JUDGEMENT
Anoop Sharma, Judicial Member -
(1.)THIS is an appeal filed by the assessee against the order of the Commissioner of Income-tax, Bombay, passed under Section 263 of the Act. The only grievance is that the provisions of Section 263 should not have been invoked in the present case thereby set asiding the order passed by the Income-tax Officer and directing him to make a fresh assessment according to law. The assessee in the present case is a private trust. During the accounting year relevant to the assessment year 1983-84, the beneficiaries received a gift of Rs. 10,04,762 from Mrs. Neelam Mohan Valrani at Dubai on 3-1-1982. the donor is a non-resident. The Income-tax Officer, while completing the assessment accepted the gift as a genuine gift and observed as follows:
During the year of account the beneficiaries have received gift from Mrs. Neelam Mohan Valrani at Dubai in 3-1-1982. She is a non-resident. The declaration of the gift by the donor and donee has been made in Dubai before the Consulate General of India, Dubai, on 3-1-1982. Xerox copy of the same is obtained and kept on the record. The foreign remittance in the share of gift has been received through bank. Xerox copy of the bank account is obtained and kept on the record. Copy of the account of Central Bank of India is obtained and kept on the record.
(2.)The CIT acting under Section 263 was of the view that proper and full enquiries had not been made by the ITO while accepting this gift and therefore, the order passed by him was erroneous and prejudicial to the interests of the revenue. He, accordingly set aside the same with a direction that the assessment be made afresh according to law.
The assessee is aggrieved by this order of the CIT which has been challenged before us in the present appeal. Shri D.M. Harish, the learned counsel for the assessee, appearing before us very vehemently assailed the action of the CIT in passing the impugned order. He submitted that the identity of the donor, his or her credit-worthiness and the genuineness of the transaction was not disputed. The onus which was cast upon the assessee to prove the credit stood discharged and that the ITO after having satisfied himself rightly completed the assessment treating the gift as a genuine one. It was pointed out that the following pieces of evidences were considered by the ITO while treating the gift as a genuine one.
(i) Letter dated 25-1-1982 of Central Bank of India, Churchgate Branch, Bombay, addressed to the assessee, intimating the credit of the amount in the bank account;
(ii) Declaration of the donor giving the gift and acceptance of the trustee at Dubai on 3-1-1982. The said declaration being made before the Consulate General at Dubai;
(iii) Certificate of foreign inward remittance dated 25-1-1982 issued by the Central Bank of India, Churghgate Branch, Bombay.
It was, therefore, urged that all proper enquiries had been made by the ITO when he completed the assessment. It was submitted that no further enquiries or investigation was required to be made in the present case and therefore, the conclusion of the CIT that no proper enquiries had been made was unwarranted on the facts of the present case. He submitted that the gift had been made out of natural love and affection by the donor, who was a cousin sister of the mother of the donee. He argued that the conditions and tests to prove a cash credit would be more stringent and strict than the conditions and tests required to prove a gift. His submission was that in the case of a gift the identity of the donor and the donee and their respective offer and acceptance were enough to constitute a valid gift, in the present case, these conditions stood satisfied, besides, the condition of credit worthiness, therefore the CIT's order on this point should be cancelled.
(3.)ON the other hand, the learned Departmental Representative, in counter reply very strongly relied upon the order of the CIT. He submitted that the gift in the present case was not of a small amount but of a huge amount of more than Rs. 10 lakhs, the gift was made and accepted at Dubai, the ITO, therefore, on the basis of a mere declaration of the donor and the donee and on the basis of just two certificates should not have inferred that the gift was a genuine one. The financial capacity of the donor which was the most important factor and condition to ascertain and see that it had been fulfilled was not at all enquired into by the ITO. He submitted that in a haste manner without full application of mind and without making proper enquiries the ITO had wrongly accepted the gift as a genuine one. He strongly objected to the consideration of fresh evidence placed before us by the learned counsel regarding the credit-worthiness of the donor, he submitted that no enquiries having been made by the ITO vis-a-vis the financial capacity of the donor to make this gift, the CIT was right in cancelling the assessment and directing the ITO to make enquiries in this direction and thereafter pass a fresh assessment order.
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