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4. The assessee's counsel filed a paper book which contains xerox copy of the bank draft of Chartered Bank, Calcutta favouring assessing, a copy of declaration of the donor, Shri R.N. Agarwal, a copy of the sworn declaration of Shri R.N. Agarwal notarised on 28-5-1986, a copy of the Income-tax assessment order of donor of the Income-tax Department, Kathmandu, Nepal, which is in Hindi. It was contended by the assessee's counsel that the sum of Rs. 1 lac credited to the bank account of the assessee in Union Bank of India by and through the demand draft of Chartered Bank, Calcutta was a gift from Shri R.N. Agarwal, a resident of Kathmandu, Nepal made by him out of natural love and affection for the assessee, he being the dharambhai of the assessee since last two decades. The assessee also accepted the said gift made to her by the said donor. Thus, according to assessee's counsel the essential conditions for making valid gift were present and complied with both by the donor and therefore, the Assessing Officer was not justified in holding that the gift was not genuine and was a collusive transaction. The assessee's counsel drew our attention to the various supporting evidence particularly the declaration filed by the donor before the Assessing Officer as well as before the A.C. to support his case that the gift was made by Shri R.N. Agarwal, money passed and that the gift was complete upon the acceptance of the gift by the assessee. When the gift is complete in accordance with law, it is not open to the A.C. to take a different view and hold that it is a collusive transaction and the gift is invalid or not genuine. The assessee's counsel took us to the order of the A.C. to satisfy us that he has taken irrelevant factors into consideration and has doubted the gift on frivolous reasons branding the same as a collusive transaction without placing on record any concrete or positive evidence. Arguing further the assessee's counsel submitted that the A.O. made the addition for want of proper verification; whereas, the A.C. turned the table and brought out a wholly altogether new story and improved the case of the A.O. on new grounds. It was not the case of the A.O. that the gift was invalid or that the transaction was a collusive transaction whereas the A.C. held that it was a collusive transaction and the gift was invalid. The A.C. has unjustifiably ignored and rejected the positive and reliable evidence placed by the assessee on record. The order of the A.C. is a biased order and is based on speculation, suspicion and conjectures and should not. be sustained by us. It was further submitted that the assessee has not maintained any account books and the said sum of Rs. 1 lac was not credited in its account books so as to bring it within the mischief of Section 68 of the Income-tax Act as was done by the A.O. The bank draft of Chartered Bank, Calcutta favouring assessee was directly credited to the account of the assessee in Union Bank of India and, therefore, the provisions of Section 68 wholly became inapplicable. Even the A.O. has not stated as to under what deeming provision of the Income-tax Act the said amount of Rs. 1 lac was added by him. The addition was made by the A.O. on the simple ground "for want of verification" whereas factually all the details and evidence relating to gift were filed before him and are on record. Reliance placed by the A.C. on the observation of Their Lordships of the Supreme Court in the case of McDowell & Co. Ltd. (supra) is wholly misplaced and misconceived and no aid ought to have been taken by the A.C. in deciding the controversy which lay before him in the first appeal. There has been no income to assessee and no dubious device is adopted to evade tax. In view of the above submissions it was urged strenuously by the assessee's counsel that the impugned order of the A.C. be reversed.

5. The departmental representative, on the other hand, relied upon the reasonings given by the A.C. in the impugned order and submitted that the appeal of the assessee be dismissed.

6. We have given our anxious consideration to the rival submissions made before us by the representatives of both the parties. We have also perused the order of the A.O. as well as the impugned order of the A.C. and the copies of various documents placed by the assessee's counsel in the paper book filed in this appeal. In our view, the assessee has a very strong case to succeed in this appeal. The A.O. added Rs. 1 lac to assessee's income from undisclosed sources "for want of verification" and not on the ground that the gift was invalid or non-genuine or that the provisions of Section 68 got attracted, or that the gift was a dubious device to evade tax. When the matter rested before the A.C. by way of first appeal, he invented a new case for the A.O. and held that the gift was not genuine and the transaction of gift was a colourable device to evade tax and held that the A.O. was justified in treating the sum of Rs. 1 lac as assessee's income under Section 68 of the Income-tax Act whereas the addition was not made by the A.O., as stated by us above, taking the aid of Section 68 of the Act. The A.O. has stated that the issue to be decided in this appeal is whether in the facts and circumstances of the case the gift was genuine and whether the A.O. was justified in treating the amount of Rs. 1 lac as assessee's income from undisclosed sources. It was not the case of the A.O. that the gift was invalid or non-genuine. Therefore, it was not open for the A.C. to embark upon the issue about the validity or genuineness of the gift. The A.C. has stated as under in the impugned order :

7. It is evident from the discussion extracted by us above from the impugned order that the A.C. did not decide the issue with an open mind and was perhaps biased that the assessee, a lady, residing in India, could receive a gift of Rs. 1 lac from a resident of Nepal out of natural love and affection and also without there being any evidence of social interaction between donor and donee, namely, the assessee. We fail to understand as to how and why it is necessary for the donor and the assessee to prove the social interaction between them or for that matter to prove natural love and affection by donor towards donee assessee. A person may have or develop love and affection for another person instantly and some persons may not even develop love and affection for years together but so far as the validity of a gift is concerned, these are not the considerations which are to be weighed. As per Section 122 of Transfer of Property Act, 1882 a gift is complete in respect of existing movable and immovable property when there is a transfer of such property by a person called 'donor' and acceptance of such gift of such property by a person called 'donee'. If these essential conditions are prevalent or satisfied, then the gift is complete and it is not open for challenge until the same is proved to the contrary with cogent and strong evidence which in the instant case neither the A.C. nor the A.O. possess. The donor has categorically stated more than once that he has gifted Rs. 1 lac to the donee assessee and also transferred the money. The donee assessee has also stated that she has accepted the gift and received the money. Such being the case, we see no reason for the A.C. to come to the conclusion that the gift was invalid or not genuine. Apart from expressing his surprise and dissatisfation over the amount gifted to the assessee, the A.C. has not led any iota of evidence to prove that the gift was collusive or a dubious device or a subterfuge to evade tax. The assessee did not have such income so as to collude with a Nepal Resident and adopt a dubious device to evade payment of tax. No such evidence or material is on record of the A.O. nor anything is collected by the A.C. and placed on record, as stated by us above. The A.C. has given more weightage to the voluntary disclosure made in 1975 by the family members and viewed the gift with suspicion. The observations made by the A.C. to confirm the addition are imaginary and general and appear to us as tainted with prejudice vitiating his order. The provisions of Section 68 also; in our view, are not attracted in the instant case as the sum of Rs. 1 lac was not found credited in the books of account maintained by the assessee for the previous year relevant to the year under appeal. Section 68 comes into operation if any sum is found credited in the books of account maintained by the assessee and no satisfactory explanation is offered in respect of the sum so credited. The sum of Rs. 1 lac was found credited in the bank account of the assessee in Union Bank of India through the bank demand draft of Chartered Bank, Calcutta, drawn by the donor in favour of the assessee. When the amount is found directly credited to the bank account of the assessee then the provisions of Section 68 are not at all attracted and, therefore, the A.C. grossly erred in corning to the conclusion that the A.O. was justified in treating the said sum of Rs. 1 lac as income from undisclosed sources under Section 68 of the Income-tax Act, 1961. The A.C. as observed above, has not placed any evidence on record to agree with him that the gift transaction was a colourable device or a subterfuge to evade tax and thus hit the assessee with the aid of the judgment of the Supreme Court in the case of McDowell & Co. Ltd. (supra).