RAM LAL AGRAWAL Vs. COMMISSIONER OF INCOME TAX
LAWS(ALL)-2005-7-32
HIGH COURT OF ALLAHABAD
Decided on July 29,2005

RAM LAL AGRAWAL Appellant
VERSUS
COMMISSIONER OF INCOME-TAX Respondents





Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. S.K.JAIN [LAWS(ALL)-2012-7-295] [REFERRED TO]
PAVAN PRAKASH VS. COMMISSIONER OF INCOME-TAX (CENTRAL) [LAWS(PAT)-2016-1-138] [REFERRED TO]


JUDGEMENT

- (1.)At the instance of the assessee, the Income-tax Appellate Tribunal, Delhi, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion of this court: Whether on the facts and in the circumstances of the case, and in law the Tribunal was correct in holding that the gifts received by the applicant were not genuine and further that they fall under Section 68 of the Income-tax Act and were thus correctly added to the income of the assessee ?
(2.)The present reference relates to the assessment years 1987-88 and 1988-89.
(3.)The brief facts of the case as follows : The Assessing Officer issued notices under Section 148 and during the course of assessment proceedings he noted that the assessee had declared a gift of Rs. 20,000 during the assessment year 1987-88 which was received from Shri Prem Narayan Singhal. The Assessing Officer further noted that a similar gift of Rs. 20,000 was received in the assessment year 1988-89 from Shri Rattan Lal. Both the donors were produced and their statements were recorded. The donors confirmed that they had made the said gifts of Rs. 20,000 each. Shri Prem Narayan Singhal stated that he had a capital of about Rs. 46,000 during the year 1986-87 and that he was an income-tax payer and that the gift had been shown in the income-tax return filed by him. Similarly Shri Rattan Lal stated that he had a capital of about Rs. 50,000 in the year 1987 and that he had made the gift out of the said capital. On the basis of the said statements, the Assessing Officer asked the assessee to explain as to why the gifts of Rs. 20,000 each may not be added to his income. The Assessing Officer further mentioned that the donors were having no direct relation with the assessee and that there was no proper occasion for making the gifts. He also mentioned that the donors had no capacity to make the said gifts. The assessee filed replies and the thrust of the said replies was that the documents in the form of gift deeds had been executed wherein the factum of gift had been affirmed, the gifts were made through drafts, the donors had also been produced in the course of assessment proceedings and their statements on oath were recorded wherein they had categorically stated and accepted the factum of gift of Rs. 20,000 each. The assessee further stated that when the donors had admitted and confirmed the factum of gift and the source thereof was also out of their capital, there remained nothing else to be proved to support the genuineness of the gifts. He further stated that it was not necessary that the donors and the donee should have any direct relation and that the genuineness of the gifts could not be doubted simply on the ground that the donor and the donee had no direct relation. The assessee further stated that for making a gift no reason or occasion was required. He also stated that the absence of bank account or books of account of the donor could not be made a ground for rejection of the apparent state of affairs and that the law did not cast a liability on the person to maintain books of account. He also stated that there could not be a better proof than the statement of assets and liability disclosed in the course of assessment proceedings by the ' donors. The assessee also relied on the decisions reported in CIT v. Shamshuddin Manzoor Haque [1988 ]172 ITR696 (All ), [1988 ]36 TAXMAN128 (All ) and CIT v. Mrs. Sunita Vachani [1990 ]184 ITR121 (Delhi ). The Assessing Officer considered the explanation offered by the assessee and made an addition of Rs. 20,000 in each of the assessment years by observing as under : The assessee's explanation is not satisfactory. The assessee's claim that Shri Prem Narain has accepted that he has made gift out of his capital and there is nothing to be proved by the assessee to support the genuineness of the gift. Mere admission by Shri Prem Narain Singhal is not sufficient. This is a fact which is apparent from the cross-examination that he is having no means to make the gift. Again, the claim of the assessee that for making the gift, it is not necessary that the donor and donee should have any direct relation. The case law cited, i.e., Lall Chand Kalra v. CIT clearly shows that the gift by 3rd person without occasions is not a valid gift in the eye of law and particularly when the assessee is not in the capacity of making the gift.


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