Bhupinder Kumar Chugh,, vs Assessee

Appellant by : Shri Rakesh Gupta, Adv. Shri Ashwani Taneja, Adv. Respondent by : Shri T.Vasamtjam. Sr/ DR

Date of hearing : 18.05.2015 Date of pronouncement : 02.06.2015

ORDER

PER T.S. KAPOOR, AM:

This is an appeal filed by assessee against the order of Ld. CIT(A) dated 27.08.2004. The appeal in I.T.A. No. 4659/Del/2004 was earlier dismissed in limine vide Tribunal order dated 02.03.2009 but the same was restored vide tribunal order dated 19.06.2009 for hearing on merits.

2. In I.T.A. No. 4659/Del/2004, the assessee has taken various ground of appeal by which he had challenged the addition sustained by Ld. CIT(A) both on the basis of violation of legal principles as well as merits of the case. However, the issue is only one i.e. confirmation of addition on account of gift received by assessee.

2 ITA No.4659/Del/2004 3. The brief facts of the case are that the case of the assessee was reopened u/s 148 of the Act. The case was reopened on the basis of information received from Investigation wing of Income tax Department that assessee had received a bogus gift of Rs.10 lacs on 30.07.1993 from an NRE account held by Shri Subhash Sethi in American Express Bank, New Delhi. As per assessment order, the notice u/s 148 was served on 21.05.2001 but assessee did not comply with the same. The notice u/s 142(1) was served on 24.09.2001 and again there was no compliance. Then notice u/s 143(2) was issued on 07.11.2001 fixing the case for 19.11.2001. On 19.11.2001, the assessee filed a reply and challenged the validity of notice u/s 143(2) and submitted that notice was served beyond a period of 12 months from the end of month in which return was filed. Return of income in this case was claimed to have been filed way back in 1995. After giving various notices as mentioned above to which assessee had not responded, finally assessee was served summons u/s 131 of the Act and in response to which assessee was represented by one Shri Ashok Kumar and assessee was required to furnish the following information:-

"1. On perusal of record it is noticed that you have received a gift of Rs. 10 lacs from one Sh: Subhash Chander of Delhi during the F.r. 1993-94 relevant to the A.Y. 1994-95. You are requested to produce Sh: Subhash Chander along with documentary evident regarding the capacity to make the gift as claimed by you. Please also intimate what relations you have with Sh: Subhash Chander and also inform the occasion on which the same was received by you.

2. You are a/so requested to give copies of your account from the different firms in which you have deposited the amount/you are having interest in those firms relevant to the A. Y. 1994-95.

3. Prove the reasonableness of household expenses with reference to the size of family and standard of living.

4. Produce post office/Bank pass books and other books of account if any maintained by you.

3 ITA No.4659/Del/2004 5. Give the details of movable/immovable properties owned by you during this period along with date of purchase and source of investment.

4. However again no compliance was made. Again on 16.08.2002 notice u/s 143(2) was issued fixing the date of hearing on 28.08.2003 but again nobody attended. The case was again fixed for 20.11.2002. On that date, Shri Rajat Aggarwal, C.A. attended but did not file any reply. Then on change of jurisdiction notices u/s 142(1) and 143(2) were served upon the assessee on 02.01.2003 and case was fixed for 10.01.2003 but nobody attended on 10.01.2003 and case was fixed for 13.02.2003. The authorized representative then filed a reply vide letter dated 20.11.2002. Vide this reply, the assessee reiterated that return was filed within time allowed u/s 139(1) but could not give the exact date on which date it was filed. The assessee also denied the service of notice u/s 148 and also submitted that notice u/s 143(2) issued on 07.11.2001, was beyond time allowed under proviso of section 143(2) of the Act. The A.O. however held that service of notice u/s 148 was made by affixture also. The A.O. further held that no proof of filing of income tax return u/s 139(1) as claimed by assessee was filed. He held that assessee could not give GIR number allotted to him. The assessee, during assessment proceedings submitted that the donor was a distant relative of father of assessee. It was claimed that gift received by him was genuine on the basis of following submissions:

i) Existence of Subhash Sethi proved by mentioning the reference of ` Subhash Sethi in order o Enforcement Directorate.

ii) Capacity of donor is established by credits in NRE a/c emanating from foreign sources, 4 ITA No.4659/Del/2004

iii) Genuineness of transaction through gift deed execution,

iv) No evidence for compensatory payment by assessee,

v) No proceedings pending with Directorate of FERA.

5. The A.O. however, did not agree with the contention of assessee and made additions as under:-

"The assessee failed to establish that any return of income for A Y 1994-95 was ever filed although stated in presumption manner that it was filed within prescribed time i.e. Before August. 1994. Coming to the point of gift, it is submitted by the assessee vide para 3 of page 8 that the Asstt. Direction, Enforcement Directorate, FEMA, exonerated the notice Bhupinder Kumar Chugh to all the changes leveled in memorandum and the order is stated to be appended. But as per order No. AD/61/JC/02/SPS elated 27-6-2002 and file No. T- 4173/JIJ200213086, no favour has been made for assessee as alleged. The assessee could not produce the donor for examination. Moreover, could not establish that the gift had been shown in the return of income. There is no force in the version that the set of documents being given now was appended with return as no acknowledgment of filing of return has been so furnished. The assessee even could not give the GIR No. Allotted to the assessee for that asstt. Year. It is the onus of the assessee that he has filed any return of income for that asstt. Year. The assessee stated that genuineness of gift is not in doubt and identity of donor is sought to be established through his confirmation to the donee. The donor is stated to be a distant relation of father of assessee. One time the assessee is trying to float a bond of relationship between donor and himself (although without any basis or stretch of imagination) and on the other hand state that relationship and occasion of gift is not required for having and receiving any gift The gift has been claimed to be genuine on reasons :-

(i) Existence of Subhash Sethi proved by mentioning the reference of Subhash Sethi in order to Enforcement Directorate.

(ii) Capacity of donor is established by credits in NRE ale emanattng from foreign sources.

(iii) Genuineness of transaction through gift deed execution. (tv) No evidence for compensatory payment by assessee.

5 ITA No.4659/Del/2004 (v) No proceedings pending with Directorate of FERA.

The assessee further claimed that there was no interest income for asstt. Year 1994-95, total withdrawals of Rs. 63600/· were stated to be adequate for family of seven members (contribution of assessee only Rs. 8800) and it was undertaken that no movable or immovable property was purchased during the year. In the same reply, it was mentioned at S. No. 4 on page 12 that Bank Pass Books are produced for reference but no such pass books have, ever been produced before the AG. The contention of the assessee is not correct as for a valid gift, the assessee will have to establish besides the identity and capacity of donor and genuineness of transaction of gift, the element of relationship between donor and donee and the occasion of the gift in view of Lal Chand Kalra's case. Now, the assessee says that Dr. Subhash Sethi is a relative of my father and in the statement given on 4-5-1998, the assessee stated that Sh. Subhash Sethi is friend of his father -in-law's brother. The donee is not familiar with donor's family background. Hence, it is unbelievable that a stranger would give such a large amount us gift without any motive.

Although, the deed is stated to be executed on 30-7-93 and confirmation through affidavit is stated to be executed on 30-7-1993 but as none of the above documents are registered hence, in the absence of registration of these documents, do not have any evidentiary value. The reasons stated to establish gift as genuine have not force as the assessee could not prove the identity and capacity of donor as could not produce him for examination and could not file his return of income tiled in UK or India. The genuineness of transaction as not established as pointed out Directorate of FERA, and Investigations of Income tax Department. The occasion of gift was not proved as stated at the time of marriage which happen to be in March but gift is stated to be given on 30th July. Relationship was not established between donor and assessee. The assessee was confronted vide letter dated 17-2-2003 that notice u/s 148 was duly served and was legally in nature as per provisions of Income Tax Act. to produce the donor and registered documents of Sift and affidavit, bank pass book and prove the filing of return/of income of donor. and assessee was also asked to file a copy of return stated to have been filed earlier along with its annexures, books of accounts and bank pass books relevant to F.Y.

1993-94 and to justify household withdrawals. Incompliance to it, the assessee filed reply 6 ITA No.4659/Del/2004

dated 10-3-2003 vide which nothing was added to the reply filed earlier and almost reiterated the reply filed on 13-2-2003.

When the assessee could not produce the donor for examination he was asked to give his address of India. The address was given Subhash Sethi s/o Sh. Tara Chand Sethi, 84, Sunder Nagar, New Delhi. Summons u/s. 131 of IT Act was issued to the donor through registered post on 24-2-2003 which returned back on 5-3)003 with the remarks "No such person in 84, Sunder Nagar". Although, the assessee was confronted on the issue but he could not be satisfactory answer and only stated that this was the latest available address of the donor with him. In this way the assessee could not prove the gift as genuine.

On investigations of the Income Tax Department and Enforcement Directorate, 'it has been uncovered that the beneficiaries had approached through CA's/agents to get such bogus gifts out of such NRE account on payment of 10 to 15% premium on the purchased gifts. The assessee even has not been bothered to furnish basic minimum information about extent and sources of income of the alleged donor during the relevant period. Rather he tried to shift the burden of proof upon this office which is of no help to the assessee as is a bogus gift. Summons issued to donor received back with remarks that no such person at the address.

Hence, it is amply clear from the facts and circumstances of the case that the assessee purchased a bogus gift of Rs.10 lacs on 30.07.1993 on payment of an equal amount in cash along with premium for arranging such gift which is taken @ 10% of the amount of gift arranged, The amount of bogus gift so arranged was utilized by the assessee for making investment in shares of MIs Golden Home Furnishing (P) Ltd. Panipat. Therefore, the amount of Rs, 11 lacs representing the bogus gift shown by the assessee alongwith premium paid is taken as undisclosed income of the assessee for the asstt, Year 1994-95.

As the assessee could neither give any evidence of filing of return of income [or the asstt. Year 1994-95, nor any bank pass book, copy of account in books of other concerns, interest/dividend income, income and expenditure account. Hence, in absence of filing of any 7 ITA No.4659/Del/2004

information regarding income on the part of the assessee, it was confronted to the assessee on 16-3-2003, if not proof of income is given, the maximum of income tax i.e. 40% will be applied on the income assessed as per information available on record and the case was fixed for 17-3-2003. On 17-3-2003, the counsel of the assessee stated that the return has already been filed and again no concrete information about income was supplied. Under these circumstances, the rote of tax is applied at 40% (Rate of tax over the slap of income of Rs, 1 Lakh) on the income of Rs. 11 lakhs discussed above."

6. Aggrieved, the assessee filed appeal before Ld. CIT(A) and filed various submissions. However Ld. CIT(A) also did not accept the contention of assessee and upheld the addition and rather increased the amount of addition by an amount of Rs.75,140/- by holding as under:

" The matter has been considered. It is seen that the AO allowed more than sufficient opportunity to the appellant to prove the genuineness of the alleged gift but the apparent could neither produce Shri Subash Sethi before the A.O. for verification of the gift nor could file any other document/evidence in support of his claim. Even the summons u/s '131 could not be served upon Sh. Subhash Sethi on The address given by the appellant. The appellant could also not establish as to what was the relationship of the donor with the appellant and as to what was the occasion on which the gift was alleged to have been given, The AO, on the other hand, has pointed out that under similar facts and circumstances and for the same asstt. year an addition of Rs. 11,50,000/- comprising of bogus gift of Rs. 10 lacs and premium of Rs. 1,50,0001- made by the ITO, Ward 25(3), New Delhi in the case of Sh. Ved Prakash Chugh, brother of the appellant, has been confirmed by the CIT(A), X.XIV, New Delhi vide his order dated 01.08.2003. The CIT(A) is stated to have observed as under :-

"On going through the Enforcement Directorate's order dated 27.6.2002, it appears that the order was basically passed to show that no payment through hawala or the like mode was made to the NRI Sh. Subhash Sethi outside India in contravention of Foreign Exchange 8 ITA No.4659/Del/2004

Regulations. In this order of the Directorate, it has been observed that "Sh. Subash Sethi in his letter dated 7.8. 95 has clearly submitted that he has not made any gift to any person in India out of his said NRE account as he had not remitted any money from abroad into this account", The order of the ED also throws light on the fact that the NRE account No. 320169733 of Sh. Subash Sethi with American Express bank, New Delhi was actually being operated by one Sh. Umesh Mahndiralta. The A O on perusal of the said bank account found that there was regular cash deposits made in the said NRE account of Sh. Subash Sethi and the amounts were utilized for issuing MCS and DDs. On such DD No. 78428 dated 9.7.93 of Rs. 10 lacs was made in the name of appellant.

From the above, it is obvious that Sh. Subash Sethi has not given any Gifts to any person in India. Thus, the gift of Rs. 10 lacs claimed to have been received by the appellant from Sh. Sethi is obviously bogus. It is also common knowledge that the appellant must have paid some premium for arranging this bogus gift. Thus, the addition of Rs. 11 lacs ( Rs. 10 lakhs bogus gift + 1 lakh premium) is upheld and grounds of appeal No.5, 6 and 7 are hereby rejected.

As discussed in preceding paragraphs, the AO made the asstt. at Rs.11 lakhs and taxed it at the maximum rate of 40% because the appellant could not file any evidence of the original return of income. The Id.AR, however, in the submissions made during the appellate proceedings, has stated that the AO in his comments has stated that the returned income of Rs. 75,140/- is required to be added back to the income of Rs. 11 lacs as assessed by the AO. Therefore, assessed income is required to be enhanced by Rs.75,140/-. The appellant was required by me to file counter comments on this submission of the AO.

The appellant has requested that the AO should be directed to compute/revise the income accordingly and tax the same as per the rates applicable and not the maximum rate i.e. @ 40%). In view of the above, income of the appellant is enhanced to Rs.11,75,140/- and the AO is directed to tax the same as per the tax rates applicable for the year under appeal."

7. Aggrieved, the assessee is in appeal before us.

9 ITA No.4659/Del/2004 8. Ld. A.R. at the outset invited our attention to synopsis filed by him and also submitted that he will be making reference to the paper book filed by revenue. Ld. A.R. further submitted that grounds no.1, 2 & 6 relate to legal issue of which is agitated by appellant on various counts. He submitted that service of notice u/s 148 was not according to law contained in order V Rule 20 of CPC and in this respect, he invited our attention to paper book page 20 of Revenue's paper book where a copy of notice dated 29.05.2001 was placed. Inviting our attention to the date of notice, Ld. A.R. submitted that at the back of notice dated 29.05.2001 the inspector had mentioned that he had made various repeated visits to serve the notice but the notice could not be served as the assessee had gone out. Ld. A.R. submitted that on the same date i.e. on 29.05.2001, the inspector was authorized to serve the notice by affixture and invited our attention to paper book page 19 where a copy of order V under Rule 20 of CPC was placed. He submitted that before taking action under rule 20 of order V the Court have held that certain conditions must be met which include that the court should reasonably be satisfied that assessee was remaining out of house for the purpose of avoiding service of notice and further it should be satisfied that summons cannot be issued in ordinary course and there must be basis on record on the basis of which action can be taken. He submitted that satisfaction of court for making order V under Rule 20 contemplates objective satisfaction and relevant material must exist to justify the conclusion. He submitted that mere fact that notice could not be served, would not lead to conclusion that assessee was keeping away for the purpose of avoiding service and that for any other reason, the summon could not be served. He argued that between 29.05.2001 and 31.05.2001the notice server 10 ITA No.4659/Del/2004

is stated to have visited the house of assessee several times. Every time, when server visited, it was informed that the assessee had gone out. He argued that for the purpose of serving notice, the notice server should have gone like a creditor and he should have effectively served the notice. He submitted that on 29.05.2001 itself, the said order under rule V was passed which itself indicates that notice server never visited the assessee and all paper work was done in the office itself to prove that notice server had made various attempts and this fact is further proved from the fact that the notice of affixture was not displayed on the notice board of Income tax Department which is the requirement of law.

9. He argued that before substitute service as provided in order V rule 20 of CPC is passed, it is the duty of department to discharge the onus to prove that the authority had the reason to believe that the assessee was keeping out of way for the purpose of avoiding service and this was only reason to come to the conclusion that notice was not served in the ordinary course. In view of above, it was argued that order directing substitutes service was not in accordance with law and reliance was placed on the following judgements:-

i) Satish Construction Co. Vs Allahabad Bank AIR 1999 MP 21, 23.

ii) Kunj Behari Vs ITO 139 ITR 73

10. Coming to another legal aspect, Ld. A.R. submitted that reopening itself was bad in law as the action u/s 148 was approved on 29.05.2001 and was alleged to have been served by A.O. on 31.05.2001, whereas the A.O. received the sanction for issue of notice on 01.06.2001 as is apparent from paper book page 22. Ld. A.R. further argued that the reasons recorded as contained in Revenue's paper book page 17 do not contain any material to show nexus with the firm belief that some income had escaped assessment.

11 ITA No.4659/Del/2004 He submitted that reasons were recorded on the basis of some report received from ADIT of Investigation wing carried out by ADIT, Ghaziabad. He submitted that entire reasons revealed that there was no material to indicate that there was escapement of appellant's income. He submitted that reasons recorded are quite vague and cannot be the basis for reopening of assessment. He submitted that the reasons recorded indicate that there was no application of mind as the same were based on the basis of report received from ADIT and there is no application of mind by A.O. Ld. A.R. submitted that Hon'ble Supreme Court in the case of M/s. Ganga Saran & Sons (P) Ltd. Vs ITO reported at 130 ITR 01 had said that the words 'reason to believe' are stronger than word satisfaction and to believe must not be arbitrary or irrational and it must be reasonable and be based on reason with relevant material on record. Inviting our attention to notice u/s 148, Ld. A.R. submitted that multiplicity of assessee mentioned in the notice itself shows that A.O. has mechanically followed for issuing notice u/s 148 and has not applied his mind. Reliance in this respect was placed on the case law of Sarthak Securities (P) Ltd. decided by Hon'ble Delhi High Court. Inviting our attention to a further defect in the affixture of notice, Ld. A.R. submitted that there is no witness evidencing the so called affixture and nothing is mentioned regarding time of affixture and exact location of affixture. He further argued that affixture was done on 31.05.2001 whereas the order was passed on 29.05.2001 and in between this period, it is not known whether any efforts were made to locate the assessee and serve the notice.

11. Ld. A.R. further argued that notice u/s 148 is further invalid on the ground that reasons was not provided u/s 148 within stipulated period and 12 ITA No.4659/Del/2004

rather the copy of reason was obtained by assessee by filing a letter dated 31.01.2007 and, therefore, also the reopening is bad in law. Reliance in this respect was placed on the decision of ITAT decision in the case of Balvant Rao Bhargava VS ITO in I.T.A.No.4806/.... Dated 14.11.2011. Ld. A.R. further argued that the A.O. had not applied his mind and rather issued notice in pursuance of directions from higher authorities and in this respect he invited our attention to paper book page 14 wherein a copy of letter addressed to A.O. written by ADIT Rohtak was placed. He submitted that senior officers directed the A.O. and therefore, the whole action of recording the reasons issued and notice u/s 148 framing reopening order making an addition on account of gift which has been done in pursuance of will of higher authorities and, therefore the same was void ab-initio and illegal.

12. Regarding merits, Ld. A.R. submitted that the donor had filed an affidavit stating the factum of gift and there was a gift deed which was executed between donor and donee and in this respect, our attention was invited to paper book pages 11-12. He further submitted that paper book pages 14-15 is a copy of cheque and paper book pages 16-24 is copy of passport of donor and paper book 13 is certificate from bank certifying that the amount was out of NRE account of donor. In view of above documents, Ld. A.R. Submitted that the assessee had furnished all the documents demonstrating the gift was a genuine gift and was received through banking channel from a NRE account of a donor who happened to be a relative. Ld. A.R. took us to paper book pages 36-40, 57-63 wherein copy of detailed submissions made before A.O. and Ld. CIT(A) were placed. Therefore he argued that on merits also, the assessee has a strong case and the gift is liable to be accepted.

13 ITA No.4659/Del/2004 13. Ld. D.R. on the other hand submitted that though the A.O. seems to have received the permission from higher authorities on 01.06.2001 through letter but the fact remains that A.O. must have obtained verbal permission through telephone or by hand and formal permission was received afterwards and, therefore, it cannot be said that the notice u/s 148 was issued before the approval was obtained. In respect of service of notice, Ld. CIT(A) had remanded back this issue to A.O. and had obtained remand report and then decided the issue after recording extensive findings. He further submitted that under the provisions of Section 148, the requirement is that notice needs to be issued within prescribed time, whereas as per requirements of Section 143(2), it is mandatory to serve notice within prescribed period. In this respect, he invited our attention to page 4 of Ld. CIT(A) order and invited our attention to back page of notice where notice server had mentioned that on 29.05.2001, he had visited the assessee many times but the assessee was not available. He submitted that notice server is not required to note down time of every visit and it is sufficient compliance when he made report that he could not find assessee for service of notice and, therefore A.O. held that notice could not be served in an ordinary way and that is why he made an order under Rule V for serving the notice by affixture.

14. As regards the argument of Ld. A.R. that higher authorities had directed to issue notice, Ld. D.R. submitted that higher authorities while giving permission/ sanction to issue notice generally guide, direct and there is nothing wrong in it. Only on the basis of some wording, it cannot be said that A.O. had initiated on the basis of directions by higher authorities. Regarding argument regarding multiplicity of assessees as mentioned in the 14 ITA No.4659/Del/2004

notice u/s 148 Ld. D.R. submitted that the second name is the name of brother of assessee and these two had received gifts and mentioning of two names on the same notice does not amount to non application of mind. Ld. D.R. further relied upon the provisions of Section 292B and argued that no notice will be invalid in view of any discrepancy in a summon and therefore Ld. D.R. heavily relied on the order of Ld. CIT(A) in this respect.

15. Regarding merits, Ld. D.R. submitted that donor Sanjay Sethi had stated that he had not made any gift to any person and in this respect, he invited our attention to Ld. CIT(A)'s order where he has referred to the proceedings in the case of his brother Shri Ved Prakash Chug. He further submitted that in the case of Shri Ved Prakash Chug, the proceedings attained finality as the assessee had not made any appeal. He submitted that the facts in both the cases are exactly similar. Therefore also, he submitted that addition on merits needs to be sustained. On a question by bench to Ld. A.R. regarding the status of proceedings in the case of Shri Ved Prakash Chug Ld. A.R. stated that he was not aware regarding the case of Shri Ved Prakash Chug. However, Ld. D.R. stated that in that case Ld. CIT(A) has upheld the action of A.O. and assessee has not challenged the action of Ld. CIT(A) and therefore, the proceedings in that case had attained finality.

16. We have heard the parties and have gone through the material placed on record. As regards legal grounds taken by assessee regarding service of notice u/s 148, we find that Ld. CIT(A) after obtaining remand report from A.O. has passed a detailed and exhaustive order. The relevant findings of Ld . CIT(A) are reproduced below:

"Regarding the service of notice, it has been claimed that n notice was served jupon the appellant on 31st of May 2001. It has been argued that it was the duty of the revenue to establish that the service 15 ITA No.4659/Del/2004

of a notice was made on the appellant itself or on someone duly authorized by him in that behalf. The Ld. A.R. further argued that the impugned notice u/s 148 was issued on the last date of limitation, which could not have, in any case, been served on the appellant 011 the same very day. Accordingly, it was argued that the service beyond the limitation period shall not save the same from bar of limitation. Coming to the service by affixture, it was submitted that the service by affixture could only be resorted to if none of the other modes of service were practical. It was claimed that service by affixture could not be resorted to in the first place. On the basis of these submissions, it was pleaded that notice u/s 148 should be quashed.

Copy of these submissions was forwarded to the AO for his comments. In his comments, it has been stated by 'the AO that notice u/s 148 was issued with the prior- approval of the Addl. Commissioner of I. Tax, Rohtak Range, Rohtak granted vide his letter dated 29.5.2001. The service of notice was made by regd. A.D. post which was received back with the following remarks of the postal authorities :-

''Addressee not attended after delivery of notice hence returned to sender as unclaimed"

Then the notice was again served by affixture on 31.5.2001 by the Notice Server and Inspector as the Notice Server has reported on 29.5.2001 that the assessee was not available at his residential address after repeated visits by the Notice Server. Thereafter, the then AO passed order under Rule 20 of order V of the C.P.C 1908 to serve the notice by affixture. On the basis of these facts, it has been Pleaded by the A.O. that the notice was served upon the appellant properly. The AO also pointed out that the appellant has not furnished any evidence of having furnished the original return, either during the asstt. proceedings or during the Appellate proceedings. Regarding the legality of notice issued u/s 148, the AO has stated that the notice was served after receiving definite information from various authorities and after recording the reasons in writing and after obtaining necessary approval from the AddI.CIT. Therefore, it was argued that the notice u/s 148 was issued legally and served properly.

16 ITA No.4659/Del/2004 The appellant was afforded an opportunity to file his counter comments. The Id.AR of the appellant vide his letter dated 4.8.2004 has pointed out the following discrepancies :-

"i) The Addl. Commissioner at I. Tax, Rohtak vide letter dated 25.5.2001 had sent on intimation directing to issue notice u/s 148 011 the basis of certain information alleged to be in possession of the department.

ii) This letter was duly received in the Income-tax office, (Sonipat on 20.5.2001.

iii) On the basis of the direction the AO has allegedly sent the reasons for reopening the proceedings u/s 148 strongly on 25.5.2004 itself.

iv) These reasons were approved by the Addl. Commissioner of I. Tax, Rohtak Range, Rohtak vide his office letter No. 672 dt.

29.5.2001 which is received by the AO allegedly on 31.5.2001.

v) Sir, one more important fact which need your kind consideration that the stamp of the receiving office was of dt. 1.6.2001.

vi) The AO has received the prior approval on 31.5.2001 or on 1.6.2001 whereas notice u/s 148 was issued on 29.5.2001.

vii) The notice server has reported on 29.5.2001 itself that assessee was not available at his residence after repeated visits by tile notice server.

Sir, your Honour will agree that there is no law in India, which requires the assessee to be present at his known address all time to facilitate the service of notice by the I. T Department on any date convenient to the department officials.

viii) The AO i.e. the DCIT, lnv. Circle, Panipat passed the order under Rule 20 of order V of the CPC, 1908 to serve the notice by affixture on 29.5.2001 itself.

17 ITA No.4659/Del/2004 ix) The then A.O. had sent the notice by regd. Post on 31.5.2001 to be served within time limitation of evening of 31.5.2001.

x) The fixture was restored by the then AO had sent the notice by regd. post either to be served or come back without servers.

xi) The notice sent by Regd. Post was received unserved on 01.06.2001."

On the basis of these submissions, it was argued by the Ld.A.R. that the re-assessment initiated now was totally untenable in law and deserves to be quashed.

The matter has been considered. The relevant asstt. record has also been perused. It is seen that a letter dated 23/24.05.2001 was sent by the Addl. Director of Income-tax (Inv.), Haryana, Rohtak to the AO having jurisdiction over the case of the appellant and vide this letter the AO was informed that the appellant has received a gift for Rs. 10,00,000/- from Sh. Subash Sethi (NRI) and many documents including the statement of the appellant recorded on 04.05.1998 was enclosed along with this letter. This letter was received in the office of the AO on 2 .5.2001. The AO recorded the reasons for reopening the case on 25.5.2001 and a proforma for obtaining approval of the Add!. Commissioner was sent to the Addl.CIT on 25.01.2001 itself.

Approval of the Addl.CIT has been granted on 29.5.2001 and the AO issued notice u/s 148 on that very date i.e. 29.5.2001. One copy of the notice was sent through the regd. post and another was given to the notice server for personal service. Since the appellant was not available at his residence, the notice was duly served upon the appellant on 31.5.2001 by affixture. Therefore, it is held that the notice u/s 148 has been issued in accordance with law on the basis of information received from the Addl. Director of I.Tax (lnv. ), Rohtak and the same has duly been served by post and by affixture. Therefore, grounds of appeal No,1, 2, 3,4 and 8 are rejected."

18 ITA No.4659/Del/2004 17. We find that Ld. CIT(A) has passed a speaking and well reasoned order.

18. As regards the arguments of Ld. A.R. regarding sufficiency of reasons recorded, we find that at the time of issue of notice, the detailed reasoning is not required as detailed reasoning can only be given after hearing the assessee. The A.O. had definite information through Investigation Wing of the Department that assessee along with his brother had taken bogus gifts therefore, this reason itself is sufficient to ascertain the correct facts. At the time of issuance of notice, the A.O. only needs a prima facie view that some income had escaped assessment.

18.1 As regards the argument of Ld. A.R. that the Revenue had not made necessary efforts to serve notice in the ordinary course before taking resort to notice by affixture, we find that notice server has clearly submitted a report that notice could not be served despite various visits. It is not required to note down time and date of visit on every visit. If he submits a report regarding non service of notice, it is a sufficient compliance for making alternative arrangement of serving the notice.

18.2. The other argument of Ld. A.R. that notice was issued before sanction, is also devoid of merit as receipt of sanction by A.O. on 01.06.2001 by post does not mean that A.O. was not conveyed sanction telephonically or otherwise.

19 ITA No.4659/Del/2004 18.3 In view of the above we are of the considered view that notice u/s 148 has been rightly served upon the assessee and, therefore, grounds No.1, 2 and 7 are dismissed.

19. As regards merits of the case, we find that it has been established that NRE account of donor Shri Subhash Sethi was being used for the purpose of making bogus gifts as the alleged donor has himself stated before Enforcement Directorate that he had not made any gift to any person in India out of his said NRE account as he has not remitted any money from abroad into this account. As noted by Ld. CIT(A) at page 10, a letter dated 07.08.1995 written by alleged donor Shri Subhash Sethi denying any gift to any person in India finds mention in the order of Enforcement Directorate dated 27.06.2002. We further find that in the case of brother of assessee, Shri Ved Prakash Chug, similar addition has been made and was confirmed by Ld. CIT(A) vide his order dated 01.08.2003. As per the statement of Ld. A.R., he was not aware of the status of any appeal filed by Shri Ved Prakash Chug before the Tribunal wherein Ld. D.R. categorically stated that the issue had attained finality in that case as no appeal was preferred by Shri Ved Prakash Chug before the Tribunal. The appellant also could not establish as to what was the relationship between donor and appellant, and what was the occasion on which gift was alleged to have been given. In view of above facts and circumstances, we do not find any infirmity in the order of Ld. CIT(A) as regards merits of the case. Therefore, addition sustained by Ld. CIT(A) is confirmed and in view of above, grounds No.3, 4, 5, 7 & 8 are dismissed.

20 ITA No.4659/Del/2004 20. Ground No.9 is with respect to charging of interest u/s 234B and initiation of penalty proceedings u/s 271(1)(c) of the Act which are premature and do not require any adjudication.

21. In view of above, appeal filed by assessee is dismissed.

22. Order pronounced in the open court on 02nd June, 2015.

Sd./- Sd./- ( G. C. GUPTA) (T.S. KAPOOR) VICE PRESIDENT ACCOUNTANT MEMBER nd Date: 02 June, 2015 Sp Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.

By Order

(ITAT, New Delhi).

S.No. Details Date Initials Designation 1 Draft dictated on 26/5 Sr. PS/PS 2 Draft placed before author 27,28, Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS 2/6/15 Sr. PS/PS 6 Kept for pronouncement 2/6 Sr. PS/PS 7 File sent to Bench Clerk 2/6 Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order