CIT LUDHIANA vs. SMT.NIRMAL KOHLI

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No.32 of 2000 Date of Decision: 17.11.2014 Commissioner of Inocme Tax (Central), Ludhiana .....Appellant Versus Smt. Nirmal Kohli

....Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE B.S. WALIA Present: Mr. Rajesh Katoch, Advocate, for the appellant. Mr. Salil Kapoor, Advocate, with Mr. Vikas Jain, Advocate, for the respondent. **** RAJIVE BHALLA, J (ORAL) The Revenue is before us challenging order dated 29.07.1999 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “Tribunal”) whereby the assessee has been granted benefit of Rs.81,941/- on account of past savings, while affirming the addition of Rs.1,50,000/- on account of unexplained gifts. The question of law framed by the Revenue reads as follows:- Whether, on the facts and in the circumstances of the case, the ITAT was right in law in restricting the Addition totalling Rs.2,31,941/- made VINAY 2015.01.09 17:56 I attest to the accuracy and integrity of this document Punjab & Haryana High Court, Chandigarh

ITA No.32 of 2000 -2- on account of non-genuine Gifts only to Rs.1,50,000/- by considering the peak of the Bank Account where such Gifts were credited and after allowing benefit of Past Savings?” Counsel for the revenue submits that as the assessee was assessed for the block period 1987-88 there was no reason to consider the peak of the bank account and grant of benefit of past saving. The impugned order, being illegal and arbitrary, may be set aside. Counsel for the respondent submits that apart from the fact that the question so framed is neither substantial nor a question of law, the quantum is too small. It is also contended that as discretion exercised by the Tribunal is neither arbitrary nor perverse and is based upon clear and cogent reason, the appeal may be dismissed. We have heard counsel for the parties and perused the impugned order. A relevant extract from the order reads as under:- “ 2.4 We have taken due consideration to the submissions made before us by both sides. The first observation to be decided whether the gifts are genuine or not. The material before us does not give us confidence to treat these gifts as genuine one. It is true that the gifts have been deposited in the bank account. But sofar Smt.Lata Khurana's VINAY 2015.01.09 17:56 I attest to the accuracy and integrity of this document Punjab & Haryana High Court, Chandigarh

ITA No.32 of 2000 -3- statement is concerned that clearly shows that gift is not a genuine gift. The Ld. Counsel of the appellant has taken legal stand that the gifts were received outside the taxable territory and as such same could not be treated as income. This argument of Ld. Counsel is not accepted because we are looking into the genuineness of the credit which is received modus-operandi draft or cash being credited in the bank account as gift. For acceptance of the gifts identification, the genuineness and the credit worthiness are important ingredients and all the three ingredients are to be used simultaneously. However, we in agreement with the Ld. Counsel that since all the gifts are credited in the Bank Account and the Bank Account is having peak to the extent of Rs.2,09,240/- and addition can be made only to the extent of peak amount i.e. Rs.2,09,240/-. The second arguments given by the Ld. Counsel relates to the benefit of assessed income whereby only explained investment is to the tune of Rs.1,10,000/-. The argument of the Ld. Counsel is partly correct but he has not given benefit to the domestic withdrawals. The domestic withdrawals even though have been shown by other family members but a reasonable estimate is required and to our mind the same for a Block Period will be to the tune of Rs.40,000/-. We, therefore, give benefit for past savings out of the assessed income to the tune of Rs.2,31,941/- - Rs.1,50,000/- = Rs.81,941/-. The addition of Rs.1,50,000/- is accordingly confirmed.” A perusal of the aforesaid extract reveals that the assessee has been granted the benefit of Rs.81,941/- while confirming addition of Rs.1,50,000/- by referring to the VINAY 2015.01.09 17:56 I attest to the accuracy and integrity of this document Punjab & Haryana High Court, Chandigarh

ITA No.32 of 2000 -4- peak of the bank account and granting benefit of past savings. The Tribunal has assigned clear and cogent reasons for considering the peak value of the bank accounts and granting benefit of past savings. Even otherwise, the tax effect is only Rs.49,164/-. In view of what is recorded hereinabove, we find no error of jurisdiction and while answering the question of law against the revenue, dismiss the appeal. [ RAJIVE BHALLA ]

JUDGE

[ B.S. WALIA ] JUDGE 17.11.2014

Vinay VINAY 2015.01.09 17:56 I attest to the accuracy and integrity of this document Punjab & Haryana High Court, Chandigarh