KUSUM LATA THAKRAL vs. CIT, KARNAL

The assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Delhi Bench “D” Delhi dated 24.10.2008 passed in ITA No. 4723(Del) of 2007 for the assessment year 2003-04, proposing to raise following substantial question of law:- “That the ITAT was not justified in concurring with the findings of the authorities below in treating the genuinely given gifts duly affirmed by way of affidavits, gift deeds, independent confirmations by the donors to the AO of the appellant and by filling copies of their respective Bank Accounts thus fulfilling all the three ingredients of a genuine gift of establishing the identity, creditworthiness (2) and genuineness of a transaction, so that so the orders of the ITAT is bad in law and perverse and thus needs to be quashed.”

The assessee claimed certain gifts but the Assessing Officer made addition to the declared income by treating the alleged gifts to be income from undisclosed sources. The said additions were confirmed on appeal by the CIT(A) as well by the Tribunal.

We have heard learned counsel for the appellant.

Learned counsel for the appellant submitted that the donors had given affidavits and the gift deeds were also produced. The Assessing Officer obtained report from Mr. R.S. Bura, Assessing Officer, Rohtak, where the donors disowned the making of the gifts. Contention raised on behalf of the appellant is that the assessee should have been allowed opportunity to cross-examine the donors.

Before we proceed to deal with the submission, it will be appropriate to refer to the finding recorded by the Tribunal, which is as under:- “9. It is a settled law that in case of a gift as in the cash creditors the onus is on the assessee to prove the identity, the genuineness of the transaction and creditworthiness of the donors. In the case before us, the assessee had only discharged the onus relating to identity of the donors. The onus of proving the creditworthiness of donors and the genuineness of the transactions had not been discharged. The ld. AR of the assessee has sought annulment of the order on the ground that the assessee was not allowed to confront the donors. We are unable to agree with the submissions made by the ld. AR of the assessee.

Hon’ble juri ictional High Court in the case of accommodation entry of the assessee’s own money, which is not disclosed for the purpose of taxation.

If the facts of the case are tested on the touchstone of the ratio of the decision of Hon’ble Punjab Hon’ble Supreme Court in the case of Sumati Dayal v.

It is clear from the above finding that there was no relationship between the donors and the assessee and there was no natural love and affection. The Tribunal has followed the judgement of this Court in Shri Tirath Ram Gupta Vs. CIT 304 ITR 145 (P&H), laying down that in absence of natural love and affection, the gift could not be accepted as genuine.

The above being undisputed position, mere fact that the assessee produced the confirmations of the gift deeds and the assessee was not allowed opportunity to cross-examine the donors, who disowned the making of the gifts, they will not be in any manner affected.

Learned counsel for the appellant also relies upon the following judgments:- (i) CIT Vs. S.P. Jain (1973) 87 ITR 370 (SC) (ii)Additional Commissioner of Income Tax, Bihar Vs. Hanuman Agarwal (1985) 151 ITR 150 (PAT) (iii)Commissioner of Income Tax, Delhi (Central-2) (P&H) (v)CIT Vs. Rajesh Kumar (2008) 12 DTR 176 (Del) (vi)CIT Patiala-II Vs. Sham Lal 127 ITR 816 (P&H) (vii)CIT Vs. Dharam Pal Prem Chand Ltd. 295 ITR 105 (DEL)

However, he wishes the Court to deal with the judgment in Sanjiv Kumar Jain's case (supra).

In the said judgment, the Assessing Officer had recorded statements of some persons to whose accounts the assessee had made credit entries but they were allowed to be cross-examined. This Court held that in absence of cross-examination, the order of assessment was vitiated. In para 9 of the judgment, it was observed as under:- “We find merit in the aforesaid submission of the learned counsel for the appellant. The AO had failed to afford an opportunity to the respondent assessee to cross- examine the persons whose statements were recorded by him, before passing the assessment order under ss 143/147 of the IT Act, 1961, on 31st March, 2004. The action of the AO was unacceptable in law. Naturally, there was nothing wrong upto the stage of recording the statements of the 4 persons referred to above. The proceedings conducted by the AO after recording the statements of aforesaid individuals, are liable to be set aside. The same alone are, therefore, set aside. It will be open to the AO to re-initiate the proceedings from the aforesaid stage if he is still of the same opinion. In the aforesaid eventuality, any further action taken by the AO (8) would inevitably require him to allow the respondent assessee to cross-examine all the four witnesses whose statements were the basis of the earlier consideration. Thereafter, it will be open to the AO to pass a fresh order in accordance with law. We would also like to clarify that the instant liberty granted to the AO, to redetermine the issue would not enable him to collect any further information, besides the material already available with him (while passing the order dated 31st March, 2004), for the purpose under reference.”

We do not find any relevance of the judgment relied upon. The said judgment was not of gift but of relying upon certain statements at the back of the assessee, which was against the nature justice. The question whether denial of opportunity of cross-examination results in violation of natural justice depends upon facts of each case. The object of cross-examination is to test the veracity of the version given in examination in chief. In the present case, even if cross-examination was allowed and the donors who had disowned the making of gifts, were confronted and shown to be factually wrong, the same would have made no difference, as there was no natural love and affection and in its absence, the gifts were not genuine.

In view of above, no substantial question of law arises. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 24, 2009