JUDGMENT
1. This appeal is directed against the impugned order of the Tribunal, dated February 20, 2002, whereby the Tribunal has restored the addition of Rs. 1 lakh, gift received from Smt. Asha Devi Singhi.
2. The relevant assessment year is 1987–88. The assessee has filed the return for the assessment year 1987–88 on October 6, 1987, declaring the income of Rs. 38,460. That original assessment was completed under sec-tion 143(1) accepting the income at Rs. 38,460. Thereafter the assessment has been reopened under section 143(2)(b) of the Income-tax Act, 1961. After reopening, the assessment has been completed under section 143(3) and Rs. 1 lakh has been added, which has been received by the assessee on account of gift from one Asha Devi Singhi. Smt. Asha Devi Singhi has given the gift of Rs. 1 lakh to the assessee on October 16, 1986. She has also given the declaration to this effect by decla-ration dated October 18, 1986. On October 18, 1986, she has also given the affidavit to this effect. The Income-tax Officer of Sikkim has given the cer-tificate that Smt. Asha Devi Singhi is an assessee in the income-tax and sales tax.
3. The assessee has challenged the assessment order of the Assessing Officer. The Commissioner of Income-tax (Appeals), vide order dated March 5, 1991, set aside the assessment order and remitted the matter back to the Assessing Officer to make necessary enquiry giving opportunity to the assessee to confirm on the material collected against the assessee and also issue commission to examine Smt. Asha Devi Singhi in Sikkim.
4. A fresh assessment was passed in compliance with the direction of the Commissioner of Income-tax (Appeals) and again the income was assessed at the same amount. Again the assessee has preferred the appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) was of the view that the direction of the Commissioner of Income-tax (Appeals) in order dated March 5, 1991, has not been properly complied with. Neither proper enquiry has been made nor that lady has been examined by a commissioner, as directed in the earlier order of the Commissioner of Income-tax (Appeals). Considering the material on record, the Commissioner of Income-tax (Appeals) has deleted the amount of Rs. 1 lakh, which has been added by the Assessing Officer. Thereafter, the Department has carried the matter before the Tribunal. The Tribunal has passed the main order in the case of Padam Prakash Khandaka and restored the addition.
5. Heard learned counsel for the parties.
6. Mr. Ranka, learned counsel for the assessee, submits that in para. 7 of the Commissioner of Income-tax (Appeals) order dated March 5, 1991, clear direction has been given as to how to examine the genuineness of the gift. That has not been complied with and by a detailed order in this second round, the Commissioner of Income-tax (Appeals) has deleted the amount of Rs. 1 lakh added on account of gift. The Tribunal has not given any jus-tification to restore the addition.
7. Mr. Singhi, learned counsel for the Department, submits that the amount of gift has not been given from the account of Smt. Asha Devi Singhi, therefore, it is not genuine. Gift should be given by Smt. Asha Devi Singhi from her own money. He supported the order of the Tribunal.
8. When, after reopening of the assessment, Rs. 1 lakh has been added in the income of the assessee, the assessee carried the matter before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), vide order dated March 5, 1991, has set aside the assessment order and directed the Assessing Officer to re-examine the genuineness of the gift. The directions have been given in para. 7 of his order. The relevant para. 7 reads as under:
“After due consideration, it appears that the addition so made deserves to be set aside inasmuch as proper enquiries having a bearing on the issue with a view to decide the matter in a clinching man-ner have not been caused while deriving the adverse inference. It may be seen that the appellant has already filed an affidavit from the donor, a copy of the gift declaration, etc., and in view of this, if at all the contents of the affidavits, the contents of the gift declaration, etc., was to be disbelieved or suspected, the proper course would have been to issue commission to the concerned with a view to ascertain the factual position in respect of the genuineness of the gift so received by the appellant. The donor was living at a distance of more than 500 km., and hence, it was impracticable for the appellant to produce her for the purpose of examination and this was also not practicable for the purpose of issuing any summons under section 131. This legal hurdle could have been overcome by issue of com-mission which otherwise appears to have been not done. Similarly, if any evidence was to be made use of on the basis of the enquiries got conducted through different banks at Calcutta or through the DDI Investigation as referred to in the impugned assessment order, pro-priety demands that the person affected is to be confronted before-hand so that one may not feel aggrieved of being unaware of certain evidence being utilised against it. This is what the principles of nat-ural justice also postulate but unfortunately this was also overlooked and in view of the same, the use of the results of enquiry from these sources without confronting the appellant was not in good taste and also not in tune with the principles of natural justice. Furthermore, it may be that one of the persons buying the draft at Calcutta has signed as N.K Jain but this aspect should have been preferred (probed) further by collecting the relevant information with a view to find out as to whether the initials stood for the appellant or for some one else and that too when the probability of having a similar name or similar initials as a fact comes across in the day-to-day life. In view of all this, it would be fair and reasonable if the addition in question is set aside with a direction that the possibility of issue of commission as stated supra may be considered, the appellant may be confronted with the results of enquiries being made use of and it may also be enquired into as to whether the person buying the draft at Calcutta was a different person or otherwise, so that the facts can be properly appreciated. Other enquiries having a bearing on the issue may also be caused and only after affording a reasonable opportunity to the appellant of being heard, the acceptability or otherwise of the gift so received may be decided afresh. Hence, the addition in question is set aside for fresh consideration.”
9. Thereafter, again the matter has been considered by the Assessing Officer and the Assessing Officer has again added the same amount of gift treating the gift as not genuine. In the second round, he has not issued the commission to examine Smt. Asha Devi Singhi. He has issued commission to the Assistant Commissioner of Income-tax, Gangtok. The Assistant Commissioner of Income-tax, Gangtok, also affirmed that Smt. Asha Devi Singhi is an income-tax assessee but she is not aware of the gift. Again, the matter came back to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) gave the detailed reasons and finally held that there is no justification to treat the gift as not genuine. The relevant para, of the order of the Commissioner of Income-tax (Appeals) dated November 3, 1993, in the second round is 4.3, which reads as under:
“After due consideration of the different facts involved grounds of appeal as also the report of the concerned authority as referred to ear-lier, it appears that the addition so made was without any proper basis and there is no iota of any evidence whatsoever to show that the source of gifts referred to earlier emanated from the appellant with a view to give it a colour of genuineness for the purpose of showing it as a gift from Smt. Asha Devi. It may be seen that while filing the return of income, the gift-deed, and affidavit was filed and there was a certificate from the Income-tax Officer of the State of Sikkim wherein he has categorically affirmed of Smt. Asha Devi carrying on the business under the name and style of Narpat Singh, Gangtok, and also being an income-tax payer in the land of Sikkim State. It was also certified that she had made the gifts through the bank draft pay-able at Jaipur and it was out of her capital. The genuineness of the gift was also stated to have been verified by the Income-tax Officer of the State of Sikkim, and this certificate was dated October 24, 1986, which was filed along with the return in October, 1987. Along with the said return, the copy of the affidavit was also filed and a decla-ration of gift from the donor was also filed. In spite of this, no attempt whatsoever was made at the relevant point of time to cause the dif-ferent enquiries from the donor with a view to find out the factual position. The concerned authority has also not brought any evidence on record so as to show that the certificate given by the Income-tax Officer, State of Sikkim as referred to earlier was a make-believe statement. In the absence of the same, there was hardly any locus standi in coming, to a conclusion that Smt. Asha Devi Singhi was not being assessed to income-tax and was also not doing any business and that too when the Income-tax Officer of the State of Sikkim has categorically stated as per the certificate referred to earlier about the donor doing the business as also being assessed to income-tax. In view of this, the adverse inference so drawn by disbelieving the cre-ditworthiness of the donor was not justified. It may also be stated that the amounts were withdrawn from the bank account of Shri Ramesh Singhi, the son of the donor, and if certain deposits are made in the bank account of Shri Ramesh Singhi and the persons from whom such deposits have come are not traceable or found to be non-exist-ent, adverse inference, if any, is to be drawn with reference to such deposits in the hands of Shri Ramesh Singhi and there was no basis at all in presuming that such deposits represented the black money of the appellant having been pondered back in the guise of gift through Smt. Asha Devi shown as donor. There is no iota of evidence to show that the amounts so deposited in the account of Shri Ramesh Singhi were from the appellant or from his brothers and this is more so when the appellant has never visited Calcutta as duly admitted by him in the statement recorded by the concerned authority. It may be that in one of the applications, the initials were N.K Jain for the purpose of buying drafts but merely on this basis, it could not have been stated that the said application was signed by the appellant and particularly when the appellant has never visited Calcutta as con-tended for. Normally, as per the banking procedure, when the drafts are purchased by tendering cash at a place where no bank account is being operated by a person, the signatures in the application are given in the presence of the banking official and the appellant having no bank account at Calcutta and having never gone to Calcutta, there would not have been any possibility to move such an application. It is a day to day experience that the initials of different persons do tally but merely on this basis, it could not have been stated that the initial so given in the said application for buying the drafts at Calcutta rep-resented the initials of the appellant. Apart from this, the appellant in the course of examination by the departmental authority also denied having moved such an application as also about the similarity in the signatures, it also requested for verification of the same with the sig-natures of the income-tax returns, etc., and also for taking the hand-writing expert's opinion, but, in spite of all this, no such attempt was made by obtaining the handwriting expert's opinion and in the absence of the same, there was no justification in treating the said ini-tials as those of the appellant. The decision of the Sikkim High Court referred to earlier also makes a specific reference of the returns of the donor having been filed and assessed to tax. In view of all this, it can-not be said that the donor was not assessed to tax or was not doing any business in the State of Sikkim at the relevant point of time. It may be that the legal heir of the donor was not co-operating but merely on this basis, it cannot be said that the factum of gift was of dubious nature with a view to treat it as unexplained for the purpose of addition. There is no material evidence whatsoever to show that the money was deposited by the appellant or by a relative in the bank at Calcutta and thereafter got deposited in the account of Shri Ramesh Singhi which ultimately came back to the appellant under the guise of a gift. It may be that there was some racket for showing certain amounts by way of gift from persons living in the State of Sikkim at the relevant point of time but in the absence of any evidence, circumstantial, documentary or corroboration, it could not have been stated that the appellant was also involved in similar transactions vis-a-vis the factum of gift under consideration. In view of this, the report of the departmental authority in regard to there being a racket was of general nature without giving any specific particulars so as to justify the adverse inference so drawn. It may be that the appellant was not in a position to give the details about the family particulars of the donor but this too could not have given a proper basis to justify the adverse inference. Taking into consideration all these facts such as the certificate given by the Income-tax Officer of the State of Sikkim, the donor being assessed to tax as certified by him, lack of any evidence of the money having emanated from the appellant or his relatives by way of the deposits made in the account of Shri Ramesh Singhi and the appellant having never gone to Calcutta, etc., etc., it appears that there was no justification at all in holding the gift so received by the appellant as the undisclosed income. Hence, the addition in question, being unwarranted, is deleted.”
10. In appeal before the Tribunal, the Tribunal has passed the main order in the case of Padam Prakash Khandaka, the other donee. He has not treated the gift as genuine holding that Smt. Asha Devi Singhi did not make the gift from her own funds, therefore, the gift is not genuine and the Commissioner of Income-tax (Appeals) has wrongly deleted the addition treating the gift as genuine. Considering the detailed reasons given by the Commissioner of Income-tax (Appeals), especially the fact that in spite of his direction, the donor has not been examined through a commissioner by the Assessing Officer, though Smt. Asha Devi Singhi has given the affidavit to this effect and also the declaration that she has given the gift of Rs. 1 lakh to the assessee. The assessee has also been examined in the second round by the Assessing Officer wherein in answer to question No. 1, the assessee submits that I know Smt. Asha Devi Singhi since long. The donor was impressed by his grandmother, who was a “Sadhvi” in Jain Dharam and donor also visited so many times to Jaipur and stayed with his family and gift has been given. On these admitted facts and the reasons given in detail by the Commissioner of Income-tax (Appeals), we see no reason to confirm the view taken by the Tribunal. Even merely on conjectures and surmises, such gifts cannot be treated as not genuine. Therefore, we are of the view that the gift is genuine and the Tribunal has committed an error in restoring the addi-tion of Rs. 1 lakh that for no justification.
11. In the result, the appeal stands allowed.