K.L. AGGARWAL v. INCOME TAX OFFICER
[Citation -1987-LL-0428-4]

Citation 1987-LL-0428-4
Appellant Name K.L. AGGARWAL
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 28/04/1987
Assessment Year 1974-75, 1976-77
Judgment View Judgment
Keyword Tags development officer • managing director • savings bank • bank draft • gift-tax
Bot Summary: Counsel for the assessee, referred to the material on the record and submitted that the gifts were duly established on the basis of the evidence on the record. According to her, the amount of Rs. 50,000 was gifted after withdrawing the same from her husband Shri Sukhbir Prasad Jain. 15th Dec., 1975, the assessee had stated that the gift was made out of natural love and affection due to long friendship. The same is the position of the other gift of Rs. 25,000 which she is alleged to have made on 30th June, 1975. The family of Sh. Sukhbir Prasad Jain, as their records showed made total gifts of Rs. 2,31,000 from March, 1972 to. 14th March, 1974 to the effect that the gift was made through cheque drawn on the Punjab National Bank, Civil Lines, Saharanpur on 14th March, 1974. 1974-75 the assessee's appeal should be allowed in part, i.e. to the extent of gifts made by Shri Vidyasagar Jain and Chaman Prakash.


DELHI BENCH K.L. AGGARWAL v. INCOME TAX OFFICER April 28, 1987 JUDGMENT V.P. ELHENCE, J.M. These two appeals, filed by assessee, out of separate orders dt. 6th Oct., 1986 & 29th Oct., 1986 of ld. CIT(A) VII, New Delhi, for asst. yrs. 1974-75 and 1976-77. assessee, Shri K.L. Aggarwal is individual. He deals in chemicals. question involved in both years relates to certain gifts alleged to have been received by assessee, details whereof would be clear from following table: Sl. No. Name of Donors Amount & date for asst. yr. 1974-75 Amount & date for asst. yr. 1976-77 Smt. Shiromani Devi W/o Sh. Sukhbir Prasad Jain of Jagadhari Rs. 50,000 by Draft of Oriental Bank of Commerce, dt. 7-4-1975 Rs. 25,000 dt. 30-6-1975 Shri Sukhbir Prasad Jain Nil Rs. 25,000 dt. 30-6-1975 Shri Vidyasagar Jain S/o Sh. Kulwant Rai Jain of Saharanpur Rs. 25,000 by cheque dt. 14-3-74 on Punjab National Bank, Civil Lines, Saharanpur. Nil Shri Chaman Prakash of Saharanpur. Rs. 25,000 by cheque dt. 21-3-1974 on Union Bank of India, Saharanpur. assessee filed confirmations from aforesaid parties, as also copies of gift-tax assessment orders in cases of Smt. Shiromani Devi and Shri Vidyasagar Jain. ITO also examined Shri Vidyasagar Jain and Shri Chaman Prakash. ITO issued letter of enquiry to Oriental Bank of Commerce under s. 131 and bank informed ITO vide its letter dt. 22nd March, 1980 that draft for Rs. 50,000 was not issued by it. After scrutinising all evidence, he came to conclusion that initial deposits of donors in banks were negligible and that at end of year in which gifts were given, deposits remained negligible. He, therefore, concluded that it was money of assessee himself which was put in bank in order to create evidence of gifts. He, therefore, made addition of Rs. 1,00,000 for asst. yr. 1974-75 and Rs. 50,000 for asst. yr. 1976-77 by treating them as income from other sources. In appeal ld. CIT(A) by brief order agreed with ITO. ld. CIT(A) was of view that donors were of very ordinary means and there were no particular occasions for alleged gifts. conclusion drawn was that donors were mere dummies. Shri C.S. Agarwal, ld. counsel for assessee, referred to material on record and submitted that gifts were duly established on basis of evidence on record. He also referred to following decisions: (i) Nathu Ram Premchand vs. CIT (1963) 49 ITR 561 (All); (ii) CIT vs. Ganeshi Lal Sham Lal (1966) 61 ITR 408 (Punj); (iii) Jaswant Rai vs. CWT (1977) 107 ITR 477 (P&H); (iv) Brig. B. Lall vs. WTO (1980 15 CTR (Raj) 180: (1981) 127 ITR 308 (Raj) & (v) Sona Electric Co. vs. CIT (1984) 43 CTR (Del) 287: (1985) 152 ITR 507 (Del). On other hand ld. Departmental Representative placed k reliance on orders of IT authorities. A. We have heard ld. representatives on both sides in these appeals and have also considered decisions cited on their behalf. Smt. Shiromani Devi filed affidavit confirming gift. According to her, amount of Rs. 50,000 was gifted after withdrawing same from her husband Shri Sukhbir Prasad Jain. said gift was taxed in her gift-tax assessment for asst. yr. 1974-75. ITO addressed letter dt. 11th March, 1980 to Smt. Shiromani Devi to produce all records regarding wealth of her husband. She was not produced before ITO. ITO noticed that she had account in Punjab National Bank, Jagadhari which was opened on 11th April, 1974 with deposit of Rs. 100. Andhra Bank Ltd. Connaught Circus is said to have collected proceeds of demand on Draft No. DG 072009/316/73 dt. 7th April, 1973 of Oriental Bank of Commerce and to have credited to her savings bank account No. 35 in April, 1973. Though it is right that she was not related to assessee but her means for being able to make gift of such substantial amount have not been established. There is also no evidence as to what was occasion for making such gift to unrelated person. In his letter dt. 15th Dec., 1975, assessee had stated that gift was made out of natural love and affection due to long friendship. In absence of evidence and production of Smt. Shiromani Devi, mere fact that she got gift-tax assessment made wherein alleged gift was shown, would not be enough. same is position of other gift of Rs. 25,000 which she is alleged to have made on 30th June, 1975. alleged gift is, therefore, not established. B. So far as Sh. Sukhbir Prasad Jain is concerned, he is husband of Smt. Shiromani Devi. He is alleged to have made gift of Rs. 25,000 on 30th June, 1975. family of Sh. Sukhbir Prasad Jain, as their records showed made total gifts of Rs. 2,31,000 from March, 1972 to. June, 1975 Shri Sukhbir Prasad Jain was partner in firm of M/s Kewalram Uggar Sain who carried on business in name and style of M/s Swastika Metal Industries. On dissolution of said firm, Shri Sukhbir Prasad Jain is said to have received Rs. 2,50,000 on 19th Jan., 1967. Thereafter he carried on his own independent business in name and style of M/s Globe Metal Industries which was closed down. He is also said to have started small unit under name and style of Unesco Metal Industries, income from which did not exceed Rs. 1,000 per month. He died on 8th Dec., 1979. He opened account on 7th April, 1972 with Rs. 100. He withdrew Rs. 50 and Rs. 20 on 10th April, 1972 and 11th April, 1972 respectively and on 24th April, 1972 he deposited Rs. 54,000 in cash. He issued cheque for Rs. 50,000 in favour of assessee which was cleared by bank on 1st May, 1972. ITO had found on perusal of copy of his account that balance in his account remained very small. These transactions have been examined and discussed in assessment order in detail. Here also Shri Sukhbir Prasad Jain could not be produced. remarks applicable in case of Smt. Shiromani Devi are equally applicable in this case. Therefore, we agree with appreciation of material on record as made by ITO and ld. CIT(A). next case is that of Shri Vidyasagar Jain. He gave gift deed dt. 14th March, 1974 to effect that gift was made through cheque drawn on Punjab National Bank, Civil Lines, Saharanpur on 14th March, 1974. He was examined before ITO. He was working with LIC as Development Officer from May, 1962 to July, 1976. His salary in 1962 was Rs. 175 per month and in 1976 it was Rs. 1,250 per month. He is alleged to be owning 52 bighas of agricultural land out of which 30 bighas were sold in July, 1973 for Rs. 25,000. According to him sale proceeds were received by bank draft which was deposited in his savings bank account with Punjab National Bank, Civil Lines on 11th July, 1973. He said that he had close friendship with assessee since time he was running industry at Jagadhari. In reply to specific question as to whether cash was provided by assessee to make deposit in bank in order to get cheque passed as he had already obtained cheque, Shri Vidyasagar Jain denied suggestion and stated that it was his own money. copy of account of M/s Mayur Machinery Mart, Railway Road, Saharanpur, had been filed by him as also certificate from Laxmi Financiers, Ambala Road, Saharanpur. On basis of these evidence, so far as Shri Vidyasagar Jain is concerned, gift in question stood established. Therefore, apparent had to be taken as real in absence of any material to contrary. Lastly comes case of Shri Chaman Prakash. He gave gift deed and was also examined. He stated that he knew assessee for 20-25 years. He had been deriving income from agriculture and money-lending. He was Managing Director of Jagadhari Light Railways. Some of lands owned by him were said to have been sold and business of company was said to have been suspended in 1956. He owned one single-storeyed house at Gill Colony in Saharanpur. Earlier he had accounts in Imperial Bank, Saharanpur, Lloyds Bank, Simla and Punjab National Bank, Subhash Ganj, Saharanpur. Later on he had only one account in Punjab National Bank, Civil Lines, Saharanpur. He stated that his net savings upto 30th July, 1974 amounted to Rs. 55,000. According to him deposits were available with M/s Minakshi Sales Corporation, Jagadhari and M/s Ruchika Enterprises, Meerut. When asked, he stated that he made gifts to assessee as he was more dear and near to him than any family member. He also denied suggestion that amounts gifted represented assessee's own money. He also gave details of rented properties at Jagadhari. perusal of his statement and other material on record also establish that in his case also apparent had to be taken as real in absence of any material to contrary. In result we are of view that for asst. yr. 1974-75 assessee's appeal should be allowed in part, i.e. to extent of gifts made by Shri Vidyasagar Jain and Chaman Prakash. However so far as asst. yr. 1976-77 is concerned, gifts remained unexplained. In result ITA No. 5696/Del/86 is partly allowed whereas ITA No. 5697/Del/86 fails and is dismissed. *** K.L. AGGARWAL v. INCOME TAX OFFICER
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