Income Tax Appellate Tribunal - Delhi
Suraj Bhan Bajaj vs Income Tax Officer on 21 April, 2006
Equivalent citations: (2006)102TTJ(DELHI)665
ORDER
R.C. Sharma, A.M. These are cross-appeals filed by the revenue and the assessee against the order of Commissioner (Appeals), dated 10-1-2003 for the assessment year 1995-96, in the matter of order passed by the assessing officer under section 143(3) read with section 148.
2. The assessee is aggrieved by action of Commissioner (Appeals) in confirming an addition of Rs. 90,000 under section 68 in respect of gifts received from the close relatives and family friends. The revenue is aggrieved for deletion of addition of Rs. 4,10,000 on account of gift alleged to be received by the assessee and deletion of addition of Rs. 76,000 on account of loan.
3. Rival contentions have been heard and records perused. The brief facts of the case are that the assessee constructed a residential house, the cost of which was shown at Rs. 2,50,000 before ADIT (Investigation). Considering the cost of construction low, reference was made to the DVO who has determined the cost of construction at Rs. 11.86 lakhs and period of construction was mentioned from July, 1994 to April, 1996 vide valuation report dated 20-9-1996. The assessing officer further observed that valuation of the said house mainly pertains to the assessment years 1995-96 and 1996-97. As no specific amount of cost of construction was determined by the valuation cell for particular year, the assessing officer adopted 50 per cent cost in each of the assessment years 1995-96 and 1996-97. The assessee was asked to furnish source of the amount invested in the construction of the house. The assessee furnished cash flow account for the period 1-4-1992 to 31-3-1993, 1-4-1993 to 31-3-1994 and upto 30-4-1996. The assessing officer observed that as per the cash flow statement for the period 1-4-1992 to 31-3-1994, the assessee has indicated receipt of gift of Rs. 2,10,000 from various persons and brought forward opening balance of Rs. 4,28,000. Opening balance was brought forward cash balance for the period 1-4-1992 to 31-3-1994. The assessing officer further found that during the year 1992-93 the assessee has also shown gifts of Rs. 80,000 from four persons and a loan of Rs. 76,000. During the year under consideration, the assessing officer found that assessee has claimed receipt of gifts from 7 persons totalling Rs. 2,10,000. The assessee has furnished affidavits from all the persons who (are said) to have given gifts to the assessee during these three years. The assessing officer further stated that assessee was required to produce all these persons to find out the genuineness of the affidavits. As per the assessing officer, the assessee only produced three persons, namely, Shri Bishan Dass, Shri Raj Kumar and Shri Sudershan Kumar. The assessing officer recorded statements of these persons in which they have admitted to have given gifts to the assessee and also stated their relation with the assessee and their source of income. The assessing officer stated that all these persons were not assessable to income-tax and their income always remained below taxable limit, they cannot have capacity to make such gifts, The assessing officer, therefore, held that assessee failed to prove genuineness of the gifts and that no supporting evidence for loan of Rs. 76,000 was also produced. The assessee's claim both for gifts and loans was not accepted by the assessing officer.
4. By the impugned order, the Commissioner (Appeals) observed that as per the cash flow statement submitted before the assessing officer, Rs. 1,66,000 was received by the assessee during the period relevant to assessment year 1993-94, likewise Rs. 2,10,000 was received during the period relevant to assessment year 1994-95 and the balance amount of Rs. 2,10,000 was received during the assessment year 1995-96 under consideration. He, therefore, held that amount received during the assessment years 1993-94 and 1994-95 were not hable to be assessed during the assessment year 1995-96. He, therefore, deleted addition to the extent of Rs. 3,66, 000 (Rs. 1, 56, 000 + Rs. 2, 10, 000).
5. In respect of amount of gifts of Rs. 2,10,000 received during the year under consideration, the Commissioner (Appeals) observed that gifts were received by the assessee from close relatives either from the side of in-laws or brother of the assessee. He further found that assessing officer has declined assessee's claim merely on the ground that income of the donors were below taxable limit and, therefore, they were not likely to make any gift. He further observed that statement of three persons were duly recorded by the assessing officer, affidavits of all the donors have also been filed and that the assessing officer has not brought anything on record to suspect the capacity of even those persons whose statements have been recorded by him and who have confirmed the fact of gifts in question. He, therefore, deleted addition in respect of gifts of Rs. 30,000 received each from Shri Bishan Dass, Shri Sudershan Kumar and Raj Kumar amounting to Rs. 90,000 in total. In respect of remaining four donors, on the basis of their affidavits and source of income, the Commissioner (Appeals) found that only Shri Ishwar Dass appears to be a man of means and also intimately connected with the assessee. He, therefore, deleted addition for the gift of Rs. 30,000 received from Ishwar Dass.
6. However, in respect, of remaining three donors, he confirmed the action of the assessing officer.
7. Aggrieved by the above order of Commissioner (Appeals), both the assessee and revenue are in appeal before us. Assessee is aggrieved for confirmation of addition in respect of three donors amounting to Rs. 90,000 whereas revenue is aggrieved for deletion on account. of gifts of Rs. 4,10,000 and loan of Rs. 76,000.
8. It was argued by leaned authorised representative that Commissioner (Appeals) after appreciation of all the materials found that gifts were received by the assessee from close relatives. The donors have also furnished their affidavits, but the Commissioner (Appeals) was not justified in confirming the gifts received from Dilip Singh, family friend of assessee, Wazir Chand, father-in-law of assessee and Thakur Das, father of the assessee. As per the learned authorised representative, the assessee has discharged the primary onus caste on him with regard to identity, genuineness and creditworthiness of the donors.
9. On the other hand, it was submitted by learned Departmental Representative that assessee had failed to produce all the donors before the assessing officer, therefore, he was justified in making addition on account of gifts. He further submitted that Commissioner (Appeals) was not justified in deleting part of the gifts amount on the plea of pertaining to the earlier years, insofar as the affidavit and cash flow statement produced before the assessing officer were rejected by him.
10. We have considered the rival contentions, carefully gone through the orders of authorities below and find from the record that to explain the source of investment in the house, the assessee has furnished detailed cash flow statement before the assessing officer for the period 1-4-1992 to 31-3-1996. As per cash flow statement, the assessee has received various gifts from his close relatives and family friends. The assessee also produced affidavits from all the donors to explain the capacity of donor and also genuineness of the transaction. Three donors were also produced before the assessing officer for examination whose statements were recorded by the assessing officer. However, the assessing officer declined the factum of gifts merely on the plea that donors' income were below taxable limit and they were not assessed to tax. We have carefully gone through the cash flow statement placed in the record, which as per the certificate furnished by the learned authorised representative were also produced before the assessing officer and which has been narrated by the assessing officer in his assessment order at p. 2 para. 3. As per the cash flow statement, the assessee has explained receipt of gifts in each assessment year which was utilized by him for the respective assessment year in construction of house. Each assessment year is separate and there is no reason for making addition in respect of gifts received in years earlier to the year for which assessment is being framed. Even while invoking deeming provisions for making addition, Income Tax Act does not empower the revenue authorities to include certain receipt as income of the year which actually pertains to some other years. The Commissioner (Appeals), therefore, correctly deleted the addition in respect of part of the gifts and loans which was not pertaining to the year under consideration, and was received by the assessee in earlier years and was explained before the lower authorities vide his cash flow statement. In respect of three donors who were produced before the assessing officer and whose statements were also recorded, the Commissioner (Appeals) observed that all these persons have confirmed the factum of giving gifts and assessing officer has not been able to bring on record any material to suspect the bona fides of statement of these persons. He further observed. that recording of statement by the assessing officer was not merely a formality, and when the assessing officer has not been able to bring anything against the assessee out of the statement so recorded, the assessing officer was not at all justified in making addition about the gifts made by these three persons. We had also gone through the statement of these three persons as recorded by the assessing officer and which are placed at pp. 9-14 of the paper book. As per these statements recorded by the assessing officer, all these three persons were having regular source of income. Shri Sudershan Kumar was real brother-in-law of assessee. He was running an ice factory which was earlier run by his father. Shri Bishan Dass was real brother of the assessee and was running a cloth shop since last 30-35 years at Fatehabad. Shri Raj Kumar was also brother-in-law of assessee, who was running a shop of cold drinks since last 12 years. All these persons, in their statements have categorically accepted the fact of giving the gift, reason for giving the gift and their source of income. There is no dispute to the well settled legal proposition that not only identity and genuineness of the gifts is required to be proved, but the creditworthiness of the donor is also required to be established. In the instant case, we found that in respect of all these three donors, not only identity and genuineness was established, but also the creditworthiness to advance the impugned amount of gifts. Since the gifts were given by the close relatives, the essential ingredient of valid gift, that it should be out of natural love and affection has also been fulfilled. We, therefore, do not find any infirmity in the order of Commissioner (Appeals) for deleting addition in respect of gifts and loan amount which were undisputedly not received during the year under consideration but was received in other years and also the three gifts received from the close relatives whose statements were recorded and were found to be persons of sufficient means by Commissioner (Appeals). We also found that on the basis of information furnished before the lower authorities, Ishwar Dass who has given a gift of Rs. 30,000 was elder brother-in-law of assessee, who was found to be man of sufficient means for advancing gift of Rs. 30,000, We, therefore, do not find any reason to interfere with the findings recorded by the Commissioner (Appeals) for deleting the impugned addition.
11. In the result, appeal of both the assessee and revenue are dismissed.