JAWAHAR KUMAR GOYAL vs. C I T APPEALS JAIPUR AND ANOTHER

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 138 / 2010 Jawahar Kumar Goyal S/o Late Shri Namo Narayan Goyal, Aged About 58 Years, R/o C-84 Nehru Nagar, Shastri Nagar, Jaipur ----Appellant Versus 1. The Commissioner of Income Tax (Appeals)-II, Income Tax (Appeals)-II, Income Tax Building, Statue Circle, Jaipur 2. The Assistant Commissioner of Income Tax (os&K), Income Tax Building Statue Circle, Jaipur ----Respondents _____________________________________________________ For Appellant(s) : Mr. Ankur Rastogi For Respondent(s) : Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 22/08/2017 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeal of the assessee and confirmed the order of the CIT(A) & AO. 2. This court while admitting the appeal on 5.4.2010 framed following substantial question of law:- “1. Whether the statement of donor was required before initiating the proceeding u/s 148 of I.T. Act so that the learned AO may have reasonable belief, as per the Act? 2. Whether the learned AO should not have verify cash creditors (Donors)” u/s 131 of I.T. Act, 1961 before making addition u/s 68 of I.T. Act, 1961?”

(2 of 5) [ITA-138/2010] 3. We have gone through the order of the CIT(A) and in view of the concurrent finding recorded by the tribunal, we see no reason to interfere. Apart from that, the transactions which were entered by the assessee are reproduced by the tribunal as under:- “6. Considering the arguments advanced by the parties, we do not find reason to interfere with the first appellate order on the issue as the assessee has thoroughly failed to establish the claimed gift stated to have been made by the eight donors out of love and affection. These donors were as under:- S.No. Name of Donor Amount of Gift (Rs.) 1. Sh. Bhawani Singh Rajveer 50,000/- 2. Sh. Ratanlal 50,000/- 3. Sh. Mahaveer Prashad 2,00,000/- 4. Sh. Rajesh Gupta 2,00,000/- 5. Sh. Anil Gupta 2,00,000/- 6. Sh. Rajendra Agarwal 2,00,000/- 7. Sh. Rajendra Swaroop Agarwal 2,00,000/- 8. Sh. Mahesh Kumar Saini 50,000/- Total 11,50,000/- For a ready reference para 2.2 of the first appellate order is being reproduced hereunder wherein the ld. CIT(A) after discussing the case of each donor has rightly come to the conclusion that the same was not acceptable. Undisputedly, these donors were neither produced by the assessee before the AO as required nor were they found on their given address:- “2.2 Challenging the said view of assessing officer Sh Jain in his submission has briefly discussed that how the findings given by A.O in respect of different persons from whom gifts

(3 of 5) [ITA-138/2010] were taken was not justified for the purpose of making addition u/s 68 of l.T. Act. Thereafter, vide this office letter dated 27.8.2007 a copy of the said submission was sent to the assessing officer with a request to examine the same and to send his report. In response to that the ITO Ward 4(1) vide his report dated 7-3-2008 has reported that as per directions of this office he issued summons u/s 131 to the person concerned on the given addresses in affidavit filed by the appellant. The Ward Inspector was deputed to served the summons who has reported that none of the person was residing or worked at the given address. Further, it were clarified that no whereabouts of Sh. Mahesh Kumar Saini was provided by the appellant. On the basis of said Inspector's report it was reported by the AO that the existence of these persons was not proved, addresses mentioned in the statement were not correct and since, in the assessment order it was already stated by A.O that these persons have already deposited cash before giving gift cheque to the appellant and therefore, the sources in the hands of donor was not proved. Thereafter, a copy of the said report was sent along with a notice dated 12.3.2008 which was served on the AR of the appellant on 14.3.2008 by which the counter comments were required to be given on 24.3.2008. However, on the appointed day there was no compliance from the side of appellant. Under these circumstances, I have to decide this issue on the basis of material available on record and on its own merit. It is seen that except Rs. 2,05,000 which was received by cheque from different four persons all the gift money was received in cash. It is also a fact that none of the donor as related with the appellant obviously the relations is an important factor to decide the issue of genuineness of the gift. Further, in none of the case it could be proved that the donors were having resources for making such huge amount of gift and that too in respect of unrelated donee. The AO has recorded the statement of the appellant and in respect of one of the donor Sh. Mahaveer Prashad the appellant had stated that the said person was doing the accounting work, he was not having his telephone number. he does not know about family members of Sh Mahaveer Prashad. similarly in respect of another persons namely Sh. Rajesh Gupta from whom gift of Rs

(4 of 5) [ITA-138/2010] 2,00,000/- was shown it was stated by the appellant that he does not know about the house of Sh. Rajesh Gupta. Similar reply is given in respect of Sh. Rajendra Swaroop Bansal, Sh Anil Gupta, Sh. Rajendra Agarwal and for about Sh Mahesh kumar Saini. In respect of Sh. Ratan lal and Sh. Bhawani Singh from whom gift of Rs. 50,000/- in each case was shown he did not know anything about these persons. It is clear that in the assessment

proceedings

neither

the genuineness of the gift could be proved nor capacity of the donors could be proved. Similarly, in the appellate proceedings also no such evidence could be given proving capacity of the donors and genuineness of the gift transactions. Even in the appellate proceedings when the submission was sent to A.O. with a direction to re-examine the same and when he issued the summons on the given addresses to the 7 donors, surprisingly not a single summon could be served upon any of the donor on the given addresses. Even when the report of the AO was sent for counter comments, on the appointed day the appellant preferred not to offer any counter comments. Under these circumstances, in my considered view the assessing officer was fully justified in treating the aforesaid credit of Rs. 11,50,000/- shown as gifts received from aforesaid 8 persons as unexplained cash credit within the meaning of S. 68 of l.T. Act and the same is hereby confirmed." 7. We have to keep in mind that it is not the case of cash credit simplicitor but a case of gift stated to have been made out of love and affection. For making a genuine gift it is not necessary that donor and donee must be related but love and affection is an essential ingredient to weigh the genuineness of the claimed gift. For verifying its genuineness their creditworthiness is also required to be examined. The decisions relied upon by the ld. A/R having distinguishable facts and circumstances are not helpful to the assessee. As in the present case the stated donors as stated above were neither produced nor found on the given address to affirm the donation given by them and the surrounding circumstances indicating their love and affection with the assessee is also lacking to justify the donation of gift by them. Under these circumstances, we are having no option

(5 of 5) [ITA-138/2010] but to uphold the first appellate order in the issue. The ground no. 2 is accordingly rejected. 4. We are in complete agreement with the view taken by the tribunal. 5. In that view of the matter, the issues are answered in favour of the department and against the assessee. 6. Hence the appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Brijesh 50.