ACIT, New Delhi v. Ms. Mayawati,, Lucknow

ITA 2079/DEL/2009 | 2006-2007
Pronouncement Date: 27-08-2010 | Result: Dismissed

Appeal Details

RSA Number 207920114 RSA 2009
Assessee PAN APCPM1284D
Bench Delhi
Appeal Number ITA 2079/DEL/2009
Duration Of Justice 1 year(s) 3 month(s) 12 day(s)
Appellant ACIT, New Delhi
Respondent Ms. Mayawati,, Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 27-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 27-08-2010
Date Of Final Hearing 02-06-2010
Next Hearing Date 02-06-2010
Assessment Year 2006-2007
Appeal Filed On 15-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NOS. 4259/DEL/07 2078 & 2079/DEL/09 A.Y. 2004-05 2005-06 & 2006-07 DY. COMMISSIONER OF INCOME-TAX VS. MS. MAYAWATI CENTRAL CIRCLE-11 NEW DELHI. C-1/11 HUMAYUN RO AD NEW DELHI. PAN/ GIR NO. APCPM1284D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI S.D. KAPILA SPL. COUNSEL & SHRI R.R. MAURYA ADV. RESPONDENT BY : DR. RAKESH GUPTA; DR. R.K. AGARWAL SHRI ASHWANI TANEJA & SHRI TARUN KUMAR. O R D E R PER R.P. TOLANI J.M : THESE ARE THREE APPEALS BY THE REVENUE FOR ASSESSME NT YEARS 2004-05 2005-06 & 2006-07. 2. BRIEF FACTS OF THESE APPEALS ARE:- THE ASSESSEE IS A PROMINENT POLITICAL FIGURE OF INDIAN POLITICS NOW HOLDING THE CHAIR OF HONBLE CHIEF MINISTER U.P.; AT THE RELEVANT TIME MEMBER OF PARLIAMENT & NATIONAL PRESIDENT OF BAHUJAN SAMAJ PARTY (BSP). AS IN THE PAST ASSESSEE HAS RECEIVED HUGE AMOUNTS OF GIFTS OF MOVABLE PROPERTIES FROM NUMBER OF PERSONS IN THESE YEARS WHICH HAVE BECOME SUBJECT MATTER OF DISPUTE. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 2 2.1. IN A.Y. 2004-05 THE AO HELD THAT GIFTS OF RS. 8 31 25 107/- WERE NOT GENUINE AND ADDED THEM AS UNEXPLAINED INCOME OF ASS ESSEE. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL AGITATING VARIOUS G ROUNDS. CIT(A) QUASHED THE ASSESSMENT AND ON MERITS ALSO HELD THAT THE GIF TS WERE GENUINE AS ASSESSEE HAD DISCHARGED HER ONUS IN PROVING THE SAM E BY FOLLOWING MAIN OBSERVATIONS:- (I) THE MANDATORY NOTICE U/S 143(2) WAS NOT SERVED ON T HE ASSESSEE WITHIN THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN OF INCOME WAS FILED AS PRESCRIBED BY LAW FOR FRAMING A VALID ASSESSMENT U/S 143(3)AND QUASHED THE ASSESSMENT; (II) ON MERITS ALSO THE CIT(A) HELD THAT OUT OF GIFTS OF RS. 8 31 25 107/- AN AMOUNT OF RS. 8 29 25 107/- WAS PROVED BY THE ASSESSEE TO BE VALID GIFTS. ON BOTH THE ISSUES THE REVENUE IS IN APPEAL BEFOR E US RAISING VARIOUS GROUNDS. 2.2. IN THE MEANWHILE LEGISLATURE IN ORDER TO TACK LE THE MENACE OF THE MONEYS RECEIVED BY ASSESSES WITHOUT CONSIDERATION INCLUDING GIFTS AMENDED I.T. ACT AS SECTION 56(2)(V) WAS INSERTED BY FINANCE (NO.2) ACT 2004 W.E.F. 1-4-2005 I.E. FROM A.Y. 2005-06 PRESCR IBING AS UNDER: 56(2) IN PARTICULAR AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1) THE FOLLOWING IN COMES SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FROM OTHER SOURCES NAMELY:- .. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 3 (V) WHERE ANY SUM OF MONEY EXCEEDING TWENTY-FIVE T HOUSAND RUPEES IS RECEIVED WITHOUT CONSIDERATION BY AN INDI VIDUAL OR A HINDU UNDIVIDED FAMILY FROM ANY PERSON ON OR AFTER THE 1 ST DAY OF SEPTEMBER 2004 THE WHOLE OF SUCH SUM: PROVIDED THAT WHERE ANY SUM OF MONEY EXCEEDING TWEN TY-FIVE THOUSAND RUPEES IS RECEIVED WITHOUT CONSIDERATION B Y AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY FROM ANY SPECIFIED PERSON (RELATIVE) ON OR AFTER 1-9-2004 IMPLYING THEREBY GIFTS ALSO SUCH RE CEIPTS WILL BE DEEMED TO BE INCOME FROM OTHER SOURCES IN THE HANDS OF THE ASSESSEE. 2.3. IN A.Y. 2005-06 AND 2006-07 ASSESSEE RECEIVED HUGE AMOUNTS OF GIFTS WHICH WERE OFFERED IN RETURNS OF INCOME BY DI VIDING INTO TWO CATEGORIES AS PER THIS AMENDMENT: (I) GIFTS ABOVE RS. 25 000/- WHICH WERE OFFERED BY ASS ESSEE HERSELF IN THE RETURN OF INCOME AS TAXABLE U/S 56(2)(V); AND (II) GIFTS UP TO RS. 25 000/- WHICH WERE CLAIMED TO BE NOT TAXABLE U/S 56(2)(V). 2.3.1. AO IN BOTH THE ASSESSMENT YEARS ACCEPTED THESE GIFT S OFFERED UNDER CATEGORY (I) AS TAXABLE AS RETURNED BY ASSESSEE. HE HOWEVER HELD THAT GIFTS IN CATEGORY (II) WERE TAXABLE U/S 28 UNDER T HE HEAD INCOME FROM BUSINESS OR PROCESSION BEING INCOME FROM VOCATIO N OF POLITICS AND MADE THE ADDITIONS ACCORDINGLY. 2.3.2. AGGRIEVED ASSESSEE PREFERRED FIRST APPEALS CLAIMING THAT THE GIFTS WERE GIVEN ON THE OCCASION OF HER BIRTH DAY WERE O NLY PERSONAL IN NATURE. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 4 THEY WERE DECLARED IN CONSONANCE WITH SEC 56(2)V. A O ERRED IN TREATING CATEGORY (II) GIFTS UPTO RS. 25 000/- WHICH THOUGH WERE PERSONAL IN NATURE AS ASSESSES VOCATIONAL INCOME U/S 28. IT WAS AGAINST T HE MANDATE OF AMENDED LAW WHICH PRESCRIBED TAXATION OF GIFTS RECEIVED WI THOUT CONSIDERATION AS INCOME FROM OTHER SOURCES. CIT(A) HELD THAT ASSESS EE HAS ESTABLISHED THESE GIFTS TO BE VALID PERSONAL GIFTS RECEIVED ON OCCAS ION OF BIRTH DAY AND IT CAN NOT BE TREATED AS INCOME OF THE ASSESSEE FROM VOCAT ION OR PROFESSION AS FROM THE EVIDENCE FILED IT WAS PROVED THAT THESE WERE PE RSONAL IN NATURE. BESIDES GIFTS UP TO RS. 25 000/- ALSO WERE TO BE COVERED U NDER THE HEAD INCOME FROM OTHER SOURCES SIMILAR TO GIFTS ABOVE RS. 25 0 00/- AND WERE NON- TAXABLE. AO WAS NOT CORRECT IN SPLITTING THE SIMILA R TYPE OF PERSONAL GIFTS UNDER TWO DIFFERENT HEADS OF INCOME I.E. ONE U/S 56 (2)(V) AS INCOME FROM OTHER SOURCES AND THE OTHER U/S 28 AS VOCATIONAL INCOME. BASED ON VARIOUS OBSERVATIONS CIT(A) DELETED THE ADDITIONS. AGGRIEV ED REVENUE IS IN APPEAL BEFORE US ACCORDINGLY FOR A.Y. 2005-06 & 2006-07. 2.4. IT SHALL BE PERTINENT HERE TO MENTION THAT THE FACTS IN RESPECT OF GIFTS FOR A.Y. 2004-05 ARE SIMILAR TO A.Y. 2003-04. GENUINENE SS OF GIFTS WERE A MATTER OF DISPUTE BETWEEN DEPARTMENT AND ASSESSEE I N EARLIER YEARS UP TO A.Y. 2003-04. ITAT IN ASSESSEES OWN CASE FOR A.Y. 2003-04 VIDE ORDER ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 5 DATED. 30-11-2007IN ITA NOS. 279 AND 422/DEL/07 EX AMINED THE ISSUES AND HELD THEM TO BE GENUINE GIFTS BY FOLLOWING OBS ERVATIONS: 18.3. GENUINENESS OF THE TRANSACTION OF GIFTS: ONCE THE IDENTITY OF THE DONOR IS ESTABLISHED AND HIS CAPACI TY IS ALSO PROVED THEN THE ONLY QUESTION TO BE SEEN IS AS TO W HETHER THE TRANSACTIONS OF GIFT WAS GENUINE OR NOT. FOR EXAMIN ING THIS ASPECT THE CONDUCT OF PARTIES THAT IS THE DONOR A ND THE DONEE AND THE APPRECIATION OF ATTENDING CIRCUMSTANCES BEC OMES NECESSARY. THE CONDUCT CAN BE SEEN FROM VARIOUS ANG LES. IF THE DONEE MAKES HIS OR HER OWN INVESTMENTS FOR ARRANGIN G THE GIFT OR PURCHASING THE GIFT OR DIRECTLY OR INDIRECTLY MA NAGES SUCH GIFTS THEN SUCH CONDUCT WILL DEFINITELY RENDER THE TRANSACTIONS AS A COLOURABLE ONE OR OF DUBIOUS NATURE. SIMILARLY IF THE DONOR MAKES A GIFT IN LIEU OF SOME VALUABLE CONSIDERATION OR FOR ANY TANGIBLE BENEFIT OR FOR PAST OR FUTURE CONSIDERATIO N IN TERMS OF MONEY OR MONIES WORTH THEN SUCH GIFT MAY NOT BE TR EATED TO BE GENUINE. LIKEWISE IF THE CIRCUMSTANCES UNDER WHICH THE GIFT IS BEING MADE SHOW THAT THE GIFT WAS MADE TO COVER UP OR CONCEAL OTHER TRANSACTIONS OR TO CONVERT BLACK MONEY INTO WHITE MONEY BY TAKING RECOURSE TO SUCH MODE THEN THE TRANSACTIO N OF GIFT MAY BE TREATED TO BE NON-GENUINE. THERE MAY BE SEVE RAL OTHER CIRCUMSTANCES TO CREATE SUSPICION TO THE GENUINENES S OF THE GIFT. THE FINANCIAL POSITION OF DONOR OR THAT OF DONEE MA Y ALSO BE RELEVANT FACTORS TO JUDGE THE GENUINENESS OF THE GI FT. HOWEVER SUCH CONDUCT OF THE DONOR OR THE DONEE OR SUCH CIR CUMSTANCES WHICH CREATE DOUBT IN THE GENUINENESS OF THE TRANSA CTION OF THE GIFT HAVE TO BE BROUGHT ON RECORD. MERE GUESSWORK W ILL NOT BE SUFFICIENT. SIMILARLY THE MERE FACT THAT THE GIFT W AS MADE OF HUGE AMOUNT OR OF VALUABLE PROPERTY IN ABSENCE OF A NY OTHER MATERIAL TO DOUBT THE GENUINENESS OF THE GIFT WILL NOT BE SUFFICIENT TO TREAT THE GIFT AS NON-GENUINE. LACK O F BLOOD RELATIONSHIP OR FAMILY RELATIONSHIP OR ABSENCE OF O CCASION FOR MAKING GIFT ARE AGAIN NOT THE ONLY CONSIDERATIONS F OR TREATING THE GIFT AS NON-GENUINE. ALTHOUGH THESE MAY AT TIM ES BE RELEVANT CORROBORATIVE CONSIDERATIONS TO ESTABLISH THE NON- GENUINENESS OF THE TRANSACTIONS BUT BY ITSELF NONE OF SUCH FACTORS CAN BE SUFFICIENT CONSIDERATIONS FOR TREATI NG THE GIFT AS NON-GENUINE. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 6 18.3.1. IN THE INSTANT CASE THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAD IN ANY WAY AT ANY TIME F INANCIALLY OR OTHERWISE HELPED THE DONORS TO GAIN IN ANY MANNER B Y MISUSING HER POSITION AS A PUBLIC SERVANT. THERE IS NO PROOF THAT THE DONEE MADE ANY INVESTMENT IN THE PROPERTY GIFTED TO HER B EFORE THE SAME WAS GIFTED. SMT. VEENA JAIN AND SH. ASHOK JAIN BORROWED FUNDS FOR PURCHASING THE PROPERTY GIFTED TO THE DON OEE. THERE IS NO EVIDENCE THAT THE DONEE HAD MADE ARRANGEMENT OF THE LOAN OR PAID ANY PART OF THEM OR INTEREST THEREON EITHER PR IOR TO THE PURCHASE OF THE PROPERTY OR SUBSEQUENTLY. IN ALL TH E THREE GIFTS IN QUESTION THE ENTIRE INVESTMENT MADE WAS FROM THE SO URCE OF DONORS AND NOT FROM THE DONEE. 18.3.2. THE A.O. HAS NOT COLLECTED ANY EVIDENCE TO DISPROVE THE GENUINENESS OF THE GIFT BY BRINGING MA TERIAL ON RECORD TO SHOW THAT THE GIFTS WERE ARRANGED BY THE ASSESSEE FROM HER RESOURCES OR THAT DONORS MADE GIFT IN LIEU OF S OME TANGIBLE BENEFIT DERIVED BY THEM FROM THE ASSESSEE BY MISUSI NG HER OFFICE OF PUBLIC SERVANT. ON THE CONTRARY THE ASSES SEE ADDUCED SUFFICIENT EVIDENCE TO SHOW THAT THE GIFTS WERE MAD E VOLUNTARILY BY THE DONORS WITHOUT ANY CONSIDERATION AND OUT OF NATURAL LOVE AND AFFECTION. ALL THE THREE DONORS HAVE REPEATEDLY CONFIRMED THE FACT THAT THE PROPERTIES WERE GIFTED BY THEM TO THE DONEE OUT OF NATURAL LOVE AND AFFECTION. THE ASPECT OF VOLUNT ARILY GIVING OF GIFTS HAS BEEN FULLY PROVED IN ALL THE THREE CAS ES. THE DELIVERY OF POSSESSION WAS GIVEN AT THE TIME OF MAKING GIFT. THE GIFTS OF IMMOVABLE PROPERTY IN THE INSTANT CASE PROVE THE GE NUINENESS OF THE TRANSACTIONS BEYOND ANY SHADOW OF DOUBT BECA USE OF THE PROCEDURE ADOPTED FOR TRANSFERRING SUCH PROPERTIES BY WAY OF GIFT THROUGH REGISTERED DEEDS. 18.3.3. IT IS NOT UNCOMMON THAT PEOPLE GIVE DONATIO NS AND CHARITIES TO PERSONS IN WHOM THEY PLACE FAITH OR FO R WHOM THEY HAVE LIMITLESS REGARDS. SIMILARLY GIFTS ARE ALSO MA DE OF INVALUABLE PROPERTIES FOR FURTHERANCE OF NOBLE OBJ ECTS EXECUTED BY PERSONAGES OF HIGH EMINENCE. AS STATED BY THE DO NORS IN THEIR STATEMENTS RECORDED BY THE A.O. THE DONEE IS A PUBLIC AND POLITICAL FIGURE WHO WAS WORKING FOR THE WELFARE OF THE DOWNTRODDEN IN A MISSIONARY MANNER AND ON ACCOUNT O F THIS SOCIAL WORK THE DONORS DECIDED TO PART AWAY WITH T HEIR PROPERTIES BY GIVING THE SAME AS GIFT TO HER. THE E LEMENT OF REVERENCE VENERATION OR PERSONAL ESTEEM AND FAITH ALL DEPEND ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 7 UPON PERSONAL FEELINGS AND DESIRE. NO PROBE CAN EAS ILY BE MADE INTO SUCH ASPECTS OF HUMAN PSYCHOLOGY AND THE BEST PERSONS TO EXPLAIN SUCH FEELINGS AND DESIRES ARE THOSE WHO ADV ANCE AND EXECUTE THE SAME. 18.3.4. IN THIS REGARD REFERENCE MAY BE MADE TO THE CASE OF CIT VS. ABDUL GANI GURDEJI OF RAJASTHAN HIGH COURT REPORTED IN ITR 213 AT PAGE 798 . THE BRIEF FACTS OF THE CASE WERE THAT THE ASSESSEE WAS KHADIM AT THE DARGAH OF KHWAJA MOINUDD IN CHISTI AJMER AND DERIVED INCOME BY EXERCISE OF SU CH PROFESSION. HE RECEIVED A SUM OF RS. 1 05 000 ON JU NE 19 1978 FROM A NON-RESIDENT PILGRIM CALLED ABU SUFIA N WHO WAS COMING TO THE DARGAH FOR A NUMBER OF YEARS. THE ASS ESSING OFFICER TREATED THIS GIFT TO BE A GENUINE GIFT MADE ON ACCOUNT OF LOVE AND AFFECTION TOWARDS THE DONEE WHILE THE CIT REVERSED THE ORDER HOLDING THAT THE PAYMENT WAS CAMOUFLAGED AS A GIFT. ON APPEAL THE TRIBUNAL SET ASIDE ORDER OF CIT AND C ONFIRMED THE ORDER OF ASSESSING OFFICER. THIS ORDER WAS CHAL LENGED BY CIT BY MAKING A REFERENCE U/S. 256 (1). IN THE REFERENC E THE HIGH COURT UPHELD THE DECISIONS OF THE TRIBUNAL AND HELD AS FOLLOWS:- THE FINDING WHICH THE TRIBUNAL HAS RECORDED IN THIS CASE IS THAT IT IS NOT A CASE WHERE THE DONO R WAS BENEFITED FROM ANY PREACHING OR DISCOURSE OR ANY SPECIAL SERVICE OF THE ASSESSEE BUT IT IS A CA SE WHERE THE DONOR ON HIS OWN NOTICED SOME SUPERNATURAL POWER IN THE ASSESSEE AND BEING INFLUENCED BY THAT HE DECIDED TO EARMARK THE POUNDS EQUIVALENT TO THE AMOUNT FOR MAKING THE PAYMENT TO THE ASSESSEE. IT WAS OBSERVED THAT IT IS A CLEAR CASE OF VOLUNTARY PAYMENT MADE TO THE ASSESSEE FOR HIS PERSONAL QUALITIES OR AS A MARK OF THE HIGH ESTEEM AND REGARD IN WHICH THE ASSESSEE WAS HELD BY THE DONOR. THERE IS NOT AN IOTA OF EVIDENCE TO LINK THE IMPUGNED PAYMENT WITH THE ROUTINE AND ORDINARY SERVICES RENDERED BY THE ASSESSEE AS KHADIM TO THE DONOR. THE FINDING WHICH HAS BEEN RECORDED IS ONE OF FACT AND HAS NOT BEEN CHALLENGED. IT WAS OPEN TO THE REVENUE EVEN TO CHALLENGE THE FINDING WHICH HAS BEEN RECORDED BY THE TRIBUNAL ON ANY GROUND INCLUDING THAT THEY ARE PERVERSE. NO SUCH STEPS WERE TAKEN TO ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 8 CHALLENGE THE FINDING OF FACT RECORDED BY THE TRIBUNAL. IT HAS NOWHERE BEEN ESTABLISHED THAT THE GIFT HAD ANY RELATION WITH THE SERVICE RENDERED. IT MAY BE THE BASIS OF ACQUAINTANCE BUT CANNOT BE CONSIDERED AS HAVING ANY LINK OR REFERENCE TRACEABLE TO THE VOCATION WHICH THE ASSESSEE WAS PERFORMING AS KHADIM. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT TH E TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE SUM OF RS. 1 05 000 RECEIVED BY THE ASSESSEE FROM ABU SUFIAN UNDER GIFT DEED DATED JUNE 22 1978 WAS NOT TAXABLE AS THE ASSESSEE'S INCOME FROM HIS PROFESSION/VOCATION. THE REFERENCE IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. NO ORDER AS TO COSTS. 18.3.5. IN THE INSTANT CASE THE DEPARTMENT HAS NOT BROUGHT ANY MATERIAL TO QUESTION SUCH FEELINGS AND DESIRES OF THE DONEES AND THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFI ED IN HOLDING THAT THE GIFTS WERE NOT GENUINE. 19. KEEPING IN VIEW OF THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE AND AFTER CONSIDERING THE ENTIRE MATERIAL AVAILABLE ON RECORD WE ARE OF THE OPINION THAT ALL THE THREE GIFTS ARE NOT ONLY GENUINE BUT ALSO THE IDENT ITY AND CAPACITY OF THE DONOR TO MAKE THE GIFT STANDS DULY AND FULLY ESTABLISHED. HENCE WE UPHOLD THE FINDINGS OF THE LD . CIT (APPEALS) IN HOLDING THAT THE ASSESSEE HAS FULLY DI SCHARGED NOT ONLY HER ONUS BUT ALSO THE BURDEN CAST ON HER BY PR OVING THE IDENTITY OF THE DONORS AND THEIR CREDITWORTHINESS AS WELL AS THE GENUINENESS OF THE GIFT. ACCORDINGLY WE UPHOLD THE FINDINGS OF THE LD. CIT (APPEALS) DELETING THE ADDITIONS MADE O N ACCOUNT OF THE SAID GIFTS BY THE A.O. 2.5. IN THIS FACTUAL BACKDROP NOW WE PROCEED TO EX AMINE VARIOUS GROUNDS OF APPEAL AS RAISED BY REVENUE IN DIFFERENT YEARS ON THESE ISSUES: ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 9 2004-05: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN Q UASHING THE ASSESSMENT ON THE GROUND THAT THE NOTICE U/S 14 3(2) OF INCOME TAX ACT 1961 WAS NOT SERVED WITHIN THE PERI OD OF 12 MONTHS FROM THE DATE OF FILING OF RETURN BY IGNORIN G THE FACT THAT THE NOTICE U/S 143(2) OF THE I.T. ACT 1961 WAS ISS UED ON 23/3/2005 AND SENT BY REGISTERED POST WHICH IS WELL WITHIN THE STATUTORY PERIOD PROVIDED IN THE INCOME TAX ACT 19 61. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS IGNORED THE SUBMISSION OF THE ASSESSING OFFICER GIVEN IN THE REMAND REPORT THAT THE PROOF OF SERVIC E OF FIRST NOTICE U/S 143(2) OF I.T. ACT 1961 FOR ASSESSMENT YEAR 2004-05 WAS PASTED IN THE FILE FOR ASSESSMENT YEAR 1998-99 AND THUS A VALID NOTICE U/S 143(2) OF THE I.T. ACT 1961 FOR A SSESSMENT YEAR 2004-05 WAS ISSUED ON 23/3/2005 WHICH WAS SENT BY R EGISTERED POST TOGETHER WITH NOTICE U/S 148 FOR THE ASSTT. YE AR 1998-99 AND THE NOTICES WERE NOT RECEIVED BACK UN-SERVED IM PLYING THEREBY THAT THEY WERE DULY SERVED. 3. RELIANCE IS PLACED ON THE DECISION OF CIT VS. GY AN PRAKASH GUPTA (1987) 165 ITR 501 (RAJ) SHAKTI PROD UCTS VS. ITO (1984) 9 ITD 630 (ALL. TRIB) AND SANT BABA MOHA N SINGH VS. CIT (1973) 90 ITR 197 (ALL.) IN WHICH IT WAS HE LD THAT ASSESSMENTS COMPLETED EVEN WITHOUT SERVICE OF NOTIC E U/S 143(2) ARE NOT VOID AB INITIO AND NOT LIABLE TO BE ANNULLED. AT BEST THEY COULD BE SET ASIDE FOR REMOVAL OF THE D EFECTS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8 29 25 107/- OUT OF TOTAL ADDITION OF RS. 8 31 25 107/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED GIFTS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN HOLDING THE GIFTS OF RS. 8 29 2 5 107/- RECEIVED BY THE ASSESSEE FROM VARIOUS PERSONS/ PART IES AS GENUINE. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 10 6. THAT THE ORDER OF LD. CIT(A) IS ERRONEOUS AND CO NTRARY TO FACTS AND LAW. 7. THE APPELLANT CRAVES RIGHT TO ALTER/MODIFY/ADD/ DELETE/ DELETE ANY OR ALL GROUNDS OF APPEAL. 2005-06: 1. THE ORDER OF THE LD. CIT(APPEALS) IS NOT CORREC T IN LAW AND FACTS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE GIFTS RECEIVED BY THE ASSESSEE WERE NOT ON ACCOUNT OF HER VOCATION IGNORING THE FACT THAT THE GIFTS HAD BEEN MADE IN R ESPONSE TO A CALL FROM THE ASSESSEES POLITICAL PARTY HAD BEEN GENERATED AND COLLECTED IN A SYSTEMATIC FUND RAISING DRIVE BY THE PARTY MACHINERY AND HAD BEEN PRESENTED TO THE ASSESSEE ON HER BIRTHDAY WHICH WAS DECLARED AS AARTHIK SAHYOG DIWA S OF HER PARTY ONLY BECAUSE SHE WAS THE PRESIDENT OF THE PA RTY? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN SAYING THAT T HE ASSESSING OFFICER HAD FAILED TO PROVE QUID PRO QUO IGNORING THE ASSESSEES OWN SUBMISSION THAT THE GIFTS WERE ON ACCOUNT OF HE R WORK FOR UPLIFTMENT OF THE DOWNTRODDEN THAT HAD BROUGHT ABOU T ADMIRATION AND GRATITUDE AMONG HER SUPPORTERS TOWAR DS HER AND THE ASSESSING OFFICERS FINDING OF THE FACT THAT HI S WORK WAS INEXTRICABLE ENTWINED WITH HER VOCATION I.E. POLITI CS? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN SEEKING TO DISTI NGUISH THE ASSESSEES CASE FROM THAT OF KRISHNA MENON (35 ITR 48) GOVINDLALJI RANCHODLALJI (34 ITR 92) & AMRENDRA NAT H CHAKRABORTY 79 ITR 342 ALL OF WHICH HELD THAT QUID PRO QUO COULD BE IN NON MATERIAL TERMS ONLY ON THE BASIS OF THE FACT THAT THE ASSESSEE PURSUED A DIFFERENT VOCATION. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSING ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 11 OFFICER HAVING BROUGHT ON RECORD SPECIFIC INSTANCES OF PARTY FUNCTIONARIES (WHO ARE BENEFITED BY THE ASSESSEE) B EING RESPONSIBLE FOR THE GENERATION AND COLLECTION OF G IFTS THE QUID PRO QUO STOOD ESTABLISHED EVEN IN MATERIAL TERMS? 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) FAILED TO APPRECIATE THAT EVE N OTHERWISE THE ASSESSEES CASE WAS SIMILAR TO THAT OF GOVINDLA LJI RANCHODLALJI WHERE THE HONBLE HIGH COURT HELD THA T THE MAKING OF OFFERINGS MOTIVATED BY THE COMPELLING FE ELING ON THE PART OF THE FOLLOWER TO MAKE PRESENTS TO THE HEAD O F THE FAITH AS IT WAS CUSTOMARY WERE PRESENTS NOT RECEIVED ON ACC OUNT OF THE PERSONAL CHARACTERISTICS OF THE ASSESSEE BUT DUE T O THE OFFICE THAT HE HELD AND THE SAME WERE HIS INCOME FROM VOCA TION? 7. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSIO N ONLY ON ACCOUNT OF THE FACT THAT ASSESSEE HAD HERSELF OFF ERED GIFTS OVER RS. 25 000 FOR TAX UNDER THE PROVISIONS OF SECTION 56(2)(V) & AND THE ASSESSING OFFICER HAD LEFT SUCH GIFTS UND ISTURBED AS HIS FINDINGS DID NOT CHANGE THE TAXABLE STATUS OF THE S AME? 8. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS CORRECT IN HOLDING THAT SEC TION 56(2)(V) ALSO CONFERS EXEMPTION TO GIFTS UNDER RS. 25 000 AND IN DIRECTING THE ASSESSING OFFICER TO GRANT RELIEF TO THE ASSESSEE UNDER THAT SECTION WHEN THE ASSESSING OFFICER HAD COME TO A CATEGORICAL FINDING THAT SUCH GIFTS WERE INCOME R ELATED TO THE VOCATION OF THE ASSESSEE AND TAXABLE AS SUCH? 9. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEN D ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HARING OF THE APPEAL. 2006-07: 1. THE ORDER OF THE LD. CIT(APPEALS) IS NOT CORREC T IN LAW AND FACTS. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 12 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS. 20 33 92 828/- MADE ON ACCOUNT OF INCOME FROM VOCA TION OF POLITICS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE GIFTS RECEIVED BY THE ASSESSEE WERE NOT ON ACCOUNT OF HER VOCATION IGNORING THE FACT THAT THE GIFTS HAD BEEN MADE IN R ESPONSE TO A CALL FROM THE ASSESSEES POLITICAL PARTY HAD BEEN GENERATED AND COLLECTED IN A SYSTEMATIC FUND RAISING DRIVE BY THE PARTY MACHINERY AND HAD BEEN PRESENTED TO THE ASSESSEE ON HER BIRTHDAY WHICH WAS DECLARED AS AARTHIK SAHYOG DIWA S OF HER PARTY ONLY BECAUSE SHE WAS THE PRESIDENT OF THE PA RTY? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE ASSESSEES CLAIM THAT THE CONTRIBUTIONS RECEIVED I N RESPONSE TO PARTYS CALL FOR FINANCIAL ASSISTANCE ON HER BIRTHD AY MUST HAVE BEEN ACCOUNTED FOR IN THE PARTYS ACCOUNTS REMAINE D UNSUBSTANTIATED WHILE HER OWN BANK ACCOUNT SHOWED L ARGE CREDITS SUBSEQUENT TO HER BIRTHDAY? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DISREGARDING SPECIFIC INSTANCES BROUGHT ON RECORD BY ASSESSING OFFICER W HICH DEMONSTRATED THAT EVEN WHILE MAKING GIFTS TO THE AS SESSEE THE DONORS BELIEVED THAT THEY WERE MAKING GIFTS TO THE ASSESSEE EITHER ON ACCOUNT OF HER POLITICAL STANDING OR ON T HE DIRECTIONS OF THE LEADERSHIP OF THE PARTY? 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN SAYING THAT T HE ASSESSING OFFICER HAD FAILED TO PROVE QUID PRO QUO IGNORING THE ASSESSEES OWN SUBMISSION THAT THE GIFTS WERE ON ACCOUNT OF HE R WORK FOR UPLIFTMENT OF THE DOWNTRODDEN THAT HAD BROUGHT ABOU T ADMIRATION AND GRATITUDE AMONG HER SUPPORTERS TOWAR DS HER AND THE ASSESSING OFFICERS FINDING OF THE FACT THAT HI S WORK WAS INEXTRICABLE ENTWINED WITH HER VOCATION I.E. POLITI CS? ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 13 7. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN SEEKING TO DISTI NGUISH THE ASSESSEES CASE FROM THAT OF KRISHNA MENON (35 ITR 48) GOVINDLALJI RANCHODLALJI (34 ITR 92) & AMRENDRA NAT H CHAKRABORTY 79 ITR 342 ALL OF WHICH HELD THAT QUID PRO QUO COULD BE IN NON MATERIAL TERMS ONLY ON THE BASIS OF THE FACT THAT THE ASSESSEE PURSUED A DIFFERENT VOCATION. 8. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAVING BROUGHT ON RECORD SPECIFIC INSTANCES OF PARTY FUNCTIONARIES (WHO ARE BENEFITED BY THE ASSESSEE) B EING RESPONSIBLE FOR THE GENERATION AND COLLECTION OF G IFTS THE QUID PRO QUO STOOD ESTABLISHED EVEN IN MATERIAL TERMS? 9. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) FAILED TO APPRECIATE THAT EVE N OTHERWISE THE ASSESSEES CASE WAS SIMILAR TO THAT OF GOVINDLA LJI RANCHODLALJI WHERE THE HONBLE HIGH COURT HELD THA T THE MAKING OF OFFERINGS MOTIVATED BY THE COMPELLING FE ELING ON THE PART OF THE FOLLOWER TO MAKE PRESENTS TO THE HEAD O F THE FAITH AS IT WAS CUSTOMARY WERE PRESENTS NOT RECEIVED ON ACC OUNT OF THE PERSONAL CHARACTERISTICS OF THE ASSESSEE BUT DUE T O THE OFFICE THAT HE HELD AND THE SAME WERE HIS INCOME FROM VOCA TION? 10. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSIO N ONLY ON ACCOUNT OF THE FACT THAT ASSESSEE HAD HERSELF OFF ERED GIFTS OVER RS. 25 000 FOR TAX UNDER THE PROVISIONS OF SECTION 56(2)(V) & AND THE ASSESSING OFFICER HAD LEFT SUCH GIFTS UND ISTURBED AS HIS FINDINGS DID NOT CHANGE THE TAXABLE STATUS OF THE S AME? 11. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS CORRECT IN HOLDING THAT SEC TION 56(2)(V) ALSO CONFERS EXEMPTION TO GIFTS UNDER RS. 25 000 AND IN DIRECTING THE ASSESSING OFFICER TO GRANT RELIEF TO THE ASSESSEE UNDER THAT SECTION WHEN THE ASSESSING OFFICER HAD COME TO A CATEGORICAL FINDING THAT SUCH GIFTS WERE INCOME R ELATED TO THE VOCATION OF THE ASSESSEE AND TAXABLE AS SUCH? ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 14 12. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AME ND ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HARING OF THE APPEAL. ITA NO. 4259/DEL/07 (A.Y. 2004-05) : 3. LEARNED DR SHRI S.D. KAPILA (SPECIAL COUNSEL FOR DEPARTMENT) AT THE OUT SET PRAYED FOR ADMISSION OF REVENUES ADDITIONA L GROUND WHICH IS AS UNDER: WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(APPEAL S) SHOULD HAVE HELD THAT THE GIFTS TO THE TUNE OF RS. 8 29 25 107/- EVEN IF HELD TO BE GENUINE WERE TAXABLE AS INCOME FROM TH E PROFESSION OF POLITICS IN VIEW OF HIS FINDING THA T THEY WERE RECEIVED BY THE ASSESSEE FROM HER SUPPORTERS ON HER BIRTHDAY IN HER CAPACITY AS THE HEAD OF POLITICAL PARTY. 3.1. LEARNED DR CONTENDS THAT IN ORIGINAL ASSESSMEN T FOLLOWING EARLIER YEARS AO HELD THAT GIFTS WERE NOT GENUINE AND ADDE D THEM AS UNEXPLAINED GIFTS U/S 68 IN FACT HE SHOULD HAVE TAXED THESE GI FTS UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AS INCOME FROM PROFESS ION OF POLITICS. THE ADDITIONAL GROUND IS TAKEN TO CURE THIS MISTAKE IT IS CLAIMED THAT THE ADDITIONAL GROUND IS A LEGAL GROUND AND CAN BE DEC IDED BY ITAT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND ARGUMENTS WHIC H ARE BEING RAISED FOR A.Y. 2005-06 AND 2006-07. IT WILL NOT REQUIRE INVES TIGATION INTO FRESH EVIDENCE OR FACTS. RELIANCE WAS PLACED ON THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF NTPC 259 ITR 383 FOR THE PROPO SITION THAT A LEGAL ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 15 QUESTION CAN BE RAISED AT ANY STAGE OF APPELLATE PR OCEEDINGS. IT IS PLEADED THAT IN THE CASE OF CITRARASU (CP) VS. CIT 160 ITR 534 (MAD.) IT HAS BEEN HELD THAT QUESTION OF LAW DEPENDS ON THE FACTS OF E ACH CASE AND IN THAT CASE A SIMILAR QUESTION WAS HELD TO BE A QUESTION OF LAW. 4. LEARNED COUNSEL FOR THE ASSESSEE SHRI RAKESH GUP TA ON THE OTHER HAND VEHEMENTLY OPPOSES THE ADMISSION OF ADDITIONA L GROUND ON FOLLOWING PLEAS: (I) ASSESSMENT ORDER IS THE BASIS FOR TAXING INCOME UND ER PRESCRIBED HEADS AND AO IS FREE TO CHOOSE ANY OF THEM. IF AO H AS CHOSEN TO TAX INCOME OR RECEIPT UNDER A PARTICULAR HEAD FOLLO WING HIS ORDER IN EARLIER YEARS BY CARRYING OUT REQUIRED INVESTIGATI ONS. AO HEARD THE ASSESSEE ACCORDINGLY AND DECIDED TO TAX IT AS UNEXP LAINED GIFT U/S 68. MERELY BECAUSE THERE IS A CHANGE IN THE OPINION OF AO IN SUBSEQUENT YEARS WILL NOT ENTITLE THE REVENUE TO RAISE THIS PURELY FACTUAL GROUND AS AN ADDITIONAL LEGAL GROUND. (II) HONBLE SUPREME COURT IN THE CASE OF M.CORP GLOBAL 309 ITR 434 HAS HELD THAT THE APPELLATE TRIBUNAL IN SECOND APPE AL HAS NO POWER TO TAKE BACK BENEFIT CONFERRED BY AO OR ENHANCE ASS ESSMENT OR PUT THE ASSESSEE IN WORSE POSITION. BY ADMITTING THE AD DITIONAL GROUND THE ASSESSEE WILL BE PUT TO WORSE SITUATION AS SHE WAS NEITHER HEARD NOR ANY EVIDENCE WAS LAID ON THIS ISSUE WHILE FRA MING THE ASSESSMENT. ASSESSMENT PROCEEDINGS ARE DISTINCT AND SEPARATE IN EACH YEAR AND MERELY BECAUSE THE DEPARTMENT BECAME WISER IN ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 16 SUBSEQUENT YEAR IN INTERPRETING A LEGISLATIVE AMEND MENT THERE IS NO JUSTIFICATION FOR ITAT IN ADMITTING THIS ADDITIONAL GROUND WHILE HEARING THE SECOND APPEAL. (III) THE ADDITIONAL GROUND RAISES ESSENTIALLY QUESTIONS OF FACTS INASMUCH AS THE LEARNED DR HAS RELIED ON VARIOUS FA CTS AND EVIDENCE WHICH CERTAINLY REQUIRES INVESTIGATIONS IN TO NEW FACTS AND CIRCUMSTANCES EXPLANATION OF ASSESSEE STATEMENT O F DONORS TO INQUIRE ASPECT OF PERSONAL OR VOCATIONAL CIRCUMSTAN CES ISSUES ABOUT QUID PRO QUO ETC. FACTS OF EACH AND EVERY GIF T ARE DIFFERENT IN TERMS OF DONOR HIS LOCATION FINANCIAL CAPACITY AN D PROPERTY IN GIFT AND MODE THEREOF. THE ADMISSION OF ADDITIONAL GROUN D WILL AMOUNT TO PUTTING THE CLOCK BACK AT THE COST OF ASSESSEES RIGHTS MULTIPLICITY OF PROCEEDING AND HARASSMENT TO ASSESS EE ON ISSUES WHICH HAVE BECOME FINAL. (IV) IT CHANGES THE ENTIRE LINE OF INVESTIGATION FACTUA L CONSIDERATIONS WHICH IS THE DOMAIN OF AO AND THEREAFTER CIT(A) IN FIRST APPEAL ACCEPTING THIS ADDITIONAL GROUND AT ITAT LEVEL WI LL AMOUNT TO REINVESTIGATING THE ISSUES SETTLED BY EARLIER ORDER S WHICH IS NOT THE PURPOSE OF CONFERRING POWER TO ADMIT ADDITIONAL GRO UND 5. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW THE ENTIR E ASSESSMENT AND APPELLATE PROCEEDINGS WERE COMPLETED ON THE BASIS OF AOS STA ND OF INVESTIGATING INTO THE GENUINENESS OF GIFTS ONLY AS DONE IN EARLIER YE ARS. AFTER ELABORATE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 17 INVESTIGATIONS CONSIDERATION OF VARIOUS FACTS CIRC UMSTANCES DEPOSITION AND HEARINGS AO HELD THEM AS UNEXPLAINED GIFTS AND MADE THE ADDITION ACCORDINGLY I.E. U/S 68 AND DID NEVER RAISED ANY IS SUE ABOUT VOCATIONAL NATURE OF GIFTS; IN APPEAL CIT(A) ON THE BASIS OF THESE ISSUES DECIDED THE APPEAL FOR AY2004-05 AS ALSO IN EARLIER YEARS. IN THE ENT IRE LENGTH AND BREADTH OF ASSESSMENT PROCEEDINGS AO DID NOT PROPOSE TO CONSID ER THESE GIFTS TO BE VOCATIONAL OR PROFESSIONAL RECEIPTS IN ANY MANNER. WE MAY ADD THAT AOS ACTION IN THIS YEAR WAS IN CONFORMITY WITH EARLIER YEARS AND IF IT WAS NOT CORRECT ASSESSMENT COULD HAVE BEEN REOPENED OR CIT COULD HAVE INVOKED HIS POWER U/S 263 OR THE CIT(A) MAY HAVE TAKEN NECESSAR Y STEPS TO ENHANCE THE ASSESSMENT OR CORRECT THE ASSESSMENT ORDER. AMENDME NT OF SECTION 56(2)(V) WAS INSERTED BY FINANCE ACT (NO.2) OF 2004 W.E.F. 1 -4-2005. AO HAS PASSED ASSESSMENT ORDER ON 31-12-2007 I.E. ABOUT 3 YEARS A FTER AMENDMENT WAS BROUGHT ON STATUTE BOOK. CIT(A) PASSED HIS ORDER ON 15-4-2009 I.E. AFTER ABOUT 5 YEARS OF AMENDMENT. AO COULD HAVE ADOPTED THIS VIEW BEFORE PASSING ASSESSMENT OR BROUGHT THIS TO THE NOTICE OF CIT(A) TO CORRECTLY DECIDE THIS ISSUE. THE ISSUE ABOUT GIFTS HAS BEEN L ITIGATED ACCORDINGLY IN EARLIER YEARS BY REVENUE AND ASSESSEE. IT IS TOO LA TE IN THE DAY TO ACCEPT THIS ADDITIONAL GROUND AT THIS STAGE WHICH IN OUR VIEW WILL AMOUNT TO ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 18 (I) ADMITTING A GROUND WHICH NEEDS EXAMINATION OF FRESH FACTS DOCUMENTS AND RECORD; (II) DECIDING A SECOND APPEAL ON ALTOGETHER NEW ISSUES WHICH WERE NEITHER TAKEN UP BY AO NOR ADJUDICATED BY CIT(A) A SSESSEE WAS NEVER HEARD OR INTENDED TO BE HEARD AND DEPARTMENT HAS EARLIER TAKEN SAME LINE AS ADOPTED BY AO. (III) IT WILL PUT THE ASSESSEE IN A WORSE SITUATION AS CO NTEMPLATED BY THE HONBLE SUPREME COURT IN THE CASE OF M. CORP GLOBAL 309 ITR 434. JUSTIFICATIONS FOR ADMISSION OF ADDITIONAL GROUND I N CASE OF NTPC (SUPRA) WAS A SPECIAL BENCH JUDGMENT AND INVESTIGAT ION OF FACTS WAS NOT REQUIRED. IN THIS CASE THE AMENDMENT WAS IN TRODUCED 3 YEARS PRIOR TO ASSESSMENT AND 5 YEARS PRIOR TO FIRS T APPEAL AO HAVING CONSCIOUSLY TOOK A DECISION ADDITIONAL GROU ND CANNOT BE ACCEPTED BECAUSE IT IS MORE CONVENIENT FOR REVENUE . (IV) IN CASE OF CHITRA RASU (SUPRA) IT WAS A QUESTION O F LAW FOR ADMISSION TO HIGH COURT WHEREAS THE ISSUE BEFORE U S IS ADMISSION OF AN ADDITIONAL GROUND AT INSTANCE OF REVENUE WH ICH REQUIRES FRESH INVESTIGATION OF FACTS AND HEARING ASSESSEE A CCORDINGLY. 5.1. IN VIEW OF THESE FACTS WE REFRAIN TO ADMIT TH E ADDITIONAL GROUND SOUGHT TO BE RAISED BY THE REVENUE. 6. BRIEF FACTS APROPOS FIRST ISSUE RAISED BY REVEN UE REGARDING QUASHING OF ASSESSMENT DUE TO NON SERVICE OF NOTICE U/S 143( 2) LEARNED CIT(A) BY VARIOUS FACTUAL OBSERVATIONS HELD THAT NOTICE DATE D 23-3-05 U/S 143(2) AS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 19 ALLEGED BY AO WAS NOT SERVED ON ASSESSEE AND THERE FORE ASSESSMENT DESERVED TO BE QUASHED BY FOLLOWING OBSERVATIONS: II. ISSUE OF NOTICE U/S 143(2) : THE ASSESSEE HAS CHALLENGED THE ASSESSMENT MADE AS BAD IN LAW ON THE GROUND THAT N O NOTICE U/S 143(2) WAS ISSUED AND SERVED ON HER WITHIN THE PERI OD OF TWELVE MONTHS OF THE FILING OF THE RETURN. TO THIS EFFECT SHE HAD ALSO FILED AN AFFIDAVIT BEFORE ME WHICH WAS SENT TO TH E AO. THE AO POINTED OUT THAT A NOTICE U/S 143(2) DATED 23-3- 2005 WAS SENT TO THE ASSESSEE BY REGISTERED POST ON 24-3-200 5 AT THE LAST KNOWN ADDRESS OF THE ASSESSEE AND AS THE SAME WAS NOT RECEIVED BACK UNSERVED IT CAN BE PRESUMED THAT THE NOTICE WAS SERVED. A PHOTO COPY OF THE RECEIPT DATED 24-3-200 5 WAS ALSO PLACED ON RECORD. ON RECEIPT OF THE REMAND REPORT THE COMMENTS OF THE ASSESSEE WERE ALSO OBTAINED AND IT IS THE ASSESSEE S CASE THAT: (I). NO NOTICE U/S 143(2) DATED 23-03-2005 WAS SERV ED ON THE ASSESSEE AND THE AO HAS NOT REBUTTED THIS ALLE GATION BY CROSS-EXAMINING THE ASSESSEE AND POINTING OUT ANY F ALSITY IN THE AFFIDAVIT. (II) THE NOTICE PURPORTEDLY ISSUED IS DATED 23-03-2 005 AND THE DATE FOR HEARING IS FIXED FOR 10-4-2006 I.E . MORE THAN ONE YEAR AFTER THE DATE OF ISSUE OF NOTICE. THIS IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IT IS UNREASONABLE A ND ARBITRARY TO FIX THE DATE OF HEARING AFTER ONE YEAR AND ALSO UNR EALISTIC. IT IS THEREFORE UNBELIEVABLE AND HENCE CANNOT BE PRESUMED TO HAVE ACTUALLY TAKEN PLACE. (III) THE ASSESSEE HAS ALSO POINTED OUT THAT THE RE GISTERED POST RECEIPT TO WHICH THE AO IS REFERRING PERTAINS TO NOTICE U/S 148 FOR THE ASSESSMENT YEAR 1998-99 WHICH WAS SENT ON 24-3- 2005 AND RECEIVED BY THE ASSESSEE. (IV) EVEN ASSUMING THAT THE HEARING WAS FIXED FOR 1 0-04- 2006 THE ASSESSEE HAS NEITHER RESPONDED NOR THE AO HAS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 20 RECORDED ANYTHING IN THE ORDER SHEET OR IN THE ASSE SSMENT ORDER TO THIS EFFECT. THIS AGAIN POINTS TO THE FACTS THAT NO SUCH NOTICE WAS IN FACT ISSUED. (V) IT WAS ALSO SUBMITTED THAT IF NOTICE HAD BEEN A LLEGEDLY ISSUED ON 23-03-2005 AND SERVED ON THE ASSESSEE THE AO COULD NOT HAVE PROCESSED THE CASE U/S 143(1) ON 28-03-200 6 I.E. MORE THAN ONE YEAR AFTER THE DATE OF THE ISSUE OF THE N OTICE. THE LAW ON THE POINT IS VERY CLEAR. FURTHER THE DEPARTMENT AL INSTRUCTIONS ARE THAT FIRST ALL THE RETURNS SHOULD BE ACCEPTED U/S 143(1) AND THEN ONLY SELECTED FOR SCRUTINY. FROM THESE FACTS A CLEAR INFERENCE CAN BE DRAWN THAT NO NOTICE U/S 143(2) DA TED 23-03- 2005 WAS EVER ISSUED OR SERVED ON THE ASSESSEE. (VI) IT IS ALSO SUBMITTED THAT ADMITTEDLY THE SAID RECEIPT HAS BEEN PASTED ON THE NOTICE U/S 148 PERTAINING TO THE ASSESSMENT YEAR 1998-99 AND THEREFORE IT FOLLOWS T HAT IT PERTAINS TO THE SERVICE OF NOTICE U/S 148 FOR ASSES SMENT YEAR 1998-99. APART FROM THE ABOVE LEGAL SUBMISSIONS WERE ALSO M ADE IN THIS REGARD AND IT WAS URGED THAT THE AO IS TRYI NG TO COVER UP THE LAPSE OF NON SERVICE OF NOTICE U/S 143(2) IN TH IS WAY WHICH IS CLEAR AND APPARENT AND THEREFORE THE ASSESSMEN T DESERVES TO BE QUASHED. II.2. I HAVE EXAMINED THIS ISSUE AND I FIND THAT TH E FACT OF THE ISSUE AND SERVICE OF NOTICE U/S 143(2) DATED 23-03- 2005 TO THE ASSESSEE DOES NOT FIND ENTRY IN THE ORDER SHEET. H OWEVER ALL SUBSEQUENT NOTICES ISSUED U/S 143(2) DO FIND MENTIO N IN THE ORDER SHEET. I AM UNABLE TO COMPREHEND THIS FACT. (B) I ALSO FIND THAT AS PER THIS NOTICE THE ASSESSE E WAS REQUIRED TO ATTEND ON 10-04-2006 I.E. MORE THAN ONE YEAR AFTER THE RECEIPT OF TH4E NOTICE WHICH DOES NOT APPEAR P LAUSIBLE. MORE SO IN THE LIGHT OF THE FACT THAT AS WHAT HAPP ENED ON THE DATE OF HEARING HAD NOT BEEN RECORDED IN THE ORDER SHEET OR ASSESSMENT ORDER BY THE AO. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 21 IT ALSO DOES NOT APPEAR PLAUSIBLE OR LEGALLY PERM ISSIBLE THAT THE AO WOULD HAVE PROCESSED THE CASE U/S 143(1 ) ON 28-03- 2006 WHEN THE NOTICE U/S 143(2) HAD ALREADY BEEN IS SUED MORE THAN ONE YEAR EARLIER I.E. 23-03-2005. (D) IT IS ALSO A FACT THAT A NOTICE U/S 148 FOR AS SESSMENT YEAR 1998-99 HAD BEEN ISSUED TO THE ASSESSEE AND THE SAI D RECEIPT HAS BEEN POSTED ON THE COPY OF THE 148 NOTICE. THEREFOR E IT CANNOT BE SAID THAT THE NOTICE DATED 23-03-2005 WAS SENT T HROUGH THIS RECEIPT NUMBER. (E) AS REGARDS THE LEGAL POSITION ONCE THE ASSESSE E HAD FILED AN AFFIDAVIT AND STATED ON OATH THAT THE NOTICE U/S 143(2) DATED 23-03-2005 HAD NOT BEEN SERVED ON HER ONUS WAS CAS T ON THE AO TO CROSS EXAMINE THE ASSESSEE AND BRING OUT THE FALSITY OF THE AVERMENTS IN THE AFFIDAVIT IF ANY. THIS HAS NO T BEEN DONE AND IT IS A POINTER TO THE FACT THAT THE AVERMENTS OF THE ASSESSEE HAVE TO BE TAKEN AS TRUE AND CORRECT. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES STATED ABOVE I AM OF THE OPINION THA T NOTICE U/S 143(2) HAD NOT BEEN SERVED ON THE ASSESSEE WITHIN T HE PERIOD OF 12 MONTHS FROM THE DATE OF FILING OF THE RETURN. IN SUCH FACTS AND CIRCUMSTANCES I AM LEFT WITH NO ALTERNATIVE BU T TO QUASH THE ASSESSMENT AS BAD IN LAW. THE AO IS DIRECTED ACCORD INGLY. 7. LEARNED DR ON THIS ISSUE REITERATED THE STAND TA KEN BY AO AND CONTENDS AS UNDER: (I) REVENUES BURDEN IS TO SHOW THAT NOTICE U/S 143(2) WAS ISSUED ON THE ASSESSEE ON THE BASIS OF RECORD WHICH IS COMPL IED WITH. (II) THERE IS NO PRESUMPTION THAT DEPARTMENTAL RECORD IS UNTRUE. (III) ORDER-SHEET IS A RECORD OF MINUTES OF PROCEEDINGS FOR WHICH NO PROFORMA IS PRESCRIBED AND ITS WRITING DEPEND ON OF FICER TO OFFICER ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 22 THEREFORE MERE NON-MENTIONING OF WORDS ON 23-3-05 ISSUE NOTICE U/S 143(2) AND HEARING FIXED FOR 10-4-2006 WILL N OT MAKE ASSESSMENT INVALID AS NOTICE EXISTS ON THE RECORD. . IN THIS CASE SINCE 148 PROCEEDINGS WERE ALSO TAKEN UP AGAINST AS SESSEE FOR A.Y. 1998-99 INSTEAD OF SENDING TWO SEPARATE ENVELOPES TO SAME ASSESSEE ONE ENVELOPE CONTAINING THESE 2 NOTICES I.E. NOTICE U/S 148 FOR A.Y. 1998-99 AND NOTICE DATED 23-3-05 U/S 1 43(2) FOR A.Y. 2004-05 WERE SENT TO ASSESSEE ON 24-3-2005 BY REGIS TERED POST AS MENTIONED BY AO. THEREFORE AS FAR AS DEPARTMENT IS CONCERNED THE NOTICE HAS BEEN PROPERLY ISSUED ON ASSESSEE BY RPAD. (IV) DURING THE COURSE OF REMAND PROCEEDINGS AO VIDE LE TTER DATED 3- 8-2007 MENTIONED AS UNDER: TO THE COMMISSIONER OF INCOME TAX (APPEALS)-I NEW DELHI. SIR SUB: APPEAL NO. 625/06-07 MS. MAYAWATI ASSTT. YEAR 2004-05 REGARDING KINDLY REFER TO YOUR OFFICE LETTER NO. 46 DATED 27- 07-2007 AND TELEPHONIC DISCUSSION HELD WITH YOU ON THE ABOV E CITED SUBJECT. YOU HAVE MENTIONED THAT THE AO HAS NOT MADE ANY ENT RY FOR ISSUE OF NOTICE U/S 143(2) DATED 23.03.2005 ON THE ORDER SHEET. IN THIS CONNECTION IT IS SUBMITTED THAT THE ASSESSMENT WAS COMPLETED BY MY PREDECESSOR AND IT HAS BEEN NOTICED THAT HE AHS NOT BEEN IN THE HABIT OF MAKING ENTRIES OF FIRS T NOTICE U/S 143(2) ON THE ORDER SHEET. I HAVE GONE THROUGH CERT AIN OTHER FILES AS WELL AS I AM COMPLETING ASSESSMENT FOR THE A.Y. 2005- 06 WHEREIN HE HAS NOT MADE ANY ENTRIES REGARDING IS SUE OF ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 23 NOTICE ON THE ORDER SHEET. YOU HAD DISCUSSED WITH M E ON TELEPHONE THAT RECEIPT OF REGISTERED POST HAS BEEN PASTED ON NOTICE U/S 148 ISSUED FOR THE ASSTT. YEAR 1998-99./ IN THIS CONNECTION IT IS STATED THAT THE NOTICE U/S 143(2) FOR ASSTT. YEAR 2004-05 AND NOTICE U/S 148 FOR ASSTT. YEAR 1998-99 WERE ISSUED ON 23.03.2005. AS THE AO HAS MADE AN ENTRY ON THE N OTICE U/S 143(2) THAT THE SAME HAS BEEN SENT BY REGISTERED PO ST AND THE RECEIPT IS AVAILABLE IN THE FILE FOR THE ASSTT. YEA R 1998-99. IT SEEMS THAT BOTH THE NOTICES MIGHT HAVE BEEN SENT IN THE SAME ENVELOPE UNDER REGISTERED POST. THE ASSESSEE IS A PUBLIC FIGURE AND WAS PRESIDENT O F A MASS BASED P-ARTY THE LETTERS RECEIVED BY POST ARE NOT OPENED BY HERSELF BUT BY HER STAFF. THEREFORE IT IS POSSI BLE THAT BOTH THE NOTICES MIGHT HAVE BEEN SENT IN THE SAME ENVELOPE. YOU HAVE ALSO STATED THAT THE ASSESSEE HAS STATED THAT THEY HAD ATTENDED THE ASSESSMENT PROCEEDINGS UNDER PROTEST. NO SUCH LETTE R IS AVAILABLE ON RECORD OR ENTERED IN THE ORDER SHEET. IT HAS ALSO NOT BEEN MENTIONED IN THE ASSESSMENT ORDER. AS DESIRED ASSESSMENT RECORDS FOR3 A.Y. 1998-99 IN TWO VOLUMES ARE BEING ENCLOSED HEREWITH FOR YOUR KIND P ERUSAL. YOURS FAITHFULLY SD/- (V.S. KAPOOR) DY. COMMISSIONER OF I. TAX CENTRAL CIRCLE-11 NEW DELHI. IT CLEARLY SUGGESTS THAT ASSESSEE STAFF MAY HAVE MI SPLACED THE NOTICE. (V) THE FINDING OF CIT(A) THAT SINCE THERE WAS NO MENTI ON OF NOTICE U/S 143(2) IN THE ORDER-SHEET NO SUCH NOTICE WAS I SSUED WAS ERRONEOUS. IT IS NOT THE CASE OF ASSESSEE THAT SHE WAS NOT HEARD DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE DE FICIENCY IF ANY AMOUNTS TO IRREGULARITY IN NOTICE AND NOT A FA TALITY SO AS TO QUASH THE ASSESSMENT. RELIANCE WAS PLACED ON THE DECISIONS IN THE CASES OF YAMA INDUSTRIES 306 ITR 309 (DEL.); AND SA NT BABA ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 24 MOHAN SINGH 90 ITR 197 (ALL.) AND OTHER CASE LAWS C ITED IN THE GROUNDS FOR THE PROPOSITION THAT SUCH MISTAKE AMOU NTS TO IRREGULARITY AND IS NOT FATAL TO THE PROCEEDINGS. (VI) IT WAS FURTHER PLEADED THAT AO ASSUMES JURISDICTION OF ASSESSMENT ON FILING OF RETURN WHICH IS APPLICABLE TO CASE O F THE ASSESSEE. MERELY BECAUSE THERE IS SOME IRREGULARITY IN THE PR OCESS OF DISPATCH OF NOTICE AND ASSESSEE WAS OTHERWISE FULLY HEARD AN D PARTICIPATED IN ASSESSMENT THIS IRREGULARITY WILL NOT QUASH THE ASSESSMENT PROCEEDINGS. RELIANCE IN THIS BEHALF IS PLACED ON THE DECISIONS IN THE CASES OF CIT V. GYAN PRAKASH 165 ITR 501 (RAJ.) ; AND INTERCRAFT INDIA 154 ITR 162 (DEL.). 7.1. IT WAS PLEADED THAT EXISTENCE OF NOTICE U/S 14 3(2) ON RECORD DEMONSTRATES COMPLIANCE OF PROVISIONS ALTERNATIVEL Y THE ISSUE BECOMES ONE OF CURABLE DEFICIENCY THEREFORE ASSESSMENT PROCEE DINGS BE HELD AS VALID. 7.2. COMING TO THE MERITS OF THE ADDITIONS IN THIS YEAR AS NON GENUINE GIFTS LEARNED DR CONTENDS THAT THOUGH FACTS OF THE ASSES SEES CASE ARE SIMILAR TO A.Y. 2003-04 WHICH HAVE BEEN DECIDED BY ITAT HOLDIN G THAT THE GIFTS WERE GENUINE HOWEVER RE RELIED ON ASSESSMENT ORDER HO LDING THE GIFTS TO BE NON- GENUINE AS HELD BY AO EARLIER. 8. IN REPLY LEARNED COUNSEL FOR THE ASSESSEE SHRI R AKESH GUPTA ADVERTING TO THE ISSUE OF NO SERVICE OF NOTICE U/S 143(2) WITHIN TIME LIMIT CONTENDS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 25 THAT COPY OF ORDER-SHEET PROVIDED BY THE DEPARTMENT REVEALS FOLLOWING ENTRIES:- OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 11 NEW DELHI. E-2 ARA CENTRE JHANDEWALAN EXTN. ROOM NO. 364 3 RD FLOOR NEW DELHI NAME & ADDRESS OF THE ASSESSEE : M/S MAYAWATI C-1/11 HANUMAN ROAD NEW DELHI. ASSTT. YEAR : 2004-05 21.07.2004 RETURN RECEIVED- PLACED ON FILE 28-03-2006 PROCESS U/S 143(1) OF THE I.T. ACT. 08-06-2006: ISSUE NOTICE U/S 143(2) 142(1) & QUESTIONNAIRE FOR HEARING ON 19-06-2006. 19-06-2006 SANDEEP NAGPAL CA ATTENDS AND REQUEST ADJOURNMENT. 04-08-2006: ISSUE NOTICE U/S 143(2) 142(1) FOR HE ARING ON 17-08-2006. 27-11-06: SH. SANDEEP NAGPAL CA ATTENDS FILES COPY OF BANK A/C. ADJ. TO 05-12-06. 13-12-06: SH. SANDEEP NAGPAL CA SENDS THE LETTER TH ROUGH SPECIAL MESSENGER. PLACE ON FILE. 15.12.06: SH. SANDEEP NAGPAL CA SENDS THE LETTER 05 .030 PM THROUGH SPECIAL MESSENGER. 22-12-06: SH. SANDEEP NAGPAL CA ATTENDS. FILES REQU EST FOR PHOTOCOPIES OF STATEMENT RECORDED EARLIER. 26-12-06: SH. SANDEEP NAGPAL CA ATTENDS. FILES LETT ERS DATED 23-12-06 AND 26-12-06. 27-12-06: SH. SANDEEP NAGPAL CA ATTENDS. FILES LETT ER DT. 26- 12-06. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 26 8.1. ON THIS BASIS LEARNED COUNSEL CONTENDS THAT:- (I) RETURN OF INCOME OF THE ASSESSEE WAS FILED ON 21-7- 2004. FOR A VALID ASSESSMENT U/S 143(3) NOTICE U/S 143(2 ) SHOULD BE SERVED ON THE ASSESSEE WITHIN ONE YEAR FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED I.E. 31-7-2 005. ACCORDING TO THE ASSESSEES CONSISTENT STAND NOTICE U/S 143(2) WAS ISSUED ON HER VIDE NOTICE DATED 8-6-200 6 FIXING THE HEARING ON 19-06-06 WHICH IS DULY RECORDED BY A O ON ORDER SHEET THIS IS CLEARLY TIME BARRED. NOTICE DA TED 23-3- 2005 AS ALLEGED BY THE AO IS NEVER RECEIVED BY ASSE SSEE AND IS NOT RECORDED BY AO IN HIS PROCEEDING SHEET. ON R ECEIPT OF THIS FIRST NOTICE U/S 143(2) DATED 8-6-2006 ASSESS EE FILED AN OBJECTION BEFORE AO VIDE LETTER DATED 1-7-06 CHALLE NGING THAT NOTICE DATED 8-6-06 WAS BARRED BY LIMITATION. (II) AO NEITHER REPLIED TO THIS OBJECTION NOR CONTRADICT ED ASSESSEES VERSION AND PROCEEDED TO FRAME ASSESSMEN T BY ASKING VARIOUS EXPLANATIONS RECORD AND CALLING FOR THE DONORS. THE ORDER-SHEET ENTRY IS A VITAL RECORD O F ANY INCOME-TAX PROCEEDINGS AS AO HAS TO RECORD ALL THE PROCEEDINGS ISSUANCE OF STATUTORY NOTICES INCLUDIN G COMPLIANCES ON THIS SHEET. IN THE ORDER-SHEET PRODU CED BY THE DEPARTMENT THERE IS NO MENTION OF ISSUANCE OF ANY NOTICE U/S 143(2) DATED 23-3-2005 FIXING DATE OF HEARING A FTER AN UNBELIEVABLE GAP OF 13 MONTHS ON 10-4-2006. ON THE CONTRARY ORDER SHEET HAS A CLEAR ENTRY ON 8-6-2006 ISSUE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 27 NOTICE U/S 143(2)/142(1) AND QUESTIONNAIRE FOR HEAR ING ON 19-6-2006. IT IS HIGHLY STRANGE ON THE PART OF THE DEPARTMENT TO TAKE A PLEA THAT IT IS NOT NECESSARY TO RECORD T HE ISSUANCE OF NOTICE U/S 143(2) DATED 23-3-05 WHEREAS ALL OTHER NOTICES INCLUDING U/S 143(2) DATED 8-6-04 ARE CONSP ICUOUSLY MENTIONED THEREON. THE ALLEGED NOTICE U/S 143(2) IS FURTHER CLAIMED TO BE SENT TO ASSESSEE IN SOME ENVELOPE ALO NG WITH OTHER NOTICE U/S 148 FOR A.Y. 1998-99 WHICH SEEMS UNBELIEVABLE JUSTIFICATION AS THIS IS NOT THE PRACT ICE OF THE DEPARTMENT TO SEND TWO SEPARATE PROCEEDINGS OF DIFF ERENT ASSESSMENT YEARS IN ONE ENVELOPE. (III) AO VIDE LETTER DATED 3-8-2007 ADDRESSED TO CIT(A) IN RESPECT OF ENQUIRY INTO THE TRUTH OF ISSUANCE & SER VICE OF THIS NOTICE AND ASSESSEES AFFIDAVIT HAS REPLIED AS UN DER: IT SEEMS THAT BOTH THE NOTICE MIGHT HAVE BEEN SENT IN THE SAME ENVELOPE UNDER THE REGISTERED POST. THIS REPLY ITSELF SHOWS THE SHAKY NATURE OF DEPARTM ENTS STAND ABOUT DISPATCH OF TWO NOTICES IN SAME ENVELOPE. 8.2. THE STAND OF THE DEPARTMENT ON ISSUE AND SERVI CE OF NOTICE U/S 143(2) DATED 23-3-05 IS UNBELIEVABLE; NEITHER SUCH NOTICE WAS ISSUED NOR SERVED ON ASSESSEE. DEPARTMENTS EXPLANATION HAS NO LEGS TO S TAND BECAUSE OF FOLLOWING ANOMALIES: (A) IF THERE IS NO NECESSITY TO RECORD ISSUANCE OF NOTI CE U/S 143(2) DATED 23-3-2005 ON THE ORDER-SHEET THEN WHY AO TOOK THE TROUBLE OF RECORDING ISSUANCE OF NOTICE U/S 143(2) ON 8-8-2006. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 28 (B) ACCORDING TO THE AO THE ALLEGED NOTICE WAS SERVED ON 23-3-2005 FIXING A DATE OF 8-2-2006 MEANING THERE BY THE AO ISSUED NOTICE U/S 143(2) FIXING THE CASE OF THE ASSESSEE AFTER AN UNHEARD GAP OF ABOUT 13 MONTHS WHICH IS HIGHLY IMPROBABLE. (C) ASSESSEES RETURN WAS PROCESSED U/S 143(1) ON 28-3- 2006 I.E. AFTER A PERIOD OF ABOUT ONE YEAR OF ALLEG ED ISSUANCE OF NOTICE U/S 143(2). ONCE NOTICE U/S 143( 2) IS ISSUED RETURN CANNOT BE PROCESSED U/S 143(1) WHIC H ALSO INDICATES THAT NO SUCH NOTICE U/S 143(2) WAS I SSUED ON 23-3-2005. (D) THE REGISTERED POSTAL RECEIPT PRODUCED BY LEARNED DR IS IN RESPECT OF NOTICE U/S 148 FOR A.Y. 1998-99 AN D NOT FOR A.Y. 2003-04. ASSESSEE NEVER RECEIVED NOTICE U/ S 143(2) DATED 23-3-05. AO WILL NEVER ISSUE TWO NOTIC ES OF DIFFERENT PROCEEDINGS FOR DIFFERENT ASSESSMENT Y EARS IN ONE ENVELOPE. THIS EXPLANATION IS CONCOCTED ON IMPROBABLE ASSUMPTIONS TO COVER THE LAPSES OF DEPARTMENT. (E) IF NOTICE DATED 23-3-2005 WAS SENT FIXING THE DATE OF 10-4-2006 AND AO FORGOT TO RECORD ENTRY IN THAT CA SE AT LEAST AN ENTRY OF 10-4-2006 I.E. DATE OF HEARIN G SHOULD HAVE BEEN MADE IN THE ORDER-SHEET WHICH CANNOT BE OMITTED FROM RECORDING. ITS ABSENCE CLEAR LY SUGGESTS THAT NEITHER SUCH NOTICE WAS ISSUED ON 23- 3- 2005 NOR ANY HEARING WAS FIXED ON 10-4-2006. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 29 (F) NOTICE DATED 23-3-2005 WAS NEITHER ISSUED NOR DISPATCHED AND IN ANY CASE NOT SERVED ON ASSESSEE INASMUCH AS NO EVIDENCE OF SERVICE OF NOTICE U/S 14 3(2) HAS BEEN BROUGHT ON RECORD AND ASSESSES AFFIDAVIT STANDS UNCONTROVERTED. EXCEPT A MAKE BELIEVE STORY THAT NOTICE MIGHT HAVE BEEN SENT ALONG WITH NOTICE U/S 148 FOR A.Y. 1998-99 NO OTHER RECORD HAS BEEN SHOW N TO SUPPORT DEPARTMENTS SHAKY EXPLANATION. (G) THE AOS USE OF WORD MIGHT IN REMAND REPORT ITSE LF INDICATES THAT IT IS A WEAK ATTEMPT TO LEGITIMIZE A TIME BARRED NOTICE. (H) THE INCONSISTENT CIRCUMSTANCES NON-ADJUDICATION O F ASSESSEES OBJECTIONS MISSING ORDER SHEET ENTRIES AND UNSATISFACTORY REPLY BY AO CLEARLY INDICATE THAT NO SUCH NOTICE U/S 143(2) DATED 23-3-05 WAS ISSUED AT ALL BY AO. IN REMAND PROCEEDINGS ASSESSEES AFFIDAVIT WAS DULY SENT BY CIT(A) TO AO WHICH IS AVAILABLE O N RECORD TOGETHER WITH ASSESSEES OBJECTION LETTER. A OS LETTER DATED 3-8-07 DOES NOT REPRESENT CORRECT FACT S. THE ASSESSEES OBJECTION WAS NEVER DEALT AND WAS NE VER CROSS-EXAMINED. (I) UNDER THESE CIRCUMSTANCES BURDEN OF PROOF IS SQUAR ELY ON THE DEPARTMENT TO DEMONSTRATE THAT ALLEGED NOTIC E DATED 23-3-2005 U/S 143(2) WAS IN FACT ISSUED DULY SERVED ON THE ASSESSEE AND IT WAS ACTED UPON BY AO ACCORDING TO USUAL AND NORMAL OFFICE PROCEDURE. PRO OF OF SERVICE OF NOTICE IS CONSPICUOUSLY MISSING RELE VANT ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 30 ENTRIES IN PROCEEDING SHEET ARE DEMONSTRATIVELY MISSING AO NEITHER DEALS WITH OBJECTION FILED ON H ER FIRST NOTICE NOR CONTROVERTS THE AFFIDAVIT. AS A STANDARD AND NORMAL PROCEDURE AO WOULD HAVE IMMEDIATELY REJECTED THE ASSESSEES OBJECTION ON THE GROUND THA T NOTICE DATED 8-6-2006 WAS A SECOND NOTICE AND EARLI ER NOTICE U/S 143(2) DATED 23-3-05 WAS ALREADY ISSUED AND SERVED ON THE ASSESSEE WHICH WAS WITHIN TIME. AOS MYSTERIOUS SILENCE ON ALL THESE VITAL ISSUES DATES AND RECORD CLEARLY DEMONSTRATE THAT NO NOTICE DATED 23- 3- 2005 WAS EVER ISSUED OR IN THE LEAST SERVED ON ASSE SSEE. WHAT THE DEPARTMENT HAS NOW PRODUCED IS NEITHER ANY SATISFACTORY PROOF OF SERVICE NOR ANY INDEPENDENT P ROOF OF DISPATCH FOR A.Y. 2004-05. MERELY BY PASTING A PHOTO COPY OF POSTAL SLIP FOR A.Y. 1998-99 ON ALLEG ED ANTE DATED NOTICES FOR 2004-05 DEPARTMENT IS PROPOSING AN UNBELIEVABLE AND IMPROBABLE STAND. EVEN IF IT IS ASSUMED THAT THIS NOTICE WAS SENT BY AO IN THAT CASE THERE IS NEITHER PROOF OF SERVICE ON THE ASSESSEE NOR ANY NOTING OF PROCEEDING ON 10-4-06 I. E. DATE OF HEARING AFTER 13 MONTHS. (J) NO PRESUMPTION CAN BE DRAWN THAT A NOTICE ISSUED IS A NOTICE SERVED. (K) AS PER ORDER-SHEET ASSESSMENT HAS BEEN FRAMED ON T HE BASIS OF TIME BARRED NOTICE DATED 8-6-06 WHICH IS CLEARLY TIME BARRED. FOLLOWING AUTHORITIES HAVE HEL D THAT IF NOTICE U/S 143(2) IS NOT SERVED IN TIME TH E ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 31 ASSESSMENT IS BAD IN LAW AS IT VIOLATES STATUTORY MANDATE OF SECTION 143(2). FOLLOWING CASE LAWS ARE RELIED ON FOR MANDATORY SER VICE OF NOTICE U/S 143(2) WITHIN PRESCRIBED TIME: (1) CIT VS. HOTEL BLUE MOON 35 DTR 1 (SC) 229 CTR 2 19 (2) CIT VS PAWAN GUPTA 318 ITR 322 (DEL) (3) CIT VS. VARDHMAN ESTATE (P) LTD. 287 ITR 368(DEL) (4) CIT VS BHAN TEXTILES (P) LTD. 287 ITR 370(DEL) (5) DCIT V. MAHI VALLEY HOTELS AND RESORTS 287 ITR 36 0 (GUJ.) (6) CIT VS. M.CHELLAPPAN 281 ITR 444(MAD) (7) CIT VS. CEBON INDIA LTD. 34 DTR 119(P&H) 8.3. HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) HAS HELD AS UNDER: HOWEVER IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158BC NOTICE UND ER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FRO M THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PAR T OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 1 43(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND THEREFORE THE REQUIREMENT OF NOTICE U NDER SECTION 143(2) CANNOT BE DISPENSED WITH. 8.4. HONBLE DELHI HIGH COURT IN THE CASE OF PAWAN GUPTA 318 ITR 322 HAS CLEARLY HELD THAT PROVISION OF SECTION 143(2) A RE MANDATORY IN NATURE WHETHER LOOKED FROM THE STAND POINT OF REGULAR ASSE SSMENT OR FROM THE STAND ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 32 POINT OF BLOCK ASSESSMENT UNDER CHAPTER XIV-B AND I SSUANCE OF A PROPER NOTICE IS A PRE-REQUISITE CONDITION FOR COMPLETING A VALID ASSESSMENT AND AN ASSESSMENT ORDER IN VIOLATION OF PROVISION OF SECTI ON 143(2) WOULD BE INVALID AND NOT MERELY IRREGULAR. 8.5. IN VIEW OF THESE JUDGMENTS IT IS A SETTLED PR OPOSITION THAT IF THE NOTICE U/S 143(2) IS NOT ISSUED WITHIN ONE YEAR FROM THE E ND OF THE MONTH IN WHICH RETURN IS FILED OMISSION ON THE PART OF AO TO ISSU E NOTICE U/S 143(2) CANNOT BE HELD AS PROCEDURAL IRREGULARITY AND IS NOT CURAB LE. NOTICE DATED 8-6-2006 BEING CLEARLY TIME BARRED CIT(A) HAS RIGHTLY QUASH ED THE ASSESSMENT FOLLOWING VARIOUS JUDICIAL PRECEDENTS. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN ISSUE WHICH DESERVES TO BE DECIDED IS WHETHER THE FIRST NOTICE ISSUED U/S 143(2) WAS DATED 8-6-2006 AS CONT ENDED BY ASSESSEE OR 23- 3-2005 AS ALLEGED BY THE DEPARTMENT. 9.1. IN OUR VIEW THE ORDER-SHEET CONSTITUTES A VER Y IMPORTANT RECORD ASSESSMENTS ARE QUASI JUDICIAL AND APPEALABLE PROC EEDINGS IT IS IMPERATIVE THAT AO WILL RECORD PROPER ENTRIES ABOUT MINUTES O F PROCEEDINGS INCLUDING INVOKING OF ANY JURISDICTION EXERCISE OF ANY STATU TORY POWER ISSUING NOTICE FIXING DATE OF HEARING OUTCOME ON DATE OF HEARING AND ATTENDANCE ETC. WE ARE UNABLE TO AGREE WITH THE LEARNED DR THAT THE RE CORDING OF ENTRIES VARIES ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 33 FROM OFFICER TO OFFICER AND ASPECTS OF NON-MENTIONI NG OF ISSUE OF IMPUGNED NOTICE U/S 143(2) DATED 23-3-05AND FIXATION OF DAT E OF HEARING AFTER A VERY LONG TIME OF 13 MONTHS ON 10-4-2006 SHOULD BE IGNOR ED. ENTRIES IN ORDER- SHEET SHOULD BE ENSURED TO BE MAINTAINED IN A CHRON OLOGICAL AND TRUTHFUL ORDER OF THE SEQUENCE EVENTS AND HAPPENINGS DURING THE EXERCISE OF ASSESSMENT BY AO WHO IS A QUASI-JUDICIAL OFFICER. T HIS IS TO MAINTAIN TRANSPARENCY IN PROCEEDINGS AND AVOID ANY SUBSEQUEN T INTERFERENCE OR TEMPERING WITH THE RECORD. THE PLEA OF THE DEPARTME NT THAT BECAUSE AO WAS CONTEMPLATING ISSUANCE OF NOTICE U/S 148 FOR A.Y. 1 998-99 HE HAD SIMULTANEOUSLY ISSUED BOTH NOTICES ON 24-3-2005 B OTH WERE SENT BY REGISTERED POST IN ONE ENVELOPE IS UNUSUAL AND SUR PRISING. THERE IS NO ACKNOWLEDGMENT OR RECORD SUGGESTING THE SERVICE OF NOTICE FOR A.Y. 2004- 05. IN OUR VIEW IF THE AO ISSUED NOTICE IN THAT CASE ATLEAST PROCEEDINGS OF HEARING ON 10-4-2006 WOULD HAVE BEEN NOTED ON ORDER -SHEET AS A NATURAL PROCEDURE. A QUASI JUDICIAL OFFICER WILL NOT FIX A DATE OF HEARING AND FORGET TO TAKE UP PROCEEDINGS ON THAT DAY. NON ATTENDANCE OF STATUTORY NOTICE LEADS TO PENALTY U/S 271(1)(B) AND ISSUE OF A FURTHER REGIST ERED NOTICE FOR HEARING. ALL THESE NATURAL HAPPENINGS ARE CONSPICUOUSLY MISSING FROM THE DEPARTMENTAL RECORD. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 34 9.2. WE WOULD NOW LIKE TO EXAMINE ASSESSEES EXPLA NATION WHO CLAIMS THAT FIRST NOTICE U/S 143(2) WAS RECEIVED ON 8-6-20 06 AND ON RECEIPT THEREOF ASSESSEE OBJECTED THAT THIS NOTICE WAS TIME BARRED . AO DID NOT ADJUDICATE THE SAME AND ASSESSMENT PROCEEDINGS WENT ON AS PER THE EVENTS SUGGESTED BY ORDER-SHEET. ASSESSEE HAS TAKEN THIS CONSISTENT STA ND THROUGH OUT INCLUDING AN AFFIDAVIT WHICH EXIST ON RECORD SAME WERE DULY FORWARDED TO AO BY CIT(A) IN REMAND PROCEEDINGS. AOS COMMENTS ARE NO T FOUND TO BE CORRECT. 9.3. AOS NON-MAINTENANCE OF PROPER ORDER SHEET SE EMINGLY IMPLAUSIBLE STAND THAT THE NOTICE DATED 23-3-2005 MIGHT HAVE BE EN SENT WITH 148 NOTICE FOR A.Y. 1998-99 FIXATION OF HEARING AFTER A LAPS E OF YEAR ON 10-4-2006 NON-RECORDING OF SUCH HEARING AND FOLLOW UP ACTION FRAMING OF ASSESSMENT U/S 143(1) AFTER ISSUE OF 143(2) NOTICE AND UNRELIA BLE COMMENTS SENT TO CIT(A) ALL THESE INCONSISTENCIES AND ABNORMALITIE S CANNOT BE HELD AS COINCIDENCES OR VARIATION IN DISCRETION FROM OFFICE R TO OFFICER IN IMPORTANT QUASI JUDICIAL MATTERS LIKE ASSESSMENT. 9.4. CONSEQUENTLY WE ARE UNABLE TO TAKE COGNIZANCE OF NOTICE U/S 143(2) DATED 23-3-2005 AND HOLD THAT IT WAS ISSUED AND SE RVED ON THE ASSESSEE. THE NOTICE DATED 23-3-2005 IS NEITHER SATISFACTORILY ES TABLISHED TO HAVE BEEN ISSUED NOR RECEIVED BY ASSESSEE. WE HOLD THAT NOTIC E DATED 8-6-2006 WAS THE FIRST NOTICE RECEIVED BY ASESSEE WHICH IS RECEIVED BY HER AFTER THE STATUTORY ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 35 TIME LIMIT U/S 143(2) AND WAS DULY OBJECTED UPON. S INCE THIS NOTICE U/S 143(2) IS CLEARLY TIME BARRED RELYING ON SUPREME COURT JUDGMENT IN THE CASE OF HOTEL BLUE MOON (SUPRA) AND THAT OF DELHI H IGH COURT IN THE CASE OF PAWAN GUPTA (SUPRA) WE HOLD THAT CIT(A) WAS CORRE CT IN QUASHING THE ASSESSMENT AS INVALID SINCE WE ARE FOLLOWING HONB LE SUPREME COURT AND DELHI HIGH COURT JUDGMENTS WE WILL NOT DWELL INTO O THER CASES CITED. 9.5. COMING TO MERITS OF THE CASE THE ISSUES ABOUT GENUINENESS OF GIFTS ARE ALREADY ACCEPTED IN FAVOUR OF THE ASSESSEE BY THE EARLIER ORDER OF THE ITAT IN HER OWN CASE FOR A.Y. 2003-04. FOR THE IMPUGNED ASSESSMENT YEAR I.E. A.Y. 2004-05 FACTS AND CIRCUMSTANCES ARE CLAIMED T O BE SAME AS IN A.Y. 2003-04 BY BOTH PARTIES. UNDER THESE CIRCUMSTANCES RELYING ON ITAT JUDGMENT IN ASSESSEES OWN CASE WE UPHOLD THE ORDE R OF CIT(A) ON MERITS ALSO ACCEPTING THE GIFTS RECEIVED TO BE GENUINE. IN VIEW THEREOF REVENUES VARIOUS GROUNDS CHALLENGING GENUINENESS OF THE GIFT ARE ACCORDINGLY DISMISSED. A.Y. 2005-06 & 2006-07 : 10. FACTS RELEVANT TO THESE YEARS ARE THAT ASSESSEE RECEIVED GIFTS FROM VARIOUS DONORS OUT OF WHICH GIFTS IN EXCESS OF R S.25000/- EACH WERE OFFERED TO TAX IN THE RETURN OF INCOME BY THE ASSES SEE AS INCOME FROM OTHER SOURCE UNDER SEC. 56(2)(V) OF THE I T ACT. THE BAL ANCE AMOUNTS COMPRISING OF RS.25000/- EACH OR LESS WERE TAXED BY A.O. IN BO TH THE ASSESSMENT YEARS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 36 IN THE HANDS OF THE ASSESSEE AS INCOME FROM THE VO CATION OF POLITICS U/S 28 DETAILS WHEREOF ARE AS UNDER: A.Y. TOTAL GIFTS OFFERED BY ASSESSEE U/S 56(2)(5) GIFTS UP TO RS. 25 000/- 2005-06 3 85 22 102 1 20 49 590 2 64 72 512 2006-07 21 62 91 844 1 28 99 016 20 33 92 828 10.1. CIT(A) AFTER CONSIDERING THE AOS ORDER ASSE SEES EXPLANATION CONFIRMATIONS AFFIDAVITS AND STATEMENTS OF DONEES APPRECIATION OF CASE LAWS RELIED ON BY AO AND ASSESEE HELD THAT THE GIF TS RECEIVED WERE PERSONAL IN NATURE AND NOT VOCATIONAL INCOME. BESIDES GIFTS RECEIVED BEING OF SIMILAR NATURE CAN NOT TO BE SPLIT INTO TWO DIFFERENT HEADS OF INCOME I.E. ABOVE RS. 25 000/- AS INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCE U/S 56(2)(V) AND UPTO RS. 25 000/- AS INCOME FROM BUSINESS OR P ROFESSION U/S 28 RELEVANT OBSERVATIONS FROM CIT(A)S DETAILED ORDER (TAKEN FROM AY2006-07) ARE AS UNDER: 7. I HAVE GONE THROUGH THE FACTS OF THE CASE SUBMI SSIONS MADE BY THE APPELLANT AND THE COMMENTS OF THE ASSES SING OFFICER AND COUNTER REPLY OF THE APPELLANT. I GAVE THE FOLLOWING FINDINGS WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2005-06 IN APPEAL NO.333/07-08:- THE ASSESSING OFFICER HAS MENTIONED IN THE ORDER TH AT AFFIDAVITS WERE FILED BY VIRTUALLY ALL THE DONORS R EAFFIRMING THE FACT OF GIFT FURNISHED PROOF OF THEIR IDENTITY AND DETAILS REGARDING SOURCE OF THEIR INCOME. THE A.O. HAS ALSO ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 37 OBSERVED THAT NO ADVERSE INFERENCE IS TAKEN IN THIS ASSESSMENT YEAR REGARDING THE GENUINENESS OF THE GI FTS. THE ASSESSING OFFICER HAS DEALT THE GIFTS IN TWO PA RTS. THE GIFT BELOW RS.25 000/- AND ABOVE RS.25 000/-; THE A .O. HAS ADDRESSED A QUESTION TO HIMSELF IN PARA 39 OF T HE ORDER THAT WHAT HAPPENS TO THE GIFT OVER RS.25 000/- IF THE GIFTS BELOW THE SAME ARE BEING ASSESSED AS INCOME FROM BU SINESS AND PROFESSION? HE ANSWERED TO HIMSELF THAT I BELIE VE THAT SINCE THE SAME HAVE BEEN OFFERED FOR TAXATION UNDER A SPECIFIC PROVISION OF THE STATUTE THE FINDING THAT THE GIFTS ARE THE ASSESSEES INCOME FROM VOCATION OF POLITICS WILL NOT CHANGE THE STATUS OF THE GIFT OFFERED FOR TAXATION UNDER 56(2)(V). THE ASSESSING OFFICER RELIED ON THE CASE OF COMMISS IONER OF EXPENDITURE TAX VS.P. V.G.RAJU 101 ITR 465(1975) FOR POLITICS TO BE A PROFESSION. AM. MENTIONED THAT A P ERUSAL OF THE RETURNS OF THE ASSESSEE IS ENOUGH TO CONVINCE U S THAT THE ASSESSEE IS A POLITICIAN BY VOCATION IF NOT PROFESS ION. IT IS ALSO MENTIONED THAT SHE DREW SALARY INCOME AS AN HO NBLE MEMBER OF PARLIAMENT THE ASSESSEE IS ALSO NOT KNOWN FOR CONTRIBUTION TO ANY OTHER FIELD OF ACTIVITY. THE A. 0. HAS FURTHER MENTIONED THAT IN THE CASE OF P.KRISHNA MENON VS. COMMISSIONER OF INCOME TAX; MYSORE TRAVANCORE-COCHIN COORG AND BANGALORE 35 I TR 48 THAT ANY GIFT THAT ACCRUE TO A PERSON BY VIRTUE OF THE OFFICE THAT HE HOLDS OR THE VOCATION THAT HE PURSUE S SHOULD BE REGARDED AS HIS INCOME FROM VOCATION OR PROFESSI ON. REGARDING QUID PRO QUO THE A.O. RELIED ON THE JUDGMENT OF P.KRISHNA MENON (SUPRA) AMRENDRA NATH CHAKRABORTY 79 ITR 342 AND RAM KRIPAL TRIPATHI 125 ITR 408. THE AM. HAS MENTIONED AT PAGE 13 OF THE ORDER AS UNDER: ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 38 THE GRATITUDE WHICH THE ASSESSEE REFERS TO IS IN R ELATION TO WHAT HER FOLLOWERS PERCEIVE SHE HAS DONE FOR THEM I .E. BRING ABOUT SOCIAL REVOLUTION AND CHANGE IN MINDSET OF SO CIETY TOWARDS THE DOWNTRODDEN. THIS HAS OBVIOUSLY BROUGHT MENTAL HAPPINESS TO THEM AND THAT IS WHY THEY FEEL A SENSE OF GRATITUDE TO HER. THE USE OF THE WORD GRATITUDE BY THE ASSESSEE IS INDICATIVE OF THE TRUE POSITION. ONE DO ES NOT HAVE A SENSE OF GRATITUDE FOR THE PERSONA! QUALITIE S OF A PERSON. GRATITUDE ONLY FLOWS FROM THE PERCEPTION TH AT SOMETHING GOOD HAS BEEN DONE FOR THEM. THIS MAY BE IN MATERIAL TERMS. IT MAY BE INTANGIBLE BUT THIS PERCE PTION OF THE DEED DONE IS THE QUID PRO QUO WHICH THE ASSESSE E HAS DONE FOR HER POLITICAL SUPPORTERS AND WHICH MAKES T HE GIFTS TO HER DIRECTLY LINKED TO HER VOCATION OF POLITICS (WHICH AS PER HER OWN ADMISSION IS CLOSELY LINKED TO HER PURS UIT OF SOCIAL REFORM) AND HER POSITION AS HEAD OF THE BAHU JAN SAMAJ PARTY THE GIFTS ARE THEREFORE TAXABLE IN HER HANDS AS INCOME FROM THE VOCATION OF POLITICS. IT WAS ARGUED THAT THE CASE LAWS RELIED UPON BY THE A.O. ARE NOT APPLICABLE ON THE FACTS OF THE CASE OF THE APPE LLANT. FURTHER A.O. CANNOT GIVE TWO DIFFERENT TREATMENTS T O THE GIFTS RECEIVED BY THE APPELLANT. IN THE CASE OF P. V. G.RAJU THE FOLLOWING TWO QUEST IONS WERE BEFORE THE HONBLE SUPREME COURT: (1). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE EXPENDITURE OF RS.38 832/- CLAIMED TO BE THE AMOUNT INCURRED BY THE ASSESSEE FOR THE BENEFIT OF OTHER CANDIDATES FOR ELECTION IS EXCLUDIBLE FROM THE TAXA BLE EXPENDITURE EITHER UNDER SECTION 5(A) OR UNDER SECT ION 5(1) OF THE EXPENDITURE TAX ACT? (2). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SUM OF RS.47 867/- CLAIMED TO BE PARTY EX PENSES COULD BE EXCLUDED FROM THE TAXABLE EXPENDITURE OF T HE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 39 ASSESSEE EITHER UNDER SECTION 5(A) OR UNDER SECTION 5(1) OF THE EXPENDITURE. TAX ACT? THE HONBLE SUPREME COURT HELD AS FOLLOWS AS PER T HE HEAD NOTE: (I).THAT WHAT THE RESPONDENT EXPENDED FOR OTHER CA NDIDATES DURING THE ELECTIONS WAS DONATION WITHIN THE MEAN ING OF SECTION 5(J) OF THE EXPENDITURE TAX ACT 1 958. (II).THAT THE AMOUNTS PAID BY THE RESPONDENTS TO HI S PARTY WERE PAID PURELY AS GIFTS AND DONATIONS AND WERE AL SO EXEMPT UNDER SECTION 5(J) OF THE ACT WHEN A PERSON GIVES MONEY TO ANOTHER WITHOUT ANY MATERIAL RETURN HE DONATES THAT SUM. AN ACT BY WH ICH THE OWNER OF A THING VOLUNTARILY TRANSFERS THE TITLE A ND POSSESSION OF THE SAME FROM HIMSELF TO ANOTHER WIT HOUT ANY CONSIDERATION IS A DONATION. THE HOPE OF SPIRITUAL BENEFIT OR POLITICAL: GOOD WI LL THE SPONTANEOUS AFFECTION THAT BENEFACTION BRINGS THE POPULARIZATION OF A GOOD CAUSE OR THE PRESTIGE THAT PUBLICIZED BOUNTY FETCHES THESE AND OTHER MYRIAD CONSEQUENCES OR FEELINGS MAY NOT MAR A DONATION TO MAKE IT A GRANT FOR A QUID PRO QUO. WHOLLY MOTIVELESS DONAT ION IS RARE BUT MATERIAL RETURN ALONE NEGATES A GIFT OR D ONATION. THE HONBLE COURT ALSO OBSERVED IN THE ORDER AS UND ER: THE NEXT ITEM RELATES TO SUMS GIVEN TO THE SOCIALI ST PARTY. IT IS REASONABLE TO ASSUME THAT THE AMOUNTS PAID TO THE OFFICE BEARERS OF THE PARTY WERE WITHOUT ANY EYE ON ANY MATERIAL RETURN OTHER THAN ROYALTY OR GRATITUDE. TH EY. WERE OUTRIGHT. GIFTS. INDEED MANY RICH PEOPLE OUT OF DI VERSE MOTIVES MAKE DONATIONS TO POLITICAL PARTIES. THE HO PE OF SPIRITUAL BENEFIT OR POLITICAL GOODWILL THE SPONTA NEOUS AFFECTION THAT BENEFACTION BRINGS THE POPULARIZATI ON OF A ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 40 GOOD CAUSE OR THE PRESTIGE THAT PUBLICIZED BOUNTY F ETCHES- THESE AND OTHER MYRIAD CONSEQUENCES OR FEELINGS MAY NOT MAR A DONATION TO MAKE IT A GRANT FOR A QUID PRO QU O. WHOLLY MOTIVELESS DONATION IS RARE BUT MATERIAL RE TURN ALONG NEGATES A GIFT OR DONATION. WE NEED NOT INVES TIGATE THE PROPRIETY OF POLITICAL DONATIONS UNLIMITED AN D OFTEN INVISIBLE. ALL THAT WE NEED CONSIDER IS WHETHER SUC H . SUMS ARE GIFTS AND DONATIONS OR ARE NON-GRATUITOUS PAYME NTS WITH A TAG OF RETURN. WE HAVE NO DOUBT THAT ON THE QUEST ION AS FRAMED AND ON THE FACTS AND CIRCUMSTANCES PRESENT THESE SUMS WERE PAID PURELY AS G4FTS AND DONATIONS TO HIS PARTY BY THE RESPONDENT IT IS .NOT SURPRISING EITHER BEC AUSE HE WAS THE CHAIRMAN OF THE SAID PA HAD A LONG AND LIBE RAL PURSE FROM WHICH TO DRAW AND A LARGE CIRCLE OF SUPPORT TO BUILD UP IN THE LONG RUN. IT CAN BE SEEN THAT THE HONBLE COURT HELD THAT TH ESE SUMS WERE PAID PURELY AS GIFTS AND DONATIONS TO HIS PART Y BY THE RESPONDENT HONBLE SUPREME COURT AFFIRMED THE VIEW OF HONBLE ANDHRA PRADESH HIGH COURT IN P. V.G.RAJU VS. COMMISSIONER OF EXPENDITURE TAX (1971) 079 ITR 0430(AP) HON WE ANDHRA PRADESH HIGH COURT IN THE SAID ORDER MEANING AS PER HEAD NOTE AS UNDER: SINCE AN OCCUPATION IS THAT WITH WHICH A PERSON OCCUPIES HIMSELF; THERE IS NO REASON WHY POLITICS CANNOT BE AN OCCUPATION PROVIDED IT IS TAKEN UP AS A CAR EER THOUGH A PROFIT MOTIVE IS ABSENT IN POLITICS PROFI T MOTIVE IS NOT AN ESSENTIAL REQUISITE OF OCCUPATION FOR A PE RSON WELL ENDOWED WITH THE GOODS OF THE WORLD MAY PREFER TO PURSUE A PROFESSION OR OCCUPATION WITHOUT RECEIVING ANY REMUNERATION FOR HIS SERVICES. THE CASE OF P. V. G.RAJU WAS REFERRED BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS.RAJA ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 41 MANICKAM(S.A.) (1984) 149 ITR 0085. THE HEAD NOTE MENTIONS AS UNDER:- A COMMITTEE CONSISTING OF THE PAYMENT OF A POLITIC AL PARTY OF WHICH THE ASSESSEE WAS AN ACTIVE MEMBER A ND HELD VARIOUS OFFICES COLLECTED DONATIONS FROM THE MEMBE RS OF THE PARTY BUSINESSMEN AND PUBLIC AND ALSO ARRANGED A DRAMA FOR THE PURPOSE OF DONATING A PURSE TO THE A SSESSEE. ACCORDINGLY A PURSE CONTAINING RS.56 000/- WHICH IN CLUDED A SUM OF RS.5 000/- GIVEN BY THE ASSESSEES FORMER EMPLOYER WAS PRESENTED TO THE ASSESSEE WHO HANDED O VER THE SAME TO THE COMMITTEE WITH. A REQUEST TO PURCH ASE A HOUSE FOR HIM WITH THE SAID FUND. ACCORDINGLY A HOU SE WAS PURCHASED FOR RS 72 000/-. THE 1T0. THE ITO HELD T HAT THE SUM OF RS. 51 000/- OUT OF THE AMOUNT GIVEN TO THE ASSESSEE BY HIS ADMIRERS WOULD CONSTITUTE INCOME RECEIVED BY THE ASSESSEE IN THE COURSE OF HIS VOCATION AS A POLITIC IAN. THE AAC ON APPEAL ACCEPTED THE CLAIM OF THE ASSESSEE TH AT THIS SUM OF RS.51 000/-. WAS ONLY IN THE NATURE OF A PER SONAL GIFT TO HIM BY HIS ADMIRERS AND ACCORDINGLY DIRECTE D THE DELETION OF THE AMOUNT AND THIS WAS CONFIRMED BY TH E TRIBUNAL. ON A REFERENCE: HELD THAT THERE BEING NO EVIDENCE TO SUBSTANTIATE THE CONTENTION THAT THE AMOUNT WAS PAID TO THE ASSESSEE AS REMUNERATION FOR HIS SERVICE TO ANY PARTICULAR INDI VIDUAL OR TO THE POLITICAL PARTY THE AMOUNT COULD ONLY BE TR EATED AS A GIFT OR A WINDFALL RECEIVED BY THE ASSESSEE FOR HIS PERSONAL QUALITIES. THERE WAS NO QUID PRO QUO IN THE PAYMENT OF THE DONATION MADE BY THE GENERAL PUBLIC THE FORMER EMP LOYER AND THE PARTYMEN. CONSEQUENTLY THE TRIBUNAL WAS RI GHT IN ITS VIEW AND THE SUM OF RS.51 000/- WAS NOT TAXABLE AS THE ASSESSEES INCOME. THE HONBLE HIGH COURT ALSO OBSERVED FOR RECEIPT AN D DONATIONS AS UNDER: ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 42 THEREFORE WE CANNOT ADOPT TWO STANDARDS ONE FOR THE EXPENDITURE AND THE OTHER FOR THE RECEIPT OF DONATI ONS MADE OR RECEIVED BY THE POLITICIANS WHEN THE SUPREME CO URT IS OF THE VIEW THAT SUCH DONATIONS MADE OR RECEIVED IS ONLY A VOLUNTARY GIFT AND NOT OTHERWISE AS A RETURN FOR SU CH DONATIONS. ON THE ANALOGY OF THE ABOVE CASE IN THE PRESENT CASE ALSO THE AMOUNT PAID TO THE ASSESSEE IS NOT I N RETURN FOR ANY SPECIFIED OR GENERAL SERVICE RENDERED BY TH E ASSESSEE BUT ONLY IN RECOGNITION OF HIS PERSONAL Q UALITIES THERE IS NO QUID PRO QUO IN THE PAYMENT OF DONATION MADE BY THE GENERAL PUBLIC FOR MER EMPLOYER AND THE PARTYMEN. FURTHER HONBLE HIGH COURT STATED AS. UNDER REGARDI NG TAXABILITY:- AT P.238 IN VOL.1 7TH EDIT. OF KANGA AND PALKHIVAL A S THE LAW AND PRACTICE OF INCOME TAX THE AUTHORS HAVE EXPRESSED THE FOLLOWING VIEW:- BUT A RECEIPT DOES NOT NECESSARILY ARISE FROM THE EXERCISE OF A PROFESSION OR VOCATION MERELY BECAUSE THE PROF ESSION OR VOCATION AFFORDS THE OPPORTUNITY FOR EARNING THE RECEIPT A GOLDEN HANDSHAKE GIVEN AS GIFT BY A COMPANY TO I TS AUDITORS WHOSE APPOINTMENT WAS NOT RENEWED WAS HELD NOT TO BE A PROFESSIONAL RECEIPT AS AGAINST SUCH PREPONDERANT MATERIALS AND CIRCUMST ANCES IN FAVOUR OF THE ASSESSEE THAT THE PRESENT OF RS.51 .000/- TO THE ASSESSEE AMOUNTED TO A WINDFALL OR GIFT FOR HIS PERSONAL QUALITIES THOUGH HIS PROFESSION OR VOCATION AS A P OLITICIAN HAS ALSO CONTRIBUTED OR AFFORDED AN OPPORTUNITY FOR EARNING SUCH A PRESENT THERE IS ABSOLUTELY NO MATERIAL WHAT SOEVER ON THE SIDE OF THE REVENUE PLACED EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE THE TRIBUNAL TO DECIDE THAT T HE SAID PRESENT WILL AMOUNT TO A RECEIPT ARISING FROM THE E XERCISE OF ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 43 A PROFESSION OR VOCATION OR OCCUPATION WHICH IS EX IGIBLE TO INCOME TAX IN THE CASE OF CHITRARASU (CP.) VS. COMMISSIONER OF INCOME TAX [1986] 160 ITR 0534 HON'BLE MADRAS HIGH COURT HELD AS UNDER:- HELD-THAT MERELY BECAUSE A MEMBER OF A POLITICAL P ARTY RECEIVED GIFTS THE AMOUNT OF THE GIFT WOULD NOT N ECESSARILY BECOME INCOME BY WAY OF REMUNERATION FOR THE SERVIC ES RENDERED AS A MEMBER OF THE PARTY TO HOLD THAT MERELY BECAUSE THE ASSESSEE WAS THE MEMBER OF THE DMK PARTY AND WIELDED INFLUENCE THE PEOPLE COLLECTED FUNDS WAS TO IGNORE THE POSITIVE C ASE OF THE ASSESSEE THAT HIS SERVICES TO TAMIL AND HIS PER FORMANCE AS AN AUTHOR HAD EARNED HIM THE RESPECT OF THE PEO PLE. A RECEIPT DOES NOT NECESSARILY ARISE FROM THE EXERCIS E OF A PROFESSION OR VOCATION: THE TRIBUNAL WAS THEREFORE NOT RIGHT IN ITS CONCLUSION THAT THE SUM OF RS. 48 176/ - WAS LIABLE TO TAR AS INCOME ARISING FROM VOCATION OR OC CUPATION OF THE ASSESSEE. CIT VS.RAJARNANICKAM (1984) 1491TR 85 (MAD) FOLLOWED IN THE CASE OF KRISHNA MENON (P) VS.CIT (1959) 035 ITR 0048 HONBLE SUPREME COURT HELD AS UNDER:- HELD- (I) THAT TEACHING WAS A VOCATION IF NOT A P ROFESSION AND TEACHING VEDANTA WAS JUST AS MUCH TEACHING AS A NY OTHER TEACHING AND THEREFORE A VOCATION; (II) THAT IN ORDER THAT AN ACTIVITY MIGHT BE CALLED A VOCATION IT WAS NOT NECESSARY TO SHOW THAT IT WAS AN ORGANIZ ED ACTIVITY AND THAT IT WAS INDULGED IN WITH A MOTIVE OR MAKING PROFIT; IT WAS WELL-ESTABLISHED THAT IT WAS NOT THE MOTIVE OF A PERSON DOING AN ACT WHICH DECIDED WHETHER THE ACT DONE BY HIM WAS THE CARRYING ON OF A BUSINESS PROFESSIO N OR VOCATION; AND IF ANY BUSINESS PROFESSION OR VOCATI ON IN FACT ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 44 PRODUCED AN INCOME THAT WAS TAXABLE INCOME AND WA S NONE THE LESS SO BECAUSE IT WAS CARRIED ON WITHOUT THE MOTIVE OF PRODUCING AN INCOME. (III). THAT THE TEACHING OF VEDANTA BY THE APPELLAN T WAS THE CARRYING ON A VOCATION BY HIM AND THAT THE IMPARTIN G OF THE TEACHING WAS THE CAUSA CAUSANS OF THE MAKING OF THE GIFTS BY L THAT IT WAS IMPOSSIBLE TO HOLD THAT THE PAYME NTS TO THE APPELLANT HAD NOT BEEN MADE IN CONSIDERATION OF THE TEACHING IMPARTED BY HIM AND THA4. THEREFORE THE PAYMENTS WERE INCOME ARISING FROM THE VOCATION OF T HE APPELLANT (IV) THAT AS THE PAYMENTS MADE BY L WERE INCOME ARI SING FROM A VOCATION THEY WERE NOT CASUAL OR NON-RECURR ING RECEIPTS AND NO QUESTION OF EXEMPTION UNDER SECTION 4 (3) (VII) OF THE INDIAN INCOME TAR ACT AROSE. IN ORDER THAT A PAYMENT MAY BE EXEMPTED UNDER SECTI ON 4(3) (VII) OF THE INDIAN INCOME TAX ACT AS A CASUA L AND NON-RECURRING RECEIPT IT HAS TO BE SHOWN THAT IT D ID NOT ARISE FROM THE EXERCISE OF A VOCATION IN THE CASE OF GOVINDLAIJI RANCHHODLAI (MAHARAH SHR I) VS.CIT (1958] 034 ITR 0092 HON WE BOMBAY HIGH COUR T HELD AS UNDER:- HELD- THAT THE INCOME FROM THESE GIFTS WAS TAXABLE UNDER THE INCOME TAX AC4 AS (I) IT WAS FOUND BY THE TRIBU NAL THAT ALTHOUGH THERE WAS NO LEGAL OBLIGATION UPON THE FO LLOWERS OF THE FAITH TO MAKE THE GIFTS THE MAKING OF THE O FFERINGS WAS MOTIVATED BY THE COMPELLING FEELING ON THE PART OF THE FOLLOWERS OF A FAITH TO MAKE PRESENTS TO THE HEAD O F(HE FAITH WHICH WAS CUSTOMARY;(II) THE GIFTS WERE MADE TO THE ASSESSEE NOT BECAUSE OF HIS PERSONAL CHARACTERISTIC BUT BECAUSE HE WAS THE HEAD OF THE RELIGIOUS SECT; AND (III) THE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 45 ASSESSEE HELD AN OFFICE AND IT WAS ONLY THAT OFFICE THAT INDUCED HIS DISCIPLINES TO MAKE T HE GIFTS. HELD ALSO (I) IT WAS NOT NECESSARY TO DECIDE WHETHE R THE INCOME FELL UNDER SECTION 10 OR SECTION 12 OF THE A CT (II). EVEN A PRACTICE OF RELIGION COULD BECOME A VO CATION AND MORE SO WHEN IT BROUGHT IN A STEADY INCOME IT IS NOT NECESSARY THAT THE HOLDER OF AN OFFICE SHOULD RECEI VE PRESENTS BY VIRTUE OF A CONTRACT IN ORDER TO CONSTITUTE THOSE R ECEIPTS TAXABLE INCOME IF HE RECEIVES THEM BECAUSE HE IS HOLDING A N OFFICE AND NO PERSONAL GIFTS EVEN IN THE ABSENCE OF A. LEGAL AND BINDING CONTRACT THE RECEIPTS WOULD BE TAXABLE INCOME. AN OFFICE MAY NOT DEPEND UPON ANY LAW OR ANY CONTRACT OR ANY MANDAT E FROM THE STATE OR ANY AUTHORITY. AN OFFICE MEANS A POSITION WHICH.. REQUIRES THE PERSON HOLDING IT TO PERFORM CERTAIN D UTIES AND DISCHARGE CERTAIN OBLIGATIONS. IN THE CASE OF RAM KRIPAL TRIPATHI VS.ADDLCITFL9SOJ 125 ITR 0408 HONBLE ALLAHABAD HIGH COURT HELD AS UNDE R: HELD- (I) THAT THE MERE FACT THAT THE TEACHING OF VEDANTA WAS A MATTER OF RELIGION WOULD NOT MEAN THAT THE AS SESSEE WAS NOT CARRYING ON A VOCATION. THOUGH THE ASSESSEE WAS GIVING THE DISCOURSES WITHOUT ANY MOTIVE OR INTENTI ON OF MAKING A PROFIT OUT OF SUCH ACTIVITY YET THE GIVIN G OF DISCOURSES WAS A VOCATION AND THE RAISING OF THE CONTRIBUTIONS FOR PURCHASING A CAR FOR THE ASSESSEE BY HIS DISCIPLES WAS IN CONSIDERATION OF THE TEACHING IMPA RTED BY HIM. THE GIVING OF THE DISCOURSES BY THE ASSESSEE W AS A CAUSA CAUSANS FOR THE RAISING OF THE CONTRIBUTIONS BY HIS DISCIPLES AND THE PURCHASE OF THE CAR BY THEM FOR H IM. (II)SINCE THE WORD PROFESSION INCLUDES VOCATION A ND THE TEACHING OF VEDANTA OR GIVING REGULAR DISCOURSES ON VEDANTIC PHILOSOPHY AMOUNTED TO CARRYING ON A PROFE SSION THE BENEFIT ACCRUING TO THE ASSESSEE DURING THE COU RSE AND AS A RESULT OF THAT ACTIVITY WOULD NOT BE IN THE N ATURE OF THE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 46 GRANTING OF A MERE RELIEF THE BENEFIT WAS OF A MATE RIAL THING AND THE VALUE THEREOF WOULD BE DEEMED TO BE INCOME UNDER CL. (VA) OF S.2(24) OF THE I.T.ACT 1961 AND AS SUC H THAT VALUE WOULD BE LIABLE TO BE TREATED AS INCOME FROM VOCATION UNDER SECTION 28(IV). (III) THEREFORE THE ASSESSEE WAS CARRYING ON A PROFESSION WITHIN THE MEANING OF SECT ION 28(IV) AND THE RECEIPT OF THE CAR WAS A BENEFIT ACC RUING TO HIM AND THE ENTIRE VALUE OF THE BENEFIT WOULD BE TA XABLE IN THE HANDS OF THE ASSESSEE. IT CAN BE SEEN THAT THE APPELLANT IS NEITHER A TEAC HER NOR A RELIGIOUS LEADER. SHE IS A POLITICAL LEADER AND WAS A MEMBER OF PARLIAMENT DURING THE RELEVANT PERIOD. THE QUID PRO QUO WHICH IS THE ESSENTIAL INGREDIENT FOR TAXABILITY IS ABSENT IN THE FORM OF MATERIAL RETURN . THE A.0. HAS DERIVED THE HYPOTHETICAL CONCEPT OF THE MENTAL HAPPINESS IN THE FORM OF QUID PRO QUO BY EQUATING T HE APPLICANT AS A VEDANTIC TEACHER OR A RELIGIOUS PREA CHER OR AN AUTHOR AND REFORMER. TUE CASE REFERRED: BY A.0FOR Q UID PRO QUO INTER ALIA CONTAINS SOME SORT OF DIRECT DISCOUR SES FOR ENLIGHTMENT LEADING TO SO CALLED MENTAL HAPPINESS. IN THE CASE OF RAJA MANICKAMIN WHICH CASE OF P. V.G .RAJU IS REFERRED THE HONBLE HIGH COURT CLEARLY STATED T HAT THERE WAS NO QUID PRO QUO IN THE PAYMENT OF THE DONATION MADE BY THE GENERAL PUBLIC THE FORMER EMPLOYER AND THE PARTYMEN. CONSEQUENTLY THE TRIBUNAL WAS RIGHT IN IT S VIEW AND THE SUM OF RS.51 000/- WAS NOT TAXABLE AS THE ASSESSEES INCOME. IN THE CASE OF PARIMISETHI SEETHARAMAMMA VS.CIT [1965] 57 ITR 532(AP) WHILE EXPLAINING THE RATIO OF JUDGMENT OF HONBLE .SUPREM E COURT IN THE CASE OF A.GOVINDARAJU MGSDALIAR VS.CIT (1958) 34 ITR 807 HONBLE ANDHRA PRADESH HIGH COUR T OBSERVED AS UNDER: THE OBSERVATION RELIED UPON DOES NOT LAW DOWN A PROPOSITION THAT IT MAYBE INFERRED THAT A RECEIPT I S TAXABLE AS INCOME BECAUSE THE ASSESSEE FAILS TO LEAD ALL EVIDE NCE IN ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 47 SUPPORT F THE CASE PLEADED BY HIM THAT THE RECEIPT IS NOT WITHIN THE TAXING PROVISION: WHETHER A RECEIPT .IS LIABLE TO BE TREATED AS INCOME DEPENDS VERY LARGELY UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE: IT IS OPEN TO THE I NCOME TAX AUTHORITIES TO RAISE AN INFERENCE THAT A RECEIPT BY AN ASSESSEE IS ASSESSABLE INCOME WHETHER HE FAILS TO DISCLOSE SATISFACTORILY THE SOURCE AND THE NATURE OF THE REC EIPT BUT IN THIS CASE THE SOURCE OF THE INCOME WAS DISCLOSED BY THE APPELLANT AND THERE WAS NO DISPUTE ABOUT THE TRUTH OF THAT DISCLOSURE. IN THE CASE OF NLRMALA F.ATTAVALE VS.ITO-16(3) IN I T APPEAL NO.1084(MUM OF 2005) VIDE ORDER DATED 20 FEBRUARY 2008 (2008) 22 SOT 197 (MUM) HONBLE ITAT MUMBAI BENCH A HONBLE ITAT OBSERVED THAT THE PROVISIONS OF SECTION 28(IV) RELATING TO SOCIAL REF ORMER AND PHILOSOPHER FOR VOLUNTARY GIFTS RECEIVED AS UNDER: WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH SI DES MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. IRIS NOTED THAT THE ASSESSEE IS A SOCIAL REFORMER WHO ES TABLISHED A MOVEMENT CALLED SWADHYAYA FOR THE UP-LIFTMENT O F MASSES WHICH WAS JOINED BY GREAT NUMBER OF FOLLOWER S. IT IS ALSO NOTED THAT THE ASSESSEE HAS DEVOTED HIS WHO LE LIFE TO THE CAUSE OF THIS MOVEMENT IT IS ALSO NOTED THAT AS SESSEE HAS NEVER CHARGED ANY FEE OR REMUNERATION FROM HIS FOLL OWERS OR THE PERSONS WHO ATTENDED HIS LECTURES AT ANY POI NT OF TIME. IN THIS BACKGROUND WE FIND SUFFICIENT FORCE IN THE CONTENTION OF THE ASSESSEE THAT IT WAS MOVEMENT OR CAMPAIGN AND NOT A VOCATION. HAVING STATED SO HOWE VER EVEN F IT IS TREATED AS VOCATION THEN HAVING REGAR D TO THE FACT THAT ASCESSEE NEVER CHARGED ANY FEE OR REMUNER ATION FOR HIS IMPARTING OF KNOWLEDGE AND PRACTICING OF V ALUES BASED ON SHRUNAD BHAGAWCT GLITZ AND ALSO THE FACT THAT THE ASSESSEE DID NOT HAVE ANY VESTED RIGHT TO RECEI VE ANY KIND OF PAYMENT FOR THESE ACTIVITIES FROM HIS DISCIPLES/FOLLOWERS HENCE THE GIFT MADE BY THE FO LLOWERS; ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 48 WITHOUT BEING UNDER ANT CONTRACTUAL OR LEGAL OR CU STOMARY OBLIGATIONS CANNER BE TREATED AS A CONSIDERATION A RISING OUT OF CARRYING OF VOCATION. WE WOULD FURTHER LIKE TO A DD THAT AS FAR AS PROVISIONS OF INCOME TAX ACT IS CONCERNED EVERY RECEIPT IS NOT INCOME THOUGH THE TERM INCOME HAS BE EN DEFINED HI AN INCLUSIVE MANNER HENCE SUCH RECEIPT MUST NECESSARILY FALL UNDER THE SPEC4JIC CHARGING PROVIS IONS. THE REVENUE AUTHORITIES HAVE APPLIED THE PROVISIONS OF SECTION 28(7V) OF THE ACT WHEREIN IT IS PROVIDED THAT ANY B ENEFIT OR PERQUISITE ARISING OUT OF EXERCISE OF BUSINESS OR P ROFESSION WOULD BE TREATED AS INCOME THESE TWO WORDS HAVE BEE N USED IN THIS PROVISION I.E. BENEFIT OR PERQUISIT E AND OTHER CONDITION. IS THAT SUCH BENEFIT OR PERQUISITE SHOUL D ARISE OUT OF EXERCISE OF BUSINESS OR PROFESSION. IN THE FACTS OF THE CASE THE REVENUE HAS NOT ESTABLISHED CONCLUSIVELY THAT THE AMOUNT OF GIFT AROSE TO THE ASSESSEE AS A CONSEQUEN CE OF EXERCISE OF VOCATION BECAUSE SUCH GIFTS HAVE GOT NO ELEMENT OF CONSIDERATION BEING PAID FOR SERVICES OBTAINED B Y THE FOLLOWERS/DISCIPLES. IT IS ALSO NOTED THAT BOTH THE WORDS BENEFIT AND PERQUISITE REFER TO SPECIFIC SITUAT IONS WHEREIN GENERALLY RECEIPT OF REVENUE NATURE HAVING ATTRIBUTES OF INCOME WOULD BE COVERED AND SUCH ATTR IBUTE SHOULD EXIST FROM VERY BEGINNING. TO ILLUSTRATE THI S ASPECT WE STATE THAT WHERE A GIFT IS MADE IN LIEU OF PAYIN G CONSIDERATION FOR SERVICES OBTAINED AND THIS FACT I S ESTABLISHED THEN SUCH AMOUNT OF GIFT CAN FALL WITH IN THE PROVISIONS OF SECTION 28(IV) OF THE ACT IN VIEW OF ALL THE FACTS AND CASE LA4VS4ISCUSSED AB OVE THE ASSESSING OFFICER. COULD NOT PROVE QUID PRO QUO I N THE CASE OF THE APPELLANT. IF THE LOGIC OF A.O. IS ACCE PTED THEN EVERY HONBLE MEMBER O PARLIAMENT CAN BE TAXED FOR EVERY RECEIPT OF BELOW TWENTY FIVE THOUSAND AS INCOME FRO M VOCATION WHETHER IT MAY BE A GIFT OR OTHERWISE.. IT WOULD AMOUNT TO THAT THE PROVISIONS OF SECTION 56(2)(V) I S NOT APPLICABLE ON THE HONBLE MEMBERS OF PARLIAMENT OR ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 49 LEGISLATIVE ASSEMBLY. EVERY POLITICIAN HAS SOME FOL LOWING WHETHER LESS OR LARGE IT DOES NOT MATTER. THE A.O. HAS SIMPLY TAXED THE GIFS BELOW TWENTY FIVE THOUSAND A INCOME FROM PROFESSION BY IMPORTING THE CONCEPT OF VOCATIO N RELATING TO POLITICIANS FROM THE CASE OF P. V.G.RAJ U AND FURTHER IMPORTED THE HYPOTHETICAL CONCEPT IN THIS C ASE AS MENTAL HAPPINESS TO BE QUID PRO QUO WITHOUT DIFFERE NTIATING THE FACTS. A.O. HAS THOROUGHLY CONFUSED HIMSELF IN CORRELATING THE DEFINITIONS OF POLITICIANS VOCATIO N QUID PRO QUO AND MATERIAL RETURN. HE HAS ALSO MIXED UP THE PROFESSIONS OF TEACHERS RELIGIOUS LEADERS AUTHORS REFORMERS AND POLITICIANS. THE RATIO LAID DOWN BY H ONBLE SUPREME COURT IN THE CASE OF P.V.G.RAJU IS APPLICA BLE TO THE EXTENT THAT POLITICS IS A VOCATION OR PROFESSIO N. REGARDING TAXABILITY OF GIFT AS INCOME FROM VOCATIO N THE RATIO OF VARIOUS JUDGMENTS CITED ABOVE ARE ALSO TO BE EXAMINED FROM THE FACTS OF THE CASE. GIFT IS A FOR M OF RECEIPT AND EVERY RECEIPT IS NOT TAXABLE IT/S A WE LL SETTLED LAW. FURTHER A.O. HAS ALSO CONFUSED HIMSELF IN INTERPRET ING THE PROVISIONS OF SECTION 56(2)(V) OF THE IT. ACT. THE SECTION 56(2)(V) AS APPLICABLE FOR THIS ASSESSM ENT YEAR READS AS UNDER:- WHERE ANY SUM OF MONEY EXCEEDING TWENTY FIVE THOUSA ND RUPEES IS RECEIVED WITHOUT CONSIDERATION BY AN INDI VIDUAL OR A HINDU UNDIVIDED FAMILY FROM ANY PERSON ON OR A FTER THE DAY OF SEPTEMBER; 2004 ( BUT BEFORE THE 1ST DA Y OF APRIL. 2006 ) THE WHOLE OF SUCH SUM: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY TO ANY SU M OF MONEY RECEIVED- (A). FROM ANY RELATIVE; OR (B). ON THE OCCASION OF THE MARRIAGE OF THE INDIVID UAL; OR (C). UNDER A WILL OR BY WAY OF INHERITANCE; OR ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 50 (D).IN CONTEMPLATION OF DEATH OF THE PAYER; OR (E) FROM ANY LOCAL AUTHORITY AS DEFINED IN THE EXPL ANATION TO CLAUSE (20) OF SECTION 10; OR (F) FROM ANY FUND OR FOUNDATION OR UNIVERSITY OR OT HER EDUCATIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICA L INSTITUTION OR ANY TRUST OR INSTITUTION REFERRED TO IN CLAUSE (23C) OF SECTION 10; OR (G). FROM ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION I2AA . EXPLANATION-FOR THE PURPOSES OF THIS CLAUSE RELAT IVE MEANS (I) SPOUSE OF THE INDIVIDUAL; (II) BROTHER OR SISTER OF THE INDIVIDUAL; (III) BROTHER OR SISTER OF THE SPOUSE OF THE INDIVIDUAL (IV) BROTHER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUAL; (V) ANY LINEAL ASCENDANT OR DESCENDANT OF THE INDIVIDUAL; (VI) ANY LEGAL ASCENDANT OR DESCENDANT OF THE SPOUSE OF THE INDIVIDUAL; (VII) SPOUSE OF THE PERSON REFERRED TO IN CLAUSES(II) TO (VI). THE SECTION TALKS ABOUT ANY SUM RECEIVED ONLY. THE WORD GIFT IS NOWHERE USED IN THIS SECTION. GIFT IS A FOR M OF RECEIPT WITHOUT CONSIDERATION. EXCEPTIONS FOR NOT TAXING RE CEIPT WITHOUT CONSIDERATION ARE PROVIDED IN THE SECTION ITSELF THE APPELLANT DOES NOT FALL IN SITE EXCEPTION CATEGORY. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 51 THE WHOLE RECEIPT IN THE FORM OF GIFT HAS BEEN DIV IDED INTO TWO PARTS BY THE A.O. A PORTION ABOVE 25 000 HAS BE EN ACCEPTED AS GIFT QUOTING THE PROVISIONS OF SECTION 569FFV ) AND OTHER PORTION BELOW 25 000 HAS BEEN TAXED AS IN COME FROM VOCATION. THE GENUINENESS OF RECEIPT AS GIFT H AS NOT BEEN DOUBTED BY THE A.O. SPLITTING OF SAME NATURE OF RECEIPT WHICH IN THIS C ASE IS IN THE FORM OF GIFT AND TAXING THEM INTO TWO DIFFERENT HEADS OF INCOME UNDER TWO DIFFERENT PROVISION OF THE ACT IS BEYOND THE LEGAL DOMAIN. THE PROVISIONS OF SECTION 56(2)(V ) IS TO BE APPLIED AS A WHOLE. A.O. IS NOT FREE TO APPLY TH E TAXABILITY PART AND NOT TO APPLY THE NON TAXABILITY PART WHICH IS IMPLICIT THAT RECEIPT BELOW 25 000 IS NOT TO BE TAXED. THE DEFINITION OF VOCATION OR PROFESSION RELATING T O POLITICIANS IN THE ABSENCE OF MATERIAL RETURN AS EM BEDDED IN THE CONCEPT OF QUID PRO QUO CANNOT BECOME THE BASIS FOR SPLITTING THE RECEIPTS WHICH IN THIS CASE IS GIFT 9. IN VIEW OF THE FACTS OF THE CASE AND ABOVE DISCU SSIONS THE ASSESSING OFFICER IS DIRECTED TO APPLY THE PROV ISIONS OF SECTION 56(2)(V) AS A WHOLE AND NOT TO DIVERT THE G IFTS (RECEIPT) BELOW 25 000 TO TAX UNDER DIFFERENT PROVI SIONS OF THE ACT.-. 8. AS THE ISSUE INVOLVED REMAINS THE SAME AS WAS IN THE .ASSESSMENT YEAR. 2005-06 SO THE ASSESSING OFFICER IS DIRECTED T O FOLLOW THE DIRECTION .GIVEN BY ME IN THE APPELLAT E ORDER FOR ASSESSMENT YEAR 2005- 06 AS MENTIONED ABOVE IN THI S YEAR ALSO I.E. FOR ASSESSMENT YEAR 2006 10.2. AGGRIEVED REVENUE IS BEFORE US REPRESENTED BY SHRI S.D. KAPILA ADVOCATE. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 52 11. BOTH THE PARTIES AGREED THAT THE GENUINENESS OF THE GIFTS RECEIVED REMAINS UNDISPUTED. THE MAIN ISSUES FOR CONSIDERATI ON IN BOTH YEARS ARE WHETHER THE GIFTS RECEIVED ARE PERSONAL IN NATURE O R DURING THE COURSE OF CARRYING ON VOCATION OF POLITICS AND WHETHER THE GI FTS UP TO RS. 25 000/- CAN BE ASSESSED IN THE HAND OF THE ASSESSEE AS INCOME FROM THE VOCATION OF POLITICS MORE SO WHEN THE GIFTS ABOVE RS. 25 000/ - HAS BEEN TAXED BY AO AS INCOME FROM OTHER SOURCES. 12. LEARNED DR CONTENDS AS UNDER: 12.1. MS. MAYAWATI IS A RENOWNED FIGURE OF NATIONAL POLITICS WHO SUCCEEDED TO THE LEGACY OF REVERED DALIT LEADER LAT E SHRI KANSHI RAM. SHE IS A CHARISHMA AND HAS TOTAL IMPACT ON THE POLITICAL P ARTY NAMELY BAHUJAN SAMAJ PARTY (BSP IN SHORT). HER IDENTIFICATION WI TH BSP IS TOTAL AND INEXTRICABLE IN AS MUCH AS SHE IS HELD IN GREAT EST EEM AS DALIT MASIHA. SHE HAS BEEN SYSTEMATICALLY RECEIVING GIFTS FROM HER PA RTY WORKERS MEMBERS OFFICE BEARERS AND SUPPORTERS AND HAS NO OTHER VOCA TION EXCEPT ACTIVE PRESENCE AND WORK IN NATIONAL POLITICS THEREFORE IT IS NATURAL TO INFER THAT HER VOCATION IS POLITICS. GIFTS ARE BEING RECEIVED FROM THESE PEOPLE OVER A PERIOD OF TIME AND THE REGULARITY OF THESE GIFTS REPRESENT S A CONTINUOUS PROCESS AND STREAM OF EARNING. CIT(A) WHILE PASSING HIS ORDER F OR A.Y. 2006-07 ON PAGE 106 APPLYING HONBLE SUPREME COURT JUDGMENT IN THE CASE OF P.V.G. RAJU ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 53 101 ITR 465 HAS HELD THAT RATIO OF THIS JUDGMENT I S APPLICABLE TO THE EXTENT THAT POLITICS IS A VOCATION OR PROFESSION.. THIS BE ING SO ANY RECEIPT BY ASSESSEE FROM THIS VOCATION OF POLITICS WILL BE CHA RGEABLE AS INCOME U/S 28 AND NOT U/S 56(2)(V) AO HAS TREATED THE GIFTS ABO VE RS 25 000/- AS INCOME FROM OTHER SOURCES BY ACCEPTING ASSESSEES RETURN SHOWING THESE THESE RECEIPTS U/S 56(2)(V). TAKING HIS ARGUMENTS FURTHE R LD DR PLEADS THAT GIFTS RECEIVED BY THE ASSESSEE ARE VOCATIONAL/ PROFESSION AL RECEIPT BECAUSE OF FOLLOWING FACTORS: (I) ASSESSEE HAS BEEN RECEIVING NUMEROUS GIFTS ON REGUL AR BASIS OVER A LONG PERIOD OF TIME; (II) ASSESSEE HAS BEEN HOLDING THE OFFICE AS MEMBER OF P ARLIAMENT; IS A POLITICAL LEADER SPECIALLY FOR DALIT MASSES; AND BS P PARTY PRESIDENT POPULARLY REGARDED AS ITS SUPREMO FOR A LONG TIME. (III) HER IDENTIFICATION WITH A POLITICAL PARTY I.E. BSP IS TOTAL AND SHE IS REGARDED AS POLITICAL HEIR OF LATE SHRI KANSHIRAM. (IV) THE NATURE OF RECEIPT IS TO BE SEEN FROM THE STAND POINT OF RECIPIENT AND NOT THE DONOR. THE NOMENCLATURE ADOPTED BY DONO R IS NOT MATERIAL FOR TAXABILITY AS NATURE OF RECEIPT IN THE HANDS OF DONE IS RELEVANT FOR DECIDING THE HEAD OF TAXATION. GIFTS H AVE BEEN GIVEN BY DONORS ON ACCOUNT OF HER POLITICAL PERSONA AS A DAL IT POLITICAL LEADER; BSP PARTY PRESIDENT; TO HELP IN CBI CASES E TC THOUGH THE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 54 WORDS MENTIONED BY DONEES MAY BE COUCHED IN THE LAN GUAGE OF PERSONAL LOVE AND AFFECTION THE GIFTS HAVE BEEN GI VEN TO RECEIVE RECOGNITION AND REGARDS OF AN INFLUENTIAL POLITICAL LEADER WITH A MOTIVE TO DERIVE SOME POSSIBLE BENEFITS. (V) THE DONORS HAVE BEEN STEADILY RISING AND HER BIRTHD AY ON 15 TH JANUARY IS CELEBRATED AS AARTHIK SAHYOG DIWAS WHI CH HAS BECOME A LAND MARK POLITICAL EVENT EVERY YEAR IN IN DIA. SYSTEMATIC STREAM OF RECEIPTS OVER A PERIOD OF TIME CONSTITUTE S INCOME IN THE COURSE OF PROFESSION/ VOCATION. (VI) THE POLITICAL STATURE AND ACTIVITY OF THE ASSESSEE IS CAUSA CAUSANS FOR THESE GIFTS I.E. EVENTS WHICH PRECEDES THE ACTU AL HAPPENING OF A CAUSE. (VII) LEARNED DR CONTENDS THAT THE STREAM OF BANK DRAFTS SHOW THAT THEY WERE PURCHASED IN A METHODICAL MANNER WHICH DOES NO T INDICATE THAT THEY WERE PURCHASED BY DONORS IN A BENIGN MANN ER AS: (A) DDS WERE PURCHASED FROM VARIOUS PLACES. NUMBER OF T HEM ARE IN SAME DENOMINATIONS. NUMBERS ARE IN SERIATUM MOS TLY NOTARIZED BY SAME NOTARY AFFIDAVITS ARE IN THE SAM E PROFORMA AND HAVE BEEN NOTARIZED ON THE SAME DAY. THIS PA TTERN WAS FOLLOWED IN SEVERAL DISTRICTS FOR A PERIOD ABOUT TH REE AND HALF MONTHS. THIS CLEARLY SUGGEST THAT DONORS WERE INSTR UCTED TO PROCEED IN A PARTICULAR MANNER. MOST OF THE AFFIDA VITS ARE IN ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 55 ENGLISH WHEREAS THE DONORS LACK PROFICIENCY IN ENGL ISH BUT HAVE SIGNED IN HINDI. (B) THE DATES OF AFFIDAVITS DO NOT CONCIDE WITH THE ASS ESSEES BIRTH DATE BESIDES THE PROCEEDS OF THE GIFTS HAVE BEEN U TILIZED FOR INVESTMENT IN PROPERTIES. (C) MOST OF THE AFFIDAVITS FROM TAMILNADU AND KARNATAK A INDICATE THAT THE PURPOSE OF THE GIFTS WAS TO PREVENT THE AS SESSEES HARASSMENT FROM THE CBI BESIDES THEY HAVE BEEN COL LECTED BY MEMBERS OF THE ASSESSEES BSP PARTY IN HER CAPACITY AS A POLITICAL PERSON. 12.2. LD DR FURTHER CONTENDS THAT : (I) IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN TH E CASE OF COMMISSIONER OF EXPENDITURE TAX VS. P.V.G. RAJU 101 ITR 465 THAT POLITICS IS VERY MUCH A PROFESSION. THE ASSESSEE IS ALSO NOT KNOWN FOR CONTRIBUTION TO ANY OTHER FIELD OF ACTIVITY. EV EN THE SOCIAL REFORM AGENDA THAT SHE PURSUES IS THROUGH THE FORUM OF POL ITICS. THEREFORE THERE IS NO DOUBT THAT THE ASSESSEE IS PRIMARILY A POLITICIAN AND IS KNOWN RESPECTED AND REGARDED ON THIS ACCOUNT ALONE . (II) IT HAS FURTHER BEEN HELD BY THE HONBLE SUPREME COU RT IN THE CASE OF P.KRISHNA MENON V. CIT 35 ITR 48 THAT ANY GIFT THAT ACCRUES TO A PERSON BY VIRTUE OF THE OFFICE THAT HE HOLDS OR THE VOCATION THAT HE PURSUES SHOULD BE REGARDED AS HIS INCOME FROM VOCAT ION OR PROFESSION. (III) FURTHER IN THE CASE OF GOVINDLALJI RANCHHODLALJI 3 4 ITR 92 THE HONBLE BOMBAY HIGH COURT HAS HELD THAT ALTHOUGH TH ERE IS NO LEGAL OBLIGATION ON THE PART OF A FOLLOWER TO MAKE AN OFF ERING THE MAKING ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 56 OF OFFERINGS MOTIVATED BY THE COMPELLING FEELING ON THE PART OF THE FOLLOWER TO MAKE PRESENTS TO THE HEAD OF THE FAITH AS IT WAS CUSTOMARY WERE PRESENTS NOT RECEIVED ON ACCOUNT OF THE PERSON AL CHARACTERISTICS OF THE ASSESSEE BUT DUE TO THE OFFICE THAT HE HELD THAT INDUCED HIS DISCIPLES TO MAKE THE GIFT AND THE SAME WERE HIS IN COME FROM VOCATION. (IV) THE REAL QUESTION IS REALLY TO CONSIDER HOW THE FAC TS OF THE ASSESSEES CASE FITS IN WITH THE PROPOSITIONS LAID DOWN BY THE HONBLE COURTS AND WHETHER ON THE FACTS AND CIRCUMSTANCES OF HER C ASE GIFTS RECEIVED BY HER THOUGH CLAIMED TO BE OUT OF LOVE AN D AFFECTION ON THE OCCASION OF BIRTH DAY IN FACT ARE GIFTS TO HER POLITICAL PERSONALITY AND POLITICAL WORK. FACTS OF ASSESSEES CASE ARE DI FFERENT FROM THAT OF SHRI CHITRASUS (SUPRA). IN THE FIRST PLACE WHILE THE CONTRIBUTIONS THAT THE ASSESSEE HAS MADE TO THE UPLIFTMENT OF THE DOWN TRODDEN ARE NOT DENIED IT IS SUBMITTED THAT THE METHOD ADOPTED BY THE ASSESSEE FOR SOCIAL REFORM ARE IMPORTANT TO OUR CASE. UNLIKE SHR I CHITRASU WHO BESIDES BEING A MEMBER OF THE DMK WAS A LEADER OF THE SELF RESPECT MOVEMENT AND AN ESTABLISHED AUTHOR AND WHO HAD GIVE N SPEECHES AND WRITTEN BOOKS TO PROMOTE THE SELF RESPECT MOVEM ENT. THE ASSESSEE HAS CHOSEN TO PURSUE THE PATH OF POLITICS TO BRING ABOUT SOCIAL CHANGE AND SOCIAL REFORM AND HER CONTRIBUTIO N TO UPLIFTMENT OF THE DOWNTRODDEN WAS TO GIVE THEM POLITICAL VOICE AN D POLITICAL REPRESENTATION. INDEED UPLIFTMENT OF THE STATUS OF THE BAHUJAN SAMAJ THROUGH CAPTURE OF POLITICAL POWER IS AND HAS BEEN THE PROFESSED IDEOLOGY OF THE POLITICAL FORMATION THAT SHE HEADS. SO WHAT IS BEING ASSERTED IS THAT THE POLITICS OF THE ASSESSEE AND T HE SOCIAL REFORM AGENDA PURSUED BY THE ASSESSEE ARE INEXTRICABLY ENT WINED AND THERE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 57 IS NO DIFFERENCE BETWEEN THE TWO. SO IF A GIFT IS G IVEN TO HER ON ACCOUNT OF THE RESPECT THAT SHE COMMANDS AS A SOCIA L REFORMER THAT IN EFFECT MEANS HER WORK AS A POLITICIAN. (V) ON PAGE 36 OF BUNDLE OF AFFIDAVITS AND DRAFTS FROM KARNATAKA FILED BY THE ASSESSEE IS A LETTER FROM ONE N. MAHESH WHO IS THE ZONAL SECRETARY OF THE BSP CHAMRAJNAGAR MYSORE WHICH ST ATES THAT ON THE 26 TH AND 27 TH OF JANUARY THEY HAD CONDUCTED A JEEP RALLY IN CHAMRAJNAGAR MYSORE AND MANDYA DISTRICTS TO CREATE AWARENESS AMONG THE BHAUJAN SAMAJ ABOUT THEIR CONSTITUTIONAL RIGHTS AND WAYS TO IMPLEMENT THEM. THE LETTER HOWEVER SAY THAT I N THIS RALLY THE PEOPLE OF THE BAHUJAN SAMAJ HAVE CONTRIBUTED LITTLE BIT AS BIRTHDAY GIFT TO OUR IRON LADY. (VI) SECONDLY IT HAS BEEN OBSERVED THAT A NUMBER OF DRA FTS SENT TO HER FROM TAMIL NADU AND KERALA HAVE BEEN MADE OUT IN TH E NAME OF MAYAWATI NATIONAL PRESIDENT BAHUJAN SAMAJ PARTY OR MAYAWATI NATIONAL PRESIDENT BSP. THEY ARE ACCOMP ANIED BY AFFIDAVITS THAT REFER TO HER AS THE NATIONAL PRESID ENT OF BSP. THEY ARE FORWARDED BY A LETTER FROM A MR. CHIKANNA A PARTY WORKER WHO SAYS THAT SINCE THEY HAD CONDUCTED MANY PROGRAMMES OF TH E PARTY IN VIEW OF THE FORTHCOMING ELECTIONS THEY WERE ABLE TO COL LECT ONLY THE MINIMUM POSSIBLE AMOUNT. (VII) THESE DRAFTS AFFIDAVITS AND FORWARDING LETTERS FRO M KARNATAKA SEAL THE ISSUE THAT THE GIFTS SENT TO THE ASSESSEE WERE ON ACCOUNT OF THE OFFICE THAT SHE HELD AND THAT THE PROGRAMME OF SOCI AL REFORM AND POLITICAL MOBILIZATION PURSUED BY HER ARE ONE AND T HE SAME. ON THIS ACCOUNT IT IS PERTINENT TO HOLD THAT THE GIFTS RECE IVED BY HER HAVE BEEN BY VIRTUE OF HER POLITICAL STANDING AND NOT ANY OTH ER ACCOUNT. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 58 (VIII) IT IS NOT THAT THIS STATE OF AFFAIRS IS CONFINED TO KARNATAKA. ENQUIRIES CONDUCTED AT VARIOUS BANKS IN UP ALSO REVEALED THAT THE DRAFTS WERE PURCHASED IN MANY CASES BY BAHUJAN SAMAJ PARTY FUNC TIONARIES. FOR INSTANCE EXAMINATION OF DRAFTS PURCHASED FROM ALLAH ABAD BANK AZAMGARH BETWEEN 10-01-2005 AND 12-01-2005 REVEAL T HAT THEY HAVE ALL BEEN PURCHASED BY ONE DAYARAM BHASKAR WHO IS THE DISTRICT CHAIRMAN OF THE AZAMGARH BAHUJAN SAMAJ PARTY. IN T HE BULANSHAHAR REGION ENQUIRIES REVEALED THAT MANY OF THE DONORS W ERE WORKERS OF THE BAHUJAN SAMAJ PARTY AND THAT THE AMOUNTS DONATE D BY THEM REPRESENTED SUM TOTAL OF SMALL AMOUNTS COLLECTED BY THEM FROM DIFFERENT PERSONS. THE PATTERN OF DRAFT PURCHASE AN D SWEARING OF AFFIDAVITS DO NOT POINT TO A SPONTANEOUS OUTPOURING OF AFFECTION FOR THE ASSESSEE BUT ARE INDICATIVE OF A SYSTEMATIC FUN D RAISING DRIVE. THE FACT THAT EVIDENCES HAVE EMERGED TO INDICATE THE IN VOLVEMENT OF PARTY WORKERS IN SUCH ACTIVITY GIVE A POLITICAL COL OUR TO THESE GIFTS. IT CONFIRMS THAT THE GIFTS ARE FOR HER ON ACCOUNT OF H ER POSITION AS THE HEAD OF THE PARTY ARRANGED THROUGH THE PARTY MACHIN ERY. THE SYSTEMATIC PATTERN OF PURCHASE OF DRAFTS AND SWEARI NG OF AFFIDAVITS BRINGS OUT MINDS TO THE OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 THAT WHILE LOOKING AT THE ASSESSEES CLAIM THE ENTIRE SURROUNDING CIRCUMSTANC ES HAVE TO BE LOOKED INTO WHICH INDICATE THAT THERE HAS BEEN EFFO RT ON THE PART OF THE ASSESSEE TO SECURE THE GIFTS WHICH WOULD TAKE IT OUT OF THE AMBIT OF BEING A WINDFALL AND MORE IN THE NATURE OF INCOM E. ASSESSEES CLAIM OF GIFTS BEING FOR HER BIRTHDAY IS NOT CORRE CT AS THEY ARE SPREAD OVER THREE AND A HALF MONTHS. THE ASSESSEES EXPLAN ATION THAT HER SUPPORTERS BEING PREPARING FOR HER BIRTHDAY WELL IN ADVANCE AND ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 59 THEREFORE THE PREPARATIONS OF DRAFTS AND AFFIDAVITS HAVE BEGUN FROM THE MONTH OF DECEMBER IS UNRELIABLE CLAIM SOME GIF TS FROM U.P. CAME LATER BECAUSE SHE REFUSED TO TAKE CASH AND HER SUPPORTERS WENT BACK TO THEIR NATIVE PLACES AND SENT DRAFTS IS HIGH LY IMPLAUSIBLE AS THERE IS NO PLACE IN UP THAT IS SO REMOTE THAT IT W OULD TAKE PEOPLE NEARLY TWO MONTHS TO GO BACK VISIT THE BANK AND G ET A DRAFT PREPARED. (IX)EVEN IF IT IS HELD THAT THESE GIFTS ARE MADE ON THE OCCASION OF HER BIRTHDAY ASSESSEES CASE IS STILL HIT BY THE CASE OF GOVINDLALJI RANCHHODLALJI 34 ITR 92. THE ASSESSEE HOLDS BIRTHDAY CELEBRATIONS YEAR AFTER YEAR IN WHICH IT IS CLAIMED THAT HER SUPPORTERS COME WITH G IFTS OF MONEY WHICH ARE CUSTOMARY AMONG THE ASSESSES FOLLOWERS. IF THAT IS THE CASE THEN FOLLOWING THE RATIO OF THE HONBLE BOMBAY HIGH COURT IN THIS CASE ALTHOUGH THERE IS NO LEGAL OBLIGATION ON THE PART OF HER SUPPORTERS T O MAKE A GIFT THE MAKING OF GIFTS MOTIVATED BY THE COMPELLING FEELING ON THE PART OF THE SUPPORTERS TO MAKE PRESENTS TO THE HEAD OF THE POLITICAL PARTY AS IT WAS CUSTOMARY THEREFORE THESE GIFTS ARE NOT RECEIVED ON ACCOUNT OF THE PERSONAL CHARACTERISTICS OF THE ASSESSEE BUT DUE TO THE STAT US AND OFFICE WHICH SHE HOLD AND WHICH INDUCED HER SUPPORTERS. CONSEQUENTLY THEY REPRESENT HER INCOME FROM VOCATION AND THE AFFIDAVITS FILED BY TH E ASSESSEES SUPPORTERS TO THE CONTRARY HAVE NO MEANING AS THEY HAVE BEEN P REPARED ACCORDING TO A PRE DECIDED FORMAT WHICH AS ADMITTED BY THE ASSESS EE HERSELF IN HER SUBMISSION HAS BEEN PREPARED CENTRALLY. 12.3. COMING TO THE INTERPRETATION OF APPLICABILITY OF SEC 56(2)(V) LD DR CONTENDS THAT THE INCOME TAX ACT HAS CONCEPT OF SO URCES OF INCOME AND ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 60 HEADS OF INCOME. AO DIVIDED THE RECEIPT OF MONEYS W ITHOUT CONSIDERATION FROM NON RELATIVES INTO TWO SOURCES ONE SOURCES RE PRESENTS GIFTS ABOVE RS 25 000/- WHICH IS TAXABLE UNDER THE HEAD INCOME FR OM OTHER SOURCES U/S 56(2)(V) AND THE OTHER SOURCES COMPRISES OF GIFTS UPTO RS 25 000/- FOR WHICH AO HAS APPLIED THE HEAD OF INCOME FROM BUSINESS AN D PROFESSION. AO HAS SPECIFICALLY NOTED IN HIS ORDER THAT ASSESSEE HAS O FFERED THE FORMER UNDER A SPECIFIC HEAD THEREFORE THE RETURN OF INCOME WAS AC CORDINGLY ACCEPTED AND THIS WILL NOT BE DETRIMENTAL TO STAND THAT GIFTS U PTO RS. 25 000/- ARE TAXED AS INCOME FROM VOCATION OF POLITICS. AO PRINCIPALLY H ELD THAT GIFTS IN ASSESSES CASE WERE INCOME FROM VOCATION AND MERELY BECAUSE A PART OFFERED BY ASSESSEE IN RETURN IS ACCORDINGLY ACCEPTED IS PERM ISSIBLE IN VIEW OF FOLLOWING CASE LAWS: (A) CIT VS. AHMUTY & CO. LTD. 27 IT R 63 (BOM.) (B)UNITED COMMERCIAL BANK LTD. VS. CIT 32 ITR 688 ( SC); (C)CIT VS. SHRIKRISHAN CHANDMAL 60 ITR 303; 12.4. IT IS PLEADED THAT AO TAXED A SOURCE UNDER TH E HEAD OFFERED BY THE ASSESSEE WILL NOT MEAN THAT THE OTHER HEAD OF INC OME FOR GIFTS UP TO RS. 25 000/- CANNOT BE TAXED AS VOCATIONAL INCOME. 12.5. RELIANCE WAS PLACED ON VARIOUS CASE LAWS WHIC H ARE MOSTLY RELIED ON BY AO IN HIS ORDER. 12.6. DISTINGUISHING THE CASE LAWS RELIED ON BY CIT (A) LD DR CONTENDES THAT: (I) IN THE CASE OF RAJAMANIKAM 149 ITR 85 (SUPRA) THE RE WAS NO CONTINUITY OF GIFTS AND ONLY ONE TIME COLLECTION OF PURSE WAS GIVEN WHEREAS IN THE CASE OF THE ASSESSEE THERE IS A MARKED REGULARITY OF RECEIPTS OF GIFTS. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 61 (II) IN THE CASE OF C.P. CHITRARASU 168 ITR 534 (SUPRA) ALSO IT WAS A CASE OF SOLITARY GIFT AND HE WAS ONLY A MEMBER OF D MK PARTY AND HIS PERFORMANCE AS AUTHOR LED THE HONBLE MADRAS H IGH COURT TO HOLD THAT IT WAS NOT FROM VOCATION OR PROFESSION. (III) IN THE CASE OF DILIP KUMAR ROY V. CIT 94 ITR 1 (SUP RA) DEPARTMENT DID NOT INVOKE SECTION 28(IV). (IV) CASES OF MAHESH PATTANI; ABDUL GANI GURDEJI AND DA VID MICHEL (SUPRA) ALL THESE CASES ARE OF SOLITARY GIFTS. 12.7. ACCORDING TO LD DR THE REGULARITY AND LENGTH OF TIME OF RECEIPTS OF GIFTS ASSESSEES POLITICAL PERSONALITY AND WORK TO GETHER WITH THE MANNER OF RECEIVING GIFTS ARE INEXTRICABLY LINKED WITH VOCATI ON OF POLITICS AND HENCE GIFTS ARE TAXABLE UNDER THE HEAD INCOME FROM BUSINE SS AND PROFESSION. 12.8. POLITICAL STATUS AND HER WORK IN THAT FIELD A RE CAUSA CAUSANS FOR THE RECEIPT OF GIFTS WHICH MEANS INCIDENCES PRIOR TO A CAUSE WHICH ARE MATERIAL INCIDENCES FOR A PARTICULAR CAUSE I.E. REC EIPT OF THESE GIFTS. 12.9. IT WAS PLEADED THAT IMPLIED QUID PRO QUO IS I NVOLVED IN ALL THESE GIFTS BETWEEN DONORS AND ASSESSEE WHICH INCLUDES MOTIVES OF SERVING OF AN INTEREST OR POSSIBILITY OF SERVING OF AN INTEREST. ASSESSEE BEING IN AN INFLUENTIAL POSITION CAN BE OF SOME USE IN FUTURE THESE FACTORS CONSTITUTE A QUID PRO QUO FOR THESE GIFTS. DONORS MAY HAVE ADMIR ATION BUT THE GIFTS WERE PAID TO A POLITICAL PERSONALITY WHO WANTED TO BE RE COGNIZED. IT WAS PLEADED THAT THE ASSESSEE BEING IN THE PROFESSION OF POLITI CS AND GIFTS BEING DIRECTLY ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 62 ATTRIBUTABLE TO AND IN THE COURSE OF EXERCISE OF P ROFESSION OR VOCATION GIFTS UPTO RS. 25 000/- WERE RIGHTLY TAXED AS BUSINESS IN COME OF THE ASSESSEE. 12.11. SECTION 56 HAS BEEN INSERTED ONLY TO TREAT G IFTS ABOVE RS. 25 000/- AS INCOME FROM OTHER SOURCES AND IT DOES NOT MEAN TH AT OTHER GIFTS ARE ALLOWED BY THIS SECTION AS TAX FREE PROPER HEAD EX ISTS U/S 28 TO TAX GIFTS UPTO RS. 25 000/- AS INCOME FROM BUSINESS OR PROFESSION. THE ORDER OF AO WAS RELIED ON. 13. LEARNED COUNSEL FOR ASSESSEE DR. RAKESH GUPTA ADVOCATE VEHEMENTLY CONTENDS THAT IT IS A SETTLED PROPOSITION UNDER THE INCOME TAX LAW THAT A PERSON CAN HAVE CAPITAL RECEIPTS WHICH ARE NOT REGA RDED AS INCOME ALONG WITH TAXABLE INCOME. MERELY BECAUSE ASSESSEE IS IN POLITICS EVERY RECEIPT CANNOT BE HELD TO BE VOCATIONAL INCOME. IN ORDER TO TAX PERSONAL GIFTS RECEIVED BY ASSESSEE ON HER BIRTH DAY IT IS ESSENTI AL TO EXAMINE THE NATURE OF VOLUMINOUS EVIDENCE AND DOCUMENTS FILED BY HER. 13.1. ALL THE GIFTS RECEIVED BY THE ASSESSEE WERE C OLLECTED AND PRESENTED BY THE DONORS TO CELEBRATE THE OCCASION OF HER BIRTHDA Y THEY WERE GIVEN BY HER PERSONAL FRIENDS ADMIRERS AND WELL WISHERS OUT OF THEIR LOVE AND AFFECTION FOR THE ASSESSEE AND ARE CUSTOMARY IN NATURE. SHE I S HEAD OF A MAJOR POLITICAL PARTY WORKING FOR THE UPLIFTMENT OF THE DOWNTRODDEN AND SUPPRESSED SECTION OF THE SOCIETY HER OWN PERSONAL HONESTY INTEGRITY DYNAMISM AND SUCCESS IN BRINGING ABOUT A SOCIAL REVOLUTION AND CHANGE IN TH E MINDSET OF THE SOCIETY TOWARDS ACCEPTANCE OF THE BACKWARD CLASSES. THESE P ERSONAL QUALITIES HAVE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 63 WON HER MANY ADMIRERS FANS AND WELL WISHERS BELONG ING TO ALL WALKS OF LIFE SPREAD ALL OVER INDIA. MANY OF THEM OUT OF FEELIN GS OF APPRECIATION AND GRATITUDE FOR THESE PERSONAL QUALITIES HAVE VOLUNTA RILY MADE GIFTS TO THE ASSESSEE ON THE OCCASION OF HER BIRTHDAY EXHIBITING THEIR LOVE AND AFFECTION. THESE GIFTS ARE OFFERED BY THE DONORS FOR PERSONAL QUALITIES AND NOT FOR POLITICS OR POLITICAL PARTY. MANY WELL WISHERS OFF ERED WITH CASH GIFTS WHICH WERE POLITELY DECLINED BY ASSESSEE TO AVOID CONTROV ERSIES RELATED TO CASH. THE DONORS THEN SENT DEMAND DRAFTS WITH GIFT DEEDS ; AS A RESULT SOME DEMAND DRAFTS BEAR DATE AFTER BIRTH DAY. AN AFFIDAV IT BY THE ASSESSEE CONFIRMING THESE FACTS IS ON RECORD. 13.2. THE ASSESSEES WORK FOR UPLIFTMENT OF THE DOW NTRODDEN AND SUPPRESSED SECTION OF THE SOCIETY DOES NOT FALL IN THE PURVIEW OF BUSINESS OR PROFESSION OF POLITICS. ASSESSEE NEITHER CHARGES ANY FEE FOR S ERVICES RENDERED TO THE COMMUNITY AT LARGE NOR EXPECTS ANY RETURN IN ANY FO RM FOR HER SELFLESS SOCIAL SERVICE. HER WORK IS DEDICATED TO DALIT MASSES SPRE AD ACROSS INDIA AND NOT FOR ANY PARTICULAR INDIVIDUAL OR GROUP OF INDIVIDUALS. THE WORK IS DEVOTED FOR NATION AT LARGE AND NOT FOR ANY FOLLOWER OR FOR ANY PERSONAL BENEFITS OF ANY KIND ASSURED OR IMPLIED TO ANY PERSON. 13.3. THERE IS NO QUID PRO QUO BETWEEN THE DONORS A ND ASSESSEE EITHER EXPRESS OR IMPLIED TO RECIPROCATE ANY FAVOR OR CON SIDERATION FOR THE GIFT ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 64 RECEIVED. THE GIFTS RECEIVED ARE PURELY CUSTOMARY BY DESCRIPTION PERSONAL PRESENTED BY DONORS EX-GRATIA OUT OF LOVE AND AFFE CTION FOR HER PERSONAL QUALITIES. THEY CAN NOT BE HELD AS VOCATIONAL RECEI PTS AND BROUGHT TO TAX BY TWISTING THE FACTS IRRELEVANT ANALOGIES AND TAKING A CONTRADICTORY STANDS ABOUT THE HEAD OF INCOME FROM THE SAME SOURCES OF G IFTS HAVING SIMILAR TYPE OF CONFIRMATIONS. 13.4. IN THE DECISION IN EPHARAM V. CIT (1989) 176 ITR 78 (KER) THE HONBLE COURT HAS OBSERVED THAT IN ORDER TO CONSTI TUTE THE RECEIPT AND THE SERVICE RENDERED I.E. RENDERING OF SERVICE WAS CAUS E CAUSANS OF THE RECEIPT. THIS LINE OF THINKING OF DIFFERENT COURTS IS FURTHE R ENDORSED IN DILIP KUMAR ROY V. CIT (1974) 94 ITR 1 (BOM.) IT IS HELD THAT HAVING REGARD TO THE PROVISIONS OF SECTION 10 OF THE ACT IT CANNOT BE DI SPUTED THAT IT IS ONLY THE RECEIPTS ARISING OUT OF PROFITS OR GAINS OF BUSINES S PROFESSION OR VOCATION THAT CAN BE SUBJECTED TO TAX UNDER THAT SECTION BU T IT IS A PROFESSIONAL GIFT FOR PERSONAL QUALITIES OF THE ASSESSEE AND AS A TOKEN O F PERSONAL ESTEEM IT CANNOT BE SUBJECTED TO TAX. IT IS WELL SETTLED BY SECTION 3 AND 4 OF THE ACT THAT THE ACT IMPOSES A GENERAL LIABILITY TO TAX UPON ALL INC OME BUT IT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TAX. IN ALL CASES WHERE A RECEIPT IS SOUG HT TO BE TAXED AS INCOME THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 65 PROVISION. IF THE GIFT IS OFFERED FOR THE PERSONAL QUALITIES OF THE DONEE AS A TOKEN OF PERSONAL ESTEEM AND VENERATION IT CANNOT B E SUBJECTED TO TAX AS INCOME ARISING OUT OF BUSINESS PROFESSION OR VOCAT ION UNDER SECTION 10 OF THE ACT. 13.5. IT IS FURTHER CONTENDED BY LD COUNSEL THAT IN THE CASE OF DAVID MITCHELL V. CIT (1958) 30 ITR 701 HONBLE CALCUTTA HIGH COU RT HELD THAT THE TEST TO BE APPLIED IN SUCH CASES HAS BEEN CLEARLY STATED IN THE WELL KNOWN CASE OF COOPER V. BLAKISTON (1908) 5 TC 347 (HL) WHICH IS POPULARLY KNOWN AS THE EASTER OFFERINGS CASE AND WHICH IS REGISTERED A S THE ROOT AUTHORITY ON THE SUBJECT. LORD LOREBURN L.C. MADE THE FOLLOWING STA TEMENT OF THE LAW: WHERE A SUM OF MONEY IS GIVEN TO AN INCUMBENT SUBSTANTIALLY IN RESPECT OF HIS SERVICES AS INCUMBENT IT ACCRUES TO HIM BY REASON OF HIS OFFIC E .. HAD IT BEEN A GIFT OF AN EXCEPTIONAL KIND SUCH AS A TESTIMONIAL OR A CONTRIBUTION FOR A SPECIFIC PURPOSE AS TO PROVIDE FOR A HOLIDAY OR A SUBSCRIPTION PECULIARLY DUE TO THE PERSONAL QUALIFIES OF THE PARTICULAR CLERGYMAN IT MIGHT NOT HAVE BEEN A VOLUNTARY PAYMENT OR SERVICES BUT A MERE PRESENT. THE GIFTS GIVEN BY HER PERSONAL FRIENDS AND ADMIRERS WAS OUT OF THEIR LOVE AND AFFECTION DUE TO HER CONTRIBUTION FOR A SOCIAL CAUSE AND IS PECULIAR LY DUE HER PERSONAL QUALITIES. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 66 13.6. LD COUNSEL FURTHER RELIED ON : MAHESH ANANTRA I PATTANI & ANOTHER VS. CIT 41 ITR 481 (SC);PATTABHIRAMI SEETHARAMAMMA V. CIT AP 57 ITR 532 (SC); DILIP KUMAR ROY V. CIT 94 ITR 1 (BOM.); C IT V. PROF. P.G. NATH 234 ITR 854 (DEL.); ABDUL GANI GURDEJI 213 ITR 798 (RAJ.); CIT VS. M. BALAMRALIKRISHNA 171447 (MAD.); CIAT VS. RAJAMANICK AM 149 IOTR 85 ALSO FOLLOWED IN C.P. CHITRARASU VS. CIT 160 ITR 53 4 (MAD.); DAVID MITCHELL VS. CIT 30 ITR 701 (CAL.); CIT V. K.R. HON NAPA 180 ITR 66 (KAR) 13.7. NOTED JURIST SHRI PALKHIWALA IN HIS BOOK LAW & PRACTICE OF INCOME TAX VOLUME I NINTH EDITION BASED ON NUMEROUS JUD ICIAL DECISIONS HAS GIVEN A COMMENTARY IS AS UNDER : 1. A GIFT WHICH HAS THE PERSONAL ELEMENT IN ESSENCE IS NOT INCOME AT ALL. 2. GIFT TO THE OFFICE HOLDER BY WAY OF REMUNERATION FO R THE OFFICE IS TAXABLE. BUT PERSONAL GIFTS GIVEN ON PERSONAL GROU NDS AND AS PERSONAL TESTIMONIAL OR AS A TOKEN OF PERSONAL ESTEEM RESPE CT REGARD VENERATION OR TO MARK AN OCCASION IS NOT AN INCOME. 3. A PERSONAL GIFT DOES NOT BECOME INCOME MERELY BECAU SE IT IS REPEATED YEAR AFTER YEAR. 13.8. LD COUNSEL PLACED RELIANCE ON THE DECISIONS O F : (I) HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHESH ANANTRAI PATTANI 41 ITR 481 HOLDING THAT A GIFT WH ICH IS PERSONAL IN THE SENSE THAT IT IS GIVEN TO THE PERSO N NOT AS HOLDER OF OFFICE OR EMPLOYMENT BUT AS A PERSONAL TE STIMONIAL OR TOKEN OF PERSONAL ESTEEM AND VENERATION OR TO MA RK AN OCCASION IS NOT INCOME; ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 67 (II) HONBLE BOMBAY HIGH COURT IN THE CASE OF DILIP KUMA R ROY VS. CIT 94 ITR 1 HOLDING THAT MERELY BECAUSE AN ASSESSEE CARRIES ON A VOCATION THERE IS NO PRESUMP TION UNDER THE LAW THAT ANY AMOUNT RECEIVED BY HIM IS INCOME S UBJECT TO TAX. TEST IS AS TO WHETHER AMOUNT IS PAID TO HIM FOR THE SERVICES RENDERED. 13.9. THE ISSUE WHETHER A GIFT IS FOR PERSONAL ESTE EM OR FOR THE SERVICES RENDERED AS HOLDER OF AN OFFICE IS ESSENTIALLY A QU ESTION OF FACT TO BE DECIDED IN THE LIGHT OF THE EVIDENCES AND THERE CAN BE NO B LANKET PROPOSITION OF LAW THAT GIFT WOULD ALWAYS BE RECEIVED BY A PERSON FOR PERSONAL QUALITIES OR GIFT WOULD BE RECEIVED BY A HOLDER OF AN OFFICE AS CONSI DERATION FOR THE OFFICE ONLY. 13.10. LD. COUNSEL THEN REFERRED TO SOME OF THE AFF IDAVITS GIVEN BY THE DONORS WHICH ARE FILED IN THE PAPER BOOK WHICH DEMO NSTRATE THAT THESE GIFTS WERE GIVEN BY THE DONORS OUT OF LOVE AFFECTION RE SPECT ADMIRATION AND VENERATION OF THE PERSONAL QUALITIES OF THE ASSESSE E ON THE OCCASION OF BIRTHDAY OF THE ASSESSEE AS PERSONAL TESTIMONIALS. THE CONTENTS OF THE AFFIDAVITS HAVE NOT BEEN DISPROVED BY ANY CONTRARY EVIDENCE.ONLY SOME OBJECTIONS ARE RAISED ABOUT SAME PROFORMA BANK SER IAL NOS. OF DDS. TO CELEBERATE HER BIRTH DAY DONORS AMONG THEMSELVES DE CIDE TO HAVE COMMON PROFORMAS CANNOT BE HELD AGAINST THE ASSESSEE. THES E AFFIDAVITS HAVE BEEN OTHERWISE ACCEPTED BY ASSESSING OFFICER WHICH IS EV IDENT FROM HIS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 68 OBSERVATIONS IN PARA 8 OF THE ASSESSMENT ORDER FOR A.Y. 2005-06 TO THE EFFECT THAT NO ADVERSE INFERENCE IS TAKEN IN THIS ASSESSMENT YEAR REGARDING THE GENUINENESS OF THE GIFTS 13.11. THERE IS NO JUSTIFICATION ON THE PART OF AO TO RELY ON ONE PART AND REJECT OTHER PART S OF AFFIDAVITS WHICH IN CLEAR TE RMS DEPOSE THAT THESE GIFTS WERE GIVEN OUT OF LOVE AND AFFECTION FOR PERSONAL Q UALITIES. THERE WAS NO BASIS OR JUSTIFICATION ON THE PART OF AO TO ASSUME WITHOUT CONTROVERTING THE EVIDENCE ON RECORD THAT GIFTS WERE RECEIVED BY THE ASSESSEE IN THE EXERCISE OF HER VOCATION AS POLITICIAN OF BACKWARD MASSES. 13.12. HONBLE SUPREME COURT IN THE CASE OF GAURI P RASAD BAGARIA 42 ITR 112 HELD THAT ONCE CONTENTS OF THE AFFIDAVITS WERE ACCEPTED THERE IS NO SCOPE FOR SURMISES. FURTHER REFERENCE IS MADE TO THE DECI SIONS REPORTED AT 234 TIR 854 (DELHI) AND 94 ITR 1 (BOM) FOR THE PROPOSITION THAT LEGAL EFFECT OF THE DOCUMENTARY EVIDENCE CANNOT BE IGNORED WITHOUT THER E BEING CONTRARY EVIDENCE AND THE AFFIDAVITS ONCE ACCEPTED CANNOT BE DISBELIEVED IN THE SAME BREATH. 3.13. IT IS FURTHER PLEADED THAT THE REVENUE IS A DOPTING A BLOW HOT AND BLOW COLD APPROACH TO ASSESSEES CASE. GIFTS IN EXCESS O F RS. 25000/- ARE BEING ACCEPTED AS GIFTS BY ASSESSING OFFICER FOR DEEMING THEM AS INCOME FROM OTHER SOURCES U/S 56(2) (V). GIFTS UPTO RS. 25000/ - THOUGH OF IDENTICAL ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 69 NATURE ARE BEING TREATED AS VOCATIONAL INCOME. THE RE IS NO VALID JUSTIFICATION FOR A.O. TO TREAT THE GIFTS AS REPRESENTING DIFFERE NT CHARACTER/NATURE. THE OPTION OF ASSESSING OFFICER IN ACCEPTING GIFTS ABO VE RS. 25 000/- AS INCOME FROM OTHER SOURCES U/S 56(2)(V) PUTS AN ES TOPPEL ON HIM TO TAKE CONTRADICTORY STAND ON THE SAME SET OF FACTS. 13.14. LEGISLATURE HAS INTRODUCED SEC. 56(2) V WITH A PROPER SCHEME IN AS MUCH AS THE RECEIPTS WITHOUT CONSIDERATION WHICH I NCLUDE GIFTS HAVE BEEN INTENDED TO BE SPECIFICALLY TAXED UNDER THE HEAD IN COME FROM OTHER SOURCES AND FURTHER DIVIDED INTO ABOVE TWO CATEGORIES SMAL LER GIFTS HAVE BEEN INTENDED TO BE NON TAXABLE AND GIFTS ABOVE 25 000/- HAVE BEEN TAXED UNDER THIS HEAD. A.O. HAS FAILED TO COMPREHEND THIS CLEAR SCHEME OF THE I.T. ACT INTENDED BY LEGISLATURE AND THE RECEIPTS OF SAME NA TURE AND SOURCE HAVE BEEN GIVEN DIFFERENT TREATMENT WITHOUT ANY JUSTIFICATION AND IN VIOLATION OF THIS SCHEME. IF THE GIFTS WERE VOCATIONAL INCOME THERE W AS NO QUESTION OF TAXING GIFTS UPTO RS. 25 000/- AS PART OF THE INCOME FROM THE VOCATION OF POLITICS WHEN HE HAS HELD THE OTHER GIFTS FOLLOWING LEGISLAT IVE MANDATE UNDER THE HEAD INCOME FROM OTHER SOURCES. 13.15. HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.R. HONNAPPA 180 ITR 660 HAVE HELD THAT BEING MLA MIGHT HAVE AFF ORDED HIM AN OPPORTUNITY TO RENDER SERVICE IN THE CONSTITUENCY T O THE PEOPLE IN GENERAL AND ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 70 EARN THEIR ESTEEM BUT PAYMENT ON ACCOUNT OF SUCH ES TEEM OR AFFECTION DOES NOT MEAN THAT IT ARISES FROM THE EXERCISE OF THE PR OFESSION OR VOCATION MERELY BECAUSE VOCATION AFFORDS AN OPPORTUNITY FOR EARNING THIS RECEIPT. HONBLE HIGH COURT FURTHER HELD THAT GIFT WAS NOT BY WAY OF QUID PRO QUO FOR THE SERVICES RENDERED BY HIM TO THE CONTRIBUTORS BUT IT WAS ON ACCOUNT OF HIS QUALITIES OR PERSONAL CHARACTER IN RENDERING SERVIC ES TO THE CONSTITUENCY IN GENERAL AND ON ACCOUNT OF THE ESTEEM IN WHICH HE WA S HELD. HONBLE HIGH COURT WENT FURTHER TO HOLD THAT HE BEING MLA MIGHT HAVE FACILITATED HIM TO RENDER SERVICES TO THE PEOPLE OF THE CONSTITUENCY A ND ALSO TO GENERAL PUBLIC BUT FOR THAT REASON ALONE IT CAN NOT BE ASSUMED TH AT GIFTS WERE FOR ANY SPECIFIC SERVICE TO ANY SPECIFIC CONTRIBUTOR. 13.16 IT IS CONTENDED THAT HONBLE HIGH COURT IN THIS DECISION CONSIDERED THE CASE LAWS REPORTED IN THE CASES OF - RAM KRIPAL TRIPATHY 125 ITR 408 PVG RAJU101 ITR 465 KRISHNAMENON35 ITR 48 AND DIS TINGUISHED THEM AND FOLLOWED THE DECISIONS OF RAJA MANICKAM 149 ITR 85 AND DILIP KUMAR ROY 94 ITR 1. 13.17. HONBLE MADRAS HIGH COURT IN THE CASE CIT VS . RAJA MANICKAM 149 ITR 85 HELD THAT BEING A POLITICIAN MIGHT HAVE FACI LITATED THE ASSESSEE TO RENDER SERVICES NOT ONLY TO THE DEVELOPMENT OF HIS PARTY AND TO GENERAL PUBLIC BUT RECEIPT OF DONATION CANNOT BE SAID TO BE RECEIPT IN THE EXERCISE OF ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 71 THE PROFESSION OR VOCATION. HONBLE HIGH COURT FURT HER HELD THAT THERE WAS NO QUID PRO QUO IN THE PAYMENT OF THE DONATIONS MAD E BY THE GENERAL PUBLIC AND THE PARTYMEN. HONBLE HIGH COURT CONSIDERED THE DECISION REPORTED IN THE CASE OF PVG RAJU. 13.18. HONBLE DELHI HIGH COURT AFTER CONSIDERING T HE DECISIONS REPORTED AT 35 ITR 48 (SC) 156 ITR 412 (SC) HELD IN THE CASE O F CIT VS. PROFESSOR P.G. NATH 234 ITR 854 THAT THE GOODWILL AND THE RESPECT THOUGH WAS EARNED BY THE ASSESSEE BY DINT OF HIS PAST PERFORMANCE THE A MOUNT COULD NOT BE SAID TO HAVE BEEN PAID TO HIM BY WAY OF REMUNERATION FOR AN Y PAST OR PRESENT SERVICES. 13.19. REFERRING TO HONBLE RAJASTHAN HIGH COURT I N THE CASE OF CIT VS. ABDUL GANI GURDEJI 213 ITR 789 THE FACTS ARE THE DONOR CLAIMED THAT HE WAS NOT BENEFITED FROM ANY PREACHING OR DISCOURSE O R ANY SPECIAL SERVICE OF THE ASSESSEE HE NOTICED SOME SUPERNATURAL POWER IN THE ASSESSEE AND BEING INFLUENCED BY THIS IMPRESSION PAID THE AMOUNT IN QU ESTION TO ASSESSEE. IT WAS HELD THAT IT IS A CLEAR CASE OF VOLUNTARY PAYMENT MADE TO THE ASSESSEE FOR HIS PERSONAL QUALITIES OR AS A MARK OF THE HIGH ESTEEM AND REGARD IN WHICH THE ASSESSEE WAS HELD BY THE DONOR AND THEREFORE NOT LI ABLE TO TAX. 13.20. HONBLE RAJASTHAN HIGH COURT WHILE RENDERING THIS JUDGMENT HAS CONSIDERED THE JUDICIAL DECISION OF KRISHNA MENON. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 72 13.21. HONBLE MADARS HIGH COURT IN THE CASE OF CIT VS. BALA MURLI KRISHNA 171 ITR 447 AFTER CONSIDERING THE DECISION OF KRIS HNA MENON HELD THAT THERE IS NO DIRECT NEXUS BETWEEN GIFTS AND HIS VOCA TION THOUGH IT MAY NOT BE DENIED THAT THERE IS AN INDIRECT CONNECTION BETWEEN THE TWO. THE REAL REASON FOR THE PAYMENT WAS THE ESTEEM AND REGARDS WHICH HI S ADMIRERS AND FANS HAD FOR HIM. IT WAS THE EXPRESSION OF THEIR GOODWILL FO R THE ASSESSEE WHICH WAS RESPONSIBLE FOR THIS GIFT. THOUGH IT MAY BE THAT TH E GOODWILL AND RESPECT HAVE BEEN EARNED BY THE ASSESSEE AS A RESULT OF HIS PAST PERFORMANCES THE AMOUNT CANNOT BE SAID TO HAVE BEEN PAID TO HIM BY WAY OF R EMUNERATION FOR THOSE SERVICES. 13.22. HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. B.M. SUNDERAVADANAM 148 ITR 333 HELD IN THE CASE OF DOCT OR WHO WAS COMPENSATED EARLIER FOR THE MEDICAL SERVICE PROVIDE D BY HIM WAS GIVEN GIFT BY THE SAME PATIENT AFTER TWO YEARS SUCH GIFT WAS NOT TREATED AS PROFESSIONAL INCOME IN THE HANDS OF THE ASSESSEE-DOCTOR ON THE G ROUND OF THE SAME HAVING BEEN GIVEN DUE TO PERSONAL ESTEEM AND REGARD. 13.23. MUMBAI BENCH OF THE ITAT IN THE CASE OF NI RMALA P. ATHAVALE VS. ITO 118 ITD 373 CONSIDERED THE CASES OF DILIP KUMAR ROY94 ITR1 AND KRISHNA MENON35 ITR 48 AND HELD THAT IN THE BACK G ROUND OF THE FACTS WHERE ASSESSEE NEVER CHARGED ANY FEE OR REMUNERATIO N FROM THE FOLLOWERS OR ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 73 THE PERSONS WHO ATTENDED THE LECTURES THERE WAS NO QUID PRO QUO ASSESSEE DID NOT HAVE ANY VESTED RIGHT TO RECEIVE ANY KIND O F PAYMENT AND THAT WHERE THERE WAS NO LEGAL CONTRACTUAL OR CUSTOMARY OBLIGA TIONS TO OFFER GIFTS SUCH GIFTS RECEIVED BY ASSESSEE WERE HELD AS NON TAXABLE . 13.24. LD COUNSEL CONTENDS THAT IN ALL THESE CASES GIFTS HAVE NOT BEEN GIVEN ON THE BIRTH DAY WHEREAS IN ASSESSES CASE THE GIFTS HAVE BEEN SPECIFICALLY RECEIVED ON THE SOLEMN OCCASION OF BIRTH DAY WHICH IS CELEBRATED BY THE PUBLIC AT LARGE INCLUDING FOLLOWERS AND PARTY WORKE RS. LOOKING AT THE CONTENTS OF AFFIDAVITS THE OCCASION OF BIRTH DAY A ND OTHER FACTORS LEADING TO THESE GIFTS IT CANNOT BE ASSUMED THAT THE DONORS W ANTED OR ANTICIPATED FAVORS OR THEY PRESUMED THAT THEIR NAMES WILL BE REGISTERE D IN ASSESSEES MEMORY THEREFORE THERE IS IMPLIED QUID PRO QUO. THE REVEN UE HAS DEVISED A LONG WINDING HYPOTHETICAL THEORY BASED ON PURELY GUESS W ORK WHICH CANNOT BE A BASIS FOR LEVYING TAX ON A PART OF GIFTS. 13.25. IN THE BACK GROUND OF THESE FACTS ARGUMENTS AND JUDICIAL DECISIONS IT IS PLEADED THAT THE PART OF GIFTS RECEIVED BY THE A SSESSEE CAN NOT BE BROUGHT TO TAX AS INCOME FROM VOCATION OF POLITICS ON SELECT IVE BASIS. 13.26. RESPONDING TO THE DRS PROPOSITION THAT THES E GIFTS WERE RECEIVED BY THE ASSESSEE NOT FOR HER PERSONAL QUALITIES BUT FOR THE VOCATION OF POLITICS AND THAT MOST OF THE GIFTS WERE GIVEN BY HER SUPPORTERS OF THE PARTY OF WHICH SHE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 74 HAS BEEN PRESIDENT OR VICE PRESIDENT WERE AND QUID PRO QUO IS INBUILT IT IS VEHEMENTLY ARGUED THAT THESE FINDINGS ARE CONTRARY TO EVIDENCE ON RECORD WHICH CLEARLY DEMONSTRATES THAT GIFTS RECEIVED BY T HE ASSESSEE ARE NOT IN CONSIDERATION OF ANY QUID PRO QUO AND WERE MEANT FO R HER PERSONAL QUALITIES ONLY. ASSESSEE EARNED TREMENDOUS PERSONAL RESPECT A ND ADMIRATION FOR HER UNSTINTED SUPPORT FOR THE CAUSE OF DALITS OVER THE YEARS AND GIFTS WERE RECEIVED ON SOLEMN OCCASION OF HER BIRTH DAY OUT OF LOVE AND AFFECTION AND NOT FOR ANY FAVOR OR QUID PRO QUO OR OF ANY IMPLIED SUGGESTION FOR ANY SERVICE TO BE RENDERED TO DONORS. EVIDENCES FURNISH ED BY THE ASSESSEE CAN NOT BE DISLODGED ON SURMISES AND PARTICULARLY IN TH E ABSENCE OF ANY CONTRARY EVIDENCE. LD. DRS RELIANCE ON FACTS OF GROWTH OF D ONORS/DONATIONS AND THUS TO SHOW MORE AND MORE FOLLOWING & FOLLOWERS AMOUNT S TO POLITICAL VOCATION IS MISPLACED IN AS MUCH AS IF MORE AND MO RE PERSONS CAME FORWARD DUE TO ADMIRATIONS OF THE PERSONAL QUALITIES OF THE ASSESSEE IT DOES NOT CONVERT PERSONAL QUALITIES INTO VOCATION OF POLITIC S. THE GIFTS RECEIVED ON A SOLEMN BIRTH DAY OCCASION FOR NATURAL LOVE AND AFFE CTION ACQUIRED OUT OF PERSONAL QUALITIES ESTEEM AND VENERATION FOR ASSES SEE CANNOT BE HELD AS PROFESSIONAL OR VOCATIONAL RECEIPTS MERELY BECAUSE ASSESSEE HAPPENS TO BE A POLITICIAN. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 75 13.27. RESPONDING TO SOME AFFIDAVITS RELIED ON BY L EARNED DR THE LD. COUNSEL OF THE ASSESSEE CONTENDS THAT PAGES 36 38 41 ARE IN FAVOR OF THE ASSESSEE AS THESE ARE THE DEPOSITIONS TO THE EFFECT THAT THE GIFTS HAVE BEEN GIVEN FOR LOVE AND AFFECTION TO THE ASSESSEE. PAGE 16 IS OF NO USE AS NO GIFT WAS RECEIVED BY THE ASSESSEE FROM THIS PERSON. PAGE 11 IS FROM ONE MR. UPENDRA WHOSE GIFT HAS BEEN ACCEPTED AS PERSONAL BY AO IN ASSESSMENT ORDER OF A.Y. 04-05. PAGE 1 48 SHOWS THE RESPECT O F THE DONORS FOR ASSESSEE AND PERSONAL GIFTS AND IN ANY CASE THESE GIFTS RELA TE TO A.Y. 2004-05 13.28. RESPONDING D.RS CONTENTION THAT THE PUBLIC CALL WAS MADE TO DONATE TO PARTY TO CELEBRATE HER BIRTHDAY AS ARTHIK SAHYOG DIVAS OF THE PARTY IT IS CONTENDED THAT IT WAS FOR THE DONORS TO CHOOSE THE DONE BESIDE REVENUE HAS NOT QUESTIONED THE GIFTS AND HAS DIFFERED ON TAXABI LITY AS THE VOCATIONAL INCOME. THIS ARGUMENT HAS NO BEARING ON THE ISSUE I N AS MUCH AS THE RECEIPTS OF GIFTS HAVE BEEN ACCEPTED ALBEIT AS VOC ATIONAL INCOME AGAINST THE ASSESSES CLAIM OF PERSONAL GIFTS. 13.29. IN KRISHNAMENONS CASE(35 ITR 48) THE DONOR MR. LEVY ACCEPTED THAT I HAVE HAD THE BENEFIT OF HIS TEACHINGS ON VEDENTA WHICH SHOWS THAT THERE WAS QUID PRO QUO WHEREAS IN THIS CASE DONORS HAVE NOT ACCEPTED THAT THEY WERE BENEFITED IN ANY MANNER. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 76 14. WE HAVE HEARD THE RIVAL SUBMISSION MATERIAL AV AILABLE ON RECORD AND CASE LAWS. THE FIRST AND FOREMOST QUESTION TO BE DE CIDED IS WHETHER THE GIFTS ARE RECEIVED BY THE ASSESSEE DURING THE PURSUANCE O F HER PROFESSION OR VOCATION OF POLITICS OR THE THEY ARE RECEIVED IN PE RSONAL CAPACITY . 14.1. ALTHOUGH AO HERE AND THERE RAISED CERTAIN I SSUES ABOUT THE BULK AFFIDAVITS NOTORISATION BANK DRAFTS WHICH HAVE CO MMON FEATURES AND GIFTS BEING A SCHEME TO ACCUMULATE MONEY. HOWEVER ULTIMAT ELY AO HAS HELD THESE GIFTSTO BE ASSESSES RECEIPTS. THEREFORE ONLY RELEVANT DISPUTE IS WHETHER THE GIFTS CLAIMED AS PERSONAL RECEIPTS CAN BE TREAT ED AS VOCATIONAL RECEIPTS BY AO. 14.2. ASCERTAINMENT OF THE NATURE OF GIFTS IS ESSEN TIALLY A QUESTION OF FACT THE APPLICABILITY OF CASE LAWS INTERPRETATION AND LEGISLATIVE INTENT FOR AMENDMENTS SHALL FOLLOW LATER. 14.3. THE CONTENTS OF AFFIDAVITS DO NOT SPELL OUT A NY CONSIDERATION OF ANY DIRECT OR INDIRECT BENEFIT WHICH ACCRUED OR WAS PRO MISED TO DONORS MOST OF THEM DEPOSE THAT THE ASSESSEE IS A DALIT LEADER WHO HAS WORKED HARD FOR THE UPLIFTMENT OF DOWNTRODDEN MASSES GIFTS ARE BEING G IVEN AS A VENERATION OF HER QUALITIES IN CRUSADE OF SOCIAL DEVELOPMENT ETC. APPARENTLY THEY DO NOT REFER TO ANY QUID PRO QUO. BY VARIOUS ARGUMENTS REV ENUE HAS TAKEN A STAND - THAT THE GIFTS ARE INDUCED BY THE FACT OF HER BEING AN INFLUENTIAL POLITICAL ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 77 LEADER AND NOT BY HER PERSONAL QUALITIES. THE QUID PRO QUO PERCEIVED BY DONORS IS TO GET RECOGNIZED IN HER MEMORY FOR ANY P OSSIBLE FAVORS WHICH MAY BE DERIVED IN FUTURE. IN THE ENTIRE LENGTH AND BREADTH OF THE ARGUMENTS AO HAS NOT POINTED OUT ANY DONOR WHO HAS STATED TO HAVE RECEIVED ANY DIRECT OR INDIRECT FAVOR. REVENUE ON THE BASIS OF VARIOUS CASE LAWS AND ARGUMENTS HAS STRESSED THAT DONEES EXPECTATION ABOUT POSSIBL E BENEFITS WAS A COMPELLING FACTOR FOR MAKING GIFTS THEREFORE THE N ATURE OF THESE GIFTS IN THE HANDS OF ASSESSE IS OF VOCATIONAL RECEIPTS. IT HAS BEEN PLEADED THAT THE ASSESSES IDENTIFICATION AS AN INFLUENTIAL POLITICAL LEADER AND WITH BSP IS TOTAL THEREFORE GIFTS ARE INEXTRICABLY LINKED TO HER VOC ATION AS A POLITICIAN. PROVISIONS OF SEC 28 OF I T ACT ARE CLEARLY APPLICA BLE TAXING SUCH RECEIPTS. A PERTINENT ARGUMENT HAS BEEN RAISED THAT THE RECEIPT IS TAXABLE BY ITS NATURE IN THE HANDS OF DONE/ASSESSEE AND NOT HOW DONOR INTEND ED IT TO BE. REVENUE RELIES ON THE CASE OF PVG RAJU THAT POLITICS IS A V OCATION AND ASSESSEE HAS NOT DISPUTED IT. REVENUE HAS RELIED ON VARIOUS JUDG MENTS WHICH HAVE BEEN CONSIDERED IN OUR VIEW CASES OF KRISHNA MENON KG EORGETHOMS RAMKRIPALTRIPATHY GOVINDLALJI RANCHHODJI(SUPRA) W HO WERE ALL PROMINENT RELIGIOUS PREACHERS HAVE BEEN STRONGLY RELIED BY TH E REVENUE WHICH ARE BEING CRITICALLY DISCUSSED. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 78 14.4. ASSESSEES FIRM STAND IS TO THE EFFECT THAT G ENUINENESS OF THE GIFTS GIVEN ON THE OCCASION OF HER BIRTH DAY HAS NOT BEEN QUESTIONED BY THE AO AFFIDAVITS AND THEIR DEPOSITIONS HAVE NOT BEEN CONT ROVERTED THEREFORE THE EVIDENCE ON RECORD STANDS ACCEPTED. QUESTION ABOUT NATURE OF RECEIPT IS CLEAR FROM DEPOSITIONS WHICH DEMONSTRATE OF DONORS THAT T HE GIFTS WERE MADE FOR HER PERSONAL QUALITIES AND NOT FOR HER POLITICAL VO CATION. ASSESSEE MAY BE AN IMPORTANT FIGURE IN BSP PARTY HOWEVER IT IS A CADR E BASED PARTY WITH A DEMOCRATIC CONSTITUTION HAVING A BIG ORGANIZATIONAL SETUP. BEFORE HER BECOMING PRESIDENT SHE WORKED IN DIFFERENT POSTS U NDER THE STEWARDSHIP OF LATE SHRI KANSHIRAM. THERE IS NO SIGNIFICANCE OF WO RDS COINED AS SUPREMO SHE IS POPULARLY KNOWN AS BAHENJI. THEREFORE IT IS A MISNOMER TO PROPOSE THAT HER IDENTIFICATION WITH BSP IS TOTAL AND HE HA S NO PERSONAL INDIVIDUALITY. 14.5. NO PERSONAL BENEFIT HAS BEEN PROMISED OR GIVE N TO ANY DONOR MANY OF THEM ARE EVEN NOT KNOWN TO HER REVENUES CLAIM ABOU T QUID PRO QUO OR POSSIBILITY THEREOF OR ASSESSEE HAVING INFLUENCED THEM TO THINK SO ARE ALL FARFETCHED ASSUMPTIONS. 14.6 IN OUR CONSIDERED VIEW INCOME TAX ACT RECOGNIZ ES DUAL CAPACITIES OF ANY ASSESSEE I.E. TO ACQUIRE NON TAXABLE PERSONAL/C APITAL RECEIPTS AND TAXABLE RECEIPTS ASSESSEE IN THIS CASE CANNOT BE TREATED A S AN EXCEPTION TO THIS PROPOSITION. REVENUES EMPHASIS IS TO THE EFFECT TH AT THE ASSESSES PERSONA IS ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 79 INEXTRICABLY LINKED WITH HER POLITICS THEREFORE WHA TEVER SHE RECEIVES AMOUNTS TO VOCATIONAL RECEIPTS. IN OUR VIEW THIS VIEW MILIT ATES AGAINST THE BASIC SCHEME OF THE INCOME TAX ACT WHICH PRESCRIBES THAT ANY PERSON CAN HAVE NONTAXABLE RECEIPTS INCLUDING GIFTS. THEREFORE MER ELY BECAUSE ASSESSEE IS IN POLITICS MEMBER PARLIAMENT AND PRESIDENT BSP WILL NOT DEPRIVE HER OF ORDINARY TREATMENT UNDER INCOME TAX LAW. IT CANNOT BE HELD THAT HER IDENTIFICATION WITH POLITICS OR BSP IS SO TOTAL THA T SHE CAN NO MORE HAVE ANY PERSONAL IDENTITY 14.7. REVENUE HAS FURTHER ARGUED THAT THE GIFTS RE CEIVED BY ASSESSEE ARE IN CONSIDERATION OF QUID PRO QUO INFLUENCED BY ASSESSE S POLITICAL STATURE. IN DONORS AFFIDAVITS THERE IS NO REFERENCE TO ANY DIRE CT INDIRECT OR PROMISED FAVOR EXTENDED BY ASSESSEE. BULK OF GIFTS NO. OF A FFIDAVITS BULK ISSUANCE OF DDS AND NOTORIZATION ARE TREATED BY REVENUE TO BE A DVERSE SURROUNDING CIRCUMSTANCES TO HOLD THAT DONORS WERE INFLUENCED O R INDUCED TO OFFER GIFTS TO ASSESSEE BY HER POLITICAL VOCATION. IN OUR VIEW ASCERTAINMENT OF QUID PRO QUO IS A SINE QUA NON TO HOLD THAT GIFTS WERE VOCAT IONAL RECEIPTS OF THE ASSESSEE. IN KRISHNA MENON CASE DONOR/DISCIPLE MR. LEVY STATED THAT HE WAS PERSONALLY BENEFITTED FROM HIS VEDANTA TEACHINGS T HEREFORE THE QUID PRO QUO WAS ESTABLISHED. IN THE CASE OF DR K GEORGE THOMAS HONBLE SUPREME COURT AFFIRMED THE ORDER OF HIGH COURT HOLDING THAT THERE WAS NO EVIDENCE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 80 THAT GIFT WAS GIVEN FOR PERSONAL QUALITIES. IN RAMK RIPAL TRIPATHY CASE DISCIPLES WERE SUPPOSED TO BEAR ASSESSEES TRAVELLI NG EXPENSES IN LIEU THEREOF THEY GAVE THE MONEY TO PURCHASE THE CAR. THERE WAS UNDERSTANDING TO DEFRAY EXPENSES CLEARLY SUGGESTS EXISTENCE OF QUID PRO Q UO. 14.8. THE ISSUES ABOUT THE GIFTS BEING OFFERED ON P ARTYS CALL OR ITS NAME ON DEMAND DRAFTS ARE NOT RELEVANT INASMUCH AS AO HAS ULTIMATELY HELD THESE GIFTS AS ASSESSEES RECEIPTS AND THE DISPUTE IS IN RESPECT OF HEAD OF INCOME AND PERSONAL VERSUS PROFESSIONAL RECEIPT. 14.9. IN OUR VIEW NO DEMONSTRATIVE EVIDENCE IS BR OUGHT ON RECORD BY AO TO CONTRAVEN THE AFFIDAVITS OR CROSS EXAMINATION OF DONORS THAT GIFTS CARRIED ANY PERCEPTIBLE OR INTENDED QUID PRO QUO. FROM THE READING OF AFFIDAVITS IT EMERGES THAT THE DONORS OFFERED THEIR GIFTS AS TOKE N FOR APPRECIATION OF HER REFORMATIVE WORK OF UPLIFTMENT OF DALITS. IN THESE FACTS AND CIRCUMSTANCES WE ARE UNABLE TO NOTICE ANY POTENTIAL EVIDENCE OR INFE RENCE AGAINST THE CLAIM OF ASSESSEE THAT THESE GIFTS WERE OFFERED IN CONSIDERA TION OF PERSONAL QUALITIES VENERATION LOVE AND AFFECTION. AOS INFERENCE TOWAR DS QUID PRO QUO CANNOT BE ACCEPTED ON MERE RELIANCE ON SOME ASSUMPTIONS. A S ALREADY HELD NATURE OF GIFTS ESSENTIALLY DEPEND ON FACTS OF EACH CASE IN OUR VIEW THE CASES CITED BY REVENUE INCLUDING KRISHNA MENON AND RAMKRIPAL TR IPATHY ARE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 81 DISTINGUISHABLE AS QUID PRO QUO IN THOSE CASES WAS ESTABLISHED AND MORE OR LESS ACCEPTED BY THE DONORS. 14.10. CASE OF GOVINDLALJI ALSO HAS PECULIAR FACTS ASSESSEE WAS DIRECT DESCENDENT OF AN ESTABLISHED RELIGIOUS SECT VALLAB H SAMPRADAY WHICH HAD A DEDICATED FOLLOWING OFFERINGS MADE TO HIM WERE T REATED AS TAXABLE. BOMBAY HIGH COURT HELD THAT A RELIGION COULD BECOME A VOCATION OFFERINGS WERE MADE OUT OF COMPELLING FEELINGS OF FOLLOWERS THEY WERE MADE NOT FOR HIS PERSONAL QUALITIES BUT AS A HEAD OF SECT AND TH E ASSESSEE HELD AN OFFICE WHICH REQUIRED HIM TO PERFORM CERTAIN DUTIES AND DI SCHARGE CERTAIN OBLIGATIONS THAT INDUCED THE DISCIPLES TO OFFER GI FT WHICH WERE VOCATIONAL RECEIPTS. WHEREAS IN THIS CASE ASESSEE NEITHER OW ED ANY DUTIES NOR OBLIGATIONS TO BE PERFORMED TOWARDS DONORS. IN THE ABSENCE OF OBLIGATION AND DUTIES IT CANNOT BE HELD THAT DONORS WERE COMPELLE D TO MAKE THESE GIFTS. IN THE CASE BEFORE US THERE IS NO COMPULSION OR OBLIG ATION ON THE PART OF DONORS FOR MAKING ANY GIFTAND DEPOSITIONS DO NOT SPELL OUT ANY BENEFIT RECEIVED BY DONORS DIRECTLY OR INDIRECTLY. MOST OF THE AFFIDAVI TS REFER TO ASSESSES PERSONAL QUALITIES LIKE UPLIFTMENT OF DALITS AND RAISING THE IR STATUS IN SOCIETY. IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES THESE GIFTS ARE TO BE TREATED AS PERSONAL AND NOT VOCATIONAL OR PROFESSIONAL GIFTS. IN THE CASE O F DILIP KUMAR ROY HONBLE BOMBAY HIGH COURT HELD THAT THE AFFIDAVITS FILED ON RECORD BY ASSESSEE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 82 SUGGEST THAT GIFTS WERE FOR PERSONAL VENERATION AND ESTEEM SAME CANNOT BE ADDED AS VOCATIONAL INCOME. FROM SIMILAR STAND POIN T MUMBAI ITAT IN THE CASE OF NIRMALA ATHAVALE HAS RIGHTLY HELD THAT THE RE BEING NO OBLIGATION OR DUTY TO RENDER SERVICES ON HER PART GIFTS OFFERED BY DISCIPLES CANNOT BE TREATED AS PROFESSIONAL RECEIPTS. 14.11. CASE LAWS CITED BY BOTH PARTIES ARE ON VOCAT ION/PROFESSION RECEIPTS OF RELIGIOUS PREACHERS HEADS OF SECTS MUSICIAN ACTR ESS AND POLITICIANS IN OUR VIEW EACH CASE WILL HAVE ITS OWN FINER ASPECTS AND FACTUAL NUANCES. IT WILL BE BETTER TO CONSIDER CASE LAWS OF POLITICIAN I.E. RA JA MANICKAN & CHITRA RASU (SUPRA). IN THE CASE OF RAJAMANICKAM HE WAS AN ACT IVE POLITICIAN MLC AND HELD VARIOUS POLITICAL OFFICES INCLUDING DMK PARTY THE AMOUNT OF RS 51 000/- COLLECTED BY HIS WELL WISHERS AND PRESENTI NG TO HIM AS A PURSE FOR CONSTRUCTION OF HOUSE IT WAS HELD AS VOCATIONAL RE CEIPT BY AO AND TAXED. HONBLE MADRAS HIGH COURT HELD THAT SUCH RECEIPTS C ANNOT BE TAXED AS VOCATIONAL RECEIPTS BY FOLLOWING OBSERVATIONS: HELD THAT THERE BEING NO EVIDENCE TO SUBSTANTIATE THE CONTENTION THAT EH AMOUNT WAS PAID TO THE ASSESSEE AS REMUNERATION FOR HIS SERVICE TO ANY PARTICULAR INDI VIDUAL OR TO THE POLITICAL PARTY THE AMOUNT COULD ONLY BE TREAT ED AS A GIFT OR A WINDFALL RECEIVED BY THE ASSESSEE FOR HIS PERSONA L QUALITIES. THERE WAS NO QUID PRO QUO IN THE PAYMENT OF THE DON ATION MADE BY THE GENERAL PUBLIC THE FORMER EMPLOYER AND THE PARTYMEN. CONSEQUENTLY THE TRIBUNAL WAS RIGHT IN ITS VIEW AN D THE SUM OF RS. 51 000/- WAS NOT TAXABLE AS THE ASSESSEES INCO ME. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 83 14.12. SIMILARLY IN CHITRA RASU CASE HONBLE MADRA S HIGH COURT DELETED SIMILAR ADDITION BY HOLDING AS UNDER: IT IS WELL SETTLED THAT HE BURDEN IS ON THE REVENU E TO ESTABLISH THAT A PARTICULAR RECEIPT IS OF A REVENUE CHARACTER IF ANY AUTHORITY IS NEEDED IT IS TO BE FOUND IN THE LATES T DECISION OF THE SUPREME COURT IN DR. K. GEORGE THOMAS V. CIT (1985) 156 ITR 412 420. NOW UNDOUBTEDLY THE ASSESSEE WAS A MEMBER OF THE DMK PARTY. BUT TO HOLD MERELY ON THAT ACCOUN T THAT THE PEOPLE COLLECTED THE FUNDS ONLY BECAUSE HE WAS A ME MBER OF THE DMK PARTY IS TO IGNORE THE POSITIVE CASE OF THE ASS ESSEE THAT HIS SERVICE TO TAMIL AND HIS PERFORMANCE AS AN AUTHOR H AD EARNED HIM THE RESPECT OF THE PEOPLE. IT IS COMMON KNOWLED GE THAT A RECEIPT DOES NOT NECESSARILY ARISE FROM THE EXERCIS E OF A PROFESSION OR VOCATION MERELY BECAUSE THE PROFESSIO N OR VOCATION AFFORDS THE OPPORTUNITY FOR EARNING THE RE CEIPT )SEE KANGA & PALKHIVALAS THE LAW AND PRACTICE OF INCOME TAX 7 TH EDN. VOL. 1 P. 238). IF THIS PRINCIPLE IS APPLIED THEN MERELY BECAUSE THE ASSESSEE HAPPENED TO BE A MEMBER OF THE DMK PARTY AND WAS HONOURED IT WOULD NOT NECESSARILY FO LLOW THAT WHATEVER AMOUNTS LIE RECEIVED WERE BY VIRTUE OF BEI NG A MEMBER OF A POLITICAL PARTY. AS WE HAVE ALREADY POI NTED OUT THE ORDER OF THE TRIBUNAL DOES NOT MAKE ANY REFEREN CE TO THE POSITIVE CASE OF THE ASSESSEE THAT HE WAS MORE OF A N AUTHOR AND A REFORMER THAN A POLITICIAN AND IT IS THOSE ACTIVI TIES WHICH WERE SOUGHT TO BE HONOURED BY THE PEOPLE BY BRINGING OUT HIS BIOGRAPHY AND MAKING A COLLECTION FOR A PURSE TO B E PRESENTED TO HIM ON HIS 64 TH BIRTHDAY. THE OBSERVATIONS MADE BY THE TRIBUNAL THAT THE COLLECTIONS WERE MADE NOT OUT OF ANY PERSONAL REGARD BUT WERE MADE BECAUSE THE ASSESSEE WIELDED INFLUENCE IN THE DMK PARTY APPEARS TO US TO BE AN INFERENCE WITHOUT ANY EVIDENCE. AS A MATTER OF FACT IT DOES NOT APPEAR T HAT THERE IS ANY MATERIAL PLACED BY THE REVENUE TO DISPROVE THE CASE OF THE ASSESSEE THAT HE WAS MORE A REFORMER IN THE SENSE HE UNDERSTOOD THE TERM AND WRITER IN TAMIL THAN A POL ITICIAN. THERE IS ALSO NO EVIDENCE TO SHOW THAT THE CONTRIBU TIONS WERE MADE ONLY BY THE MEMBERS OF THE DMK PARTY. AS WE HA VE ALREADY INDICATED THERE ARE SOME ASSOCIATIONS WHIC H HAVE ALSO CONTRIBUTED TO THE PURSE TO BE PRESENTED TO THE ASS ESSEE. THE ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 84 REVENUE IN THIS CASE HAS IN OUR OPINION MISERABLY FAILED TO ESTABLISH THAT THE RECEIPT AROSE OUT OF HIS PROFESS ION AS A POLITICIAN OR THAT THE RECEIPT OF THE AMOUNT PRESEN TED TO THE ASSESSEE WAS IN THE NATURE OF AN INCOME AS A POLITI CIAN. THE POSITIVE CASE OF THE ASSESSEE HAS NOT BEEN REJECTED BY ANY OF THE AUTHORITIES AND INDEED IT COULD NOT HAVE BEEN SO R EJECTED UNLESS THERE IS EVIDENCE TO THE CONTRARY. WE HAVE ALREADY POINTED OUT THAT THE QUESTION AS TO WHETHER A PARTICULAR RECEIPT AMOUNTS TO INCOME OR NOT WILL DEPEND UPON THE FACTS OF EACH CASE. THE DECISION OF THE QUESTIO N DEPENDS ON THE INFERENCE WHICH IS TO BE DRAWN ON THE BASIS OF THE FACTS ESTABLISHED. THE DECISIONS TO WHICH OUR ATTENTION H AS BEEN DRAWN BY THE LEARNED COUNSEL FOR THE REVENUE ALL RE PRESENTED THE DIFFERENT TYPES OF CASES WHERE THE INFERENCE IS DRAWN ON THE FACTS PROVED IN THOSE CASES. IN THE DECISION IN CHE LLADURAIS CASE (1984) 145 ITR 139 (MAD.) THERE IS A POSITIVE FIND ING RECORDED BY THIS COURT AT PAGE 150 ON THE FACTS ESTABLISHED IN THAT CASE. THIS COURT HELD THAT ON THE MATERIALS ON RECORD TH E POSITION WAS CLEAR BEYOND DOUBT THAT THE ASSESSEE AS A SOCIAL WO RKER WAS NEVERTHELESS ENGAGED IN AN OCCUPATION. IN THE ABSENCE OF ANY QUID PRO QUO AND ANY DUTIES O R OBLIGATIONS ON THE PART OF ASSESSEE TO RENDER ANY SERVICES POLITICAL OR OTH ERWISE SUCH GIFTS CANNOT BE HELD FROM VOCATION OF POLITICS. 14.13. WE MAY FURTHER ADD THAT GIFTS WERE GIVEN BY ALL SORTS OF PEOPLE DALITS UPPER CASTE PEOPLE MUSLIMS FROM ALL WALKS OF LIFE. AS ALREADY MENTIONED THERE WERE NO OBLIGATIONS ON THE ASSESSEE TO PERFORM ANY DUTY TOWARD DONORS AND THERE WAS NO QUID PRO QUO CLINCH ES THE ISSUE THAT GIFTS WERE RECEIVED FOR PERSONAL QUALITIES OF THE ASSESSE E AND NOT FROM POLITICAL VOCATION. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 85 14.14. WE MAY HASTEN TO ADD THAT THE MENACE OF EXCH ANGE OF MONEY CAMOUFLAGED IN THE FORM OF GIFTS IN INDIA WAS ASSU MING ALARMING PROPORTIONS SINCE A LONG TIME; VARIOUS HONBLE COUR TS HAVE EXPRESSED THEIR CONCERNS. LEGISLATURE IN ORDER TO DEAL WITH THIS SI TUATION INSERTED SEC 56(2)V WEF 1-4-2005 TAXING RECEIPT OF SUCH MONEYS WITHOUT CONSIDERATION ABOVE RS 25 000/-. PERHAPS THIS AMENDMENT ALONE COULD NOT F ULLY DEAL WITH THE PROBLEM THEREAFTER LEGISLATURE AGAIN INSERTED SEC 56(2)(VII) WEF 1-10-2009IN THE INCOME TAX ACT PRESCRIBING THAT AGGREGATE OF S UCH RECEIPTS(ABOVE AGGREGATE OF RS. 50 000/-) WILL BE TAXED IN THE HAN DS OF RECIPIENT AS INCOME FROM OTHER SOURCES. FROM THESE LEGISLATIVE AMENDME NTS ALSO IT EMERGES THAT LEGISLATURE INTENDED TO TAX SUCH RECEIPTS UNDE R THE SPECIFIC HEAD OF INCOME FROM OTHER SOURCES AND NOT UNDER THAT HEAD INCOME FROM BUSINESS OR PROFESSION. ON THIS SCORE ALSO THE COR RECT PROVISION AND HEAD OF INCOME FOR TAXING THE ASSESSEE IN THE RELEVANT ASSE SSMENT YEAR I.E. 2005-06 AND06-07 IS CONTAINED IN SEC 56(2)V. LD DR HAS RAIS ED A PLEA THAT WHILE TAXING GIFTS ABOVE 25 000/- U/S 56(2) V AO MERELY ACCEPTED THE ASSESSEES RETURN THEREFORE HIS PROPOSITION REGARDING THEORY OF DIFFERENCE IN SOURCE AND HEAD OF INCOME MAY BE ACCEPTED. IN OUR VIEW THE PLE A IS TOO TECHNICAL AND UNACCEPTABLE IN THESE FACTS. IF THE GIFTS WERE RECE IPTS OF PROFESSION AO SHOULD HAVE STRAIGHTWAY APPLIED SEC. 28 FOR ALL THE GIFTS INSTEAD OF ADOPTING ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 86 A CURIOUS WAY OF SPLITTING THE SAME SOURCE OF INCOM E INTO TWO DIFFERENT HEADS. IN VIEW OF AFOREMENTIONED FACTS AND OBSERVAT IONS THE GIFTS IN QUESTION ARE TO BE CONSIDERED UNDER SEC 56(2) V INCLUDING UP TO AND ABOVE RS/- 25 000/- AS HELD BY CIT (A) WE UPHOLD HIS ORDER O N THE GROUNDS RAISED IN THIS BEHALF. 15. IN CONSIDERATION OF FOREGOINGS REVENUE APPEALS FOR AYS 2004-05 2005-06 AND 2006-07 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 TH AUGUST 2010. SD/- SD/- ( SHAMIM YAHYA ) (R. P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST 2010. MP COPY TO: (1) ASSESSEE (2) AO (3) CIT (4) CIT(A) (5) DR ITAT. ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 87 ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 88 ITA 4259/D/07 2078 & 2079/DEL/09 DCIT VS. MS. MAYAWATI 89