Commissioner of Income-tax v. Ramesh Suri
[Citation -2015-LL-0210-9]

Citation 2015-LL-0210-9
Appellant Name Commissioner of Income-tax
Respondent Name Ramesh Suri
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 10/02/2015
Judgment View Judgment
Keyword Tags business connection • donee
Bot Summary: Mr. Ashwani Suri, the original donee complied with the directions of the donor contained in the letter and transmitted the relevant amounts to each of the beneficiaries named in the said letter. The assessees, including the present assessee, resisted these proceedings and relied upon various letters which are set out in the order of ITR No.17/2002 Page 2 the CIT. The said letters are as follows : i) Letter dated 10.1.84 from Sh. Arjun C. Waney to Sh. Ashwani Suri inclusive of 16000 UD dollars favouring Shri Ramesh Suri. Iii) Letter dated 25.1.84 from Sh. Ramesh Suri Ramesh to shri Waney regarding gift of 16000 iv) Letter dated 10.2.84 from Sh. Waney to Sh. Ashwani Suri regarding gift of 300000. The fact of the receipt of the amount from abroad stands established without going into the question of the person in who hands the amount should be added there appears to the basis for making the addition in the hands of the because the link between the receipt of the amount by shri Ashwani Suri from abroad and by the assessee has been established. Although his relationship with Mr. Ashwani Suri was known, being his brother-in-law, the amounts to be disbursed in particular, to the assessee, were unknown. In these circumstances, the underlined transaction whereby the donor directed amounts to be disbursed by Mr. Ashwani Suri to specified or named individuals cannot be treated as unnatural. As noticed earlier, the relationship between the donor, Mr. Ashwani Suri and Mr. Ramesh Suri i.e. the assessee is not disputed.


IN HIGH COURT OF DELHI AT NEW DELHI Decided on: 10th February, 2015 ITR 17/2002 COMMISSIONER OF INCOME TAX ..... Petitioner Through Mr. Balbir Singh, sr. standing counsel with Ms. Rubal Maini, Adv. versus RAMESH SURI ..... Respondent Through Mr. Prakash Kumar, Adv. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % 1. following reference has been received under erstwhile Section 256(2) of Income Tax Act. It is agreed that question of law which this Court has to answer is Whether on facts and in circumstances of case, Tribunal was correct in law in holding that amount of US Dollors 16000 equivalent to 1,84,860/- received from Arjun C. Waney was in nature of gift in hands of Shri Ramesh Suri and hence not taxable? undisputed facts are that one Mr. Arjun C Waney settled in United States, gifted aggregate of $3 lakhs vide letter dated 10.1.1984 to one Sh. Ashwani Suri. letter and other correspondence which was placed on record of Income Tax Authority, directed beneficiary Mr. Ashwani Suri to distribute sum ITR No.17/2002 Page 1 received in different proportions. relevant extract of letter reads as follows : As discussed I intend to make further gift of US $ 300,000 in favour of your various family members and M/s Divya International Pvt. Ltd. your family concern, with details as under : Divya International P. Ltd. $ 150000 M/s G. Sagar Suri & HUP 50000 Mr. G. Sagar Suri 16000 Mr. Ujval Sagar Suri 16000 Mr. Narinder Suri 16000 Mr. Ramesh Suri 16000 Mrs. Leela Suri 9000 Mr. Roshan Lal Suri 9000 Yourself 18000 $ 300000 Please send me letters of acceptance of gifts from your above relations and M/s Divya International Pvt. Ltd. so that I may remit amount to them. As suggested by you, I will be sending one draft US $ 300000 in your name to be distribution on my behalf to above family member amounts indicated against each. 2. Mr. Ashwani Suri, original donee complied with directions of donor contained in letter and transmitted relevant amounts to each of beneficiaries named in said letter. These transactions were made out by each of beneficiaries. revenue sought to bring to tax these amounts, on plea that sources of income were undisclosed, and were liable to be added back under Section 68, since they were not genuine gifts. assessees, including present assessee, resisted these proceedings and relied upon various letters which are set out in order of ITR No.17/2002 Page 2 CIT. said letters are as follows : i) Letter dated 10.1.84 from Sh. Arjun C. Waney to Sh. Ashwani Suri inclusive of 16000 UD dollars favouring Shri Ramesh Suri. ii) Letter dated 12.1.84 from Sh. Ashwani Suri to Sh. Waney regarding gift of 300000. iii) Letter dated 25.1.84 from Sh. Ramesh Suri Ramesh to shri Waney regarding gift of $16000 iv) Letter dated 10.2.84 from Sh. Waney to Sh. Ashwani Suri regarding gift of $ 300000. v) Copy of advice of Bank of America, N. Delhi dated 28.9.84 to Sh. Ashwani Suri dercredit (sic) to his a/c. 3. AO rejected contentions of various assessees including present assessee, and brought to tax sum of 1,84,860/- being equivalent of US Dollar 16,000 received, pursuant to Mr. Waney s directions to Mr. Ashwani Suri. CIT(Appeals) upon being approached, considered conspectus of circumstances and reversed AO s decision holding as follows : copies of correspondence on which appliance has placed reliance have been filed. fact of receipt of amount from abroad stands established without going into question of person in who hands amount should be added there appears to basis for making addition in hands of because link between receipt of amount by shri Ashwani Suri from abroad and by assessee has been established. In these circumstances that in treating amounts as income of assessee from undisclosed sources is not justified and cannot be upheld. addition is deleted. 4. Income Tax Appellate Tribunal (hereinafter referred to as ITAT ) rejected revenue s appeal. In doing so, it followed its previous ITR No.17/2002 Page 3 ruling in case of original donee Mr. Ashwani Suri. This led to payment by revenue, for reference which was rejected. Revenue therefore approached this Court under Section 256(2). That was disposed of by judgment reported as CIT v. G. Sagar Sun & Sons & Ors. (1998) 234 ITR 58 (Del). revenue s claim was upheld and ITAT was directed to frame appropriate questions, which it did. It is in these circumstances that question adverted to above has been referred. 5. It is contended, on behalf of revenue, that ITAT fell into error in holding that sums gifted to assessee were genuine. learned counsel pressed upon that fact that, essentially, donee was Mr. Ashwani Suri and that onward transmission of amounts did not satisfy test of genuineness. learned counsel submitted that under Section 68, it is not only identity of person making donation or giving money which is to be looked into, but also creditworthiness and genuineness of transaction. Counsel submitted that there was no explanation as to why Mr. Waney wished to make donation. Although his relationship with Mr. Ashwani Suri was known, being his brother-in-law, amounts to be disbursed in particular, to assessee, were unknown. Equally, submitted counsel for revenue, creditworthiness of donor was not made known and, in these circumstances, assessee had to discharge onus of discharging whether transaction was genuine. revenue relied upon decision of Supreme Court in CIT V. P. Mohanakala & Ors (2007) 291 ITR 278 (SC). 6. learned counsel for assessee, on other hand, submitted that question of whether one underlined transaction (which led to receipt of 1,54,000/-) was genuine or not, in circumstances of case, is ITR No.17/2002 Page 4 pure finding of fact which has been concurrently upheld by CIT(Appeals) and ITAT, and it would be perverse in law, if this Court should analyze reasons given by either or both of those Tribunals. 7. It was submitted that modes for gifting amounts of properties cannot be really gone into by revenue, so long as identity or relationship is established, which has been done in present instance. This Court considered factual matrix. revenue does not dispute present relationship between donor (through Mr. Waney) and Mr. Ashwani Suri. It also does not dispute that letter in terms of which initial donation was made to Mr. Ashwani Suri, directed disbursement of amounts in particular proportion, which he did. assessee is also related to Mr. Ashwani Suri. In these circumstances, underlined transaction whereby donor directed amounts to be disbursed by Mr. Ashwani Suri to specified or named individuals cannot be treated as unnatural. Both authorities CIT(Appeals) and ITAT took note of these facts and further noticed that all gifts were rooted to normal banking transactions. While Section 68 certainly enables AO to bring to tax amounts which are suspect, in transaction of present kind, where identity and relationship of donor are known, AO in our opinion ought not to have concluded that transaction by which assessee received amount of 1,84,860/- was ingenuine. 8. As far as reliance placed on P. Mohanakala & Ors (supra) is concerned, this Court noticed that findings of AO and CIT(Appeals) went against assessee in that case; more importantly donor had no relationship save business connection with one of donees. Furthermore, statement of parties i.e. donees themselves, was ITR No.17/2002 Page 5 inconsistent and secondly, donor had operated through no less than three different names. Moreover, ITAT spoke in divided voice, in that there was difference of opinion. Given this matrix of circumstances, Supreme Court was of opinion that claim that there was genuine donation was suspect. 9. As noticed earlier, relationship between donor, Mr. Ashwani Suri and Mr. Ramesh Suri i.e. assessee is not disputed. In these circumstances, to require further proof, considering that donor was NRI at given point of time in 1984, might have been asking for too much. In any event this Court is of opinion that since concurrent finding has been rendered largely based on facts no interference is called for. Reference is accordingly rejected. S. RAVINDRA BHAT (JUDGE) R.K.GAUBA (JUDGE) FEBRUARY 10, 2015 vld ITR No.17/2002 Page 6 Commissioner of Income-tax v. Ramesh Suri
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