Satpal Goyal, Panchkula vs Assessee

Satpal Goyal, Vs. The D.C.I.T., House No.388, Central Circle, Sector 21, Chandigarh. Chandigarh. PAN: ADAPG9749F (Appellant) (Respondent)

Appellant by : Shri Deepak Aggarwal Respondent by : Shri S.K.Mittal, DR

Date of hearing : 04.02.2015 Date of Pronouncement : 10.02.2015

PER BHAVNESH SAINI, J.M. :

All the above appeals by the same assessee are

directed against different orders of learned Commissioner

of Income Tax (Appeals)-I, Ludhiana dated 15.5.2014 for

assessment years 2003-04, 2005-06 and 2006-07.

2. All the appeals are time barred by 17 days. The assessee

has filed application for condonation of delay in all the 2

appeals. It is explained that after receiving the impugned

order, the assessee has sent the same to the Chartered

Accountant Shri Sanjay Goyal who has forwarded the papers

to Shri Deepak Aggarwal in Chandigarh for preparation of the

appeal on 2.8.2014 as Shri Sanjay Goyal, Chartered

Accountant was busy in the year ending closing. The assessee

also suffering from various diseases and was not keeping well

and could not contact Shri Deepak Aggarwal at Chandigarh.

Therefore, due to these reasons, there was nominal delay.

3. Considering the explanation of the assessee and that

nominal delay is there in filing the appeal, we are of the view

that the assessee has sufficient cause for explaining the

delay. The delay in filing of the appeals is, therefore,

condoned.

4. We have heard the learned representatives of both the

parties and perused the material available on record.

All the appeals are decided as under :

ITA No.742/Chd/2014 :

5. In this appeal the assessee challenged non-admission of

additional evidences by the learned CIT (Appeals) under Rule

46A of the Income Tax Rules and addition of Rs.5 lacs (actual

Rs.5,25,000/-) under section 68 of the Act on account of

unexplained gifts. The Assessing Officer made the addition of

Rs.5,25,000/- under section 68 of the Act on account of

unexplained gifts. The Assessing Officer required the

assessee to file confirmation and copy of bank account, copy 3

of income-tax return and other supporting documentary

evidence to establish the genuineness of the gifts received by

the assessee. The assessee in order to comply with the

requirement sought number of adjournments but could not file

necessary evidence called for in respect of the gifts received

from friends and relatives on his marriage anniversary. The

assessee also shown inability to file any documentary

evidence to establish the genuineness of the gifts in the

matter. The assessee was also directed to file necessary

evidences of the donors and to produce them before the

Assessing Officer for cross verification. However, the assessee

expressed his inability to produce the donors before the

Assessing Officer for examination and verification. The

Assessing Officer, therefore, noted that the assessee has not

furnished any details of close relationship with the donors

and that the affidavits are not believable and no Gift Deed

have been executed. The gifts are received in cash, the

source of which is not explained. The capacity of the donor

to give gifts has also not been established. Therefore, the

addition of Rs.5,25,000/- was made on account of

unexplained gifts. The assessee explained before the learned

CIT (Appeals) that the gifts were received from the following

persons :

i) Shri Gurcharan Singh S/o Shri Pritam Singh Rs.1,50,000/-

ii) Shri Gurcharan Singh Rs.1,50,000/- S/o Shri Bhajan Singh

iii) Shri Paramjit Singh Rs.2,25,000/- Rs.5,25,000/- 4

6. The Gifts are received in cash from the above donors who

are agriculturists on the marriage anniversary of the

assessee. The assessee filed affidavits alongwith Jamabandi

as proof of ownership of land and Form 'J' for sale of

agricultural produce. Therefore, the assessee has discharged

his onus of proving the genuineness of the gifts. It is,

however, admitted that the donors are not related to the

assessee. The assessee also moved for admission of the

additional evidences before the learned CIT (Appeals) which

are the copies of confirmations received from the donors.

The assessee, therefore, sought the learned CIT (Appeals) to

admit the confirmations as additional evidences. The

assessee also stated that he can produce the donors for

examination but the donors were never produced. The

learned CIT (Appeals) considering the submissions of the

assessee noted that despite giving number of opportunities to

explain the genuineness of gifts, the assessee could not file

sufficient evidence and even additional evidences shall have to

be considered in the light of Rule 46A of the Income Tax

Rules. The learned CIT (Appeals) noted that since no

exceptional reason has been explained by the assessee,

therefore, additional evidences could not be admitted and

accordingly, dismissed the appeal of the assessee as

genuineness of the gifts have not been established in the

matter.

5

7. We have heard the learned representatives of both the

parties and perused the material available on record. It is

not in dispute that the assessee received cash gifts from all

the above three donors. Therefore, the onus would be upon

the assessee to prove the identity of the donors, their capacity

to advance the gifts and the genuineness of the gifts in the

matter. The assessee has accordingly, explained that the

donors are his friends and the gifts have been received on his

marriage anniversary. The assessee accordingly, filed

affidavits of the donors alongwith Jamabandi as proof of the

ownership of land and form 'J' for sale of agricultural

produce. The copies of the affidavits are filed on record in

which two affidavits of the donors have only thump impression

and one affidavit signed in Punjabi. The affidavits are,

however, in English. It is, therefore, clear that the deponents

of the affidavits would not be knowing language of the

affidavits. Therefore, it is for the assessee to explain under

what circumstances these affidavits have been prepared and

whether deponent admit the contents of the same. The

assessee, however, failed to establish anything in this regard.

The gifts are in cash, therefore, the verification of the gifts

was necessary by producing the donors for examination before

the Assessing Officer. However, no donor was produced for

examination and the genuineness of the gifts was not

established. No Gift Deed was produced to prove the

genuineness of the gifts. Merely because the donors have 6

agricultural land or form 'J' for sale of agricultural produce

would not establish their capacity to advance the gifts to the

assessee. Thus the assessee has failed to establish the

creditworthiness of the donors as well as the genuineness of

the transaction in the matter. The Assessing Officer wanted

to verify the genuineness of the gifts in the matter.

Therefore, the assessee shall have to file confirmations of the

gifts as well as supporting evidences to prove the genuineness

of the gifts in the matter. The assessee shall have to produce

the donors before the Assessing Officer for their examination

in order to find out the truth. However, the assessee has

failed to produce any of the donors before the Assessing

Officer for examination of their income, relationship, love and

affection. In the absence of sufficient evidence or material on

record, the Assessing Officer was justified in treating the gifts

to be non-genuine. Mere filing of the affidavits would not

serve any purpose. The affidavits are like examination-in-

chief and unless and until the deponents of the affidavits are

cross-examined, such affidavits cannot be read in evidence.

No evidence of reason or occasion of gift have been filed on

record. No evidence or material showing any love and

affection have been filed before the authorities below. No

sufficient evidence have been filed on record to prove the

genuineness of the gifts in the matter. It is, therefore, clear

that the gifts in the matter are not genuine gifts and are

arranged affairs of the assessee.

7

8. The Hon'ble Delhi High Court in the case of CIT Vs Anil

Kumar 292 ITR 552 held as under :

" I n t h e c a s e o f g i f t s me r e i d e n t i f i c a t i o n o f t h e d o n o r a n d s h o wi n g t h e mo v e me n t o f t h e g i f t a mo u n t t h r o u g h b a n k i n g channels is not suff icient to prove the genuineness of the gif t. Since the claim of gif t is made by the assessee, the onus lies on him not only to establish the identity of the person mak ing the gif t but also his c ap ac ity to make such a g if t. In assessmen t proceedings f or the assessmen t ye ar 1995-96 the Assessing Off icer observed that the assessee h a d r e c e i v e d t wo g i f t s o f R s . 1 0 l a k h s e a c h f r o m N . R . E . a c c o u n t s o f t wo d o n o r s , n a m e l y V a n d D . T h e A s s e s s i n g Off icer f ound th at the assessee could not d ischarge his o n u s o f p r o v i n g t h e c r e d i t - wo r t h i n e s s o f t h e donors and held that the amount of Rs.20 lakhs wh i c h h a d b e e n d e c l a r e d b y t h e a s s e s s e e a s g i f t , wa s i n f a c t h i s i n c o me and added to his total income under section 68. The a d d i t i o n wa s d e l e t e d b y t h e C o m m i s s i o n e r ( A p p e a l s ) a n d t h i s wa s u p h e l d b y t h e T r i b u n a l . O n a p p e a l t o t h e H i g h C o u r t : H e l d t h a t t h e r e wa s n o t h i n g o n r e c o r d t o s h o w a s t o wh a t wa s t h e f i n a n c i a l c a p a c i t y o f t h e d o n o r s , wh a t wa s the c r e d i t - wo r t h i n e s s of the donors, wh a t kind of r e l a t i o n s h i p t h e d o n o r s h a d wi t h t h e a s s e s s e e , wh a t we r e t h e s o u r c e s o f f u n d s g i f t e d t o t h e a s s e s s e e a n d wh e t h e r t h e y h a d t h e c a p a c i t y o f g i v i n g l a r g e a m o u n t s o f g if t t o t h e a s s e s s e e . F u r t h e r , t h e a s s e s s e e wa s a s k e d t o a p p e a r i n person bef ore th e Assessing Off icer, but never appeared. T h e a d d i t i o n o f R s . 2 0 l a k h s wa s j u s t i f i e d .

9. The Hon'ble Supreme Court in the case of CIT Vs P.

Mohankala 291 ITR 278 held as under :

8

"T he assessee received f oreign gif ts f rom one co mmon d o n o r . T h e p a y m e n t s we r e m a d e t o t h e m b y i n s t r u me n t s issued by f oreign banks and credited to the respective account of the assessees by negotiation through a bank in I n d i a . M o s t o f t h e c h e q u e s s e n t f r o m a b o a r d we r e d r a wn on the Citibank, N. A. Singapore. The evidence indicated th at the donor was to receive suitable compensation f ro m the assessees. On this material the Assessing Officer held that the g if ts though apparent we r e not real and a c c o r d i n g l y t r e a t e d a l l t h o s e a mo u n t s wh i c h we r e c r e d i t e d i n t h e a c c o u n t b o o k s o f t h e a s s e s s e e s a s t h e i r i n c o me applying section 68 of the I n c o me - t a x Act, 1961. The assessees did not contend th at even if their explan ation w a s n o t s a t i s f a c t o r y t h e a mo u n t s we r e n o t o f t h e n a t u r e o f i n c o me . The Commissioner (Appeals) conf irmed the a s s e s s me n t . O n f u r t h e r a p p e a l , t h e r e wa s a d i f f e r e n c e o f opinion b e t we e n the t wo Members of the Appellate T r i b u n a l a n d t h e m a t e r wa s r e f e r r e d t o t h e V i c e P r e s i d e n t wh o c o n c u r r e d w i t h t h e f i n d i n g s a n d c o n c l u s i o n o f t h e Assessing Off icer and the Commissioner (Appeals). On appeal the High Court re-appreciated the evidence and s u b s t i t u t e d i t s o wn f i n d i n g s a n d c a me t o t h e c o n c l u s i o n t h a t t h e r e a s o n s a s s i g n e d b y t h e T r i b u n a l we r e i n t h e realm of surmises, conjecture and suspicion. On appeal to t h e S u p r e me C o u r t : H e l d , r e v e r s i n g t h e d e c i s i o n o f H i g h Court, that f indings of the Assessing Of f icer, the C o m m i s s i o n e r ( A p p e a l s ) a n d t h e T r i b u n a l we r e b a s e d o n the material on record and not on any conjectures and s u r m i s e s . T h a t t h e mo n e y c a me b y wa y o f b a n k c h e q u e s a n d wa s p a i d t h r o u g h t h e p r o c e s s o f b a n k i n g t r a n s a c t i o n was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent f i n d i n g s o f f ac t . "

9 10. Hon'ble Punjab and Haryana High Court in the case of Yash Pal Goel Vs CIT 310 ITR 75 held as under :

"Held, dismissing the appeal that the f inancial position of M. suggested that he neither had the capacity to make the g i f t n o r t h e s o u r c e f r o m wh e r e t h e g i f t wa s m a d e . N o r e a s o n wh a t s o e v e r h a d b e e n a s s i g n e d f o r g i f t i n g s u c h a h u g e a mo u n t b y M t o t h e a s s e s s e e . M n e v e r v i s i t e d t h e h o me o f t h e a s s e s s e e a n d h e n c e t h e r e wa s n o l o v e a n d af f e c t i o n . I t wa s n o t h i n g b u t a s u b t e r f u g e t o a v o i d i n c o me - t a x . T h e t r a n s a c t i o n s we r e n o t g e n u i n e o n e s " .

11. The Hon'ble Punjab & Haryana High Court in the case

Smt.Usha Rani Vs. CIT, 301 ITR 121 held as under :

" H e l d , d i s m i s s i n g t h e a p p e a l s , t h a t i t wa s f o u n d f r o m a p e r u s a l o f t h e o r d e r s o n r e c o r d t h a t t h e r e a s o n s we r e recorded by the compe tent authority for initiation of proceedings under section 148 of the Income-tax Act, 1961. The sufficiency thereof could not be gone into by the court. It could not be successf ully argued that the reasons did not have any nexus wi t h the material a v a i l a b l e wi t h t h e A s s e s s i n g O f f i c e r . The authorities belo w h ad d isbelieved receipt of gif ts. T h e r e wa s n o t h i n g o n r e c o r d t o s h o w t h e r e l a t i o n s h i p b e t we e n t h e d o n o r a n d the donee, cap acity of the donor to make g if ts and the occasion theref ore. The assessee had f ailed to discharge the onus to prove the g i f ts . The r e a s s e s s me n t p r o c e e d i n g s we r e v a l i d . "

12. Considering the above discussions, it is clear that the

assessee failed to prove any relation with the donors and their

creditworthiness. No sufficient evidence or material is filed

on record to prove the genuineness of the gifts in the matter. 10

The assessee later on filed confirmation before the learned CIT

(Appeals) for admission of additional evidence. However, the

things remain same that two of the confirmations have only

thumb impression of the donors and one confirmation is

having signature in Punjabi. Therefore, the findings of the

Assessing Officer have not been met by the assessee at all.

Further no reason has been explained as to why these could

not be filed before the Assessing Officer at the stage of

assessment proceedings rather at the assessment proceedings

the assessee has expressed inability to produce any further

evidence or bank statement of the donors for examination

before the Assessing Officer. Therefore, condition of Rule 46A

of Income Tax Rules have not been satisfied by the assessee in

the matter for admission of additional evidence. We may also

refer here the judgments of Hon'ble Calcutta High Court in the

cases Bharati Private Limited, 111 ITR 951 and United

Commercial & Industrial Company Pvt. Ltd., 187 ITR 596, in

which the Hon'ble High Court held that for proving the

ingredients under section 68 of the Act, the assessee shall

have to prove the identity of the creditors, their capacity and

genuineness of the transaction in the matter. Mere filing of

the confirmation is not enough to prove the genuineness of

the credits in the matter. In view of the above, we are of the

view that the learned CIT (Appeals) was justified in refusing to

admit the additional evidence because mere confirmation

could not establish anything in favour of the assessee.

Further no reason has been explained as to why the

confirmation of the donors were not filed before the Assessing 11

Officer. The Hon'ble Supreme Court in the case of Durga

Prasad More 82 ITR 540 and in the case of Sumati Dayal 214

ITR 801 held that "Courts of Tribunals have to judge the

evidence bef ore them by applying the test of human

probabilities". If the said test is applied in this matter, it is

clearly established that the assessee has failed to prove

genuine gifts in the matter. We accordingly, do not find any

merit in the appeal of the assessee. The same is accordingly,

dismissed.

ITA No.743/Chd/2014 :

13. In this appeal the assessee challenged the order of

learned CIT (Appeals) in refusing to admit the additional

evidence under Rule 46A of the Act and confirming addition

for Rs.5,80,000/- on account of sundry creditors under

section 68 of the Act as well as addition of Rs.2,50,000/- on

account of unexplained credits under section 68 of the Act.

The Assessing Officer noted that the assessee has shown

sundry creditors of Rs.7,97,600/- in the books of account.

The assessee was required to explain the same. The assessee

sought adjournment. The Assessing Officer asked the

assessee to file confirmation of the credit balance of the

aforesaid amount. The assessee later on filed confirmation

from Mukat Brick Klin, Khojenajra, sundry creditors of

Rs.1,17,500/- and M/s Sandheoli Bricks Inds., sundry

creditors of Rs.1 lacs. However, with respect to the credit

balance of Rs.5,80,000/- from the remaining creditors, the

assessee could not file any confirmation or documentary 12

evidence to support the same. The details of the same are as

under :

i) Shri Ajay Bansal Rs.1,71,500/- ii) Mukat Bricks Klin Dhodan Rs.1,93,700/- iii) Yaseen Rs. 23,300/- iv) Hari Iron & Cement Store Rs.1,67,600/- Rs.5,80,100/-

14. The Assessing Officer brought on record that the

assessee did not file confirmation or documentary evidence

and also the assessee could not provide address, PAN,

telephone Number, sales tax number, etc. in respect of these

creditors. On verification of the books of account produced

by the assessee, it was seen that there are no vouchers

relating to purchase of construction material debited to Profit

& Loss Account. This fact was brought to the notice of the

assessee but the assessee failed to produce any primary

vouchers or any supporting documents. No confirmation from

these parties have also been filed. The Assessing Officer,

therefore, noted that on one hand, the assessee had debited

bogus purchases of construction material in the Profit & Loss

Account and on the other hand, has created bogus sundry

creditors of Rs.5,80,100/-. Therefore, the addition of

Rs.5,80,000 was accordingly, made. These parties were also

not produced before the Assessing Officer for examination.

It was further found that the assessee has also not filed

confirmation with regard to unsecured loans taken from Shri

Guljari Lal of Rs.2,50,000/-. The assessee expressed his

inability to file any documentary evidence to prove the

genuineness of the loan of Rs.2,50,000/-. Therefore, the 13

same was considered as unexplained credit and addition of

Rs.2,50,000/- was also made.

15. The assessee challenged both the additions before the

learned CIT (Appeals). It was submitted that due to paucity of

time confirmation cold not be filed. The confirmation now

filed before the learned CIT (Appeals) for admission of

additional evidence. It was submitted that an amount of

Rs.2,50,000/- was received from Shri Guljari Lal of

Panchkula through account payee cheque. Therefore, in the

presence of these particulars, the assessee has discharged his

onus to prove the genuineness of the credit in the matter.

The assessee, therefore, submitted that the assessee has been

able to prove the genuineness of the credit in the matter.

Therefore, the additional evidences may be admitted and

addition may be deleted. The learned CIT (Appeals), however,

found that no exceptional circumstances have been proved.

Therefore, the additional evidence cannot be admitted and

accordingly, rejected the appeal of the assessee.

16. We have heard the learned representatives of both the

parties and perused the material available on record. The

Assessing Officer has specifically found that the assessee has

booked bogus purchase of construction material in the Profit

& Loss Account because no purchase vouchers for a sum of

Rs.5,80,100/- have been produced. Therefore, there is no

question of entering the genuine credit in the books of

account. This finding of fact has not been rebutted by the

assessee at all. The assessee in the Paper Book has filed 14

application for admission of additional evidence before the

learned CIT (Appeals) in which the assessee sought admission

of the confirmation and documentary evidences before the

learned CIT (Appeals). However, the same would show that in

the case Shri Ajay Bansal photocopy of account and photocopy

of bill have been filed. In the case Mukat Bricks Klin

Dhodan same copy of the account and copy of the bill and

copy of confirmation of the account is filed. The same is the

position in respect of Yaseen and Hari Iron & Cement Store.

It is, therefore, clear that in none of the cases the assessee

has filed any independent confirmation. All the outstanding

balance appearing in the books of account of the assessee as

stated to have been from the creditors. Mere confirmation of

the account or copy of the account would not prove the

genuineness of the credit in the matter. As noted above,

since the purchase vouchers qua these parties have not been

produced before the Assessing Officer at assessment stage,

would prove that the assessee booked bogus purchases in the

books of account as well as noted bogus credit entries in the

books of account. We have already referred to the judgments

of Hon'ble Calcutta High Court in the cases of Bharati Private

Limited and United Commercial & Industrial Company Pvt.

Ltd. (supra) for the proposition that mere filing of

confirmation is not enough to prove the genuine credit, would

clearly prove that the assessee failed to prove the genuine

credit in the matter. The assessee failed to prove the

identity of the creditors, their capacity and genuineness of the

transaction in the matter. Whatsoever additional evidences 15

were produced before the learned CIT (Appeals) are not

sufficient to discharge the onus upon the assessee to prove

the genuine credit in the matter. Further the assessee failed

to explain why the same were not filed before the Assessing

Officer. Therefore, the learned CIT (Appeals) was justified in

refusing to admit this additional evidence. In the case Shri

Guljari Lal for loan of Rs.2,50,000/- even before us no

confirmation or any evidence have been filed to prove the

genuineness of the credit. Therefore, the learned CIT

(Appeals) was justified in confirming both the additions.

17. In the result, the appeal of the assessee fails and is

dismissed.

ITA No.744/Chd/2014 :

18. The assessee similarly challenged the order of the

learned CIT (Appeals) in refusing to admit the additional

evidence under Rule 46A and addition of Rs.1 lac on account

of credit in the name of Shri K.C.Bansal. The Assessing

Officer noted that credit of Rs.1 lac on account of unsecured

loan appeared in the books of account of the assessee which

pertains in the name of S/Shri K.C.Bansal and Vinod Jindal.

The assessee could not file sufficient evidence before the

Assessing Officer. Therefore, the addition was made on

account of unexplained credit.

19. The learned CIT (Appeals) similarly refused to admit the

additional evidence and dismissed the appeal of the assessee. 16

20. On consideration of the rival submissions and material

on record, we do not find any merit in this ground of appeal of

the assessee. The assessee sought admission of confirmation

issued by Shri K.C.Bansal (PB-11) before the learned CIT

(Appeals). However, it was not explained why it was not filed

before the Assessing Officer. In the absence of any

exceptional reason, the learned CIT (Appeals) was justified in

refusing to admit such additional evidence. Further copy of

the bank account of Shri K.C.Bansal is filed at page 14 of the

Paper Book. This, however, discloses that when a cheque of

Rs.1 lacs dated 24.3.2006 was given to the assessee, prior to

it there was bank balance of Rs.668.35 and Shri K.C.Bansal

made deposit of Rs.1 lac in cash on same day in his bank

account on 24.3.2006. for giving loan to the assessee. The

I.T.A.T. Agra Bench in the case Suman Gupta, 138 ITD 153

confirmed the addition on the same facts on depositing cash

by the creditor in his bank account for giving loan to the

assessee and the order has been confirmed by the Hon'ble

Allahabad High Court in the case Smt.Suman Gupta Vs. CIT in

ITA No.680 of 2012 dated 7.8.2012 and same view is taken by

the Hon'ble Gujarat High Court in the case of Blessing

Construction Vs. ITO, 32 Taxmann.com 366. Considering the

above, we are of the view that the learned CIT (Appeals) was

justified in refusing to admit the additional evidence at

appellate stage. Mere filing of confirmation is thus not

enough to prove the identity of the creditors, his

creditworthiness and genuineness of the transaction. Merely

because the loan is given through cheque is no sacrosanct to 17

prove non-genuine transaction to be genuine transaction. In

this view of the matter, the appeal of the assessee fails and is

dismissed.

21. In the result, all the three appeals of the assessee are

dismissed.

Order pronounced in the open court on this 10th day of

February, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 10 t h Februray, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh