Income Tax Appellate Tribunal - Delhi
Sanjeev Batra vs Assistant Commissioner Of Income-Tax on 14 August, 1998
Equivalent citations: [1999]69ITD23(DELHI)
ORDER
U. B. S. Bedi, J.M.
1. This is assessee's appeal directed against the order of the CIT(A), New Delhi, dt. 13th September, 1996, relating to asst. yr. 1993-94 and following grounds have been raised :
"1. Action of the CIT(A) in not deleting following additions made by the AO is unjust, illegal, arbitrary and against the facts and circumstances of the case :
(a) Rs. 25,00,000 under s. 68 of the IT Act, for gift of that amount received by Master Suvrat Batra, son of the assessee.
(b) Addition of Rs. 48,000 for personal expenses.
2. Action of the CIT(A) in upholding charge of interest under s. 234A, 234B and 234C of IT Act is unjust, illegal, arbitrary and against the facts and circumstances of the case.
3. Action of the CIT(A) in not taking note of the submissions of the applicant that the provisions of s. 64(1A) of IT Act are not applicable to the facts of this case is unjust, illegal, arbitrary and against the facts and circumstances of the case."
2. Since ground No. 1(a) and ground No. 3 are inter-related, these are first taken up and disposed of.
3. Facts in brief are like this that the return of income of Rs. 4,65,100 was filed on 3rd December, 1993. During the year under consideration assessee has received income from house property and income from other sources. The income of assessee's minor sons. Master Suvrat Batra and Master Samegh Batra are also clubbed with the income of the assessee. During the year assessee's son Master Suvrat Batra is shown to have received gift of Rs. 25 lakhs from one Shri Jagjit Singh Kochar, an NRI. In support of the same, the assessee filed before the AO a copy of cheque No. 030030 drawn on Bank of America, New Delhi, dt. 19th May, 1992. The case of the assessee is that this gift has been given by Shri J. S. Kochar out of personal consideration and love and affection. That he is a close family friend. The assessee had submitted further personal details regarding Shri Kochar and also stated that :
(a) Shri J. S. Kochar was non-resident India.
(b) He maintains an NRE account in India.
(c) He has remitted the amount into his own NRE account in foreign exchange.
(d) He has substantial funds to his credit in the NRE account.
(e) He has gifted the money to a known and close person.
(f) He is a man of means.
(g) The gift was by cheque.
(h) The gift has been accepted properly.
4. The assessee claimed before the AO that in view of the evidence as mentioned above, the gift he accepted is in order. However as per AO, the assessee had not been able to establish the financial capacity of the donor and also the genuineness of the gift had not been established. The AO also noted that though the huge amount of Rs. 25 lakhs had been shown as gift, yet the fact remains that the families are not related. In this case love and affection has just been translated into a gift, only when the second son of the assessee was horn. It was also noted that there is a further gift of Rs. 25 lakhs to M/s S. L. Batra (HUF) from the same Shri Kochar. According to the AO the quantum of the gift has also to be considered while discussing the genuineness of the gift. However, rich a person might be and however closely he might be related and in this case there is no relation, the quantum of money involved definitely casts a shadow on the genuineness of the gift in the circumstances under which the gift is made. While recording the statement of Mr. Sanjeev Batra, he was specifically asked by the AO whether Mr. J. S. Kochar had set any other gift on the birth of Suvrat. With regard to the same. Mr. Sanjeev Batra, the assessee replied that he did not remember but it is a matter of record which he has to check. When Shri Sanjeev Batra was confronted that his father's HUF, namely S. L. Batra & Sons had also received a gift of Rs. 25 lakhs, the assessee replied that the HUF might have got the gift and the HUF is also assessed to tax. During the course of assessment proceedings, the assessee had submitted that his was a joint family and the family resides in its own house at Defence Colony. The quantum of gift and the entity to which gift was shown and replies of assessee undoubtedly question the genuineness of gift. The AO also noted that the alleged gift was made in undue haste. The letter of Mr. J. S. Kochar in Dubai is dt. 19th May, 1992, and the cheque of the same date. It has been credited to Master Suvrat's account in India on 20th May, 1992. The AO has also observed that the so-called gift has come at a time when huge investments were made in the shares of Trident Projects Ltd. The AO thus noted that the amount claimed to have been received by the assessee is :
(a) Isolated in nature.
(b) One way.
(c) Between persons who are not related.
(d) Made in undue haste.
(e) At a time when assessee and his family had to make huge investments.
The AO concluded that the onus lay on the assessee to establish creditworthiness of the donors and genuineness of the gifts had not been discharged. He has, therefore, invoked s. 68 in deeming the receipt of Rs. 25 lakhs as the income of the assessee from undisclosed sources as the income of Master Suvrat Batra is clubbed with the income of the assessee.
5. The assessee preferred appeal against the order of AO and pleaded before the first appellate authority that Shri J. S. Kochar has remitted Rs. 25 lakhs from Dubai to India through banking channels and this amount was paid to Suvrat Batra by cheque. That the assessee has thus discharged onus that lay upon him to prove the genuineness of the gift. The onus is of shifting character and after the assessee has discharged the initial onus, it shifts to the Department. The AO wants the assessee to establish in this case the source of source which is not warranted by law. It was contended that the AO has based the assessment on suspicion that hawala transactions prevailed in India and there is possibility of transactions may be of hawala nature. He has, however, not found anything of that nature. According to the assessee, the assessment based on conjectures and materials partly relevant and partly irrelevant is liable to be quashed. It was further stated that besides gift made to Suvrat Batra and S. L. Batra & Sons (HUF) Shri Kochar made further gift of Rs. 11 lakhs to M/s Sanjeev Batra (HUF) in the asst. yrs. 1990-91. An objection was taken that the AO had made certain enquiries but the assessee had not been confronted. Shri Batra admitted that there is no relationship between the two families but, then it is the wish of the donor as to whom he should make a gift. That it is not necessary that a person making a gift must have made a gift in the past and should also make in the future. The learned representative of the assessee further objected to the observations of the AO that gift came out of the blue. According to him the gift is duly supported and the observations of the AO that there was collection of evidence, to give credence that gift had been received from an NRI are based on suspicion. However, it was pointed out by the AO without any evidence that money shown to have been received as gift is anything but gift and for the consideration which is definitely not out of love and affection. The assessee further repeated the contentions as raised before the AO during the course of assessment proceedings and submitted that the addition made by the AO being based on conjectures and surmises should be deleted. Assessee's representative, in order to support his contentions placed reliance on a number of judgments and pleaded for deletion of addition.
6. While concluding the CIT(A) has held as under :
"I have considered the matter. The claim of the assessee is that his son master Suvrat Batra has received a gift of Rs. 25 lakhs from one Shri J. S. Kochar. Shri Kochar is not a relative. Further it has been claimed that said Shri Kochar made a gift of Rs. 25 lakhs to the HUF of assessee's father M/s S. L. Batra & Son. And further Shri Kochar made a gift of Rs. 11 lakhs to M/s Sanjeev Batra, HUF in asst. yr. 1990-91. No other gifts stated to have been made by Shri Kochar to any of his own relatives. It is difficult to accept the preposition that huge gifts did come to the Batra family from Shri Kochar in the facts and circumstances of the case. It could be anything but certainly not a gift. The so-called gift of Rs. 25 lakhs from Shri Kochar is in undue haste and at a time when the Batra family had to make huge investments in Trident Group as elaborately discussed by the AO. Besides the appellant has failed to establish the gift as claimed. Mere submission is no evidence.
In the facts and circumstances of the case and the elaborate discussion as made by the AO in the assessment order, I hold that the AO has rightly invoked the provisions of s. 68 and clubbing to tax the sum of Rs. 25 lakhs in the hands of the assessee as income from undisclosed sources. The case law relied by the assessee, it is stated with respect, is distinguishable on facts and is thus of no aid to the appellant. The ground accordingly stands rejected."
7. The assessee preferred the second appeal. The learned counsel for the assessee as well as the learned Departmental Representative filed additional evidences along with their respective applications under r. 29 of the IT (Appellate Tribunal) Rules, 1963.
8. In the assessee's application, dt. 12th May, 1977, the following four documents were prayed to be admitted as additional evidence :
(i) Letter dt 31st October, 1997, from the donor to S. L. Batra, promising to send certificate from his bankers and also confirming the gifts made by him to the family members of S. L. Batra, so as to establish the capacity of the donor (p. 459).
(ii) Certificate dt. 2nd February, 1997, from Abu Dhabi Commercial Bank, Dubai, certifying about the valuable connection of the donor with that bank, also certifying the financial capacity of the donor (p. 460).
(iii) Certificate dt. 19th February, 1997, of Abu Dhai Commercial Bank, Abu Dhabi, reflecting upon the financial status of the donor (p. 460).
(iv) Letter dt. 1st March, 1997, from Al Mehtab Trading Co.
9. Similarly, in the case of the Revenue there are two applications, one dt. 12th February, 1997, whereby Revenue sought admission of additional evidence with respect to copies of bank statements, copies of deposit slips and copies of cheques issues running into 102 pages. There is another application of the Revenue of the similar nature dt. 13th January, 1998, whereby Revenue sought admission of 5 types of documents as detailed below :
(i) Copy of bank statement of a/c No. 19912-012 of Shri J. S. Kochar & Rabinder Kochar.
(ii) Confirmation of Shri J. S. Kochar to Shri R. K. Agarwal (HUF).
(iii) D.O. letter dt. 21st August, 1992, of Shri J. S. Kochar to Shri R. K. Agarwal (HUF).
(iv) D.O. Letter dt. 24th August, 1992, of Shri R. K. Agarwal to Shri J. S. Kochar.
(v) Copy of bank statement of Shri J. S. Kochar in ANZ Grindlays Bank a/c. No. 01SEP1437600.
10. The learned counsel for the assessee and the learned Departmental Representative submitted that these evidence could not be earlier obtained either during assessment or appellate proceedings are very material and relevant for disposal of appeal under consideration. Therefore, it was submitted that these should be admitted as additional evidence in terms of r. 29. Copies of documents as well as application were given to opposite parties and both the parties have shown no resistance for admission of additional evidence. Rather they have conceded that additional evidence as led by them should be admitted.
11. We have considered the request of both sides on admission of additional evidence and also looked into the nature of documents sought to be admitted. After looking into the details of the documents, we are convinced that these are necessary for the disposal of appeal in hand and there is no objection from either of the sides for admission of these documents. Therefore, we admit additional evidence of both the parties in this case.
12. The learned counsel for the assessee reiterated the submissions as made before the authorities below and further submitted that addition of Rs. 25 lakhs was made without giving adequate opportunity to the assessee. It was further submitted that from the order of the AO it is observed that the assessee has not been able to establish the financial capacity of the donor and genuineness of the gift had also not been established. At p. 4 of his order it was observed that it was also necessary for the assessee to prove that financial capacity of the donor to make the gifts. In this regard necessary evidence in the shape of the income earned by the donor as also the financial status at the time of making the gift would be necessary. Attention was drawn to letter dt. 20th January, 1996, from the assessee to the AO wherein it was submitted that at p. 25C of the said letter, it is specifically mentioned that confirmation of the gift of Rs. 25 lakhs from Shri J. S. Kochar, NRI out of his NRE account was enclosed and further to this, vide letter dt. 14th March, 1996, in response to letter dt. 12th March, 1996, it was submitted that Master Suvrat Batra received a gift of Rs. 25 lakhs from Shri J. S. Kochar out of personal consideration and love and affection as he is close family friend of the assessee. It was further stated that his father Sardar M. S. Kochar was having good connection with the father of the assessee since 1950. Now in the light of fresh documents furnished following submissions were made in respect of Shri J. S. Kochar :
"(a) Mr. Jagjit Singh Kochar is a non-resident Indian businessman presently residing at Dubai. He is son of Late S. Mehtab Singh who was borne in India but who in the early stages of his life went to Tehran (Iran) and carried on business from Tehran under the name of Sharkate Jawahar Ltd.
(b) The group carried on business not only with India but were traders with the rest of the world as well. In India, they carried on business (primarily in commodities and dry fruits). Mr. Mehtab Singh Kochar was married to Mrs. Satnam Kaur. He did on 12th December, 1993.
(c) Mr. Mehtab Singh Kochar has two sons, i.e., S. Santa Singh Kochar, who is married to Mrs. Kanwaljeet Kaur. S. Santa Singh has one son and two daughters, both of them are married. The second son who is younger to S. Santa Singh Kochar, i.e. S. Jagijit Singh Kochar (who is resident of Dubai) and is married to Mrs. Rubinder Kaur (Ruby). They have one son, gurji.
(d) The brothers are non-resident Indians and have extensive business interests in Dubai, Tehran, Hong Kong and London and own vast properties in London. Their old ancestral home is in Tehran (Iran).
(e) Mr. Jagjit Singh Kochar (JITI) is a person of medium height (5 ft. 8 inch). He has considerable business interests and is presently spending more time in Dubai where they are trading under the name of Al Mehtat Trading Co., P.O. Box 6354, Dubai, U.A.E. This is a limited liability Co. engaged in trading activities having a turn over in excess of Rs. one crore a day. He has been leading and setting the prices for bean crop into Spain and also asofetida into Russia.
Mr. Kochar comes to India rarely (probably once a year)."
13. It was further submitted that no query was made from the assessee to establish the financial capacity of the donor at assessment stage or at appellate stage. The assessee has produced all relevant papers in order to establish that gift made is genuine and the donor had the capacity to make such gift. The donor being NRI had a vast business empire in foreign country. As per documents filed, he had the capacity to make gifts at one point in the amount of Rs. one crore as per financial background certified by the bankers of the donors. The donor had family relations with the father of the assessee and at the time of birth of second son of the assessee he made a gift of Rs. 25 lakhs out of love and affection and the gift has been received through banking channels, confirmation has been given by the donor and long family relations have been established in this case in order to justify the gift. It was also pleaded that in good old days at one point of time, assessee's father, who had good relations with Kochar family, in order to settle property and legal matters in India, helped him a lot and thereafter relations got strengthened and since 1950 family of the donor is closely connected with the family of the assessee. So it is wrong to hold that donor is stranger. The entity of the gift has been accepted by the donor. Financial capacity has been proved by furnishing bank certificate issued by Abu Dhabi Commercial Bank letter dt. 2nd February, 1997, that the donor has the financial capacity to gift any amount upto US Dollars 5 lakhs at any given time. Another letter of 19th March, 1997, of the said bank advised the donor on his request that he is maintaining with the bank fixed deposit aggregating US Dollar 18,98,571.72 which are underlined for the facilities sanctioned to Al Mehtab Trading Co. It was also submitted that assessee's father is confident of the Kochar family inasmuch as last will written by the father of the donor was also kept with the assessee's father to be disclosed to the family members after his death. Therefore, the degree of relationship between the families can be judged from the fact that last will (photocopy filed) which is considered to be most confidential document is being kept with the father of the assessee. Therefore, the gift of Rs. 25 lakhs made on the birth of second son of the assessee is nothing for such a wealthy person who has special love and affection with the family. Necessary documents have been produced to justify the genuineness of the gift and capacity of the donor to make the gift. It was argued that addition made is uncalled for and should be deleted.
14. It was also submitted that it is a clear case of making of gift through banking channels out of NRE account of NRI and neither s. 68 nor 69A could be invoked in this case and the assessee had with cogent evidence and material established the identity, genuineness of the gift and capacity of the donor. So addition made is unwarranted and uncalled for which needs to be deleted. Otherwise also s. 68 or s. 69A are not applicable to the facts of the case and addition made by invoking these provisions is to be deleted. It has not been established by the Department that the amount gifted has not come from foreign country. It is also not established that donor is not a man of means by any documentary evidence. So addition made in unwarranted. It was further pleaded that in the case of gift from NRI the assessee is required to establish that the amount had come through banking channels which has since been established by the assessee. So no addition could be made. Assessee's counsel further relied upon number of judgments and further emphasised that the assessee is not required to prove source of source and addition made is required to be deleted. It was also pleaded that in another case of Rakesh Agarwal, HUF where same donor had made a gift of Rs. 11 lakhs and the same has been accepted by the AO in the asst. yr. 1993-94 vide order under s. 143(3), dt. 15th February, 1996. Therefore, it was pleaded that in the case of the assessee addition needs to be deleted. Assessee placed reliance on the following judgments of Delhi High Court and various orders of Tribunal and notification etc., on gifts :
(1) Smt. Shama Suri & Ors., "C" Bench, Delhi in ITA Nos. 3089(Del)87 etc. for asst. yr. 1982-83, dt. 28th September, 1990;
(2) Ms. Sunita Vachani, "A" Bench Delhi in ITA No. 1474(Del)86 for asst. yr. 1982-83, dt. 17th March 1987;
(3) Master Nikhil Nanda, etc. "C" Bench Delhi in ITA No. 1958(Del)85 for asst. yr. 1980-81, dt. 20th April, 1987;
(4) Shri Narinder Suri, "C" Bench, Delhi in ITA No. 4119(Del)85 for asst. yr. 1981-82, dt. 29th March, 1988;
(5) Shri D. C. Rastogi (HUF) etc. "D" Bench, Delhi in ITA No. 7638(Del)89 etc. for asst. yr. 1986-87, dt. 28th June, 1995.
(6) CBDT Circular No. 302, dt. 2nd May, 1981;
(7) Double Taxation Agreement between India and U.A.E. dt. 18th January, 1993;
(8) Smt. Meena Rastogi, "D" Bench, Delhi in ITA No. 5086(Del)91 for asst. yr. 1987-88, dt. 6th November, 1996;
(9) P. D. Kumaresar, "A" Bench Madras in GTA No. 57(Mds)81 for asst. yr. 1975-76, dt. 13th July, 1982.
(10) O. A. P. Andiappan, "C" Bench, Madras in ITA No. 544(Mds)79 for asst. yr. 1973-74, dt. 13th November, 1979; and (11) Shyam Sunder Gupta, ITA No. 512(JP)1994, for asst. yr. 1989-90, 22nd December, 1994.
On onus when discharged by assessee/Department;
(12) Radha Krishna Behari Lal vs. CIT (1954) 26 ITR 344 (Pat);
(13) Shri Dattatraya Laxman Deshpande, ITAT, Nagpur Bench, ITA No. 7(Nag) 79 for asst. yr. 1975-76, dt. 2nd November, 1979;
(14) Gujarat State Fertilizers Co. Ltd. ITAT, Ahmedabad "C" Bench, in ITA No. 1724(Ahd)86 for asst. yr. 1981-82, dt. 21st November, 1988 (1989) 35 TTJ(Ahd)161;
(15) Indo European Machinery Co. vs. CIT (1955) 28 ITR 493 (Punj);
(16) P. V. Raghav Reddi vs. CIT (1956) 29 ITR 942 (AP);
(17) Parkash Textile Agency vs. CIT (1980) 121 ITR 890 (Cal);
(18) Oriental Wire Industries (P) Ltd. vs. CIT (1981) 131 ITR 688 (Cal);
(19) Jambudas vs. CIT 2 ITC 135, Nagpur;
(20) Bishma Priya Chowdhri, I ITC 261 (Cal);
(21) MMAK Mohindeen Thamby & Co. vs. CIT (1959) 35 ITR 481 (AP);
(22) Lajwanti Sial & Ors. vs. CIT (1956) 30 ITR 228 (Nag); and (23) Sreelekha Banerjee & Ors. vs. CIT (1963) 49 ITR 112 (SC).
15. Assessee's counsel also filed various statements of accounts and other connected documents to substantiate its claim that the gift was validly made out of love and affection for the new born and is not taxable in the hands of the assessee. Copies of passports of donor and his wife were also filed to substantiate its claim. It was pleaded that the donor is a man of means having ample sources and has a special feelings and affection for the family of the assessee. So gift made by him is liable to be accepted. AO as well as CIT(A) was unjustified in not accepting the claim of the assessee. So far as gift of 11 lakhs to Shri Rakesh Aggarwal (HUF) by the same donor is concerned, it was submitted that in this case gift has been accepted by Asstt. CIT, Co. Circle 1(3), New Delhi vide order dt. 15th February, 1985, and as regards other amounts to other parties and bank transactions details of which were filed by Department and copy supplied to assessee. The learned counsel for the assessee submitted that he has no comments to offer as transactions pertained to donor and not to assessee.
16. The learned Departmental Representative, on the other hand, submitted that despite specific opportunity granted to the assessee to prove genuineness of the gift as well as financial capacity of the donor during assessment proceedings the assessee failed to do so. Therefore, AO was fully justified in not accepting the gift amount as gift and rightly added the same in the income of the assessee. It was also pleaded that gift of such a big amount of Rs. 25 lakhs is against normal human conduct and all probabilities especially when donor is admittedly not related to assessee. It was also pointed out that the said donor has not only gifted Rs. 25 lakhs to the minor son of the assessee but also made further gifts of Rs. 25 lakhs and Rs. 11 lakhs to two HUFs of the family one in this year and the other in different assessment year i.e. 1990-91 and besides this number of accounts have been given by the same donor to different persons in India out of this same NRE bank account and photocopies of those cheques were produced to substantiate the plea moreover when that donor could not have such a big financial capacity for this amount in question as well as for all other amounts and no source of income was shown by the assessee of the said donor with any documentary evidence. Two certificates have no doubt been produced from the banks but those certificates do not indicate if the donor had any regular source of income which could result in generation of huge amounts. The learned Departmental Representative further stated that undue haste in sending of cheque for transferring of the amount within one day also fortifies the stand of the stand of the Department that this transaction is not a genuine one. The explanation given by the assessee in this regard is also against human probabilities. AO has proceeded in a prescribed manner giving fullest opportunity to the assessee to prove the genuineness of the transaction as well as financial capacity of the donor to substantiate its claim for exemption of this amount from taxability. But the assessee could neither be able to prove either of these two before the AO or before the learned first appellate authority. So it was strongly emphasised that action of authorities below is fully justified. It was, thus, urged for confirmation of order of authorities below as assessee has miserably failed to establish his case here also and case law as cited and relied upon by assessee's learned counsel is either of no relevance or distinguishable on facts. Further learned Departmental Representative relied upon following case law :
(1) CIT vs. Sophia Finance Ltd. (1994) 205 ITR 98 (Del)(FB) (2) D. C. Rastogi (HUF) vs. Asstt. CIT, ITA No. 7638(Del)89 etc. 'D' Bench, Delhi order dt. 28th June, 1995; and (3) Mrs. Jyotsna Suri vs. Dy. CIT & Ors. ITA No. 300(Del)96 & Ors. 'B' Bench, Delhi order dt. 3rd January, 1997.
17. We have heard the rival submissions, perused the record and gone through the relevant record to which our attention was drawn and also looked into the case law cited by both the parties. In this case an amount of Rs. 25 lakhs was received by the minor son of the assessee from one Shri J. S. Kochar who is stated to be non-resident Indian and has given a gift of this amount on the birth of second son of the assessee and this amount has been given out of NRE account of the said alleged donor Shri J. S. Kochar and remittances in this NRE account is stated to have been made by Shri J. S. Kochar in foreign exchange. It is also the case of the assessee that said Shri J. S. Kochar has substantial funds to his credit in the NRE account and he has gifted this money of Rs. 25 lakhs to a known and close person. This is also the case of the assessee that said alleged donor is a man of means having paid the amount through cheque and the said gift is stated to have been accepted properly. So there was no occasion for any addition to be made in the income of the assessee. Assessee has claimed before the AO that in view of evidence as mentioned above the amount by way of alleged gift accepted by the assessee on behalf of his minor son is in order and assessee has been able to establish the financial capacity of the alleged donor and genuineness of the gift had also been established. It was also pointed out by the assessee's representative that in spite of all the material and evidence as led by the assessee's counsel AO was not justified in not accepting the amount of Rs. 25 lakhs as gift received and it is immaterial whether families are related to each other or not. But they are very close to each other and love and affection has just been translated into a gift.
18. In spite of all these assertions it is admitted fact that assessee had another son and nothing was brought on record to show that said alleged donor had gifted anything at the time of birth of his first son when he stated that there are long ties of the so-called donor Shri J. S. Kochar with the family of the assessee. It was also necessary to look into the question of the gift which has to be considered while discussing the genuineness of the gift. However rich a person might be and however closely he might be related (in this case there is no relation) Rs. 25 lakhs as gift out of the blue definitely casts a shadow on the genuineness of the gift as the circumstances under which the gift was made have to be verified so as to ascertain the genuineness of the gift. In his statement Shri Sanjeev Batra was firstly asked by the AO whether Shri J. S. Kochar has sent any other gift on the birth of Suvrat. The assessee replied that he did not remember but it is a matter on record which he has to check. When Shri Sanjeev Batra was confronted with his father's HUF namely S. L. Batra & Sons it also received a gift of Rs. 25 lakhs. Assessee replied that HUF might have get the gift and HUF is also assessed to tax. During the assessment proceedings assessee had submitted that his was a joint family and the family resides in his own house at Defence Colony. The quantum of which and the time to which the gift was shown and the replies of the assessee undoubtedly questioned the genuineness of the gift. It was also observed that the alleged gift was made in undue haste and whole of the transaction took place within 19th May, 1992, to 20th May, 1992, and observed that the so-called gift has been given at a time when huge investments were made in the shares of Triden Group. So in view of these facts it was held that the amount claimed to have been received is (a) isolated in nature; (b) one way; (c) between persons who are not related; (d) made in undue haste; (e) at a time when the assessee and his family had to make huge investments. It was thus concluded that assessee failed to establish creditworthiness of the donors and genuineness of the so-called gift had not been discharged and by invoking the provisions of s. 68, the receipt of the amount was treated as income of the assessee from undisclosed sources as income of Master Suvrat Batra is clubbed with the income of the assessee. Against the invoking of s. 68 assessee relied upon various judgments and pleaded that this provision is neither applicable nor can be invoked in the case of the assessee.
19. We after having heard both sides and considering the contentions as raised and looking into the relevant documents, case law and other materials, are of the view that the AO was fully justified in treating the amount of Rs. 25 lakhs received by the assessee on behalf of his minor son from Shri J. S. Kochar as income of the assessee because he has not been able to conclusively prove that there is any valid and apparent source of income of so-called donor Shri J. S. Kochar. None of the documents produced by him show that he has conducted any business and has earned or generated any income whatsoever. Despite specifically asking for establishing the genuineness and financial capacity of the so-called donor assessee has not been able to prove the same. From the evidence and material adduced it transpires that besides gifting amount of Rs. 25 lakhs to a minor son of the assessee, the said Shri J. S. Kochar has gifted another amount of Rs. 25 lakhs to the HUF of the assessee's father M/s S. L. Batra & Sons and further made a gift of Rs. 11 lakhs to M/s Sanjeev Batra, HUF in the asst. yr. 1990-91. Assessee has further stated that no other gifts, etc. have been made by Shri Kochar to any of his own relatives whereas the documents furnished by the Revenue clearly indicate the following amounts aggregating to Rs. 3,97,09,000 having been given through cheques out of the same bank account from where the amount was given to the assessee and his other HUFs. The details of the amounts given are as below :
List of cheques
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1. Ravinder Kum. Juneja Bank of 522327 21-12-93 8,00,000 America
2. Ms. Rany Bharany -do- 522328 21-12-93 21,00,000
3. Kanta Kumari Juneja -do- 522330 18-01-94 5,00,000
4. Mrs. Veed Agarwal -do- 522331 1-2-94 5,00,000
5. Mr. G. Sagar Suri -do- 522333 7-2-94 12,50,000
6. Mrs. Kavita Singh -do- 522334 28-2-94 1,00,000
7. Master Siddarth Singh -do- 522335 28-2-94 34,000
8. Mr. G. Sagar Suri -do- 522336 15-3-94 31,00,000
9. Udai Singh (HUF) -do- 522337 25-3-94 90,000
10. Prem Sagar Bhatia -do- 522339 4-4-94 5,50,000
11. Parveen Kumar Jain -do- 522340 14-4-94 5,00,000
12. Mr. Jaiprd Singh -do- 522341 6-5-94 5,00,000
13. Jyoti Goel -do- 522342 24-6-94 10,00,000
14. Udai Singh (HUF) -do- 522343 28-6-94 2,00,000
15. Mrs. Surj Kaur -do- 522345 19-7-94 3,00,000
16. Mrs. Sheela Khanna -do- 522346 28-7-94 4,70,00
17. Mrs. Surjit Kaur -do- 522347 29-7-94 4,00,000
18. Mrs. Meera Kapoor -do- 522348 9-9-94 31,00,000
19. Mr. Anil Kapoor -do- 522349 10-9-94 15,00,000
20. Ankit Kapoor -do- 030027 20-4-92 11,00,000
21. Akanksha Kapoor -do- 030028 20-4-92 11,00,000
22. Ravinder Kumar Juneja -do- 030029 19-5-92 5,00,000
23. Master Suvraj Batra -do- 030030 19-5-92 25,00,000
24. Anita Kapoor -do- 030031 20-5-92 11,00,000
25. Anil Kapoor -do- 030032 20-5-92 11,00,000
26. Anil Kapoor (HUF) -do- 030033 20-5-92 11,00,000
27. Mrs. Kanwaljeet Kaur Kochar -do- 030034 28-5-92 25,00,000
28. Mr. Raj Kumar -do- 030035 22-6-92 3,50,000
29. Mr. Anil Tanwar -do- 030036 22-6-92 1,00,000
30. Mr. Paramjit Singh Sarna-do- 030037 11-7-92 1,00,000
31. Mr. Bhupinder Pal Singh Sarna -do- 030038 11-7-92 50,000
32. Prakash C. Lakhotia -do- 030039 30-10-92 21,00,000
33. Mr. Jamna Datlani -do- 030041 9-11-92 4,00,000
34. Prakash C. Lokhotia -do- 030042 11-11-92 10,00,000
35. Suvrat Batra -do- 030043 25-4-93 15,000
36. Ramji Sarany -do- 030045 25-5-93 25,00,000
37. Kewal Krishan Juneja -do- 030046 19-7-93 5,00,000
38. Mr. R. C. Juneja -do- 030048 24-8-93 5,00,000
39. Mr. R. C. Juneja -do- 030049 1-10-93 5,00,000
40. Sanjeev Kumar Juneja -do- 030050 8-11-93 10,00,000
41. S. L. Batra & Sons (HUF)-do- 030026 20-4-92 25,00,000
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Besides these, there are number of other transactions as per copy of bank statements filed by Revenue with respect to J. S. Kochar and Rubinder Kochar a/c No. 19912-012, Bank of America and also ANZ Grindlays Bank a/c No. 01SEP1437600 with respect to J. S. Kochar. Apart from it, another gift of Rs. 11 lakhs was made by this donor as per record furnished by Revenue in the name of R. K. Agarwal (HUF). But we are only concerned with amount of Rs. 25 lakhs and shall confine ourselves to that only.
20. It is also a fact that the assessee had received this amount when Batra family had made a huge investment in Trident Group as elaborately discussed by the AO. All the documents furnished by the assessee in any manner do not prove that the said donor has conducted any business or has any source of income. The amounts came to his bank account in the Bank of America on various dates without showing necessary evidence or material or source of deposit. In order to examine the claim of the assessee that he has furnished full details and documents with regard to genuineness of the gift as well as financial capacity of the donor we observe that he mainly relied upon bank certificates, letter of confirmation which according to him are ample proof of making gift by the donor having good and sound financial background and also to establish the gift as genuine and, while furnishing addition evidence, assessee has furnished two bank certificates (one letter and the other certificate of the bank) from Abu Dhabi Commercial Bank, Dubai dt. 2nd February, 1997 and 19th February, 1997. He also relied upon confirmatory letter as well as letter from donor to father of the assessee dt. 31st January, 1997. The contents of these documents are reproduced hereinafter :
Letter dt. 19th February, 1997, from Abu Dhabi Commercial Bank to the donor is as under :
"19 February, 1977 Mr. Jagjit Singh Kochar, PO Box 6356 Dubai.
Dear Sir, At your request, we have to advise that you are maintaining with the bank fixed deposits aggregating USD 1,893,571.72 which are under lien for the facilities sanctioned to AI Mehtab Trading Company LLC.
Yours faithfully, For Abu Dhabi Commercial Bank Sd/-
Authorised signatory."
certificate from the said bank dt. 2nd February, 1997, is as under :
"We hereby certify that Mr. Jagit Singh Kochar, Indian national and partner of AI Mehtab Trading Co. L.L.C. is well known to the Bank.
He maintains a valuable connection with the Bank since July, 1979. To the best of our knowledge and belief, Mr. Jagit Singh Kochar has the financial capacity to transact/gift and amount up to US Dollar 5,00,000 (U.S. Dollars five hundred thousand only) at any given time.
For Abu Dhabi Commercial Bank Sd/-
Farouq AI Hussari Sr. Asstt. General Manager."
Letter of confirmation by the donor received through FAX which is undated is as under :
Confirmation "I, Jagjit Singh Kochar do hereby confirm as under :
1. That I am a non-resident Indian. Permanently residing at Dubai.
2. That I am maintaining non-resident External (NRE) account No. 013-34-19912 with Bank of America, Hansalaya Building, Barakhamba Road, New Delhi, India.
3. That I made a gift of Indian Rs. 2,500,000 (rupees two million five hundred thousand) by cheque No. 030030, dt. 19th May, 1992, drawn on NRE a/c No. 012-34-19912 with Bank of America, Hansalaya Building, Barakhamba Road, New Delhi, India to Master Suvrat Batra, s/o Mr. Sanjeev Batra, C-466, Defence Colony, New Delhi - 110024 - India out of my love and affection for him.
Sd/-
(Jagjit Singh Kochar)"
Letter of donor to father of the assessee dt. 31st January, 1997 is as under :
"JAGJIT SINGH KOCHAR 31st January 1997 Dear respected Batra Uncle Namaskar With due respects. This has reference to the discussions between us on 18th January, 1996. I am very sorry to note about the interference of income-tax people and that my gift of Rs. 25,00,000 to Suvrat is subject to income-tax. I once again confirm that I made the gifts to various persons in your family due our cordial family relations and at the instance of my great late father who had been very very close to you and respected you like his brother. Since my childhood, I have been witness of your help and guidance to our business problems and family matters. I cannot forget your advice and guidance from time to time you have been great help to us in all respects. It is impossible for us to reciprocate your goodness. My father always wanted to be of help to you and thus at his instance, I made the gifts to members of your family. I assure you and confirm that the gifts made by me to your family members are out of my own personal resources. If necessary I can request my bankers in Dubai to issue a certificate in this respect. I am sorry that you have to face problems with income-tax people due to my affection and love towards you and your family members. Ruby & Gorji join me to convey our sincere respects to you and dear aunty. Best regards to Gulooji & Shelly.
With respect, Your affectionately Sd/-
Mrs. S. L. Batra, C/466, Defence Colony, New Delhi."
21. On the basis and strength of above-noted communications, assessee asserted that genuineness as well as financial capital of the donor has been established but we after having gone through the contents language of these documents are unable to accept the contention of the assessee as in none of these documents it has been established that either the assessee had any business or any amount has been withdrawn by the donor to co-relate that with the gift made to the assessee's minor son. These bank documents are of general nature and do not support the case of the assessee in anyway.
22. Assessee's counsel has also produced copies of assessment order in the case of M/s Rakesh Agarwal HUF dt. 15th February, 1996, passed under s. 143(3) for the asst. yr. 1993-94 along with photocopy of demand notice and balance sheet and reply dt. 19th September, 1995, in the assessment proceedings alleged to have been filed during the assessment and it was pleaded that similar type of gift of Rs. 11 lakhs was made by the same donor to this assessee of which reference was made by the Revenue at the time of hearing of stay application and as would appear from the copy of the assessment order no addition on account of gift received by the said assessee from the same donor was made. So on these basis also assessee's counsel has pleaded for deletion of addition of Rs. 25 lakhs. We examined the assessment order of above noted case and find that as there is no mention of gift amount in the order under s. 143(3), reliance on such order is of no help to the assessee.
23. Now we come to the case law as relied upon by assessee's counsel to support the case of the assessee and in the decision of Tribunal 'C' Bench in ITA No. 3089(Del)89 for the asst. yr. 1982-83, dt. 26th September, 1990, in the case of Smt. Shama Suri, New Delhi and 2 others we find that the source of the donor has been explained but in the case in hand no such explanation or evidence to establish the source of amount is there. So in ITA No. 1474(Del)86 for the asst. yr. 1982-83, dt. 17th March, 1987, 'A' Bench of the Tribunal in the case of Mrs. Sunita Vachani the case was remanded back as to verify the credit worthiness and genuineness of the transaction and this case is also of no help to the assessee. In the case of Master Nikhil Nanda etc. 'C' Bench of the Tribunal in ITA No. 1958(Del)85 for the asst. yr. 1980-81, dt. 20th April, 1987, vide order dt. 20th April, 1987, the creditworthiness and genuineness of the gift was duly proved. In the case of Narinder Suri, 'C' Bench, Delhi in ITA No. 4119(Del) 85, for the asst. yr. 1981-82 vide order dt. 29th March, 1988, the matter was remanded back for fresh adjudication and to find out the genuineness of the mode of gift from donor. The case of D. C. Rastogi (HUF) etc. 'D' Bench, Delhi in ITA No. 7638(Del)89, etc. for asst. yr. 1986-87 dt. 28th June, 1995, rather supports the case of the Revenue and has been heavily relied upon by the Revenue. Assessee also relied upon CBDT Circular No. 302, dt. 2nd May, 1981, Double Taxation Agreement between India and U.A.E. dt. 18th January, 1993, and four decisions of other Benches to support his case with regard to gift but after going through these we find that somehow or other these cases are distinguishable on facts and not applicable. Similarly, assessee's counsel also relied upon 12 more cases of different High Courts and Tribunal Benches on the point whether onus of proof is to be discharged by the assessee or the Department and after going through all these cases, we are of the considered opinion that primary onus has not been discharged by the assessee for establishing the genuineness of the gift and financial capacity of the donor and these cases anyway, do not help the assessee.
24. It is also one of the grounds of the assessee that action of AO is unjust, illegal, arbitrary and against the facts and circumstances of the case in making addition of Rs. 25 lakhs under s. 68 of the IT Act for the gift of that amount received by Master Suvrat Batra, son of the assessee. Assessee relied upon various case law and lengthy arguments were advanced on this point which were duly rebutted by the Departmental Representative and it was pleaded that with respect to any credit entry in the books of account of the assessee, AO is duty bound to probe into the same, looking into its nature-genuineness etc. It was pleaded that similar situation arose in the case of Shri D. C. Rastogi & Ors. Asstt. CIT referred to supra, whereby 'D' Bench of Tribunal has held in para 20 of the order as under :
"20. Considering the facts and circumstances of this case and the evidence on record, we are of the view that the onus that lay on the assessee to establish the creditworthiness of the donors and genuineness of the gifts has not been discharged. The AO in such circumstances, was justified in invoking s. 68 in deeming the receipts as income of the assessee from undisclosed sources. The additions of Rs. 95,496 claimed to have been received from Shri Thomas Mathaw of Libya and Rs. 6,692 received from Shri S. Paul are accordingly confirmed."
25. In this case it was also held that :
"Though there is no bar for the strangers to make gift to persons in India, yet it would be necessary for the assessee to explain the circumstances under which the gift was made so that genuineness of gift could be verified. It is a common knowledge that hawala business is invoked in India and elsewhere and the mere fact that money has been received in India in foreign exchange from abroad would not be sufficient to absolve the assessee from burden of establishing the identity, financial capacity of the donor and the genuineness of the gifts. In this case we find only a confirmation from parties that the gift has been made. There is evidence that money has been received by draft from abroad. In such circumstances no enquiry could be conducted by the AO to verify the claim of the assessee. There is no such evidence on record to establish the financial status of the donor nor is there satisfactory evidence supporting the genuineness of the gift."
Appeal of the assessee was dismissed by the Tribunal vide order dt. 28th June, 1995 in the above case. Similarly, in another case of Mrs. Jyotsna Suri vs. Dy. CIT & Ors. ITA No. 300(Del)96 and others vide order dt. 3rd January 1997, while discussing and deliberating upon similar issue Tribunal has dismissed the appeal of the assessee and upheld the order of the CIT(A) with regard to gifts. While deciding the abovenoted two cases reliance was placed on the decision of Hon'ble Delhi High Court (1994) 205 ITR 98 (supra) in the case of Sophia Finance Ltd. and action of the AO in invoking s. 68 was held to be proper and valid. Relevant extracts of Sophia Finance were also reproduced.
26. We after having heard both sides on this point and looking into the case law as cited as well as documents on record are of the view that AO was fully justified in invoking s. 68 for bringing to tax an amount of Rs. 25 lakhs alleged to have been received by the assessee as gift from one Mr. J. S. Kochar (though received by the assessee in his minor son's account through banking channels) which has neither been proved to be genuine nor financial capacity of the donor has been established. Therefore, we confirm the order of CIT(A) on this point and dismiss these grounds of appeals of the assessee.
27. How we shall take up ground No. 1(b) of the assessee's appeal which relates to addition of Rs. 48,000 on account of low withdrawals for personal expenses ?
28. Facts are like this that assessee has shown withdrawal of Rs. 10,434 as personal expenses and when he was confronted with, the plea taken by the assessee before the AO was that he resides with his parents in joint family and all expenses are being borne by Shri S. L. Batra, assessee's father who has withdrawn Rs. 64,000 during the year. Accordingly to the AO the personal withdrawal of the assessee seems to be paltry keeping in view his income, status and size of the family. So AO has estimated such expenses at Rs. 4,000 per month over and above the withdrawals made by the assessee and in this way addition of Rs. 48,000 was made. Assessee preferred appeal and pleaded before the first appellate authority that he is living in a joint family consisting of assessee's father, mother, assessee himself, his wife and his two minor sons and all expenses are borne by the father of the assessee Shri S. L. Batra who has withdrawn Rs. 64,000 which were sufficient to pay for the basic needs of the family. It was also stated that Shri S. L. Batra, father of the assessee, is being assessed to income-tax. CIT(A) while confirming this action of the AO has concluded at p. 6 as under :
"As per the statement of income of Shri Sanjeev Batra, the appellant for asst. yr. 1993-94 i.e., the relevant assessment year, the rent from house property in respect of Tolstoy Marg flat is shown at Rs. 2,95,860. There is rent shown for another flat at Nehru Place Rs. 46,118. The income from other source shown is Rs. 37,760. Further, the income of son Master Samegh Batra included in the total income of the assessee. Such income is arising out of rent of Rs. 1,50,000 from house property, 10-D, Sagar Apartments, and basement No. 35, Sagar Apartment rent Rs. 36,000, total rent Rs. 1,86,000. There is shown other income of Master Samegh at Rs. 28,071. With all this incomes and assets, the assessee has shown withdrawal of Rs. 10,434 as personal expenses. The case is that the assessee lives in a joint family and withdrawals of his father are of Rs. 54,000 during the year. Having regard to the income level, status and size of the family, I do not consider it necessary to interfere with the AO's action in making the addition on account of low withdrawals at Rs. 48,000. The addition is confirmed."
29. The learned counsel for the assessee reiterated the submissions as made before the first appellate authority and further pleaded that since household expenses are being incurred by the father of the assessee and assessee is being residing in joint family with his father and mother, he was very much justified in making withdrawal of Rs. 10,434 as personal expenses. It was also submitted that nothing was placed on record by the AO which could suggest that the amount withdrawn is substantially low because he has just remarked that having regard to the income level, status and size of the family, the withdrawals shown by the assessee are low and on same basis CIT(A) has confirmed it. So it was urged for deletion of the addition. The learned Departmental Representative on the other hand, submitted that the action of the AO is very much justified as assessee has very high status and income level is also on higher side. So CIT(A) was fully justified in confirming the action of the AO.
30. We have heard rival submissions, perused the record, looked into the basis and reasoning as given by the authorities below for making the addition. It is an admitted fact that assessee has substantial income and thus withdrawal shown by him cannot be held to be sufficient. Since no material or any other evidence has been adduced by the assessee to prove his contention, so while confirming the action of the authorities below we dismiss this ground following the reasoning and discussion in this regard as given by authorities below.
31. The last ground taken by the assessee in ground No. 2 of the memorandum of appeal relates to confirmation of charging of interest under s. 234A, 234B and 234C. While making assessment AO made a stipulation that interest to be charged as per law. Assessee's counsel challenged this direction in this order of the AO before learned CIT(A) and submitted that the order of the AO is not a speaking order and according to him, such order is of no consequence and bad in law. So it as pleaded that charging of interest on the basis of this order may be cancelled/deleted. CIT(A) while deliberating upon this issue held that since there was a specific order of charging interest by the AO as per law in the order of assessment and interest has been charged according to the procedure, he found no infirmity in the direction issued by the AO and while rejecting his objection of the assessee, he dismissed this ground of appeal of assessee.
32. Assessee's counsel in second appeal pleaded that this sketchy order of AO cannot be said to be either a speaking order or valid order in the eye of law and in view of judgments of various Courts as noted in the documents submitted in the paper book and detail as given below it was pleaded for cancellation of charging of interest :
(1) Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 723 (Bom);
(2) S. Hastimal vs. CIT (1963) 49 ITR 273 (Mad);
(3) Devamani Atha vs. CIT (1978) 112 ITR 837 (Ori);
(4) Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 (SC);
(5) Addl. CIT vs. Bahri Bros. (P) Ltd. (1985) 154 ITR 244 (Pat);
(6) Hazari Lal Roopchand (1965) 55 ITR 488 (All);
(7) Union of India vs. Playworld Electronics (P) Ltd. 68 Comp. Cas. 582;
(8) Fakhri Automobiles vs. CIT (1980) 126 ITR 417 (Raj);
(9) CIT vs. S. P. Jain (1973) 87 ITR 370 (SC);
(10) Tolaram Daga (1966) 59 ITR 672 (Assam);
(11) CIT vs. Daulat Ram Ravatmull (1973) 87 ITR 349 (SC);
(12) Sarogi Credit Corpn. vs. CIT (1976) 103 ITR 344 (13) In the case of M/s Ratan Chand Krishna Lal;
(14) ITO vs. Gauri Shankar Sita Ram (1984) 18 TTJ (Del) 329;
(15) M/s Mulak Raj Bimal Kumar 7 TLR 97 (J&K) (16) Urmila Devi 12 Current Tax Bulletin 462;
(17) Khoharam Om Prakash 1983 Taxation 76(6)-90;
(18) Gwalior Cloth Agencies;
(19) Shree Durga Traders;
(20) M/s Punjab Auto Enterprises;
(21) M/s M. G. Bros. vs. Asstt. CIT (1985) 154 ITR 695 (AP) (22) Patel Engg. Co. Ltd. vs. C. B. Rathi & Anr. (1985) 44 (Guj) 158 : (1985) 151 ITR 542;
(23) Seth Banarsi Das Gupta vs. CIT (1977) 107 ITR 368 (All);
(24) Malayalam Plantations India Ltd. vs. CIT (1988) 174 ITR 587 (Ker);
(25) S. Govindaraju vs. CIT (1982) 138 ITR 495 (Kar);
(26) ITO vs. Hari Chand (1983) 16 TTJ (Ind) 14;
(27) Anita Kapur vs. Asstt. CIT; and (28) Asstt. CIT vs. Jindal Irrigation Systems Ltd. (1996) 56 ITD 164 (Hyd) in IT appeal No. 620(Hyd) 92 for asst. yr. 1989-90, dt. 22nd August, 1995.
33. The learned Departmental Representative the other hand, submitted that charging of interest is compensatory in nature, mandatory and automatic. So it is seen that AO, while making assessment has stipulated that interest to be charged as per law. There is no ambiguity or infirmity in the order of AO and all case law as cited by the assessee's counsel are with regard to different proposition as in these cases, there is no order for charging of interest. So it was pleaded for the confirmation of the order of the authorities below.
34. We have heard rival submissions, perused the record and find that the AO has made specific direction for charging of interest and since interest is compensatory in nature its chargeability has been upheld by different Courts being mandatory. As there appears to be no flaw in the order of the authorities below in this respect, so while confirming the order of CIT(A), we dismiss this ground of appeal of the assessee.
35. As a result, appeal of the assessee gets dismissed.