MUKESHBHAI G. RACHH,,RAJKOT-GUJARAT vs. THE INCOME TAX OFFICER, WARD-1(2),, RAJKOT-GUJARAT

First, we take up ITA No. 538/AHD/2013 for the AY 2004-05. The assessee has raised the following grounds of appeal: 1. The ''Ld.AO erred in law as well as on facts in making addition of Rs.5,00,000/- in respect of Gift u/s.68 of the Income Tax Act, 1961 ( the act) and the ''Ld.CIT(A) erred in law as well as on facts in confirming the same. 2. The ''Ld.CIT(A) erred in law as well as on facts ignoring the decisions, referred and relied upon by the appellant, without passing any comment thereon.

The only effective issue raised by the assessee in this appeal is that the Ld.CIT (A) erred in confirming the addition made by the AO for Rs. 5 Lacs u/s 68 of the Act in respect of gift received by the assessee.

Briefly stated facts are that the assessee is an individual and engaged in the business of trading of Kapas (raw cotton) in the name and style of Balaji Trading Co. The assessee during the year under consideration received a gift of Rs. 5,00,000/- from the Smt. Nita S. Bavish (donor) who is an NRI, based at Sudan which was credited to the capital account.

However, the AO found that a statement of the assessee was recorded u/s 131 of the Act in the immediately preceding assessment AY 2003-04 on dated 16-03-2005, wherein she admitted that she had not received any gift except the AY 2003-04. The AO further on verification of the NRE account of the donor found that i. The account was opened on the date 26-06-2003 by depositing a sum Rs. 2305 and after that, there was a deposit of Rs. 4,98,740/- dated 27-06-2003. ii. On very next day, i.e., 28-06-2003 the donor issued a cheque of Rs. 5 lacs to the assessee. iii. There was no major transaction except the deposit of money and issue of the cheque as a gift to various parties in such NRE A/c. In view of the above, the AO opined that the gift received by the assessee from the donor described above is not genuine as well as without any natural love and affection.

Aggrieved assessee preferred an appeal before the Ld. CIT (A) who confirmed the order of the AO by observing as under: 8.2 I have carefully considered the submission of the appellant, findings of the A.O. in the assessment order and the remand report of the A.O. I have also gone through the ease records of the appellant as well as Smt. Alkaben Rachchh for A.Ys. 03-04, 04-05 & 05-06. I find that, on similar set of facts in the appellant's own case, the Ld, CTT(A) dismissed the appeal for A.Y. 200.5-06 by relying on the judgment of the Hon'ble Jurisdictional ITAT in the case of Dinesh Babulal Thakkar 39 SOT 332 and held that the appellant has miserably failed to establish its case and fails on all counts of human probability, source, relationship, occasion and reciprocity in so received 8.3 The Hon'ble ITAT, Rajkot Bench, Rajkot, vide its common order in the cases of Shri Mukesh Girdharlal Rachchh & Smt. Alkaben Mukeshbhai Rachchh in ITA No.44, 45 & 46/Rjt/2012., dt. 5/10/2012 for A.Ys. 2004-05 & 2005-06 dismissed the appellant's appeals and upheld the decision of the Ld. C1T(A). In fact, the appellant seems to be regularly using this method of bogus , gifts for converting his unaccounted income into accounted income. 8.4 For this assessment year also, i.e.. A.Y. 2004-05, the appellant, has not been able to prove the financial capacity of the donor, occasion for gift as well as relationship with the donor. Thus, giving of substantial gifts in this case is outside the realm of human probabilities. The additional evidences so submitted could have been easily procured in case of a close relative and a genuine gift. Moreover, genuineness of a gift can be shown by relationship and acquaintance which should be of such a degree showing emotional bondages so as to prompt and motivate the donor to part away his hard earned money to the donee. Such acquaintance or relationship has to be established by surrounding circumstances, past history of the donors, their mutual relationship and help to each other- in the past or blood relationship on the basis of which one could infer a bondage of affection between donor and donee. However, gifts are not feasible where there is no reciprocity which is an important element of gifts in society while giving such gift to1 each other. It cannot be mere a one way process that only donor has given gift to the donee and at no point of time the donee has given anything to the family members of the donor. Another aspect of surrounding circumstances to establish genuineness of the gift is the occasion on which the gift was given.

Being aggrieved by the order of the Ld.CIT (A) the assessee is in appeal before us.

The Ld. AR before us filed paper book running from pages 1 to 56 and submitted that all the relevant details such as bank statement, confirmation from the donor etc were filed before the authorities below. Accordingly, the learned AR before us prayed that the amount of gift could not be treated as bogus.

On the other hand the Ld. DR vehemently supported the order of authorities below.

We have heard the rival contentions and perused the materials available on record. At the outset, we find that in the identical facts and circumstances in the own case of the assessee bearing ITA no 46/Rjt/2012 and bearing MA no 22/Rjt/2012 for AY 2005-06 dated 10-07-2013, the ITAT has confirmed the addition made by the AO. The relevant extract of the order is reproduced as under: 9. We have heard both the parties. It is essentially a question of fact as to whether a particular gift is genuine or not. Similarly, the issue as to whether the assessee has been able to satisfactorily explain the nature and source of credit entries found recorded in his books is also a question of fact. Judicial decisions help us in understanding the legal position. We have perused all the judgment cited by the assessee in her paper-book and taken note of the principles emerging from them. The fact of the matter, however, is that the issue with regard to genuineness of gift is essentially a question of fact. 10. We have carefully gone through the findings recorded by the Assessing Officer and the ''Ld.CIT(A). Both the authorities have concurrently recorded findings of facts that the impugned gift is not genuine. They have taken into account the surrounding circumstances, frequency of gifts claimed by both of them to have been received in the past, absence of relationship between donor and done, absence of occasion on which the gift could be given etc. In our considered view, the impugned gift cannot be said to be genuine on the facts of the case. We do not see any valid reason to take a view different from the view concurrently taken by the Assessing Officer and the Ld.CIT(A). The appeal filed by the assessee is dismissed.

However, the AO further noticed from the assessment proceeding for AY 2003-04 of Smt. Alkaben M. Rachchh, wife of the assessee who was also assessed in the same ward in which the assessee is assessed that the similar gift transaction was proved as non-genuine gift and addition was accordingly made vide order dated 29-03-2006 in her assessment under section 143(3) of the Act.

Aggrieved assessee preferred an appeal before the Ld.CIT (A) who confirmed the validity of the re-opening of assessment u/s 147 of the Act.

Being aggrieved by the order of the Ld.CIT (A) the assessee is an appeal before us. The Ld. AR before us filed paper book running from pages 1 to 102 and challenged the validity of the assessment framed under section 147 of the Act in the ground of appeal.

On the other hand the Ld. DR vehemently supported the order of authorities below.

We have heard the rival contention and perused the materials available on record. At the outset, we note that the learned AR for the assessee did not advance any argument on the finding of the learned CIT (A). Therefore we do not find any infirmity in the order of the learned CIT (A). Accordingly, we uphold the order of the learned CIT-A. Hence the ground of appeal of the assessee is dismissed.

The issue raised by the assessee in the ground no. 2 is that the Ld.CIT (A) erred in confirming the addition of Rs. 11 lacs u/s 68 of the Act on account of the bogus gift received.

An identical issue has been considered and decided by us in appeal vide ITA no 538/Rjt/2012 in Ground no. 1 Para No. 10 of this order. We have

In the combine result the appeals filed by different assessee are dismissed.