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.
7.4 Coming to the cases relied upon by the revenue, it is seen that in the case of Subhash Chander Sekhri (supra), the plea of the assessee that the donor was produced for examination of the AO was found to be incorrect. It was also found that there was no evidence to show that there was any marriage or any other function in the family of the donor during the period of the gift. The facts in the case of Jaspal Singh (supra) were that the donor was not related to the assessee; the donor’s family never received such gifts; she was stated to be the sister of a neighbor but had shifted to Germany 15 to 20 years ago; the donor had not made similar gifts even to her real brother; the donor had done all the paper work including preparation of affidavit and handed over the same along with the demand draft to the assessee; and her name could not be properly established. Thus, apart from non-existence of the occasion and relationship, there was also doubt about the identity of the donor. The facts of the case of P. Mohankala (supra) were that there were doubts about the identity of the donor; there was also hint about compensatory payments in lieu of the gift. In the case of Anil Kumar (supra), the assessee did not appear personally, there was no evidence about the capacity of the donor to make substantial gifts although gift deed, affidavit, passport and bank certificates relating to the gifts were filed. In the caseofRajeev Tandon (supra), although the gifts were made through banking channels, but on analyzing die balances in the accounts, the AO came to the conclusion that the assessee could not establish that donors had financial capacity to make gifts of such huge amounts in a circumstance when the assessee was not related to them. The Tribunal came to the conclusion that in absence of any relationship and occasion, making of such large gifts defied the human probabilities, i.e., it was against the behaviour of a normal human being. On consideration of these cases, we are of the view that it is for the assessee to establish identity and financial capacity of the donors, and he has also to establish the fact that the gift was genuine. In arriving at conclusion regarding genuineness of the gift, attendant circumstances as past conduct of the donors of having received or given gifts to others, including gifts received from the present donee, relationship, occasion etc. have to be considered and an opinion has to be formed as to whether it could be said that the behaviour of the donor was that of a normal human being. We are also of the view that the burden in respect of a gift is somewhat heavier than the burden in case of a loan as the former is a gratis payment and involves consideration of human conduct.
7.5 Coming to the cases relied upon by the learned counsel, it has been held by Hon’ble Delhi High Court that while establishing the identity and movement of gift through banking channels are not enough to establish genuineness of the gift, the fact that the gifts were made to a stranger merely raise a suspicion, which cannot be the sole basis of making the addition. This ratio comes out clearly from the decision in the case of R.S. Sibal and Smt. Sunita Vachani (supra). This also becomes clear from the decision in the case of Sajan Dass & Sons, but in this case, it was also held that the assessee has to prove the financial capacity of the donor to make a gift and that it has actually been received as a gift. It was held that there was nothing on record to show what was the financial capacity of the donors, what was the creditworthiness of the donors, what kind of relationship the donor had with the assessee and _what were the sources of funds gifted to the assessee and whether they had the capacity of giving large amount of gift to the assessee. The case of the Id. counsel was that in this case all these three ingredients have been proved and, thus, the addition was made merely on suspicion.
7.6 Coming to the case of Smt. Ranjana Katyal (supra), the assessee had produced sufficient evidence to establish the identity by way of PAN cards, voter identity cards and affidavits. The assessee had also produced returns of income and wealth and bank accounts from which the gifts were given. In these circumstances, it was held that the gift was genuine. In coming to this conclusion, the Tribunal observed, as also submitted by the learned DR, that assessee was acting as legal heir of her husband and, therefore, she was considerably handicapped in gathering evidence in support of the gifts. This fact was considered by the Tribunal. Therefore, it does appear to us that extenuating circumstances, peculiar to the case, also influenced the order of the Tribunal. In view of the peculiar facts, which were considered in deciding the case, we will be wary of drawing general proposition of law regarding acceptance of gift as genuine from that case. In the case of Padam Singh Chouhan (supra), the assessee had filed gift deeds and affidavits of NRI donors. The Hon’ble Rajasthan High Court held that in absence of any evidence of money laundering, the amount of gift cannot be added as income on account of receiving gift. We find that the ratio of this case is somewhat in contradiction with the decision of Hon’ble Delhi High Court in the case of Sajan Dass & Sons, a part of which is extracted below:-
“That a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to prove the genuineness of the gift Since the claim of the gift was made by the assssee, the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it had actually been received as a gift from the donor. Having regard to the enquiries conducted by the Assessing Officer from the bank with which the assessee was admittedly confronted and bearing in mind the fact that admittedly the donor was not related to the assessee, the findings recorded by the Tribunal were pure findings of fact warranting no interference. The appeal was liable to be dismissed.”
This case makes it abundantly clear that apart from the identity and the capacity, the onus of proving that the gift was actually received by the assessee was on him. In the case of Kusum Gupta (supra), the donors were produced before the AO, who were examined in detail. They had made detailed narration about their acquaintance with the donee for last 15 years and had also explained the circumstances leading to the making of the gift. In the case of ACIT Vs. Amit Mittal in ITA No. 101(Del)/2005 dated 14.6.2005, the Tribunal held that absence of relationship between the donor and the donee per se cannot be the basis for holding the gift to be non-genuine. It was also held that the reasons recorded by the AO were not sufficient to have reason to believe that the income escaped assessment. Thus, the case involved the question regarding validity of reopening the assessment also.
7.7 Coming to the facts of this case, it has already been mentioned by us that there is no evidence about acceptance of the gifts. However, that is only a technical issue as it is not the case of anyone that the amounts were in the nature of loans. The identity of the donors has been established. However, there are problems regarding the capacity of the donors to make gifts of the stated amounts. It has been mentioned by us that Shri R.K. Jain did not own any immovable property. Most of his capital and loans taken by him were locked up in the loans advanced by him. Even the gift amount consisted of some amount as loans realized. His income was only Rs. 3,67,817/-, out of which Rs. 98,684/- were paid as tax. Yet, he ostensibly chose to make a gift of Rs. 10.00 lakh to an unrelated person at a time when there was no occasion to make the gift. He was also not produced before the AO for examination at the time of assessment or in remand proceedings. These factors have an adverse impact while deciding upon the genuineness of the gift also. Similar are the facts in the case of Smt. Ranjana Gupta. Her identity has been established. However, her income was only Rs. 79,990/- out of which tax of Rs. 5,000/- was paid. Her capital was more or less blocked in current assets. A major portion of gift amount was out of realization of loan. Yet, she chose to make a gift to an unrelated person at a time when there was no occasion to make the gift. She was also not produced before the AO for examination either in assessment proceedings or in the remand proceedings. In such a situation, circumstances surrounding the gift become of equal importance in order to test whether the gift was genuine or not. Both the donors made substantial gifts when compared with their incomes. They never received similar gifts either from the assessee or from any one else. They also did not make any gift to any one else except the assessee. The assessee also neither received or made any gift except the instant gifts ostensibly received to purchase an immovable property./The failure of the persons to appear before the AO for examination in assessment proceedings or remandjwoceedings tilts the scales in favor of the revenue for giving a finding that the gifts were not genuine/ In doing so, we may reiterate that the mere establishment of identity and movement of gifts through banking channels are not enough. The financial affairs of both the donors do not evoke confidence that they could have made the gift of large amounts compared to their incomes in a circumstance when their monies were locked up elsewhere. They themselves did not own any immovable property. These facts impinge directly on the genuineness of the gifts also. Thus, when the whole of the evidence is weighed and the conduct of a normal human being is taken into account, it can be said that the financial capacity and genuineness of the gifts do not stand established in this case in a manner to shift the onus on to the . revenue to prove that the gifts were bogus. Thus, it is held that the Id. CIT(Appeals) erred in deleting the addition in respect of these two gifts. 8. In the result, the appeal is allowed.