Shri Dinesh Babulal Thakkar, Ahmedabad v. The ACIT.,Cent.Circle-2(2),, Ahmedabad

ITA 4434/AHD/2007 | 1999-2000
Pronouncement Date: 31-03-2010 | Result: Dismissed

Appeal Details

RSA Number 443420514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 4434/AHD/2007
Duration Of Justice 2 year(s) 3 month(s) 16 day(s)
Appellant Shri Dinesh Babulal Thakkar, Ahmedabad
Respondent The ACIT.,Cent.Circle-2(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-03-2010
Date Of Final Hearing 16-03-2010
Next Hearing Date 16-03-2010
Assessment Year 1999-2000
Appeal Filed On 14-12-2007
Judgment Text
ITA.4434-35-07-DCA. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI BHAVNESH SAINI AND SHRI D.C. AGRAWAL. I.T.A. NO.4434/AHD/2006 (A.Y. 1999-00) I. T.A. NO.4435/AHD/2006(A.Y.2000-01) SHRI DINESH BABULAL THAKKAR 10 ELLIPHANTA SOCIETY NR. D.K. HALL NARANPURA AHMEDABAD. VS THE ASSTT.COMMISSIONER OF INCOME TAX CENT.CIR. 2(2) 3 RD FLOOR AAYAKAR BHAVAN ASHRAM ROAD AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: -AATPT 3154 D APPELLANT BY : SHRI S.N. DIVATIA. RESPONDENT BY : SHRI SHELLY JINDAL SR. D.R. ( (( ( )/ )/)/ )/ ORDER PER: SHRI D.C. AGARWAL. THESE ARE TWO APPEALS FILED BY THE ASSESSEE FOR AS SESSMENT YEAR 1999-00 AND 2000-01 AGAINST THE ORDER OF LD. C.I.T. (A) DATED 16-10-2007. THESE TWO APPEALS INVOLVE COMMON ISSUES AND HENCE T HEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. I.T.A. 4434/AHD/06 (A.Y.1999-00) . 2. IN THIS APPEAL ASSESSEE HAS RAISED FOLLOWING GR OUNDS :- ITA.4434-35-07-DCA. 2 1. THE ORDER PASSED ON 16.10.2007 BY CIT(A) III AHMEDABAD CONFIRMING THE ORDER PASSED BY THE AO IS WHOLLY ILL EGAL UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. 2. THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN DEALING W ITH THE GROUND OF APPEAL RELATING TO THE VALIDITY OF THE PROCEEDIN GS INITIATED BY AO U/S 153 A (A) OF THE ACT. 3.1. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN DISALLOWING THE SHORT TERM CAPITAL LOSS IN RESPECT OF LAND TRANSACTIONS. 3.2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW THE LD. CIT (A) OUGHT NOT TO HAVE UPHELD THE DISALL OWANCE OF SHORT TERM CAPITAL LOSS IN RESPECT OF LAND TRANSACT ION. 3.3. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND/OR ON FACTS IN REJECTING THE ADDITIONAL EVIDENCE FURNISHED BY THE APPELLANT THOUGH NO SUFFICIENT OPPORTUNITY WAS ALLOWED BY AO BEFORE MAKING THE IMPUGNED DISALLOWANCE. 3.4. THE OBSERVATIONS MADE AND CONCLUSION REACHED B Y CIT (A) IN UPHOLDING THE DISALLOWANCE OF SHORT TERM CAPITAL LO SS IN RESPECT OF LAND TRANSACTION ARE UNCALLED FOR IN THE FACTS O F THE CASE. ITA.4434-35-07-DCA. 3 4.1. THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN LAW AN D/OR ON FACTS IN CONFIRMING THAT THE GIFT RECEIVED FROM BIRAL PATEL WAS UNEXPLAINED. 3. THE LD. A.R. DID NOT PRESS GROUND NO.1.1 AND 2.1 AND HENCE THEY ARE REJECTED AS NOT PRESSED. 4. THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN IN DIVIDUAL. A SEARCH WAS CARRIED OUT BY AHMEDABAD POLICE ON 26-8-2003 AT THE PREMISES OF M/S. KALGI WHEREIN CASH GOLD JEWELLERY AND VARIOUS DOCU MENTS WERE FOUND AND SEIZED. LATER ON THESE DOCUMENTS AND ASSETS WERE RE QUISITIONED BY THE DEPARTMENT U/S. 132A. STATEMENT OF ONE SHRI TARUN K ARIA WHO WAS AN EMPLOYEE OF THE ASSESSEE WAS RECORDED BY THE POLICE . IT WAS STATED BY HIM THAT HE AND THE ASSESSEE WERE ENGAGED IN THE BUSINE SS OF CRICKET BATTING. THE ASSESSEE AS SUCH HAS CLAIMED IN THE RETURN OF INCO ME TO BE CARRYING ON BUSINESS AND EARNING INCOME FROM OTHER SOURCES INCL UDING LONG TERM CAPITAL GAINS. IN RESPONSE TO NOTICE U/S. 153A FOR A.Y. 199 9-00 AND 2000-01 THE ASSESSEE DECLARED INCOME OF RS.1 59 480 AND RS.1 69 790/- RESPECTIVELY FOR THE TWO YEARS. IN THE ASSESSMENT YEAR 1999-00 ASSES SEE CLAIMED SHORT TERM CAPITAL LOSS OF RS.2 50 000/- AND RS.6 50 000/- IN THE ASSESSMENT YEAR 2000- 01. ITA.4434-35-07-DCA. 4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR TH E ASSESSMENT YEAR 1999-00 A.O. NOTICED THAT ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH CERTAIN LAND OWNERS FOR PURCHASE OF THEIR LAND. THI S AGREEMENT IS CALLED AS BANAKHAT-NAMA. THE ASSESSEE PAID ADVANCES(OF RS.2 50 000/- IN A.Y. 99- 00 AND OF RS.6 50 000/-IN A.Y.00-01) TO THE LAND OW NERS. SUBSEQUENTLY THIS BANAKHAT-NAMA WAS CANCELLED AND THE ADVANCE GIVEN B Y THE ASSESSEE WAS FORFEITED BY THE LAND-OWNERS AS THE ASSESSEE FAILED TO GET THE LAND REGISTERED IN HIS NAME. ACCORDINGLY THIS LOSS WAS CLAIMED AS SHORT TERM CAPITAL LOSS WHICH WAS SET OFF IN BOTH THE ASSESSMENT YEARS AGA INST THE LONG TERM CAPITAL GAINS ARISING OUT OF THE SALE OF DIAMONDS WHICH WER E DISCLOSED BY THE ASSESSEE UNDER VDIS. THE DETAILED FACTS RELATED TO THE CONTROVERSY ARE THAT THIS ASSESSEE ENTERED INTO AN AGREEMENT WITH SHRI KANTILAL PURSHO TTAMBHAI & SHRI DHIRUBHAI KANTILAL BEING POWER OF ATTORNEY HOLDER O F CERTAIN LAND OWNERS AT VILLAGE BOPAL AND PAID A SUM OF RS.2 50 000/- ON 1 5.4.1998. THE SALE DEED WAS REQUIRED TO BE EXECUTED WITHIN SIX MONTHS FROM THE DATE OF AGREEMENT. THEREAFTER THE AFFIDAVIT OF ONE SHRI DEEPAK J. PAT EL ON BEHALF OF ASSESSEE WAS FILED THAT SHRI DINESH THAKKAR (THE ASSESSEE ) COULD NOT MANAGE FUND. ACCORDINGLY THE AGREEMENT WAS CANCELLED AS PER CONS ENT DEED DATED 21-11- 1998. THE A.O. CONSIDERED THE CLAIM AS NOT GENUINE. HE CALLED FOR AN ITA.4434-35-07-DCA. 5 EXPLANATION OF THE ASSESSEE IN RESPONSE TO WHICH TH E FOLLOWING REPLY WAS SUBMITTED:- I ENTERED INTO AN AGREEMENT BY TWO PROPERTIES AND INITIAL PAYMENT WAS GIVEN. THIS DOCUMENT WAS NOTARIZED. AS THE PAYM ENT COULD NOT BE MADE IN TIME THIS AMOUNT WAS FORFEITED FOR WHICH C ANCELLATION OF BANAKHAT WAS EXECUTED IN PRESENCE OF EXECUTIVE MAGI STRATE. THERE WAS CONDITION IN BANAKHAT TO FORFEIT THE AMOUNT IF THE FINAL DEED WAS NOT EXECUTED. COPY OF THE BANAKHAT WAS FURNISHED TO YOUR GOOD SELF ON 17.3.2006 WHEN I ENTER INTO AN AGREEMENT TO BUY ANY PROPERTY AND MAKE PAYMENT TOWARDS THIS PROPERTY IT IS PAYME NTS FOR ACQUIRING PROPERTY OR RIGHT IN PROPERTY AND ANY GAIN OR LOSS ARISES OUT OF THIS TRANSACTION ITS CAPITAL INCOME/LOSS. THUS I HAVE RIGHTLY CLAIMED THIS LOSS AS CAPITAL LOSS. THIS CLAIM IS SUPPORTED BY DE CISION IN THE CASE OF CIT VS. TATA SERVICES LTD. REPORTED IN 122 ITR 594 BOMBAY. COPY OF WHICH IS ENCLOSED HEREWITH. 5. THE A.O. CONSIDERED THE REPLY AND INFERRED THAT THE MAIN BENEFIT OF CANCELLATION OF BANAKHATNAMA IS TO SET OFF LONG TE RM CAPITAL GAINS ARISING ON ACCOUNT OF SALE OF DIAMOND/JEWELLERY DECLARED UNDER VDIS. IN A SIMILAR MANNER THE ASSESSEE IS FOUND TO HAVE SUFFERED A LOS S OF RS.6 50 000 IN ASSESSMENT YEAR 2000-01 ALSO BY GIVING ADVANCE AGAI NST SOME PROPERTY BY ENTERING INTO AGREEMENT TO PURCHASE THEM. LATER ON THROUGH A CONSENT DEED ADVANCE WAS AGREED TO BE FORFEITED BY THE LAND OWNE RS AS ASSESSEE WAS SHOWN TO BE NOT ABLE TO PURCHASE THE LAND FOR WANT OF FUNDS. THE A.O. INFERRED THAT AS NO PROPERTY WAS TRANSFERRED TO THE ASSESSEE THERE IS NO QUESTION OF ANY SHORT TERM CAPITAL LOSS. HE ACCORDI NGLY DISALLOWED THE CLAIM OF LOSS. ITA.4434-35-07-DCA. 6 6. THE LEARNED C.I.T.(A) EXAMINED THE AFFIDAVITS OF POWER OF ATTORNEY HOLDERS DEPOSING FORFEITURE OF MONEY OF THE ASSESSE E AND FOUND THAT THEY LACK CREDIBILITY AND LEGITIMACY. ORIGINAL DOCUMENTS WERE NOT FURNISHED. THE AFFIDAVIT DID NOT REFER TO ANY DETAILS ETC. FURTHE R THEY WERE CLEARLY INTENDED TO UTILIZE THE CAPITAL GAINS ARISING ON SALE OF JE WELLERY DECLARED UNDER VDIS. 7. THE LD. A.R. SUBMITTED THAT THE PREMISES ON WHIC H THE LD.CIT(A) HAS CONFIRMED THE ORDER IS NOT LEGALLY SOUND. HE HAS PO INTED OUT DEFECTS IN THE AFFIDAVIT WHICH ARE REALLY NO DEFECT. THIS IS A NEW ARGUMENT TAKEN BY THE LD. CIT(A) WHICH WERE NOT TAKEN UP BY THE A.O. 8. THE LD. D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT ENTIRE STORY FOR WHICH ADVANCE WAS GIVEN WAS F OR NEUTRALISING CAPITAL GAIN ARISING ON SALE OF JEWELLERY DECLARED UNDER VD IS. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORDS. IN OUR CONSIDERED VIEW NO CAPITAL LOSS CAN BE ALLOWED ON THE ALLEGED FORFEITURE OF RS.2 50 000/- CAPITAL GAINS WOULD AR ISE WHEN SALE PROCEED IS MORE THAN THE COST OF AN ASSET BUT WHEN SALE PROCE EDS OF AN ASSET IS LESS THAN COST OF ACQUISITION OF ASSET THEN LOSS WOULD ARISE . THE UNDERLYING PRINCIPLE IS THAT THERE SHOULD BE TRANSFER OF ASSET OWNED BY THE ASSESSEE. IN THE WHOLE TRANSACTION OF FORFEITURE OF ADVANCE NO ASSET IS O WNED BY THE ASSESSEE AND NOTHING IS TRANSFERRED. THERE IS NO TANGIBLE OR INT ANGIBLE ASSET WHICH IS ITA.4434-35-07-DCA. 7 SUBJECT MATTER OF TRANSFER. MERELY BY MAKING AN AGR EEMENT WITH THE ALLEGED POWER OF ATTORNEY HOLDER OF THE LAND OWNERS THE AS SESSEE DOES NOT ACQUIRE ANY RIGHT EXCEPT AN OBLIGATION TO PURCHASE THE PROP ERTY WITHIN SIX MONTHS. IT IS NOT A CASE THAT RIGHT TO PURCHASE THE PROPERTY H AS BEEN TRANSFERRED TO SOME OTHER PERSON ON ACCOUNT OF ASSESSEE HAVING INSUFFIC IENT FUNDS TO PURCHASE THE PROPERTY IN HIS NAME. IN OUR CONSIDERED VIEW THE AG REEMENT IS TO PURCHASE THE PROPERTY ONLY ON THE PAYMENT OF FULL CONSIDERAT ION AS PER THE TERMS. UNLESS ASSESSEE PAYS FULL AMOUNT OF CONSIDERATION N O CAPITAL RIGHT WOULD BE GENERATED IN FAVOUR OF THE ASSESSEE. FOR FINDING OU T WHETHER ASSESSEE HAD ACTUALLY INCURRED ANY CAPITAL LOSS WE LOOK TO SECTI ONS 45 2(14) AND 2(47). THE ESSENTIAL REQUIREMENT FOR CHARGING CAPITAL GAIN S (OR ALLOWING CAPITAL LOSS) IS THAT A TRANSFER OF CAPITAL ASSET SHOULD BE EFFECTED IN THE PREVIOUS YEAR. THE TRANSFER IS DEFINED UNDER SECTION 2(47). THE CL AUSE (II) THEREOF STATES THAT TRANSFER INCLUDES EXTINGUISHMENT OF RIGHTS THEREIN . IT REQUIRES ASSIGNMENT OF A MEANING TO THE TERM THEREIN. SECTION 2(47)(II) CAN BE INVOKED WHEN THERE IS AN EXTINGUISHMENT OF ANY RIGHT IN A CAPITAL ASSE T. THEREFORE FOR THE PURPOSES OF EXTINGUISHMENT OF A RIGHT IN A CAPITAL ASSET EXISTENCE OF CAPITAL ASSET IS A MUST. TILL THE POINT OF TIME THE AGREEM ENT TO PURCHASE THE LAND IS CANCELLED THE ASSESSEE DID NOT GET ANY RIGHT WHICH COULD BE TERMED AS A PROPERTY SO AS TO FALL WITHIN THE DEFINITION OF CA PITAL ASSET AS DEFINED IN ITA.4434-35-07-DCA. 8 SECTION 2(14) OF THE ACT. THE RIGHT (OR IN REALITY AN OBLIGATION) WHICH THE ASSESSEE HAD TILL THE POINT OF TIME OF CANCELLATIO N OF THE AGREEMENT BY CONSENT DEED WAS TO MAKE THE PAYMENT OF THE BALANCE AMOUNT AND GET THE REGISTRATION OF THE PROPERTY DONE IN HIS NAME. THE ONLY RIGHT (RATHER OBLIGATION) THE ASSESSEE HAD TILL THEN WAS TO PERFO RM ITS PART OF THE AGREEMENT AND SEEK PERFORMANCE OF THE AGREEMENT FROM THE LAND OWNERS/POWER OF ATTORNEY-HOLDERS. THIS CANNOT BE TERMED AS A CAPITA L ASSET WITHIN THE DEFINITION OF SECTION 2(14) AND WHICH IS TRANSFERRE D WITHIN THE MEANING OF SECTION 2(47). OUR VIEW IS SUPPORTED BY DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PATEL BRASS WORKS VS. CIT 286 ITR0598 (GUJ.). A SIMILAR VIEW WAS ALSO HELD BY HON.GUJARAT HIGH COUR T IN THE CASE OF KAILASH INVESTMENTS PVT. LTD. VS. CIT (2006) 281 ITR 92 (G UJ.). IN THIS CASE THE ASSESSEE HAD LIABILITY TO MAKE THE PAYMENT OF ON MO NEY. THE LIABILITY WAS CONVERTED INTO DEBT AND PART OF THE DEBT WAS FORGON E. THE AMOUNT WHICH WAS FOREGONE WAS CLAIMED AS CAPITAL LOSS. IT WAS HELD BY HONBLE GUJARAT HIGH COURT THAT AT NO POINT OF TIME ASSESSEE WAS IN POSS ESSION OR ENTITLED TO ANY ASSET. IN ABSENCE OF ANY ASSET THERE COULD BE NO QU ESTION OF ANY EXTINGUISHMENT OF RIGHTS. WHAT LD. AR HAS ARGUED IN THE PRESENT CASE IS THAT ASSESSEE HAS RIGHT TO PURCHASE PROPERTY. IN FACT IT HAS NO RIGHT/RATHER HAS AN OBLIGATION TO PERFORM HIS PART OF THE AGREEMENT (BY THE ASSESSEE) AND ITA.4434-35-07-DCA. 9 THEREAFTER TO GET THE PART PERFORMANCE DONE BY THE OTHER PARTY AS PER THE AGREEMENT WITH THAT PARTY. PRIOR TO THIS THERE IS NO RIGHT IN THE ASSESSEE AND THEREFORE THERE IS NO QUESTION OF INVOKING SECTION 2(47)(II). AS A RESULT NO CAPITAL LOSS WOULD ARISE TO THE ASSESSEE. 10. NOTWITHSTANDING WE ARE OF THE VIEW WHAT ASSESSE E HAS ENTERED INTO A COLOURABLE DEVICE FOR ACQUIRING CAPITAL LOSS TO BE SET OFF AGAINST CAPITAL GAINS EARNED BY IT ON SALE OF JEWELLERY DECLARED UNDER VD IS. ONCE ASSESSEE DID NOT HAVE SUFFICIENT FUNDS IN THE A.Y. 1999-00 TO PURCHA SE THE PROPERTY THEN THERE WAS NO REASON TO ENTER INTO PURCHASE OF FURTHER PRO PERTY IN A.Y. 2000-01 AND MAKING THE PAYMENT OF ADVANCE AGAIN IN THAT YEAR AN D GET IT FORFEITED BY THE PERSPECTIVE SELLERS. IT IS CLEARLY A DEVICE WHEREBY LOSS IS CREATED TO BE ADJUSTED AGAINST CAPITAL GAINS ON SALE OF JEWELLERY . ON THIS ACCOUNT ALSO ASSESSEE IS NOT ENTITLED TO GET LOSS ASSESSED AS SU CH TO BE SET OFF AGAINST CAPITAL GAINS. AS A RESULT THE RELATED GROUNDS OF T HE ASSESSEE ARE REJECTED. 11. THE NEXT ISSUE IN THIS APPEAL IS ABOUT THE GIFT . IT IS CLAIMED THAT ASSESSEE HAS RECEIVED GIFT FROM ONE SHRI MAHENDRA A MBALAL PATEL OF RS.1 42 845/- IN THE ASSESSMENT YEAR 1999-00 AND OF RS.12 LACS IN THE ASSESSMENT YEAR 2000-01. THE A.O FOUND THAT THE GIF TS WERE RECEIVED IN TWO YEARS FROM THE SAME PERSON. THE A.O. REQUIRED THE A SSESSEE TO FURNISH ITA.4434-35-07-DCA. 10 ADDRESS AND CONFIRMATION WITH EVIDENCE OF CREDITWOR THINESS AND OTHER DETAILS OF THE DONOR. THE ASSESSEE HOWEVER SUBMITTED CONFI RMATION FROM SHRI MAHENDRABHAI AMBALAL PATEL WHO IS A FATHER AND POW ER OF ATTORNEY HOLDER OF SHRI BIRAL M. PATEL THE DONOR. IN SUPPORT OF TH E CREDITWORTHINESS THE COPY OF NRE ACCOUNT NO.0971-0-000-010372 FROM 7.7.99 ONW ARDS WAS FILED. THE SOURCE OF GIFT WAS CLAIMED TO BE SALE OF CERTAI N ASSET THE DONOR HAD IN USA. THE A.O. EXAMINED THE DOCUMENTS BEING CONFIRM ATION FROM THE FATHER OF THE DONOR AND DETAILS ABOUT THE CREDITWORTHINESS CLAIMED TO BE SENT BY THE DONEE BUT REJECTED THEM AND TAXED THE SUM OF RS.1 4 2 845/- AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS REGARD THE A.O. M ADE FOLLOWING OBSERVATION: (A) BIRAL M. PATEL HAS MADE GIFT TO HIS MOTHER SMT. ROH INIBEN M. PATEL AND ASSESSEES WIFE SMT. SONAL D. THAKKAR ALSO NUMB ER OF OCCASIONS. IN FACT THE GIFTS OF RS.24 00 000 IN TOT AL WERE MADE TO THE ASSESSEE AND HIS WIFE SONAL D. THAKKAR BY BIRA L M. PATEL HE HAS ALSO MADE GIFT AMOUNTING TO RS.23 92 504/- TO H IS MOTHER ROHINIBEN M. PATEL ON 24.11.1999. IT IS ALSO NOTED THAT DURING A.Y. 2002-03 BIRAN M. PATEL HAS MADE GIFTS TO THE TUNE O F RS.85 00 000 IN TOTAL TO HIS PARENTS. THUS THE TOTAL GIFT GIVEN TO SHRI BIRAL M. PATEL TO VARIOUS PERSONS AMOUNTS TO RS.1.33 CRORES APPROXIMATELY. FURTHER GIFT TO OTHER PERSONS BY BIRAL M. PATEL CAN NOT BE RULED OUT. THEREFORE ISSUE OF CREDITWORTHINESS OF BIRAL M. PA TEL IS REQUIRED TO BE SEEN IN CONTEXT OF SUCH HUGE GIFTS OVER A PERIOD OF 4-5 YEARS. (B) THE GIFT IS QUESTION HAS BEEN MADE DURING THE F.Y. 1998-99. THEREFORE THE CREDITWORTHINESS HAS TO BE SEEN DURI NG THE PERIOD PRIOR TO DECEMBER 1999. SHRI BIRAL M. PATEL IN FAX MESSAGE THE COPY OF WHICH WAS FILED BY ASSESSEE. HAS STATED THA T HE WAS ENGAGED IN THE BUSINESS DURING THE YEAR 1999 AND SO LD THE BUSINESS IN THE YEAR 2000 FOR $ 110 000. THE INCOME BY WAY OF SALE OF BUSINESS IS IMMATERIAL FOR DECIDING THIS ISSUE AS T HE GIFT WAS ITA.4434-35-07-DCA. 11 RECEIVED BY ASSESSEE BEFORE SUCH SALE. FURTHER ASS ESSEE HAS NOT PROVIDED ANY DETAILS REGARDING THE BUSINESS ACTIVIT Y OF BIRAL M. PATEL DURING THE PERIOD PRIOR TO 1999. IT IS IMPOR TANT TO KNOW AS TO WHAT BIRAL M. PATEL WAS DOING IN USA BEFORE THE YEA R 1999 AS HUGE GIFTS TO VARIOUS PERSONS INCLUDING ASSESSEE WE RE MADE BY HIM DURING THE F.Y. 1998-99 AND 1999-00. ASSESSEE FURNI SHED THE COPY OF RETURN FILED BY BIRAL M. PATEL IN USA IN THE YEA R 1999 AND ONWARDS. HOWEVER NO DETAILS WERE FURNISHED WITH RE GARD TO RETURN FILED PRIOR TO 1999. THESE COPIES OF RETURNS WERE U NSIGNED AND EVIDENCE SHOWING THAT THE RETURN WAS FILED BEFORE T HE US AUTHORITIES WAS NOT PRODUCED. 12. THE LD. C.I.T.(A) ALSO EXAMINED THE CONFIR MATION SUBMITTED BY FATHER OF THE DONOR AND DETAILS OF ASSETS CLAIMED T O BE SOLD BY DONOR AND CAME TO THE CONCLUSION THAT GIFT IS NOT GENUINE. HI S JUDGEMENT IS BASED ON THE FOLLOWING REASONS :- (1) THE ASSESSEE DID NOT ESTABLISH THAT DONOR HAS N OT POINTED OUT ANY REASON OCCASION OR RELATIONSHIP FOR MAKING THE ALL EGED GIFT TO THE ASSESSEE SHRI DINESH THAKKAR. (2) THERE IS NO DIRECT CONFIRMATION OF THE DOMO R GIVING GIFT TO THE ASSESSEE IT IS ONLY A CONFIRMATION FROM HIS FATHER. (3) THE LETTER ISSUED BY THE DONOR DOES NOT MENTION THE QUANTUM OF GIFT NAME OF RECIPIENT OR ANY REASON FOR GIVING GI FT. THE ASSESSEE IN THE RETURN OF INCOME HAS SHOWN INCO ME FROM SOME NON SPECIFIC ACTIVITIES SUCH AS LIASON WORK AND RESOLVI NG DISPUTES ETC. ONE SHRI TARUN KARIA WHO WAS UNDER THE EMPLOYMENT OF THE ASS ESSEE WAS FOUND ENGAGED IN BAITING AND GAMBLING. HE HELD THAT THESE TRANSACTIONS INVOLVING MONEY LAUNDERING WERE APPARENTLY CARRIED OUT WITH T HE HELP OF THE SAID DONOR. ITA.4434-35-07-DCA. 12 13. AGAINST THIS THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES HAVE TREATED THE GIFT AS NOT GENUINE ON HYPOTHETICAL CONSIDERATIONS. THE GIFT IS GIVEN BY SHRI BIRAL M. PATEL TO HIS FAMILY MEMBERS WHICH HAS BEEN ACCEPTED AS GENUINE THEN THE RE IS NO REASON WHY THIS GIFT TO THE ASSESSEE SHOULD NOT BE ACCEPTED AS GENUINE. THERE IS NO REQUIREMENT FOR GIFT TO BE GENUINE THAT THERE SHOUL D BE RELATION OR OCCASION. THE MONEY HAS BEEN TRANSFERRED THROUGH BANKING CHAN NEL. IT HAS COME FROM THE NRE ACCOUNT OF THE DONOR. THE GIFT GIVEN BY THE DONOR TO THE WIFE OF THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT. THE D OCUMENT FURNISHED BY THE DONOR OR HIS FATHER ARE NOT DOUBTED THEREFORE GIFT TO THE ASSESSEE SHOULD HAVE BEEN ACCEPTED AS GENUINE. HE RELIED ON THE DEC ISION OF HONBLE RAJASTHAN HIGH COURT IN CIT VS. PADAMSINGH CHAUHAN (315 ITR -433)(RAJ.) WHEREIN IT IS HELD THAT IT IS NOT NECESSARY THAT DO NOR SHOULD HAVE RELATIONSHIP OR THERE SHOULD BE SOME OCCASION OR THAT GIFT WAS GIVEN OUT OF LOVE AND AFFECTION AND DONOR WAS CAPABLE OF MAKING GIFTS. 14. ON THE OTHER HAND LD. D.R. SUBMITTED THAT AL L THE NECESSARY INGREDIENTS OF SECTION 68 ARE NOT SATISFIED AND THEREFORE GIFT WAS NOT GENUINE. THE DONOR HAS NOT FURNISHED HIS OWN CONFIRMATION NO GIFT DEE D IS FILED DONOR IS NOT AVAILABLE FOR EXAMINATION BY THE A.O. AND DONOR IS NOT RELATED TO THE ASSESSEE. IT IS NOT PROVED THAT THERE IS ANY LOVE A ND AFFECTION OF THE DONOR WITH THE ASSESSEE. IT IS NOT BELIEVABLE THAT DONOR WOULD PART AWAY HIS MONEY RECEIVED ON SALE OF HIS ASSETS BY GIVING GIFTS. THE GIFT CANNOT BE PROVED MERELY BY SELF SERVING DOCUMENTS FURNISHED BY THE A SSESSEE PURPORTED TO BE WRITTEN BY THE DONOR. THERE IS NO RECORD OF THE REV ENUE DEPARTMENT OF THE USA SHOWING DONOR HAD ASSETS TO THE EXTENT CLAIMED BY HIM AND CLAIMED TO HAVE BEEN SOLD BY HIM GIVING GIFT TO THE ASSESSEE. THE LD. D.R. RELIED ON THE ITA.4434-35-07-DCA. 13 DECISION OF HONBLE S.C. IN THE CASE OF CIT VS. P. MOHANKALA REPORTED IN 291 ITR 278 (SC) WHICH ACCORDING TO HIM FAIRLY APPL IES TO THE FACTS OF THE CASE. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE TO INTERFERE IN THE ORDER OF THE LD. CIT(A). REASONS ARE THAT IT IS NOT PROVED THAT BIRAL M. PATEL WAS KNOWN TO THE ASSESSEE. NO EVIDENCE IN SUPPORT OF ANY ACQU AINTANCE OR LOVE OR AFFECTION WITH THE ASSESSEE HAS BEEN FILED. THERE A RE NO REASONS OR OCCASION FOR GIVING GIFT EXCEPT RELYING ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT THAT BLOOD RELATION IS NOT NECESSARY FOR GIVI NG GIFT. IN OUR CONSIDERED VIEW THE JUDGEMENT OF HONBLE SUPREME COURT IN MOHA N KALAS CASE (SUPRA) WILL BE MORE APPLICABLE ON THE FACTS OF THE PRESENT CASE. IT REQUIRE THE NECESSITY OF BLOOD RELATION AND SURROUNDING CI RCUMSTANCES FOR ACCEPTING THE GIFT TO BE GENUINE IN ADDITION TO EVIDENCE OF TRANSFER OF MONEY. HONBLE S.C. IN ABOVE CASE HELD THAT TRANSFER OF MONEYS THR OUGH BANKING CHANNELS IS NOT SUFFICIENT TO HOLD THE GIFT AS GENUINE. IN THI S REGARD WE REFER TO THE FOLLOWING PORTION OF THE JUDGEMENT. (HEAD NOTES) IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSE SSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN THE BOOKS IS NOT SATISFACTORY THERE IS PRIMA FACIE EVIDENCE AGAINS T THE ASSESSEE VIZ. THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME AND IF HE FAILS TO REBUT IT IT CAN BE HELD AGAINS T THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME NATURE. THE BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATT ENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY TH E SUM FOUND CREDITED IN THE BOOKS BEING TREATED AS A RECEIPT OF INCOME NATURE. ITA.4434-35-07-DCA. 14 THE ASSESSEES RECEIVED FOREIGN GIFTS FROM ONE COMMO N DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNT OF THE ASSES SEES BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT F ROM ABROAD WERE DRAWN ON THE CITIBANK N. A. SINGAPORE. THE EVIDENC E INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE ASSESSEES. ON THIS MATERIAL THE ASSESSING OFFICER HELD THAT TH E GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE ACCOUNT BOOKS OF THE ASS ESSEES AS THEIR INCOME APPLYING SECTION 68 OF THE INCOME-TAX ACT 1 961. THE ASSESSEES DID NOT CONTEND THAT EVEN IF THEIR EXPLAN ATION WAS NOT SATISFACTORY THE AMOUNTS WERE NOT OF THE NATURE OF INCOME. THE COMMISSIONER (APPEALS) CONFIRMED THE ASSESSMENT. ON FURTHER APPEAL THERE WAS A DIFFERENCE OF OPINION BETWEEN T HE TWO MEMBERS OF THE APPELLATE TRIBUNAL AND THE MATTER WAS REFERRED TO THE VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCL USIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS). O N APPEAL THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITU TED ITS OWN FINDINGS AND CAME TO THE CONCLUSION THAT THE REASON S ASSIGNED BY THE TRIBUNAL WERE IN THE REALM OF SURMISES CONJECTURE AND SUSPICION. ON APPEAL TO THE SUPREME COURT : HELD _ REVERSING THE DECISION OF THE HIGH COURT THAT TH E FINDINGS OF THE ASSESSING OFFICER THE COMMISSIONER (APPEALS) A ND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CHEQUE S AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT. SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC) ; [1995 ] SUPP 2 SC453 RELIED ON. 16. FROM THE ABOVE DECISION IT IS CLEAR THAT GENUI NENESS OF THE GIFT TRANSACTIONS CANNOT BE DETERMINED WITHOUT LOOKING I NTO THE HUMAN PROBABILITY ASPECTS SURROUNDING CIRCUMSTANCES SUCH AS RELATIONSHIP OF THE DONOR AND DONEE AND IF ASSESSEE FAILS TO ESTABLISH ANY OF THESE FACTORS THE ITA.4434-35-07-DCA. 15 GIFT TRANSACTION CANNOT BE TREATED AS GENUINE. IN T HIS REGARD WE ALSO REFER TO THE FOLLOWING JUDGEMENTS:- (I) SAJAN DASS AND SONS V. CIT [2003] 264 ITR 435 (DELHI) : IN THIS CASE THE HON'BLE DELHI HIGH COURT HELD THA T MERE IDENTIFICATION AND SHOWING MOVEMENT THROUGH BANKING CHANNELS IS NO T SUFFICIENT. IN THE PRESENT CASE ALSO IT IS NOT ESTABLISHED THA T DONORS HAD MONEY TO DEPOSIT IN THE BANK. THEREFORE THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE AMOUNT CLAIMED AS GIFT WAS THE ASSESSEE'S OWN MONEY. (II) RAM LAL AGRAWAL V. CIT [2006] 280 ITR 547 (ALL ) IN THIS CASE THE HON'BLE ALLAHABAD HIGH COURT THAT WHERE THERE IS A FINDING GIVEN BY THE INCOME-TAX AUTHORITIES THAT CREDITWORTHINESS OF DEP OSITORS WAS NOT PROVED THE AMOUNT COULD BE ASSESSED AS INCOME OF T HE ASSESSEE. (III) SUNIL SIDDHARTHBHAI V. CIT [1985] 156 ITR 509 (SC) IT WAS HELD BY THE HON'BLE SUPREME COURT THAT IT IS THE RIGHT OF T HE INCOME-TAX AUTHORITIES TO CONSIDER GENUINENESS OF THE TRANSACT IONS AND TO PENETRATE THE VEIL AND ASCERTAIN THE TRUTH. IT IS WITHIN THEI R POWER TO CONSIDER WHETHER A PARTICULAR TRANSACTION WAS TO EVADE TAX. (IV) K. RAMASAMY V. CIT [2003] 261 ITR 358 (MAD) IT WAS HELD THAT VEIL CAN BE PIERCED IN EXCEPTIONAL CIRCUMSTANCES. THE IN COME-TAX AUTHORITIES ARE ENTITLED TO LOOK AT THE REALITY OF THE TRANSACT ION. 17. IN ADDITION TO ABOVE FOLLOWING JUDGEMENTS ARE ALSO RELEVANT ON THE ISSUE :- (1) ITO V. DIZA HOLDINGS P. LTD. [2002] 255 ITR 573 (KER); (2) RAUNAQ RAM NAND LAL V. CIT [2002] 254 ITR 617 (P & H); (3) SMT. IVA GOGOI V. CIT [2002] 254 ITR 576 (GAUHATI); (4) CIT V. PRECISION FINANCE PVT. LTD. [1994] 208 ITR 465 (CAL); (5) RAJSHREE SYNTHETICS PVT. LTD. V. CIT [2002] 256 ITR 331 (RAJ); ITA.4434-35-07-DCA. 16 (6) R. B. MITTAL V. CIT [2000] 246 ITR 283 (AP) ; (7) CIT V. UNITED COMMERCIAL AND INDUSTRIAL CO. P. LTD. [1991] 187 ITR 596 (CAL); (8) M. A. UNNEERI KUTTY V. CIT [1992] 198 ITR 147 (KER); (9) NEMI CHAND KOTHARI V. CIT [2003] 264 ITR 254 (GAUHATI); AND (10) HINDUSTHAN TEA TRADING CO. LTD. V. CIT [2003] 263 ITR 289 (CAL). 18. WE INFER FROM THE DISCUSSION MADE IN THESE JUDG EMENTS THAT REVENUE AUTHORITIES ARE ENTITLED TO CONSIDER GENUINENESS OF THE TRANSACTIONS AND TO PENETRATE THE VEIL AND ASCERTAIN THE TRUTH. THEY AR E ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITIES OF THE TRANSACTIONS SHOWN TO HAVE BEEN ENTERED INTO BY THE PARTIES. THE OTHER FACTORS E.G. RELATIONSHIP OCCASION FOR GIVING GIFTS AND GIFTS NOT GIVEN BY T HE DONEE TO THE FAMILY MEMBERS OF THE DONOR ETC. IN THE PRESENT CASE ALS O ALL THESE FACTORS PUT TOGETHER LEAVE NO DOUBT THAT IT IS A FIT CASE WHERE FORM HAS TO BE IGNORED AND ONE HAS TO GO INTO THE REALITIES OF THE TRANSACTIO N. HONBLE RAJASTHAN HIGH COURT IN CHAINSUKH RATHI VS. CIT (2009) 270 ITR-360 (RAJ.) HELD THAT EVEN OCCASION IS RELEVANT FOR FINDING OUT WHETHER GIFT I S GENUINE. IF THERE IS NO OCCASION GIFT CANNOT BE ACCEPTED AS GENUINE. APPLY ING THE RATIO OF HONBLE S.C. AND OTHER COURTS AS REFERRED ABOVE WE DRAW F OLLOWING INFERENCES :- (I) MERE IDENTIFICATION OF DONOR AND SHOWING MOVEMENTS OF GIFT AMOUNT THROUGH BANKING CHANNELS IS NOT SUFFICIENT T O PROVE THE GENUINENESS OF THE GIFT (II) SINCE THE CLAIM OF THE GIFT IS MADE BY THE ASSESSEE THE ONUS ITA.4434-35-07-DCA. 17 LIES ON HIM NOT ONLY TO ESTABLISH THE I DENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. THE ASSESSEE HAS TO PROVE THAT THE MONEY HAS ACTUALLY B EEN RECEIVED AS A GIFT FROM DONOR (III) IT IS THE BURDEN OF THE ASSESSEE TO SHOW AND DEMO NSTRATE WHAT KIND OF RELATIONSHIP OR WHAT KIND OF LOVE AND AFFECTION THE DONOR HAS WITH THE ASSESSEE AND TO EXPLAIN CIR CUMSTANCES IN WHICH GIFT WERE MADE. IF THE EXPLANATION AS REGARDS THE CLAIM OF THE GIF T OFFERED BY THE ASSESSEE IS NOT PROPER REASONABLE AND ACCEPTABLE O NE AN INEVITABLE CONCLUSION WOULD BE DRAWN THAT THE ASSES SEE HAS NOT OFFERED ANY EXPLANATION AS THE EXPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER REASONABLE AND ACCEPTABLE EXPLANATION (SEE P. MOHAN AKALA 291 ITR 278 (SC). (V) THE OPINION OF THE A.O. FOR NOT ACCEPTING THE EXPLA NATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY OR PROP ER OR REASONABLE OR ACCEPTABLE IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUM STANCES AVAILABLE ON RECORD. THE OPINION OF THE A.O. IS REQ UIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL A VAILABLE ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION BY THE A.O. (VI) IN CASES WHERE THE EXPLANATION OFFERED BY THE ASS ESSEE ABOUT THE NATURE AND SOURCE OF THE MONEY RECEIVED BY THE ASSESSEE IS NOT SATISFACTORY THERE IS PRIMA FACIE EVIDENC E AGAINST THE ASSESSEE VIZ THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME AND IF HE FAILS TO REB UT IT IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME NATURE ITA.4434-35-07-DCA. 18 (VII) THE BURDEN IS ON THE ASSESSEE TO PROVE AND ES TABLISH THAT EVEN IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMS TANCES - AVAILABLE ON RECORD DO NOT JUSTIFY THE MONEY RECEIV ED BY THE ASSESSEE BEING NOT TREATED AS A RECEIPT OF INCOME N ATURE. 19. SIMILARLY ITAT DELHI F-BENCH IN THE CASE OF RA JENDRAKUMAR MITTAL VS. ACIT IN ITA. NO.1199/DEL/07 PRONOUNCED ON SEPTE MBER 7 2009 WHEREIN JUDGEMENT OF DELHI HIGH COURT PUNJAB & HAR YANA HIGH COURT AND HONBLE S.C. ON THE ISSUE OF GIFT ARE REFERRED CAME TO THE SAME LEGAL INFERENCE. 20. IN THE PRESENT CASE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE GIFT IS NOT SATISFACTORY BECAUSE (1) THERE IS NO DIRECT CONFIRMATION FROM THE DONOR AND THAT HE HAS GIVEN GIFT TO THE ASSESSEE. (2) CRE DITWORTHINESS OF THE DONOR IS NOT PROVED THROUGH INDEPENDENT SOURCES PARTICULA RLY ABOUT HIS ASSETS FROM THE RECORD OF US REVENUE AGENCIES. (3) THERE IS NO OCCASION OR REASONS FOR GIVING GIFT TO THE ASSESSEE. (4) IT IS NOT PROVED T HAT DONOR HAD ANY ACQUAINTANCE OR ANY LOVE AND AFFECTION FOR THE ASSE SSEE. IT IS NOT SHOWN AS TO WHEN DONOR HAD COME TO INDIA AND INTERACTED WITH TH E DONEE OR DONEE HAD GONE TO USA AND INTERACTED WITH THE DONOR. (6) ASSE SSEE HAS NOT SHOWN INCOME FROM ANY DEFINITE SOURCES. ON THE OTHER HAND IT IS SHOWING INCOME FROM SOURCES WHICH ARE VAGUE INDICATING THAT HE IS ENGAGED IN THE ACTIVITIES WHICH ARE NOT DEFINED. THE ALLEGATION OF THE A.O. T HAT ASSESSEE IS ENGAGED IN THE CRICKET BETTING AND FOR THAT PURPOSE HE IS ENGA GED IN MONEY LAUNDERING GETS SUPPORTED FROM UNDEFINED SOURCE OF INCOME DEC LARED BY THE ASSESSEE IN HIS RETURN. (7) NO GIFT DEED AS SUCH HAS BEEN FILE D SHOWING THE GIFT BY THE DONOR AND RECEIPT OF THE GIFT BY THE ASSESSEE. ITA.4434-35-07-DCA. 19 21. AS STATED ABOVE MERE RECEIPT OF AMOUNT THROUGH BANKING CHANNELS IS BY ITSELF NOT SUFFICIENT TO PROVE THE GENUINENESS O F THE GIFT. WE ARE MORE CONCERNED HERE ABOUT THE GENUINENESS OF THE GIFT AN D NOT ABOUT THE MODE OF THE PAYMENT. THUS WE ARE CONCERNED WITH THE REALIT Y OF THE TRANSACTION NOT WITH THE FORM ALONE. THE BURDEN OF PROVING THE GEN UINENESS OF GIFT IS MORE AND HEAVIER AS COMPARED TO PROVING THE BURDEN IN TH E CASE OF CREDIT TO BE TAXED U/S. 68 BECAUSE IN GIFT DONOR FORGOES LIEN O VER THE MONEY FOREVER WHEREAS IN THE CASE OF LOAN/CASH CREDIT THE CREDITO R RETAINS THE RIGHT TO RECOVER THE MONEY FROM THE ASSESSEE AND HE MAY HAVE SUITABLE EVIDENCE TO PROVE THAT HE HAS GIVEN CREDIT. THEREFORE MERELY B Y SAYING THAT MONEY IS TRANSFERRED THROUGH BANKING CHANNELS WILL NOT BE SU FFICIENT TO DISCHARGE THE BURDEN LAYING ON THE ASSESSEE. UNLESS SAID BURDEN I S DISCHARGED AO CANNOT BE ASKED TO ACCEPT THE APPARENT. 22. IN CASE OF CASH CREDIT THE GENUINENESS OF TRAN SACTION CAN BE PROVED BY SURROUNDING CIRCUMSTANCES SUCH AS COMMERCIAL EXPED IENCY BENEFIT TO BOTH THE PARTIES I.E. CREDITOR AND ASSESSEE REASONABLE DEGREE OF ACQUAINTANCE BETWEEN CREDITOR AND ASSESSEE PRESENCE OF BROKER DETAILS ABOUT CREDIT SUCH AS MODE PAYMENT OF INTEREST AND REPAYMENT OF PRINC IPAL ETC. ON THE OTHER HAND GENUINENESS OF GIFT CAN BE SHOWN BY RELATIONS HIP AND ACQUAINTANCE WHICH SHOULD BE OF SUCH A DEGREE SHOWING EMOTIONAL BONDAGES SO AS TO PROMPT AND MOTIVATE THE DONOR TO PART AWAY HIS HARD EARNED MONEY TO THE ASSESSEE. SUCH ACQUAINTANCE OR RELATIONSHIP ARE NOT MERE STATEMENT TO BE GIVEN BY THE DONOR OR BY THE ASSESSEE BEFORE THE AS SESSING OFFICER OR IN THE AFFIDAVIT BUT HAS TO BE ESTABLISHED BY SURROUNDING CIRCUMSTANCES PAST HISTORY OF THE TWO PERSONS THEIR MUTUAL RELATIONSHIP AND H ELP TO EACH OTHER IN THE ITA.4434-35-07-DCA. 20 PAST OR BLOOD RELATIONSHIP FROM WHERE ONE COULD IN FER A NATURAL BONDAGE OF AFFECTION BETWEEN DONOR AND DONEE. 23. IN ADDITION TO THESE IT HAS TO BE SHOWN THAT T HERE HAS BEEN A RECIPROCITY WHILE GIVING TO EACH OTHER. IT CANOE BE MERELY A ONCE WAY PROCESS THAT ONLY DONOR HAS GIVEN GIFT TO THE DONEE AND AT NO TIME DONEE HAS GIVEN GIFT TO THE FAMILY MEMBERS OF DONOR. ANOTHER EVIDENCE OF SURROUNDING CIRCUMSTANCES TO ESTABLISH GENUINENESS OF THE GIFT IS OCCASION FOR GIVING GIFT. IMPORTANCE OF OCCASION LIES IN SHOWING THAT NO ONLY ONE DONOR BUT MANY OTHERS HAVE COME TO GIVE GIFTS. IF THERE IS AN OCCA SION AND THE FAMILY MEMBERS OF THE DONEE HAVE ALSO GIVEN GIFT TO THE DO NEE IN ADDITION TO OTHER ACQUAINTANCES THEN IT COULD BE SHOWN THAT OTHER AC QUAINTANCES HAD REASON TO GIVE GIFT TO THE ASSESSEE. FURTHER IT IS NOT A SIN GLE CRITERIA WHICH IS RELEVANT BUT ONE HAS TO DERIVE INFERENCE FROM CUMULATIVE EFF ECT OF ALL THESE CRITERIA. ONE INDIVIDUAL CRITERIA MAY NOT BE RELEVANT BUT IT IS THE EFFECT OF ALL THESE CIRCUMSTANCES INDICATING THAT DONOR IN NATURAL COU RSE COULD HAVE GIVEN GIFT TO THE ASSESSEE. THIS ASPECT HAS BEEN HIGHLIGHTED I N THE CASE OF ISHRAWATI DEVI VS. ITO 298 ITR 313 (AT)(AU) WHEREINTHE CUMULA TIVE EFFECT OF SURROUNDING CIRCUMSTANCES HAS BEEN DESCRIBED. 24. IN THE CONTEXT OF THESE GIFTS WE ARE TEMPTED TO REFER TO THE COMMENTS OF HONBLE MADRAS HIGH COURT IN ADDL.CIT VS. RANGAN ATHAN CHETTY (1985) 153 ITR-453 AT PAGE-466 AS UNDER :- LOOK AT THE WAY THE GIFTS WERE MADE. NOT ONLY WERE MADE TO OTHER PEOPLES CHILDREN BUT SOME OF THEM WERE MADE TO OT HER PEOPLES WIVES. IN ANY PLACE EXCEPTING IN A TAX COURT GIFT S TO OTHER PEOPLES WIVES EVEN IF THEY ARE WIVES OF CO-PARTNERS WOULD RAISE A HOST OF ITA.4434-35-07-DCA. 21 QUESTIONS AND NOT A FEW EYE-BROWS EXCEPTING WHEN T HERE IS AN UNDERSTANDING NOD. AH IT IS ALL FOR PURPOSES OF INCOME-TAX. THE ITO SAW THE FACTS WITH A LAYMANS EYES WHICH WAS T HE CORRECT WAY TO LOOK AT THEM. THE TRIBUNAL FOR THEIR PART HOWEVER GOT INVOLVED IN THE CONVOLUTIONS OF THE MITAKSHARA LAW OF GIFTS AND BRO UGHT TO BEAR A DRY AND UNREAL; LEGALISTIC APPROACH TO THE APPLICATION OF S.64 WHICH THE PROVISION DOES NOT CALL FOR IF WE UNDERSTAND KOTHA RIS CASE (1963) 49 ITR(SC) 107 (EMPHASISE SUPPLIED). 25. IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS LAYING ON HIM TO PROVE THAT GIF T RECEIVED BY HIM FROM SHRI BIRAL M. PATEL WAS GENUINE. ACCORDINGLY THE A UTHORITIES BELOW WERE JUSTIFIED IN TREATING THE SAME AS INCOME OF THE ASS ESSEE. AS A RESULT APPEAL FILED BY THE ASSESSEE IS DISMIS SED. ITA.NO.4435/07 (A.Y.2000-01) . 26. IN THE ASSESSMENT YEAR 2000-01 ISSUES INVOLVED THIS YEAR ARE THE SAME. FIRST IS ABOUT CLAIMING CAPITAL LOSS OF RS.6 50 000/- AND SECOND IS ABOUT GIFT OF RS.12 LACS. FROM SHRI BIRAL M. PATEL. FACTS AND CIRCUMSTANCES OF THE CASE REMAIN THE SAME EXCEPT NAMES OF POWER A TTORNEY HOLDERS AND AMOUNT OF ADVANCE FORFEITED AFTER EXPIRY OF THE SIX MONTHS THROUGH CONSENT DEED. 27. IN VIEW OF THE SIMILAR FACTS SIMILAR ARGUMENTS OF THE PARTIES WE FOLLOW THE SAME REASONING AS GIVEN BY US IN THE ASS ESSMENT YEAR 1999-00 AND HOLD THAT CAPITAL LOSS DID NOT ACCRUE TO THE AS SESSEE AND THEREFORE IT CANNOT BE ADJUSTED AGAINST CAPITAL GAINS ARISING T O THE ASSESSEE AGAINST SALE ITA.4434-35-07-DCA. 22 OF JEWELLERY DECLARED UNDER VDIS. THIS GROUND OF TH E ASSESSEE IS ACCORDINGLY DISMISSED. 28. THE NEXT GROUND IS ABOUT RECEIPT OF GIFT FROM S HRI BIRAL M. PATEL FOR A SUM OF RS.12 LACS. THE FACTS AND CIRCUMSTANCES OF T HE CASE AND EVIDENCES FURNISHED BY THE ASSESSEE IN SUPPORT OF THE GIFTS A RE THE SAME AS IN A.Y. 99- 00. THE DEFICIENCY IN THE EVIDENCE IS ALSO THE SAME THE ARGUMENTS OF THE PARTIES FOR AND AGAINST THE ISSUE ARE ALSO THE SAME AS IN A.Y. 1999-00. FOLLOWING OUR REASONING GIVEN BY US IN A.Y. 1999-00 WE HOLD THAT ASSESSEE WAS UNABLE TO DISCHARGE THE ONUS WHICH LAY ON HIM T O PROVE THAT THE GIFTS ARE GENUINE. THEREFORE AUTHORITIES BELOW WERE JUSTIFIED IN TREATING THE SUM OF RS.12 LACS AS INCOME OF THE ASSESSEE U/S. 68. AS A RESULT APPEAL BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31/ 03 /2010. SD/- SD/- (BHAVNESH SAINI) (D.C.AGRA WAL) JUDICIALMEMBER. ACCOUNTANT MEMBER. AHMEDABAD. DATED: 31/ 03 /2010. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. ITA.4434-35-07-DCA. 23