RAGHBIR SINGH vs. INCOME TAX APPELLATE TRIBUNAL, CHD. & OR

ITA/192/2007HC Punjab & HaryanaPHHC01072871200716 April 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it was unable to accept the assessee's submissions. The Court found that neither the capacity of the donor to make the gift, nor his identity, nor the source from which the gift was made, had been established. No special reason for gifting such a huge amount to the assessee and his wife was on record. The Court noted clear doubts regarding why the draft was purchased with US dollars in Singapore when the donor himself had a bank account in the same bank. The assessee failed to produce any evidence to establish the known source of the donor's income and the genuineness of the gift. The Court found the case pleaded to be beyond human probabilities and that the findings of the Tribunal were not perverse. The appeal was dismissed. The High Court upheld the ITAT's decision to restore the addition of Rs. 6,00,000/- to the assessee's income, setting aside the CIT(A)'s deletion. However, the High Court also upheld the ITAT's decision that the addition of Rs. 12,00,000/- in the hands of the assessee on account of gifts received by his wife could not be justified as she was a separate assessee. The ITAT's upholding of the CIT(A)'s deletion of Rs. 60,300/- on account of household expenses was also implicitly upheld by the High Court's dismissal of the appeal.

What were the facts?

The assessee, Raghbir Singh, filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated October 26, 2006, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had reversed the decision of the Commissioner of Income Tax (Appeals) (CIT(A)), who had deleted an addition of Rs. 6,00,000/- made by the Assessing Officer (AO). The AO had added this amount to the assessee's income, rejecting the genuineness of a gift. The assessee had declared a total income of Rs. 92,300/- for assessment year 1993-94. Following a search and seizure operation, the AO issued notices and subsequently assessed Rs. 18,00,000/- (Rs. 6,00,000/- to the assessee and Rs. 12,00,000/- to his wife) as income from undisclosed sources. The CIT(A) deleted this addition, but the revenue appealed to the ITAT.

What were the issues?

The High Court was to decide the following substantive questions of law: 1. Whether the action of the respondents (ITAT and AO) was arbitrary in assessing the income of the appellant's wife as income in the hands of the appellant. 2. Whether the action of the respondents in not accepting the gift of Rs. 18,00,000/- given by S. Gurmit Singh to the appellant and his wife was discriminatory, given that a similar gift of Rs. 16.94 lacs from Balwant Singh (father of the donor) was accepted for assessment year 1990-91. 3. Whether the respondents failed to properly appreciate the facts and evidence on record demonstrating the genuineness of the gift. Assessee's Contentions: The assessee argued that the relationship with the donor, S. Gurmit Singh, was very close, akin to blood relations, as his father, Balwant Singh, was a 'DHARAM BHAI' to the assessee's wife, and she tied 'RAKHI' to him. The CIT(A) had accepted this reasoning. The assessee also contended that transactions were through bank and NRI accounts, supporting their genuineness. The assessee relied on the CIT(A)'s order which deleted the addition, finding the AO's presumption incorrect regarding the operation of the NRI account. Revenue's Contentions: The revenue contended before the ITAT that the burden to establish the genuineness of the gift lay with the assessee, including the identity, creditworthiness, and genuineness of the donor. The AO's enquiries revealed that drafts were purchased in Singapore by one T.P. Anand in cash and remitted to India. The ITAT noted that the donor, S. Gurmit Singh, had an account in the same Singapore bank from which demand drafts were purchased by T.P. Anand using cash. The AO treated the gift as not genuine as the donor was not produced and his financial status was not established. The revenue argued that additional evidence filed before the CIT(A) was insufficient and that the money's source was not established.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(1)(a),Section 127,Section 143(2),Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision 16 .4.2007 Raghbir Singh .. Appellant Versus The Income Tax Appellate Tribunal, Chandigarh and others .. Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE RAJESH BINDAL PRESENT: Mr.Sukhwinder Singh, Advocate for the appellant. M.M.Kumar, J. This appeal filed under Section 260 A of the Income Tax Act, 1961 (for brevity 'the Act') prays for quashing order dated 26.10.2006 (Annexure P.1) passed by the Income Tax Appellate Tribunal (for brevity 'the Tribunal') holding that the deletion of Rs. 6,00,000/- by the Commissioner of Income Tax ( Appeals) (for brevity 'the CIT(A)') which were added by the Assessing Officer by rejecting the genuineness of the gift, was absolutely incorrect. On the basis of the order passed by the Tribunal in ITA No.158 / Chandi/ 1997 in respect of assessment year 1993- 94 the Assessee has claimed that following substantive question of law would arise for determination of this Court:

“ 1. Whether the action of respondents No. 1 and 3 is arbitrary in assessing the income of the Appellant's wife as income in the hands of the Appell

The order continues below.

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