ORDER
Manzoor Ahmed Bakhshi, Judicial Member
1. We find it convenient to dispose of these two appeals involving similar issues by this consolidated order. The learned D.R. Shri Abrar Ahmed and the learned counsel for the assessees Shri H.G. Malik have been heard and records perused.
2. We snall first take up the case of Arun Kumar Jain [IT Appeal No. 994 (Delhi) of 1991]. The relevant facts are that assessee has two minor children, namely, Ms. Anima Jain and Master Nipun Jain. During the year relevant to assessment year 1982-83, it was claimed that the minor children of the assessee had received the following gifts :
Miss Anima Jain:
Name of the donor Amount Date of gift Sh. Dinesh Kr. Gupta Rs. 20,000 16-7-1981 Mrs. San tosh Devi Agarwal Rs. 15,000 17-7-1981 Sh. Anuj Jhujhunwala Rs. 15,000 17-7-1981 Sh. Raj Kumar Agarwal Rs. 15,000 17-7-1981 Sh. GopiDutt Rs. 15,000 25-7-1981 Smt. Lalita Devi Gupta Rs. 15,000 25-7-1981 Master Nipun Jain: Sh. A jit Kr. Agarwal Rs. 20,000 16-7-1981 Sh. Radhey Shyam Rs. 15,000 17-7-1981 Sh. Suresh Kr. Agarwal Rs. 15,000 17-7-1981 Sh. Hari Kishor Rathi Rs. 15,000 17-7-1981 Sh. G.D. Jhunjhunwala Rs. 15,000 17-7-1981 Sh. Mahesh Kumar Gupta Rs. 20,000 26-7-1981
Returns of minor children had been filed for the first time for asst. year 1982 83 and the afore-mentioned gifts were duly shown in the said returns. Investments were made in the name of the minor children and in the name of wife of the assessee. When assessee was asked to explain the source of these investments, it was stated that his wife and children were assessed to tax separately and had their own sources of income. The Assessing Officer made enquiries regarding the gifts claimed to have been received by the minor children of the assessees and it was found that all the donors lived in Calcutta. Necessary enquiries were made by the Assessing Officer from DDI at Calcutta and on the basis of his report, it was found that out of the six donors making gifts to Master Nipun, only two persons i.e. Mahesh Kumar Gupta and Shri Ajit Kumar Agarwal had filed their returns of gifts whereas remaining four had not filed their gift-tax 0returns. In the case of Miss Anima Jain, out of the six donors Mrs. Lalita Devi Gupta and Mrs. Santosh Agarwal and Shri Dinesh Kumar Gupta only had filed the returns of gift-tax but they could not be traced at the address given by the assessee. The remaining three had neither filed any gift-tax returns nor were they available at the address given by the assessee. In view of these circumstances, the Assessing Officer required the assessee to prove the genuineness of the gifts. He was also required to produce the donors.
3. In his reply, the assessee submitted that the donors were identified and they had filed their declarations regarding the gifts made and have also given their permanent account numbers. He also requested the Assessing Officer that the donors may be summoned under Section 131 of the Income-tax Act. The Assessing Officer, however, did not issue any notice under Section 131 on the ground that the donors were not available at the addresses given by the assessees, as per the report of DDI Calcutta.
4. The gifts have been treated as bogus for the following reasons :
(a) That all the donors lived in Calcutta whereas the donees lived in Meerut.
(b) There was no blood relation or any intimacy between the donors and the donees or between the donors and the parents of the donees and therefore, there could be no love and affection for which gifts could be made.
(c) All the bank drafts through which the gifts were made had been prepared either at the Indian Bank, Howrah or from the United Bank, Calcutta. As against this the addresses of the donors showed that they belonged to different localities which was far off from the two banks.
(d) The stamp papers on which affidavits of the donors have been filed had been purchased from the same vendor and on the same day and most of them have been attested by the same notary.
(e) All the gift-tax challans in respect of all the donors residing at different places had been written by the same person.
(f) Most of the donors were not found existing at the addresses given by the assessee.
5. On the basis of these facts, the Assessing Officer came to the conclusion that the gifts claimed to have been received by the minor children are bogus and that all this evidence had been manipulated and bank drafts,stamp papers, affidavits had been prepared by one person which could be none other than father of the children. Moreover, there was nothing on record to establish that the donors were capable of making the gifts.
6. In appeal, assessee had claimed that “all the donors are existing persons and were assessed to income-tax at Calcutta and had their permanent account numbers. The affidavits of these persons have been filed contracts of which had not been controverted. The balance-sheets and capital accounts of these persons had also been filed which clearly establish the capacities of these persons to make gifts. All these gifts had been received by means of account payee bank drafts”.
7. The CIT (A) had called for a remand report from the Assessing Officer on the following points :
(1) What is the relationship between donors and the donees ?
(2) What are the sources of income of the donors and since when they had been assessed to tax?
(3) What are the income returned and assessed of the donors for the five years previous to the year and in which the gifts were made ?
(4) Have the donors made any gifts to any other persons and if so the details thereof.
(5) In para 9 of the assessment order the ITO, inter alia stated that there was only one person who had actually made the gift-tax payments on behalf of the donors. What was the source of ITO’s assertion ?
(6) How the draft No. 110633 for Rs. 15,000 purchased on 17-7-1981 by Shri Anup Jhunjhunwala was accepted by the assessee on 22-1-1982 when the period of this draft would have already expired ?
Assessing Officer had filed the remand report. The assessee had also submitted the objections to the remand report furnished by the Assessing Officer. The said objections are broadly summarised as under:
(a) Complete books of accounts had been maintained on behalf of the minor children of the assessee and all financial transactions relating to them reflected. The gifts had been duly shown in these books of account.
(b) Income-tax returns had also been filed on behalf of minor children though assessment was made on protective basis.
(c) The genuineness of the gifts was stated to have been established.
(d) The evidence furnished by the assessee in respect of all the gifts referred to elsewhere in this order were also highlighted. Such evidence was in the form of balance sheet of the donors, affidavits and confirmations, copies of gift-tax demands under Section 131 of Gift-tax Act, copies of the notice of demand under Section 156 of the Income-tax Act for asst. year 1982-83.
(e) It was also pointed out that all these gifts had been received through account payee bank drafts and these were credited in the respective accounts of the minor children.
(f) That no credit appears in the books of accounts of the assessee or in his bank accounts and thus the onus that lay on the assessee to prove the correctness and genuineness of the receipt of the money through bank drafts of the two children had duly been discharged in so far as identity of the parties and the genuineness of the transactions was proved by positive documentary evidence.
8. The CIT(A) accepted the contentions of the assessee by holding that the onus that rested upon the assessee stood discharged by furnishing of the above evidence. It was further held by the CIT(A) that the mere fact that some of the donors could not be located was not enough for holding the gifts as non-genuine as it is likely that those parties had left the premises and had gone somewhere else as there was a gap between the making of the statement and the date of making the enquiry. According to the learned CIT(A), capacity to make the gifts had also been established in so far as copies of the balance sheets had been furnished before the Assessing Officer to show the financial capacities of the donors. These gifts had been indicated in the balance sheet of the donors. Referring to the finding of the Assessing Officer that the donors were totally strangers to the donees and had no relationship with them, the learned CIT(A) held that it would not make any dent on the issue as what is required to be shown is that the money had been received from the donors. The decision of the Delhi High Court in the case of CIT v. Mrs. Sunita Vachani[1990] 184ITR 121 has been cited in support of the finding that even if the gifts were received from strangers from abroad it will be difficult to record that money received in India from abroad was representing the income of the assessee until and unless something more tenable than suspicion is proved. The learned CIT(A) further observed that Assessing Officer has failed to rebut the evidence furnished on behalf of the assessee.
9. The CIT(A) has further considered the assessability of the gifts in the hands of the assessee and held that even if the gifts were held to be not genuine, in the absence of any evidence to show the linkage with the assessee, in the amounts of various gifts received aggregating to Rs. 2 lakhs could not be assessed in the hands of the assessee.
10. Revenue is aggrieved and is in appeal before us. It has been vehemently argued that the learned CIT(A) has applied the tests of cash credits to the bogus gifts which is not warranted on the facts and in the circumstances of the case. It was further contended that the evidence furnished by the assessee might ordinarily be sufficient to discharge the onus but the Assessing Officer found on the basis of the enquiry from DDI Investigation, Calcutta that most of the donors were not available at the given address, and the assessee had been confronted with this information and asked to produce the donors. Even if the identity of the donors were established it was necessary for the assessee to establish the capacity of the donors. From the statements/balance-sheet filed in respect of the donors, it was found that they had withdrawn Rs. 3,100 approximately in each case for household expenses. Making of gifts ranging from Rs. 15,000 to Rs. 20,000 by 12 different persons to two minor children of the assessee was highly against human probabilities. Reliance in this regard was placed on the decision of the Supreme Court in the case of CITv. Durga Prasad More [1971] 82 ITR 540 at 545 to 547. Following decisions were cited in support of the contention that the onus to prove that the gifts were genuine was on the assessee:
1. Jatinder Nath Sarmah v. /JO [1978] 113 ITR 898 (Guj.),
2. K.L. Aggarwal v. CIT[ 1991] 190 ITR 303 (Delhi),
3. Lallu Mal v. OT[1980] 126 ITR 42 (All.).
The jurisdiction of this case vests with Allahabad High Court. According to the learned D.R. the onus to prove that the gifts were genuine had not been discharged by the assessee. It was accordingly contended that the order of the CIT(A) may be set aside and that of the Assessing Officer restored.
11. The learned counsel for the assessee Shri H.G. Malik on the other hand, contended that the Assessing Officer was wrong to hold that some of the donors had not filed gift-tax returns. According to him, all the donors had filed income-tax returns and were assessed to tax. They had also filed copy of balance sheet in each case along with return of income-tax. These balance sheets were verified by the Assessing Officer, Calcutta to be on record of the respective donors. Gift-tax assessments had also been made. In this connection our attention has been drawn to the gift-tax demand notices in respect of all the donors placed in the paper book. The learned counsel vehemently argued that the onus that rested upon the assessee stood discharged as donors’ sworn affidavits and confirmations had been filed. The balance sheets from their income-tax assessment records had been filed. The evidence regarding filing of gift-tax returns had also been furnished. The moneys had been received by bank draft. The Department had not collected any evidence in rebuttal. Assessee had also filed affidavits, the contents of which had not been controverted. It was not therefore permissible for the Revenue to ignore the same. In this connection, reliance has been placed on the decision of the Allahabad High Court in the case of CITv. Shamshuddin ManzoorHaque[l988] 172 ITR 696. It has further been contended that gift-tax assessments made in the name of the donors have not been cancelled. In such circumstances, it was not open to the revenue to claim that the gifts received by the minor children were not genuine. In this connection, reliance was placed on the decision in the case of Sunita Vachani and the decision of the Calcutta Bench of the Tribunal in the case of Smt. Bhagwati Devi v. ITO[ 1993] 47ITD 58. It was accordingly contended that the appeals of the revenue may be dismissed.
12. In counter-reply, the learned D.R. relied upon the decision of the Allahabad High Court in the case of SriKrishnav. CIT[1983] 142 ITR 618 in support of the proposition that self-serving statement in the form of affidavits need not be considered in every case.
13. We have given our careful consideration to the rival contentions. It is well-settled principle of law that where the assessee claims to have received gifts, the onus is upon him to prove the identity of the donor, his creditworthiness and the genuineness of the gift. This principle is not even disputed before us. Assessee has produced evidence before the Assessing Officer in respect of the gifts claimed to have been received from various persons, all residents of Calcutta, in the name of minor children who are residents of Meerut, U.P. The evidence furnished by the assessee is in the form of affidavits of the donors giving particulars of the drafts, etc. The demand notices under Section 156 of the Income-tax Act, 1961 for asst. year 1982-83 in respect of all the donors has also the gift-tax demand notices relating to the gifts made had been filed before the Assessing Officer – Copies of the balance sheets which were claimed to have been filed by the donors along with income-tax returns for asst. year 1982-83 had also been furnished by the assessee which the gifts claimed to have been received stood reflected. On receiving this primary evidence, the Assessing Officer had made enquiries from DDI, Calcutta. Most of the donors were not found to be existing at the addresses given in the affidavits. It was also found by the DDI, Calcutta that the various drafts by several donors had been purchased from two banks at the same time and the pay-in-slips for purchasing the drafts had been prepared in the handwriting of only one person. Stamp papers in respect of drafts were also found to have been purchased from one vendor when the donors as per the addresses given in the affidavits belonged to various places. On receiving this information assessee had been confronted and asked to produce the donors. Assessee, however, failed to produce the donors. The Assessing Officer accordingly treated the gifts as bogus and since the minor children had no means of earning the income, the gifts claimed to have been received in the name of minor children were treated to be the income introduced by the father out of undisclosed sources.
14. The CIT(A) has deleted the addition on the ground that assessee had furnished the evidence before the Assessing Officer and the mere fact that the gifts had been made by the strangers and that they were not available at the given addresses was not sufficient for treating the gifts as not genuine. The learned CIT(A) has strongly relied upon the decision of the Supreme Court in the case of CITv. Orissa Corporation (P) Ltd.[ 986] 159 ITR 78 and the decision of the Delhi High Court in the case of Mrs. Sunila Vachani (supra) in support of his findings. We have to consider as to whether on the facts and in the circumstances of this case, the assessee can be said to have discharged the burden that lay on him and as to whether the principle in the case of Orissa Corporation (P) Ltd. (supra) and in the case of Mrs. Sunita Vachani (supra) had rightly been applied by the CIT(A). As we have already pointed out that the burden was on the assessee relating to establishing the identity of the donors, their creditworthiness and the genuineness of the gifts. There is no doubt that assessee had identified the donors by giving their names and addresses and the demand notices under the Income-tax Act as well as under the Gift-tax Act as also the copies of the balance-sheets purported to have been filed along with the income-tax returns. However, when the Assessing Officer made enquiries through DDI, Calcutta, it was found some donors had filed gift-tax returns and income-tax returns but they were not existing at the given address. Gift-tax returns of only five donors had been found to have been filed. In respect of seven donors gift-tax returns were not found on record. Assessee had made a request to the Assessing Officer for issue of summons under Section 131 to the donors. However, as a result of the enquiry made by the Assessing Officer through DDI, Calcutta, the Assessing Officer considered the exercise of issuing notices to the creditors as an exercise in futility. It was at this stage, the assessee was asked to produce the donors. The donors admittedly have not been produced by the assessee nor is there any evidence on record to suggest that assessee had explained his inability to produce the creditors for reasons beyond his control. It is true that Assessing Officer could have made further enquiry in this regard so as to ascertain as to whether the donors ever existed at the addresses given in the respective affidavits. Though that enquiry has not been made yet it cannot be said that the evidence furnished by the assessee was sufficient to establish the three important factors that are required to be established in order to prove that the gifts received were genuine. An affidavit of a person unknown to the assessee along with demand notice showing that he is assessed to tax and the gift-tax return and the balance sheet furnished along with the return of income for asst. year 1982-83 by all the donors would be a prima facie evidence in support of the claim. However, on careful examination of this evidence, it is evident that it by itself does not establish two important factors, namely, the capacity of the donors to make the gifts and the genuineness of the gifts. Though it is true, as held by their Lordships of the Delhi High Court in the case of Mrs. Sunita Vachani(supra) that the mere fact that the gifts had been received from strangers may not be enough to hold the gifts as not to be genuine, yet it was for the assessee to establish that the gifts received from the strangers were genuine. The decision of the Delhi High Court in the case of Mrs. Sunita Vachani(supra) has got to be read in the light of the facts and findings recorded by the Tribunal in that case. In that case, the Tribunal has recorded a categorical finding that on the basis of the evidence on record, it was established beyond doubt that the gifts had been genuinely made to the donees. Therefore, the mere fact that the gifts have been made by the strangers may not be enough to uphold the addition provided there is sufficient evidence on record to establish that the gifts had been genuinely made to the donees.
15. In the case of K.L. Aggarwal (supra) their Lordships of Delhi High Court held that “the onus of proving the validity of the gifts made to the assessee is on the assessee. It is for the assessee to produce the donors for being examined. The question of summoning the donors for being examined can arise only if the assessee informs the assessing authority that he is not in a position to obtain the presence of the donors and the summons should be issued”.
16. In the present case on the basis of the information collected by the Assessing Officer from DDI, Calcutta, it was found that the donors were not available at the addresses indicated in the affidavits. The assessee had been asked to produce the donors. The assessee was also informed about the results of the enquiry made by the DDI, Calcutta, particularly the fact that the donors were not available at the given addresses. On the basis of this information, assessee had been asked to produce the donors. Assessee failed to produce the donors. The CIT(A) has relied upon the decision of the Supreme Court in the case of Orissa Corporation (P) Ltd. (supra) to hold that the mere fact that the notices issued to the creditors for appearance have been returned with the endorsement “left”, the amount of the credit could not be added to be the income of the assessee. The observation of the Supreme Court has got to be read as a whole in the context it was made and in the light of the facts of that case. In that case also the Tribunal had recorded a finding that assessee had furnished sufficient evidence to establish the genuineness of the credits. Their Lordships of the Supreme Court considering the fact that no attempt had been made by the Assessing Officer to examine the source of the credit, held that the mere fact that the notices had been received back with the remark “left” was not sufficient to direct the Tribunal for making a reference. The principle laid down is inapplicable to the facts of this case in view of the fact that Assessing Officer had pursued the matter after getting the information of non-availability of the donors, by asking the assessee to produce the donors. Moreover, in the present case the Assessing Officer had the benefit of the balance sheets filed by the donors along with their income-tax returns for asst. year 1982-83. As per the balance sheets of the donors the total accumulated capital as on 31-3-1982, gifts made and the drawings made for household expenses are as under:
Total Gift Drawings Income-tax
Capital made for household paid
Rs. Rs. Rs. Rs.
Ganesh Kr. Gupta 34,775 20,000 3,000 Nil
Santosh Devi 31,041 15,000 3,600 Nil
Anup Jhunjunwala 48,505 15,000 3,600 Nil
Raj Kr. Aggarwal 37,896 15,000 3,000 17
Gouri Ditt Gupta 64,449 15,000 5,387 Nil
Lalit Gupta 36,940 20,000 3,000 Nil
Ajit Aggarwal 34,332 20,000 3,000 Nil
Radhey Shyam Jhunjhunwala 39,504 15,000 5,000 Nil
Suresh Aggarwal 39,880 15,000 3,750 Nil
Harikishan Rathi 37,607 15,000 3,100 Nil
Ghanshyam Das Jhunjhunwala 31,603 15,000 4,500 Nil
Mahesh Kr. Gupta 64,633 20,000 3,600 Nil
The above chart depicts the financial strength of the donors. The withdrawals for household expenses in the case of all the donors but for one does not exceed Rs. 5,000 p.a. On the basis of financial strengths depicted in the balance sheets of the donors it cannot be said that assessee had established the financial capacity of the donors to make the gifts. The capital of the donors in most of the cases is less than Rs. 50,000. The income of the donors is meagre, not even exceeding the maximum amount not liable to tax. In most of the cases, no tax was payable. In such circumstances, it is not understood as to why the income-tax returns had been filed when no tax was payable by the donors. It is not difficult in the current scheme of summary assessments for any person to file the returns of income in the name of any other person and getting the assessments made under Section 143(1) as the Department as a matter of policy in most of the cases does not require the presence of the assessees in support of the returns. Similar is the position in respect of the gift-tax returns. Returns could be filed and assessments made on the basis of the returns without the presence of persons. Though summary assessments are valid in the eye of law yet when one has to examine as to whether such persons in fact existed much weight cannot be given to such assessmentsin this case, a strong burden lay on the assessee to establish the genuineness of the gifts. The mere fact that the donors’ capital was more than the amounts of gift(s) made does not establish possession of the cash available on the respective dates of making the gifts. The balance sheets also do not establish that the amounts were available with the donors on the date of purchasing the drafts in the name of minor children of the assessee. It has to borne in mind that the gifts have not been made by payees account cheques but by account payee drafts purchased by depositing cash in the bank. There is no difficulty for anyone to purchase the drafts in various names and in such circumstances the drafts purchased by one person would be purported to have been purchased by various persons.
17. In the case of IAC v. Indian Art Emporium [1994] 50 ITD 21 (Bom.) (TM) it has been held that mere filing of the returns and possession of agricultural lands did not prove the possession of cash with the creditors on the respective dates.
18. In the case of the donors it has been found that though returns of income had been filed by all the donors for asst. year 1982-83, by a strange coincidence in 11 cases out of 12, the tax payable was nil In the case of 12th donor, tax of Rs. 17 has been paid. The gift-tax challans in the case of 12 donors by strange coincidence have been found to be in the handwriting of one person. Again by a strange coincidence the affidavits of 12 different donors residing at different places were authenticated before the same notary on the same date. The stamp papers were also purchased from one stamp vendor by coincidence. It was also a strange coincidence that all the 12 donors residing at Calcutta unknown to the donees decided to make gifts of amounts which in their cases could be said to be substantial in view of the meagre drawings for household expenses and financial capacity visible as per the balance-sheets attached to income-tax returns.
19. In the light of the above circumstances, the affidavits of the donors filed before the Assessing Officer could not be accepted as correct. In the case of ShriKrishna(supra), their Lordships of the Allahabad High Court held as under:
It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that that statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability.
At this stage, we may also refer to the decision of the Supreme Court in the case of Durga Prasad More (supra) where it has been held as under:
It is true that an apparent must be considered real unless until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.
It is evident from the aforementioned decision of the Supreme Court that where there are reasons to believe that apparent is not real, it is open to the Assessing Officer to take into account the surrounding circumstances to find out the reality of the claim made by the assessee.
20. Referring to the onus their Lordships of the Supreme Court in Durga Prasad Mores case (supra) held that the law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It all depends on the facts and circumstances of each case. In some cases the onus may be heavy whereas in others, it may be nominal. There is nothing rigid about it. When we consider the facts of the present case in the light of proposition of law laid down by their Lordships of the Supreme Court, we are not left with any doubt that the onus that lay on the assessee in this case, has not been discharged.
21. In this case, assessee had claimed to have received various gifts from 12 persons claimed to be residents of Calcutta when assessee is residing in Meerut. The donors are neither related to the assessee nor otherwise close to the donees or to the assessee. Assessee is unable to say as to under what circumstances the strangers had made the gifts. For the persons not having more than Rs. 50,000 as capital, the making of gifts ranging from Rs. 15,000 to Rs. 30,000 was undoubtedly a big sum. It cannot be believed that the said persons had made the gifts to unknown persons without any rhyme or reason. The story of the assessee cannot be believed, as it does not accord with human probabilities. We are unable to swallow the story of the gifts having been made by 12 unknown persons to the minor children of the assessee. We do no state that assessee was precluded from producing evidence to establish the claim even if it did not accord with human probabilities. In a case of such nature as already held, the onus of the assessee is heavy and the evidence that is required to be produced should be sufficient for shifting the onus to the Department. In the case of Mrs. Sunila Vachani (supra), the Tribunal had recorded a finding of fact that there was sufficient evidence to establish that genuine gifts had been made by persons of substantial means. On the basis of that finding the Hon’ble High Court declined to call for a statement of case.
22. Considering the facts and circumstance of this case, we are of the view that the CIT(A) was not justified in holding that the onus that lay on the assessee to establish the identity of the donors, creditworthiness of the donors and genuineness of the gifts had been discharged. On the contrary, we are of the view that the onus that lay upon the assessee has not been discharged.
23. Now the only issue that remains to be considered is as to whether the amounts claimed to have been received by the minor children could be assessed in the hands of their father. e. the appellant. In this case the story of gifts has riot been accepted as correct. The minors have no means to earn income. In such circumstances, it is permissible to presume that the amounts of gifts claimed to have been received by the assessee in the name of minor children is income of the assessee from undisclosed sources. In certain circumstances, it is permissible to do so, as is evident from decision of the Supreme Court in Durga Prasad More’s case (supra). In that case assessee had received some income which was claimed to be the income of the wife. The Tribunal disbelieved the story of the assessee and held that the income was assessable in the hands of the assessee. Their Lordships held as under:
It is a story that does not accord with human probabilities. It is strange that High Court found fault with the Tribunal for not swallowing that story. If that story is found to be unbelievable as the Tribunal has found and in our opinion, rightly that the decisions remains that the consideration for the sale proceeded from the assessee and therefore, it must be assumed to be his money.
It is surprising that the High Court has found fault with the ITO for not examining the wife and the father-in-law of the assessee for proving the Department’s case. All that we can say is that the High Court has ignored the facts of life. It is unfortunate that the High Court has taken a superficial view of the onus that lay on the Department.
24. From the observations of the Supreme Court quoted above, it is evident that if the circumstances warrant the income of the minor children or that of the wife of the assessee, can be assessed in the hands of the assessee. We accordingly uphold the decision of the Assessing Officer in assessing the amounts of the purported gifts in the name of minor children in the hands of the assessee.
25. Before we wind up, we would like to point out that the decisions cited on behalf of the assessee are distinguishable on facts. We do not consider it necessary to refer to some of the decisions which are irrelevant and distinguishable on facts. We would, however, like to refer to the Allahabad High Court decision in the case of Shamshuddin Manzoor Haque (supra) where the Tribunal had found that the amounts have been received by cheques and the donors had paid gift-tax on the gifts and/On the basis of evidence on record, it was held that the gifts were genuine. On an application to direct reference, their Lordships of the Allahabad High Court held that the gift-tax assessments having been made on the donors and that fact having not been controverted by the Commissioner and the latter having failed to take any steps to disturb these assessments made on the donors, it was amply clear that the gifts were genuine. In this case, the amounts had been received by payee’s account cheque. The Hon’ble High Court, taking note of this fact coupled with the fact that the gift-tax assessment had been made and not doubted, was of the view that since the amounts had flown from the donors, therefore, the credit in the capital account of the partners would not be doubted. In the present case, the amounts have not been received by account payee cheques but by drafts. We have already pointed out elsewhere in this order that the drafts could be purchased by any person in the name of any other person. Therefore, the decision is distinguishable on facts. Moreover, the decision has been read in the context in which rendered in CITv. Sun Engg. Works (P.) Ltd[1992] 198 ITR 297 (SC). The contention raised on behalf of the assessee that Section 68 is not attracted in this case is also a controversy unnecessary as the Assessing Officer has not specifically referred to the said section. The amounts have been reflected by the assessee in the books of the minor children. The minor children have no independent source, of income. They are represented by the assessee. The books of account have been maintained by the assessee, purportedly for minor children. Once it has been found that the gifts claimed to have been received in the name of minor children are not genuine, the amount credited in the books of account could reasonably be said to be credited in the books of account of the assessee. In that view of the matter, Section 68 would be attracted. Even if Section 68 is not attracted, Section 69A would be attracted as assessee had claimed to have received the money and as such he is found to be the owner of the money. He was under an obligation to establish the source of acquisition which in the light of our findings he has failed to do so. Therefore, the amount could be assessed under Section 69A. We, therefore, do not find any merit in the contentions raised on behalf of the assessee in this regard. The decision of the Allahabad High Court, which is the jurisdictional High Court, in the case of Lallumal (supra) and decision of Bombay High Court in the case of Hariram Hemraj v. CIT [1982] 136 ITR 168 also supports the view.
26. The appeal of the revenue is accordingly allowed, the addition is restored.
27. The facts in the case of Arun Kumar Jain (supra) are similar to the case of Ajay Kumar Jain. In fact the CIT (A) had followed his order in the case of Arun Kumar Jain (supra) in this appeal. Therefore, this appeal is also covered by our above decision in the case of Arun Kumar Jain (supra). The addition on account of gifts is restored.
28. In the result, appeals of the revenue are allowed.
