Income Tax Appellate Tribunal - Pune
Jaikisan R. Agarwal vs Assistant Commissioner Of Income Tax on 17 December, 1999
ORDER
B. L. Chhibber, A.M.
1. The assessee, an individual, deals in country liquor on wholesale basis under the proprietary concern M/s J. R. Agarwal & Co. He also has a retail country liquor business under the name and style of M/s J. R. Wines. He is also running the business of lodging in the proprietary concern M/s Mukesh Lodge. Apart from this, he has invested in agricultural land and earned income from agricultural operations.
2. A search and seizure action was conducted at the residential and business premises of the assessee on 21st September, 1995. Simultaneously survey action under s. 133A of the Act was undertaken in the case of M/s Mukesh Lodge. As a result of this search, proceedings were started under s. 158BC of the Act. The assessee filed a return for the block period 1986-87 to 1996-97 declaring undisclosed income of Rs. 6,15,900, as against which the undisclosed income has been computed by the AO at Rs. 42,42,347. Aggrieved by the order of the AO the assessee is in appeal before us. Seven grounds have been raised. The same are discussed and disposed of as follows :
3. Ground No. 1 reads as under :
"On the facts and in the circumstances of the case, the AO has gravely erred in making the addition of the various amounts received by the appellant's four children on different occasions being customary receipts or presents, treating the same as bogus gifts. The details of these additions are :
Financial year Amount
1995-96 (Part) 1,500
1994-95 3,500
1993-94 8,701
1992-93 9,150
1991-92 9,500
1990-91 9,250
1989-90 10,500
1988-89 10,404
1987-88 12,200
1986-87 11,000
1985-86 5,500
91,205
4. The assessee has four children namely
1. Miss Dimple (daughter)
2. Mr. Umesh (son)
3. Miss Dobha (daughter)
4. Mr. Mukesh (son)
The capital accounts of all the children had been enclosed with the block return of income. These capital accounts showed the amounts of petty gifts received by the children on various occasions including birthdays, etc. right from asst. yrs. 1986-87 to 1996-97. The aggregate amounts of gifts so received was Rs. 90,201 (wrongly mentioned in the assessment order at Rs. 95,201). The AO noted that as against these receipts of gifts, there were no expenses or outgoing from the capital accounts of the assessee or of the children which might had been incurred on birthdays every year. The AO also noted that there was no proof for the gift receipts nor there were any bills/vouchers for the expenses incurred. The AO accordingly held that these amounts represented assessee's own money and therefore, he made an addition to the undisclosed income of the block assessment years.
5. Shri S. N. Doshi, the learned counsel for the assessee drew our attention to p. 1 of the paper book which showed the details of yearwise gifts received by the above four children. He submitted that the amounts of gifts are so petty that there is no reason to disbelieve the gifts received. Each child has received the gifts every year in the range of Rs. 1,500 to Rs. 3,000. The learned counsel also submitted that these gifts are received on birthdays and on occasions like Diwali, family social functions and so on considering the community to which these children belongs such receipt of gifts being customary should not have been disbelieved. The learned counsel further submitted that except on birthdays there is no reason for incurring any expenditure for the gifts received on other occasions. The birthday gifts are taken at net amount i.e., after setting off the petty expenses incurred on birthday functions. In spite of these, there are shown petty withdrawals to the capital accounts of these children as per the details shown on p. 2 of the paper book. The learned counsel further submitted that these children have agricultural income which also is taken at net amount after paying off petty expenses, if any, incurred on birthday functions. The learned counsel drew our attention to the details of net agricultural income at p. 3 of the paper book.
6. Shri Adhir, Jha, the learned Departmental Representative relied upon the order of the AO.
7. We have considered the rival submissions and perused the facts on record. We find great force in the submissions of the learned counsel. It is customary in Hindu society that children do get gifts on birthdays, on festive occasions and on family social functions. It is noted that the amounts of gifts are so petty that there is no reason to disbelieve the gifts received as is clear from the details of gifts received by the children that each child has received gifts every year ranging from Rs. 1,500 to Rs. 3,000 only. It is also noted that the four children have agricultural income and this agricultural income has been accepted by the AO. We have perused the details of agricultural income shown at p. 3 of the paper book and note that the agricultural income is taken at net amount after paying petty expenses, if any, incurred by the children from time to time. Taking into consideration all these facts, we see no justification for the impugned addition. The same is accordingly deleted. This ground accordingly succeeds.
8. Ground No. 2 relates to the addition on account of unexplained investments in purchase of agricultural lands. The yearwise details of additions made and challenged are as under :
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Asst. yr. Addition Ground
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Rs.
1987-88 60,000 Excess paid over document price.
1989-90 26,470 Excess paid over document price.
1990-91 1,00,000 Difference of market value and document price.
1991-92 99,000 Difference of market value and document price.
1992-93 50,000 Excess paid over document price.
1992-93 6,89,000 Difference of market value and document price.
1994-95 4,94,582 Difference of market value and document price.
1995-96 5,27,000 Difference of market value and document price.
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20,46,052
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The assessee and his children had purchased the agricultural lands during the financial years 1986-87 to 1994-95. There are as many as 15 agricultural lands purchased by the assessee and his children during the above period. The investments made in the lands had been duly accounted for the children and the assessee. The sources for the investments have been accepted by the AO. However, the AO in respect of eleven agricultural lands found that the values for stamp duty purposes were more than the actual price shown in the documents. The AO considered these values as the actual investments made by the assessee and excess of these values over the document price has been considered as the unexplained investment made by the assessee. This amount of unexplained investment made by the assessee. This amount of unexplained investment has been worked out at Rs. 19,09,582 (details are on p. 4 of the paper book). The AO treated this amount as assessee's income from undisclosed sources and added the same to the income of the assessee. Similarly, the AO found that in respect of four agricultural lands, the assessee had actually paid more amount than the price stated in the document. This addition has been made on the basis of statement recorded of the vendors at the back of the assessee. Later on, the assessee cross-examined these land vendors who in their cross-examination retracted their own statements and confirmed that they had not received any money more than what is stated in the document. The AO however, refused to accept their statements made in the cross-examination and made the addition of Rs. 1,36,470 as undisclosed income. Thus, the total addition made was Rs. 20,46,052.
9. Shri S. N. Doshi, the learned counsel for the assessee submitted that as regards the value prescribed or the stamp duty, it has limited purpose of collecting the stamp duty and it cannot mean that actual price paid has to be the same. He submitted that actually there was a proposal in the Union Budget of 1998-99 of amending s. 48 to the effect that for the purpose of computing capital gain the consideration received shall be substituted by the value adopted for stamp duty, if such value is higher than the consideration received. However, on having realised the correct position with respect to determination of such values by the different State Governments under different guidelines, the Finance Minister had quite rightly cancelled this proposal while getting passed the Finance Act, 1998. The learned counsel further submitted that the price stated in the document is the actual price based on negotiation and on taking into accounts innumerable factors such as adverse title to the lands, litigation, inconvenient locality, lack of approach road, non-availability of water, further possible development of acquisition, if any uneven or hilly lands and so on. In nutshell, the learned counsel submitted that the price agreed and mentioned in the document is the price willing to be accepted by the vendors and willing to be paid by the purchaser.
He submitted that for the purpose of income-tax assessments what is important is the amount actually paid. As regards the allegation of excess payment made to the vendors, the learned counsel submitted that as these vendors in cross-examination retracted from their original statements which were taken by the AO at the back of the assessee, there is no justification for the impugned addition of Rs. 1,36,470. In this behalf, he draw our attention to the original statements as well as the statements given in cross-examination placed in the paper book. The learned counsel further submitted that in the draft assessment order submitted to the CIT for approval, the following two additions were not proposed.
Rs.
Asst. yr. 1991-92 : Unexplained investment in agricultural land 99,000 Asst. yr. 1992-93 : Unexplained investment in agricultural land 6,89,000 He submitted that under s. 158BC it is provided that no order of assessment for the block period should be passed without the previous approval of the CIT. This provision therefore, requires the AO to pass the draft assessment order and obtain the approval of the CIT. From the above, it is clear that the addition to these extents have been made without the approval of the CIT and hence to this extent, the order passed by the AO is bad in law.
10. Shri Adhir Jha, the learned Departmental Representative relied upon the order of the AO so far as the addition of Rs. 19,09,582 on account of excess paid over the documents. As regards the addition of Rs. 1,36,470 he submitted that the vendors in their original statements had categorically confirmed that they had got money over and above the price recorded in the documents. Accordingly to the learned Departmental Representative the assessee had tuitored the vendors at the time of recording the subsequent statement which cannot be relied upon.
11. We have considered the rival submissions and perused the facts on record. So far as the addition of Rs. 19,09,582 on account of alleged excess paid over the document price is concerned, the same is legally not tenable in view of Rajasthan High Court judgment in the case of Krishna Kumar Rawat & Ors. vs. Union of India Ors. (1995) 214 ITR 610 (Raj) at p. 628, Madras High Court judgment in the case of CGT vs. R. Jawahar (1996) 217 ITR 59 (Mad) and the decision of the Supreme Court in the case of Jawajee Nagnatham vs. Revenue Divisional Officer, Adilabad A.P. & Ors. (1994) 4 SCC 595 and in the case of U. P. Jal Nigam vs. M/s Kalra Properties 1996 AIR 1170 (SC). Moreover, out of the above, additions of Rs. 99,000 for asst. yr. 1991-92 and Rs. 6,89,000 for asst. yr. 1992-93 are bad in law because the same were not proposed in the draft assessment submitted for the approval to the CIT and accordingly, the assessee never got an opportunity to put his case before the Revenue authorities.
12. As regards the addition of Rs. 1,36,470 is concerned, the same has been made by the AO on the basis of statements of the vendors recorded at the back of the assessee. Such statements recorded at the back of the assessee have no evidentiary value in the eyes of law. Later on, when the assessee insisted in the cross-examination, these vendors, retracted from their statements before the AO and confirmed that they had not received any money more than the amounts stated in the documents. The AO has conveniently ignored these statements. It is further noted that during the course of search, no document or paper whatsoever was found to indicate that the assessee had paid any amount over and above the amounts recorded in the documents executed for the purchase of land. Accordingly, we see no justification for this additions too. Under the circumstances, this ground succeeds and the assessee gets relief of Rs. 20,46,052.
13. Ground No. 3 relates to the addition on account of alleged on money payment made to M/s S. N. Products. M/s S. N. Products is the manufacturer of country liquor and supplies country liquor to the assessee for sale. There was simultaneous action under s. 132 on the premises of the said M/s S. N. Products. The AO noted that the said manufacturer collected on money on the sale of country liquor made to its wholesale dealers for which no receipts were given and which were not accounted in their books of accounts. The statement of the assessee was also recorded and he admitted that during 1st April, 1995, to 21st September, 1995, he had collected on money of Rs. 2,36,380 from its retail customers as per the instructions of the manufacturer and paid back the same to the said manufacturer. This fact has been mentioned by the assessee in the statement of undisclosed income for the block period under footnote No. 1 (p. 45 of the paper book). This collection of amount by the assessee was for and on behalf of the manufacturer and having been paid to the manufacturer, the AO did not treat this amount as assessee's undisclosed income i.e. he accepted the varacity of the statement of the assessee. However, the statement of Smt. S. N. Godbole of M/s S. N. Products was recorded on 24th July, 1996, at the back of the assessee where she had stated to have confirmed collection of on money from M/s J. R. Agarwal. On the basis of this statement, the AO held that besides the amount of Rs. 2,36,380 referred to supra, M/s S. N. Products had collected Rs. 4,17,830 in the financial year 1993-94 from the assessee.
Later, during the course of assessment proceedings, the assessee cross examined Smt. S. N. Godbole on 27th September, 1996 (pp 29 to 34 of the paper book) wherein, she categorically stated that she never received any on money from any wholesale distributor including the assessee. The AO relied on her original statement and made an addition of Rs. 4,17,830 in the asst. yr. 1994-95 and Rs. 4,36,630 in the asst. yr. 1995-96.
14. Shri S. N. Doshi, the learned counsel for the assessee submitted that there is no justification for the impugned addition. As Mrs. S. N. Godbole has categorically stated that she had never collected any on money from the wholesalers and that her original statement was recorded under tremendous mental pressure brought on her by the tax officials. Further, she has not been able to collect the on money from the assessee. The learned counsel further submitted that there is no record or evidence found and seized from her premises at the time of search which could substantiate the collection of such on money. The learned counsel further submitted that as per the assessee, whatever on money he collected from his retail customers for and on behalf of the manufacturer had been paid to the manufacturer and that this does not give rise to any income much less the undisclosed income. This factual position has been accepted by the AO and quite rightly this amount has not been taken as undisclosed income. According to the learned counsel, the AO could not have relied on the original statement of Smt. S. N. Godbole and should have relied upon her statement given in cross-examination. He further submitted that merely because the said Smt. S. N. Godbole had shown such on money collection for the reasons best known to her that itself cannot be taken as evidence against the assessee unless it is corroborated by an independent evidence that establishes the payment of such on money by the assessee. It is possible that Mrs. S. N. Godbole might have stated and confirmed such collection of money to suit her own interest but in that case she cannot make third party liable for any consequences. The learned counsel further submitted that except Rs. 2,36,380 collected as on money from the customers during 1st April, 1995 to 21st September, 1995, the assessee had neither collected nor paid on money to M/s S. N. Products. Assuming but not admitting, the learned counsel submitted that the collection of such on money from the customers and paying back to M/s S. N. Products, the same cannot constitute the undisclosed income because the same might have been collected as per the instructions and for the benefit of M/s S. N. Products to whom the said amount is paid back. Incidentally, this position has been accepted by the AO with respect to the on money collected during 1st April, 1995 to 21st September, 1995 and paid back to M/s S. N. Products which amounts have not been considered as the undisclosed income of the assessee.
In support of this contention, the learned counsel relied upon the decision of this Bench in the case of M/s Hotel Vrindavan Kolhapur (I.T(SS) A.No. 91/Pn/1997 (pp. 46 of the paper book) and in the case of M/s Vijaylaxmi Construction, Kolhapur in IT(SS) A.No. 86/Pn/1997 (p. 50 of the paper book). Alternatively, it was contended by him that the payment of 'on Money' on the purchases of country liquor be allowed as deduction under s. 37.
15. Shri Adhir Jha, the learned Departmental Representative submitted that there was a practice of collection of 'on money' in the business of country liquor and this practice was accepted by the assessee in his statement that he had collected Rs. 2,36,380 from his retail customers during the period 1st April, 1995, to 21st September, 1995. He drew our attention to the statement of Smt. S. N. Godbole recorded on 24th July, 1996, Shri J. R. Agarwal had collected on money. Later on, the Departmental Representative submitted that Smt. S. N. Godbole retracted from her original statement but since in the original statement, Smt. Godbole has made a spontaneous statement, the same should be preferred over her subsequent statement.
16. We have considered the rival submissions and perused the facts on record. The question for our consideration is whether the assessee paid 'on money' on its purchase of country liquor from M/s S. N. Products. If yes, whether the assessee is entitled to deduction of the same under s. 37. It has been admitted by the assessee in his statement under s. 132(4) recorded on 16th October, 1995, in answer to question No. 7 that he had paid the 'on money' to M/s S. N. Products on the purchases of country liquor at the rate of Rs. 10 per box. A copy of the statement is placed on pp. 93 to 95 of the Departmental paper book. Smt. S. N. Godbole, proprietress of M/s S. N. Products has also accepted this fact in her statement recorded under s. 132(4) on 21st September, 1995. In answer to question No. 13 it has been specifically admitted by her that she was charging on money from her customers including the assessee. The relevant question No. 13 and answer thereto appears at p. 106 of the Departmental paper book. This fact was again admitted by her in her statement under 132(4) dt. 22nd September, 1995, in answer to question No. 2 which appears at p. 110 of the Departmental paper book. This statement has great evidentiary value since they were recorded in the course of search and corroborated each other. Further, the statement of Smt. S. N. Godbole was recorded on 24th July, 1996. In that statement also, she confirmed that she received on money at the rate of Rs. 10 per box from the assessee on the sales since July, 1993. The cross-examination was allowed by the AO to the assessee on 27th September, 1996. Again in answer to question No. 7 she admitted that she collected Rs. 10 per box from the assessee. No doubt, later on, in re-examination by the AO she denied charging any on money from the assessee. This denial cannot be accepted since the assessee himself has accepted the fact that he paid the on money to M/s S. N. Products for the period 1st April, 1995, to 21st September, 1995. In view of the statements mentioned above, the only conclusions can be drawn is that the on money was paid by the assessee on his purchases at the rate of Rs. 10 per box since July, 1993. Therefore, the contention of the assessee that on money was paid only for the period 1st April, 1995, to 21st September, 1995, cannot be accepted.
17. Moreover, we find force in the alternate contention of the learned counsel for the assessee that such on money should be considered as part of the purchase price and consequently deduction for the same be allowed under s. 37. This contention is well founded in view of the decision of this Bench in the case of Sharma Associates vs. Asstt. CIT (1996) 217 ITR 1 (AT). Accordingly, it is held that no addition on this account is justified in view of the aforesaid decision of this Bench. The addition so made by the AO is hereby deleted.
18. Ground Nos. 4 and 5 pertain to a common issue. As per ground No. 4, the assessee has objected to the addition of Rs. 6,15,900. This amount represents the income declared for the block period as per the yearwise details given on p. 44 of the paper book. Out of this declaration of Rs. 6,15,900 the amount declared for asst. yr. 1996-97 is of Rs. 3,90,000 consisting of business cash Rs. 2,90,000 and agricultural cash Rs. 1,00,000.
19. Ground No. 5 is with respect to the addition of Rs. 2,38,597 on account of suppression of sales. Though this addition is objected by the assessee for the reasons explained on pp. 7 and 8 of the paper book but during the course of hearing before us, the learned representative of the assessee submitted that this addition of Rs. 2,38,597 be considered as covered in the declaration of cash of Rs. 2,90,000 for asst. yr. 1996-97 otherwise this addition of Rs. 2,38,597 would amount to double addition. Therefore, ground No. 4 stands restricted only to the addition of Rs. 2,38,597 out of the total addition of Rs. 6,15,900 and therefore, excess of Rs. 6,15,900 over Rs. 2,38,597 i.e. Rs. 3,77,303 remains and this addition was not pressed. Accordingly, this addition of Rs. 3,77,703 would stay. It was conceded by the learned Departmental Representative that the addition of Rs. 2,38,597 was a double addition.
20. After hearing both the sides, we delete the addition of Rs. 2,38,597 and the remaining addition of Rs. 3,77,703 is confirmed. This ground accordingly succeeds in part.
21. In ground No. 6, the assessee has challenged the addition of Rs. 4,35,000 which amount, according to the assessee, represents the difference between the amount of Rs. 15 lakhs declared in the statement recorded under s. 132(4) and the amount of Rs. 10,65,000 out of business income actually disclosed in the block return.
22. In the statement recorded under s. 132(4) the assessee for himself, HUF and Mrs. B. J. Agarwal had made a declaration of Rs. 15 lakhs as income for the block period. However, while filing the block return, the group offered the following amount :
Business income Agricultural income Total
Shri J. R. Agarwal 6,15,000 1,00,000 7,15,000
Shri J. R. Agarwal HUF 1,50,000 50,000 2,00,000
Smt. B. J. Agarwal 3,00,000 1,00,000 4,00,000
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10,65,000 2,50,000 13,15,000
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The AO however, considered the disclosure only of Rs. 10,65,000 disregarding the disclosure made for agricultural income. Therefore, as the business income offered for taxation was found to be short of Rs. 15 lakhs by Rs. 4,35,000 the AO made the addition as undisclosed income on the ground that it represents unaccounted loans.
23. Shri S. N. Doshi, the learned counsel for the assessee submitted that it is true that in the statement recorded under s. 132(4) the income agreed to be declared was Rs. 15 lakhs. The assessee though derives income both from business and agriculture, at the time of preparation of the block return, the assessee and the other members of the group could find that unaccounted income for declaration was Rs. 13,15,000 consisting of business income of Rs. 10,65,000 and agricultural income Rs. 2,50,000 and accordingly, the assessee and others declared the income in their block returns. In other words, they retracted the declaration of Rs. 1,35,000 being the difference of Rs. 15 lakhs and Rs. 13,65,000. The learned counsel submitted that it is incorrect to assume that income to be declared has to be only the taxable income especially in the cases where the persons derive income from both business and agriculture. Moreover, the agricultural income is also indirectly taxed under the IT Act.
24. Shri Adhir Jha, the learned Departmental Representative strongly supported the order of the AO.
25. We have considered the rival submissions. We do not find much force in the submission of the learned counsel for the assessee. The assessee had offered a sum of Rs. 15.00 lakhs in his statement under s. 132(4) which was given on estimate basis. However, after verification of the facts the offer was retracted to Rs. 13,15,000. Since there is no material on record that the assessee had invested any amount over and above Rs. 13,15,000 we accept the retraction to this extent. However, there is no material on record to suggest that undisclosed income pertained to agricultural income. In his statement under s. 132(4) the assessee never stated that he had received money outside the books of accounts from agricultural activities. In our opinion, he has conveniently stated that the sum of Rs. 2.50 lakhs related to agricultural income. In the absence of any material on record, this submission of the assessee cannot be accepted. Accordingly, an addition of Rs. 2.50 lakhs is hereby sustained on this account.
26. Ground No. 7 pertains to the addition of gifts aggregating to Rs. 2 lakhs received from one Mrs. Chhaya N. Shah, a non-resident Indian. During the course of assessment proceedings, the AO noted that the assessee and his family members had allegedly received gifts from one Mrs. Chhaya N. Shah, who was staying in U.S.A. These gifts were received on 25th April, 1995, as follows :
Rs.
Shri J. R. Agarwal 1,00,000
Shri Umesh J. Agarwal 50,000
Shri Mukesh J. Agarwal 50,000
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2,00,000
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In support of these gifts, the assessee produced letters written by the said NRI Mrs. Chhaya N. Shah, who had confirmed the payment of gifts by cheques drawn on Bank of India, Bhawani Peth Branch, Pune, from her NRI account No. 13597. A copy of one such letter has been reproduced by the AO in para 7 on p. 15 of the assessment order. The AO also examined the husband of Mrs. Smita D. Shah, sister of Mrs. Chhaya N. Shah, Dilip N. Shah on dated on 12th September, 1996, at 4.30 p.m. Mr. Dilip N. Shah also confirmed that his sister-in-law viz. Mrs. Chhaya N. Shah who lives in U.S.A. had gifted the above amounts to the assessee and his two sons. The AO recorded the statement of Shri J. R. Agarwal on 13th September, 1996, and noted that Shri J. R. Agarwal even did not know the phone number of this lady and could tell the number after referring to his diaries. He also observed that there was no occasion for giving such gifts.
He accordingly treated the gifts as undisclosed income of the assessee and added the same to the income of the assessee for the asst. yr. 1996-97.
27. Shri S. N. Doshi, the learned counsel for the assessee drew our attention to NRI Bank pass book of Bank of India, Bhawani Peth, Pune (placed on record) where the said amounts stand debited. Prior to these withdrawals there are gifts/deposits of Rs. 6 lakhs and Rs. 3,99,390 by clearance of foreign remittances. He submitted that the donor Smt. Chhaya Shah had duly confirmed that she had given the said gifts from her NRI Bank account No. 13597 with Bank of India, Bhawani Peth Branch, Pune. He therefore, submitted that there was no justification on the part of the AO for not accepting the genuineness of the gifts. The learned counsel also raised a legal objection i.e. the addition of Rs. 2 lakhs had not been produced and incorporated in the draft assessment order dt. 9th September, 1996. He drew our attention to the copy of the draft assessment order placed on record. He, therefore, submitted that since the assessee did not get an opportunity to explain this issue before the CIT who approved the draft assessment order, there is no justification for the impugned addition. At this stage, the learned Departmental Representative filed copies of correspondence between the Asstt. CIT and the CIT and submitted that the CIT had approved the proposed addition. He further submitted that the gifts were not at all genuine as held by the AO in his assessment order.
28. After considering the rival submissions of the parties, we are unable to accept the legal submission of the learned counsel for the assessee that the addition was illegal on the ground that the same was not proposed in the draft assessment order. The material produced before us by the learned Departmental Representative shows that after an opportunity given by the CIT the assessee was given an opportunity to explain the gifts from NRI. It was only after the explanation of the assessee that the fresh draft assessment order was approved by the CIT. Accordingly this submission of the assessee is rejected.
29. Coming to the merits, we find that Mrs. Chhaya N. Shah who lives in U.S.A. was a family friend of the assessee. She had been visiting India and staying with the assessee. She made gifts by cheques drawn on her NRI account No. 13597 with Bank of India, Bhawani Peth, Pune. Thus the genuineness of the transactions cannot be doubted. The identity of Smt. Chhaya N. Shah also stands established because in her letter to the donee, she confirmed that she/was gifting the above amounts to them. Her brother-in-law Shri Dilip N. Shah who was examined by the AO on oath also confirmed that his sister-in-law had made the above gifts to the assessee and his family.
In the case of CIT vs. Dr. R. B. Kamdin (1974) 95 ITR 476 (Bom), the Hon'ble Bombay High Court has held that the only requirement in respect of gifts is that the donor has divested himself of the concerned property. The matter has been thoroughly examined by the Delhi 'A' Bench in the case of K. L. Agarwal vs. ITO (1988) 30 TTJ (Del) 279 and also in the case of D. C. Jain vs. ITO (1989) 45 Taxman 79 (Del) wherein it has been held that relationships or the occasion are not the factors which have to be taken into account. It is only the fact of having transferred the money by the donor in the hands of donee and the availability of the funds at that time in the case of donor which are the material factors to be proved by evidence for holding the genuineness of the gift. In the case before us, the donor Mr. S. Chhaya N. Shah is well-to-do lady living is U.S.A. she is the family friend of the assessee. She gifted the amounts by a/c payee cheques and also confirmed that she had divested herself of the property i.e. money in this case. Accordingly, we hold that the AO is not justified in holding that the gifts aggregating to Rs. 2 lakhs are not genuine gifts. Even otherwise, the gift of Rs. 50,000 to Umesh J. Agarwal son of the assessee cannot be added in the hands of the assessee because at the time of gift i.e. on 25th April, 1995, he was a major, his date of birth being 8th August, 1976.
30. In the light of above discussion, we see no justification for the impugned addition of Rs. 2 lakhs. The same is accordingly deleted. This ground accordingly succeeds.
31. In the result, the appeal is allowed in part.