1997-VIL-106-ITAT-PAT
Equivalent Citation: ITD 063, 087, TTJ 059, 655,
Income Tax Appellate Tribunal PATNA
Date: 19.06.1997
PRADIP KUMAR LOYALKA.
Vs
INCOME-TAX OFFICER
BENCH
Member(s) : T. V. RAJAGOPALA RAO., V. K. SINHA., ABDUL RAZACK.
JUDGMENT
Per Shri Abdul Razack, Judicial Member -- The assessee has three grievances in this appeal which are as under:--
1. Confirmation of a sum of Rs.87,000 as income from undisclosed sources under section 68 of the Act.
2. Retention of a sum of Rs.15,000 as against Rs.20,800 made by the Assessing Officer (A.O.) on account of low withdrawal for household expenses.
3. Levy of interest under section 217 of the Act.
2. As regards the third grievance it was brought to the notice of the assessee's counsel that there is no decision whatsoever by the Appellate Commissioner (A/C) and, therefore, this ground does not arise from out of the impugned order of the A/C. However, after some discussion it was decided that instead of sending the matter back to the A/C for rendering a decision on the ground taken in the first appeal regarding levy of interest under section 217, we direct the Assessing Officer to give a reasonable opportunity of being heard to the assessee before charging interest under section 217. The third ground is disposed off accordingly.
3. The facts in relation to the first grievance are as under:--
The assessee maintains personal accounts and a sum of Rs.87,000 was found credited in such account, the explanation of which was that the assessee received gifts from the below given persons:--
1. Smt. Sumitra Devi Rs. 10,000
2. Sri Kali Pd. Khowalla Rs. 10,000
3. Puranmal Agarwalla Rs. 10,000
4. Smt. Chhoti Devi Rs. 21,000
5. Raj Kumar Agarwalla Rs. 20,000
6. Shri Suresh Kumar Bansal Rs. 11,000
7. Shri Manoj Biani Rs. 15,000
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Rs. 87000
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In order to verify the explanation furnished by the assessee, the Assessing Officer examined on oath three persons, viz., Shri Kali Prasad Khowalla, Shri Puranmal Agarwalla and Shri Raj Kumar Agarwalla. In their respective oath statements recorded by the Assessing Officer they all confirmed having made gifts from out of their bank accounts The same has been elaborately discussed by the Assessing Officer in his assessment order. Smt. Sumitra Devi, one of the donors did not appear, but a written reply was filed by her stating that gift was made by her to the assessee on 15-5-1987 and filed a copy of declaration of gift and a copy of her capital account for the assessment year 1988-89. The summons issued by the Assessing Officer to Shri Suresh Kumar Bansal were returned unserved with the postal remark "not found". The assessee submitted that from this person also a gift was received but on account of lapse of time the present address of the said donor was not given. Smt. Chhoti Devi, another donor could not appear before the Assessing Officer as she was on pilgrimage but nonetheless a declaration of gift made by her confirming the factum of the gift of Rs.21,000 to the assessee on 17-7-1987 was filed. The said donor is also an income-tax assessee with the ITO, Ward-1, Dhanbad under GIR No. C-856. This lady also filed her gift-tax return and the gift-tax assessment was also completed. The assessee also filed a gift-tax assessment order, demand notice and challan of payment of gift-tax by Smt. Chhoti Devi in the paper book placed at pages 14 to 18. Though Shri Manoj Biyani, one of the donor did not appear before the Assessing Officer in reply to summons under section 131 of the Act; yet reply was filed from his authorised representative Shri B.P. Jhunjhunwala confirming the gift made to the assessee of Rs.15,000 on 22-3-1988 enclosing a copy of capital A/C of the donor for the assessment years 1987-88 and 1988-89. The said authorised representative also mentioned that Shri Manoj Biyani was assessed to income-tax. The assessee's counsel who appeared in this appeal has filed a paper book containing 35 pages comprising of gift declarations made by the donors with relevant supporting documents. The assessee's counsel has also relied upon the decisions of various Benches of this Tribunal in the case of different assessees wherein similar facts were prevailing. The details of those cases are as under:--
1. Smt. Bhagwati Devi Goidani (Mohta) v. ITO [IT Appeal No. 2639(Cal.) 1989]
2. ITO v. Kamlesh Kumar Sharma [IT Appeal No. 2747 (Cal.) of 1990 dated 30-10-1992]
3. Smt. Namita Saraf v. Asstt. CIT [IT Appeal No. 2593 (Cal.) of 1989 dated 17-3-1993]
4. ITO v. Bijoy Kr. Loyalka [IT Appeal No. 936 (Cal.) of 1991 dated 23-12-1992]
The assessee counsel has also filed copies of the orders passed by various Benches of this Tribunal in the above mentioned cases to support the case. The Assessing Officer did not believe the factum of gift by various donors in favour of the assessee and came to conclusion that there were no gifts at all and it was the assessee's own income/monies which were brought back in the account books in the guise of gifts and it, therefore, represented concealed income of the assessee. The Assessing Officer, therefore, added the entire sum of Rs.87,000 which is the amount received as gift by the assessee from various donors and credited to his capital accounts in his personal account books. When the matter rested with the first appellate authority viz., A/C he agreed with the reasoning of the Assessing Officer and upheld the entire addition so made. This appeal, therefore, assails such a conclusion of the A/C.
4. Before us, the assessee's counsel submitted that the A/C has not properly appreciated the facts of the case and the law which has developed in this regard and unjustifiably confirmed the additions made by the Assessing Officer. According to him the amounts credited to the capital account were gift received by the assessee from various persons and who have confirmed the fact of gift and copies of gift declarations were also made which forms part of the record. Wherever possible the assessee could prevail upon the donors to appear before the Assessing Officer and confirm the factum of gift and three of the donors, in fact, appeared before the Assessing Officer and confirmed the gift made to the assessee and also explained their sources for making such gifts. It was only Shri Suresh Kumar Bansal who could neither appear before the Assessing Officer nor could file any confirmation but the rest of the donors viz., Smt. Sumitra Devi, Shri Manoj Biyani and Chhoti Devi, though did not appear before the Assessing officer nonetheless confirmed the factum of gift through letters as well as by other related evidence. Thus, the assessee did whatever which was within his capacity to explain and convince the Assessing Officer that the sum of Rs.87,000 in aggregate credited in his capital account in his personal books was not his concealed income from any undisclosed sources but was gifts received from various persons. The assessee's counsel supporting the assessee's case further submitted that one of the donors, Smt. Chhoti Devi had also filed gift-tax return and was assessed accordingly and gift-tax paid. Arguing further the assessee's counsel submitted that apart from rejecting the explanation given by the donors no other material or evidence has been brought or placed on record by the Assessing Officer to hold that no gifts were made or that the sum of Rs.87,000 represented concealed income of the assessee from undisclosed sources to be assessed as per the provisions of section 68 of the Act. The assessee's counsel as narrated by us above relied upon various decisions of different Benches of this Tribunal on facts identical to the facts in the instant case. The assessee's counsel drew our attention to all those documents which have been placed in the paper book to convince us that the view taken by both the lower authorities was erroneous.
5. The departmental representative appearing for the revenue, Shri Nikhil Choudhury fully supported the reasons given by the A/C for confirming the addition. According to him the assessee miserably failed to discharge the onus which lay on it as per section 68 of the Act and, therefore, the Assessing Officer was left with no other option but to add the sum of Rs.87,000 being the amount credited to the assessee's capital account in his personal books and, therefore, no fault can be found with the A/C in confirming the addition so made by the Assessing Officer.
6. We have given our thoughtful consideration to the entire case with reference to the various documents placed in the paper book and our attention to which was drawn. We have also gone through the decisions rendered by different Benches of this Tribunal having more or less similar facts, copies of which have been placed by the assessee forming part of the paper book. In our view there was no case for the Assessing Officer to make addition under section 68 of the Act. The Assessing Officer has merely disbelieved the explanation/statement given by the various donors (except Shri Suresh Kumar Bansal) and has converted good proof into no proof. At this stage we are reminded of the felicitous observations made by Hon'ble Justice Hidayatullah of the Supreme Court in the celebrated case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC), 120 that the Income-tax Department cannot by merely rejecting unreasonably a good explanation, convert good "proof into no proof." Apart from disbelieving the explanation tendered by the donors, the Assessing Officer has not collected or placed on record an iota of evidence which could go to suggest that the assessee gave monies first to the donors and in turn they made gift of those amounts to the assessee. In the absence of any such evidence on record, we are unable to agree with the A/C that the Assessing Officer was right in making addition under section 68 of the Act. By simply saying in this manner, the assessee cannot be subjected to tax in respect of the gift amounts. Something more is required to ask the assessee to pay tax on the sum of Rs.87,000 and that something more is missing in this case. The Assessing officer has in our view miserably failed to establish that there has been no gift by those donors to the assessee particularly when copies of gift declarations have been executed and filed and formed part of the record accompanied by supporting documents and evidence, which cannot loose their weightage or credence merely on the ground that such an explanation is unbelievable. This is not the requirement of section 68 of the Act. We fully agree with the assessee's counsel that once a gift is made and in the case of movable property the possession of the subject-matter of gift, viz., cash in the instant case is handed over and delivered to the donor upon acceptance of the gift then the gift is complete and it is not open to the revenue to come forward and say that there has been no such gift particularly in the absence of any evidence or material to the contrary. Calcutta 'A' Bench of this Tribunal in the case of Smt. Bhagwati Devi Goidani (Mohta) to which one of us has been a party (Sri Abdul Razack, J.M.) have held that as per section 122 of the Transfer of Property Act, 1951 a gift is complete in respect of existing movable and immovable property when there is transfer of such property by person called donor and acceptance of such gifts of such property by a person called donor. If these essential conditions are prevalent and satisfied then the gift is complete and it is not open to challenge until the same is proved to the contrary with cogent and strong evidence. We reiterate that the Assessing Officer has not placed or brought on record through his enquiry any cogent or strong evidence to dislodge the factum of gift by various persons in favour of the assessee. The orders passed by other Benches of this Tribunal', copies of which have been placed by the assessee's counsel in the paper book strongly support the case of the assessee that in the absence of cogent, reliable and legal evidence by the Assessing Officer, the addition of Rs.87,000 is wholly unwarranted and cannot be sustained as per law. From the foregoing discussions we are firmly of the opinion that the A/C committed an error in confirming the addition of Rs.87,000 made by the Assessing Officer as per section 68 of the Act. We direct deletion of the same.
7. We have also heard both sides in respect of the sum of Rs.15,000 sustained by the A/C on account of low household withdrawals. In our view the A/C has been quite fair and reasonable in giving relief of Rs.5,800 to the assessee and in sustaining an addition to the extent of Rs.15,000 as against Rs.20,800 made by the Assessing Officer. No other point was urged or argued.
8. In the result, the appeal is partly allowed.
V.K. Sinha, Accountant Member--I have gone through very carefully the order proposed by my ld. brother but with respect I am unable to agree to the conclusion partly in respect of deletion of an addition of Rs.87,000 as "Income from undisclosed sources" under section 68 of the Act. I am, therefore, proceeding to write this separate order.
2. At the outset, it may be mentioned that I agree with the conclusions of my ld. brother regarding the second and third grievances i.e., retention of a sum of Rs.15,000 by the CIT (Appeals) on account of low withdrawals for household expenses and levy of interest under section 217 of the Act. Consequently, no separate order is being written by me in regard to these two matters.
3. Coming back to the addition of Rs.87,000, the first significant factor to be noticed is that the assessee had credited seven sums, totalling Rs.87,000, in his capital account. The source of the credits was explained to be gifts from the respective persons but the explanation was not accepted by the Assessing Officer. He accordingly made an addition of Rs.87,000 as concealed income of the assessee from other sources. He did not specifically mention section 68 of the Act. The addition was confirmed by the CIT(Appeals) in a brief order and he also did not mention section 68 of the Act. However, it is quite evident from a reading of the order that the addition was made under section 68 of the Act. In the course of argument, before us, also, the understanding was the same and, in fact, the ld. D.R. relied on the decision of the Patna High Court in Sarogi Credit Corpn. v. CIT [1976] 103 ITR 344 which is concerned with burden of proof in the case of cash credits added under section 68 of the Act. My ld. brother has rightly observed, in para I of his order, that the first grievance was "confirmation of a sum of Rs.87,000 as "Income from undisclosed sources" under section 68 of the Act."
4. Though the provisions of section 68 of the Act are well known, it will still be useful to reproduce them as under, since it is with respect to these provisions that the action of the Assessing Officer has to be examined:
"68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."
5. My ld. brother has referred to 5 decisions of the Tribunal, relied upon by the ld. counsel for the assessee and, in para 6 of his order, it is stated that the decisions had more or less similar facts, though the contents have not been discussion except briefly in the case of Smt. Bhagwati Devi Goidani (Mohta). Copies of these decisions are available in the paper book and it will be useful to note their contents.
6. In the case of Smt. Bhagwati Devi Goidani (Mohta) there was a controversy whether a sum of Rs. 1. lakh, received by the assessee through banking channels from a resident of Nepal and stated to be a gift, was to be considered as "Income from undisclosed sources". The sum of Rs. 1 lakh was found credited in the assessee's account in the Union Bank of India but was not credited in the books of account maintained by the assessee. The Tribunal held in para 7 of its order that the provisions of section 68 were not attracted. This single factor makes the case distinguishable from the present case. Further, the donor was assessed to income-tax in Nepal and a sworn declaration by the donor was filed before the Assessing Officer. It was held by the Assessing Officer that the gift was a collusive transaction -- a device to avoid tax. Reliance was placed on the decision of the Supreme Court in the case of McDowell & Co. Ltd v. CTO [1985] 154 ITR 148/22 Taxman 11. The facts are, therefore, distinguishable from the present case in this regard also. There the question dealt with the validity or otherwise of the gift and the question of discharge of the assessee's onus under section 68 was not even discussed, since section 68 was held to be not applicable. The decision is, therefore, distinguishable.
7. In the case of Kamlesh Kumar Sharma, the Assessee was an individual and received gifts of Rs.20,000 each from three donors, totalling to Rs.60,000. The Assessing Officer summoned the donors under section 131 and recorded their depositions and came to the conclusion that Shri Shiv Kumar Sharma did not have the capacity to make the gift of Rs.20,000 to the assessee. The Tribunal noticed that the assessee was having income of Rs.32,000 during the year without taking into account the addition on account of "Income from undisclosed sources". Shri Shiv Kumar Sharma was assessed on a total income of Rs.33,360 consisting of salary Rs.25,035, interest Rs.5,745 and share of profit Rs.2,380. It was observed that even if the amount was not explained inspite of affidavit given by Shri Shiv Kumar Sharma, it was to be considered in his hands the sense and in that view, it will be even be more beneficial to the revenue. This factor weighed heavily with the Tribunal in deleting the addition in the hands of the assessee. No such similar case has been made out in the matter before us and, therefore, the facts are distinguishable. Further here also, the Tribunal was not considering an addition under section 68 of the Act, and, in fact, there is no mention of the section in the order at all. The case is, therefore, again distinguishable.
8. In the case of Smt. Namita Saral there was an addition of Rs. 4 lakhs claimed to be gift received by the assessee from her mother-in-law, which was confirmed by the CIT (Appeals). The assessee had purchased a flat for Rs.6,28,345 and when explaining the sources of investment, had stated that a sum of Rs. 4 lakhs was received as a gift from her mother-in-law. Here again, there was no credit of Rs. 4 lakhs in the assessee's books of account and, therefore, section 68 did not come into play at all. The case is, therefore, distinguishable. The Tribunal further went into the facts of the case and found that there was a deed of gift executed by the assessee's mother-in-law where the donor had made the gift and the donee had accepted it. The source of Rs. 4 lakhs was adequately explained as sums paid by M/s. Yak & Yeti Hotel Limited, to the father-in-law of the assessee towards dividend and management commission. A finding of fact was given that the claim of gift of Rs. 4 lakhs from the assessee's mother-in-law could not be added. These are findings of fact in the facts and circumstances of the case and cannot be made automatically applicable to the facts of another case. We will see later that the facts of the present case are quite different. Thus the case is also fully distinguishable.
9. The next case is that of Bijoy Kumar Loyalka. In this case, it was found that the assessee had deposited Rs. 21,000 in his bank account on 19-8-1987 and the source was stated to be a gift from one Shri Ramesh Chandak. A declaration of gift from Shri Chandak was filed. On a request of the assessee, summons under section 131 were served on Shri Chandak but he failed to comply. The Assessing Officer, therefore treated the gift as income of the assessee but the addition was deleted in first appeal.
10. Here again, since the credit was not in assessee's books but in the bank account, the addition would not fall to be made under section 68 of the Act and therefore, the case is distinguishable. However, the Tribunal observed that it was not disputed that the identity of the party had been established, notice under section 131 was served and the Income Tax File number was available. Apart from issuing 131 notice the Assessing Officer failed to pursue the matter. The Tribunal, therefore, confirmed the decision of the first appellate authority in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80F. This decision is regarding addition under section 68 of the Act. However, the facts in the present case are different. The Assessing Officer did pursue the matter apart from issuing 131 notice to the assessee in most cases as we shall see. The case is, therefore, distinguishable on this count also.
11. The salient features of the facts of the present case will now be noted. The details are available in the assessment order. There were seven credits in the assessee's capital account, totalling Rs.87,000 as per list given in para 3 of my ld. brother's proposed order. 3 of the creditors were examined by the Assessing Officer and their statements were recorded. We will first refer to the statements.
12. Shri Kali Prasad Khowala stated that he made a gift of Rs.10,000 by cheque and produced his bank pass book in support thereof. It was found that Rs.20,000 was deposited in cash in bank on 24-4-1987 and on the next date i.e. 25-4-1987 two cheques of Rs.10,000 each were issued to the assessee and to Shri Deepak Kumar Loyalka respectively The source of deposit of Rs.20,000 was stated to be cash lying in the house. He was assessed to income-tax at Calcutta, although he was residing at Deoghar. His capital account for the assessment year 1987-88 showed that he had income of Rs.18,000 from salary and Rs.9,600 from interest. Similar capital account for assessment year 1988-89 showed that he had an income of Rs.18,300 from commission and interest on loan. The Assessing Officer found it strange that a person, having meagre income, residing at Deoghar was assessed to tax at Calcutta and opened a bank account at Dhanbad. There was no transaction in bank account at Dhanbad after 24-7-1987. The Assessing Officer did not accept that his entire earnings would be donated in this manner without keeping anything for his future requirement.
13. It is further recorded that the assessee is sister's son of the wife of Shri Khowala. In other words, the creditor is a close relative.
14. Shri Puran Mal Agarwal is the son of Shri Kali Prasad Khowala and, therefore, also a close relative. In a statement on oath, he stated that he made a gift of Rs.10,000 to the assessee by cheque on 12-5-1987. His bank account at Dhanbad showed that Rs.20,000 was deposited in cash on 11-5-1987 and two cheques were issued of Rs.10,000 each on the next date i.e., 12-5-1987 in the names of the assessee and Shri Atul Kumar Loyalka, his brother, respectively. Regarding the source of deposit of Rs.20,000, he stated that he was doing business of Dalali and got commission on sales to others. However, no evidence was produced of earning such income. His statement of income for assessment years 1987-88 and 1988-89 showed income from salary and interest on loan. This contradicted his statement on oath regarding commission income. Bank account was opened on 24-7-1986 but there was no deposit prior to 11-5-1987. His gross income for assessment years 1987-88 and 1988-89 was Rs.21,051 and Rs.23,052 respectively. His family consisted of self and wife. Here also the explanation was rejected and the amount was added.
15. Shri Raj Kumar Agarwal confirmed the gift of Rs.10,000 by cheque. His bank account of Dhanbad also showed a deposit of Rs.10,000 in cash one day before the so called gift. The next day the cheques were issued of Rs.10,000 each in the names of the assessee and Shri Atul Kumar Loyalka. The source of deposit was stated to be savings from his income kept in the house in cash. The deponent was an accountant in the firm. M/s. Raghunath Prasad Agarwal and had salary income of Rs.1,250 per month only. He maintained a family of self, wife and three daughters. On these fact, the explanation was rejected and the amount was added.
16. The ld. D.R. relied on the decision of the Patna High Court in the case of Sarogi Credit Corpn. The question of burden of proof in the case of cash credits under section 68 was examined in this case. It was held that if the credit entry is in the names of third party and is accepted by the respective parties, the initial burden of proof on the assessee has been discharged. It may be noted that only the initial burden was discharged and it may well be that in certain circumstances the onus was again shifted to the assessee on account of the action taken by the department. It was further held that there was a difference when the parties are close relations of the assessee. It will be useful to reproduce the relevant extract from the head notes as below:
"Held, that if the credit entry in the books of the assessee stands in the name of the assessee or the assessee's wife and children, or in the name of any other close relation or an employee of the assessee, the burden lies on the assessee to explain satisfactorily the nature and source of the entry. But if the entry does not stand in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie on him to establish the identity of that party and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make an advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the present case, have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed source. And in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials."
17. In the above three cases the first two are close relatives and, therefore, the burden on the assessee even initially extended to explain satisfactorily the nature and source of the entry. In both the cases, the cash deposits in the bank were at Dhanbad and a day before the cheques were issued. The deponents were residing at Deoghar and not at Dhanbad whereas the assessee was residing at Dhanbad. The source of deposits, in my opinion, has not been satisfactorily explained, since no reasonable man will accumulate cash in his house to deposit it in a bank account on a single day in a different town only for the purpose of issuing cheques on the next day of the same amount. Assessment proceedings are akin to civil proceedings, and we have to proceed on the basis of pre-ponderance of probabilities, which is against the explanation. The creditworthiness has not been satisfactorily, explained and established either, since the extent of income of the two parties was not adequate to save such amount either. Therefore, additions due to cash credits in the names of Shri Kali Prasad Khowala and Shri Puran Mal Agarwal are confirmed.
18. Shri Raj Kumar Agarwal is a third party and, therefore, the initial burden stood discharged when he confirmed the transactions. However, his statement has brought about a different picture. Here again, cash deposit was made at Dhanbad a day before the cheques were issued whereas he was an accountant in a firm at Jharia. This is once more against human probabilities. His salary was small and his family was large and it does not stand to reason that he could accumulate so much savings in cash in his house, only to be deposited in a bank account in a different town for the purpose of issuing cheques on the next day. Here also, I hold that the addition on account of cash credit should be confirmed.
19. We now come to the four credits where the parties did not appear. Summons were issued to Smt. Sumitra Devi. She did not appear personally but sent a written reply confirming the gift of Rs.10,000. A declaration of gift and a copy of the capital account for assessment year 1988-89 were also sent. The Assessing Officer found that she had income of Rs.7,060 from interest, Rs.5,022 from petty gift and Rs.6,000 from embroidery i.e., Rs.18,062 which is just above taxable limit. He took a view that the returns were filed only with a view to create bogus capital. There was no reason why a person earning Rs.18,062 would make a gift of Rs.10,000.
20. In this case, there is nothing to show that the lady was a close relative and, therefore, the burden of proof on the assessee was that which would be necessary for a third party. The lady confirmed the gift and gave particulars of her assessment and also sent a declaration of gift, the initial burden of the assessee, therefore, stood discharged. The Assessing Officer did not pursue the matter further and, therefore, the burden did not again shift to the assessee. I, therefore, hold that the addition of Rs.10,000 on account of cash credit, in the name of Smt. Sumitra Devi, is not justified and is, therefore, deleted.
21. Summons were issued to Shri Suresh Kr. Bansal under section 131 but that was received back unserved with a postal remark "Not Found". it was claimed by the assessee that a gift of Rs.11,000 was received from him. Since the whereabouts were not ascertainable, the Assessing Officer rejected the contention and made an addition of Rs.11,000.
22. Here also, there is nothing to show that Shri Suresh Kr. Bansal was a close relative and, therefore, the extent of burden of proof would be only that relatable to a third party. However, in the assessment order there is not even any description of any confirmation of gift by Shri Suresh Kumar Bansal. If that is so, then the assessee's burden of proof is not discharged. On the other hand, the paper book filed, before us, contained a copy of the Affidavit dated 6-5-1988 by Shri Suresh Kumar Bansal confirming the gift and giving his Income Tax File No. There is no certificate on the index of the paper book whether this declaration was filed before the Assessing Officer. I, therefore, set aside the matter to the Assessing Officer with a direction to verify whether the declaration was filed before him during the course of assessment proceedings. If that was filed, then the addition will stand deleted for the same reasons as in the case of Smt. Sumitra Devi. If that was not filed, then the, addition will stand confirmed.
23. In the case of Shri Manoj Biyani, summons under section 131 were issued and a reply was sent by Shri B.P. Jhunjhunwala, A.R. of the donor and it was stated that Shri Biyani was unable to go to Dhanbad. The gift of Rs.15,000 was confirmed. He was assessed at Calcutta and copies of his capital account for assessment years 1987-88 and 1988-89 were sent. Here again, there is nothing to show that Shri Manoj Biyani was a close relative and, therefore, he has to be treated like a third party. I hold that the addition of Rs.15,000 should be deleted for the same reasons as for Smt. Sumitra Devi.
24. In the case of Smt. Chhoti Devi, the assessee was asked to produce the donor but a petition was filed saying that she had gone on pilgrimage and as such she could not be produced. A declaration of gift was filed stating that she had made a gift of Rs.21,000 and she was assessed to Income Tax at Dhanbad. The Assessing Officer did not accept the explanation and added Rs.21,000.
25. Before us, a copy of letter from the assessee to the Assessing Officer has been filed, according to which, Smt. Chhoti Devi left for pilgrimage and was expected to return by the end of July, 1989. Subsequently it was stated that the gift of Chhoti Devi may kindly be accepted without any further enquiry. It is not a case where the assessee sought adjournment for producing the lady but, in fact, declined to produce her. In the circumstances, I hold that the initial onus discharged by the assessee in the case of this third party again reverted back to the assessee and the explanation was rightly rejected by the Assessing Officer who also noticed that the income in the assessment records shows income from petty gift received on birth-days, Raksha Bandhan and Bhai Duj, amounting to Rs.16,180 and income of Rs.2,521 from interest. This certainly requires verification and the assessee's unwillingness to produce her justifies rejection of the explanation. I, therefore, confirm the addition of cash credit of Rs.21,000 in her name.
26. To sum tip, the additions confirmed and deleted are listed below:
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(i) Smt. Sumitra Devi Rs. 10,000 deleted;
(ii) Shri Kali Pd. Khowala Rs. 10,000 confirmed;
(iii) Shri Puran Mal Agarwal Rs. 10,000 confirmed;
(iv) Smt. Chhoti Devi Rs. 21,000 confirmed;
(v) Shri Raj Kr. Agarwal Rs. 10,000 confirmed;
(vi) Shri Suresh Kr. Bansal Rs. 11,000 set aside; &
(vii) Shri Manoj Biyani Rs. 15,000 deleted.
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STATEMENT UNDER SECTION 255(4) OF I.T. ACT 1961
A difference of opinion, having emerged between the Judicial Member and the Accountant Member, who originally heard the appeal, we hereby state the points on which we differ and refer the matter to the Hon'ble President of the Income-tax Appellate Tribunal for further appropriate action:
1. Whether in the facts and circumstances of the case, the following additions to the assessee's income, as unexplained cash credits under section 68 of the Act, should be confirmed as held by the Accountant Member or deleted as held by the Judicial Member--
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(i) Shri Kali Prasad Khowala Rs. 10,000
(ii) Shri Puran Mal Agarwal Rs. 10,000
(iii) Smt. Chhoti Devi Rs. 21,000
(iv) Shri Raj Kumar Agarwal Rs. 10,000
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2. Whether in the facts and circumstances of the cage, the following addition to the assessee's income, as unexplained credit under section 68 of the Act, should be deleted as held by the Judicial Member or set aside for further enquiries as held by the Accountant Member:
(i) Shri Suresh Kumar Bansal Rs. 11,000.
THIRD MEMBER ORDER
1. There was difference of opinion between the Division Bench Members while disposing of this appeal. The learned Judicial Member felt that the gifts in favour of the assessee should be accepted and consequently the addition of Rs.51,000 representing gifts from 4 persons should be deleted in the hands of the assessee, whereas the learned Accountant Member wanted to confirm the gifts from the very same 4 persons. As regards the gift/credit received from Suresh Kumar Bansal of Rs.11,000, the ld. Judicial Member felt that this should be deleted from the income of the assessee whereas the ld. Accountant Member felt that it should be set aside and the matter should be further enquired into. Therefore, the learned Division Bench Members, after having identified their differences, referred them to the President to appoint a Third Member under section 255(4) of the Act. The following points of difference were set out in their referring order:
"1. Whether in the facts and circumstances of the case, the following additions to the assessee's income, as unexplained cash credits under section 68 of the Act, should be confirmed as held by the Accountant Member or deleted as held by the Judicial Member--
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(i) Shri Kali Prasad Khowala Rs. 10,000
(ii) Shri Puran Mal Agarwal Rs. 10,000
(iii) Smt. Chhoti Devi Rs. 21,000
(iv) Shri Raj Kumar Agarwal Rs. 10,000
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2. Whether in the facts and circumstances of the case, the following addition to the assessee's income as unexplained credit under section 68 of the Act, should be deleted as held by the Judicial Member or set aside for further enquiries as held by the Accountant Member:
(i) Shri Suresh Kumar Bansal Rs. 11,000"
As the President, I have appointed myself as the Third Member and I have heard the case on 24-12-1996. Before actually deciding the differences between the respective Members, I feel it necessary to survey the facts of the case to the required extent.
2. The assessee is an individual. The assessment year involved is 1988-89, for which the previous year ended by 31-3-1988. The assessee derives share income from firms commission and income from other sources. For the year under consideration, the assessee filed a return disclosing an income of Rs.43,150. The Income-tax Officer, W/2, Dhanbad, by his assessment order dated 4-9-1989, determined the total income at Rs.1,50,950. He added a sum of Rs.87,000 as unproved gifts from 7 parties as stated below and treated the whole amount of Rs.87,000 as income of the assessee from undisclosed sources:
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1. Smt. Sumitra Devi Rs. 10,000
2. Shri Kali Pd. Khowala Rs. 10,000
3. Shri Puranmal Agarwalla Rs. 10,000
4. Smt. Chhoti Devi Rs. 21,000
5. Sh. Raj Kumar Agarwalla Rs. 20,000
6. Shri Suresh Kumar Bansal Rs. 11,000
7. Shri Manoj Biyani Rs. 15,000
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Rs. 87,000
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Out of the above listed persons, Shri Kali Prasad Khowala, Shri Puranmal Agarwalla and Shri Raj Kumar Agarwalla were examined. For the relevant narration of facts, it is enough if it is noted that the gifts/credits said to have been given by the abovesaid 7 persons were disbelieved by the ITO and the total amount of Rs.87,000 was added to his assessed income as income of the assessee from other sources and thus as against the returned income of Rs.43,150, the total income was assessed at Rs.1,50,950, in which an addition of Rs.20,800 towards low withdrawals for household expenses was also included.
3. In the appeal of the assessee against the addition of Rs.87,000, he did not succeed inasmuch as the CIT(Appeals), Jamshedpur, by his impugned order dated 9-9-1991, confirmed the addition by simply observing in para-2 of his order as follows:
"2. The first dispute in this appeal relates to an addition of Rs.87,000 to the income of the appellant. This amount was shown to have been received by the appellant as gift from various relatives and friends. The Assessing Officer has not accepted the entire gift as genuine. In his order, he has discussed in detail the facts of each and every donor. I have carefully examined the observations of the Assessing Officer and I find that conclusions arrived at by him are quite reasonable and fair. Therefore, the addition of Rs.87,000 is confirmed and the grounds taken in this regard are dismissed."
4. Against the order of the CIT(Appeals), the assessee came up in second appeal before the Tribunal in which differences arose between the ld. Members who decided the second appeal and, therefore, they requested for appointment of a Third Member. Under the circumstances, the matter is now dealt with by me.
5. The assessee filed a paper book containing 43 pages before the Tribunal. I shall be discussing with the documents contained in the paper book in the course of my order.
6. Now, first, let me take up the gift of Shri Kali Prasad Khowala. He was examined by the ITO on 14-3-1989. He is a resident of Surajmal Jallan Road, Deoghar. In his statement, he stated that he made a gift of Rs.10,000 to the assessee by cheque. He produced before the ITO Bank pass book No. 41/7094 of Bank of Baroda, Dhanbad. The pass book showed that a sum of Rs.20,000 in cash was deposited on 24-4-1987. On the next day, the amount of Rs.20,000 was debited in the names of the two persons as under:
1. Rs.10,000 in the name of Shri Pradip Kumar Loyalka (assessee).
2. Rs.10,000 in the name of Shri Deepak Kumar Loyalka.
The assessee is the wife's sister's son of Shri Kali Prasad Khowala. Shri Khowala was questioned about the source of his deposit of Rs.20,000. In reply, Shri Khowala stated that the amount was lying in his house in cash. He further stated that he derives income from commission from persons who purchase cars and trucks. He was an income-tax assessee in Dist. III(A), Ward-5,169, Acharya Jagdish Chandra Bose Road, Calcutta-20. He stated that previously he was residing at 26, Bartala Street, Calcutta, and was doing dalali in Calcutta and as such he happened to be assessed at Calcutta. The ITO scrutinized the capital account of Shri Khowala for assessment years 1987-88 and 1988-89. In 1987-88, his capital account showed an income of Rs.18,000 from salary and Rs.9,600 from interest. For assessment year 1988-89, he had an income of Rs.18,360 from commission and interest on loan. Whereas he stated that he used to derive commission from persons who purchase cars and trucks, his statement of account for assessment year 1987-88, however, showed that he had earned income from salary. He was a native of Deoghar. He is assessed to income-tax at Calcutta. There was no reason why he opened a bank account at Dhanbad. In his bank account, there was no transaction after 27-4-1987. The ITO felt that assuming that the entire amount in the Bank Account belongs to him, it is unbelievable that he lent the entire amount to others and would not keep anything with him for his future requirements. Shri Deepak Kumar is the brother of the assessee. Under the circumstances, the ITO recorded that Shri Khowala is not a man of means and that the deposit amount represents the concealed income of the assessee and his brother and thus he disbelieved the gift of Shri Khowala and added it in the hands of the assessee as income from undisclosed sources. An English translation of the statement of Shri Khowala is provided. It reveals that he is a resident of Deoghar. His age was 75 years. He had gifted Rs.10,000 the assessee through cheque and his cheque was duly recorded in his Bank A/c No. 41/7094 of Bank of Baroda, Dhanbad, wherein the gift amount was duly accounted for. There was no occasion for the gift. However, he had given the gift on his own wish. Explaining the reason why he maintained a Bank A/c at Dhanbad, he said that his son-in-law Shri Giridhari Lal Agarwalla stays at Dhanbad and in connection with the work he comes to Dhanbad very frequently and therefore, he kept the Bank A/c for his convenience. When asked about the sources of deposit, he stated that he did brokerage business in sale of trucks and cars and he earned the income. He was previously assessed at Calcutta. He used to previously stay at Calcutta at 26, Burtolla Street, Calcutta-7. His statement was riddled with unnaturalities and it does not inspire confidence. On the one hand, he says that he was maintaining a Bank A/c in Dhanbad and on the other he says that upto 24-4-1987, i.e., till the amount was deposited in his Bank A/c, it was kept at his house. It is unnatural for a person, who has a bank account, to keep the money in his house instead of in his bank account. This would raise a suspicion as to whether the bank account is really his or being maintained at somebody's instance. It rouses suspicion and especially one knows that after 27-4-1987 there were no transactions in the bank account. Thus, it would appear that the bank account was opened for a particular purpose and after the purpose is over, it was closed and it was never operated again. Further, Shri Khowala has a son-in-law at Dhanbad and for this purpose he used to come often to Dhanbad. if that is so, the daughter of Khowala is ordinarily presumed to be at Dhanbad along with her husband. I came across subsequently that Shri Puranmal Agarwala is one of the sons of Khowala. In his deposition, he stated that Radheyshyam Khowala is his elder brother. Thus, as far as the present record goes, Kali Prasad Khowala was having two sons and one daughter. Thus, if there are two sons and a daughter, could it be natural that despite his advanced age of 75, Shri Khowala could gift away the whole of his earnings of Rs.20,000 to the assessee and his brother who are also the sons of the sister of his wife? Does he prefer the sons of his wife's sister for his own daughter and son-in-law and two sons for making a gift of Rs.20,000 which was the only substantial amount which he was able to save in his life. Further, there was no occasion for making the gift for the assessee and his brother. Thus, if I take into consideration the statement of Shri Khowala, his balance-sheet provided at page-9 shows that his capital account begins with a balance brought forward of Rs.1,15,341.70. Unless the earlier balance-sheets were filed, the brought forward figure in his capital account cannot be said to be satisfactorily explained. Further, a sum of Rs.12,570 was shown as commission received. However, in the statement recorded from Shri Khowala, he did not state the present vocation at his 75 years of age. He did not claim to have been engaged in any business and he did not claim to be earning any commission. Further, in the balance-sheet, a huge sum of Rs.1,06,576.89 was said to be cash on hand. There is no reason for Shri Khowala to keep such a huge amount as cash on hand instead of keeping it in his bank account. Therefore, if I take only his bank account, his balance-sheet, his computation of total income for assessment year 1988-89 into consideration, it would amount to superficial approach to the problem which is depreciated by the judgment of the Supreme Court in Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89. At page 808 of the report, Their Lordships clearly stated that what is the real test to be taken into consideration before believing a particular version as follows:
"The matter has to be considered in the light of human probabilities."
Therefore, in my opinion, the evidence on record should not merely be weighed but should be evaluated. it is the nature of the evidence which should be taken into consideration rather than the mere volume of it. In the gift declaration provided at page-3 of the paper compilation, the following is what is stated:
"That the above amount has been gifted by me from my own self acquired asset and neither my son/sons and/or anybody claiming under me shall have any right, title and/or interest in the same."
From the above, it will be clear that Shri Khowala might be having sons and daughters and he claims that Rs.20,000 which was deposited in Bank on 2-4-1987 represents his self-acquired property in which neither his sons nor daughters have any interest. Now, I am not concerned with the nature of the acquisition. I am now concerned with the probability of the gift, especially when Shri Khowala never made any gift previously nor subsequently. There was no occasion for him to make a gift. Even, according to Shri Khowala, he made Rs.20,000 gift to each of the two sons of his wife's sister. In such a case, since the gift amount is Rs.20,000, he is liable to pay gift-tax at 5%. However, it was never the claim of Shri Khowala to have filed a gift-tax return or paid any gift-tax over the gifts made to the assessee and his brother. Thus, it would appear that if human probabilities are to be considered, then it is perfectly clear to me that the gift is unlikely to be made, and the very fact that a deposit was made on 24-4-1987 and it was taken away by issuing two cheques on 25-4-1987 and there were no further transactions from 27-4-1987 in the account, goes to show that there is a strong suspicion that in all probability the amount must have been deposited in the bank account not by some body in the name of Shri Khowala in order to make it appear that he had gifted the amount. This suspicion is more strengthened by the fact that no gift-tax return was filed by Shri Khowala having made Rs.20,000 worth gifts in that year. Therefore, I agree with the conclusions reached by the learned Accountant Member and I hold that it would be perfectly justifiable to consider the amount of Rs.10,000 in the hands of the assessee as unexplained income.
7. Now, let me take up the gift said to have been made by Shri Puranmal Agarwalla. Shri Puranmal Agarwalla is none other than the son of Shri Kali Prasad Khowala and he is also resident of Deoghar. He also gave a statement on oath and he stated that he made a gift of Rs.10,000 to the assessee by issuing a cheque dated 12-5-1987 and in order to prove the genuineness of the gift he produced bank A/c. No. 4101 with Punjab National Bank, Dhanbad. His account showed that a sum of Rs.20,000 in cash was deposited on 11-5-1987 and the whole of the said amount was withdrawn on 12-5-1987 by issuing a cheque of Rs.10,000 to Shri Pradip Kumar Loyalka, the assessee, and another sum of Rs.10,000 to Shri Atul Kumar Loyalka, the brother of the assessee, on 12-5-1987. The assessee and his brother are none other than the sons of his mother's sister. The assessee and his brother are his elder brothers being sons of his Mausa. He was not able to point out any occasion for making the gift. When asked about the sources, he stated that it represented his income earned in the past. It is claimed that he does business in dalali and gets commission. His statement of income from assessment years 1987-88 and 1988-89 were on record and they show that he had earned income from salary and interest on loan in both the years. Therefore, the ITO deduced that the statement of this witness that he earned income from commission is totally a false statement. Further, after examining his bank account, he found out that the account was opened on 24-7-1986 but there was no deposit in the account earlier to 11-5-1987. His family consists of himself, his wife and he is residing in a house paying rent of Rs.150 p.m. He also pays insurance premium of Rs.63.10 quarterly. His gross income for assessment years 1987-88 and 1988-89 was Rs.21,551 and Rs.23,502 respectively. In his case, the ITO held that there is no reason why a man of Deoghar, will open his bank account at Dhanbad. There is also no reason for making the gift of Rs.10,000 to the assessee and another Rs.10,000 to his brother. Further, the ITO held that Shri Puranmal Agarwalla is not a man of means and he should not make gift to the assessee and his brother. Therefore, he concluded that the gifted amount represented no other than his concealed income and it is to be treated as the income of the assessee from undisclosed sources. In the statement, he clearly stated that he is the son of Shri Kali Prasad Khowala and he is aged 24 years and he is a resident of Deoghar. However, at present, he is staying at Gandhi Nagar, Dhanbad. He claims to be a broker in sale of scooters and he claims to be earning commission. He is assessed at Refund Circle, 169 Acharya Jagdish Chandra Bose Road, Calcutta. When asked as to why he happened to have income-tax assessment at Calcutta, he replied that his elder brother Shri Radheshyam Khowala and his uncle Shri Yugal Kishore Khowala stay at Calcutta and hence his file is at Calcutta. He says that he gifted Rs.10,000 to the assessee which was duly entered in his bank account No. 4101 with Punjab National Bank in which the gifted amount was debited on 12-5-1987. The assessee was stated to be the son of his aunt. The gift was not made on any particular occasion. The assessee is elder to him. He has got reverence to the elder brother and hence he has made the gift to the assessee. When asked as to what is the source for his earning Rs.20,000 which was deposited on 11 -5-1987 in his bank account, he stated that the money is out of his income. He admitted to have given another amount of Rs.10,000 on 12-5-1987 itself as gift to Atul Kumar Loyalka, who is the brother of the assessee. He denied the suggestion that Rs.20,000 represents the income of the donees themselves and it never represented his income. After the examination of this witness, the picture is more clearer. His father Kali Prasad Khowala at least has two sons -- Radheshyam Khowala who is doing business at Calcutta and himself. Even Puranmal Agarwala did not satisfy the substratum of his story that the gifted amount belongs to him. His gift declaration, balance-sheet for the year ending 31-3-1988 and profit & loss account are provided at pages 11 to 13 of the paper compilation. For the assessment year 1989-90, he was assessed on an income of Rs.18,060 under section. 143(1)(a). It is obvious that it is not a scrutiny assessment. Strangely, his profit & loss account for assessment year 1988-89 at page 12 shows that he obtained a net profit of Rs.23,502.50, out of which he paid salary and bonus of Rs.18,000. However, Shri Puranmal Agarwalla did not claim to have done any business in the accounting year in question. He stated that he was only a broker in sale of scooters and he only gets commission; but his profit & loss account shows net profit as if it was received from business. Further, his balance-sheet showed a brought forward balance in capital account of Rs.89,858.80. Unless the balance-sheets of earlier years were filed, one cannot know how far this brought forward balance in capital account is correct. When he is a resident of Deoghar, there is no reason why he was assessed at Calcutta simply because his elder brother as well as his uncle were residing there. Hence statement is full of unnaturalities and against human probabilities. When he is a man of 24 years having his own wife, where is the necessity for him to gift Rs.10,000 to the assessee and another Rs.10,000 to his brother. What is the occasion? No satisfactory. answers were obtained to the above questions. Further, his bank account is also maintained in the same fashion in which the bank account of his father was maintained which is already discussed above. Shri Puranmal Agarwala also did not file any gift-tax return before the GTO of Dhanbad or paid any gift-tax thereon even though he admittedly made a gift of Rs.20,000 in the year. Therefore, it would show that the documents filed in this behalf are cooked up and they do not inspire any confidence whatsoever besides his version being against human probabilities. Therefore, the ratio of Sumati Dayal clearly applies and, therefore, I agree with the learned Accountant Member and hold that the alleged gift by Shri Puranmal Agarwalla is nothing but fake and it represents nothing but the undisclosed income of the assessee and hence it is rightly added in his hands.
8. Now, let me take up the gift of Rs.21,000 allegedly given by Smt. Chhoti Devi. Despite the fact that the assessee was asked to produce her several times, time was taken by filing a series of petitions saying that she was not present and she went on pilgrimage and as such she could not be produced. Ultimately, she was never produced. An affidavit swom before a Notary, Dhanbad, was filed before the ITO. Photo copy of the affidavit was provided at page 14 of the paper compilation. It is noteworthy that it does not bear any date. That means, the document does not disclose on which date Smt. Chhoti Devi had sworn the affidavit before the Notary Public of Dhanbad. The affidavit discloses that she is the wife of Motilal Agarwal of Dhanbad, that out of natural love and affection she made a gift of Rs.21,000 on 17-7-1987 by cheque drawn on Central Bank of India, Dhanbad to the assessee, who is also resident of Dhanbad, and he accepted the same. The source of income from out of which the gift was made was stated to be self-acquired asset. She was also stated to be an income-tax assessee by the ITO, Dhanbad, Ward-1, and her GIR No. is C-856. It is also significant to note that the affidavit does not disclose what is the relationship between Smt. Chhoti Devi with the assessee and how she is related to him in order to further verify the reasonableness or otherwise of natural love and affection which she claimed to bear towards the assessee. At page 15, her balance-sheet as on 31-3-1988 was filed. Just like in the cases of other donors, in her case also, her capital account begins with a brought forward amount of Rs.47,650.24. To that, a substantial amount of Rs.16,180 was stated to have been received from petty gifts received on various occasions like Birthday, Rakhi, Bhayaduj, etc. The gift made to the assessee was found mentioned in the balancesheet. Her cheque book in Central Bank of India was not filed to verify the withdrawal on 17-7-1987 and further to verify whether the cheque amount was duly entered therein or not. In the case of Smt. Cbhoti Devi, the gift-tax assessment order for assessment year 1988-89 was filed which discloses a taxable gift of only Rs.1,000 as per return filed. In order to know whether the return filed was for Rs.1,000 or Rs.21,000, the gift-tax return itself was not filed. The assessment order passed against her under section 143(1) for assessment year 1988-89 was also filed. It shows that she had returned an income of Rs.18,000 as per the return filed. It is significant that copy of income statement of Smt. Chhoti Devi was not provided in the paper book. Therefore, from pages 14 to 18 in the paper book filed on behalf of the assessee, it is not proved that Smt. Chhoti Devi had gifted a sum of Rs.21,000 to the assessee. If really she had gifted the amount, she would have tiled a gift-tax return. Under section 5(2), the maximum exemption limit for gift-tax was only Rs. 20,000 right from 1-4-1971 up to 31-3-1987. Under the Gift-tax Act, for gift which does not exceed Rs.20,000, the donor has to pay 596 of the value of the gift. Thus, she has to pay Rs.1,000 on Rs.20,000 and @ 10% over the extra amount of Rs.1,000. i.e., Rs.100. Thus, in all, she has to pay gift-tax of Rs.1,100. Further, she did not present herself before the ITO and made a statement on oath under section 131. The mere filing of the affidavit before the ITO does not amount to proof of the transaction unless Smt. Chhoti Devi presents herself and confirms the affirmation in the affidavit before the ITO. Further, her income is very much dependent upon the gifts received by her from her relatives. Who are the relatives from whom she receives gifts every year are not known. Further, the amount of gifts also may be varying and would not be constant every year. Therefore, whether she has got sufficient sources from where she made gift of Rs.21,000 is itself doubtful. Further, what is her relationship with the assessee is not known. Unless the relationship is known between them, it is not easy to guage whether the gift of not an inconsiderable amount of Rs.21,000 is probable. For all the above deficiencies, I fully agree with the learned Accountant Member while holding that her source of income to make the gift is not proved, her gift to the assessee itself is not proved and, therefore, I concur with the learned Accountant Member and hold that the amount of Rs.21,000 is justly added in his hands and it is not liable to be cancelled.
9. Now, let me take up Shri Raj Kumar Agarwalla. He is one of the persons who was examined before the ITO on 12-6-1988 on oath. It is recorded in his statement that he confirmed having made a gift of Rs.10,000 on 16-3-1988 after drawing it from Central Bank of India, Dhanbad. His bank account No. HSS 3730 shows that a sum of Rs.20,000 in cash was deposited in his bank account. The gift was said to have been made on 16-3-1988 by issuing a cheque No. 005553 dated 16-3-1988 drawn on Central Bank of India, Dhanbad. His bank account shows that on 16-3-1988 itself he had deposited Rs.20,000 in cash and on the next day, i.e., 17-3-1988, he had issued two cheques covering the amount in favour of his maternal uncle's sons, Shri Pradip Kumar Loyalka (assessee) and Shri Atul Kumar Loyalka (his brother). Thus, the whole amount of Rs.20,000 deposited was withdrawn either on the same day of deposit (16-3-1988) or on the next day (17-3-1988) either by the assessee or his brother Atul Kumar Loyalka. Now, as regards the source of income, Shri Raj Kumar Agarwala states that he was working as an Accountant with M/s. Raghunath Prasad Agarwala, Sonapatty Jharia, who were dealers in foodgrains. He received a monthly salary of Rs.1,250. He claims that Rs.20,000 was all along with him in cash which was ultimately deposited on 16-3-1988 in the Bank. As far as the size of his family is concerned, he and his wife have got three daughters aged 10 years, 8 years and 4 years respectively by the date of deposition and all of them are depending upon him. He resides in a rented house belonging to a Trust. Apart from his salary income, he received interest income on loan given by him to various persons. He has no money lending licence. The assessee as well as Shri Atul Kumar Loyalka are the sons of his maternal uncle, Shri Gajanand Loyalka and inter se they are brothers. There was no particular occasion on which he made the gift. It is not true to state that the donors inducted the money and later he withdrew the money introduced by them. They are close relatives to each other. Pages 19 to 21 of the paper book relating to Shri Raj Kumar Agarwala do not support or advance the case of the assessee. At page-20, the balance-sheet, while giving the capital account, speaks about the balance brought forward of Rs.79,334.50, but break-up of the balance brought forward is not known. Unless the earlier balance-sheet and the capital account thereunder were filed, the present balance-sheet itself does not make any sense. The balance-sheet also reveals that Shri Raj Kumar Agarwalla had kept only Rs.138.35 in Central Bank of India and Rs.114.30 with Canara Bank, Jharia, whereas he purported to have kept Rs.42,978.45 as cash on hand. Why he was keeping so much cash on hand is not known. Generally, if a person has got a bank account, be would keep the cash in the bank and does not keep it in his hands. Even though he has got two bank accounts, still he keeps a heavy amount of Rs.42,978 on hand only. At page-21, his income-tax assessment order for assessment year 1988-89 is produced. It only shows that he was-assessed on an income of Rs.1,314 and tax was Nil. This document does not advance the case of the assessee in the absence of the income-tax statement having been filed along with it, In Sarogi Credit Corpn.'s case, the Patna High Court held that if the credit entry in the books Of the assessee stands in the name of the assessee or the assessee's wife and children, or in the name of any other close relation or an employee of the assessee, the burden lies on the assessee to explain satisfactorily the nature and source of the entry. In this case, all the 4 persons from whom gifts were alleged to have been received by the assessee were his close relatives. Even though the burden of proof lies upon the assessee to prove the sources of income of each of the donors, the assessee failed to furnish any evidence worth the name to establish their creditworthiness. The evidence produced by him in order to prove their creditworthiness is either scanty or negligible or does not inspire any confidence whatsoever or against human probabilities. Therefore, fully agree with the learned Accountant Member that the amounts were correctly disallowed by the lower authorities and they were correctly added in the hands of the assessee as his unexplained income.
10. Now, let me take up the case of Shri Suresh Kumar Bansal. Summons were issued under section 131 to Shri Bansal at 20, Maharshi Devendra Road, Calcutta, but those summons were returned unserved with the postal remark "not found". The summons were issued to the address furnished by the assessee. It is the claim of the assessee that he received a sum of Rs.11,000 as a gift from this person. The ITO held that since the whereabouts of the donor of the amount of Rs.11,000 were not ascertainable, he held that the gift was not genuine and the amount of Rs.11,000 was added to the income of the assessee as income from undisclosed sources. This was confirmed by the CIT(Appeals), Jamshedpur by his impugned order which is found to be without any discussion. The only document filed relating to Shri Suresh Kumar Bansal was a purported gift declaration said to have been made. A copy of the gift declaration was filed at page-22 of the paper compilation. The gift declaration was made on 6-5-1988 before a Notary Public, Calcutta, and in his affidavit denoting the gift declaration, it is stated that the deponent Shri Suresh Kumar Bansal made a gift of Rs.11,000 on 21-3-1988 to the assessee by demand draft No. 131125 dated 21-3-1988 drawn on Punjab National Bank and sent to the assessee, Shri Pradip Kumar Lovalka. The gift had been accepted by the assessee also. It is stated in the affidavit that Shri Suresh Kumar Bansal is an income-tax assessee and his file number is IIIA/54-B/J. It is further stated that he was a resident of 20/1 , M.D. Road, Calcutta-700 007. The following is what is found stated regarding Shri Suresh Kumar Bansal by the learned Accountant Member:
"22. Here also, there is nothing to show that Shri Suresh Kr. Bansal was a close relative and, therefore, the extent of burden of proof would be only that relatable to a third party. However, in the assessment order there is not even any description of any confirmation of gift by Shri Suresh Kumar Bansal. If that is so, then the assessee's burden of proof is not discharged. On the other hand, the paper book filed, before us, contained a copy of the Affidacit dated 6-5-1988 by Shri Suresh Kumar Bansal confirming the gift and giving his Income Tax Gile No. There is no certificate on the Index of the paper book whether this declaration was filed before the Assessing Officer. I, therefore, set aside the matter to the assessing Officer with a direction to verify whether the declaration was filed before him during the course of assessment proceedings. If that was filed, then the addition will stand deleted for the same reasons as in the case of Smt. Sumitra Devi. If that was not filed, then the addition will stand confirmed."
Therefore, virtually, the matter was sent back to verify whether this confirmation was filed before the ITO or not. After getting it verified from his original records, if it is found filed, then, since he is a third party not related to the assessee, the learned Accountant Member very correctly held that the amount of Rs.11,000 should be allowed just in the case of another cash creditor whose claim was also allowed. But, if it is not found filed, then the alleged gift of Rs.11,000 by Shri Suresh kumar Bansal should stand confirmed. I feel that this order of the ld. Accountant Member is fair and just in the facts and circumstances of the case and is liable to be accepted. After going through the learned Judicial Member's order, I feel that it proceeded on mere superficial appreciation and did not take care to go deep into the matter and also did not keep in mind the Hon'ble Supreme Court's decision in Sumati Dayal's case before deciding the point at issue. I am of the opinion that the learned Judicial had not correctly applied the ratio of the Hon'ble Supreme Court in Sreelekha Banerjee's case to the facts of the present case. In the facts of the case, it is not a question of converting good proof said to have been offered by the assessee stands to the scrunity of human probabilities. I, therefore, cannot agree with the conclusions reached by the learned Judicial Member.
11. Now, the matter will go back once again to the Division Bench who should decide the case according to the majority view.
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