Ankita Labhubhai Lakhani(Patel), Surat v. The Income tax Officer,Ward-9(2),, Surat

ITA 1388/AHD/2008 | 2002-2003
Pronouncement Date: 19-08-2010 | Result: Dismissed

Appeal Details

RSA Number 138820514 RSA 2008
Assessee PAN ABQPL3438A
Bench Ahmedabad
Appeal Number ITA 1388/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 28 day(s)
Appellant Ankita Labhubhai Lakhani(Patel), Surat
Respondent The Income tax Officer,Ward-9(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 19-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 19-08-2010
Date Of Final Hearing 28-07-2010
Next Hearing Date 28-07-2010
Assessment Year 2002-2003
Appeal Filed On 21-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ITA NOS.1388 AND 1389/AHD/2008 (ASSESSMENT YEARS:-2002-03 AND 2003-04) ANKITA LABHUBHAI LAKHANI (PATEL) 78 SADHNA SOCIETY VARACHHA ROAD SURAT [PAN: ABQPL 3438 A] V/S INCOME-TAX OFFICER WARD- 9(2) SURAT [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI SUNIL L TALATI AR REVENUE BY:- SHRI K M MAHESH DR O R D E R A N PAHUJA: THESE TWO APPEALS FILED BY THE ASSESSEE AGAINST TW O SEPARATE ORDERS DATED 12-03-2008 OF THE LD. CIT(APP EALS)-V SURAT FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 RAIS E THE FOLLOWING GROUNDS :- ITA NO.1388/AHD/2008[AY2002-03] 1 THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1 40 000/- BY WAY OF ALLEGED UNEXPLAINED GIFT. 2 THAT THE CIT(A) OUGHT TO HAVE TAKEN INTO ACCOUNT CAPACITY OF THE DONOR. 3 THAT THE ADDITION OF RS.1 40 000/- MAY KINDLY BE DELETED. 4 THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER VARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. ITA NO. 1389/AHD/2008[ AY 2003-04] 1 THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.80 000/- BY WAY OF ALLEGED UNEXPLAINED GIFT. 2 THAT THE ADDITION OF RS.80 000/- MAY KINDLY BE DE LETED. ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 2 3 THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER VARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2 THE ASSESSEE VIDE APPLICATION DATED 18-06-2008 SOUGHT TO RAISE THE FOLLOWING ADDITIONAL GROUNDS IN THE AY 2002-03: (1) THAT THE AO ERRED IN MAKING ASSESSMENT U/S 147 . (2)THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITIO N MADE U/S 147. HOWEVER AT THE TIME OF HEARING OF THESE APPEALS T HE LD. AR ON BEHALF OF THE ASSESSEE SOUGHT TO WITHDRAW THE PRAYE R FOR ADMISSION OF THE AFORESAID ADDITIONAL GROUNDS. ACCORDINGLY THE APPLICATION FOR ADMISSION OF AFORESAID ADDITIONAL GROUNDS IS DISMI SSED AS WITHDRAWN. 3 ADVERTING NOW TO THE GROUNDS RELATING TO THE ADDI TION OF RS.1 40 000/- BY WAY OF UNEXPLAINED GIFT IN THE AY 2002-03 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.88 439/-. FILED ON 30-03-2003 BY THE ASSESSEE W AS PROCESSED ON 28-05-2003 U/S 143(1)(A) OF THE INCOME-TAX ACT 196 1[HEREINAFTER REFERRED TO AS THE ACT]. MEANWHILE THE ASSESSMEN TS FOR THE AY 2002- 03 WERE FINALIZED BY THE ITO WARD-9(2) SURAT IN T HE CASE OF FATHER OF THE ASSESSEE SHRI LABHUBHAI D LAKHANI AND HER MO THER SMT. LEELABEN L LAKHANI WHEREIN GIFTS RECEIVED BY THES E ASSESSEES WERE TREATED AS UNEXPLAINED CASH CREDITS. SINCE THE ASSESSEE HAD ALSO SHOWN GIFTS IN THE YEAR UNDER CONSIDERATION A CCORDINGLY ASSESSMENT IN THIS CASE WAS REOPENED U/S 147 OF THE ACT WITH THE ISSUE OF NOTICE U/S 148 OF THE ACT ON 7.1.2005. IN RESPONSE SHRI LABHUBHAI D LAKHANI POWER OF ATTORNEY HOLDER ON BE HALF OF THE ASSESSEE SUBMITTED VIDE LETTER DATED 31.1.2005 THAT RETURN FILED ON 30.3.2001 MAY BE TREATED AS RETURN IN PURSUANCE TO NOTICE U/S 148 OF THE ACT. THE ASSESSEES OBJECTIONS TO REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WERE DISPOSED OF VIDE ORDER DATED ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 3 16.8.2005.DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE A SSESSEE CREDITED AN AMOUNT OF RS.1 40 000/- AS GIFT RECEIVED FROM ON E SHRI ASHWIN LALJIBHAI SAVANI IN HER CAPITAL ACCOUNT. DESPITE RE PEATED REQUESTS STARTING WITH LETTER 17-06-2005 UNTIL THE FINAL S HOW CAUSE ISSUED TO THE ASSESSEE TO ESTABLISH THE IDENTITY AND CREDIT WORTHINESS OF THE AFORESAID ALLEGED DONOR AS ALSO THE GENUINENESS OF THE TRANSACTIONS THE ASSESSEE DID NOT PRODUCE THE DONOR FOR CROSS -EXAMINATION AND INSTEAD THE ASSESSEE FILED A COPY OF 7/12 EXTRACTS AND COPY OF MEMBERSHIP IN SHRI MADHI VIBHAG KHAND UDHYOG SAHKAR I MANDLI LTD. (MADHI) RELEVANT TO THE FINANCIAL YEAR'2000-01 IN S UPPORT OF CREDIT WORTHINESS OF THE ALLEGED DONOR. SINCE THE GIFT CLA IMED IN THE NAME OF SHRI ASHVINBHAI PERTAINED TO THE AY 2001-02 T HE RELEVANT EVIDENCES / DETAILS WERE CALLED FOR BY THE AO. ON P ERUSAL OF THE DETAILS THE AO OBSERVED THAT AGRICULTURE LAND ADM EASURED 1.81 HECTARES AND COPY OF MEMBERSHIP IN SHRI MADHI VIBHA G KHAND UDHYOG SAHKARI MANDLI LTD. ( MADHI) REVEALED CROP O F RS.10 51 484/- FOR THE F.Y. 2000-01 .SINCE THESE EVIDENCES WERE N OT ACCEPTABLE THE AO ASKED VIDE LETTER DATED 20/9/2005 TO PRODUCE SHRI ASHWINBHAI LALJIBHAI ALONG WITH PROOF OF IDENTIFICATION CONFI RMATION OF TRANSACTION AND ALSO WITH ORIGINAL PROOF OF HIS CREDIT WORTHINESS RELEVA NT TO THE YEAR UNDER CONSIDERATION. HOWEVER THE ASSESSEE DID NOT PRODUC E THE ALLEGED DONOR NOR ESTABLISHED HIS IDENTITY OR CREDITWORTHI NESS OF THE DONOR OR EVEN GENUINENESS THE TRANSACTION AND NOR EVEN FI LED HIS CONFIRMATION. ACCORDINGLY RELYING UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 AND SRILEKHA BANERJEE VS. CIT 49 ITR 112 THE AO ADDED THE AFORESAID AMOUNT RS.1 40 000/- U/S 68 OF THE ACT . 4. ON APPEAL THE LD. CIT(A) UPHELD THE ADDITION IN THE FOLLOWING TERMS:- ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 4 THE THIRD POINT IS REGARDING THE CASH RECEIPT OF R S.1 40 000/- FROM DONOR SHRI ASHWINBHAI L SAVANI FOR THIS ALSO THE APPELL ANT HAS PRODUCED VARIOUS EVIDENCES. HOWEVER AS IT HAS BEEN INFORMED BY THE ASSESSING OFFICER THAT THE SAID ASHWINBHAI L SAVANI ALSO APPE ARS AS DONOR IN THE CASE OF FATHER AND MOTHER OF THE APPELLANT WHERE IT HAS BEEN HELD THAT GIFTS RECEIVED BY THEM WERE NOT GENUINE IT IS UNLIKELY T HAT A PERSON WOULD DONATE TO THE ENTIRE FAMILY WITH NO RECIPROCITY OR OCCASION. HAVING CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE EVIDENCES PRODUCED BEFORE ME BY THE A.R. IT IS HELD THAT THE DONOR MAY HAVE HAD THE CAPACITY BUT THE CLAIMED GIFT DOES NOT SEEMS TO BE GENUINE AND THEREFORE ADDITION OF RS.1 40 000/- MADE UNDER SECTION 68 IS CONFIRMED. 5. LIKEWISE IN THE AY 2003-04 THE AO NOTICED THAT THE ASSESSEE CREDITED AN AMOUNT OF RS.40 000/- AS GIFT FROM ONE SHRI ASHOKBHAI C. SAVANI AND AN AMOUNT OF RS.40 000/- AS GIFT FRO M SHRI MANUBHAI CHHAGANBHAI SAVANI IN HER CAPITAL ACCOUNT. DESPITE REPEATED REQUESTS STARTING WITH LETTER ISSUED ON 17-06-2005 UNTIL THE FINAL SHOW CAUSE THE ASSESSEE DID NOT ESTABLISH EITHER THE IDENTITY OR CREDIT WORTHINESS OF THE SAID TWO DONORS NOR PROVED THE GENUINENESS OF THE TRANSACTIONS AND NOR EVEN FILED THEIR CONFIR MATIONS. EVEN REPEATED REQUESTS TO PRODUCE THE DONORS WERE REPEL LED. THE AO FURTHER NOTICED FROM CERTAIN XEROX COPIES OF AGRICU LTURE BILLS IN THE NAME OF BOTH THE AFORESAID DONORS THAT ONE BILL IN THE NAME OF SHRI MANUBHAI CHHAGANBHAI WAS ISSUED ON 15-01-2003 WITH BILL NO. 29 FROM M/S VINAY TRADING WITHOUT MENTIONING ADDRESS AND TELEPHONE NO. OF THIS PARTY WHEREAS ANOTHER BILL IN THE NAME OF SAME PARTY WAS ISSUED ON 10-01-2003 WITH BI LL NO. 32. SINCE BILL NO.32 WAS ISSUED ON 10-01-2003 WHILE BILL NO. 29 ON 15-01 -2003 THE AO DOUBTED THEIR GENUINENESS ESPECIALLY WHEN NO EVIDENCE OF HOLDING OF ANY AGRICULTURAL LAND BY THE ALLEGED DONORS WAS PRODUCED. SINCE THE ASSESSEE FAILED TO PROVE IDENTITY & CREDIT WORTHINESS OF THE DONORS OR EVEN THE GENUIN ENESS OF TRANSACTIONS NOR PRODUCED THE ALLEGED DONORS BEFORE THE AO RELYING UPON DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V S. CIT (1995) 214 ITR 801 AND SRILEKHA BANERJEE VS. CIT 49 ITR 112 THE AO A DDED THE AMOUNT OF RS. 80 000/- U/S 68 OF THE ACT . ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 5 6. ON APPEAL THE LD. CIT(A) UPHELD THE ADDITION IN THE FOLLOWING TERMS:- DURING THE APPELLATE PROCEEDINGS THE APPELLANT NE ITHER PRODUCED THE CLAIMED DONOR NOR COULD FILE THE CONFIRMATION OF TH E TRANSACTIONS SHOWN IN THEIR NAMES. THE ASSESSING OFFICER HAD ALSO DISCUSS ED AT LENGTH ON PAGE 5 ABOUT GLARING DISCREPANCIES IN THE ZEROX COPIES OF THE BILLS FOR SALE OF AGRICULTURAL PRODUCE WHICH WAS CLAIMED TO BE SOURCE OF GIFTED AMOUNTS IN THE HANDS OF DONORS. SINCE IDENTITY CREDIT WORTHINESS AND GENUINENESS O F TRANSACTIONS COULD NOT BE ESTABLISHED THE ADDITION OF RS.80 000/- WAS MAD E UNDER SECTION 68 OF THE I.T. ACT. BEFORE ME COPY OF LAND REVENUE RECORDS AND BILLS O F SALES OF AGRICULTURAL PRODUCE BY THE DONORS HAVE BEEN PRODUCED WHICH I HA VE PERUSED CAREFULLY. IN THE LINE OF MY FINDINGS IN THE PRECED ING YEAR IT IS HELD THAT THE APPELLANT SEEMS TO BE IN HABIT OF FORMING CAPITAL B Y WAY OF GIFTS EVERY YEAR FROM VARIOUS PEOPLE. SHE HAD ONLY RECEIVED GIFTS BU T HAS NEVER MADE GIFT TO ANY ONE DURING ALL THE THREE YEARS. APPARENTLY THERE WAS NO OCCASION JUSTIFYING SUCH GIFTS. DONORS SEEMS TO BE CLOSELY R ELATED AMONGST THEMSELVES WHO HAD DONATED IN THE PRECEDING YEAR AN D THEREFORE ALL THE EFFORTS OF THE A.R. TO SHOW CREDIT WORTHINESS AND I DENTITY OF THE DONORS DO NOT ESTABLISH GENUINENESS OF THE TRANSACTIONS. THES E GIFTS SEEMS TO BE HAVE BEEN MANAGED AND IN REALITY REPRESENT ASSESSEE 'S OWN UNEXPLAINED INCOME OF THE YEAR. THEREFORE IT IS HELD THAT THE ASSESSING OFFICER IS JUSTIFIED IN TREATING THEM AS CASH CREDIT UNDER SEC TION 68 OF THE I.T. ACT. APPEAL IS THEREFORE DISMISSED. 7. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. CIT(A) IN THE TWO ASSESSMENT YE ARS. THE LD. AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH A COPY OF GIFT DEED PLACED AT PAGE 18 OF THE PAPER BOOK REITERATE D THEIR SUBMISSIONS BEFORE THE LOWER AUTHORITIES. IT WAS CO NTENDED THAT GIFT WAS MADE BY SHRI ASHWINBHAI OUT OF HIS AGRICULTURAL INCOME. ON THE OTHER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A ) IN THE LIGHT OF DECISION DATED 14.5.2010 OF THE ITAT IN ITA NOS.2361- 65/AHD./2005 2569/AHD./2006& 373-2835/AHD./2007 IN THE CASE OF ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 6 LAKHANI LABHUBHAI LAKHANI LILABEN & LAKHNAI MEHUL L ABHUBHAI FOR THE AYS 2002-03 & 2003-04. THE LD. DR VEHMENTLY ARG UED THAT THERE IS NO EVIDENCE ON RECORD REGARDING OCCASION OF GIF TS NOR OF LOVE AND AFFECTION. GIFT IS STATED TO HAVE BEEN MADE TO FRIE NDS DAUGHTER IN THE AY 2002-03 WHILE TO THE NEPHEW IN THE AY 2003-0 4. NOT AN IOTA OF EVIDENCE HAS BEEN PLACED ON RECORD REGARDING NAT URAL LOVE AND AFFECTION FOR THE ASSESSEE OR OTHER FAMILY MEMBERS ON WHOM GIFTS HAVE BEEN BESTOWED BY THE SAID DONOR. THE IMMEDIATE SOURCE OF MONEY FOR THE GIFT IS NOWHERE EXPLAINED WHILE THE ALLEGED ASSERTION OF AGRICULTURAL INCOME HAS NOT BEEN SUBSTANTIATED B EFORE THE AO OR THE LD. CIT(A).CONSIDERING THE TOTALITY OF FACTS AN D CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDIN G THE ADDITION THE LD. DR ADDED. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT. AS IS APP ARENT FROM THE FACTS OF THE CASE IN THESE TWO ASSESSMENT YEARS SHRI ASHWINBHAI HAS NOT ONLY MADE GIFTS TO THE ASSESSEE BUT TO THE PARENTS OF THE ASSESSEE ALSO. THE GENUINENESS OF GIFTS MADE BY THE SAID DONOR WAS NOT ACCEPTED IN THE CASE OF PARENTS OF THE ASSESSEE AND ADDITIONS HAVE BEEN UPHELD BY THE ITAT. IN THE CASE UNDER CONSIDERATION DESPITE REPEATED REQUEST BY THE AO THE ASSESSEE DI D NOT PRODUCE THE THREE DONORS BEFORE THE AO AND THUS FAILED TO ESTABLISH THEIR CREDITWORTHINESS AND EVEN THE GENUINENESS OF THE TRANSACTIONS. EVEN BEF ORE THE LD. CIT(A) GENUINENESS OF THE TRANSACTIONS RELATING TO GIFTS W AS NOT ESTABLISHED NOR ANY OCCASION OF GIFTS WAS GIVEN. THERE IS NOTHING TO SU GGEST THAT THE ASSESSEE OR HER PARENTS EVER MADE ANY GIFTS TO THE AFORESAID THREE DONORS OR THEIR CHILDREN. THERE IS NO RECIPROCITY IN THE GIFTS NOR OF ANY EVIDENC E OF NATURAL LOVE OR AFFECTION. AS POINTED OUT BY THE ITAT IN THEIR DECISION DATED 14 .5.2010 IN ITA NOS.2361- 65/AHD./2005 2569/AHD./2006& 373-2835/AHD./2007 IN THE CASE OF LAKHANI LABHUBHAI LAKHANI LILABEN & LAKHNAI MEHUL LABHUBHAI THE ASSESSEE AND HIS FAMILY MEMBERS CLAIMED TO HAVE RECEIVED GIFTS YEAR AFTER YEAR ON SEVENTY ONE OCCASIONS AND SUM TOTAL OF THE GIFTS WAS AMOUNTING TO RS.34 74 571/-. THOUGH ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 7 THE ASSESSEE CLAIMED TO HAVE RECEIVED THE GIFTS FR OM VARIOUS RELATIVES ON A NUMBER OF OCCASIONS SHE DID NOT RECIPROCATE A SIN GLE GIFT TO ANY OF THE DONORS OR THEIR FAMILY MEMBERS. THE ITAT FOUND THAT THE FIN ANCIAL CONDITIONS OF THE DONORS WERE SUCH THAT MOST OF THEM WERE OWNING BULLOCK CAR T WHILE THE ASSESSEE WAS OWNING MOTOR CAR. THE PERSONS OWNING BULLOCK CART CLAIMED TO HAVE GIVEN THE GIFTS TO THE PERSONS OWNING MOTOR CAR. IT WAS AGAI NST ALL HUMAN PROBABILITIES THAT THE RELATIVES WHO WERE MUCH POORER THAN THE ASSESSE E WERE GIVING GIFTS TO THE ASSESSEE AND HIS FAMILY MEMBERS A NUMBER OF TIMES W ITHOUT ANY RECIPROCAL GIFTS FROM THE ASSESSEES SIDE THE ITAT CONCLUDED IN TH EIR AFORESAID DECISION. IT IS NOTICED THAT THE DONOR SHRI ASHWINBHAI GIFTED AN A MOUNT OF RS1 15 000+70 000/- IN THE AY 2002-03 & RS.. 1 25 000 ON 13.3.2003 TO SHRI LAKHANI LABHUBHAI DHARMASHI BHAI. AN AMOUNT OF RS. 90 000 WAS GIFTED TO LAKHANI ILABENLABHUBHAI IN THE AY 2002-03 RS. 1 60 000/- TO LAKHANI LILABE N LABHUBHAI ON 17.3.2003 AND RS. 1 20 000/- TO SHRI LAKHANI MEHUL LABHUBHAI ON 1 4.3.2003. LIKEWISE SHRI ASHOKBHAI C. SAVANI GIFTED AN AMOUNT OF RS.35 000/- EACH ON 26.3.2003 TO SHRI LABHUBHI LAKHANI AND SMT. LILABEN LAKHANI A S ALSO RS. 40 000/- TO SHRI MEHUL LAKHANI ON 27.3.2003 WHILE SHRI MANUBHAI CHHAGANBHAI SAVANI GIFTED AN AMOUNT OF RS.40 000/- ON 26.3.2003 TO SMT. LILABEN LAKHANI. IN FACT THE ASSESSEE AND HER FAMILY MEMBERS ARE SHO WERED WITH GIFTS WITHOUT ANY EVIDENCE OF RECIPROCITY OR OF NATURAL LOVE AND AFFECTION OF THE ASSESSEE TOWARDS THE DONORS OR THEIR FAMILY MEMBER S. IN ANY CASE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THE TRANSA CTION FROM ALL THE THREE DONORS TO THE DONEE I.E. THE ASSESSEE IS UNUSUAL AND AGAIN ST ALL HUMAN PROBABILITIES. THERE IS NO EXPLANATION FOR THE IMMEDIATE SOURCE OF MONEY FOR THE AFORESAID GIFTS. THERE IS NO EVIDENCE PINPOINTING AS TO FRO M WHERE CASH HAD COME FOR THE GIFTS. EVEN THOUGH MONEY HAS FLOWN THROUGH DDS BUT THAT IS NOT SACROSANCT UNLESS DONORS ARE MEN OF MEANS. IF THE DONORS HAD A NY REAL SAVINGS THEY COULD HAVE UTILISED IT FOR THE WELFARE OF THEIR OWN FAMIL Y OR TO AUGMENT THEIR INCOME. THOUGH THE DONOR SHRI ASHWINBHAI MENTIONED THAT GI FT IS TO FRIENDS DAUGHTER NO EVIDENCE IS FILED AS TO HOW THEY ARE KNOWN TO EACH OTHER NOR ANY OCCASION HAS BEEN MENTIONED FOR MAKING GIFTS. THERE IS NO EVIDE NCE THAT THERE WAS ANY LOVE ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 8 AND AFFECTION BETWEEN THE SAID DONOR AND ASSESSEE. GIFTS ARE FLOWING FROM PERSONS OF HUMBLE MEANS TO THE RICH ASSESSEE AND HE R FAMLY MEMBERS.. THERE IS NO EVIDENCE THAT THE ASSESSEE OR HIS FAMILY HAD GIV EN GIFTS TO THE MEMBERS OF THE DONORS FAMILY AT ANY TIME. THE ENTIRE TRANSACTION O F GIFTS IS APPARENTLY UNUSUAL AS BEHAVIOUR OF THE DONORS IS QUEER. DESPITE REPEATED REQUESTS DONORS WERE NEVER PRODUCED BEFORE THE AO. IN ONE CASE FRIENDSHIP IS CLAIMED. IN ANOTHER CASE A RELATIONSHIP IS CLAIMED. SHRI ASHOKBHAI CHAGANBHAI SAVANI AND AND MANUBHAI CHAGANBHAI SAVANI HAVE GIVEN GIFTS TO THEIR NEPHEW OUT OF AGRICULTURAL INCOME. BUT EVIDENCE OF AGRICULTURAL INCOME HAS NOT BEEN SU BSTANTIATED BEFORE THE LOWER AUTHORITIES IN THE CASE OF ANY OF THE THREE DONORS. THE ASSESSEE DID NOT FURNISH ANY DOCUMENT WHICH SHOWED THE EARNING CAPACITY OF T HESE DONORS. IN THIS CONTEXT IT WOULD BE PERTINENT TO REFER TO THE COMM ENTS OF HON'BLE MADRAS HIGH COURT IN ADDL. CIT VS. C.R. RANGANATHAN CHETTY (198 7) 61 CTR (MAD) 105 : (1985) 153 ITR 456 (MAD) : 'LOOK AT THE WAY THE GIFTS WERE MADE. NOT ONLY WERE THEY MADE TO OTHER PEOPLE'S CHILDREN BUT SOME OF THEM WERE MADE TO OTHER PEOPL E'S WIVES. IN ANY PLACE EXCEPTING IN A TAX COURT GIFTS TO OTHER PEOPLE'S W IVES EVEN IF THEY ARE WIVES OF CO-PARTNERS WOULD RAISE A HOST OF QUESTIONS AND NO T A FEW EYEBROWS. EXCEPTING WHEN THERE IS AN UNDERSTANDING NOD. 'AH IT IS ALL FOR PURPOSES OF INCOME-TAX'. THE ITO SAW THE FACTS WITH A LAYMAN'S EYES WHICH WAS T HE CORRECT WAY TO LOOK AT THEM. THE TRIBUNAL FOR THEIR PART HOWEVER GOT IN VOLVED IN THE CONVOLUTIONS OF THE MITAKSHARA LAW OF GIFTS AND BROUGHT TO BEAR A DRY A ND UNREAL LEGALISTIC APPROACH TO THE APPLICATION OF S. 64 WHICH THE PROVISION DOES NOT CALL FOR IF WE UNDERSTAND KOTHARI'S CASE (1963) 49 ITR 107 (SC) RIGHT.' 8.1 ON THE FACTS OF THE ASSESSEES CASE DE CISION OF THE HONBLE APEX COURT RELIED UPON BY THE AO IN THE CASE OF SUMATI D AYAL (SUPRA) IS SQUARELY APPLICABLE. IN THAT CASE THE ASSESSEE CLAMED TO H AVE RECEIVED A TOTAL AMOUNT OF RS.3 11 831/- IN THE ASSESSMENT YEAR 1971-72 BYWAY OF RACE WINNING IN JACKPOT AND TREBLE EVENTS IN RACES AT TURF CLUBS IN BANGALO RE MADRAS AND HYDERABAD. SHE ALSO CLAIMED TO HAVE RECEIVED A SUM OF RS.93 50 0/- FROM RACE WINNINGS IN TWO JACKPOTS AT BANGALORE AND MADRAS DURING THE ASS ESSMENT YEAR 1972-73. THE INCOME TAX OFFICER TREATED THIS AMOUNT AS INCOM E FROM OTHER SOURCES AND THE ASSESSED THE SAME. THE SAME WAS SUSTAINED BY THE APPELLATE ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 9 ASSTT.COMMISSIONER. THE ASSESSEE REFERRED THE MATT ER TO THE SETTLEMENT COMMISSION. THE SETTLEMENT COMMISSION BY WAY OF MA JORITY VIEW HELD THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUINE. THE C HAIRMAN OF THE SETTLEMENT COMMISSION IN HIS DISSENTING OPINION HAS DECIDED IN FAVOUR OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS PRODUCED THE EVIDE NCE IN SUPPORT OF CREDITS IN THE FORM OF CERTIFICATES FROM RACE CLUBS GIVING PAR TICULARS OF CROSSED CHEQUES FOR THE PAYMENT OF AMOUNTS FOR WINNING OF JACKPOTS. AG AINST THE MAJORITY VIEW OF THE SETTLEMENT COMMISSION THE ASSESSEE FILED APPEAL BE FORE THE HONBLE APEX COURT WHICH SUSTAINED THE MAJORITY VIEW OF THE SETTLEMENT COMMISSION. THEIR LORDSHIP OF THE APEX COURT HELD AS UNDER : THIS IN OUR OPINION IS A SUPERFICIAL APPROACH TO THE PROBLEM. THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABIL ITIES. THE CHAIR MAN OF THE SETTLEMENT COMMISSION HAS EMPHASISED THAT THE A PPELLANT DID POSSESS THE WINNING TICKET WHICH WAS SURRENDERED TO THE RACE CLUB AND IN RETURN A CROSSED CHEQUE WAS OBTAINED. IT IS IN OUR VIEW A NEUTRAL CIRCUMSTANCE BECAUSE IF THE APPELLANT HAD PURCHASE D THE WINNING TICKET AFTER THE EVENT SHE WOULD BE HAVING THE WINNING TIC KET WITH HER WHICH SHE COULD SURRENDER TO THE RACE CLUB. THE OBSERVATION B Y THE CHAIRMAN OF THE SETTLEMENT COMMISSION THAT 'FRAUDULENT SALE OF WINN ING TICKETS IS NOT AN USUAL PRACTICE BUT IS VERY MUCH OF AN UNUSUAL PRACT ICE' IGNORES THE PREVALENT MALPRACTICE THAT WAS NOTICED BY THE DIREC T TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT OF 1972 WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE IN RESPECT OF WINNINGS FROM LOTTERIES CROSSWORD PUZZLES RACES ETC. WAS WITHDRAWN. SIMI LARLY THE OBSERVATION BY THE CHAIRMAN THAT IF IT IS ALLEGED THAT THESE TI CKETS WERE OBTAINED THROUGH FRAUDULENT MEANS IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURC HASE WOULD BE RARELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. HAVING REGAR D TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT A S WELL AS OTHER MATERIAL ON THE RECORD AN INFERENCE COULD REASONABLY BE DRAW N THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE E VENT. WE ARE THEREFORE UNABLE TO AGREE WITH THE VIEW OF THE CHAIRMAN IN HI S DISSENTING OPINION. IN OUR OPINION THE MAJORITY OPINION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBAB ILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOU NT BEING HER WINNINGS FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT T HE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BE EN REJECTED ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 10 UNREASONABLY AND THAT THE FINDING THAT THE SAID AMO UNTS ARE INCOME OF THE APPELLANT FROM OTHER SOURCES IS NOT BASED ON EVIDEN CE. 8.2 HONBLE SUPREME COURT IN THE CASE OF CIT V S. P MOHANAKALA 291 ITR 278 WHILE CONSIDERING THE ISSUE OF GIFTS OBSERVED AS UNDER: IT IS TRUE THAT EVEN AFTER REJECTING THE EXP LANATION GIVEN BY THE ASSESSEES IF FOUND UNACCEPTABLE THE CRUCIAL ASPECT WHETHER ON T HE FACTS AND CIRCUMSTANCES OF THE CASE IT SHOULD BE INFERRED THE SUMS CREDITED IN THE BOOKS OF THE ASSESSEES CONSTITUTED INCOME OF THE PREVIOUS YEAR MUST RECEIV E THE CONSIDERATION OF THE AUTHORITIES PROVIDED THE ASSESSEES REBUT THE EVIDEN CE AND THE INFERENCE DRAWN TO REJECT THE EXPLANATION OFFERED AS UNSATISFACTORY. W E ARE REQUIRED TO NOTICE THAT SECTION 68 OF THE ACT ITSELF PROVIDES WHERE ANY SU M IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEES FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEES OF THE PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEES ABOUT THE NATURE AND SOURCE OF SUCH S UMS FOUND CREDITED IN THE BOOKS OF THE ASSESSEES IS IN THE OPINION OF THE ASS ESSING OFFICER NOT SATISFACTORY. SUCH OPINION FORMED ITSELF CONSTITUTES A PRIMA FACI E EVIDENCE AGAINST THE ASSESSEES VIZ. THE RECEIPT OF MONEY AND IF THE A SSESSEES FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEES BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. IN THE CASE IN HAND TH E AUTHORITIES CONCURRENTLY FOUND THE EXPLANATION OFFERED BY THE ASSESSEES UNAC CEPTABLE. THE AUTHORITIES UPHELD THE OPINION FORMED BY THE ASSESSING OFFICER THAT THE EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSESSEES DID NOT TAKE TH E PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTE NDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REG ARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. AL L THE DECISIONS CITED AND REFERRED TO HEREINABOVE ARE REQUIRED TO BE APPRECIA TED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI D AYAL [1995] SUPP 2 SCC 453. WHETHER THE HIGH COURT WAS JUSTIFIED IN INTERFERING WITH THE CONCURRENT FINDING OF FACT ARRIVED AT BY ALL THE AUTHORITIES INCLUDING TH E TRIBUNAL? THE ASSESSING OFFICER FOUND THAT ALL THE SO-CALLED GIFTS CAME FROM ARIAVA N THOTAN AND SUPROTOMAN. THE ASSESSEES DID NOT DECLARE THAT THEY ARE THE ALIASES OF SAMPATHKUMAR. IT IS ONLY AN AFTERTHOUGHT THEY HAVE COME FORWARD WITH THE SAI D PLEA. THE ASSESSING OFFICER ALSO FOUND THAT THE GIFTS WERE NOT REAL IN NATURE. VARIOUS SURROUNDINGS CIRCUMSTANCES HAVE BEEN RELIED UPON BY THE ASSESSIN G OFFICER TO REJECT THE EXPLANATION OFFERED BY THE ASSESSEES. THE COMMISSIO NER OF APPEALS CONFIRMED THE FINDINGS AND CONCLUSION DRAWN BY THE ASSESSING OFFICER. THE TRIBUNAL SPEAKING THOUGH ITS SENIOR VICE PRESIDENT CONCURRED WITH THE FINDINGS OF FACT. THE FINDINGS IN OUR CONSIDERED OPINION ARE BASED ON THE MATERIAL AVAILABLE ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THEY ARE N OT IMAGINARY AS SOUGHT TO BE CONTENDED. ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 11 RELYING ON THE DECISIONS OF THIS COURT IN BEJOY GOP AL MUKHERJI V. PRATUL CHANDRA GHOSE AIR 1953 SC 153 AND ORIENT DISTRIBUTORS V. B ANK OF INDIA LTD. AIR 1979 SC 867 SHRI IYER LEARNED SENIOR COUNSEL CONTENDED THAT THE ISSUE RELATING TO THE PROPRIETY OF THE LEGAL CONCLUSION THAT COULD BE DRA WN ON THE BASIS OF PROVED FACTS GIVES RISE TO A QUESTION OF LAW AND THEREFORE THE HIGH COURT IS JUSTIFIED IN INTERFERING IN THE MATTER SINCE THE AUTHORITIES BEL OW FAILED TO DRAW A PROPER AND LOGICAL INFERENCE FROM THE PROVED FACTS. WE ARE UNA BLE TO PERSUADE OURSELVES TO ACCEPT THE SUBMISSION. THE FINDINGS OF FACT ARRIVED AT BY THE AUTHORITIES BELOW ARE BASED ON PROPER APPRECIATION OF THE FACTS AND THE M ATERIAL AVAILABLE ON RECORD AND SURROUNDING CIRCUMSTANCES. THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN DULY TAKEN INT O CONSIDERATION BY THE AUTHORITIES BELOW. THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONES. MAY BE THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE. 8.3 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS BY THE HONBLE APEX COURT AND BY THE ITAT IN THEIR DECI SION DATED 14.5.2010 OF THE ITAT IN ITA NOS.2361-65/ AHD./ 20 05 2569/ AHD./ 2006 & 373-2835/AHD./2007 IN THE CASE OF FAMILY MEM BERS OF THE ASSESSEE SHRI LAKHANI LABHUBHAI SMT. LAKHANI LILABE N & SHRI LAKHNAI MEHUL LABHUBHAI FOR THE AYS 2002-03 & 2003- 04 ESPECIALLY WHEN CREDITWORTHINESS OF THE AFORESAID THREE DONOR S OR EVEN GENUINENESS OF THE TRANSACTIONS OF GIFTS HAS NOT B EEN ESTABLISHED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US NOR ANY MATERIAL IN THAT CONNECTION HAS BEEN PLACED BEFORE US BY THE L D. AR ON BEHALF OF THE ASSESSEE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A).THEREFORE GROUND NOS. 1 TO 3 IN THE APPEAL FOR THE AY 2002-03 & GROUND NOS. 1 & 2 IN THE APPEAL FOR THE A Y 2003-04 ARE DISMISSED. 9. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF THE RESIDUARY GROUND NOS.4 & 3 IN THESE TWO APPEALS FOR THE AYS 2002- 03 & 2003-04 RESPECTIVELY THESE GROUNDS ARE DISMIS SED ITA NOS.1388 & 1389/AHD/2008 FOR AYS 2002-03 AND 2003-04 ANKITA L LAKHANI (PATEL) 12 10. IN THE RESULT BOTH THESE APPEALS ARE DISMISSED . ORDER PRONOUNCED IN THE COURT TODAY ON 19-08-2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 19 -08-2010 COPY OF THE ORDER FORWARDED TO: 1. ANKITA LABHUBHAI LAKHANI (PATEL) 78 SADHNA SOC IETY VARACHHA ROAD SURAT 2. E ITO WARD-9(2) SURAT 3. CIT CONCERNED 4. CIT(A)-V SURAT 5. DR BENCH-C ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD