KAILASH A KOTHARI,MUMBAI vs. ITO WD 13(1)(3), MUMBAI

सुनवाई क� तार�ख / : 04.09.2017 Date of Hearing घोषणा क� तार�ख / : 01.11.2017 Date of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Appeal by the assessee is directed against the Order by the Commissioner of Income Tax (Appeals)-24, Mumbai (‘CIT(A)’ for short) dated 20.01.2012 and pertains to the assessment year (A.Y.) 2007-08.

2. The Learned Commissioner erred in law in upholding the Order of the Assessing Officer of adding the Cash Gift amount of Rs.11,00,000.00 given by the Assessee's Sister to him as his income. He ought not to have done so.

3. The Learned Commissioner erred in law in rejecting the Affidavit and Declaration of Gift by Mrs. Badamiben N. Jain, Sister of the Appellant and doubting her creditworthiness. He ought not to have done so.

4. The Learned Commissioner erred in law in holding that neither there was any occasion nor purpose or reason to give gift by sister to her brother the Appellant.

5. The Learned Commissioner erred in law in not dealing with Ground No.2 of the Grounds of Appeal

, which read as follows;

2. The Learned Income Tax Officer has erred in levying Interest u/s 234 which is not in accordance with law."

4. Against the above order, the assessee appealed before the ld. CIT(A).

5. The ld. CIT(A) noted the following submissions before him:

(A.Y. 2007-08) Kailash A. Kothari vs. ITO 2.2 In the appellate proceedings, Ld.A.R. of the assessee submitted that the sister of the assessee had given the gift to him. She filed her return for the first time for the A.Y.2007-08 since her income in the earlier assessment years was below the taxable limit. The age of the donor was around 49 years. The source of the money for giving gift to her brother was explained to be gift of Rs.3,00,000/-, Rs.3,50,000/- and Rs.2,80,000/- received by the donor from her two daughters and son respectively and out of her opening cash balance. As regards the details of the children of the donor, it has been submitted that the two daughters had finished 1st year B. Com (Payal Kumar NJain) and 2nd yr. B.Com(Reena Kumari N.Jain) and were not studying further. They were giving tuitions at home. Son, Shri Parag Kr.Jain was a graduate and was working for a company during the period 17/12/2004 to 10/04/2008. None of the above children were filing their returns of income in view of their incomes being below taxable limit.

2.3 I have considered the facts of the case and the submissions made by the assessee. It is settled position of law that whenever cash is found credited in the books of the assessee, the onus is upon the assessee to prove the source of the same. For this purpose, the assessee is not only to prove the identity of the person from whom the money is claimed to have been received, the assessee is also required to prove the genuineness of the transaction as well as the creditworthiness of the person, in this case, the donor. It is clear from the facts on record that other than claiming that the money/cash had been gifted to him by his sister, the assessee has failed to prove the genuineness of the transaction and the creditworthiness of the donor.

3. As regards genuineness of the transaction, it is an undisputed fact that the alleged gift was received in cash. There is no evidence to show that the cash, in fact and in reality was received from the sister. It cannot be doubted that there would normally be love and affection between a brother and a sister. However, it defies all logic as to how and why a sister, who does not appear to be well off economically, whose husband is an accountant and whose children are still very young and are claimed to be earning some income by giving tuitions, would give such huge amount of Rs.11,00,000/- as gift. No social occasion for giving of the gift has also been brought on record. It appears that the assessee is much better off than the sister economically. In the Indian culture, normally it is the brother who gives gifts to his sisters. This is not to (A.Y. 2007-08) Kailash A. Kothari vs. ITO say that sisters do not or never give gifts to their brothers. However, in this case, we are talking of an amount of Rs.11,00,000/- which is claimed to have been received as gift. The donor undisputably does not have so much money. She has claimed to have received gifts of Rs.9.30 lakhs from her children to in turn given the alleged gift to her brother. It has not been shown as to why and on what occasion the children have gifted Rs.9.30 lakhs to their mother and what was the source of the said alleged gifts to the mother. The claim is unbelievable and cannot be accepted. Further, no other occasion has been shown by the assessee that they were in the habit of giving or receiving such huge amounts of gifts, either prior to the gift in question or later. Hence, the genuineness of the transaction is not established.

3.1 The above facts also prove that the sister who is alleged to have given gift to the assessee does not have the creditworthiness to give the gift of Rs.11 lakhs. She has just been used to lend her name to give-some sort of authenticity as to the source of alleged gift. It has not been established in the case that the donor, in fact, had the capacity to give the gift. In fact, all facts and circumstances clearly show that she did not have the capacity and creditworthiness to give Rs.11,00,000/- to the assessee as gift. For one, it has not been shown that she or her children had earnings and savings of the amount of the alleged gift. Secondly, the donor is shown to the gift in cash and the children are also in turn shown to have ti£ Rs.9.30 lakhs to their mother in cash. Undisputably, the donor and her family members are not well off economically. It is unacceptable that they would be keeping money amounting to such a huge amount as Rs.11 lakhs in the form of cash.

3.2 From the above, it is clear that the assessee has not been able to discharge the onus cast upon him with regard of the credit of money in the form of alleged gift and has failed to prove the genuineness of the transaction as well as the creditworthiness of the alleged donor. Although, the assessee has claimed that the gift was given by his sister, all facts and circumstances clearly show that no such gift, in fact, could have been given by his sister. Rather, the assessee has only tried to route his unaccounted money in his books by claiming that such money was a gift from his sister.

4.1 In case of Ashok Mahindru & Sons (HUF) 173 Taxman 178 (Del), it has been held that if there is enough material to raise a strong suspicion regarding

(A.Y. 2007-08) Kailash A. Kothari vs. ITO nature of transaction, the authorities can reject the documents and require the assessee to show that the transaction is above board. There can be no meters to judge truth. The same has to be culminated out of the surrounding circumstances and have to be inferred. There may not be clinching evidences but if at various places the circumstances are doubtful, the natural corollary is that such transaction was only paper transaction and cannot accord acceptability of such make belief transactions. In case of Smt Vasantibai N. Shah 213 ITR 805(Bom), the Hon'ble High Court observed that the Income tax Officer is entitled to take into consideration the totality of the facts and circumstances of the case and to draw his own inference on the basis thereof and circumstantial evidence in such cases is not impermissible. In cases like this, it is only the circumstantial evidence which will be available. No direct evidence can be expected........ In case of Durga Prasad More 82 ITR 540 (SC), the Hon'ble Supreme Court observed that the taxing authorities are not required to put on blinkers while looking at the documents produced before them. They are entitled to look into the surrounding circumstances to find out the reality of the recitals made. The proceedings under the Income Tax Act are civil proceedings and the liability therefore can be fastened on the basis of circumstantial evidence also, as held in the case Smt Sumati Dayal 214 ITR 801(SC). In case of J S Parker 94 ITR 616 (Bom) it has been" held that "the tax liability under the Income tax Act is of civil nature. To fasten a tax payer with such a liability, it is not necessary that the evidence should be in the nature of "beyond doubt" as is required to fix a criminal liability. Tax liability can be fastened on the basis of preponderance of probabilities". Perusal and examination of the facts in the case of the assessee clearly show that the donor did not have the creditworthiness to gift away the amount of Rs.11,00,000/- to the assessee and even the genuineness of the transaction has not been proved by the assessee. All the transactions relating to the alleged gift are in cash and the facts show that neither was there any occasion to give the gift nor was there any purpose or reason to give the alleged gift.

filed by the assessee is dismissed.

7. Against the above order, the assessee is in appeal before us.

(A.Y. 2007-08) Kailash A. Kothari vs. ITO The authorities below have erred in not accepting the veracity of the same. He further submitted that no material has been brought on record that the said gift is false. He further referred to following case laws: and 39/Vizag/2015 in the case of Dr.Vempala Bala Manohar vs. ITO; and 2. Hon’ble Delhi High Court decision in the case of CIT vs. Sudhir Budhraja (in dated 13.10.2015).

The daughters are still students and the son has just taken up a job. These persons are (A.Y. 2007-08) Kailash A. Kothari vs. ITO not filing the return of income. No statement of bank account of the said donor has been produced. No detail of the working of the opening balance in her hand has been produced. The husband of the sister is an accountant without much income. In this factual scenario, we find that it is abundantly clear that the said donor did not have the capacity to grant the gift of Rs.11 lacs to the assessee. Hence, as the assessee has failed to discharge the onus regarding cogently proving the capacity of the donor to give the gift. Hence, we do not find any infirmity in the order of learned CIT-A.