Case Law Details
Brief Facts
1. Arjun C Waney settled in United States, gifted an aggregate of $3 lakhs vide a letter dated 10.1.1984 to one Sh. Ashwani Suri and directed by letter written to the beneficiary Mr. Ashwani Suri to distribute the sum received in different proportions and one of the receiver is present assessee Mr. Ramesh Suri, who has received US Dollors 16000 equivalent to Rs 184860/-as stated in the letter.
2. Ashwani Suri, the original donee complied with the directions of the donor contained in the letter and transmitted the relevant amounts to each of the beneficiaries named in the said letter. These transactions were made out by each of the beneficiaries
3. The revenue sought to bring to tax these amounts, on the plea that the sources of income were undisclosed, and were liable to be added back under Section 68, since they were not genuine gifts.
Issue
Whether the Tribunal was correct in law in holding that the amount of US Dollors 16000 equivalent to Rs. 1,84,860/- received from Arjun C. Waney was in the nature of gift in the hands of Shri Ramesh Suri and hence not taxable? Particularly when the sources of income were undisclosed, and were liable to be added back under Section 68, since they were not genuine gifts .
Revenue Contention
1. That, essentially, the donee was Mr. Ashwani Suri and that the onward transmission of the amounts did not satisfy the test of genuineness . The learned counsel submitted that under Section 68, it is not only the identity of the person making the donation or giving the money which is to be looked into, but also the creditworthiness and the genuineness of the transaction.
2. Counsel submitted that there was no explanation as to why Mr. Waney wished to make a donation. Although his relationship with Mr. Ashwani Suri was known, being his brother-in-law, the amounts to be disbursed in particular, to the assessee, were unknown. Equally, submitted counsel for the revenue, the creditworthiness of the donor was not made known and, in these circumstances, the assessee had to discharge the onus of discharging whether transaction was genuine.
Assessee’s Contention
1. That the question of whether one underlined transaction was genuine or not, in the circumstances of the case, is a pure finding of fact which has been concurrently upheld by the CIT(Appeals) and the ITAT, and it would be perverse in law, if this Court should analyze the reasons given by either or both of those Tribunals.
2. It was submitted that the modes for gifting amounts of properties cannot be really gone into by the revenue, so long as the identity or relationship is established, which has been done in the present instance.
High Court held that
1. The revenue does not dispute the present relationship between the donor (through Mr. Waney) and Mr. Ashwani Suri. It also does not dispute that the letter in terms of which the initial donation was made to Mr. Ashwani Suri, directed the disbursement of amounts in a particular proportion, which he did. The assessee is also related to Mr. Ashwani Suri.
2. In these circumstances, the underlined transaction whereby the donor directed amounts to be disbursed by Mr. Ashwani Suri to specified or named individuals cannot be treated as unnatural. Both the authorities – the CIT(Appeals) and the ITAT took note of these facts and further noticed that all the gifts were rooted to normal banking transactions.
3. While Section 68 certainly enables the AO to bring to tax amounts which are suspect, in a transaction of the present kind, where the identity and the relationship of the donor are known, the AO in our opinion ought not to have concluded that the transaction – by which the assessee received the amount of Rs. 1,84,860/- was ingenuine.
