1. This appeal by the Revenue is directed against the order dt. 6th Dec., 1996, passed by learned CIT(A)(C) for asst. yr. 1993-94.
2. Nobody appeared on behalf of the assessee, despite notice having been sent through registered AD post, as per acknowledgement available on record. Earlier also, the case was fixed on different occasions but nobody came present. On one occasion, an accountant of the assessee appeared without any valid authorisation, even then the case was adjourned. On another occasion, a request was received for adjournment without any power of attorney and satisfactory reason. We have, therefore, proceeded ex pane qua the assessee to decide the appeal on merit, after hearing learned Departmental Representative, who mainly relied on order of the AO.3. Ground Nos. 1 and 2 relate to deletion of additions of Rs. 6,00,000 and Rs. 12,00,000 made by the AO on account of gifts received by the assessee and his wife, respectively, from Shri Gurmit Singh. The assessee received a gift of Rs. 6 lakhs, while his wife, Smt. Manjit Kaur, received a gift of Rs. 12 lakhs. The assessee is a partner in M/s Hightensils Products India, M/s Godlight Industries and M/s Godex (India). A search was carried out in the case of M/s Hightensils Products India, on 11th Aug., 1995, as also the residential premises of the partners. It was noted from SB a/c No. 34802 maintained with Bank of Baroda, New Delhi, that a sum of Rs. 6 lakhs was credited on 21st July, 1992. The assessee claimed that the said sum was received as a gift from. Shri Gurmit Singh of Singapore, by transfer from NRI a/c No.50616 with Indian Overseas Bank, New Delhi. NRI account was said to have been opened by Shri Gurmit Singh from Singapore by transferring the documents through bank and remitting Rs. 1,000 by money transfer.
First two entries dt. 4th May, 1992 and 7th May, 1992, were in respect of credit of Rs. 6,09,202 and Rs. 6,08,315, whereas the third entry dt.
7th May, 1992, was for Rs. 1,000. Details of NRI account are as under:___________________________________________________________________________________ Date Particulars Withdrawals Deposit Balance___________________________________________________________________________________4-5-1992 By transfer a/c opened -- 6,09,202 6,09,2027-5-1992 By transfer -- 6,08,315 12,17,5177-5-1992 By transfer 1,000 1,000 12,18,51712-5-1992 To clearing 12,00,000 -- 18,51721-5-1992 By transfer -- 2,79,775 2,98,29221-6-1992 By transfer -- 3,03,490 6,01,78221-7-1992 To cheque 6,00,000 -- 1,7823-9-1992 By interest -- 1,602 3,38415-9-1992 To excess 267 -- 3,117March, 1993 By interest -- 87 3,204Balance as -- -- -- 3,204___________________________________________________________________________________ AO enquired from the Indian Overseas Bank, who, vide their letter dt.
26th March, 1996, gave details of deposits as under : 1. TT dt. 30th April, 1992, for USD 20,000 was purchased in cash by a walk-in-customer by name, Mr. T.P. Anand, 03-07, Peninsula Shopping Centre, Singapore, Tele No. 3378868; 2. DD dt. 8th April, 1992, for USD 20,000 was also purchased by the same walk-in-customer by paying cash. The address given in the application was c/o Gurmit Singh, 07-07, Peninsula Shopping Centre; 3. TT dt. 25th June, 1992, was again purchased in cash by the same walk-in-customer, Mr. T.P. Anand c/o 03-07, Peninsula Shopping Centre, Singapore. The amount of this TT was USD 10,000.
It was noted that foreign currency worth 9,500 USD was tendered by account holder to Indian Overseas Bank, New Delhi, on 21st May, 1992.
The bank authorities entered this amount by way of transfer, to which the bank subsequently on enquiry by the AO, vide letter dt. 20th March, 1996, confirmed the correct position. All other three TTs were purchased from Singapore branch of the Indian Overseas Bank. The bankers did not produce pay-in-slips, for verification. AO thus noted that gifts of Rs. 12 lakhs on 12th May, 1992, and Rs. 6 lakhs on 21st July, 1992, were made out of savings bank a/c. AO ultimately added amounts of both the gifts in the hands of the assessee in view of the decision in the case of Lall Chand Kalra v. CIT. AO required the assessee to produce Gurmit Singh, but he was not produced. It was submitted that the wife of the assessee happened to be the Dharam sister of Gurmit Singh and thus Gurmit Singh made the gifts. AO noted that at the time of marriage of the assessee's son, the assessee had made a gift of Rs. 501 to Gurmit Singh and an equal amount to his wife Smt. Seema. No occasion for making the gifts was explained by the assessee. AO also relied on the decision in the case of CIT v.Precision Finance (P) Ltd. (1994) 208 ITR 465 (Cal). Ultimately, AO made the impugned additions in the hands of the assessee and his wife, summarising as under : (i) Only a sum of Rs. 1,000 was spent by Shri Gurmit Singh from Singapore for the purpose of opening the account in Indian Overseas Bank, Janpath, New Delhi; (ii) All other TTs/DDs have not been purchased by Shri Gurmit Singh.
Instead, as per information supplied by the IOB, Singapore, Janpath, these TTs/DDs were purchased by one Shri TP Anand, having an address different from Shri Gurmit Singh; (iii) The information collected from the bank reveals that Shri Gurmit Singh has his account in IOB, Singapore. However, none of the TTs/DDs has been purchased out of that account. Instead, these TTs/DDs have been purchased in cash by one TP Anand, who has been described by the bank as 'walk-in-customer'; (iv) The amount of 9,500 USD deposited on 21st May, 1992, in Indian Overseas Bank, Janpath, has been deposited in cash, whereas the bank authorities till last have tried to conceal the actual transaction by writing that the same has been collected by 'transfer'. It is only after being cornered, the bank has admitted that the same has been deposited in cash. Even the bank despite requests by the undersigned has neither produced nor sent the deposit slips, with the obvious intention to conceal the identity of the depositor; (v) Further, as has been mentioned above, the account opening entry which should be first entry appears to be third in the ledger on 7th May, 1992, whereas the account has become operational on 4th May, 1992, under the influence of the customer, who was no one else except Shri Raghbir Singh; and (vi) The bank authorities have connived with the assessee in operation of this account. It is Shri Raghbir Singh, who was operating this account, though the same was in the name of Shri Gurmit Singh, which happens to be an NRI residing in Singapore.
3.1 Before learned CIT(A), it was submitted that Shri Gurmit Singh was born in Singapore and his father, late Shri Balwant Singh, was very closely associated with the assessee and his family. Shri Balwant Singh was more than a brother to Smt. Manjit Kaur, wife of the assessee. Shri Gurmit Singh s/o Shri Balwant Singh ultimately gifted the amount to the assessee and his wife. Both the families kept on visiting each other on the occasions of various ceremonies. Gurmit Singh was running a travel agency in Singapore, which was inherited by him from his father. There were more than 25 people working in his office. Shri TP Anand, who purchased TTs/DDs at Singapore, was an employee of Shri Gurmit Singh and transactions had been carried out on behalf of Shri Gurmit Singh.
Therefore, while obtaining TTs/DDs, address of Shri Gurmit Singh was given. The assessee was only authorised to collect and receive cheques.
All the money was sent from Singapore, except cash deposit of 9,500 USD, when Gurmit Singh had come to India. Thus, it was submitted that the identity, creditworthiness and genuineness of the transactions were duly proved and no addition should be made. It was also submitted that in the case of Smt. Manjit Kaur, in asst. yr. 1990-91, genuineness was duly proved and no addition should be made. It was also submitted that in the case of Smt. Manjit Kaur in asst. yr. 1990-91, genuineness of gifts received from Shri Balwant Singh was accepted by the AO.Photocopy of passport of Shri Gurmit Singh was also filed to prove that when 9,500 USD was deposited, Gurmit Singh was in India, on 21st May, 1992. Photocopy of statutory declaration duly attested by the Notary Public at Singapore, was also filed. Ultimately, CIT(A) observed that the decision in the case of Lall Chand Kalra (supra) was distinguishable on facts because gifts to the assessee and his wife were from a stranger and there was nothing to show that the donor had any more important liability to meet than giving gifts to the assessee and his wife. He held the transactions to be genuine and there was no evidence with the Department that the assessee had converted his unaccounted money through gifts. Ultimately, he deleted the impugned additions. The Revenue is aggrieved.
3.2 Before us, learned Departmental Representative filed written submissions as under : "...The assessee, Shri Raghbir Singh, had shown that he had received gifts of Rs. 6 lakhs from Shri Gurmit Singh. Another Rs. 12 lakhs were claimed as gifts in the name of his wife, Smt. Manjit Kaur, from the same person. AO concluded that these gifts were not genuine and treated the same as income from undisclosed sources of Shri Raghbir Singh. Detailed facts and reasons for the same are given in assessment order dt. 29th March, 1996, which is relied upon. All these facts were highlighted by the undersigned before the Hon'ble Bench on 15th Nov., 2002. Learned CIT(A) had erred in deleting these additions.
2. Assessment record for asst. yr. 1993-94 is available, which can be perused by the Hon'ble Bench.
3. Copies of judgments cited by AO in the following cases are enclosed : 4. Learned CIT(A) had relied on the decision of Hon'ble Delhi High Court in CIT v. Mrs. Sunita Vachani (1990) 184 ITR 121 (Del). The facts of that case were different because the financial capacity and source of money of donor were proved before Tribunal. This is not so in the case of Shri Raghbir Singh in question.
(ii) Sanjeev Batra v. Asstt. CIT (1999) 65 TTJ (Del) 799 : (1999) 69 ITD 23 (Del); Ultimately, it was urged by learned Departmental Representative that the order of CIT(A) deserves to be set aside and the case is covered by the ratio of the decision in the case of Lall Chand Kalra (supra), in which also there was a gift received from relatives, like in the present case, where gift is given by donor to Dharam sister.
3.3 We have heard learned Departmental Representative, perused the orders of tax authorities and gone through the material on record as well as the case law cited by learned Departmental Representative. We find that the assessee has received a gift of Rs. 6 lakhs and his wife Rs. 12 lakhs from Shri Gurmit Singh, out of his NRI account. The principle of law is well-settled that in case of cash gift's, the onus is on the assessee to establish the identity/capacity of the donor and the genuineness of the transactions. Degree of proof in the matter of gifts is heavier than cash credits. The assessee has furnished evidence regarding receipt of amounts of gifts from NRI account, which was opened by the donor only for the transactions of so-called gifts, as is apparent from copy of account filed in the paper book and extracted hereinabove. All the deposits made in the said account, except a sum of Rs. 2,79,775 (USD 9,500) have c6me through TTs/DDs purchased in Singapore by one Shri TP Anand, as certified by the IOB letter, extracted above. As per the bank's letter, TTs were purchased by a walk-in-customer, by paying cash. From the bank account, we find that there is no other transaction except gifts of Rs. 6 lakhs and Rs. 12 lakhs, given by the donor. The onus lies on the assessee to prove identity/capacity/ creditworthiness of the donor and genuineness of the transactions. Creditworthiness of Shri Gurmit Singh could not be proved from the material on record, especially when the amounts sent through TTs, have been purchased by Anand, to which the bank has described to be a walk-in-customer, in cash. Until and unless all the three things are proved, we feel applicability of Section 68 cannot be ruled out.
The assessee did not produce the donor or even file confirmation from him. The story of gifts by Dharam Bhai/Dharam Sister can hardly be swallowed. The fact that the amounts have been gifted out of NRI account is not sufficient to establish the capacity of the donor. Even capacity of the donor can be examined from the copy of account or the financial statement, especially his creditworthiness in Singapore.
Required information was not made available by the assessee to the AO.Possibility of money having been arranged through Hawala cannot also be ruled out. On totality of facts and circumstances of the case, in our opinion, AO was right in treating the amounts of gifts claimed to have been received as income of the assessee from undisclosed sources. Since the assessee's wife did not derive any income, the money received by her as gift, in our view, also belonged to the assessee. In substance, we uphold the addition in the hands of the assessee in respect of Rs. 12 lakhs received by his wife. In our considered view, the CIT(A) failed to appreciate the facts of the case of Lall Chand Kalra (supra), in which there were two gifts of Rs. 10,000 received. Rs. 10,000 were received from a stranger and Rs. 10,000 from brother of wife of the assessee. The Tribunal rejected the genuineness of gifts. High Court confirmed the order of the Tribunal, holding that there was no reason as to why the brother of the wife has given gift of Rs. 10,000 to the assessee, particularly when there was no occasion to do so. In the case before us, the assessee claimed that the donor was brother-in-law of the assessee (Dharam Bhai) and the assessee did not point out any occasion for the gift. Therefore, in our view, the case of the assessee is duly covered by the aforesaid decision in the case of Lall Chand Kalra (supra). On the facts of the case, we set aside the order of learned CIT(A) deleting the additions in respect of gifts and restore that of the AO. Similar view has been taken in the following cases : 4. Last ground is against the deletion of addition of Rs. 60,300 made on account of low household expenses. AO noted that the assessee had made drawings of Rs. 83,700, excluding the electricity expenses. He asked for details of various expenses. AO noted that at the time of search, seven domestic servants were found to have been employed.
Monthly expenses were estimated at Rs. 12,000 and, therefore, addition of Rs. 60,300 was made. Learned CIT(A) deleted the impugned addition by observing as under : "...Taking into account the above facts, it is observed that the electricity expenses as also maintenance of house property, withdrawals shown by the assessee at Rs. 83,700 cannot be considered to be low, especially in the absence of any evidence to show that the assessee's family has incurred expenditure in excess of the withdrawals shown. It is also noted that the number of persons found at the time of search operation were not servants of the assessee but some of them were also employees of various concerns, who had come to collect keys of the factory/office premises and it is stated by the assessee that some of the persons are only part-time servants." Learned Departmental Representative did not point out any infirmity or illegality in the impugned order in deleting the addition of Rs. 60,300, neither any cogent evidence or material has been brought on file which may prove that the household expenses incurred were more than the drawings. On the facts of the case, we find no merit in the ground raised by the assessee (sic-Revenue) and it stands rejected.