B.SUDERSHAN REDDY, J. - (1.) LEAVE granted.
(2.) THESE appeals have been filed against the judgment of Madras High Court dated 29.3.2006 in TC (A) Nos. 74 to 76 and 78 to 82 of 2002 whereby the following questions have been answered by the High Court in favour of the assessees and against the revenue: (a) Whether in the facts and circumstances, the Income Tax Appellate Tribunal was correct in law to accept the principle of preponderance of probabilities in holding that the claim of the appellant that the sum of Rs. 15,62,500/- received him by way of gifts through normal Banking Channels was not genuine an that it was liable to be assessed under Section 68 of the Income Tax Act, 1961? (b) Whether in the light of the law established and based on the facts and in the circumstances of the case, the learned Income Tax Appellant Tribunal is legally justified in concluding that burden of proof cast on the appellant under Section 6B of the Income Tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income Tax Act are present? (c) Whether in the facts and circumstances of the case, the conclusion of the Tribunal that the claim of gift is not genuine is reasonable and based on relevant material and not perverse? These appeals relate to the assessment years 1995-96 and 1996-97. The dispute in all these appeals essentially relates to the addition made by the Assessing Officer in respect of several foreign gifts stated to have been received by the assesses from one common donor namely Sampath Kumar. The gifts received were from one Ariavan Thotan and Suprotoman. It is during the enquiry by the Revenue it is asserted that they were the aliases of Sampathkumar. These gifts were made to A. Srinivasan and his wife, Smt. S. Kalavathy, his son, S. Balaji Manikandan and to one of his brothers, Rajendran and Smt. Mohanakala. Each one of them is an assessee within the jurisdiction of the appellant. The foreign gifts are received by the assesses during the assessment years 1993-94 to 1996-97. The detail of the gifts received by each one of the assessees is as under: JUDGEMENT_750_TLPRE0_2007Html1.htm In all the aggregate gifts received by the assessees is to the extent of Rs. 1,79,27,703/-. The Assessing Officer did not accept the explanation offered by the respective assessees that the amount of credit is a gift from NRI and proceeded to add it as the income of the assessees from undisclosed sources. The credit entries have been made during the period from 8.7.1992 to 19.10.1995. There is no dispute that the payments were made by instruments issued by a foreign bank and credited into the respective assessee's account by negotiation through a bank in India. Most of the cheques sent from abroad were drawn on Citibank, N.A. Singapore.
(3.) THE Assessing Officer dealt with the controversy as regards the cash credit entries received from the foreign donor. He noticed that the gifts have been sent in the name of Ariavan Thottan and received by A. Srinivasan and others who are all his family members. Each one of them is an individual assessee. That all the assessees were summoned and their statements have been recorded by the Assessing Officer. Srinivasan who is the key person in his statement said that he knew Sampathkumar for the last 20 years and he had been helping Sampathkumar prior to 1985 by paying Rs. 100/- to 200/- every month as he had no source of income to get himself educated. There are material inconsistencies in the statements made by other assessees which we are not required to notice in detail. Sampathkumar in his own statement stated that he was in Indonesia up to the year 1992 and employed as an Engineer. Thereafter, he shifted to England and started consultancy profession there. Later in the end of the year 1994-95, he joined New Century Machinery Ltd. Cheshire, SK 16 4xS and became its director in 1996. It is in his statement that he is paying taxes in England from his income earned in England. As far as his Indian income is concerned, he stated that he filed the returns for the assessment years 1996-97 and 1997-98 before the Income Tax Officer, Ward 1(4), CBE only on 23rd October, 1997. His investment in Indian companies according to him will be around for Rs. 5 crores and made out of his income earned in the foreign countries. He did not reveal the details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence as regards his financial status. He stated from 1972-73 he knew Srinivasan, Rajendran and their families. His father was a taxi driver, and was very poor. Srinivasan and his family members were supporting him when he was in India. To a pointed query as to whether there is any evidence to show that he was also known by any other name other than Sampathkumar, he stated that "no evidence. Only Mr. Srinivasan used to call me as Suprotoman." The Assessing Officer after an elaborate consideration of the material available on record and the statements of the assessees and as well as that of Smapathkumar noted that all the gifts were received from Ariavan Thotan and Suprotoman. It is only after the enquiries by the department, it was informed by letter dated 25.4.1996 that Ariavan Thotan and Suprotoman are one and the same person. Even at that time, no mention was made about Sampathkumar. For the first time Sampathkumar's name figured in the letter dated 30.08.1996 and thereafter it was stated that the names of Ariavan Thotan and Suprotoman are the other names of Sampathkumar. The Assessing Officer while appreciating the contents of the letters brought on record came to the conclusion that Smpathkumar had obliged in giving 'gifts' to Srinivasan and his family members. It is further held that in all probabilities Sampathkumar may have received compensatory payments in lieu of the gifts made by him. The letters according to the Assessing Officer suggest that Sampathkumar reserved his right to receive suitable compensation from the respondents-assessees. The Assessing Officer in the circumstances came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of assessees as the income of the assessees. On appeal the Commissioner of Income Tax concluded that the story set up by the assessees is unacceptable and hard to believe and the "preponderance of probabilities, the common course of human livings point to the contrary". The appeals were accordingly dismissed.;