Income Tax Appellate Tribunal - Agra
Piyush Goyal, Etah vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND
SHRI P.K. BANSAL, ACCOUNTANT MEMBER
ITA No.679/Agr/2008
Asst. Year: 1999-2000
Shri Piyush Goyal, Vs. Income-tax Officer,
219/7, Post Office Road, Ward 3(1), Etah.
Etah (U.P.)
(PAN : AAOPG 7432 L)
ITA No.678/Agr/2008
Asst. Year: 1999-2000
Km. Preeti Goyal, Vs. Income-tax Officer,
219/7, Post Office Road, Ward 3(1), Etah.
Etah (U.P.)
(PAN : AFBPG 6828 G)
ITA No.677/Agr/2008
Asst. Year: 1999-2000
Shri Ramesh Chand Goyal, Vs. Income-tax Officer,
219/7, Post Office Road, Ward 3(1), Etah.
Etah (U.P.)
(PAN : AAOPG 7434 N)
ITA No.676/Agr/2008
Asst. Year: 1999-2000
Smt. Chandra Mukhi Goyal, Vs. Income-tax Officer,
219/7, Post Office Road, Ward 3(1), Etah.
Etah (U.P.)
(PAN : AAOPG 7433 M)
(Appellants) (Respondent)
Appellants by : Shri Anurag Sinha, Advocate
Respondent by : Shri R.C. Sharma, Jr. D.R.
ORDER
PER BENCH :
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These appeals have been filed by four different assessees against the separate orders of the CIT(A) dated 02.09.2008 for Assessment year 1999-2000. Since these four appeals involving common issues, for the sake of convenience, all these appeals are heard together and decided by this common order.
2. The issue involved relates to the validity of the action of issuing notice under section 148 and the sustenance of the addition of the gift received by each of the assessees.
3. Both the ld. A.R. and ld. D.R. agreed that since the issues involved are common i.e. the addition of the gift received in the case of each of the assessee, it was contended that the case of Shri Piyush Goyal in ITA No.679/Agr/2008 is taken and whatever decision this Tribunal may take in the case of Shri Piyush Goyal, the same may apply to other cases.
4. Even though each of the assessee has taken 6 grounds of appeal, the ld. A.R. of the assessee submitted that there is only one issue which is relevant and the same is, whether the addition in respect of the gift received by each of the assessee is justified on facts and circumstances of the case.
5. We are taking the facts of the case of Shri Piyush Goyal in ITA No.679/Agr/2008 as both the parties agreed that the facts in each case are same except the change in figures. The facts that the A.O. received information from ITO 4(1), Agra that survey under section 133A of the Income-tax Act, 1961 ('the Act' hereinafter) was conducted on 22.04.2001 at the premises of Shri D.K. Agarwal, Chartered Accountant. During the course of survey, it was noted by the 3 Department that Shri D.K. Agarwal has created bogus Trusts in the name of God and Goddesses, of which he or his family members and his other associates become trustees. He thus controlled about 292 trusts and the trusts were not conducting any business but large receipts of moneys were shown in the hands of these trusts by way of gifts, profits, donations etc. The gifts were received in cash from other trusts and in turn provided gifts to various other persons. No relationship existed between such donors and donees. One Shri Lalit Kumar Agarwal stated that Shri D.K. Agarwal has created bogus trusts in his name (of Shri Lalit Kumar Agawal) and that although he had been shown as trustee but he does not have any knowledge about the activities of the trust. A register was also found during the course of survey which shows that one of the trust namely Smt. Meera Devi Pvt. Family Trust was maintained and controlled by Shri D.K. Agarwal. The trust has given Gift of Rs.7,00,000/- to the assessee, Rs.4,00,000/- to Shri Ramesh Chad Goyal, Rs.6,00,000/- to Km. Preeti Goyal and Rs.4,00,000/- to Smt. Chandra Mukhi Goyal through D.D. purchased from State Bank of India, Jaipur House, Agra on 12.02.1999 and on the basis of the above information, notice under section 148 of the Act was issued to the assessee. The A.O. subsequently, when enquired from State Bank of India, Jaipur House, came to know that M/s. Meera Enterprises has deposited cash of Rs.4,10,000/- on 08.02.1999 and Rs.5,00,000/- in cash on 06.03.1999. On 08.02.1999 a sum of Rs.4,00,800/- was withdrawn for purchase of D.D. and on 06.03.1999 a sum of Rs.2,00,600/- was withdrawn to purchase the D.D. M/s. Meera Enterprises was shown to be the proprietary unit of Meera Devi Pvt. Family Trust. The A.O. finally added the following sum in the case of each assessee under section 68 of the Act as detailed under respectively:-
Shri Piyush Goyal Rs.7,00,000/-
Km. Preeti Goyal Rs.6,00,000/-
Shri Ramesh Chand Goyal Rs.4,00,000/-
Smt. Chandra Mukhi Goyal Rs.4,00,000/-
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6. The assessee went in appeal before the CIT(A) and challenged the initiation of the proceedings under section 147 read with section 148 of the Act and also challenged the addition made under section 68 of the Act. The CIT(A) upheld the proceedings under section 147 and also upheld the addition made under section 68 of the Act.
7. Ld. A.R. before us contended that the assessee has brought on record following documents evidencing the gifts of Rs.4,00,000/- and Rs.3,00,000/- received by the assessee :-
a) Intimation dated 08.02.1999, regarding gift for Rs.4,00,000/-
b) Gift deed of Rs.4,00,000/- mentioning the relevant particulars about the gift.
c) Statement showing availability of fund/fund flow statement in respect of gift of Rs.4,00,000/-
d) Detailed declaration regarding gift mentioning relevant information in respect of gift of Rs.4,00,000/-.
e) Intimation dated 08.02.1999, regarding gift for Rs.3,00,000/-.
f) Gift deed of Rs.3,00,000/- mentioning the relevant particulars about the gift.
g) Statement showing availability of fund/fund flow statement in respect of gift of Rs.3,00,000/-.
h) Detailed declaration regarding gift mentioning relevant information in respect of gift of Rs.3,00,000/-.
i) Intimation issued under section 143(1) of the 'Act' for A.Y. 1998-1999.
j) Income tax return acknowledgement of Trust filed on 20.04.1999 for A.Y. 1999-2000.
k) Income tax return acknowledgement of Trust filed on 27.06.2000 for A.Y. 2000-2001.
l) Income tax return acknowledgement of Trust filed on 30.07.2001 for A.Y. 2001-2002.
m) Income tax return acknowledgement of Trust filed on 08.07.2008 for A.Y. 2008-2009.
n) Capital account and balance sheet of Trust for the year ended 31.03.1999
o) Trust deed of Smt. Meera Devi Private Family Specific Trust dated 26.04.1972.
p) Copy of the combined order in ITA No.906/3558/3559/(Del) of 1985 dated 24.10.1986 passed by the Hon'ble 'E' Bench, in the case of M/s Smt. Meera Devi Pvt. Family Trust vacating/setting aside order passed under section 263 in the case of 'Trust' by the CIT, Agra.
q) Copy of the combined order dated 05.10.1987 passed by the Hon'ble 'E' Bench, in the case of M/s Smt. Meera Devi Pvt. Family Trust in R.A. No.104/105/106/Del/87 arising out of ITA No.706/3558/3557/Del/85 rejecting the reference application of the Revenue.
8. It was pointed out that during the course of assessment proceedings, Shri D K Agarwal, trustee, was summoned and his statement was recorded in which he confirmed the transaction of gift. The A.O. has not accepted the genuineness of the gift mainly on the following grounds:- 5
(i) The cash book and ledger of above Trust is not available.
(ii) He also could not answer about availability of cash on the date of deposit of cash into Bank.
(iii) The requisition slips for purchase of DD's were purchased by him.
(iv) Shri D.K. Agarwal, Trustee and the donor told that assessee is son of his friend and known to him for last 15 years. But neither assessee nor his family member has given any gift before or after receipt of the gift from the above trust.
(v) The occasion of gift was told to be God Festival, which is not specified by him.
(vi) Shri D.K. Agarwal, Trustee (donor) of M/s Meera Devi Pvt. Family Trust could not answer about date-wise withdrawals made from combined capital account of the Trust.
9. It was thus submitted that the addition has been confirmed by the CIT(A) only on the reasoning as assigned by the Assessing Officer.
10. It was submitted that none of the objection is material enough to conclude that the Gift as received by the appellant represents undisclosed income of the appellant. If the A.O. was unsatisfied with the affairs of the donor correct recourse would have been to take or proposed action in the hands of the donor instead of taxing the appellant. The A.O. has made the addition also on the ground that there is no relationship between the donor and the donee. It is submitted that there is no such requirement of law that gift can only be made by relation. Section 56(2)(v) itself provides two monetary limits for gifts by relation and by stranger which shows that the legislation does not prohibit gifts to strangers upto certain limit. In this connection, reference is invited to the following case laws:-
(i) Delhi High Court in CIT vs. Mrs. Sunita Vachane (1990) 184 ITR 125 has itself observed: "it seems unusual for the stranger to make gifts to unknown persons. Yet the Tribunal having found sufficient evidence regarding genuineness of gift. No question of 6 law arose from the order of the Tribunal. Further, the Delhi Bench observed that there is no bar for the stranger to make gift to the Indian Citizen.
(ii) In Murlidhar Loharmal vs. CIT (2006) 153 Taxman 451 (Guj), the Court did not approve the Tribunal's action in enquiring motivation for gift and to examine the question as to why the donor should make gift.
(iii) In ACIT vs. Manoj Kumar Scktri (2005) 142 Taxman 15 (Amritsar) (Maz): "Occasion and relationship with donor are irrelevant".
(iv) In Mrs. Mayawati vs. DCIT (2008) 19 SOT 460 (Delhi), the Tribunal observed that the AO had also highlighted the fact that there was no relationship between the donor and donee and therefore, the genuineness of the transaction of the gifts were not proved.
Here, it may be pointed out that a gift may be made to a stranger. Section 123 of the Transfer of Property Act does not require that gifts should be made to a relation only. Thus the AO had taken an incorrect view of law.
11. Thus, it was contended that the gift received by the assessee was genuine and no addition can be made on the ground of non-relationship. The perusal of the records would reveal that Shri. D. K. Agarwal is a trustee of trust and as a trustee of the trust was authorized by the other members of the trust to deal with the funds of the trust. The gift has been made from the Trust funds. Similar objection stood already adjudicated by the ITAT, Agra Bench in the case of Shri. Mukesh Kumar Agarwal in ITA No.110/Agra/2005 wherein vide order dated 27/07/2005 the Hon'ble Bench observed as under:-
"Before parting, I would merely like to add that the case of the department has not been that there can be no gift by a trust or that the donor has parted with the trust funds in favour of the assessee although at closing arguments were advanced by the learned D.R. in this nature. In the facts as they stand, presuming for a moment that the donor has gifted an amount from a trust from which the donor was not entitled to gift then that is an issue which is between the trust and the donor and the assessee for the said transgression, if any, cannot be a faulted with".
12. Reliance was placed on the decision of Shri Mukesh Kumar Agarwal in ITA No.312/Agr/2006 in which also vide order dated 16.10.2009, under similar circumstances, the 7 gift was held to be genuine. Copy of the decision was placed on record. It was contended that the assessee has duly discharged the primary onus to prove the genuineness of gift, identity of the donor and his creditworthiness. Reliance was placed in this regard on the following case laws :-
(a) Mrs. Ranjana Katiyal vs. ACIT (2008) 113 TTJ (Delhi) 479,
(b) Monnet Ispat and Energy Ltd. Vs. DCIT (2008) 171 Taxman 27 (Delhi) (Maz.),
(c) Kamal Motors vs. CIT (2003) 131 Taxman 155,
(d) CIT vs. Orissa Corp. (P) Ltd (1986) 159 ITR 78 (S.C.),
(e) CIT vs. Kamal Jeet Singh (2005) 147 Taxman 18 (All),
(f) Sansar Automobile vs. ITO (2005) 96 TTJ (Jodh) 368).
13. In view of these case laws, it was contended that the assessee has duly proved the identity of the donor whose PAN is on record. The trustee appeared before the A.O. and confirmed the transaction in his statement. The creditworthiness is proved from the copies of the balance sheets annexed with the gift papers. The gifts were made by account payeee D.D. from regular bank account of the donor. The A.O. made the addition only on the ground that the donor and the donee who are strangers and do not know the family members of each other. This cannot be valid ground for not accepting the genuineness of gift when the three required ingredients under section 68 are satisfied by the assessee. The assessee is not required to prove the source of the sources. The obligation of the donor cannot be extended to this unreasonable extent. If the A.O. was not satisfied, he should have made the addition in the hands of the donor. Reliance was placed in this regard on the following case laws:-
ITO, Ward-2, Mathura vs. Smt. Sukho Devi in ITA No. 1991/Del./1994, Kuldeep Gogia vs. ITO in ITA No. 297/Agra/2004, ITO vs. N. Sunitha reported in (2001) 70 TTJ (Bang.) 27 Supreme Tyres vs. ITO (2004) 1 SOT 406 (Asr).
Bhagwandas Sharda vs. ACIT (2004) 82 TTJ (Hyd) 982.
S. K. Jain vs. ITO (2004) 2 SOT 579 (Agra).8
14. It was further submitted that the Hon'ble ITAT Agra Bench, in ITA Nos. 171, 173, 174/Agr./2008 vide order dated 25.03.2008 (Paper Book pages 97 to 106) and In ITA No.175, vide order dated 20.06.2008 (Paper Book pages 107 to 109) & ITA No.484/Agr./2007 vide order dated 19.05. 2008 (Paper Book pages 110 to 116) & ITA No.110/Agra/2005 vide order dated 27.07.05 (Paper Book pages 120 to141) had the occasion to deal with identical controversy and wherein the Hon'ble Bench vide order dated 23.05.2008 upheld the order passed by the CIT(A) deleting the additions and reverse the order passed by the CIT(A) upholding the reassessment proceedings. The issue is thus covered in favour of the assessee and against the Revenue and may kindly be held so. Copies of the orders are on record.
15. Ld. D.R., on the other hand, relied on the orders of the Authorities below.
16. We have carefully considered the rival submissions and perused the material on record. We have also gone through the order of the Tax Authorities below as well as the case law relied on before us. The assessee has received gift of Rs.7,00,000/- (vide two D.Ds. of Rs.4,00,000/- & Rs.3,00,000/- respectively) from Shri D.K. Agarwal, the trustee of Meera Devi Pvt. Family Trust. The assessee submitted confirmation of the gift, gift deed, balance sheet, copy of the capital account of the trust, PAN of the trust, copy of the trust deed. Shri D.K. Agarwal, trustee was summoned and his statement was recorded in which he confirmed the transaction of gift. The A.O. has not accepted the genuineness of the gift as the donee is a stranger and the donor and donee do not know the family members each other and also that there was no occasion to give the gift. The assessee relied on the case law as has been laid down herein above. The observations, in these case law, are reproduced herein below:- 9
(i) Delhi High Court in CIT vs. Mrs. Sunita Vachane (1990) 184 ITR 125 has itself observed: "it seems unusual for the stranger to make gifts to unknown persons. Yet the Tribunal having found sufficient evidence regarding genuineness of gift. No question of law arose from the order of the Tribunal. Further, the Delhi Bench observed that there is no bar for the stranger to make gift to the Indian Citizen.
(ii) In Murlidhar Loharmal vs. CIT (2006) 153 Taxman 451 (Guj), the Court did not approve the Tribunal's action in enquiring motivation for gift and to examine the question as to why the donor should make gift.
(iii) In ACIT vs. Manoj Kumar Scktri (2005) 142 Taxman 15 (Amritsar) (Maz): "Occasion and relationship with donor are irrelevant".
(iv) In Mrs. Mayawati vs. DCIT (2008) 19 SOT 460 (Delhi), the Tribunal observed that the AO had also highlighted the fact that there was no relationship between the donor and donee and therefore, the genuineness of the transaction of the gifts were not proved.
Here, it may be pointed out that a gift may be made to a stranger. Section 123 of the Transfer of Property Act does not require that gifts should be made to a relation only. Thus the AO had taken an incorrect view of law.
17. We have also gone through the decision of ITAT, Agra Bench in the case of Mukesh Kumar Agarwal in ITA No.110/Agr/2005 wherein vide order dated 27.07.2005, the Hon'ble Bench observed as under :-
"Before parting, I would merely like to add that the case of the department has not been that there can be no gift by a trust or that the donor has parted with the trust funds in favour of the assessee although at closing arguments were advanced by the learned D.R. in this nature. In the facts as they stand, presuming for a moment that the donor has gifted an amount from a trust from which the donor was not entitled to gift then that is an issue which is between the trust and the donor and the assessee for the said transgression, if any, cannot be a faulted with".
18. We have also gone through the decision in the case of Mukesh Kumar Agarwal in ITA No.312/Agr/2006, on which the ld. A.R. has vehemently relied, in which, vide order dated 16.10.2009 in respect of similar gift given by trust in which Shri D.K. Agarwal was the trustee, this tribunal has held as under :-
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"We have heard the rival contentions and perused the facts of the case. The assessee has submitted the confirmation of the gift, gift deed, balance sheet of the trust, bank account of the trust and income tax particulars of the trust. Shri D K Agarwal, the donor was summoned during the course of the assessment proceedings and the statement was recorded and he has confirmed of having given the gift. The source of the said gifts have been explained to be an account payee cheque given from M/s. Girraj Ji Trust. In the remand report, it has been stated by the AO that there is a deposit of Rs.5.20 lacs in the bank account of M/s. Girraj Ji Trust on 16.04.01 before the said gift of Rs.4.00 lacs was made. It was argued that the said deposit of Rs.5.20 lacs is a transfer entry and not a deposit and the ld. CIT(A) has considered the same as cash deposit which has vitiated the decision making process of the ld. CIT(A), was argued by the ld. A.R. The assessee is required to prove the identity, creditworthiness and genuineness of the transactions. As regards the identity, there is no dispute since the donor Shri D K Agarwal has appeared in person in response to summon by the AO and has confirmed the transactions in the statement recorded. The sources of the said amount are the availability of funds in the trust which have been transferred in the trust at Rs.5.20 lacs before the date of the gift. It has been stated that the trust is regularly assessed to tax and income tax particulars of the trust are on record. Therefore the creditworthiness of the gift cannot be in doubt. As regards the genuineness of the transactions as observed hereinbefore, the said gift having been confirmed by the donor and the sources having been explained but the donor could not state during the course of the statement the family relationship with the assessee or the occasion of giving gift. In this regard, the reliance has been placed by Shri Anurag Sinha, Advocate, the ld. Counsel for the assessee on the decision of Hon'ble Deli High Court in the case of CIT vs. Mrs. Sunita Vachane, supra, Hon'ble Gujarat High Court in the case of Murlidhar Loharmal vs. CIT, supra, ITAT Mmritsar Bench decision in the case of ACIT vs. Manoj Kumar, supra and ITAT Delhi Bench in the case of Mrs. Mayawati vs. DCIT, supra wherein all the cases, occasion and relationship of the gifts are not relevant if otherwise the Tribunal finds sufficient evidence regarding genuineness of the gift. In the present case, we are of the view that there are sufficient evidences of genuineness of the gift and therefore, impugned gift cannot be said to be non- genuine. Therefore, in such circumstances and facts of he case and the authorities relied upon hereinabove, the AO is not justified in treating the said gift as bogus and the same cannot be treated as income of the assessee. Therefore the order of the ld. CIT(A) is reversed on this issue. Thus the appeal of the assesses is allowed".
19. We have also gone through the following cases regarding the discharge of the burden on the part of the assessee as relied by the ld. A.R. Observations made in these cases are given as under :-
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(a) Mrs. Ranjana Katiyal vs. ACIT (2008) 113 TTJ (Delhi) 479. The assessee had filed affidavit from the donor, their PAN, copies of Return of income and bank account. On these evidences, the Tribunal held that the assessee had discharged the initial burden and therefore the AO should have made further enquiry to prove that the condition of section 68 were not satisfied.
(b) In Monnet Ispat and Energy Ltd. vs. DCIT (2008) 171 Taxman 27 (Delhi) (Maz.), the Tribunal accepted the genuineness of credits on the basis of affidavit, confirmatory letter and the bank account of the creditors.
(c) In Kamal Motors vs. CIT (2003) 131 Taxman 155, the Rajasthan High Court observed that the onus is on the assessee to show that the creditor is a man of means and identifiable. When a creditor is an income tax assessee, it can not be said that he cannot be a man of means. The creditworthiness is thus established.
(d) CIT vs. Orissa Corp. (P) Ltd (1986) 159 ITR 78 (S.C.). Letters of confirmation, particulars of creditors and income tax numbers were furnished. Addition not justified.
(e) CIT vs. Kamal Jeet Singh (2005) 147 Taxman 18 (All). The assessee was held to have discharged the onus by placing confirmatory letters; their affidavits, their full address and GIR No.
(f) Sansar Automobile vs. ITO (2005) 96 TTJ (Jodh) 368). A deposit through account payee cheque is a very good piece of evidence establishing the genuineness of the transaction provided identity of the creditor is established. When the identity of the creditor is very much proved or is obvious and is not doubted by the AO, the payment received through account payee cheque becomes sacrosanct.
(g) The Hon'ble ITAT, Agra Bench, Agra in the case of ITO, Ward-2, Mathura vs. Smt. Sukho Devi in ITA No.1991/Del./1994 (Paper Book pages 14 to17) vide order dated 31/12/2003 held as under :-
"We have heard the parties and perused the records of the case. When a cash credit entry appears in the assessee's books of account in an accounting year the assessee has obligation to explain the transaction. It would appear that in the instant case identity of both the donors is not in dispute. Both the donors are assessed to tax and the gift tax return filed by them has also been accepted by the Department. The fact that there has been cash deposit in their bank accounts prior to issue of the cheques to the assessee may be a cause for enquiry in their hands. In case the A.O. was not satisfied with the cash deposits made by these two persons in their bank, the proper course would have to make assessment in the case of these donors by treating cash deposits in their bank account as unexplained investments of these donors under section 69 of the I.T. Act. In the facts and circumstances of the case, we are of the view that the 12 assessee has discharged initial onus of proving the identity of the creditors, their transaction and the Revenue has not brought any material to rebut the same. We, therefore, find no infirmity in the order passed by the CIT(A). Hence the same is upheld".
(h) Further, in the case of Kuldeep Gogia vs. ITO in ITA No.297/Agra/2004 (Paper Book pages 18 to 21) for A.Y. 2001-2002, the Hon'ble ITAT vide order dated 31/01/2005 observed as under:-
"In the instant case, the assessee has produced the copy of gift deed, affidavit of the donor, details of its Assessing Officer, showing that the donor is an existing assessee. Therefore, in the circumstances, when she has confirmed the gift of Rs.1,00,000/- advanced to the appellant. Copy of bank account was also filed before the Assessing Officer. Copy of gift deed and affidavit confirming the advancing of gift, was also filed. Therefore, in these circumstances and having regard to the decision of ITAT, Agra Bench, Agra, we are of the view that there is no scope for addition of Rs.1,00,000/- in the hands of the appellant. Hence, this ground of appeal is allowed".
(i) Hon'ble ITAT, Bangalore Bench in the case of ITO vs. N. Sunitha reported in (2001) 70 TTJ (Bang.) 27 approved the action of the learned CIT(A) who deleted the addition by holding that "Assessee received Gifts by cheques and the department has not adduced any material to suggest that the money that were deposited in the bank accounts of the donor flowed from the assessee". The Bench therefore, concluded that Gift could not be treated as unexplained in the hands of the assessee. Addition therefore, rightly deleted by the CIT(A).
(j) Supreme Tyres vs. ITO (2004) 1 SOT 406 (Asr). Where the assessee had produced the creditor for examination and his statement was recorded, the assessee was not required to prove the source of the source.
(k) Bhagwandas Sharda vs. ACIT (2004) 82 TTJ (Hyd) 982. The loan transaction was through bank by account payee cheque. The assessee was held to have discharged the onus. It is not necessary for the assessee to prove the source of the source.
(l) S. K. Jain vs. ITO (2004) 2 SOT 579 (Agra). Asking for source of deposits in bank account of the creditors would amount to asking source of the source.
20. In view of the aforesaid case laws and the provisions of section 68, Section 68 lays down the rule of evidence that when any sum is found credited in the books of the assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of such credit found in the books of the assessee or the explanation offered by the assessee in the opinion 13 of the A.O. is not satisfactory, the same so credited may be charged to income tax as the income if the assessee of that previous year. Before charging the credit as the income of th e assessee, the AO has to form an opinion. This opinion is subjective, but it has to be judicious and based on material on record. An opinion is an inference of facts from observed facts. It is not an impression. It is a conviction based on appraisal of evidence on record. In V.L.S. Finance Ltd. v CIT (2000) 246 ITR 707, the Hon'ble Delhi High Court observed as under:
"'Opinion' means something more than more retailing of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question. It means:
judgment or belief based on grounds short of proof. If a man is to form an opinion and his opinion is to govern, he must form it himself on such reasons and grounds as seem good to him."
Thus, before the AO forms an opinion, he must consider the material before him. He has before him the material submitted b y the assessee while giving an explanation, then he must collect his own material as an enquiry officer, weigh the two materials and as a quasi-judicial authorit y form an opinion as to whether explanation furnished b y the assessee is satisfactory or not. If the AO does not appl y his mind in ex amining the documents furnished b y the assessee and does not find an y substantive error in them nor he collects an y material b y exercising powers under Income-tax Act, then the claim of the assessee cannot be straightway rejected. If he does, it would be a violation of principles of natural justice and provisions of section 68.
The expression "the assessee offers no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found credited in the books of account maintained b y the assessee. The opinion of the AO for not accepting the explanation offered b y the assessee as not satisfactory must be based on proper appreciation of the material and other surrounding circumstances available on record. The opinion of the AO is to be based on appreciation of the material on record.
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21. The word "may" used in section 68 provides discretion to the AO. In general the word "may" is an auxiliary verb clarifying the meaning of another verb of expressing an abilit y, contingency, possibilit y or probabilit y. When used in a statute in its ordinary sense the word is permissive and not mandatory. But where certain conditions are provided in the statute and on the fulfillment thereof a dut y is cast on the authorit y concerned to take an action, then on fulfillment of those conditions the word "may" take the character of "shall" and then it becomes mandatory. In section 68, we find that there are no such conditions on the fulfillment of which the AO is dut y bound to make the addition. The word "may" denotes the discretion of the AO that he can make an addition or can not make an addition. The Hon'ble Supreme Court in the case of CIT v Smt. P K Noorjahan 237 ITR 570 (SC) while dealing with the word "may" in section 69 observed, as under:
"In the corresponding clause of the Bill which was introduced in Parliament, while inserting section 69 in the Income-tax Act, 1961, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the Income- tax Officer under section 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case."
22. The evidence filed by the assessee clearly proves that the assessee has duly discharged his onus so far it relates to the identity, creditworthiness and genuineness of the transaction is concerned. The assessee is not required to prove source of the sources. There is no evidence on record which may prove that the assessee has deposited the cash in the bank account of the 15 donor. Apparent is real. The onus is on the party who alleges that apparent is not real. In any case, the case of the assessee is duly covered by the decision of this Bench in the case of Shri Mukesh Kumar Agarwal in ITA No.312/Agr/2006 in which vide order dated 16.10.2009 similar gifts given by Shri D.K. Agarwal, being trustee of the Trust, were accepted to be genuine in the hands of the donees. The decision of the Co-ordinate Bench is binding on us. Respectfully following the decision of the Co-ordinate Bench, we delete the addition made by the A.O. under section 68 in the case of each of the assessee.
23. In the result, appeals filed by the respective assessees are allowed.
(Order pronounced in the open Court on 25.05.2010).
Sd/- Sd/-
(R.K. GUPTA) (P.K. BANSAL)
Judicial Member Accountant Member
Place: Agra
Date: 25th May, 2010.
PBN/*
Copy of the order forwarded to:
1. Appellant
2. Respondent By Order
3. CIT concerned
4. CIT (Appeals) concerned
5. DR, ITAT, Agra Bench, Agra
6. Guard File Assistant Registrar
Income-tax Appellate Tribunal, Agra
True Copy