Ita/36/2011 Of Sushil Kumar Jain v. Assistant Commissioner Of Income Tax And Anr

ITA No.36/2011 01/11/2011 Shri P.M.Choudhary, learned counsel for the appellant.This order will govern the disposal of ITA No.36/2011, ITA No.37/2011, ITA No.38/2011 and ITA No.39/2011 which have been filed under Section 260A of the Income Tax Act, 1961. These appeals have been filed against the common order dated 28/3/2011 passed by ITAT. ITA No.36/2011 and ITA No.37/2011 are relating to assessment year 2000-2001 and 2001-2002 respectively in respect of the appellant Sushil Kumar Jain and ITA No.38/2011 and ITA No.39/2011 are relating to the assessment year 2000-2001 and 2001-2002 respectively in respect of the appellant Mukesh Kumar Ranka. These appeals are heard on the question of admission analogously since they have been filed against the common order involving the same issues. The appellants are individuals and search on the residential and business premises of the appellant was conducted on 25/9/2003 and they were issued notices under Section 153A of the Income Tax Act, 1961, requiring them to file their return of income, accordingly they had filed the returns. They did not maintain the books of account and had disclosed the profit under Section 44(AD) of the Income Tax Act. Their cases were under compulsory scrutiny, therefore, the notices under Section 143(2) of the Income Tax were issued to the appellants and the appellants had participated in the proceeding before the assessing officer. One of the claim of the appellants was in respect of certain amount received by them from NRI Devidas Sitlani and Deepak Lalwani and treated as gift by them. The assessing officer ie. Assistant Commissioner of Income Tax, Circle 1(1), Ujjain, held that the transaction of gift was a collusive transaction, therefore, added the amount in question in the total income of the appellant under Section 69 of the Act. In appeal, the Commissioner of Income Tax (Appeals) re-examined in detail the nature of the transaction and considering the background of the case and surrounding circumstances held that the gifts were not genuine and upheld the addition made by the AO. The ITAT, in the order under appeal, re-appreciated the issue again and affirmed the finding recorded by the authorities below doubting the genuineness of the gift and creditworthiness of the donors. Aggrieved with the same, the present appeals have been filed. Learned counsel appearing for the appellant submitted that the revenue authorities as well as the ITAT have committed an error in holding the gift in question to be the collusive transaction and not accepting the genuineness of the gift. He submitted that for that purpose the proper test laid down in different judgments have not been applied and relevant factors have not been taken into consideration. We have heard the learned counsel for the appellant and minutely perused the record of the case. This issue has elaborately been dealt with by the CIT (Appeals) who had examined the appellants in order to ascertain the genuineness of the transaction. Before the CIT (Appeals) the appellants admitted that the specific use to which the gift was put is not known. They also admitted that no other person gave such gifts nor they or their wives gave any gift to anyone. They did not even have the phone number and address of the donors Shri Sitlani and Lalwani. They had no family or social relation with the donors. The Commissioner also noted that the appellants are involved in construction activity and real estate business and were disclosing the income on presumptive basis without maintaining the books of account. On the study of the bank account of the donor, the Commissioner has found that the amount in question were deposited and immediately passed on as gift and subsequently the account of donors showed meager balance of just Rs.500/- or debit balance. The appellants failed to establish the capacity of the donors to make gift. The appellants are not related to the donors and they could not furnish any cogent explanation as to why the donor had made such huge gifts to the appellants. The Commissioner (Appeal) held as follows:- CONCLUSION: “Sources the donors and their capacity are not established. The Bank accounts show meager funds and also deposits being made just to make the gifts. The appellant was disclosing income on estimate basis and is involved in real estate business which give scope for unexplained cash availability. NRI has not been produced. Donors are in no way related to the appellant. No photos establishing close links between donor and donee ever produced. No gift is ever made to the donor or their family members. Background of the case and surrounding circumstances also point out that the gifts are not genuine. By planning one can always create documents of gift deed, obtain gift by cheque etc but this does not in any way make the gift a genuine one”. The ITAT, after appreciating the matter has affirmed the findings of assessing officer and CIT (Appeals). The ITAT, after considering the mater on record held that:- “We have considered the rival contentions, carefully gone through the orders of the authorities below and find from record that both the assessee were in receipt of huge amounts of gift either in their own name or in the names of their family members. The donor was not related with the assessee in any way. Both were belonging to the different community. The capacity of the donor to advance the gifted amount was not established. Even though during the course of appellate proceedings, the assessee produced one of the donors Deepak Lalwani. However, on the basis of his bank statement, the learned Commissioner of Income tax (Appeals) found that he was not capable to give the alleged amount of gift. Thus, the credit worthiness of the donor was not established. Various findings recorded by the lower authorities with regard to genuineness of the gift and the credit worthiness of the donors could not be dislodged by the learned counsel for the assessee during the course of hearing before us. The findings recorded by the lower authorities are as per material on record which do not require any interference”. The findings which have been recorded by authorities in this regard are pure findings of facts. Thus the issue which the appellant is raising in this appeal is already concluded by findings of fact recorded by the revenue authorities and ITAT which are neither shown to be erroneous nor perverse. The learned counsel for appellant has placed reliance upon the judgment of the Delhi High Court in the matter of -Commissioner of Income Tax Delhi (Central2) Vs. Mrs.Sunita Vachani reported in (1990)184 ITR 121(Delhi), but in that case also the findings of the tribunal relating to the genuineness of the gifts were held to be pure question of fact involving no question of law. Learned counsel for appellant has further placed reliance upon the judgment of Gauhati High Court in the matter of Nemichand Kothari Vs. Commissioner of Income Tax andanother reported in (2003)264 ITR 254. The Division Bench of the Gauhati High Court has taken the view that in order to establish the receipt of a cash credit, the assessee must satisfy three conditions ie. (1) identity of the creditor (2) genuineness of the transaction and, (3) creditworthiness of the creditor. In the present case, the appellants have failed to satisfy the genuineness of the transaction as well as the creditworthiness of the creditor, therefore, no error has been committed by the Tribunal as well as the revenue authorities in rejecting the appellants claim. Gauhati High Court has further held that burden is on the assessee to prove the above three conditions, which the appellants in the present case have failed to discharge. The appellants have further relied upon the judgment of the Delhi High Court in the matter of Commissioner ofIncome Tax Vs. Mayawati reported in (2011) 201 Taxman 1, but the said judgment was on different fact situation where the donors had appeared before the department submitted material including the affidavits on oath, confirmed the gifts made and their old relations with the assessee and had proved their capacity to make the gift and reason for making the gift. In that case also, the findings recorded by the Tribunal were accepted by the Delhi High Court holding that no question of law arose in the matter. The appellant has further placed reliance upon the judgment of the Gujarat High Court in the matter of Murlidhar Lahorimal Vs. Commissioner of Income-Tax reported in (2006) 280 ITR 512 (Guj.), but that was a case where the primary onus was discharged by the assessee by establishing the genuineness of the transaction and by producing the donor before the assessing officer in person and proving the fact of the transaction having borne gift tax, but in the present case the appellants failed to discharge the primary onus and failed to establish the genuineness of the transaction and the creditworthiness of the donor to make the gift and the surrounding circumstances have rightly been noted by the Tribunal as well as the revenue authorities in reaching to the conclusion that the transaction of gift was not a genuine transaction. In view of the aforesaid, we find that the appeal does not involve any substantial question of law. The issue raised by the appellants are concluded by the concurrent finding of fact recorded by the Tribunal as well as the revenue authorities. The appeals are accordingly dismissed. Original order be kept in the record of ITA No.36/2011 and a copy whereof be placed in the record of connected ITA No.37/2011, ITA No.38/2011 and ITA No.39/2011. (Shantanu Kemkar) JUDGE (Prakash Shrivastava) JUDGE VM