2000 P T D 1568

[234 I T R 58]

[Delhi High Court (India)]

Before R. C. Lahoti and Mukul Mudgal, JJ

COMMISSIONER OF INCOME-TAX

Versus

G. SAGAR SURI & SONS and others

I.T.C. Nos.220, 217 and 219 of 1991, 54 of 1992, 134 of 1993, 11 and 12 of 1994, 1, 4, 5, 14 and 27 of 1997, decided on 21/05/1998.

Income-tax---

----Reference---Income from undisclosed sources---Amounts claimed to be gifts from non-residents---Tribunal not considering evidence---Tribunal whether justified in deleting additions---Question of law---Indian Income Tax Act, 1961, .S. 256(2).

The assessee belonging to the Suri group received lakhs of dollars from abroad, claiming them to be gifts received from one A. The gifts so received in different years were divided amongst different assessees. A letter in that regard from A was filed before the Assessing Officer and in some cases at the stage of appeal. The Assessing Officer was not satisfied about the genuineness of the gifts. He also formed an opinion that the gifts were not established to have been made by a particular donor to a particular donee. He having assigned reasons in detail for the findings so arrived at proceeded to discard the gifts and instead applied section 69A of the Income Tax Act, 19'61, and treated the amount of gifts as income from undisclosed sources. The view taken by the Assessing Officer had been reversed at one or other stage in the appeal. In all the cases, the Tribunal had accepted the gifts to be genuine and deleted the additions made by the Assessing Officer. On an application to direct reference:

Held, that the question whether the amounts were taxable in the hands of the assessee had to be referred.

Sanjeev Khanna with Ms. Premlata Bansal for Petitioners.

B. B. Ahuja for Respondents.

JUDGMENT

R. C. LAHOTI, J.---This common order shall govern the disposal of I.T.C. Nos. 12 of 1994, 217 of 1991, 219 of 1991, 54 of 1992, 134 of 1993, 11 of 1994, 1 of 1997, 4 of 1997, 5 of 1997, 14 of 1997 and 27 of 1997. These are all petitions under section 256(2) of the Income Tax Act, 1961, seeking mandamus to the Tribunal to draw up statement of case and refer the questions of law set out therein for the opinion of the High Court. All the assessees belong to one group, referred to as the Suri group. The facts out of which these several cases arise are all interconnected and, therefore, are being dealt with by a common order.

Different assessment years are involved. We would set out hereunder the assessment years, the names of the assessees and the questions, which are sought to be referred:

I.T.C. No. 217 of 1991 Smt. Shama Suri (1982-83):

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of US $ 30,000 received by Sint. Shama Suri from her son, Sh. Ashwini Suri, was in the nature of gift in her hands and hence not taxable?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at conclusions which are based on facts and circumstances not relevant to the issues?"

I.T.C. No. 219 of 1991-Sh. G. Sagar Suri (1982-83):

"(1) Whether, on the facts and in the circumstances of the case, 'the Tribunal was correct in law in holding that the amount of US $ 2,00,000 and US $ 45,000 received by Sh. Sagar-Suri from Sh. Ashwini Suri and Shri Pritam Waney, respectively, was in the nature of gift in the hands of Sh. G. Sagar Suri and hence not taxable?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at conclusions which are based on facts and circumstances not relevant to the issues?"

I.T.C. No. 54 of 1992 Ashwini Suri (HUF) (1987-88):

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of US $ 60,000 received by Sh. Ashwini Suri from Shri Pritam Waney was in the nature of gift in the hands of Shri Ashwani Suri and hence not taxable?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at conclusion which are based on facts and circumstances not relevant to the issues?"

I.T.C. No. 134 of 1993 Sh. Ashwin Suri (1985-86):

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of US $ 3,00,000 received from Waney family from U.S.A. was in the nature of gift in the hands of Shri Ashwani Suri and hence nottaxable?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal. was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at-conclusions which are based on facts and circumstances not relevant to the issues?"

I. T. C. No. 11 of 1994 Ujwal Suri (1985-86):

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of Rs.1,84,860 received by Sh. Ujwal Suri from Shri Arjun C. Waney was in the nature of gift in the hands of Sh. Ujwal Suri and hence not taxable?

(2) Whether, on the, facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at conclusions, which are based on facts and circumstances not relevant to the issues?

ITC No 12 of 1994-G Sagar Suri & Sons (HUF) (1985-86):

"(1) Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of Rs.5,77,700 received -by Shri G. Sagar Suri & Sons was in the nature of gift in the hands of Shri G. Sagar Suri and hence not txable?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee has discharged onus in establishing the nature of the transaction?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in arriving at conclusions, which are based on facts and circumstances not relevant to the issues?

ITC No 1 of 1997 Ashwini Suri (1984-85):

"(1) Whether, on the facts and the circumstances of the case, the Income tax Appellate Tribunal was correct in law in holding that the assessee had discharged the onus which lay upon him for proving (i) genuineness of alleged gift of Rs.1,15,000 (US $ 11,000), (ii) identity and paying capacity of the donor, and (iii) source of the amount donated?

(2) Whether the Income-tax Appellate Tribunal was correct in law in allowing the liability of Rs.1,15,000 (US $ 11,000) payable to Master Shiv Sagar Suri?"

I.T.C No 4 of 1997-G. Sagar Suri (1986-87):

"(1) Whether the Tribunal was correct in law in holding that the assessee had discharged the onus which was upon him for proving-

(a) genuineness of alleged gift of Rs.4,07,676

(b) identity and paying capacity of the donor and

(c) source of the amount donated?

(2) Whether the Tribunal was correct in law in upholding the order of the learned Commissioner of Income-tax Officer (Appeals) deleting the addition of Rs.4,07,676?"

ITC No 5 of 1997 Ujwal Suri (1986-87):

"(1) Whether the Income-tax Appellate Tribunal was correct in law in holding that assessee had discharged the onus which was upon him for proving (i) genuineness of alleged gift of Rs.98,887

(ii) identity and paying capacity of the donor and

(iii) source of the amount donated?

(2) Whether the Income-tax Appellate Tribunal was correct in law in upholding the order of the learned Commissioner of Income-tax (Appeals) deleting addition of Rs.98,887?".

I.T.C. No. 14 of 1997-G. Sugar Suri & Sons (HUF) (1984-85):

"(1) Whether the Tribunal was correct in law in holding that the assessee had discharged the onus which was upon it for proving, (a) genuineness of alleged gift of Rs.7,35,254, (b) identity and paying capacity of the donor, and (c) source of the amount donated?

(2) Whether the Tribunal was correct in law in upholding that order of the learned Commissioner of Income-tax (Appeals) deleting the addition of Rs.7,35,294?"

I.T.C. No. 27 of 1997 Shama Suri (1984-85):

"(1) Whether the Income-tax Appellate Tribunal was justified in law in confirming the order of the learned Commissioner of Income-tax (Appeals) deleting the addition of Rs.2,45,098 on account of foreign gifts?

Applications were filed under section 256(1) of the Income-tax Act which have been rejected by the Tribunal forming an opinion that the question were merely of facts and not arising as questions of law from the orders of the Tribunal.

Without burdening this order with a detailed statement of facts referable to each year of assessment and to each of the assessees, we would briefly highlight the requisite factual background so as to appreciate the grievance raised by the Revenue before this Court. The assessee belonging to the Suri group received lakhs of dollars from abroad, claiming them to be as gifts received from one Shri Arjun C. Waney. The gifts so received in different years were divided amongst different assessee. A letter in that regard from Shri Arjun C. Waney was filed before the Assessing Officer and in some cases at the stage of appeal.

The Assessing Officer was not satisfied about the genuineness of the gifts. He, therefore, called for evidence on the following points:

A. Source of gifts received.

B. Name and address of the donor,

C. Capacity of tire donor to make gifts,

D. Copy of the bank account of the donor to establish nexus between the amount withdrawn from the donor's bank account and received in the assessee's bank account with cheque No./Draft No and copies thereof:

E. Documents exchanged between the donors and the donee.

F. Details of gifts received in earlier and subsequent years up to date.

The assessee tried to make out that Shri Ashwani Suri, son of Shri G. Sagar Suri of the Suri Group, was married to Sint. Shalini, a niece of Shri Arjun C. Waney a non-resident Indian settled in U.S.A. in 1977. Shri Arjun C. Waney and his other family members were very rich persons. Shri G. Sagar had gone to U.S.A. in 1981 for medical treatment. Out of love and affection various gifts were made.

The Assessing Officer was not satisfied about the genuineness of the gifts. He also formed an opinion that the gifts were not established to have been made by a particular donor to a particular donee. He having assigned reason in detail for the findings so arrived at proceeded to discard the gifts and instead applied section 69A of the Act and treated the amount of gifts as income from undisclosed sources.

The view taken by the Assessing Officer had been reversed at one or the other stage in the appeal. In all the cases, the Tribunal has accepted the gifts to be genuine and deleted the additions made by the Assessing Officer.

At the hearing. Mr. Sanjeev Khana, learned senior standing counsel for the Revenue, contended that in the facts and circumstances of the case, the questions as suggested by the Revenue do arise as questions of law and, therefore, the Tribunal was not right in rejecting the applications seeking reference to the High Court. On the other hand Mr. B. B. Ahuja, learned counsel for the assessee, has maintained that the questions are questions of fact and, therefore, the rejection of the applications by the Tribunal cannot be found fault with.

We may place on record that though we heard learned counsel for the parties in great detail but at the end learned counsel for the assessees submitted that if the Court be of the opinion that mandamus to the Tribunal is called for then the Court may not at this stage record its findings in detail inasmuch as it may prejudice the assessees at the time of hearing of the references on statements of cases being made by the Tribunal. In deference to the submission of learned counsel for the assessees we are avoiding recording our detailed findings. Still to be fair to learned senior standing counsel for the Revenue we would like to briefly summarise the gist of the submissions made by him attacking the appellate orders of the Tribunal as also the orders rejecting several applications seeking reference to High Court under section 256(1). According to hint, the findings arrived at by the Tribunal were grossly erroneous and hence wholly unsustainable in law for the several reasons some of which are as under:

(i) The Tribunal did not specifically consider and deal with the facts found by the Assessing Officer and the First Appellate Authority as to the identity and name of the donor. The Tribunal also did not go into the genuineness of the gifts by reference to each and every specific transaction.

(ii) The Tribunal held that the details of the bank account from' where the money had been withdrawn was not required to be furnished and ` given. It accepted the contention of the assessee that it was not legally permissible for the income-tax authorities to enquire into the source/bank account from where the funds had originated. The finding as to genuineness of gifts is based merely on the fact that the remittances were out of some bank account, which by itself proved the genuineness of the source of the gifts.

(iii) The Tribunal omitted to see that the declaration in the form of certificate furnished by the assessee was entirely vague and lacking in details and particulars. It was also self-contradictory to some extent. The certificate says that the amounts were remitted out of the funds placed by the late Shri Sunder C. Waney and his family with Ashwani Suri. The latter is admittedly not a donor but an alleged donee. A person cannot be donor and donee both.

(iv) The certificate shows that the funds were remitted either to Mr. Ashwani Suri or as directed by him. This detracts from the voluntary nature of the gifts. Moreover, the contents of the certificate are at a departure from the plea of the assessees.

(v) The Tribunal rejecting the plea of the Revenue held that the assessees were not required to produce the estate duty order passed under the provisions of the U.S.A. tax laws relating to the late Mr. Waney. The production of that order was necessary to prove and establish the genuineness of the gifts and to reveal the truth.

(vi) Even a bare reading of the order of the Tribunal shows that it was not fully satisfied about the identity of the donor, which remained vague and confusing. The Tribunal was left in doubt if the donor was a different person and the funds had originated from a different source.

We are of the opinion that the questions sought to be referred by the Revenue do arise as questions of law from the appellate order of the Tribunal.

All the applications are, therefore, allowed. The Tribunal shall draw up statements of cases and refer the questions suggested by the Revenue for the opinion of the High Court.

M.B.A./3384/FCApplication allowed.