Manjari Jain,, v. DCIT, Central Circle-3,,

ITSSA 402/DEL/2004 | misc
Pronouncement Date: 20-08-2010 | Result: Dismissed

Appeal Details

RSA Number 40220116 RSA 2004
Assessee PAN AAEPJ1555H
Bench Delhi
Appeal Number ITSSA 402/DEL/2004
Duration Of Justice 5 year(s) 8 month(s) 20 day(s)
Appellant Manjari Jain,,
Respondent DCIT, Central Circle-3,,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 20-08-2010
Date Of Final Hearing 15-06-2010
Next Hearing Date 15-06-2010
Assessment Year misc
Appeal Filed On 30-11-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER I.T.(SS) A.NO.402/DEL/2004 BLOCK PERIOD : 01.04.1995 TO 15.03.2002 MRS. MANJARI JAIN DY. COMMISSIONER OF INCOME-T AX 9-E CONNAUGHT PLACE VS. CENTRAL CIRCLE 3 NEW DE LHI. NEW DELHI. PAN: AAEPJ1555H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.S. AGGARWAL SR. ADVOCATE. RESPONDENT BY : SHRI M.K. GAUTAM CIT(DR). O R D E R PER C.L. SETHI JUDICIAL MEMBER. THE PRESENT APPEAL FILED BY THE ASSESSEE ARISES FRO M THE ORDER DATED 30.09.2004 OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) PASSED IN THE MATTER OF AN ASSESSMENT MADE BY THE ASSESSING O FFICER UNDER SECTION 158BC OF THE INCOME-TAX ACT 1961 (THE ACT) FOR THE BLOCK PERIOD FROM 01.04.1995 TO 15.03.2002. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-II NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW IN UP HOLDING THE ASSESSMENT MADE BY THE LEARNED DCIT CENTRAL CIRCLE -3 NEW DELHI UNDER CHAPTER XIV B OF THE INCOME TAX ACT. 2 2. THAT IN UPHOLDING THE ASSESSMENT THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE TH AT NEITHER THE ASSUMPTION OF JURISDICTION UNDER THE AFORESAID CHAPTER WAS VALID NOR THE ASSESSMENT MADE COULD BE UPHELD HOLD ING THE AMOUNT OF RS.3 15 840/- AS UNEXPLAINED CASH CREDITS FOR THE FINANCIAL YEAR 1999-2000 AS REPRESENTING AN UNDISCL OSED INCOME OF THE ASSESSEE WITHIN THE MEANING OF SECTION 150B (B) OF THE INCOME TAX ACT. 3. THAT IN ANY CASE AND WITHOUT PREJUDICE THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS OVER LOOKE D THAT IN THE INSTANT CASE THE AMOUNT OF GIFT RECEIVED WERE DULY EXPLAINED AND IN NO CASE THE AMOUNTS SO GIFTED TO MASTER VARUN JAIN COULD BE HELD AS THE UNDISCLOSED INCOME OF THE ASSESSEE AS OTHERWISE TOO THE ASSESSEE WAS NOT TH E NATURAL GUARDIAN OF MASTER VARUN JAIN. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN NOT ADMITTING THE EVIDENCE FURNISH ED BEFORE HIM IN RESPECT OF WHICH AN APPLICATION UNDER RULE 46A OF THE INCOME TAX ACT WAS MADE WHICH OUGHT TO HAVE IN THE CIRCUMSTANCES OF THE CASE ADMITTED AS SUCH. THERE WAS NO JUSTIFICATION NOT TO HAVE ADMITTED THE SAID EVIDENC E WHICH WAS IN DISREGARD OF THE FACT THAT THE ASSESSEE HAD FURN ISHED SUCH EVIDENCE BEFORE THE LEARNED ASSESSING OFFICER THOUG H ON 31.3.2004 PRIOR TO THE ORDER OF ASSESSMENT. 5. THAT IN UPHOLDING THE ASSESSMENT THE ASSESSEES SUBMISSIONS MADE AND THE EVIDENCE PRODUCED HAS ALL BEEN DISREG ARDED WHICH IS HIGHLY UNJUSTIFIED IN THE CIRCUMSTANCES OF THE CASE. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 158BFA(1) OF THE INCOME TAX ACT. 3. IN THIS CASE BLOCK ASSESSMENT U/S 158BC OF THE A CT HAS BEEN MADE BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 31.03.2 004. IN THE BLOCK ASSESSMENT ORDER IT HAS BEEN STATED BY THE AO THAT THERE WAS A SEARCH AND 3 SEIZURE OPERATION UNDER SEC. 132 OF THE ACT AT THE RESIDENTIAL AND BUSINESS PREMISES OF VARIOUS ENTITIES AND INDIVIDUALS ASSOCI ATED WITH JAINSONS (TARUN KUMAR JAIN) GROUP OF CASES. THE ASSESSEE IS A WIFE OF SHRI TARUN KUMAR JAIN. DURING THE COURSE OF SEARCH VARIOUS DOCUMEN TS IN THE FORM OF LOOSE PAPERS AND VARIOUS ASSETS WERE FOUND AND SEIZED. T HE AO HAS FURTHER STATED THAT DURING THE COURSE OF SEARCH OF THE ASSESSEES RESIDENCE ON 05.02.2002 A DOCUMENT WAS SEIZED VIDE PAGE NO.21 OF ANNEXURE A-2 AND ON THIS PAGE IT WAS MENTIONED - SB ACCOUNT OF VARUN JAIN NO. 526605 658 TTABA021001088 HSBC BANK USA. THE AO FURTHER STAT ED THAT A NOTICE UNDER SEC. 158BC OF THE ACT WAS ISSUED ON 11.12.200 2 WHICH WAS SERVED UPON THE ASSESSEE ON 20.12.2002 REQUIRING THE ASSE SSEE TO FILE A RETURN FOR THE BLOCK PERIOD FROM ASSESSMENT YEAR 1996-97 TO AS SESSMENT YEAR 2002- 03 (UPTO 15.03.2002) WITHIN 30 DAYS OF THE SERVICE OF THE NOTICE. RETURN FOR THE BLOCK PERIOD WAS FILED BY THE ASSESSEE ON 21.10 .2003 DECLARING UNDISCLOSED INCOME AT `NIL. THE AO THUS ISSUED NO TICES UNDER SEC. 143(2) AND 142(1) OF THE ACT ALONG WITH THE DETAILED QUEST IONNAIRE. IN THE COURSE OF ASSESSMENT PROCEEDINGS ONE SHRI SUSHIL SALHOTRA A CCOUNTANT AND SHRI S.K. GUPTA CA BEING AUTHORIZED REPRESENTATIVES OF THE A SSESSEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS WHICH WERE PLACED ON RECORD. THE AR OF THE ASSESSEE ALSO MADE VERBAL SUBMISSIONS BEFORE THE AO. IN REPLY TO 4 EXPLAIN THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT OF SHRI VARUN JAIN WITH HSBC BANK USA THE ASSESSEE STATED BEFORE THE AO T HAT SHRI VARUN JAIN WAS HAVING 2 BANK ACCOUNTS IN HSBC BANK USA. ONE WAS THE SAVING BANK ACCOUNT NO.526-60565-8 WHICH WAS FOUND DURING THE COURSE OF SEARCH AND ANOTHER CHECKING ACCOUNT IN THE SAME BANK BEARING N O.526-35422-4. SHRI VARUN JAIN IS THE SON OF THE ASSESSEE AND HIS INCOM E UPTO 26.03.2000 I.E. THE DATE ON WHICH HE ATTAINED MAJORITY WAS BEING CLUBB ED WITH THE PRESENT ASSESSEES INCOME. THE COPIES OF BANK ACCOUNT FROM THEIR OPENING ON 26.08.2009 TO 26.03.2000 I.E. THE PERIOD TILL WHICH THE INCOME OF SHRI VARUN JAIN WAS CLUBBED WITH THE ASSESSEE WERE PROVIDED B UT THE SOURCE OF CREDIT ENTRIES IN BOTH THESE BANK ACCOUNTS WAS NOT EXPLAIN ED. THE DETAILS OF THE DEPOSIT IN THESE 2 BANK ACCOUNTS ARE SUMMARIZED B Y THE AO AS UNDER:- DATE A/C NO. 526354224 A/C NO.526605685 REMARK 26.8.1999 2500 4000 OUT OF THIS $ 3500 GIFTS FROM NRI 2.9.1999 50 GIFT FROM NRI 7.9.1999 50 GIFT FROM NRI 13.9.1999 1000 GIFT FROM NRI 8.2.2000 2120 GIFT FROM NRI 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SOURCE OF AMOUNT DEPOSITE D IN THE BANK ACCOUNT BUT IN SPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSE SSEE THE ASSESSEE DID NOT 5 FURNISH ANY DETAILS. THE AO THEN ISSUED A SHOW CAU SE NOTICE DATED 23.02.2004 MENTIONING THEREIN THE OPPORTUNITIES ALR EADY GIVEN TO THE ASSESSEE AND REQUIRING THE ASSESSEE TO SHOW CAUSE A S TO WHY THE DEPOSITS IN THE BANK ACCOUNT SHOULD NOT BE TREATED AS UNDISCLOS ED INCOME OF THE ASSESSEE. THE AO ALSO POINTED OUT TO THE ASSESSEE THAT THE PERIOD OF DEPOSIT IS PERTAINED TO THE PREVIOUS YEAR 1999-2000 RELEVAN T TO THE ASSESSMENT YEAR 2000-01 AND DURING THE COURSE OF REGULAR ASSESSMEN T PROCEEDINGS IN THE ASSESSMENT YEAR 2000-01 THESE BANK ACCOUNTS WERE N OT DISCLOSED BEFORE THE DEPARTMENT THOUGH COMPLETE DETAILS OF ALL THE B ANK ACCOUNTS WERE SPECIFICALLY CALLED FOR DURING THE ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER ALSO POINTED OUT TO THE ASSESSEE THAT THE A SSESSEE CATEGORICALLY STATED THAT NO GIFTS WERE RECEIVED DURING THE PREVIOUS YEA R 1999-2000. THE ASSESSEE THEN FURNISHED A REPLY ON 25.03.2004 SUBMI TTING THAT THE GIFTS RECEIVED FROM NRI WERE OUTSIDE INDIA AND WERE NOT A S SUCH TAXABLE INCOME. IT WAS ALSO SUBMITTED THAT DURING REGULAR ASSESSMEN T PROCEEDINGS FOR ASSESSMENT YEAR 2000-01 NO DETAILS WERE SOUGHT BY THE DEPARTMENT REGARDING THE ACCOUNT OF SHRI VARUN JAIN ABROAD AND SINCE THE GIFTS WERE RECEIVED OUTSIDE INDIA THE DETAILS THEREOF WERE NO T FURNISHED. 5. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS TH E AO HAD TAKEN A VIEW THAT THE TOTAL AMOUNT DEPOSITED IN THE BANK AC COUNT OF SHRI VARUN JAIN 6 IS UNDISCLOSED INCOME INCLUDIBLE IN THE TOTAL INCOM E OF THE ASSESSEE INASMUCH AS THE ASSESSEE HAS FAILED TO FURNISH ANY SATISFACTORY EXPLANATION REGARDING THE SOURCE OF MONEY DEPOSITED IN THE BANK ACCOUNT. THE AO THEREFORE MADE THE ADDITION OF RS.3 15 840/- BEING UNEXPLAINED CASH CREDIT PERTAINING TO THE F.Y. 1999-2000 IN THE ASSESSEES HAND AND COMPLETED THE BLOCK ASSESSMENT ACCORDINGLY. 6. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). BEFORE THE LEARNED CIT(A) THE ASSESSEE SUB MITTED THAT ON 31.03.2004 THE ASSESSEE HAD SUBMITTED CONFIRMATION IN RESPECT OF GIFT OF 5000 US$ FROM MRS. SUMAN DAS WHICH WAS NOT MENTION ED IN THE ASSESSMENT ORDER BY THE AO AS THE AO HAD CLOSED THE PROCEEDINGS ON 29.03.2004. IT WAS FURTHER SUBMITTED THAT THERE WA S NO LEGAL REQUIREMENT FOR DISCLOSURE OF GIFT IN THE COURSE OF REGULAR ASSESSM ENT PROCEEDINGS AS GIFTS WERE MADE OUTSIDE INDIA. THE ASSESSEE ALSO MADE AN APPLICATION UNDER RULE 46A FOR ADMISSION OF ADDITIONAL EVIDENCES UNDER THE PLEA THAT THESE ADDITIONAL EVIDENCES COULD NOT BE PRODUCED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AS A VERY SHORT NOTICE WAS GIVEN BY THE AO. IT WAS FURTHER SUBMITTED THAT THE ADDITION CANNOT BE MADE AS CASH CREDIT INASMUCH AS THE AMOUNT IN QUESTION WAS NOT FOUND CREDITED IN THE BO OKS OF ACCOUNT OF THE ASSESSEE FOR HIS MINOR SON. THE ADDITIONAL EVIDENC ES FILED BY THE ASSESSEE 7 WERE FORWARDED BY THE LEARNED CIT(A) TO THE AO FOR HIS COMMENTS. THE AO SUBMITTED HIS COMMENTS VIDE REPORT DATED 13.09.200 4 WHICH HAS BEEN REPRODUCED BY THE AO IN HIS ORDER. 7. IN THE COUNTER REPLY THE LEARNED AR FOR THE ASS ESSEE REITERATED HIS EARLIER STAND BEFORE THE LEARNED CIT(A) THAT NO ADD ITION WAS CALLED FOR AND FURTHER SUBMITTED THAT AS SOON AS COPIES OF THE BAN K ACCOUNT WERE OBTAINED THE ASSESSEE LOST NO TIME IN FURNISHING THE SAME TO THE AO. 8. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND AOS ORDER THE LEARNED CIT(A) CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 3(IV) I HAVE GONE THROUGH THE ASSESSMENT ORDER AN D THE SUBMISSIONS MADE BY THE LD. AR. IT IS SEEN THAT IT HAD NOT BEEN DENIED BY THE ASSESSEE THAT DURING THE COURSE OF RE GULAR ASSESSMENT PROCEEDINGS FOR A.Y. 2000-01 THE FOREIG N BANK ACCOUNTS WERE NOT DISCLOSED BY THE ASSESSEE THOUGH COMPLETE DETAILS OF ALL THE BANK ACCOUNTS WERE SPECIFICALLY CALLED FOR BY THE A.O. THE CONTENTION OF THE A.O. THAT IT WAS AL SO CATEGORICALLY STATED BY THE ASSESSEE THAT NO GIFTS WERE RECEIVED DURING THE PREVIOUS YEAR 1999-2000 HAS ALSO NOT BEE N REBUTTED. FROM THE REMAND REPORT SENT BY THE A.O. WHICH IS R EPRODUCED ABOVE IT IS SEEN THAT THE ASSESSEE WAS GIVEN ENOUG H OPPORTUNITY TO EXPLAIN THE SOURCE OF THESE CREDITS APPEARING IN THE ACCOUNTS ON THE BASIS OF WHICH ADDITIONS HAVE BEEN MADE. IT IS ALSO SEEN THAT ALL THE GIFTS ARE MADE IN CASH. I AGREE WITH THE A.O. THAT THE SOURCE OF THE DONORS HAS ALSO NOT BEEN EXPLAINE D. ALSO IT IS SEEN THAT ONLY SIMPLE CONFIRMATORY LETTERS HAVE BEE N FLED BY THE ALLEGED DONOR BUT NO COPIES OF THEIR PASSPORT ETC. TO ESTABLISH THEIR IDENTITY HAVE BEEN FURNISHED. IN THESE CIRCU MSTANCES THE ACTION OF THE A.O. IS JUSTIFIED AND THE ADDITION MA DE BY HIM DOES NOT CALL FOR ANY INTERFERENCE. THESE GROUNDS OF APPEAL ARE DISMISSED. 8 STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S. 9. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SHR I C.S. AGGARWAL HAS RAISED THE VARIOUS ARGUMENTS CHALLENGING THE VALIDI TY OF THE BLOCK ASSESSMENT ORDER MADE BY THE AO AND DISPUTING THE A DDITION OF RS.3 15 840/- MADE BY THE AO IN THE HANDS OF THE AS SESSEE. THESE ARGUMENTS ARE ON FOLLOWING COUNTS:- (1) THAT BLOCK ASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE ARE ILLEGAL INASMUCH AS THERE WAS NO SEARC H AGAINST THE ASSESSEE AND THERE WERE MERELY A CONSEQUENTIAL SEARCH AS A RESULT OF KEYS OF THE LOCKERS HAVING BEEN FOUN D DURING THE SEARCH CONDUCTED AND AUTHORIZED UNDER SEC. 132( 1) ON SHRI TARUN KUMAR JAIN; (2) THAT THE SEARCH DOCUMENT MARKED AS BEING FOUND AS A RESULT OF CONSEQUENTIAL SEARCH CONDUCTED IN PURSUANCE TO W ARRANT OF SEARCH DATED 04.02.2002 CANNOT BE MADE BASIS TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE INASMUCH AS THE AFORESAID WARRANT OF AUTHORIZATION WAS NOT IN THE N AME OF THE ASSESSEE; (3) THAT NO ADDITION ON ACCOUNT OF DEPOSIT IN THE BANK ACCOUNT IN HSBC BANK IN USA OF SHRI VARUN JAIN CAN BE MADE IN 9 THE HANDS OF THE ASSESSEE AS SHRI VARUN JAIN WAS A NON- RESIDENT DURING THAT YEAR AND HIS INCOME ARISING OU TSIDE INDIA IS NOT LIABLE TO BE INCLUDED IN THE TOTAL INC OME CHARGEABLE TO TAX IN INDIA; & (4) EVEN OTHERWISE INCOME OF SHRI VARUN JAIN IS NOT LI ABLE TO BE CLUBBED IN THE ASSESSEES HANDS INASMUCH AS UNDI SCLOSED INCOME OF FATHER OF SHRI VARUN JAIN WAS HIGHER THAN THE UNDISCLOSED INCOME OF THE PRESENT ASSESSEE WHO IS THE MOTHER OF SHRI VARUN JAIN. WITHOUT PREJUDICE TO THE ARGUMENTS IT WAS CONTENDE D THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF THE DEPOSIT IN T HE BANK ACCOUNT OF SHRI VARUN JAIN IN HSBC BANK IN USA AND THEREFORE NO AD DITION WAS CALLED FOR. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO FILED BEFORE US A WRITTEN SYNOPSIS CONTAINING VARIOUS ARGUMENTS MADE ORALLY. 10. THE LEARNED DR ON THE OTHER HAND SUBMITTED THA T IN THE LIGHT OF THE SEARCH CONDUCTED AGAINST THE ASSESSEE HERSELF ON 05 .02.2000 AT HER RESIDENCE THE DOCUMENT RECOVERED FROM THE RESIDENCE WAS A VAL ID SEIZED DOCUMENT FOR THE PURPOSE OF DETERMINING THE UNDISCLOSED INCOME O F THE ASSESSEE. HE FURTHER CONTENDED THAT THE SEARCH UNDER SEC. 132 WA S CONDUCTED AGAINST THE ASSESSEE AND RELEVANT SEIZED DOCUMENT WAS FOUND FR OM THE RESIDENCE OF THE 10 ASSESSEE AND THEREFORE THE AO WAS JUSTIFIED IN INI TIATING PROCEEDINGS UNDER SEC. 158BC AGAINST THE PRESENT ASSESSEE. HE FURTHE R SUBMITTED THAT THE INCOME OF SHRI VARUN JAIN UPTO 26.03.2000 WAS INCLU DED IN THE ASSESSEES HAND WHILE MAKING REGULAR ASSESSMENT AND THEREFORE ANY INCOME REMAINING UNDISCLOSED IS INVARIABLY BE INCLUDED IN THE ASSESS EES HANDS AS PER PROVISIONS CONTAINED IN SEC. 64(1) OF THE ACT. THE LEARNED DR FURTHER CONTENDED THAT IN THE LIGHT OF THE PERIOD OF STAY O F SHRI VARUN JAIN IN INDIA DURING THE CURRENT F.Y. RELEVANT TO THE ASSESSMENT YEAR 2000-01 SHRI VARUN JAIN CANNOT SAID TO BE A NON-RESIDENT FOR THE PURPO SE OF ASSESSMENT UNDER THE INCOME-TAX ACT. HE FURTHER SUBMITTED THAT IN SUPPO RT OF THE ASSESSEES CLAIM THAT SHRI VARUN JAIN HAD RECEIVED GIFTS FROM VARIOU S PERSONS THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY IOTA OF EVIDENCE W HICH COULD BE SAID TO BE RELIABLE TO ESTABLISH THE GENUINENESS OF THE GIFT A ND THE TRANSACTION INASMUCH AS THE ASSESSEE HAS FAILED TO PROVE AND ESTABLISH T HE CREDITWORTHINESS OF THE DONORS THE CIRCUMSTANCES OR THE OCCASION ON WHICH THE GIFT WAS GIVEN BY THE OUTSIDERS TO SHRI VARUN JAIN AND WHAT KIND OF NATUR AL LOVE AND AFFECTION THE ALLEGED DONOR HAD TOWARDS SHRI VARUN JAIN HAS ALSO NOT BEEN EXPLAINED. THE LEARNED DR THEREFORE SUBMITTED THAT THE ADDITI ON OF RS.3 15 840/- MADE BY THE AO HAS BEEN RIGHTLY CONFIRMED BY THE LEARNED CIT(A). 11 11. RIVAL CONTENTIONS OF BOTH THE PARTIES HAVE BEEN CONSIDERED ORDERS OF THE AUTHORITIES BELOW HAVE BEEN PERUSED INCLUDING V ARIOUS DOCUMENTS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. THE FIRST QUESTION THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE AO HAS RIGHTLY I NITIATED THE PROCEEDINGS UNDER SECTION 158BC OF THE ACT AGAINST THE ASSESSEE . 12. IN THIS CONNECTION THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONLY 2 WARRANTS OF AUTHORIZATION AUTHORIZED BY THE ADDITIONAL DIRECTOR OF INCOME-TAX DATED 05.02.2002 WERE ISSUED IN RESPE CT OF LOCKER NO.3053 WITH NEW DELHI VAULTS LIMITED AND LOCKER NO.1627 W ITH STANDARD CHARTERED BANK 10-E CONNAUGHT PLACE NEW DELHI. THESE AUTHORIZED LETTERS TO SEARCH LOCKER WERE MERELY A CONSEQUENTI AL SEARCH AS A RESULT OF KEYS OF THE LOCKERS HAVING BEEN FOUND DURING THE CO URSE OF SEARCH CONDUCTED AND AUTHORIZED UNDER SEC. 132(1) ON SHRI TARUN KUMA R JAIN. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THER E WAS A COMPOSITE WARRANT OF AUTHORIZATION DATED 05.02.2002 TO SEARCH THE PR EMISES AT E-9 CONNAUGHT CIRCUS NEW DELHI WHICH WAS NOT EXECUTED AGAINST T HE ASSESSEE. HE FURTHER CONTENDED THAT NO PANCHNAMA WAS PREPARED IN THE NAM E OF THE ASSESSEE ON THE BASIS OF SAID WARRANT OF SEARCH AND THEREFORE THE PROCEEDINGS INITIATED BY THE AO UNDER SEC. 158BC ARE ILLEGAL. 12 13. THE LEARNED DR ON THE OTHER HAND FURNISHED NUM BER OF SEARCH WARRANTS ISSUED AGAINST VARIOUS CONCERNS AND PERSON S BELONGING TO THIS GROUP BEFORE US INCLUDING A SEARCH WARRANT IN THE NAME OF SHRI TARUN KUMAR JAIN MRS. MANJARI JAIN (THE ASSESSEE) M/S. JAINSONS M/S. JAINSONS DEPARTMENTAL STORE PVT. LTD. IN RESPECT OF SEARCH A T E-9 CONNAUGHT CIRCUS NEW DELHI. THE SEARCH IN THIS RESPECT WAS CONDUCTE D ON 05.02.2002. A SEARCH WARRANT DATED 04.02.2002 IN THE NAME OF SHRI TARUN KUMAR JAIN AND SOME OTHER CONCERNS IN RESPECT OF SEARCH CONDUCTED AT D-400 DEFENCE COLONY NEW DELHI HAS ALSO BEEN FILED. HE ALSO POI NTED OUT TO THE WARRANT ISSUED TO SEARCH THE BANK LOCKERS BELONGING TO THE ASSESSEE NAMELY MRS. MANJARI JAIN WITH NEW DELHI VAULTS LTD. AND STANDAR D CHARTERED BANK. 14. WE HAVE PERUSED THE AFORESAID SEARCH WARRANTS A ND FOUND THAT A SEARCH WARRANT DATED 05.02.2002 WAS ISSUED IN THE N AME OF THE ASSESSEE MRS. MANJARI JAIN ALONG WITH IN THE NAMES OF M/S. JAINSO NS SHRI TARUN KUMAR JAIN AND M/S. JAINSONS DEPARTMENTAL STORE AT E-9 CONNAUGHT CIRCUS NEW DELHI. A COPY OF PANCHNAMA IN THE NAME OF M/S. JAI NSONS DEPARTMENTAL STORES PVT. LTD. SHRI TARUN KUMAR JAIN MRS. MANJA RI JAIN (THE PRESENT ASSESSEE) AND M/S. JAINSONS IN RESPECT OF SAID SEAR CH AT E-9 CONNAUGHT CIRCUS NEW DELHI WAS ALSO PREPARED STATING THAT I N PURSUANCE TO A SEARCH WARRANT DATED 05.02.2002 ISSUED IN THE NAME OF M/S. JAINSONS DEPARTMENTAL 13 STORES PVT. LTD. SHRI TARUN KUMAR JAIN MRS. MANJA RI JAIN AND M/S. JAINSONS A SEARCH WAS COMMENCED ON 05.02.2002 AT 1 .20 P.M. AND WAS TEMPORARILY CONCLUDED ON 06.02.2002 AT 8.30 P.M. WH EN A RESTRAINT ORDER WAS PASSED U/S 132(3) ON 06.02.2002. IN THE COURS E OF SEARCH CONCLUDED TEMPORARILY ON 06.02.2002 VARIOUS PAPERS CASH BOO KS CASH MEMOS ETC. WERE FOUND AS DETAILED IN PANCHANAMA A COPY OF WHI CH IS PLACED ON RECORD. THE REVOCATION ORDER WAS THEN MADE ON 14.02.2002 AN D ONE C.P.U. (SERVER) WAS SEIZED. IT MAKES IT CLEAR THAT A SEAR CH WAS ALSO CONDUCTED AGAINST THE ASSESSEE IN PURSUANCE TO THE AFORESAID SEARCH WARRANT DATED 05.02.2002 AND THEREFORE THE AO HAD EVERY RIGHT TO INITIATE BLOCK ASSESSMENT PROCEEDINGS UNDER SEC. 158BC OF THE ACT AGAINST THE PRESENT ASSESSEE ALSO. WE THEREFORE HOLD THAT THE AO WAS JUSTIFIED IN ISSUING NOTICE UNDER SEC. 158BC OF THE ACT TO THE ASSESSEE WITH A VIEW TO MAKE BLOCK ASSESSMENT AGAINST HER. 15. THE QUESTION IS AS TO WHETHER THE SEIZED DOCUME NT VIDE PAGE NO.21 OF ANNEXURE A-2 FOUND AT THE RESIDENCE OF THE ASSESSEE CAN BE UTILIZED OR USED FOR THE PURPOSE OF DETERMINING UNDISCLOSED INCOME O F THE ASSESSEE IN THE BLOCK ASSESSMENT MADE UNDER SEC. 158BC OF THE ACT. 16. IT IS NOT IN DISPUTE THAT A GROUP SEARCH WAS CO NDUCTED AGAINST THE ASSESSEE HER HUSBAND AND VARIOUS CONCERNS BELONGIN G TO THE GROUP. 14 NUMBERS OF SEARCH WARRANTS WERE ISSUED FOR CONDUCTI NG SEARCH AT DIFFERENT PLACES. ALL THE SEARCH PROCEEDINGS WERE INITIATED TOGETHER. A DOCUMENT CONTAINING THE DETAILS OF BANK ACCOUNT STANDING IN THE NAME OF THE ASSESSEES THEN MINOR SON SHRI VARUN JAIN WAS FOUND FROM THE R ESIDENCE OF THE ASSESSEE IN THE COURSE OF SEARCH CONDUCTED AT THE RESIDENCE. IT IS NOT IN DISPUTE THAT THE DOCUMENT VIDE PAGE NO.21 OF ANNEXURE A-2 FOUND AT THE ASSESSEES RESIDENCE AT D-400 DEFENCE COLONY NEW DELHI IS A DOCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH CONDUCTED UNDER SEC. 132(1) OF THE ACT AT THE ASSESSEES RESIDENCE. THEREFORE A DOCUMENT FO UND DURING SEVERAL JOINT SEARCH CONDUCTED AGAINST THE ASSESSEE OR HER HUSBA ND AND/OR GROUP CONCERNS CAN BE CONSIDERED FOR THE PURPOSE OF DETERMINING UN DISCLOSED INCOME BELONGING TO THE ASSESSEE OR HER HUSBAND AND OTHER CONCERNS BELONGING TO THE SAME GROUP. THEREFORE THE ASSESSEES CONTENTI ON THAT THE UNDISCLOSED INCOME HAS BEEN DETERMINING NOT ON THE BASIS OF THE SEIZED DOCUMENT IS REJECTED. 17. THE NEXT CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT SINCE MASTER VARUN JAIN WAS A NON-RESIDENT DURING T HE RELEVANT F.Y. 1999- 2000 THE DEPOSIT IN HIS NAME IN HIS BANK ACCOUNT M AINTAINED IN USA CANNOT BE TREATED TO BE AN INCOME CHARGEABLE TO TAX IN IND IA. IN THIS RESPECT THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE U S THE POSITION OF STAY OF 15 MASTER VARUN IN INDIA DURING THE PERIOD FROM 01.04. 1999 TO 31.03.2000 WHICH IS AS UNDER:- PERIOD IN INDIA OUTSIDE INDIA 01.04.99 TO 25.08.99 147 NIL 26.08.99 TO 18.12.99 NIL 115 19.12.99 TO 31.03.00 15 NIL 03.01.00 TO 31.03.00 NIL 88 TOTAL NO. OF DAYS 162 203 FROM THE AFORESAID DETAILS IT IS CLEAR THAT MASTER VARUN JAIN WAS IN INDIA FOR 162 DAYS. IT HAS BEEN CONTENDED BY THE LEARNED COU NSEL FOR THE ASSESSEE THAT HE LEFT INDIA ON 26.08.1999 FOR STUDY IN USA. IT I S AN ADMITTED POSITION THAT MASTER VARUN JAIN WAS RESIDENT IN INDIA DURING PERI ODS PRIOR TO 01.04.1999. IN OTHER WORDS MASTER VARUN JAIN WAS RESIDENT IN I NDIA AND WAS LIVING IN INDIA DURING THE PREVIOUS YEARS ENDED UPTO 31.03.19 99. IT IS ALSO NOT IN DISPUTE THAT MASTER VARUN JAIN WAS IN INDIA FROM 01 .04.1999 TO 25.08.1999 DURING THE CURRENT F.Y. 1999-2000 ITSELF. AS PER P ROVISION CONTAINED IN SEC. 6(1) OF THE INCOME-TAX ACT AN INDIVIDUAL IS SAID TO BE RESIDENT IN INDIA IN ANY PREVIOUS YEAR IF HE (A) IS IN INDIA IN THAT YEAR FOR A PERIOD OR PERIODS AM OUNTING IN ALL TO ONE HUNDRED AND EIGHTY-TWO DAYS OR MORE; OR; (C) HAVIN G WITHIN THE FOUR YEARS PRECEDING THAT YEAR BEEN IN INDIA FOR A PERIO D OR PERIODS AMOUNTING IN ALL TO THREE HUNDRED AND SIXTY-FIVE DA YS OR MORE IS IN 16 INDIA FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO S IXTY DAYS OR MORE IN THAT YEAR. EXPLANATION TO SECTION 6(1) OF THE ACT PROVIDES THA T IN THE CASE OF AN INDIVIDUAL - BEING A CITIZEN OF INDIA WHO LEAVES INDIA IN ANY P REVIOUS YEAR AS A MEMBER OF THE CREW OF AN INDIAN SHIP AS DEFINE D IN MERCHANT SHIPPING ACT 1958 FOR THE PURPOSES OF EMP LOYMENT OUTSIDE INDIA THE PERIOD OF 60 DAYS OR MORE OF BEI NG IN INDIA SHALL BE SUBSTITUTED BY 182 DAYS. THE AFORESAID TWO CONDITIONS FOR AN INDIVIDUAL TO B E TREATED AS RESIDENT IN INDIA ARE UNDOUBTEDLY ALTERNATIVE. AS PER FIRST P ART OF SUB-SEC. (1) OF SEC. 6 MASTER VARUN JAIN CANNOT SAID TO BE RESIDENT IN IND IA IN THE PREVIOUS YEAR 1999-2000. HOWEVER THE SECOND PART OF SUB-SEC.(1) OF SEC. 6 I.E. CLAUSE (C ) OF SUB-SEC.(1) OF SEC. 6 IS APPLICABLE TO THE PRES ENT CASE INASMUCH AS IT IS NOT IN DISPUTE THAT MASTER VARUN JAIN WAS IN INDIA FOR A PERIOD IN ALL TO 365 DAYS OR MORE DURING THE PERIOD OF FOUR YEARS PRECEDING T HE PREVIOUS YEAR 1999- 2000. IT IS ALSO CLEAR THAT MASTER VARUN JAIN WAS IN INDIA FOR MORE THAN 60 DAYS OR MORE DURING THE F.Y. 1999-2000. THEREFORE UNDER CLAUSE (C) OF SUB-SEC. (1) OF SEC.6 OF THE ACT MASTER VARUN JAI N CAN BE SAID TO BE RESIDENT IN INDIA IN THE F.Y. 1999-2000 INASMUCH AS MASTER V ARUN JAIN WAS IN INDIA 17 FOR MORE THAN 365 DAYS DURING THE FOUR YEARS PRECED ING THE F.Y. 1999-2000 AND WAS IN INDIA FOR MORE THAN 60 DAYS OR MORE DURI NG THE RELEVANT PREVIOUS YEAR 1999-2000. IT IS ALSO NOT THE CASE OF THE ASS ESSEE THAT THE ASSESSEE IS A RESIDENT BUT NOT ORDINARY RESIDENT IN INDIA IN PREV IOUS YEAR 1999-2000. WE THEREFORE HOLD THAT MASTER VARUN JAIN WAS RESIDENT IN INDIA IN PREVIOUS YEAR 1999-2000 AND THUS THE TOTAL INCOME OF MASTER VARU N JAIN FOR THE PREVIOUS YEAR 1999-2000 SHALL INCLUDE ALSO THE INCOME WHICH ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING SUCH PREVIOUS YEAR 1999-2000. 18. THE OTHER CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE UNDISCLOSED INCOME OF MASTER VARUN JAIN RELEVANT TO THE F.Y. 1999-2000 IS NOT INCLUDIBLE IN THE ASSESSEES HANDS BUT IS INCLU DIBLE IN THE HANDS OF FATHER OF MASTER VARUN JAIN INASMUCH AS THE UNDISCLOSED IN COME OF FATHER OF MASTER VARUN JAIN IS HIGHER THAN THE UNDISCLOSED IN COME OF THE PRESENT ASSESSEE AS DETERMINED IN THE BLOCK ASSESSMENT MADE UNDER SEC. 158BC OF THE ACT. AFTER CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE AND THE STAND TAKEN BY THE ASSESSEE AS WELL AS HER HUSBAND BEFORE THE AO WE DO NOT FIND ANY MERIT IN THIS SORT OF CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE. DURING THE BLOCK ASSESSMENT PROCEEDINGS WITH REFERENCE TO THE QUESTIONNAIRE F.NO.DCIT/CC-3/03-04 DATED 04.02.2004 AND LETTER F.NO.DCIT/CC-3/03-04/615 DATED 10.03.2004 A REPLY DATED 12.03.2004 WAS 18 SUBMITTED BY THE ASSESSEE WHERE IT HAS BEEN STATED BY THE ASSESSEE HERSELF THAT MASTER VARUN JAIN WAS MINOR WHEN HE WENT FOR T HE PURPOSE OF STUDIES IN AUGUST 1999 TO USA AND IT WAS A MATTER OF RECORD THAT BEING MINOR VARUN JAINS INCOME WAS BEING ASSESSED IN ASSESSEES HAND S UNDER EXPLANATION TO SEC. 64(1A) OF THE INCOME-TAX ACT AND HENCE FOR T HE PREVIOUS YEAR FORM 01.04.1999 TO 25.03.2000 HIS INCOME IS INCLUDIBLE I N THE ASSESSEES HAND. THIS HAS BEEN CATEGORICALLY STATED BY THE ASSESSEE IN THE AFORESAID LETTER DATED 12.03.2004 THAT THE INCOME OF MINOR SON NAMEL Y VARUN JAIN FOR THE PREVIOUS YEAR FROM 01.04.1999 TO 25.03.2000 WAS INC LUDIBLE IN ASSESSEES OWN HAND. IT IS ALSO NOT IN DISPUTE THAT IN THE RE GULAR ASSESSMENT FOR THE ASSESSMENT YEAR 2000-01 THE INCOME OF MINOR SON WA S INCLUDED IN THE ASSESSEES HAND. SINCE IN THE REGULAR ASSESSMENT THE INCOME OF MINOR WAS INCLUDED IN THE ASSESSEES HAND THE UNDISCLOSED IN COME OF THE ASSESSEE FOR THE SAME YEAR WHICH IS NOW TO BE ASSESSED IN THE B LOCK ASSESSMENT WILL ALSO EQUALLY BE INCLUDIBLE IN THE ASSESSEES HAND INASMU CH AS ALL THE PROVISIONS OF THE INCOME-TAX ACT SHALL APPLY ACCORDINGLY TO THE B LOCK ASSESSMENT PROCEEDINGS EXCEPT WHAT HAS BEEN SPECIFICALLY PROVI DED IN CHAPTER XIV-B OF THE ACT. IN THE CHAPTER XIV-B OF THE ACT IT HAS N OWHERE BEEN PROVIDED THAT UNDISCLOSED INCOME OF ANY MINOR CHILD SHALL BE INCL UDIBLE IN THE HANDS OF EITHER PARENTS WITH REFERENCE TO THE UNDISCLOSED IN COME ASSESSED IN THEIR 19 HANDS. IT IS NOT NECESSARY THAT BOTH THE HUSBAND A ND WIFE SHALL ALWAYS BE SUBJECT TO BLOCK ASSESSMENT PROCEEDINGS SO THAT A Q UESTION COULD ARISE AS TO IN WHOSE HANDS AN UNDISCLOSED INCOME OF THE MINOR W ITH REFERENCE TO THE UNDISCLOSED INCOME OF PARENTS SHALL BE INCLUDED. S ECTION 64(1A) SPECIFICALLY PROVIDES THAT ONCE AN INCOME IS ASSESS ED IN EITHER HAND OF THE PARENTS IT SHALL BE CONTINUED TO BE INCLUDED SO. THEREFORE ONCE THE INCOME OF MINOR SON NAMELY VARUN JAIN WAS INCLUDED IN THE HANDS OF THE PRESENT ASSESSEE IN F.Y. 1999-2000 AND THAT POSITION HAS B EEN ACCEPTED BY THE ASSESSEE IN HER LETTER DATED 12.03.2004 AS ALREADY STATED ABOVE WE HOLD THAT THE AO HAS RIGHTLY CONSIDERED THE UNDISCLOSED INCOM E OF THE ASSESSEES MINOR SON PERTAINING TO F.Y. 1999-2000 IN THE HANDS OF THE ASSESSEE. THE AOS ACTION IN THIS REGARD IS THEREFORE JUSTIFIED. 19. NOW WE COME TO THE NEXT CONTENTION OF THE LEAR NED COUNSEL FOR THE ASSESSEE WITH REGARD TO THE ADDITION OF RS.3 15 840 /- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT OF ASSESSEES MINOR CHILD SHRI VARUN JAIN DURING THE F.Y. 1999-2000 (UP TO THE DATE OF ATTAINING MAJORITY). IN THE COURSE OF BLOCK OF ASSESSMENT PR OCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH STATEMENT OF AFFAIRS OF THE AS SESSEE AS WELL AS HER FAMILY MEMBERS OF EVERY FINANCIAL YEAR FALLING WITHIN THE BLOCK PERIOD. VIDE LETTER DATED 04.02.2004 THE AO ASKED THE ASSESSEE TO FURN ISH THE DETAILS ABOUT THE 20 BANK ACCOUNT OF SHRI VARUN JAIN MAINTAINED AT HSBC BANK USA AND ASKED THE ASSESSEE TO FURNISH A COPY OF THE SAID BANK ACC OUNT FROM THE DATE OF OPENING THE ACCOUNT TILL DATE AND THE DATE ON WHIC H SHRI VARUN JAIN FIRST WENT TO USA AND THE PURPOSE OF HIS STAY THERE. THE AO ALSO ASKED THE ASSESSEE TO GIVE THE DETAILS ABOUT THE DATE ON WHIC H THE ABOVE ACCOUNT WAS OPENED BY SHRI VARUN JAIN AND THE SOURCE OF THE CRE DIT ENTRIES IN THIS BANK ACCOUNT ALONG WITH OTHER DETAILS ABOUT SHRI VARUN J AIN. IN REPLY THE ASSESSEE VIDE LETTER DATED 12.03.2004 SUBMITTED THA T VARUN JAIN WAS MINOR WHEN HE WENT TO USA FOR THE PURPOSE OF STUDY IN AUG UST 1999 AND IT WAS ALSO STATED BY THE ASSESSEE THAT BEING MINOR VARUN JAINS INCOME WAS BEING ASSESSED IN THE PRESENT ASSESSEES HANDS UNDER EXPL ANATION TO SECTION 64(1A) OF THE ACT AND HENCE FOR THE PREVIOUS YEAR FROM 01. 04.1999 TO 25.03.2000 VARUN JAINS INCOME WAS INCLUDIBLE IN ASSESSEES HA ND. THE ASSESSEE FURTHER CLAIMED THAT HE WAS NON-RESIDENT AND THEREFORE IN THE LIGHT OF THE PROVISIONS OF SECTION 5(1)(C) OF THE ACT THE INCOME WHICH AC CRUES OR ARISE TO HIM OUTSIDE INDIA IS NOT TAXABLE BUT ONLY THE INCOME W HICH ACCRUES OR ARISES IN INDIA OR IS RECEIVED IN INDIA IS ONLY TAXABLE. TH E COPY OF ACCOUNT MAINTAINED IN USA BY SHRI VARUN JAIN WAS SUBMITTED FROM THE DATE OF OPENING TILL 31.03.2000 WITH CHECKING ACCOUNT. IT WAS FURTHER STATED THAT THE ACCOUNT WAS OPENED ON 26.08.1999 AND WAS OPERATIONA L TILL 15.04.2002. 21 AGAINST CERTAIN DEPOSITS IT WAS CLAIMED BY THE ASSE SSEE THAT THESE DEPOSITS WERE MADE OUT OF THE GIFT RECEIVED BY SHRI VARUN JA IN IN USA FROM NRI. IN THE LETTER DATED 17.03.2004 THE ASSESSEE SUBMITTED THE DETAILS OF THE CREDITS APPEARING IN VARUN JAINS ACTION WITH HSBC BANK US A FOR THE PERIOD FROM 26.08.1999 TILL 27.03.2000 WITH THE REMARK THAT VAR UN JAIN ATTAINED MAJORITY ON 26.03.2000 AND WAS A NON-RESIDENT IN THE PREVIO US YEARS 2000-01 AND 2001-02 FOR WHICH YEARS THE RETURNS IN HIS INDIVIDU AL CAPACITY WERE FILED SEPARATELY ON ATTAINING MAJORITY. THE TOTAL DEPOSI TS DURING THE YEAR FROM 26.08.1999 TO 08.02.2000 CLAIMED TO HAVE BEEN RECEI VED BY WAY OF GIFT FROM NRI WAS WORKED OUT BY THE AO AT US$ 6720 EQUIVALENT TO INDIAN RS.3 15 840/-. IN THE ASSESSEES REPLY DATED 25.03 .2004 THE ASSESSEE ONLY CONTENDED THAT THE GIFTS FROM NRI MADE OUTSIDE INDI A IS NOT TAXABLE AS INCOME AND THESE GIFTS HAVE BEEN RECEIVED FROM FAM ILY FRIENDS WHO ARE NRIS SETTLED ABROAD AND ASSESSEE WAS IN PROCESS OF GETTING CONFIRMATIONS FROM THEM WHICH WAS TO BE SUBMITTED BEFORE THE AO U PON RECEIPT FROM THEM. HOWEVER IN THE MEANTIME THE ASSESSEE SUBMI TTED ONE CONFIRMATION REGARDING US$ 1000 (NET US$ 985) BEING GIFT RECEIVE D FROM ONE OF THEIR FAMILY FRIEND IN HONG KONG. THE ASSESSEE FURTHER S UBMITTED THAT THE AMOUNTS RECEIVED IN THE BANK ACCOUNT ARE SMALL AMOU NTS OF GIFTS WHICH NRI FRIENDS HAD CAPACITY TO GIVE AS THEY ARE SETTLED AB ROAD IN GOOD POSITION EITHER 22 IN SERVICE OR BUSINESS FOR LAST OVER A DECADE. THE ASSESSEE ALSO CLAIMED THAT GIFTS FROM NRI MADE ABROAD ARE NOT TAXABLE AS INCOM E IN INDIA. THE ASSESSEE FURTHER SUBMITTED THAT DURING REGULAR ASSE SSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2000-01 NO DETAILS WERE SOUGHT FOR BY THE DEPARTMENT REGARDING THE ACCOUNT OF VARUN JAIN ABROAD AND SIN CE GIFTS OF MONEY MADE BY NRI TO VARUN JAIN OUTSIDE INDIA WERE NOT TAXABLE IN INDIA THE SAME WAS NOT DISCLOSED BY THE ASSESSEE UNDER BONA FIDE BELIE F. HOWEVER IN THE ABSENCE OF ANY COGENT OR ADEQUATE MATERIAL IN SUPPO RT OF THE GENUINENESS OF THE GIFT CLAIMED TO HAVE BEEN RECEIVED FROM NRIS T HE AO TREATED THE AMOUNT AS UNEXPLAINED MONEY LIABLE TO BE INCLUDED A S UNDISCLOSED INCOME IN THE BLOCK PERIOD. THE AO THEREFORE MADE THE ADDIT ION OF RS.3 15 840/- IN THE BLOCK ASSESSMENT. 20. DURING THE COURSE OF HEARING OF APPEAL THE ASS ESSEE SUBMITTED CERTAIN EVIDENCES IN SUPPORT OF THE GIFT BEFORE THE CIT(A). NOW THE ASSESSEE HAS CONTENDED BEFORE US THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE SOURCE OF CREDIT IN THE BANK ACCOUNT OF VARUN JAIN INASMUCH A S THE ASSESSEE HAS GIVEN SUFFICIENT EVIDENCES AS TO THE FACTUM OF GIFT BEING RECEIVED BY VARUN JAIN FROM NRI FAMILY FRIENDS. 21. THE LEARNED DR ON THE OTHER HAND SUBMITTED THA T THE ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY SATISFACTORY EVIDENCE IN SUPP ORT OF THE CLAIM OF GIFT 23 BEING RECEIVED BY VARUN JAIN FROM ALLEGED NRI FAMIL Y FRIENDS AND HE THEREFORE CONTENDED THAT THE CIT(A) HAS RIGHTLY CO NFIRMED ADDITION. 22. IN THIS CONNECTION THE ASSESSEE HAS DRAWN OUR A TTENTION TO A CONFIRMATION GIVEN BY ONE MANSU EXPORTERS OF KOWLOO N HONG KONG IN SUPPORT OF THE AMOUNT RECEIVED BY VARUN JAIN FROM S AID CONCERN OUT OF LOVE AND AFFECTION. THE CONFIRMATION LETTER IS DATED 25 TH FEBRUARY 2004 AND IS ON A LETTER HEAD OF ONE MANSU EXPORTERS T.S.T. P.O. B OX 96204 KOWLOON HONG KONG AND IT IS IN RESPECT OF THE AMOUNT OF US $1000 $5000 $3000 AND $2000 DURING THE PERIOD FROM MARCH 2000 TO JANU ARY 2002. WE ARE CONCERNED ABOUT THE AMOUNT RECEIVED IN MARCH 2000 B EFORE SHRI VARUN JAIN ATTAINED MAJORITY. IN THIS CONNECTION THE ASSES SEE VIDE LETTER DATED 25.03.2004 SUBMITTED BEFORE THE AO THAT THE ASSESSE E SUBMITTED CONFIRMATION REGARDING US $1000 BEING GIFT RECEIVED FROM ONE OF THEIR FAMILY FRIEND IN HONG KONG. THIS CONFIRMATION DATE D 25 TH FEBRUARY 2004 IS SIGNED BY THE DIRECTOR OF MANSU EXPORTERS. IT IS N OT A PAYMENT BY ANY ONE INDIVIDUAL PERSON TO VARUN JAIN. WE FAIL TO UNDERS TAND HOW THERE COULD BE A GIFT FROM MANSU EXPORTERS A BUSINESS CONCERN TO V ARUN JAIN. THE PERSON WHO HAS SIGNED THE CONFIRMATION LETTER IN THE CAPAC ITY OF DIRECTOR OF MANSU EXPORTERS HAS NOT GIVEN HIS FULL NAME AND WHAT WAS THE RELATION HE HAD WITH VARUN JAIN. THE IDENTITY OF THE SIGNATORY TO THE C ONFIRMATION LETTER IS THUS 24 NOT DISCLOSED. THEREFORE THIS IS A MERE CONFIRMAT ION LETTER WITHOUT GIVING THE DETAILS AS TO ON WHAT OCCASION AND BY WHOM THE ALLEGED GIFT WAS ACTUALLY GIVEN TO MASTER VARUN JAIN. FURTHER THE AMOUNT OF GIFT CLAIMED TO HAVE BEEN RECEIVED BY MASTER VARUN JAIN FROM MANSU EXPOR TERS IS ALSO NOT ROUTED THROUGH ANY BANKING CHANNEL. IT HAS BEEN CLAIMED B Y THE ASSESSEE THAT THE AMOUNT HAS BEEN RECEIVED IN CASH AND THEN IT WAS DE POSITED IN CASH IN THE VARUN JAINS ACCOUNT. THEREFORE THE TRANSACTION O F RECEIVING THE MONEY BY VARUN JAIN FROM MANSU EXPORTERS IS NOT PROVED. THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO A CONFIRMATION WITH RESPECT TO GIFT OF US $5000 FROM MRS. SUMAN DAS NRI RESIDENT OF USA WHICH WAS CLAIM ED TO HAVE BEEN FILED BEFORE THE AO ON 31.03.2004 AFTER THE ASSESSM ENT WAS COMPLETED ON 29.03.2004. IN THIS CONFIRMATION LETTER ONE MRS. S UMAN DAS W/O LATE SHRI VINAY KUMAR DAS HAS STATED THAT SHE CONFIRMED HAVIN G MADE A CASH GIFT OF US $5000 ON 25 TH AUGUST 1999 TO MASTER VARUN JAIN FOR HIS IMMEDIAT E NEED TO PURSUE HIS STUDY AT ROCHESTER INSTITUTE OF TECHN OLOGY NEW YORK. FROM THE CONFIRMATION LETTER IT IS ESTABLISHED THAT THE TRANSACTION HAS NOT BEEN MADE THROUGH BANKING CHANNELS. THE AMOUNT HAS BEEN CLAIMED TO HAVE BEEN PAID AS CASH GIFT. MRS. SUMAN DAS HAS NOT GIVEN AN Y DETAILS AS TO WHAT KIND OF RELATIONSHIP SHE HAD WITH VARUN JAIN OR HIS PARE NTS. MERE FILING THIS CONFIRMATION LETTER SIGNED BY ONE MRS. SUMAN DAS WI THOUT THERE BEING ANY 25 CORROBORATIVE EVIDENCE IS NOT SUFFICIENT TO DISCHA RGE THE ASSESSEES INITIAL BURDEN OF PROVING GIFT BEING RECEIVED BY VARUN JAIN FROM MRS. SUMAN DAS. SIGNATURES OF MRS. SUMAN DAS ARE NEITHER ATTESTED B Y ANY COMPETENT AUTHORITY OF USA. IT IS NOT CLEAR AS TO HOW THIS C ONFIRMATION LETTER HAS BEEN TRANSMITTED FROM USA TO INDIA. IT IS ALSO FOUND TO BE UNDATED. THEREFORE ON THE BASIS OF THIS CONFIRMATION LETTER IT IS VERY D IFFICULT TO BELIEVE THAT MASTER VARUN JAIN HAD ACTUALLY RECEIVED AN AMOUNT OF US$ 5 000 FROM MRS. SUMAN DAS BY WAY OF GIFT. IN THE LIGHT OF THESE FACTS DI SCUSSED ABOVE WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE HER BUR DEN TO EXPLAIN THE SOURCE AND NATURE OF THE CREDIT IN THE BANK ACCOUNT OF HER MINOR SON. 23. IN SUPPORT OF THE CONTENTION THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE AMOUNT OF GIFT REC EIVED BY MASTER VARUN JAIN THE LEARNED COUNSEL FOR THE ASSESSEE SUPPLIED A COPY OF ORDER OF HONBLE HIGH COURT OF DELHI DATED 16 TH JULY 2010 IN THE CASE OF CIT VS. MRS. KUSUM GUPTA (ITA 831/2010) WHERE THE HONBLE H IGH COURT HAS OBSERVED AND HELD AS UNDER:- 3. HOWEVER WE FIND THAT NOT ONLY WAS THE GENUINEN ESS OF THE TWO GIFTS ESTABLISHED INASMUCH AS REGISTERED GI FT DEEDS WERE PRODUCED BUT ALSO THE STATEMENTS OF TWO DONORS ALON G WITH THE ASSESSEE WERE RECORDED. IN FACT THE TRIBUNAL IN T HE IMPUGNED ORDER HAS CONCLUDED ON FACTS THAT THE IDENTITY AND CREDITWORTHINESS OF THE DONORS WAS PROVED BEYOND DO UBT. 26 4. IN OUR OPINION AS GIFTS WERE MADE BY WAY OF REG ISTERED GIFT DEEDS AS WELL AS PAYMENTS WERE MADE BY WAY OF ACCOUNT PAYEE CHEQUES AND BOTH THE DONORS ARE INCOME TAX AS SESSEES IT CANNOT BE SAID THAT THE GIFTS ARE NOT GENUINE. RES ULTANTLY THE APPEAL STANDS DISMISSED IN LIMINE BUT WITH NO ORDER AS TO COSTS. 24. WE HAVE GONE THROUGH THE AFORESAID DECISION OF HONBLE HIGH COURT AND FOUND THAT THIS CASE WOULD NOT RENDER ANY ASSIS TANCE TO THE ASSESSEES CASE INASMUCH AS THE ASSESSEES CASE IS QUITE DIFFE RENT ON FACTS. IN THE CASE BEFORE THE HONBLE HIGH COURT IN ORDER TO ESTABLIS H THE GENUINENESS OF THE GIFT THE ASSESSEE PRODUCED REGISTERED GIFT DEEDS A ND AT THE SAME TIME THE STATEMENTS OF TWO DONORS ALONG WITH THE ASSESSEE WE RE ALSO RECORDED. IN OTHER WORDS THE IDENTITY AND CREDITWORTHINESS OF T HE DONORS WAS PROVED BEYOND DOUBT. IN THAT CASE BEFORE THE HONBLE HIGH COURT THE GIFTS WERE MADE BY WAY OF REGISTERED GIFT DEEDS AND THE PAYME NTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND BOTH THE DONORS WERE INC OME-TAX ASSESSEES. HOWEVER IN THE PRESENT CASE NEITHER THE ASSESSEE HAS PRODUCED OR FURNISHED ANY SORT OF REGISTERED GIFT DEED OR ANY AFFIDAVIT B Y THE DONOR. THE PAYMENT HAS ALSO NOT BEEN RECEIVED BY THE ASSESSEE BY ACCOU NT PAYEE CHEQUE. THE ASSESSEE HAS ALSO NOT FURNISHED THE DETAILS AS TO T HE SOURCE OF INCOME OF THE DONOR. THE VERY CONFIRMATION LETTERS STATED CLAIM TO HAVE BEEN SIGNED BY THE DONOR ARE ALSO NOT PROVED INASMUCH AS THEY ARE NEI THER COUNTER SIGNED OR AUTHENTICATED BY ANY COMPETENT AUTHORITY OF THE COU NTRY IN WHICH THESE 27 CONFIRMATION LETTERS WERE STATED TO BE MADE. THERE FORE THIS DECISION OF THE HONBLE DELHI HIGH COURT RATHER HELPS THE REVENUE T HAN THE ASSESSEES CASE. IN THE LIGHT OF THE FINDING GIVEN BY THE HONBLE HI GH COURT OF DELHI IN THE ABOVE REFERRED CASE WE MAY TAKE AN INESCAPABLE CON CLUSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE FACTUM OF GIFT O F MONEY GIVEN BY SO-CALLED DONOR TO THE ASSESSEES MINOR SON MASTER VARUN JAIN AND ALSO NOT BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF T HE DONOR. 25. THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SURESH K UMAR KAKAR IN ITA 128/2009 DATED 27 TH APRIL 2010 WHICH DECISION IN OUR CONSIDERED VIEW WOULD OF NO HELP TO THE ASSESSEE INASMUCH AS IN THA T CASE IT WAS AN ADMITTED POSITION THAT THE GIFTS WERE MADE BY THE MOTHER TO THE SON AND WITH REGARD TO THE CREDITWORTHINESS THE ASSESSEE DISCHARGED THE O NUS BY FURNISHING THE BANK STATEMENT OF DONOR AS ALSO THE CONFIRMATION CERTIFI CATION FROM THE MOTHER CONFIRMING THE SAID GIFT. ALL THESE EVIDENCES PROD UCED IN THE CASE OF CIT VS. SURESH KUMAR KAKAR (SUPRA) ARE UNDOUBTEDLY LACK ING IN THE PRESENT CASE BEFORE US. THEREFORE THIS CASE RATHER HELPS THE R EVENUES CASE AS AGAINST THE ASSESSEES CASE. 26. THE VIEW WE HAVE TAKEN ABOVE THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIF T AS WELL AS HIS CAPACITY 28 AND HAS NOT BEEN ABLE TO PROVE THE FACTUM OF GIFT G IVEN BY THE SO-CALLED DONOR TO THE ASSESSEES MINOR CHILD WE MAY MAKE A REFERENCE TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE FOLLOWING 2 CASES ON WHICH HEAVY RELIANCE WAS PLACED BY THE LEARNED DR:- (1) CIT VS. ANIL KUMAR (2007) 292 ITR 552 (DEL); & (2) RAJEEV TANDON VS. ACIT (2007) 294 ITR 488 (DEL). 26.1 IN THE CASE OF CIT VS. ANIL KUMAR (SUPRA) THE HONBLE HIGH COURT HAS TAKEN A VIEW THAT IN THE CASE OF GIFTS MERE ID ENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT AND SINCE THE CLAIM OF GIFT IS MADE BY THE ASSESSEE THE ONUS LIES ON HIM NOT O NLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAKE SUCH A GIFT. 26.2 IN THE CASE OF RAJEEV TANDON (SUPRA) THE HON BLE HIGH COURT HAS TAKEN A VIEW THAT 2 DONORS HAVE ABSOLUTELY NO CONNE CTION WITH THE ASSESSEE AND THEY MADE GIFT TO THE ASSESSEE BECAUSE HE NEEDE D MONEY TO BUY A HOUSE AND THEY WANTED TO HELP HIM. THIS WAS NOT ONLY QUI TE UNUSUAL BUT ALSO QUITE UNNATURAL AND IT WAS INCREDIBLE THAT A COMPLETE ST RANGER WOULD WANT TO GIFT LAKHS OF RUPEES TO A PERSON ONLY BECAUSE THAT PERSO N WANTED THE AMOUNT FOR PURCHASING A HOUSE. IN THAT CASE THE REASON OFFERE D BY THE ASSESSEE WAS THUS FOUND TO BE NOT REASONABLE MUCHLESS ACCEPTABLE. 26.3 IN THE PRESENT CASE IT IS ALSO NOT EXPLAINED AS TO WHY THE SO-CALLED DONOR WOULD GIVE CERTAIN AMOUNT IN CASH TO THE ASSE SSEES MINOR CHILD FOR HIS STUDY IN USA WHEN THE ASSESSEES PARENTS WHO ARE Q UITE WELL OFF CARRYING 29 ON VARIOUS BUSINESS IN INDIA HAD DECIDED TO SEND T HEIR CHILD FOR STUDY ABROAD AND WERE CAPABLE OF MEETING ALL THE EXPENSES OF THE IR MINOR CHILD STUDYING ABROAD. IN THE PRESENT CASE EVEN THE TRANSACTION OF PAYMENT OF MONEY FROM SO-CALLED DONOR TO ASSESSEES MINOR CHILD HAS NOT B EEN ESTABLISHED. 27. IN THE LIGHT OF THE DISCUSSION MADE ABOVE WE T HEREFORE HOLD THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE NATURE OF THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE MINOR CHILD MAINTAINED IN T HE FOREIGN BANK AND THEREFORE THE AMOUNT IS CONSIDERED TO BE UNDISCLOS ED INCOME OF THE ASSESSEE OR HER MINOR CHILD. THEREFORE THE ADDITION OF RS. 3 15 840/- MADE BY THE ASSESSING OFFICER AND FURTHER CONFIRMED BY THE LEAR NED CIT(A) IS UPHELD. 28. THE ISSUE WITH REGARD TO THE LEVY OF INTEREST U NDER SECTION 158BFA(1) IS CONSEQUENTIAL IN NATURE AND THE AO SHALL WORK OU T THE AMOUNT OF INTEREST CHARGEABLE UNDER SEC. 158BFA(1) OF THE ACT AS PER L AW. 29. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST 2010. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH AUGUST 2010. 30 IT(SS) A NO.402/DEL/2004 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.