Shri Miteshkumar Dineshchandra Shah,HUF, Ahmedabad v. The Income tax Officer, Ward-6(3),, Ahmedabad

ITA 1902/AHD/2007 | 2003-2004
Pronouncement Date: 01-04-2010 | Result: Dismissed

Appeal Details

RSA Number 190220514 RSA 2007
Assessee PAN AAJHS4408P
Bench Ahmedabad
Appeal Number ITA 1902/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 24 day(s)
Appellant Shri Miteshkumar Dineshchandra Shah,HUF, Ahmedabad
Respondent The Income tax Officer, Ward-6(3),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 01-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 01-04-2010
Date Of Final Hearing 29-03-2010
Next Hearing Date 29-03-2010
Assessment Year 2003-2004
Appeal Filed On 07-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N. S. SAINI AM) ITA NO.1902 AND 1903/AHD/2007 A. Y: 2003-04 AND 2004-05 MITESHKUMAR DINESHCHANDRA SHAH HUF PROP. PRIYANSH JEWELLERS 72/4 SANT CHAMBERS O/S. SHAHPUR GATE AHMEDABAD PA NO. AAJHS 4408 P VS THE INCOME TAX OFFICER WARD -6(3) AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ASHEEM THAKKAR AR RESPONDENT BY KUMAR HRISHIKESH DR O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A)-XII AHMEDABAD DATED 15-03-2007 AND 14-03-2007 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. IN THE ASSESSMENT YEAR 2003-04 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S . 147 OF THE ACT MADE BY THE ASSESSING OFFICER WHICH IS ILLEGAL AND BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1 45 000/- M ADE BY THE ASSESSING OFFICER FOR THE ALLEGED UNEXPLAINE D ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 2 GIFTS TREATING THE SAME AS UNEXPLAINED INCOME U/S. 68 OF THE I. T. ACT 1961. 4. IN THE ASSESSMENT YEAR 2004-05 THE ASSESSEE HA S RAISED THE FOLLOWING GROUND OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION OF RS.85 000/- MAD E BY THE ASSESSING OFFICER FOR THE ALLEGED UNEXPLAINED G IFTS RECEIVED BY THE APPELLANT TREATING THE SAME AS UNEXPLAINED INCOME U/S. 68 OF THE I. T. ACT 1961. ITA NO.1902/AHD/2007 5. ON GROUND NO.1 OF THE APPEAL THE ASSESSEE CHALL ENGED THE REOPENING OF THE ASSESSMENT U/S 147 OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE REASONS FOR REOPEN ING OF THE ASSESSMENT AS ARE RECORDED IN THE ASSESSMENT ORDER. HE HAS SUB MITTED THAT RETURN OF INCOME WAS FILED ON 01 ST AUGUST 2003 WHICH WAS PROCESSED U/S 143(1) OF THE IT ACT. HE HAS SUBMITTED THAT IN THIS CASE A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 18 TH MARCH 2004. SINCE THE ASSESSEE COULD NOT GIVE DETAILS OF THE GIFTS OF RS. 1 45 000/- THEREFORE THE AO REOPENED THE ASSESSMENT IN THE MATTER. HE HAS SU BMITTED THAT THE AO COULD HAVE SELECTED THIS CASE FOR SCRUTINY AND C OULD HAVE ISSUED NOTICE U/S 143(2) OF THE IT ACT LATEST BY 31 ST AUGUST 2004 HOWEVER THE AO DID NOT ISSUE NOTICE U/S 143(2) OF THE IT ACT AN D INITIATED THE REASSESSMENT PROCEEDINGS ON 18 TH FEBRUARY 2005. THEREFORE INITIATION OF THE REASSESSMENT PROCEEDINGS IS INVALID AND BAD IN LAW. HE HAS SUBMITTED THAT THERE WAS NO NEW INFORMATION AVAILAB LE ON RECORD. THEREFORE REOPENING ON THE BASIS OF MERE SUSPICION /DOUBT OR GUESS WORK IS NOT JUSTIFIED. HE HAS RELIED UPON THE ORDER OF T HE ITAT JODHPUR BENCH IN THE CASE OF DCIT VS YAKUB ALI GOPAL SINGH & PART Y 98 TTJ (JD) 821 IN WHICH IT WAS HELD WHEN THE REASONS RECORDED BY THE AO FOR REOPENING OF ASSESSMENT UNDER S. 147 DO NOT POINT O UT ANY SPECIFIC ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 3 ESCAPEMENT OF INCOME BUT ONLY MENTION THAT THE CAS E COULD NOT BE TAKEN UP FOR SCRUTINY AO DID NOT ACQUIRE VALID JURI SDICTION UNDER S.147/148 . ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT DURING THE COU RSE OF SURVEY STATEMENT OF THE ASSESSEE WAS RECORDED BUT HE COULD NOT GIVE THE DETAILS OF THE GIFTS AND THE OCCASION ON WHICH GIFTS HAVE B EEN RECEIVED. THEREFORE IT WAS SUFFICIENT MATERIAL BEFORE THE AO TO FORM HI S OPINION THAT THE ASSESSEE HAS NOT RECEIVED GENUINE GIFTS. THEREFORE HE WAS JUSTIFIED IN REOPENING THE ASSESSMENT. HE HAS SUBMITTED THAT ORI GINAL RETURN WAS PROCESSED U/S 143(1) OF THE IT ACT. MERE NON-ISSUE OF NOTICE U/S 143(2) OF THE IT ACT BY END OF AUGUST 2004 IS NOT GROUND TO Q UASH THE REASSESSMENT PROCEEDINGS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. SECTION 147 OF THE IT ACT PROVIDES FOR R EOPENING OF THE ASSESSMENT IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE SOLE CONDITION FOR REOPENING OF THE ASSESSMENT IS THUS THAT THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. IT IS ADMITTED FACT THAT SURVEY WAS CONDUCTED AT THE BUSI NESS PREMISES OF THE ASSESSEE ON 08 TH MARCH 2004 I.E. AFTER FILING OF THE RETURN BY THE ASSESSEE. DURING THE COURSE OF SURVEY STATEMENT OF THE ASSESSEE WAS RECORDED AND HE WAS SPECIFICALLY ASKED TO GIVE THE NAMES AND ADDRESSES OF THE DONORS AND THE OCCASION ON WHICH HE HAD RECE IVED THE GIFTS OF RS.1 45 000/-. BUT THE ASSESSEE COULD NOT GIVE THE DETAILS. THIS WAS THE SPECIFIC MATERIAL AVAILABLE BEFORE THE AO AT THE TI ME OF REOPENING OF THE ASSESSMENT THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. IT WAS A NEW INFORMATION AVAILABLE BEFORE THE AO. THE AO ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD RIGHTLY FORMED HIS BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF BOGUS GIFTS RECEIVED BY THE ASSESSEE. THUS THE AO HAS REASON T O BELIEVE THAT INCOME ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 4 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE AS SESSMENT YEAR UNDER APPEAL. SINCE SUFFICIENT MATERIAL WAS AVAILABLE BEF ORE THE AO THEREFORE THE AO HAS RIGHTLY RECORDED THE REASONS FOR REOPENI NG OF THE ASSESSMENT. SINCE THE RETURN WAS MERELY PROCESSED U/S 143(1) OF THE IT ACT THEREFORE NO SIGNIFICANCE SHOULD BE ATTACHED IN TH IS REGARD BECAUSE THE AO HAS NO REASON TO EXAMINE THE ISSUE OF NON-GENUIN E GIFTS OR FORM HIS OPINION ON THAT MATTER. THE LEARNED COUNSEL FOR THE ASSESSEE MAINLY SUBMITTED THAT SINCE THE NOTICE U/S 143(2) OF THE I T ACT COULD HAVE BEEN ISSUED UP TO END OF AUGUST 2004 THEREFORE REOPENI NG OF THE ASSESSMENT BY RECORDING REASONS FOR THE SAME ON 18 TH FEBRUARY 2005 IS INVALID AND UNLAWFUL. WE DO NOT AGREE WITH THE CONTENTION OF TH E LEARNED COUNSEL OF THE ASSESSEE BECAUSE SO LONG AS THE INGREDIENTS OF SECTION 147 OF THE IT ACT ARE FULFILLED THE AO IS FREE TO INITIATE PROCE EDINGS U/S 147 OF THE IT ACT AND FAILURE TO TAKE STEPS U/S 143(3) OF THE IT ACT WOULD NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDIN GS EVEN WHEN INTIMATION U/S 143(1) OF THE IT ACT HAD BEEN ISSUED. WE ARE FO RFEITED IN OUR VIEW BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MAHANAGAR TELEPHONE NIGAM LTD. VS CHAIRMAN CBDT 246 ITR 173 (DEL) IN WHICH IT WAS HELD THAT FAILURE TO TAKE STEPS U/S 143(3) OF THE IT ACT IS N OT MATERIAL. AT THE STAGE OF NOTICE OF REASSESSMENT RE ASONABLE BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IS SUFFICIENT . HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SMT. SHAKU NTALA DEVI 227 CTR 618 (P&H) HELD THAT PROCEEDINGS U/S 147 OF THE ACT COULD NOT BE HELD TO BE VITIATED MERELY BECAUSE THE ASSESSING OF FICER HAD RIGHT TO PROCEED U/S 143(2) OF THE ACT . CONSIDERING THE ABOVE DISCUSSION AND THE ABOVE DECISIONS IN THE CASE OF MAHANAGAR TE LEPHONE NIGAM LTD. (SUPRA) AND SMT. SHAKUNTALA DEVI (SUPRA) WE ARE OF THE VIEW THAT THE AO WAS JUSTIFIED IN REOPENING THE ASSESSMENT ON ACCOUN T OF ESCAPEMENT OF INCOME ON ACCOUNT OF BOGUS GIFTS. THE OPINION OF TH E AO WAS BASED UPON MATERIAL ON RECORD. THEREFORE WE DO NOT FIND ANY I NFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE. THE ORDER O F THE TRIBUNAL IN THE ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 5 CASE OF YAKUB ALI GOPAL SINGH & PARTY (SUPRA) AS RE LIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE DO NOT FIN D ANY MERIT IN GROUND NO.1 OF THE APPEAL OF THE ASSESSEE. THE SAME IS ACC ORDINGLY DISMISSED. 7. ON GROUND NO.2 OF THE APPEAL THE ASSESSEE CHALL ENGED THE ADDITION OF RS.1 45 000/- ON ACCOUNT OF UNEXPLAINED GIFTS TR EATING THE SAME AS UNEXPLAINED INCOME U/S 68 OF THE IT ACT. THE AO WHI LE VERIFYING THE BOOKS OF ACCOUNTS NOTICED THAT THE ASSESSEE HAD RE CEIVED THE GIFTS OF RS.90 000/- FROM SHRI MUKESH DANMAL SHAH AND RS.55 000/- FROM SHRI RAMESHKUMAR A. SHAH. THE AO IN ORDER TO VERIFY THE GENUINENESS OF THE GIFTS ISSUED SUMMONS TO BOTH THE DONORS FOR THEIR P ERSONAL ATTENDANCE ALONG WITH NECESSARY DOCUMENTS OF HAVING GIVEN THE GIFTS TO THE ASSESSEE. THE DONORS WERE SPECIFICALLY ASKED TO CLARIFY THEIR CONNECTION WITH M/S. VARDHMAN SAREE CENTRE OF PATAN FROM WHOM THEY HAD W ITHDRAWN THE FUNDS FOR MAKING THE GIFTS. BOTH THE DONORS FAILED TO ATTEND THE OFFICE OF THE AO PERSONALLY AND ALSO REMAINED SILENT WITH REG ARD TO THEIR CONNECTION WITH M/S. VARDHMAN SAREE CENTRE. THE ASS ESSEE WAS GIVEN OPPORTUNITY TO JUSTIFY RECEIPT OF THE GIFTS. THE AS SESSEE HAS EXPRESSED HIS INABILITY TO PRODUCE THE DONORS BEFORE THE AO. IN T HE ABSENCE OF COMPLETE DETAILS AND VERIFICATION OF THE GIFTS THE SAME WER E NOT TREATED AS GENUINE GIFTS AND ACCORDINGLY ADDITION OF RS.1 45 000/- WAS MADE IN THE HANDS OF THE ASSESSEE. ADDITION WAS CHALLENGED BEFORE THE LE ARNED CIT(A) AND THE SAME SUBMISSIONS WERE REITERATED AND IT WAS SUBMITT ED THAT CONFIRMATION OF GIFTS WERE FURNISHED BEFORE THE AO AT THE ASSESSMENT STAGE AND THEIR POSTAL ADDRESSES AND PERMANENT ACCO UNT NUMBERS ETC. WERE ALSO FILED. IT WAS ALSO EXPLAINED THAT IF THE DONORS HAVE NOT APPEARED PERSONALLY BEFORE THE AO FOR EXAMINATION THE ASSES SEE SHOULD NOT BE TAXED. THE ASSESSEE RELIED UPON SEVERAL DECISIONS I N SUPPORT OF THE CONTENTION THAT THE ASSESSEE RECEIVED GENUINE GIFTS AND MAINLY RELIED UPON THE DECISIONS OF THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF DCIT ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 6 VS ROHINI BUILDERS 256 ITR 360 (GUJ.) AND IN THE CA SE OF MURLIDHAR LAHORIMAL VS CIT 280 ITR 512 (GUJ.). 8. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE NOTED THAT THE ASSESSEE DID NOT PRODUCE BOTH THE DO NORS BEFORE THE AO DESPITE SPECIFIC QUERY RAISED BY THE AO. THE ASSESS EE HAS NOT PROVED THE CAPACITY OF THE DONORS. THE ASSESSEE CLAIMED TO HAV E RECEIVED THE GIFTS ON ACCOUNT OF NATURAL LOVE AND AFFECTION BUT BOTH THE DONORS ARE STRANGERS TO THE ASSESSEE AND HAVE ALSO FAILED TO APPEAR BEFO RE THE AO AND NOT EVEN CLARIFY THE GENUINENESS OF THE GIFTS IN ORDER TO HE LP THE ASSESSEE. THE LEARNED CIT(A) ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE FILED CONFIRMATIONS OF GIFTS BEFORE THE AO AND THAT THE ADDRESSES AND PERMANENT ACCOUNT NUMBERS ETC. WERE ALSO FILED. GIFTS WERE GIVEN TO THE ASSESSEE THROUGH BANKING CHANNEL. THEREFORE TH E ASSESSEE PROVED THE IDENTITY OF THE DONORS AND THE GENUINENESS OF T HE TRANSACTIONS IN THE MATTER. THE CAPACITY TO MAKE THE GIFTS IS ALSO PROV ED BY FILING THEIR PERMANENT ACCOUNT NUMBERS AND PROOF OF ACKNOWLEDGEM ENT OF FILING OF THE RETURN. THE SAME DOCUMENTS ARE ALSO FILED IN TH E PAPER BOOK AT PB 8 TO 10. HE HAS SUBMITTED THAT STATEMENT OF THE ASSES SEE WAS RECORDED IN WHICH NO QUESTION WAS ASKED ABOUT THE GENUINENESS O F THE GIFTS IN THE MATTER. HE HAS SUBMITTED THAT THERE IS NO NEED TO P ROVE RELATION BETWEEN THE DONORS AND THE DONEE AND THAT IT IS ALSO NOT RE QUIREMENT TO PROVE THE OCCASION ON WHICH THE GIFTS HAVE BEEN GIVEN TO THE ASSESSEE. HE HAS RELIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE O F MAYAWATI 19 SOT 460 AND THE ORDER OF ITAT AGRA BENCH IN THE CASE OF AVI NASH KUMAR SINGH 124 TTJ 750 (TM). HE HAS RELIED UPON THE SAME DECIS IONS WHICH WERE RELIED UPON BEFORE THE LEARNED CIT(A) INCLUDING THE DECISIONS OF THE ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 7 HONBLE GUJARAT HIGH COURT IN THE CASE OF ROHINI BU ILDERS AND MURLIDHAR LAHORIMAL (SUPRA). 10. ON THE OTHER HAND THE LEARNED DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE D ID NOT PRODUCE THE COPY OF THE BANK ACCOUNT OF BOTH THE DONORS BEFORE THE AO. THE BALANCE SHEETS OF THE DONORS ARE ALSO NOT FILED. THE LEARNE D DR POINTED OUT THAT COPY OF THE RETURN OF THE DONORS ARE FILED IN THE P APER BOOK BUT THEY HAVE SHOWN MEAGER INCOME WHICH IS BELOW TAXABLE LIMIT AR OUND RS.48 000/- WHICH WOULD NOT PROVE THE CAPACITY OF THE DONORS TO MAKE THE GIFTS. HE HAS SUBMITTED THAT THE DONORS DID NOT APPEAR BEFORE THE AO FOR EXAMINATION AND THE ASSESSEE FAILED TO PRODUCE BOTH OF THEM BEFORE THE AO. BOTH THE DONORS ARE STRANGER TO THE ASSESSEE. T HE ASSESSEE HAS FAILED TO PROVE HIS LOVE AND AFFECTION AND OCCASION FOR GI VING THE GIFTS TO THE ASSESSEE. THE LEARNED DR SUBMITTED THAT THE DONORS HAVE ALSO FAILED TO CLARIFY THEIR CONNECTION WITH M/S. VARDHMAN SAREE C ENTRE FROM WHOM THE DONORS HAVE WITHDRAWN THE FUNDS FOR MAKING THE GIFTS. THE LEARNED DR SUBMITTED THAT THE ASSESSEE NOT ONLY SHALL HAVE TO PROVE THE IDENTITY OF THE DONORS BUT ALSO SHALL HAVE TO PROVE THEIR CA PACITY TO MAKE THE GIFTS AND GENUINENESS OF THE GIFTS IN THE MATTER WHICH TH E ASSESSEE FAILED TO PROVE. THE LEARNED DR SUBMITTED THAT SINCE THE DONO RS COULD NOT BE EXAMINED BY THE AO THEREFORE THE GENUINENESS OF T HE GIFTS COULD NOT BE PROVED IN THE MATTER. ADDITION WAS THEREFORE RIGH TLY MADE BY THE AUTHORITIES BELOW. 11. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJ OINDER REFERRED TO PB -33 WHICH IS NOTICE ISSUED BY THE AO TO THE ASSE SSEE IN WHICH THE AO HAS MENTIONED THAT THE DONORS HAVE CONFIRMED GIVING OF GIFTS TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE THE REFORE SUBMITTED THAT SINCE THE GENUINENESS OF THE GIFTS IS PROVED IN THE MATTER THEREFORE INITIAL BURDEN UPON THE ASSESSEE IS DISCHARGED. ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 8 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE RECEIVED GIFTS FROM THE ABOVE TWO DONORS IN A SUM OF RS.1 45 000/- . THE AO WANTED TO VERIFY THE GENUINENESS OF THE GIFTS IN THE MATTER A ND ACCORDINGLY SUMMONED BOTH THE DONORS TO APPEAR BEFORE HIM FOR V ERIFICATION. BOTH THE DONORS WERE ALSO SPECIFICALLY ASKED TO EXPLAIN THEIR CONNECTION WITH M/S. VARDHMAN SAREE CENTRE FROM WHOM THE DONORS HAD WITHDRAWN THE FUNDS FOR MAKING THE GIFTS. BOTH THE DONORS FAILED TO APPEAR BEFORE THE AO IN ORDER TO SATISFY THE AO ABOUT THE GENUINENESS OF THE GIFTS IN THE MATTER. BOTH THE DONORS HAVE ALSO REMAINED SILENT T O EXPLAIN THEIR CONNECTION WITH M/S. VARDHMAN SAREE CENTRE. THE AO ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE (PB 33 R EFERRED TO BY THE LEARNED COUNSEL OF THE ASSESSEE) AND ASKED THE ASSE SSEE TO JUSTIFY THE RECEIPT OF THE GIFTS IN THE MATTER. THE AO IN THIS SHOW CAUSE NOTICE HAD GIVEN FINAL OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE ABOVE DONORS TO PROVE THEIR CAPACITY TO MAKE THE GIFTS AND GENUINEN ESS OF THE GIFTS IN THE MATTER. THE ASSESSEE HAS FAILED TO PRODUCE BOTH THE DONORS BEFORE THE AO FOR EXAMINATION BY HIM. IT THEREFORE STANDS PROVE D ON RECORD THAT THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENTS OF TH E AO TO PRODUCE BOTH THE DONORS FOR EXAMINATION BEFORE HIM AND TO EXPLAI N THE CONNECTION OF THE DONORS WITH M/S. VARDHMAN SAREE CENTRE FROM WHO M THE DONORS HAVE WITHDRAWN THE MONEY FOR THE PURPOSE OF MAKING THE GIFTS TO THE ASSESSEE. IT IS THEREFORE PROVED THAT THE ASSESSE E NEVER WANTED THAT THE AO SHOULD VERIFY THE CAPACITY OF THE DONORS TO MAKE THE GIFTS AND TO EXAMINE THE GENUINENESS OF THE GIFTS IN THE MATTER. THE ASSESSEE ADMITTEDLY DID NOT FILE ANY COPY OF THE BANK ACCOUN TS OF THE DONORS BEFORE THE AO AND EVEN THEIR BALANCE SHEETS WERE AL SO NOT FILED. THE COPIES OF THE ACKNOWLEDGMENT OF FILING OF THE RETUR N BY THE DONORS ARE FILED IN THE PAPER BOOK OF THE ASSESSEE WHICH SHOW THAT THE DONORS HAVE FILED RETURN OF INCOME AT THE INCOME OF RS.48 333/- RS.27 722/- RS.47 872/- AND RS.48 040/- ON WHICH NO TAX HAS BEE N PAID. IT WOULD ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 9 THEREFORE SHOW THAT THE DONORS HAVE NO CAPACITY TO MAKE THE GIFTS TO THE ASSESSEE. NO SOURCE OF INCOME OF THE DONORS IS ALSO PROVED. BOTH THE DONORS ARE ADMITTEDLY NOT RELATED TO THE ASSESSEE. NO NATURAL LOVE AND AFFECTION IS PROVED FOR GIVING GIFTS TO THE ASSESSE E. NO OCCASION IS ALSO PROVED FOR GIVING GIFTS TO THE ASSESSEE. SINCE BOTH THE DONORS FAILED TO APPEAR BEFORE THE AO TO PROVE GENUINENESS OF THE G IFTS IN THE MATTER AND THE ASSESSEE ALSO EXPRESSED INABILITY TO PRODUCE TH E DONORS BEFORE THE AO WOULD PROVE THAT THE GIFTS IN THE MATTER ARE NOT GE NUINE GIFTS AND ARE ARRANGED AFFAIRS OF THE ASSESSEE. IF THE DONORS WOU LD HAVE ANY LOVE AND AFFECTION FOR THE ASSESSEE AND HAVE GIVEN THE GENUI NE GIFTS TO THE ASSESSEE THERE WAS NO REASON FOR THEM NOT TO APPEA R BEFORE THE AO FOR EXAMINATION IN ORDER TO VERIFY THE CAPACITY OF THE DONORS TO MAKE THE GIFTS OR TO PROVE GENUINENESS OF THE GIFTS IN THE MATTER. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR 292 ITR 552 (DEL) HELD IN THE CASE OF GIFTS MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL S IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SI NCE THE CLAIM OF GIFT IS MADE BY THE ASSESSEE THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIF T BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. IN ASSESSMENT PROCEED INGS FOR THE ASSESSMENT YEAR 1995-96 THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD RECEIVED TWO GIFTS OF RS.10 LAKHS EACH FROM N. R. E. ACCOUNTS OF TWO DONORS NAMELY V AND D. THE ASSESSI NG OFFICER FOUND THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONU S OF PROVING THE CREDIT-WORTHINESS OF THE DONORS AND HELD THAT THE AMOUNT OF RS.20 LAKHS WHICH HAD BEEN DECLARED BY THE ASSESSEE AS GI FT WAS IN FACT HIS INCOME AND ADDED TO HIS TOTAL INCOME UNDER SECT ION 68. THE ADDITION WAS DELETED BY THE COMMISSIONER (APPEALS) AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT : HELD THAT THERE WAS NOTHING ON RECORD TO SHOW AS TO WHAT WAS THE FINANCIAL CAPACITY OF THE DONORS WHAT WAS THE CREDIT-WORTHIN ESS OF THE ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 10 DONORS WHAT KIND OF RELATIONSHIP THE DONORS HAD WI TH THE ASSESSEE WHAT WERE THE SOURCES OF FUNDS GIFTED TO THE ASSESSEE AND WHETHER THEY HAD THE CAPACITY OF GIVING LARGE AMOUN TS OF GIFT TO THE ASSESSEE. FURTHER THE ASSESSEE WAS ASKED TO AP PEAR IN PERSON BEFORE THE ASSESSING OFFICER BUT NEVER APPEARED. T HE ADDITION OF RS.20 LAKHS WAS JUSTIFIED. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS P.MOHANKALA 291 ITR 278 (SC) HELD THE ASSESSEE RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS W ERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CRE DITED TO THE RESPECTIVE ACCOUNT OF THE ASSESSEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT FROM ABOARD WERE DRAWN ON THE CITIBANK N. A. SINGAPORE. THE EVIDENCE INDICATED T HAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE ASSES SEES. ON THIS MATERIAL THE ASSESSING OFFICER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMO UNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASSESSEES AS THEIR INCOME APPLYING SECTION 68 OF THE INCOME-TAX ACT 1961. TH E ASSESSEES DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE NOT OF THE NATURE OF INCOME. THE COMMI SSIONER (APPEALS) CONFIRMED THE ASSESSMENT. ON FURTHER APPE AL THERE WAS A DIFFERENCE OF OPINION BETWEEN THE TWO MEMBERS OF TH E APPELLATE TRIBUNAL AND THE MATER WAS REFERRED TO THE VICE PRE SIDENT WHO CONCURRED WITH THE FINDINGS AND CONCLUSION OF THE A SSESSING OFFICER AND THE COMMISSIONER (APPEALS). ON APPEAL THE HIGH COURT RE- APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FI NDINGS AND CAME TO THE CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL WERE IN THE REALM OF SURMISES CONJECTURE AND SUSPI CION. ON APPEAL TO THE SUPREME COURT: HELD REVERSING THE DECISION OF HIGH COURT THAT FINDINGS OF THE ASSESSING OFFICER THE COMMISS IONER (APPEALS) AND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECO RD AND NOT ON ANY CONJECTURES AND SURMISES. THAT THE MONEY CAME B Y WAY OF ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 11 BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BA NKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. T HE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONC URRENT FINDINGS OF FACT. 13. CONSIDERING THE ABOVE DISCUSSIONS IT IS CLEAR THAT THE ASSESSEE FAILED TO PROVE ANY RELATION WITH THE DONORS AND TH EIR CREDITWORTHINESS. NO SUFFICIENT EVIDENCE OR MATERIAL IS FILED ON RECO RD TO PROVE THE GENUINENESS OF THE GIFTS IN THE MATTER. MERE IDENTI FICATION OF THE DONORS AND SHOWING GIFTS THROUGH BANKING CHANNEL IS NOT SU FFICIENT TO PROVE THE GENUINENESS OF THE GIFTS IN THE MATTER. 14. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED T O THE LETTER OF THE AO (PB -33) IN WHICH THE AO HAS MENTIONED THAT THE DONORS HAVE CONFIRMED GIVING GIFTS TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAILED TO NOTE THAT THE AO HAS GIVEN D ETAILED NOTICE TO THE ASSESSEE AND THE REASONS FOR EXAMINATION OF THE DON ORS AT HIS LEVEL BECAUSE HE WAS NOT SATISFIED WITH THE CREDITWORTHIN ESS OF THE DONORS AND THE GENUINENESS OF THE GIFTS IN THE MATTER. THE AO THEREFORE GAVE FINAL OPPORTUNITY TO THE ASSESSEE TO PRODUCE BOTH THE DON ORS FOR EXAMINATION BEFORE HIM AND IN ORDER TO PROVE THEIR CAPACITY TO MAKE THE GIFTS AND GENUINENESS OF THE GIFTS TRANSACTION IN THE MATER. HOWEVER THE ASSESSEE HAS FAILED TO COMPLY WITH THE NOTICE ISSUED BY THE AO. THE ABOVE FACT THEREFORE SHOWS THAT THE ASSESSEE HAS FAILED TO PR OVE CREDITWORTHINESS OF THE DONORS TO MAKE THE GIFTS AND THE GENUINENESS OF THE GIFTS IN THE MATTER. THE DECISIONS RELIED UPON BY THE LEARNED CO UNSEL FOR THE ASSESSEE CANNOT BE GIVEN PRECEDENCE IN VIEW OF THE FACTS OF THE CASE AND THE DECISIONS IN THE CASE OF ANIL KUMAR (SUPRA) AND P. MOHANKALA (SUPRA). ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 12 15. IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR F INDINGS AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE ON THIS ISSUE. 16. AS A RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED. ITA NO.1903/AHD/2007 17. IN THIS APPEAL THE ASSESSEE CHALLENGED THE ADD ITION OF RS.85 000/- ON ACCOUNT OF UNEXPLAINED GIFT. THE ASSESSEE RECEIV ED GIFT OF RS.85 000/- FROM ONE SHRI TEJAL AMICHAND SHAH OF PATAN. THE AS SESSEE FURNISHED THE GIFT DEED AND COPY OF RETURN OF INCOME FILED BY THE DONOR. THE ASSESSEE WAS REQUESTED TO PRODUCE THE DONOR FOR PER SONAL VERIFICATION WITH REGARD TO HIS IDENTITY CAPACITY AND GENUINENE SS OF THE TRANSACTIONS. THE ASSESSEE FAILED TO PRODUCE THE DONOR BEFORE THE AO. THE AO ISSUED SUMMONS AGAINST THE DONOR FOR HIS PRODUCTION BEFORE HIM FOR EXAMINATION OF GENUINENESS OF THE GIFT IN THE MATER . BUT HE FAILED TO TURN UP FOR VERIFICATION OF THE GIFT IN THE MATTER. THE DONOR WAS NOT RELATED TO THE ASSESSEE AND NO OCCASION FOR GIVING THE GIFT WA S ALSO EXPLAINED. THE GIFT WAS ACCORDINGLY TREATED AS NON-GENUINE AND THE ADDITION WAS ACCORDINGLY MADE. THE LEARNED CIT(A) ON THE SAME RE ASONING AS IN THE EARLIER YEAR CONFIRMED THE ADDITION AND DISMISSED T HE APPEAL OF THE ASSESSEE. 18. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS SAME AS IS ARGUED IN ASSESSMENT YEAR 2003-04 IN ITA NO.1902/AHD/2007. HE SUBMITTED THAT HIS ARGUMEN T IS SAME AS IS ARGUED ABOVE. THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 19. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE A RE OF THE VIEW THAT THE ISSUE IS SAME AS IS CONSIDERED AND ARGUED IN TH E ASSESSMENT YEAR ITA NOS. 1902 AND 1903/AHD/2007 MITESHKUMAR DINESHCHANDRA SHAH 13 2003-04 OF WHICH WE HAVE DISMISSED THE APPEAL OF TH E ASSESSEE. BY FOLLOWING THE SAME REASONS FOR DECISION IN ITA NO.1 902/AHD/2007 WE DISMISS THIS APPEAL OF THE ASSESSEE. 20. AS A RESULT BOTH THE APPEALS OF THE ASSESSEE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-04-2010. SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01- 04-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD