the assessee, tne authoritycited by the assessee as Commissioner ofIncome Tax v. R.S. Sibal, (2004) 269 ITR 429does not support the case of the appellant.Thus, there is no perversity or impropriety inthe impugned order and sequelly the same isupheld.,donor had the means to make the gifts, therebeing neither any relationship nor there beingany circumstance to show natural love andaffection of tne donor for the donee nor therebeing any occasion to make such gifts to theassessee and the authority of jurisdictional HighCourt being against the assessee, tne authoritycited by the assessee as Commissioner ofIncome Tax v. R.S. Sibal, (2004) 269 ITR 429does not support the case of the appellant.Thus, there is no perversity or impropriety inthe impugned order and sequelly the same isupheld., 11. Adverting to the facts of present case, here a person ITA No. 101 of 20048 residing abroad had sent a gift to a stranger. He has not gifted asingle penny to his family members residing in India and thisamount could not nave peen deleted. Tnere was no occasion formaking the gift. 127In view of the discussion made above, the findings ofthe Tribunal and the CIT(A) are not sustainable so far as deletionof amount of|617388/- is concerned. Consequently, the impugneorders are set aside to the extent given above and order ofAssessing Officer in respect thereof is restored. We accordinglyanswer the question in favour of revenue relating to amount of|617388/-. Tne appeal is partly allowed. (AJAY KUMAR MITTAL)(ANITA CHAUDHRY )JUDGEJUDGE29.01.2014Jiten