MR VIDIT JAIN,NEW DELHI vs. ITO, NEW DELHI

This appeal by assessee has been directed against the order of Ld. CIT(A) 7 Delhi dated 31st March, 2015 for asstt. Year 2010-11, challenging the addition of Rs. 30,72,236/- on account of unexplained cash deposit in the bank account of the assessee.

It was further submitted that assessee was regularly withdrawing cash and depositing the same on the advice of his real estate consultants M/s Rishta, Real Estate Investment, New Delhi for which certificate was also filed. Further on the issue of regarding the opening cash balance in hand the assessee has neither submitted any evidence nor any explanation in support of his claim regarding holding opening cash in hand. Further on the issue regarding receipt of gifts in cash, assessee submitted that out of total gifts of Rs. 7,70,000/- Shri Subhash Chandra Sanghai and Ms.

Kiran Sanghai have gifted Rs. 2,51,000/- each in cash on the occasion of birthday ceremony of his son. In support of the claim assessee has filed copy of gift deed prepared on plain papers and signed by the above donors. Assessee was therefore directed to prove the creditworthiness of the donors. Assessee submitted that major amount of gift amount received was Rs. 6,04,000/- from his in laws who are Nepali citizens and belongs to one of the renowned business family of Nepal. It was submitted that procurement of documents would take some time.

Assessee filed copy of the gift deed, and declaration from Civil Capital Market Limited and dividend warrant of Nepal Industrial and Commercial Bank Ltd. alongwith copies of the passport. The AO however noted that mere filing of declaration from Nepal Industrial and Commercial Bank Ltd. would not prove the creditworthiness of the donors to give any gift to the assessee. No copy of the bank statement and other documents have been filed. The AO therefore noted that assessee wanted to divert the directions of the proceedings. AO also noted that assessee has not filed any evidence of opening cash balance of Rs. 2,15,454/-. As regards bank withdrawals, it was noted that assessee has not declared even a single transaction of capital gains arisen on sale and purchase of the property in the year under consideration. The submissions regarding frequent withdrawals and subsequently depositing the same amount on the advice of the real estate agent is entirely baseless and far from truth. The fact that when assessee was holding cash in hand of Rs. 20,15,454/- on 29th April, 2009, the necessity of different withdrawals would not arise. Further, the sequence of withdrawals and deposits of more or less the same amount prove the fact of accommodation of unaccounted cash entry in his account for which assessee has nothing to explain. The assessee was asked in statement u/s 131 of the Act to explain source of cash deposit in his bank account. AO noted that it is crystal clear that assessee doing the property transactions in cash and introducing unaccounted cash routing through his banking channel and same were neither declared nor brought to tax by him. Further despite of such huge and frequent withdrawals, the assessee has even not made any withdrawal from 1st April, 2004 to 21st January, 2010. The withdrawals on household expenses are made for Rs. 5,000/-, Rs.10,000/- and Rs. 1,31,545/- only in December, 2009, January 2010 and March, 2010. The AO further noted regarding the gift stated to be received by assessee, asked the assessee to explain whether donors were holding huge cash in hand while coming from Nepal to India, whether the airport authorities had permitted them to carry huge cash with them or any declaration made on this behalf, any documentary evidence or payment on travel tickets etc. and further why banking channel was not used for making the gift. The Assessing Officer, therefore, noted that assessee could not explain any of the query raised by him and in the absence of any documentary evidence on record, AO noted that assessee failed to substance the cash deposits in the bank account. The same was therefore treated as unexplained cash deposits u/s 68 of the I.T. Act and addition of Rs. 32,87,690/- was made.

Assessee reiterated the submissions made before Ld. CIT(A). It was submitted that entire gift was received from in laws and that section 68 would not apply in the case of assessee. The withdrawals from the bank account are available to assessee to make redeposit in the bank account.

Ld. CIT(A) however given benefit of assessee of opening cash balance of Rs. 2,15,454/- and confirmed the addition of Rs. 30,72,236/- .

gifts. In support of gifts the copies of the gifts declaration have been filed. Copies of the same are also filed in the paper book. However mere filling of gift declaration are not enough to accept the genuineness of gift in the matter. Gifts are made in cash and source of the cash have not been proved. No evidence of how cash was brought from Nepal to India have been filed. No details of cash brought to him have been proved. No evidences of birthday ceremony have been filed on record. How much expenses have been incurred by assessee on birthday ceremony have not been filed. No evidence of presence of the donors in India have been proved. Thus assessee failed to prove the creditworthiness of the donors and genuineness of the transactions in the matter. Hon’ble Calcutta High Court in the case of Bharati Private

Limited. v. Commissioner of Income Tax, West Bengal I, Calcutta. 111

ITR 951 and Commissioner Of Income Tax. v. United Commercial And Industrial Co. Pvt. Limited. 187 ITR 596 held that mere filing of confirmation is not enough. Even in the gifts declaration no source of given gift to the assessee has been mentioned. Thus the comments of assessee to prove creditworthiness of the donors and genuineness of the transaction have not been proved. Hon’ble Delhi High Court in the case of CIT vs. Anil Kumar 292 ITR 552 held "In the case of gifts mere identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of gift is made by the assessee, the onus lies on him not only to establish the identity of the person making the gift but also his capacity to make such a gift. In assessment proceedings for the assessment: year 1995-96 the Assessing Officer observed that the assessee had received two gifts of Rs.10 lakhs each from N. R. E. accounts of two donors, namely V and D. The Assessing

Officer found that the assessee could not discharge his onus of proving the credit-worthiness of the donors and held that the amount of Rs.20 lakhs which had been declared by the assessee as gift, was in fact his income and added to his total income under section 68. The addition was deleted by the Commissioner (Appeals) and this was upheld by the Tribunal. On appeal to the High Court: Held that there was nothing on record to show as to what was the financial capacity of the donors, what was the credit-worthiness of the donors, what kind of relationship the donors had with the assessee, what were the sources of funds gifted to the assessee and whether they had the capacity of giving large amounts of gift to the assessee. Further, the assessee was asked to appear in person before the Assessing Officer, but never appeared.

The addition of Rs.20 lakhs was justified. Hon’ble Supreme Court in the case of CIT vs. P. Mohankala 291 ITR 278 held "The assessee received foreign gifts from one common donor. The payments were made to them by instruments issued by foreign banks and credited to the respective account of the assessees by negotiation through a bank in India. Most of the cheques sent from aboard were drawn on the Cittbank, N. A. Singapore. The evidence indicated that the donor was to receive suitable compensation from the assessees. On this material the Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the account books of the assessees as their income applying section 68 of the Income-tax Act, 1961. The assessees did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the mater was referred to the Vice President who concurred with the findings and conclusion of the Assessing Officer and the Commissioner (Appeals). On appeal the High Court re- appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court: Held, reversing the decision of High Court, that findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. he High Court misdirected itself and erred in disturbing the concurrent findings of fact." Hon'b1c Punjab and Haryana High Court in the case of Yash Pal Goel Vs CIT 310 ITR 75 held that "Held, dismissing the appeal that the financial position of M. suggested that he neither had the capacity to make the gift nor the source from where the gift was made. No reason whatsoever had been assigned for gifting such a huge amount by M to the assessee. M never visited the home of the assessee and hence there was no love and affection. It was nothing but a subterfuge to avoid income-tax. The transactions were not genuine ones".

Mere filing of gifts declaration is not enough to prove the genuineness of the gifts in the matter. Assessee therefore failed to prove genuineness of the gifts in the matter. The authorities below were therefore justified in treating the gifts to be not genuine. No interference is called for in the matter.

6.1. Ld. Counsel for assessee further contended that assessee has made withdrawals from the bank accounts which were available to assessee for making redeposit. He had relied upon the order of ITAT Delhi Bench in the case of ITO vs. Mrs. Deepali Sehgal 2014-TIOL-1055- ITAT-Del in which it was held that he AO could not bring out any fact that cash withdrawal from saving account and partnership overdraft account was used for other purposes anywhere else, then, merely because there was a time gap between withdrawal of cash and its further deposit to the bank account, the amount cannot be treated as income from undisclosed sources u/s 69 in the hands of the assessee. ”

The assessee has filed copy of the bank statement at pages 51 to 62 of the paper book. Page 54 discloses that on 27th April, 2009 there is a deposit of Rs. 20 lacs which have been withdrawn later on “ self or Gopal”. But other entries appearing in the bank account of the assessee shows that most of the same are transferred entries or through RTGS.

Assessee has failed to prove any co relation of cash withdrawal with the cash deposit in the bank account. Assessee has also shown petty household withdrawals. The AO has also noted that assessee has not made any withdrawals from 1st April, 2004 to 21st January, 2010. This fact support the findings of authorities below that no sufficient cash was available to the assessee to redeposit in the bank account of the assessee. The story propounded by the assessee of cash withdrawals and depositing the same was done at the advice of real estate consultant was not proved through any reliable and cogent evidence because the AO has specifically noted that the assessee has not declared even a single transaction of capital gains arises on sale and purchase of property in the year under consideration or otherwise. Therefore the decision in the case of ITO vs. Mrs. Deepali Sehgal (supra) would not advance the case of the assessee. These facts are sufficient to hold that whatever explanation was given by assessee was not substantiated through any evidence or material on record. The explanation of assessee do not inspire confidence of this bench to accept the explanation of the assessee. No other point is argued or pressed by Ld. Counsel for assessee. Considering the totality of the facts and circumstances of the case. I do not find any merit in the appeal of assessee. The same is accordingly dismissed.