10. The scope of gifts and the existing areas of controversies in regard to them are relevant issues here. Generally, the gifts may involve biological relatives, sociologically connected or unconnected persons, politically or spiritually reverend individuals etc. In the cases, where the gifts involve the biological relatives, the giving gifts are normally conventional, traditional or a social practice and the motive is the expression of love and affection. In such cases, generally there is no issue about the identity and the controversies are source or genuineness- centric. In the other cases, the controversies generally center-around the identity and the creditworthiness of the donor and therefore, the whole transaction is doubted. Among this later group of gifts, the gift transactions involving the unrelated NRI persons as donors are always a matter of dispute between revenue and the assessees. The aspects of identity of the donor, creditworthiness of the donor and the genuineness of the transaction become relevant. This is dimply for the reason as to why or what reason an unrelated person or not so well related person or geographically segregated person makes gifts to an unknown or unfamiliar donee, when there is no scope for love and affection or any other expressions of that kind, which are commonly seen in the transactions of gifts in general and valuable gifts in particular. Therefore, the commonsense approach of the AO is to investigate into other reasons for such valuable gifts. Such investigations of the AO in matters of such transactions of gifts between the unrelated persons revolve around the following. They are: whether there is any occasion; how the donor has come to know of the donee; what are the social obligation to the donor to give gifts running into lakhs of rupees worth to the donee; what is the general conduct of the donor in matters of gifting or the quantum of gifts given or whether such dononrs believe in cash gifts or otherwise; whether the donor is capable of gifting at all; and whether the donor is capable of gifting with out the mediation of the middle man or a commission agent, when the donor is separated by the geographical boundaries and so on. Further, it is a settled position that the onus is on the assessee in these matters as held in the case of Subhash Grander Sekhri (290 ITR 300) (P&H) and in the case of Jaspal Singh (290 ITR 306) (P&H) and the AO can invoke the provisions of section 68 in case of failure to discharge such onus. It is also a view of the Delhi bench in the case of Rajeev Tandon (108 ITD 560)(Del) that in cases of gifts from the NRIs, the assessee has higher levels of responsibility in matters discharging of the onus as the AO usually has no jurisdiction on them. The assessee must produce every necessary evidence to substantiate the claim of genuine gifts. In the circumstances of such failures, the adverse opinion of the AO about the genuineness of the transaction of the impugned gift in itself constitute an evidence against the assessee as held by the supreme court in the case of Mohanakala & Ors (supra). Further, Apex court also held that the factum of transactions effected through the banking channels will not come to the rescue of the assessee. Identical finding is discussed in the decision in the case of Tirath Ram Gupta (6 SOT 703 (Chandigarh) that the genuineness of the gift can not simply be accepted merely banking on the transactions effected through the banking channels. The judgments relied upon by the assessee were distinguished by the Tribunal in the above mentioned decisions.
11. In the light of the above divergent views of the both the parties as well as the scope of gifts between the unrelated parties, we have examined the facts of the case in relation to the provisions of section 68. Under the provisions of the section 68 what are to be seen are the aspects of the identity, creditworthiness, genuineness of the transaction and the discretion of the AO. In the light of the above, we find that the identity of the donors must be undoubted in view of the undisputed nature of the copies of the passports of the donors. In any case, the aspect of identity is no issue in such transactions as NRI donors are organized professionally by commission agents in the gray market. Regarding the creditworthiness, there is information about the business or profession or employment details or their source of income on the records. In such circumstances, we find the subtle distinction between the ownership of the RIBs and his creditworthiness. Ownership must be qualified by the worthiness to acquire the said owned asset. The documents available on records do not indicate basic financial capabilities of donors as there are no elementary particulars about the income particulars of the donors such as annual statements or income tax assessment particulars etc. This is not the case of the assessee that he is in a position to submit them either. Thus, we are of the considered opinion that assessee must not be treated to have furnished requisite basic details relating to various aspects of creditworthiness of the donors. Finally, regarding the genuineness of the transaction, we have culled out all the available records and found that donors and donee do not know one another as they never met or aware of their financial positions. Further, it is an admitted position that there were no formal occasions or eves for contextualizing the alleged gifts. The relationship between the donors and the deceased father of the assessee was not established too. There is neither the confirmation letters nor the gift deeds on records. The assessee’s argument of deeming the pages 5 to 7 & 17 to 23 of the paper book as the gift deeds or confirmations as the said letters addressed to the SBI. the agent for RIBs, are signed by the donor and donee, we find such argument of the assessee does not hold good for the purposes of the provisions of section 68 of the Act in respect of the alleged gifts by an NRI donors. Further, it is noticed that the said letters are addressed to the agents of the RIBs, SBI and the said letters were to be generated in the context of the transfer of the alleged RIBs to the names of the donees and subsequent redemption on maturity. More so, it is inexplicable as to why assessee could not manage a gift deed or confirmations. Therefore, in our opinion, these pages at 5 to 7 & 17 to 23 of the paper book cannot construed as gift deeds. Thus, in overall view of these gift transactions in question, we of the opinion that the bank transactions should not be treated sacrosanct and should not assume evidentiary significance for the purpose of section 68 of the Income tax Act.
12. Having found that the assessee failed to discharge the onus and the assessee’s failure to establish the genuineness of the transaction, we have examined the Delhi High Court’s judgment in the case of CIT vs Mrs Sunita Vachani (supra) which was strongly relied upon by the assessee. It is noticed that the same was delivered in the context of the revision order of the CIT u/s 263 and the AO’s failure to conduct enquiries regarding the genuineness of the gifts. Thus the facts of this case are distinguishable. In any case, the DR has relied on an apex court’s decision in the case of Mohanakala & Ors (supra), a subsequent judgment involving the gifts from the NRIs.
15. In conclusion, we find that the assessee heavily relied on pages 5 to 7 & 17 to 23 of the paper book as well as on the copy of the pass port of the donors to evidence the identity, creditworthiness as well as the genuineness of the gift transactions amounting to Rs.46,87,378/ -. The counsel’s arguments ie five years holding period of the gifts in the hands of the donors together with the gifts transactions through the banking channal establish the creditworthiness and genuineness of gifts, have been considered and rejected in view of the above discussions. Briefly, the facts of involvement of unfamiliar NRI donor, the fact of assessee’s failure to establish that the donors are known to the donees through the deceased father of the assessee, undisputed fact of the gifts is that it is a case of gift without any occasions or an event, the gifts to minors are surprisingly an identical value of US$ 30,500/- each, the nature of gifts given to the assessee as well as to his two sons is also identical i.e., RIBs, goes against the assessee. Further, it is not the case that the donees have also gifted to the impugned donors or to any others during the earlier or current or later year(s). Further, there are no details about the source of income of the donors abroad and the AO’ adverse views about the creditworthiness and the genuineness of the impugned gift transactions, with which we agree, in itself has become an evidence. The issues such as why the gifts are given and how the relationship between the donor and donees grew to the levels, where the donors have considered to give the identical gifts through an identical transaction during the same year, become relevant and were unanswered either before the revenue authorities or before us. When the onus is on the assessee in these matters of gifts involving the non resident Indians as donors, in our opinion, the AO is within his jurisdiction in rejecting the assessee claim of gifts and making additions u/s 68 of the Act. In view of the above position of law, we find that the explanation of the assessee with regard to the creditworthiness of the donors and genuineness of the transactions were rightly rejected by the AO. Consequently, the arguments put forward by the assessee’s Counsel are rejected, the order of the CIT (A) is reversed and order of the AO is restored. Accordingly, grounds of the revenue are allowed.