IN INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER ITA No.157/Ran/ 2015 Assessment Year :2010-11 Lalit Kumar Jaganani vs Income Tax Officer, C/o. Sri S.K.Pod dar, ward-1(4), Luby Advocate, Upper Bazar, Circular Road, Behind central Bank, Dhanbad Ranchi-834 001 PAN/GIR No. : ACAPJ 9045 Q (Appellant) .. (Respondent) Appellant by : Shri Devesh Poddar, Advocate Respondent by : Shri Chaudhury Oraon, DR Date of Hearing :14-09-2016 Date of Pronouncement : 16-09-2016 ORDER This is appeal by assessee against order dated 20.08.2015 of Commissioner of Income Tax (Appeals), Dhanbad relating to assessment year (AY)2010-11. 2. only issue that arises for consideration in this appeal by Assessee is as to whether CIT(A) was justified in confirming order of AO in making addition of sum of Rs.3 lacs u/s.68 of Income Tax Act, 1961, (Act). 3. Assessee is individual. He filed return of income for AY 2010-11 declaring total income of Rs.2,04,600/-. During year assessee has shown to have received cash gifts of Rs.1 lakh each from (1) Sri Sunil Kr. Jagnani, brother of assessee, (2) Sri Kedar Nath 2 ITA No.157/Ran/2015 AY:2010-11 Jagnani, father of assessee and (3) Smt. Sita Devi Jagnani, mother of assessee. Gift declarations by Donors were filed before AO. All donors were income-tax assessees and their return of income, copy of balance sheet and computation of income were filed. AO noticed from computation of income filed in case of donors that (1) Sri Sunil Kr. Jagnani was having main source of income from retail trade and income from this source had been declared at Rs.89,500/- on turnover of Rs.4.80 lakh i.e. net profit is @ 18.65% of turnover, (2) Sri Kedar Nawtdh Jagnani was having main source of income from retail trade and income from this source had been declared at Rs.1.24,400/- on turnover of Rs.6.80 lakh i.e. net profit is @ 18.29% of turnover and (3) Smt. Sita Devi Jagnani was having main source of income from retail trade and income from this source has been declared at Rs.1,49,100/- on turnover of Rs.6.90 lakh i.e. net profit is @ 21.61% of turnover. 4. As rate of net profit shown in case of donors was abnormally high, AO issued summons u/s. 131 of Act were issued to all three donors for personal appearance and it was also specifically mentioned in summons to produce evidence to prove income earned during year as shown in computation of income. In response to summons Sri Sunil Kr. Jagnani only appeared whose statement on oath was recorded. Statement on oath mainly revealed that Sri Sunil Kr. Jagnani runs Kirana Shop at Chass having turnover of around Rs.5 lakhs. His family consists of himself, wife and three school going children, one of children stays with one of relative since Sri Sunil Kr. Jagnani is not financially sound to maintain all children and wife also earns Rs.2,500/- to 3,000/- monthly to maintain family. No evidence of purchase or sale etc, against which income has been shown was produced. According to AO from statement on oath, it was very surprising that Sri Sunil Kr. 3 ITA No.157/Ran/2015 AY:2010-11 Jagnani cannot manage his family on his own and he is making gift to his brother who is well established. Hence, AO held that creditworthiness of donor is not proved and also source and genuineness of gift were also not proved since gift is made in cash. 5. As far as Sri Kedar Nath Jagnani and Smt. Sita Devi Jagnani is concerned, they did not appear in response to summons u/s 131 on ground that they are out of station. However, AO on perusal of copy of return of income, balance sheet and computation of income was of view that they also did not file any evidence to show purchase or sale etc. against which income has been sown at very high rate of net profit mentioned as above was produced. AO therefore held that in absence of any evidence of income earned creditworthiness of donors is not proved and also source and genuineness of gifts were not proved since gifts are made in cash. AO therefore treated gift of Rs.3 lakhs received by assessee and credited to capital account as unexplained cash credit u/s. 68 of Act, and Rs.3 lakhs was added to total income as unexplained cash credit u/s. 68 of Act. 6. On appeal by Assessee, CIT(A) confirmed order of AO agreeing with view of AO. Aggrieved by order of CIT(A), Assessee has preferred present appeal before Tribunal. 7. I have heard submission of learned counsel for Assessee who drew my attention to evidence in form of return of income of donors which was accepted by Assessing Officer of donors. He submitted that revenue authorities in disbelieving 4 ITA No.157/Ran/2015 AY:2010-11 explanation of Assessee with regard to gifts received have attempted to examine source of donors in assessment of donee, which is not permissible in law. learned DR relied on order of AO. 8. After considering rival submissions, first aspect which I notice is that Sri Sunil Kumar Jagnani is brother and Shri Keder Nath Jagnani is father and Smt.Sita Devi Jagnani is mother of Assessee. Therefore, there is every justification for them to give gifts to Assessee. only aspect to be considered is about creditworthiness of donors. returns filed by donors showing gift and source of funds for making gifts have already been disclosed by donors in their returns of income. AO of donors have not disbelieved capacity of donors to make gifts in question. Once three facts viz., identity of creditor, his capacity to advance loan and genuineness of transaction are established, then onus shifts onto Department. Assessee in present case has by filing documents referred to in order of assessment prima facie discharged burden cast on him u/s.68 of Act. Once aforesaid three facts viz., identity of creditor, his capacity to advance loan and genuineness of transaction are prima facie established, then onus shifts onto Department. AO in present case has found fault with capacity of donors to give gift in question to Assessee. As we have already observed, burden cast on assessee stands discharged moment assessee proves identity of creditor, his capacity to lend and genuineness of transaction. assessee cannot be further required to prove source of source of money out of which gift was given as laid down by Hon ble Madras High Court in case of S.Hastimal Vs. CIT 49 ITR 273 (Mad). In present case, I have already seen that donors have filed their returns of income and such returns of income have 5 ITA No.157/Ran/2015 AY:2010-11 been accepted. source of donors cannot therefore be gone into in assessment of Assessee. I am, therefore, of view that addition made u/s.68 of Act, in facts and circumstances of present case cannot be sustained. same is directed to be deleted. appeal of Assessee is allowed. 9. In result, appeal of assessee is allowed. Order pronounced in open court on 16/09/2016 Sd/- (N.V.VASUDEVAN) JUDICIAL MEMBER Ranch, Dated 16/09/2016 Dkp,PS Copy of Order forwarded to : 1. Appellant concerned-Lalit Kr. Jagnani, C/o Sri S.K.Poddar, Advocate, Upper Bazar B/h Central Bank, Ranchi-834001 2. Respondent concerned-Income Tax Officer, Ward-1(4), Luby Circular Road, Dhanbad 3. CIT(A) concerned 4. CIT , concerned 5. DR, ITAT, Ranchi 6. Guard file. BY ORDER, //True Copy // SR.PS, ITAT, RANCHI Lalit Kumar Jaganani v. Income-tax Officer, ward-1(4), Dhanbad