Case Law Details
ORDER
Per D. C. Agrawal, Accountant Member.
All these three appeals are filed by two different assessees against the orders of ld. CIT(A) dated 13/12/2007 and 12/12/2007. Since the assessees are of the same group and the issues involved in these appeals are common, these are taken up together for the sake of convenience.
ITA No. 1391/Ahd/2008 Asst. Year 1999-00
2. In this appeal the grounds raised by the assessee are as under :-
(1) The ld. CIT(A) erred in confirming gift from Shri Vipinkumar S. Jain as non-genuine and thereby confirming the addition of Rs. 50,000/-.
(2) On the facts and circumstances of the case, the addition has been wrongly made.
ITA No. 1392/Ahd/2008 Asst. Year 2005-06
3. In this appeal the grounds raised by the assessee are as under :-
(1) The ld. CIT(A) erred in confirming gift from Smt. Jashwantidevi as non-genuine and thereby confirming the addition of Rs. 50,000/-.
(2) On the facts and circumstances of the case, the addition has been wrongly made.
ITA No. 1393/Ahd/2008 Asst. Year 2000-01
4. In this appeal the grounds raised by the assessee are as under :-
(1) The ld. CIT(A) erred in confirming gift from Smt. Sushilaben as non-genuine as non-genuine and thereby confirming the addition of Rs. 1,00,000/-.
(2) The ld. CIT(A) erred in confirming gift from Smt. Manjulaben as non-genuine as non-genuine and thereby confirming the addition of Rs. 1,00,000/-.
(3) On the facts and circumstances of the case, the addition has been wrongly made.
5. All these appeals are time barred by 28 days. After hearing both the parties we condone the delay and admit the appeals.
6. First we take up ITA NO.1393/Ahd/2008 for Asst. Year 2000-01. The issues involved in this appeal are that ld. CIT(A) confirmed the additions in respect of gifts claimed to have been received by the assessee for Rs. 1,00,000/- each from Smt. Sushilaben and Smt. Manjulaben. During the assessment year in question the assessee has shown to have received following gifts:-
| Asst. Year- 2000- 2001 | |
| Madhu R. Jain | Rs. 50,000/- |
| Sushilaben R. Jain | Rs. 1,00,000/- |
| Manjulaben R. Jain | Rs. 1,00,000/- |
During the course of assessment proceedings, the AO found that assessee has received gifts of Rs. 2,50,000/- from three persons as above. He required the assessee to furnish confirmation of the gifts received along with evidence of creditworthiness and natural love of affections out of which gifts have been given. The assessee furnished copy of the declaration of gifts but no other evidence was furnished. The AO was not satisfied about the identity of the donor or their creditworthiness and the genuineness of the gifts as no evidence was furnished before him.
Accordingly he made the addition of Rs. 2,50,000/-.
7. Before ld. CIT(A) it was submitted that in the case of Madhu R. Jain amount of gift was withdrawn by her from M/s Shila Textiles and was deposited in Andhra Bank from where necessary gift was made. The ld. CIT(A) accepted the gift in the case of Madhu R. Jain but confirmed the additions in respect of gifts received from Sushilaben and Manjulaben as they were found not established from Income-tax record.
8. Before us, ld. AR for the assessee submitted that Smt. Sushilaben has withdrawn money from M/s Vardhman Silk Traders, on 21.4.99 and deposited the same in Andhra Bank from where she has given gift to Smt. Savitaben H. Rathod. Smt. Sushilaben and Smt. Manjulaben are cousin sisters of husband of assessee Shri H. D. Rathod. Therefore, gifts should be accepted as genuine. In any case assessee has discharged the onus and Revenue has not found anything contrary. Therefore, the addition should be deleted. The ld. AR submitted that department has accepted the gift given by Madhu R. Jain then there is no reason why the gifts in case of other two donors be not accepted.
9. On the other hand, ld. DR submitted that no evidence was furnished before the AO or even before the ld. CIT(A) as to the source of money and relationship of the donor with the assessee. Once onus is not discharged the addition has to be made under section 68. The ld. DR further submitted that assessee is rich person and no reason, occasion or purpose is given why she would take gift from stranger. Merely because money is transferred through banking channel, it should not be sufficient to hold that gift is genuine. Human probability has also to be taken into account for establishing genuineness of the gifts. The ld. DR submitted that appeal in respect of relief given in the case of gift given by Madhu R. Jain has not been filed because of low revenue effect and it is not a case that department has accepted the gift given by Madhu R. Jain.
10. We have considered the rival submissions and perused the material on record. In our considered view, there is no reason for interference in the order of ld. CIT(A). The assessee is required to discharge the onus of submitting complete details of gifts before the AO. She should have established
(i) the identity of the donor;
(ii) creditworthiness of the donor;
(iii) genuineness of the transaction;
(iv) occasion;
(v) relationship of the donor and donee;
(vi) evidence of natural love and affections.
Merely because money is claimed to have been transferred through banking channel, it is not enough to establish the genuineness of gift. The human probability has to be considered as to why donor is prompted to give gift to the assessee. This question is required to be answered because as contrary to loan, in the case of gift, donor loses his hard earned capital in favour of the donee for ever whereas in the case of loan the creditor retains the right to recover the money from the assessee. Therefore, onus is heavier on the assessee in a case of gift as compared to the case of credit. In case of credit, if identity of the creditor is known and creditworthiness of the creditor is established then onus is shifted to the Revenue to show that credit is not genuine. But in the case of gift all the three ingredients are necessary to be established by the assessee and merely by giving evidence of identity and creditworthiness of donor, genuineness cannot be taken to be established automatically. Therefore, test of human probability assumes importance so as to show that there were reasons which prompted the donor to forgo his hard earned capital in favour of the donee. Such test, to establish human probability are occasions when not only the donor but others also came up to give gifts to the assessee; there were ceremonies organized by the assessee on which he has spent money; he/ she had invited people and some of those who were invited had deep bonded relations which prompted them to give gifts to the assessee. The bondage between the donor and the donee should be shown by frequent visits of each other; involvement of each other into family affairs; standing for each other in the hour of need; donee also giving gifts to the donors; or his family members in the past or also in future; they are so closely related that foregoing hard earned money is unlikely to pinch the donor; donor is standing on higher pedastral in terms of social status, in relation or in financial worth, or in any other rational criteria, which would make him feel to pass on his hard earned capital to the donee who stands on lower pedastral in any of the above criteria. In the present cases the assessee has failed to show that even after giving gifts to the assessee Smt Sushilaben and Smt. Manjulaben had enouth of their money. On the other hand, as per copy of account furnished, Smt. Sushilaben is left with Rs.919/- and Smt. Manjulaben is left with Rs.1698/-. It is not possible to believe that donors will chose to practically become poper after giving gifts. There is no evidence of such compulsion which would prompt them to become poper. As a result, we hold that firstly assessee failed to produce evidence before the AO about the identity and creditworthiness of the donors and secondly assessee failed to establish the genuineness of the gifts. As a result, we confirm the order of CIT(A) and dismiss the appeal filed by the assessee.
11 Now we take ITA No. 1391/Ahd/2008 for Asst. Year 1999- 00. During the assessment year, the assessee has shown to have received gifts of Rs.50,000/- each from two persons and for Asst. Year 2005- 06 of Rs. 2,80,000/- as under :-
| Asst. Year | |
| 1999- 00 | Rs. 100,000/- consisting of the following: Vipinkumar Sheshmal- Rs. 50,000/- Roshanal Sheshmal- Rs. 50,000/- Rs. 50,000/- |
| 2005- 06 | Jashwantilal Bhagwatilal Jai Rs. 2,80,000/- |
During the course of assessment proceedings for Asst. Year 1999-00 assessee is found to have received gift of Rs. 50,000/- each from two persons namely from Shri Vipinkumar Sheshmal and Roshanal Sheshmal. When assessee was asked to give confirmation of gifts received along with creditworthiness and natural love and affections for giving gifts then assessee only submitted copy of declaration of the gifts. No other evidence was furnished. Before ld. CIT(A) assessee filed evidence of Shri Roshanal Sheshmal and his bank statement. He was found to be an I.T. assessee. Accordingly gift was accepted. However, in the case of Vipin Kumar Sheshmal no evidence was furnished, therefore, ld. CIT(A) confirmed the addition in respect of gift given by him.
12. We have heard the parties and carefully perused the material on record. Arguments taken by the parties in this case are as in the case of Savitaben, wife of assessee. It was claimed that money was transferred through banking channel, after transfer from account of the firm. It was submitted that Shri Vipinkumar Sheshmal is assessed to tax and filed the return of income. Further it was submitted that gift from the donor namely Shri Roshanal Sheshmal has been accepted. Ld. DR has pointed out that genuineness of the gifts have not been established and no evidences have been furnished before the AO. Further the department did not file appeal in respect of gif claimed to be given by Roshanal Sheshmal as revenue effect was low and as per Board circular the AO was directed not to file the appeal where revenue effect is less than Rs. 2 lacs.
13. After considering the rival submissions we confirm the additions for the same reason as we have given in the case of Smt. Savitaben, the wife of the assessee. In brief, the assessee has not filed any document before the AO and secondly the assessee failed to prove the genuineness of the gifts. Accordingly, appeal filed by the assessee is dismissed.
14. Now we take up ITA No. 1392/Ahd/2008 for Asst. Year 2005- 06. In this year the assessee has claimed to have received gift of Rs. 2,80,000/- from Smt. Jashwantidevi . The claim was that she had withdrawn the money from the firm and obtained draft from bank of Maharashtra, Pune. Further, it has been declared in the capital account and balance sheet of both, the donor and the donee. The gifts were received on different dates as under :-
| Date | Cheque No. | Amount (Rs.) |
| 08.12.2004 | 51157 | 1,00,000 |
| 14.12.2004 | 51302 | 1,00,000 |
| 20.12.2004 | 511351 | 80,000 |
| Total | 2,80,000/- |
The assessee filed only copy of gift declaration before the AO and no other evidence was filed. Before ld. CIT(A) assessee filed the copy of bank statement of Smt. Jashwantidevi showing transfer of money to assessee.
15. The arguments of ld. AR & the ld. DR were the same as in the case of Smt. Savitaben discussed above. For the reasons discussed by us in the case of Savitaben, we hold that firstly the assessee did not discharge the onus; he did not furnish any evidence about the identity and creditworthiness before the AO and secondly genuineness of gift was not at all established. As a result, we confirm the addition and appeal filed by the assessee is dismissed.
16 In the result, all the three appeals of the assessees are dismissed. Order was pronounced in open Court on 11/6/2010.
