JAIPUR BENCH AMAR SINGH VERMA v. GIFT-TAX OFFICER July 18, 1986 JUDGMENT ORDER H.S. AHLUWALIA, J.M. In this case assessee filed return declaring gift of Rs. 25,000 to one Sri Anil Kumar, minor son of Sri Nenmal Jain. GTO was of opinion that assessee's only source of income was salary and remuneration. He had shown withdrawal for household expenses and thus he had very little of capital left with him. Shri Nenmal Jain was none else but well known smuggler called Nainmal Poonjaji to whose son gift had been made. assessee wash goldsmith by cast. Smt. Anjana, mother of child to whom gift was made was only self-styled sister of assessee and not his real sister. gift had been made only out of love and affection. assessee had not gifted any sum to his own sons and wife. He had not gifted anything to his old parents etc. He had not much of income or property and, in fact, had taken loan from LIC on which he was paying interest. Therefore, he could not have made this gift. He, therefore, held that gift was not genuine and money, in fact, had been transferred for camouflaging so-called cheque. It was money of Sri Nenmal, father of child channelled through child by way of bogus gift and this amount was liable to taxed in hands of Shri Nenmal as his income from other sources. He, however, made protective assessment of gift in hands of assessee. said decision has been confirmed by AAC. assessee had come up in second appeal before us. We have heard representatives of parties at length in this appeal. ITO has not really doubted making of gift. What he has stated is that amount probably belonged to noted smuggler Sri Nenmal Poonjaji and was gifted to his son through assessee. Now if amount really belonged to Sri Nenmal Poonjaji and ITO assessing Sri Nenmal is able to prove that this amount belonged to him, same can easily be added in hands of Sri Nenmal. present gift will not stand in way of that assessment. However, in present case, assessee has made gift, declared it and amount has actually been transferred to Sri Anil Kumar. It is not understood as to how this gift can be assessed as protective measure. What is more interesting is that income which is to be earned on this income which has been estimated at Rs. 3,000 has been added in hands of assessee in IT assessment. If assessee had already made gift of this amount to stranger, who is not his relation, we do not see any reason as to why interest on alleged amount of gift is being added to assessee's income unless, amount belongs to assessee. We have, therefore, deleted that interest. Simultaneously we hold that assessee is liable to pay gift-tax on amount of alleged gift subsequently. This order, however, should not be deemed to affect assessment of Sri Nenmal Poonjaji where ITO will be at liberty to his own decision in accordance with facts and circumstances of that case. In result appeal is allowed. *** AMAR SINGH VERMA v. GIFT-TAX OFFICER