Income Tax Appellate Tribunal - Allahabad
Income Tax Officer vs Matadin Snehlata (Huf) on 25 July, 2003
Equivalent citations: (2003)81TTJ(ALL)995
ORDER
Bhavnesh Saini, J.M.
1. This appeal by the Revenue is directed against the order of the CIT(A), Varanasi, dt. 2 March, 1995 for the asst. yr. 1993-94 on the following grounds :
"1. That the learned CIT(A) has erred in deleting the addition of Rs. 2,10,000 being the alleged gifts received by the assessee from 10 persons at Rs. 21,000 each. The learned CIT(A) has failed to appreciate that the gifts were made suddenly and without there being any occasion from as many as 10 persons. He has failed to appreciate that the story or so called gifts represented merely a make-belief and an arrangement for capital build up on the part of the assessee.
2. That the learned CIT(A) has failed to appreciate that though the gifts were stated to have been made without any consideration and therefore out of natural love and affection, none of the alleged donors was a close relation of the assessee and all of them reside at Calcutta, whereas the assessee is a resident of Varanasi.
3. That the learned CIT(A) has not appreciated that the credits in the name of the assessee are nothing but his concealed income and the gifts were shown only to give a colour of genuineness to the effects to bring out his concealed income in the form of gifts."
2. The facts of the case are that the AO made the addition of Rs. 2,10,000 on account of bogus gifts taken from ten parties of Calcutta in a sum of Rs. 21,000 each. During the course of assessment proceedings, the AO issued notice under Section 133(6) of the IT Act to the donors through registered post on the address given in the affidavits filed by the assessee in support of receipt of the gifts. Out of the ten donors, notices issued to three persons returned with the remark "Not known". In the rest of the seven cases, the notices did not return and hence deemed to be served. The AO recorded their statement on oath. In rest of the cases in support of the claim of the assessee for receipt of the gifts, the assessee filed affidavits of the donors, photo copy of the acknowledgement, gift-tax return, demand drafts, gift-tax challan, income-tax orders, acknowledgement of filing of the income-tax returns, etc. The AO in these cases referred to all these documents to the different ITO's of Calcutta, having jurisdiction over the donors for verification, but the AO did not receive any reply from the ITO, concerned. The AO in view of these facts, was of the view that for a genuine gift, certain conditions have to be satisfied namely relationship between the donor and donee, their acquaintance, their financial capacity and their confirmation along with the identity. The AO after considering the evidence and material on record, considered each case of the gift separately and was of the view briefly that the gifts are not genuine and accordingly made additions in the hands of the assessee in respect of the gift amount of all the ten persons. The AO has recorded brief reasons for rejecting these gifts, which have been mentioned in the assessment order. The matter was carried to the CIT(A) and it was submitted that all the donors confirmed making of the gifts, filed gift-tax returns, which have been accepted by different ITO's at Calcutta. It was submitted that all the donors filed affidavits confirming the gifts made through demand draft and all the donors are assessed to tax in different circles/wards at Calcutta and three persons were examined on oath as required by the AO and in rest of the cases, compliance was made under Section 133(6) of the IT Act and all the evidences of the gifts have been filed before the AO. It was further submitted that the assessee has established the identity and capacity of the donors to make the gift as well as prove the transactions between them by submitting the evidence, which have not been rebutted by the AO. It was also submitted that all the gifts have been shown in the respective income-tax returns of different assessees and even the gift has been accepted by the concerned AO, therefore, all the gifts were genuine and are liable to be accepted. The learned CIT(A) after considering the facts and circumstances of the case accepted all the gifts in question and allowed the appeal of the assessee. The findings of the CIT(A) are reproduced for consideration, which are mentioned in paras 2 & 3 of the impugned order :
"2. I have carefully considered the submissions made, the facts involved and the reasons mentioned in the assessment order. It is a fact that there is no close relationship existing between the donors and the donee, yet the fact remains that till the donors have stated that they have known the assessee and that they have voluntarily made gifts without any consideration. On the facts, I have no difficulty to held that the appellant has satisfactorily explained the receipt of gifts from ten persons amounting to Rs. 2,10,000. Howsoever strong the suspicion may be, it cannot take the place of evidence. In the face of the documentary evidence and the explanation tendered, I hold that the gifts received have been satisfactorily explained. Therefore, the addition made is deleted.
3. In the result, the appeal is allowed."
The Revenue is in appeal on the grounds mentioned above.
3. We have heard the learned Departmental Representative and the learned counsel for the assessee. This case was taken up for hearing on 3rd Sept., 2001. The learned Departmental Representative was directed to furnish copy of the statement of the donors recorded by the AO and the report of the AO assessing the donors at Calcutta. Thereafter, this case was adjourned to 5th Nov., 2001 but the order of the Tribunal was not complied with. This case was again taken up on 16th Jan., 2002 and the learned Departmental Representative was also directed to produce the assessment record. Ultimately, this case was adjourned to 13th March, 2002, 23rd April, 2002, 26th June, 2002, 25th Sept., ,2002, 12th Dec., 2002, 20th Jan., 2003, 13th March, 2003, but the assessment record was not produced. This matter was taken up on 26th May, 2003 and the learned Departmental Representative Shri S.S. Prasad assured us that he would appear in this case on next date of hearing with the assessment record and would also produce the other papers as directed without any failure. On his undertaking the case was finally adjourned to 3rd June, 2003. Hence this matter was taken up on 3rd June, 2003. Shri S.S. Prasad did not appear with the assessment record and the required papers. The learned Departmental Representative Shri Ashok Kumar stated that the office of the Departmental Representative has written many letters to the AO concerned to produce the assessment record but there is no compliance by the AO. These facts clearly show that the Department does not want to produce the assessment record and the retired papers deliberately. We take adverse presumption against the Department. Had the Department produced the assessment record and the retired papers it would have gone against the interest of the Revenue Department. The learned Departmental Representative mainly relied upon the order of the AO and argued that the AO was justified in rejecting the gifts in question.
4. On the other hand, the learned counsel for the assessee filed paper book in detail containing the detailed evidence filed before the AO consisting of affidavit, declaration of the donors, gift-tax returns, gift-tax challan and income-tax assessment orders of the donors. The learned counsel for the assessee also filed copy of the written submissions filed before the authorities below. The learned counsel for the assessee accordingly argued that the gifts in question have not been disputed by the concerned AO, therefore, the same could not be subjected to rejection by the AO in this case. The learned counsel for the assessee relied upon the judgment of the Hon'ble Allahbad High Court in the matter of CIT v. Shamshuddin Manzoor Hague (1988) 172 ITR 696 (All) and the judgment of the Gujarat High Court in the matter of Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj). The learned counsel for the assessee argued that all the evidences of the gifts were filed before the AO and whatever donors were directed to be produced for examination were produced before the AO, whose submissions have been recorded by the AO who have confirmed their transactions with the assessee in their statements. The learned counsel for the assessee argued that for a valid gift, no relationship is required and even no occasions are required to be proved when such gifts are given or accepted. The learned counsel for the assessee argued that all the donors are IT payees and have shown gift in their returns. Therefore, the assessee had been able to discharge initial onus in all the cases. Therefore, the CIT(A) was justified in allowing the appeal of the assessee.
5. We have considered the rival submissions, material available on record and the evidences filed in the paper book. We find from the observation of the authorities below that out of the ten donors, the AO has directed to produce three donors who were produced before the AO and their statements have been recorded on oath in which they have confirmed their transactions with the assessee as well as gift given to the assessee. In all the cases, the evidence of gift like declaration/affidavit gift-tax returns were filed. The AO referred all these documents to the concerned AO at Calcutta for verification, but the assessment order shows that the AO has not received any reply, therefore, in such circumstances, the assessee cannot be said to be in default in any of the circumstances. All the evidences of the gift have been produced before the AO. The assessment record further shows that the AO has given certain brief reasons, which are not connected with the gifts in question. The AO observed that for a valid gift relationship is required, occasions are required and the identity and financial status of the donor is to be proved. The record shows that the assessee has proved the identity of all the donors and the financial status of these persons. All the gifts are made though bank draft, which have been shown in the income-tax return and gift-tax return. The assessee, therefore, had been able to discharge his initial onus to prove the genuineness of the gift in the matter. It appears that the AO was misdirected with regard to the matter in question.
6. Section 122 of the Transfer of Property Act defines the gift as under:
"Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called donor, to another, called the donee and accepted by or on behalf of donee."
Therefore, necessary ingredients of the valid gift would be;
(1) Absence of consideration (2) The donor (3) The donee (4) Subject matter (5) The Transfer (6) Acceptance.
7. Section 123 of the Transfer of Property Act deals with the transfer of movable property, which is reproduced below :
"For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery".
In this case, the evidence on record clearly shows that the gift is made by the doner, to the donee without any consideration and the gift is accepted by the donee by delivery. For the moveable property, the affidavit and declaration was also effected though it was not required. Such gifts have been shown in the returns of income-tax and gift-tax. Therefore, all the ingredients of gifts have been specifically proved by the assessee.
8. The Hon'ble Supreme Court in the case of Gyan Chand Kapoor v. Ravindra Mohan Kapoor and Ors. AIR 1987 SC 240 has held that :
"Hindu law--gift--donor's wife and son not given any share in the said house under certain gift or arbitration award--suit by them for partition and possession after donor's death--held on facts, they were not entitled to-any share in the said house."
9. In this case, the assessee has accepted the gift from the donor. The subject-matter is money which was transferred by banking channel and the delivery of the money is accepted. No consideration is proved by the Revenue. The gifts have been accepted by the Department in individual cases of the donors. As far as the financial capacity of these persons are concerned, the three donors who have appeared before the AO for examination have specifically priovel transaction with the assessee. The source of income is also proved. In the remaining cases, specific evidence is filed, which was sent for verification to the concerned AO, therefore, no adverse presumption could be drawn against them particularly in view of the above discussion in this order, The Hon'ble Allahabad High Court in the matter of Shamshuddin Manzoor Hague (supra) held as under :
"From the facts that the donors had filed gift tax returns, that they have been assessed to gift-tax and that varying amounts have been passed on by way of cheques to two partners of the assessee-firm from the Bombay parties and the CIT having taken no steps to undo the gift-tax assessments, we are of the considered view that no question of law arises from the Tribunal's order. The gift-tax assessments having been made on the donors and that fact having not been controverted by the CIT and the latter having failed to take any steps to disturb these assessments made on the donors, it is amply clear that the genuineness of the gifts in the hands of the donors has not been doubted. That being so the fact that the amounts credited in the capital account of the partners had flowed from the donors cannot be doubted and, therefore, no question of law arose from the finding of the Tribunal."
10. The Hon'ble Gujarat High Court in the matter of Rohini Builders (supra) held that the assessee had discharged the initial onus which lay on it in terms of Section 68 by proving the identity of the creditors by giving their complete address, GIR No./Permanent Account No. and copies of the assessment orders where-ever readily available, Considering the facts and circumstances of this case, the assessee has filed all the evidences of gift, gift-tax challan and income-tax return in which the gifts have been shown by them in their individual cases. The AO has not pointed out any defect or infirmity in those evidences. In some of the cases, even the AO accorded the statements of the case of the assessee. The law-counsel for the assessee filed copy of the order of the Tribunal Delhi 'E' Bench of August, 1999 in ITA No. 4396/92 in which with regard to gift it was held by the Tribunal that there may be relation by behaviour. The grounds of appeal taken in this appeal were with regard to the point that the gifts were accepted suddenly without any occasion and without love and affection. These are not the requirements of valid gift. Therefore, the grounds are infructuous. Considering the above discussion and the authorities of Hon'ble Supreme Court, Allahabad High Court and Gujarat High Court we are of the considered view that the assessee has been able to discharge initial onus in this case. The AO has not brought any evidence on record, except merely observing certain facts without any evidence and therefore, the AO has not rebutted any evidence of the assessee in this regard. Merely the jurisdictional AO has not sent the confirmation report, would not be ground to reject the explanations of the assessee or to take any adverse presumption. The AO did nothing thereafter in obtaining the report from the concerned AO of the donors.
Therefore, the CIT(A) was justified in allowing the appeal of the assessee. We uphold the finding and dismiss the appeal of the Revenue.