S. S. GODARA, JUDICIAL MEMBER:-These two Revenue’s appeals in case of different assessees for A.Y. 2004-05, arise from order of the CIT(A)-I, Ahmedabad dated 03-05-2010 in appeal nos. CIT(A)-I/CC.1(3)/217/2007-08 & CIT(A)- I/CC.1(3)/222/2007-08 respectively, in proceedings under section 153A r.w.s.143(3) of the Income Tax Act, 1961; in short “the Act”.
2. The Revenue’s sole substantive grievance in these two appeals is identical. It challenges the lower appellate order deleting additions of Rs. 15 lacs each made by the Assessing Officer in the hands of both these assessees as unexplained cash credits u/s. 68 of the Act. Parties inform us at the outset that facts as well as the issue involved are identical in these two appeals. We accordingly take up ITA 577/Ahd/2010 in case of assessee, Shri Bhanuprasad O. Trivedi as the lead case.
3. This assessee-individual derives income from house property, capital gains and other sources. The department conducted a search in his case on 22-02-2006 seizing alleged incriminating material. The assessee also got recorded his statement in course thereof. All these culminated issuance of a section 153A notice dated 29-06-2007. The assessee filed his return on 23-07-2007 admitting income of Rs. 6,67,670/-. The Assessing Officer in course of scrutiny noticed the assessee to have received a gift of Rs. 15 lacs from one Shri Sunil Gandhi based at Dubai (UAE). The assessee filed photo copy of his donor’s pass port, gift declaration dated 07-10-2003, affidavit dated 25-11-2006 solemnly averring in favour of the aforesaid gift by way of demand draft dated 06-10-2003 issued by AI Razouki International Exchange Co. Ltd LLC. The Assessing Officer sought for donor’s source and issued a show cause notice dated 12-12-2007 inter alia observing that there was no relation between the donor-donee, no reciprocity and also that the sum in question of Rs. 15 lacs was assessee’s unexplained money routed through Shri Gandhi. He would further ask evidence in support of the donor’s financial capacity and sought to satisfy the test of creditworthiness. It was further remarked that element of natural love and affection was missing in this case. The assessee filed reply to this show cause notice on 24- 072007 referring to the details already furnished forming part of the seized record inter alia classifying copy of pass port as donor’s identity proof, gift deed as evidence of genuineness and donor’s affidavit possessing net worth of 100million Dirhams to be proof of creditworthiness.
The assessee further pleaded in view of all this material that the donor, Shri Gandhi’s relation with himself was that of “Kanha and Nand” since his son Shri Deepakkumar Trivedi happened to be the donor’s friend. He submitted that this donor always treated him like his father and wanted to do everything which a son would do. Absence of any blood relation between them was also emphasized. The assessee attributed purpose of this gift for purchasing any property on rent as source of income in old age. The very gift money was claimed to have been invested in acquiring a shop opposite Rajpath Club, S.G. Highway, Ahmedabad. Next came the assessee’s reply regarding unexplained money. He contested the said reasons as not been based any inquiry conducted about the donor or from Dubai based exchange dealer. The Assessing Officer did not agree to any of these explanations. He opined in assessment order dated 28-12-2007 that assessee’s explanation lacked creditworthiness being based on a self stated donor’s affidavit and other material. He referred to assessee’s statement recorded u/s. 131(1A) dated 20-03- 2006 as not knowing anything about the donor. The Assessing Officer thereafter took into account search proceedings allegedly revealing this family having received gross gift sums of Rs. 1.5 crores i.e. Rs. 45 lacs from Shri Sunil Gandhi and Rs. 1 crore from another donor Shri Arvinkkumar; both from Dubai without knowing anything about them. The Assessing Officer observed that there was no reciprocity or occasion for the impugned gift. And also that there was no sufficient evidence to prove creditworthiness of this gift plea. He acted accordingly and involved section 68 of the Act for adding the sum in question of Rs. 15 lacs as unexplained cash credits.
4. The assessee preferred appeal inter alia challenging legality of section 153A proceedings and also assailed correctness of the impugned addition on merits. The CIT(A) has rejected this legal plea and accepts the latter one on merits as follows:-
“9.1 The issue of gifts has been discussed in detail by the Hon'ble Delhi ITAT in the case of Ms. Mayawati Vs. DCIT (113 TTJ) (Delhi) 178. In the aforementioned Judgement, the Hon'ble ITAT has held as under:-
(Quote) '
"For all intents and purposes the validity of the gift, whether of movable or immovable property, it to be examined by satisfying the conditions laid down in ss.122 and 123 of the Transfer of Property Act. From the same it follows logically that for income-tax purpose also the validity of gifts is to be examined in the light of the above referred provisions. In view of the above one has to examine as to whether these legal requirements, as laid down in ss. 122 and 123 of Transfer of Property Act are satisfied in the case of gifts made to the present assessee or not. So far as the gift from 'P' is concerned, the transaction was carried out through accounts payee cheque and reflected in the bank account of the assessee. 'P's statement was also recorded on 30th December, 2005 on oath by the Asstt. CIT. In his statement also he has again categorically deposed that he made the gift out of natural love and affection. Even in his statement recorded by Addl. Director of IT (Inv.)for the first time, which statement has been reproduced by the AO in the assessment order and in reply to question put to him, 'P' submitted that he has made the gift through cheques, and the cheques of gifted amount were delivered to the donee. The donor is a chartered accountant. He was filing If return since 1994. His net worth as reported by the AO to the CIT (A) is Rs. 1,36,01,314/-. In view of the above documentary and oral evidence on record, the requirements of law of establishing a validity executed gift of movable properties are fully satisfied inasmuch as the donor gifted the amount voluntarily to the donee and has delivered the possession of the gifted property to the donee. - CIT Vs. Smt. Shyamo Bibi AIR 1967 All 82 relied on." (Unquote) (Quote)
"The AO has also highlighted the fact that there is no relationship between the donor and donee and, therefore, the genuineness of the transaction of gifts is not proved. Here 'it may be pointed out that a gift may be made to a stranger. Sec. 123 of Transfer of Property Act does not require that gift should be made to a relation only. Thus, the AO has taken an incorrect view of law. Relationship between the donor and the donee is not necessary and is not an essential condition of gift. The AO has highlighted another point which is regarding lack -of "occasion" for making gifts. He has observed that there was no occasions for the donors to make the gifts are normally given on many occasions like birthday, marriage anniversary and other events. However, gift may be given at any time as per the wishes of the donor and the donee. Thus, it cannot be said that if a gift is not made on particular occasion or any event then such gift is not a genuine gift. Hence, occasion is not a relevant criteria. Accordingly, the findings of the CIT(A) deleting the additions made on account of the said gifts by the AO are upheld - CIT Vs. Mrs. Sunita Vachani (1990) 84 CTR (Del.) 18 : (1990) 184 ITR 12 (Del.) and Mrs. Ranjana Katyal Vs. Asstt. CIT (2008) 1 DTK (Del)(Trib) 24 relied on." (Unquote) (Quote)
"Section 68 has no applicability to the facts of present case as the assessee is not maintaining any books of accounts. If that be so Section 68 does not apply in her case for the simple reason that the cheque received from P has been deposited in her bank account. Balance sheets /statements of affairs cannot be equated to books of accounts because "in traditional terms books means a collection of sheets of paper bound together -with the intention that such binding shall be permanent and papers used are kept collectively in one volume. It can also be assumed that it can notes the contentions that it should serve as a permanent record." Bank pass book is not a book maintained 'by the assessee or under, his instructions by the bank. Whether cash credits for previous years are shown in assessee's bank pass book then they cannot be treated as income of the assessee within the meaning of Section 68. Therefore, a pass book of the bank cannot be treated as a book of account of the assessee because this is provided by the banker, which is given to its customer and is only act as an agent of the customer (the assessee). The relationship between the banker and customer is one' of debtor and creditor only. Therefore, a cash credit appearing in assessee's pass book relevant to a particular previous year, in a case where the assessee does not maintain books of account, does not attract the provisions of Section 68 - Sheraton Apparels Vs. Asstt. CIT (2002) 175 CTR (Bom) 651: (2002) 256 ITR 20 (Bom.), CIT ' Vs. BhaichandH. Gandhi (1983) 141 ITR 67 (Bom) and Sampat Automobiles Vs. ITO (2005) 96 TTJ(Jd) 368 relied on." (Unquote)
9.2 In the present case, the appellant has received gift from his son's friend, who is residing at UAE through demand draft, IT Return of which was already filed on 16.06.2004 at Indore. Search has taken place on 17.03.2006. In search action, the declaration of the gift was found and seized. Before the AO, the appellant adduced evidences with regard to identity, genuineness of the transactions and to prove creditworthiness, has filed affidavit of the donor, which is made by donor after search on 25-11.2006. In submission before AO, appellant explained relationship with the donor, occasion & reason of gift. Having considered all such facts, evidences and explanations, I am of the opinion that the appellant has proved the receipt of the gifts from an identified party and creditworthiness is proved by filing affidavit and evidences of assets and bank accounts. As held by Delhi ITAT in the case of Ms. Mayawati vs. DCIT 113 TTJ 178, relationship between donor and donee is not a condition precedent for making a valid gift nor there any requirement that there should be some occasion to make a valid gift. The Assessing Officer alleged that the appellant has routed its own unexplained money as gift but was not able to bring single evidence on record of earning unaccounted incomes of the appellant, from where the unexplained money can be given. The appellant is an old person. Accordingly, on a consideration of the facts on records, the contentions made and the decisions cited, it is held that the Assessing Officer was not justified in treating gift of Rs. 15,00,000/- as unexplained cash credit. The Assessing Officer has made the addition on a surmises, which cannot be upheld. Therefore the addition of gift as unexplained cash credit is deleted.”
5. Therefore, the Revenue is in appeal.
6. The Ld. Departmental Representative reiterates the Assessing Officer’s reasons stated in the preceding paragraphs for terming the impugned gift as bogus. Case law of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC), (2014) 265 ITR 383 (Guj) Kaushal N. Patel vs. ITO, (2013) 217 Taxman 16 (Gujarat) Satish Kumar Kantilal Shah (HUF) vs. ITO, (2012) 341 ITR 632 (Guj) Dinesh Basulal Thakkar vs. ACIT, (2014) 365 ITR 131 (Pen) Hanuman Dass vs. CIT, (2007) 291 ITR 278 (SC) CIT vs. P. Mohankala, (1969) 72 ITR 194 (SC) CIT vs. Devi Prasad Vishwanath, (1958) 34 ITR 807 (SC) A. Govindaraju Mudaliar vs. CIT. He accordingly argues that the CIT(A) ought to have upheld the Assessing Officer’s action in making the impugned addition.
7. The assessee strongly supports the lower appellate order accepting his gift plea as extracted hereinabove. He files a paper book and takes us to content thereof for submitting that the gift in question satisfies all essential conditions. Case law of ITAT Ahmedabad bench in IT(SS)A 197/Ahd/2009 decided on 20-04-2012 Smt. Heena Sharma Vs. ACIT is quoted in support which has been subsequent affirmed by the hon’ble jurisdictional high court in Tax Appeal No. 712 of 2012 decided on 21-12-2013. Ld authorized representative strongly argues that facts of the instant case are much better placed than those involved therein and the assessee deserves to succeed as per this order of hon’ble jurisdictional high court. The assessee accordingly seeks rejection of this Revenue’s appeal.
8. We heard all these arguments on 02-09-2015. It came to our notice that the Assessing Officer had quoted assessee’s statement recorded u/s. 131(IA) on 20-03-2006 deposing that he did not know much about the donors (supra). We asked the Revenue to place on record contents thereof and fixed the case for hearing as part heard. Today i.e. on 18-09-2015, the Revenue has filed assessee’s said statement. We have already confronted the assessee about the contents thereof as below:-
“Q.:6 After seeing paper seized from your premises, it is found that you, your wife, your daughter in law and grandchildrens received Gifts amounting to Rs. 1.45 Crores, from Mr. Sunil Gandhi and Arvidkumar of Dubai. Would you like to say anything about it?
A:6 The gift received from Sunil Gandhi and Arvindkumar, who live is Dubai are in good relation with my Son Deepkumar Trivedi. The gifts received from them are shown in the IT returns. I do not know much about Sunil Gandhi and Arvindkumar, may be my son would be able to tell some this.”
The assessee contended in the course of hearing that his case is much better placed than that of Smt. Heena Sharma (supra). A fine line of distinction in the appellate orders confirming the CIT(A)’s findings under challenge are maintained and reversed; is also sought to be drawn. The assessee pleads that wherever two views are possible the one taken by the lower appellate authority is to be confirmed.
9. Heard both sides. Records perused. We deem it proper to recapitulate the facts in brief. The assessee received a sum of Rs. 15 lacs from donor Mr. Gandhi by way of a demand draft. The Assessing Officer rejected this gift plea for want of creditworthiness. The same stands reversed in lower appellate order. There is no dispute about the fact that the assessee is in noway related to the donor. His claim at the best is that this donor is assessee’s son’s friend. We have already extracted hereinabove assessee’s statement thrown light upon his proximity of relations with the donor. We need to reiterate that the assessee claimed this relation to be alike that of “Kanha and Nand”. \However, this affection trail falls well short thereto. The assessee has not led any evidence; whatsoever apart from self styled deposition throwing some light upon his love and affection with the donor and vice verse. His case is that this relationship is due to the donor’s friendship with his son, Shri Deepakkumar Trivedi. This person has nowhere been produced in support of gift claim. It is seen from the paper book page no. 5 that donor’s declaration is dated 07-10-2003 giving a sum of Rs. 15 lacs without any consideration or caveat. Page no. 8 of the paper book is in the nature of gift instrument/demand draft containing name of the Dubai based exchange company. The donor’s name or any corresponding entry is nowhere found therein. Pages 9-10 comprise of passport details. Page no. 11 is the donor’s affidavit showing substantial fortune of 100 million Dirhams. Pages 12 to 47 are donor’s bank account and Indian Millenium Deposits receipts in US dollars. Pages 48 to 52 reveal donor’s India visits on more than 60 occasion between 14-04-2003 to 02-11-2007 i.e. corresponding to the assessment time period. The question that arises for consideration in this factual backdrop is as to whether the case in hand involves execution of a valid gift.
10. We have given our thoughtful consideration to the question framed hereinabove. There cannot be any quarrel that a gift instance has to arise from natural love and affection without any consideration. The above said facts and circumstances indicate that neither the assessee produced his son having very good relations with the donor nor the donor himself for necessary deposition right from scrutiny till date. It goes without any gainsaying that what is left only the donee’s statement or assertion hereinabove in support of the gift and donor’s confirmation received from abroad not even naming the asseessee’s son. We put specific query to the assessee in the course of hearing as to why the donor was not produced. He replied that the Assessing |Officer did not ask him to do so. We are not impressed with this stand. Once the assessee had claimed a specific relation alike that of “Kanha and Nand” between donor and himself, it was for him to discharge at least initial onus. He has failed to do so. We deem it appropriate to observe at this stage that these income tax proceedings do not involve strict rules of evidence law. At the same time, there has to be some reasonable element in an explanation offered by the concerned assessee so as to shift the onus in the Revenue’s court. This case does not involve any such shifting of onus much less than the burden. Coupled with this fact that the donor in question is not in any way related to the assessee. And also there is no corresponding channel in the gift instrument linking assessee’s amount credit to that of donor’s account. We take into consideration all these facts and hold that the assessee has failed to prove the execution of a valid gift in question. We quote case law of Sumati Dayal (supra) and observe that the assessee’s version lacks creditworthiness so as to be accepted.
11. Now we come to the case law of Smt. Heena Sharma. It is evident to us that therein the assessee had produced sufficient record like confirmation letter, gift deed, pan card, income tax records, gift transactions through banking channel etc. These peculiar facts led the ld. co-ordinate bench to a decision in favour of the assessee therein which stands confirmed by the hon’ble jurisdictional high court. We have already discussed in the preceding paragraphs that the assessee before us has only proved identity of the creditor along with capacity to gift the impugned sums of Rs. 15 lacs. The above stated case law accordingly stands distinguished. We are very well conscious about case law referred at the Revenue’s behest I(supra). It is to be seen that hon’ble jurisdictional high court, Punjab and Hariyana high court and apex court have decided identical issue in Revenue’s favour. The conclusion that can be drawn from a perusal thereof is that a gift claim is purely factual issue to be decided as per the explanation/supportive evidence having element of reasonableness and creditworthiness. We have already examined facts of this case to conclude that the assessee has failed in proving any love and affection with the donor. All of this discussion takes care of the assessee’s arguments addressed on 18-09-2015. It is held that when the order of the CIT(A) does not confirm to the relevant law, the same cannot be sustained. The question framed hereinabove is accordingly decided in the Revenue’s favour and against the assessee. The Revenue’s sole substantive succeeds.
ITA 577/Ahd/2010 is accepted
12. Same order to follow in ITA 579/Ahd/2010.
13. Both these Revenue’s appeals are allowed.