Income Tax Appellate Tribunal - Delhi
Vijender Kumar Jain And Sons (Huf) vs Assistant Commissioner Of Income Tax on 22 September, 2006
Equivalent citations: (2007)106TTJ(DELHI)83
ORDER
R.C. Sharma, A.M.
1. This is an appeal filed by the assessee against the order of the CIT(A), dt. 4th Oct., 2002 for the asst. yr. 1995-96, in the matter of order passed under Section 143(3)/147/251 of the IT Act, 1961.
2. Rival contentions have been heard and record perused. Originally assessment in this case was completed under Section 143(3)/148 on 13th April, 1998, wherein main addition was made on account of NRI gift of Rs. 2,20,000 received by the assessee from M/s Mohd. Shamim Khan s/o late Shri Hamid Ulla Khan of Riyadh. In the first round of appeal, the matter was restored back to the file of the AO to verify the actual position from the bank as to whether deposit in the NR(E) account can be out of local clearance or not. The AO was also directed to consider the deposit in the related account only prior to the date of gift i.e., 26th Sept., 1994. A notice under Section 131 to Smt. Mohd. Shamim Khan was to be issued, to give a right of cross-examination to the assessee. However, while refraining the order, the AO did not strictly follow the direction of the CIT(A) and has passed his order mainly on the statement of the donor.
3. By the impugned order, CIT(A) confirmed the action of the AO regarding bogus gift received by the assessee from Mohd. Shamim Khan. Aggrieved by the above order of the CIT(A), the assessee is in further appeal before us. It was contended by the learned Authorised Representative, Shri Vijayant Singh that while restoring the matter back to the file of the AO during the first round of appeal, the CIT(A) has given specific direction and the AO has not followed the same. As per learned Authorised Representative, the AO did not verify the actual position from the bank as to whether deposit in the NR(E) account was out of local clearance or not. The AO has not considered the deposit in the related account prior to the date of gift i.e., 26th July, 1994, and no right of cross-examination of the donor was given to the assessee. He further submitted that gift was given to the assessee out of the foreign remittances made on 15th July, 1993 and 20th Aug., 1993 of Rs. 1 lac each, there is no major credit entry appearing after 20th Aug., 1993 in the bank account No. 14477, from where gift was given to the assessee, except for the bank interest. As per learned Authorised Representative, even the AO was having no doubt regarding these amounts having been received from Riyadh. As per learned Authorised Representative, the AO has relied on the order of the Tribunal in cases of other assessees who has received the amount of gift from the same donor, but the same are distinguishable on facts, insofar as in those cases, opportunity was given to the assessee for cross-examination of the donor, whereas in the instant case in spite of giving so many requests to the AO, no opportunity to cross-examine the donor was afforded. He (has) further drawn our attention to the statement of the donor recorded by the AO, wherein gift was stated to have been given out of foreign remittances. The donor in his statement had admitted that he has sent Rs. 1 lakh each on different dates from Riyadh in the NR(E) account No. 14477. It was also stated by the donor that the gift was made on the occasion of the Karta's daughter's birthday. The donor was well known to the assessee which is evident from the statement even though recorded behind back of the assessee.
4. The learned Authorised Representative has also drawn our attention to the irregularities occurred while passing the assessment order with respect to the jurisdiction of the AO under whom the assessee was covered. As per the learned Authorised Representative the statement of the donor was recorded under coercion, wherein his bank account was seized by the IT authorities and after the Department was successful in recording the statement of the donor as suited to them, the said bank account was released, wherein donor was having balance of Rs. 5-6 lacs.
5. On the other hand, learned Departmental Representative, Smt. Promila Saran, vehemently argued that due justification has been given not only for reopening the assessment but also for making addition on account of bogus gift. As per learned Departmental Representative, the donor himself in his statement confessed that cash was given to him by one Mr. K. Singh and the amount was deposited in the bank account for giving the alleged gift and the donor was receiving 10 per cent commission for giving such bogus gifts. The assessee was unable to produce the donor even the Department has given copy of the statement of the donor and asked him to produce the donor if he controverts the statement recorded by the Department. She placed reliance on the decision of Ahmedabad Bench reported as ITO v. Dr. Jagdish J. Kansagara (1998) 60 TTJ (Ahd) 288 : (1998) 66 ITD 381 (Ahd) and also decision reported as Lall Chand Kalra v. CIT (1981) 22 CTR (P&H) 135, in support of the proposition that gift without occasion is cash credit and liable to be added in assessee's total income. She further submitted that in case of gift, the assessee is not only required to prove the identity of the donor but also genuineness of the transaction of gift as well as capacity of the donor to advance a particular amount of gift. As per learned senior Departmental Representative, the assessee has grossly failed to substantiate the genuineness of gift transaction as well as creditworthiness of the donor, insofar as he was earning a meager amount of income. She (has) drawn our attention to the affidavit of Mr. K. Singh according to which cash was given to the donor by Mr. K. Singh for deposit in the bank account, out of which gift was alleged to be given. In view of these facts, the learned Departmental Representative requested for upholding the order of the CIT(A).
6. We have considered the rival contentions carefully, gone through the orders of the authorities below, statement of the assessee recorded under Section 131 as well as statement of the donor. We had also carefully gone through the other material placed on the record and also deliberated on the case laws relied on by the learned Authorised Representative and Departmental Representative in the context of factual matrix of the case. From the record, we found that addition under Section 68 of the Act was made on account of NRI gift of Rs. 2,00,000 received by the assessee from Shri Mohd. Shamim Khan. In support of the gift, the assessee had filed not only affidavit of the donor, but also produced evidence to show that the gift was received through account payee cheques drawn on NR(E) account of the donor No. 14477 with Central Bank of India. The AO called the donor and his statement was recorded at the back of the assessee, wherein the donor Shri Mohd. Shamim Khan stated that various gifts have been given by him at the instance of one Shri K. Singh of Saharanpur. It was also stated that cash of equivalent amount plus 10 per cent commission was received by him. The cash was deposited in the bank account and from there money was transferred to the account of the donee. On the basis of such statement of the donor, the AO has reopened the assessment under Section 147. During the course of reassessment proceedings, copy of statement of Shri Mohd. Shamim Khan was handed over to the assessee for rebuttal. The assessee categorically requested the AO as well as the CIT(A) for cross-examination at his expense, as the statement of donor was not reliable. However, the AO did not accede to the request of the assessee and did not produce Shri Mohd. Shamim Khan for cross-examination. He held that onus to prove the genuineness of the gift was on the assessee and the assessee has grossly failed to discharge the said onus, the amount received by the assessee as gift is required to be added as his income. The AO also observed that there was no occasion for the donor to make the gift as he was not connected with the donee. However, in the first round of appeal, the CIT(A) considered the entire material and restored the matter back to the file of the AO with specific direction, which we found had not been complied with by the AO while framing the reassessment. The additions were repeated and which were confirmed by the CIT(A) in the second round of appeal. While confirming the order of the AO, the CIT(A) has relied on the order of the Tribunal in case of Smt. Sushma Jain, who has also received gift from Shri Mohd. Shamim Khan. Even before the CIT(A), the learned Authorised Representative has submitted that the case of the assessee is distinguishable from the other cases decided by the Tribunal, in so far as opportunity to cross-examine the donor was afforded in those cases and therefore the Tribunal has confirmed the order of the CIT(A) holding the gift to be bogus, whereas in the instant case, no opportunity to cross-examine the donor was afforded. The learned Authorised Representative placed reliance on the decision of Hon'ble Supreme Court in case of Prakash Chand Nahta v. Union of India and Ors. in support of the proposition that cross-examination of the witness is must, before the Department relies on the statement of the witness for making addition. Reliance was also placed on the decision of Allahabad High Court in the case of Nathu Ram Premchand v. CIT (1963) 49 ITR 561 (All), wherein the Hon'ble Court explained that it was the duty of the AO to enforce the attendance of a witness, if his witness is material in exercise of his powers under Order 16, Rule 10 of CPC and where the officer does not do so, no inference can be drawn against the assessee. Learned Authorised Representative has also drawn our attention to the order of the Tribunal, dt. 3rd July, 2006 wherein under similar facts and circumstances, the assessment was restored to the file of the AO on the plea that opportunity to cross-examine the donor was not afforded by the Department. From the record, we found that the AO himself in his order had observed that Shri Mohd. Shamim Khan had gone to Saudi Arabia and made substantial earning there, part of which was remitted to the NR(E) account No. 14477, Central Bank of India, Saharanpur. The assessee was given gift through account payee cheque out of this account only. The AO has also observed that in his statement Shri Mohd. Shamim Khan had admitted to have remitted Rs. 12,00,000 from Saudi Arabia and out of which the said gift was made. During the course of assessment, the assessee has furnished all documentary evidence with regard to identity, genuineness and creditworthiness of the donor by way of documentary evidence. On the basis of balance in NR(E) account and the factum of amount having been remitted on 15th Feb., 1993 and 20th Aug., 1993, prior to the date of gift, there was no doubt that these amounts were (sic-remitted) from Riyadh even as per the statement of the donor himself, while replying to question No. 13. Even in reply to question No. 5, he has stated that he was in Riyadh from 1985 to 1993. We also found that in reply to question No. 8, Shri Mohd. Shamim Khan has stated that he has deposited a sum of Rs. 2,15,000 on 26th Sept., 1994 in account No. 11614 of Central Bank of India, whereas the gift was made out of bank account No. 14477 and not out of bank account No. 11614, wherein alleged cash was deposited. We have also carefully gone through the order of the Tribunal wherein additions were confirmed with respect to gifts received from the same donor and found that in all these cases opportunity for cross-examination was given to the donee on 5th Feb., 1998. Similarly, we found that question of pressure being applied by the Department for recording statement of the donor by freezing his bank account was not raised before the Tribunal. We found that bank account of the donor was seized and again released after the statement of the donor was recorded by the Department, itself indicates that donor was under pressure and undue influence by the Department. Statement of the donor under these circumstances cannot be said to be voluntary. Even the statement recorded under undue influence, remained untested, in the absence of opportunity of cross-examination being given to the assessee. We are therefore inclined to agree with the submissions of the learned Authorised Representative to the effect that statement recorded behind back of the assessee without being subjected to cross-examination cannot be fully admitted as evidence against the assessee. Therefore, facts and circumstances in the present case warrant no adverse inference against the assessee without affording opportunity to the assessee to test the veracity of the statement of Shri Mohd. Shamim Khan recorded at the back of the assessee. We also found that the Tribunal in its order dt. 3rd July, 2006 in ITA No. 4932/Del/1998, had categorically observed that in case the Revenue authorities are not able to produce Shri Mohd. Shamim Khan for cross-examination of the assessee, then the said statement of Shri Mohd. Shamim Khan recorded at the back of the assessee should be discarded and AO would redetermine the issue based on the other relevant material available on record. Respectfully following the observations of the co-ordinate Bench in the case having exactly same facts and circumstances, as well as same donor, and in view of the facts discussed hereinabove, we are inclined to set aside the orders of both the lower authorities and the matter is restored back to the file of the AO for deciding the issue afresh after giving reasonable opportunity to the assessee in terms of directions given hereinabove. Irregularities pointed out by the learned Authorised Representative with respect to jurisdiction of AO may also be taken care of while refraining the assessment. We direct accordingly.
7. In the result, the appeal of the assessee is allowed for statistical purposes.