Case Law Details
RELEVANT PARAGRAPH
7. We have considered the facts of the case, the orders of lower authorities and the submissions made before us. The facts are that the assessee had shown receipt of three gifts aggregating in amount to Rs. 14-02 lakh, which were added to the total income of the assessee by the AO. The learned CIT(A) deleted the addition to the extent of Rs. 11.51 lakh in respect of gifts from Shri Rajesh Kumar Jain and Smt. Ranjana Gupta. The addition in respect of gift received from Shri Raj Kumar Aggarwal was upheld on the ground that as per information received from the bank, no account in his name was found to have been maintained. The assessee accepted this order while the revenue challenged the order in respect of deletion of the amount of Rs. 11.51 lakh from the total income.
7.1 The evidences in respect of gift from Shri Rajesh Kumar Jain are placed in the paper book on pages 25 to 31. He had filed return of income for assessment year 2001-02 declaring total income of Rs. 3,67,817/- and tax payable was Rs. 98,684/-. His capital as on 31st March, 2001, stood at Rs. 32,86,437/-. The salient features of the balance-sheet are that he did not own any immovable property, his drawings were Rs. 1.50 lakh, he had taken loans of Rs. 30.00 lakh and his assets were primarily locked up in loans advanced amounting to about Rs. 63.67 lakh. An affidavit dated 19.9.2001 was sworn by him to the effect that he gifted a sumofRs. 10.00 lakh to the assessee voluntarily, out of accumulated savings and wealth, and out of love and affection. There is no mention about any relationship with the donee or the occasion on which gift was made. There are other evidences about his identity, namely, the ration card, which shows that his family contained of self, wife and one more person; copy of form no. 16-Aand allotment of Permanent Account Number. It was explained to the Id. CIT(Appeals) that the documents filed established the identity of the donor. His account was credited to the extent of Rs. 9.91 lakh on account of transfer from another bank account and the TDS certificate shows that he received interest income of Rs. 8,43,450/- fromVintex Exports (P)Ltd. In view of the aforesaid, the genuineness of the gift also stood established.
7.2 The evidences in respect of Smt. Ranjana Gupta are placed in the paper book on pages 32 to 36. She had filed her return of income for assessment year 2001-02 showing total income of Rs. 79,990/- and tax payable at Rs. 4,998/-. The salient features of her statement of affairs on 31.3.2001 are that the capital stood at Rs. 5,11,127/-. She had made withdrawals of Rs. 36,730/- in that year. The income comprised of the business income of about Rs. 56,500/- and director remuneration of Rs. 36,000/-. She did not own any immovable property and her capital was primarily locked up in current assets of about Rs. 4,75,000/-. She maintained bank account with State Bank of India, Fatehpuri, Delhi-6, from which the gift was stated to have been made. She also filed a declaration dated 13.3.2002, designated as affidavit but not notarized, stating that she had given a gift of Rs. 1.51 lakh to the assessee out of natural love and affection, which was made out of her own funds and past savings. It was explained to the Id. CIT(A) that the credit in the bank account of the donor was on account of a receipt of Rs. L09 lakh from M/s Vinner International, to whom she had given a loan of Rs. LOO lakh. A further sum of Rs. 36,000/- was credited in the account which represented director remuneration from M/s Third Eye Education & Management Consultants (P) Ltd.. These facts showed that her identity was established along with her creditworthiness. The gift was genuine and, therefore, there was no reason to make addition of the amount of gift to the total income of the assessee.
7.3 We may consider the definition of the gift furnished in section 122 of the Transfer of Property Act, 1882. The gift is defined as transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. The acceptance has to be made during the life time of the donor and while he is still capable of giving the gift. If the donee dies before the acceptance, the gift is void. The essential elements of a gift are -(a) the donor, (b) the donee, (c) subject matter, (d) transfer, (e) the absence of consideration and (f) the acceptance. Thus, the concept of gift is diametrically opposed to any presence of consideration or compensation. TTie word “consideration” is used in the same sense as in the Indian Contract Act and excludes natural love and affection. Thus, a transfer in consideration of natural love and affection is a gift, as such consideration is not the one contemplated by the aforesaid section 122 of the Transfer of Property Act. We find that while affidavit and the declaration make a mention that the gift has been accepted by the donee, there is no evidence on record to that effect.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
