R.K.AGRAWAL, J. - (1.) ALL these appeals under Section 260A of the Income -tax. Act, 1961, hereinafter referred to as 'the Act' have been filed by different appellants against the order dated 9 -3 -1999 passed by the Income Tax Appellate Tribunal, Delhi, hereinafter referred to as 'the Tribunal' in respect of five persons, namely, Sri Rakesh Kumar Jain, Sri Sanjay Kumar Jain, Smt. Reena Jain, Smt. Usha Chawla and Smt. Sushma Jain and order dated 15 -3 -1999 in the case of M/s. Jagdish Chand and Sons and M/s. Gurbachan Lal and Sons. In all these appeals originally when filed, the appellants have sought to raise the twelve substantial questions of law, however, by way of an application, which has been allowed vide order dated 16 -11 -2000, the appellants have sought leave of the court to substitute them by the following questions of law: (1) whether on the facts and in the circumstances of the case, the Tribunal is legally justified in holding the initiation of proceeding under Section 148 valid without mentioning the reasons recorded for the initiation of the proceeding and without giving any reason? (ii) whether in view of the fact that the reasons recorded has not been communicated to the appellant which appellant had a right to get, Tribunal is legally justified inholdingthat therewas violation of the principles of natural justice in this regard without adjudicating the real issue? (iii) whether the Tribunal is legally justified in confirming the addition under Section 69C relying upon the statement of Sri Mohd. Shamim Khan which was taken at the back of the appellant without giving opportunity of cross examination? (iv) whether the observation of the Tribunal with regard to cross examination of Sri Mohd. Shamim Khan is legally correct and in accordance with law? (v) whether the statement of Sri Mohd. Shamim Khan which was taken on the back, the appellant could be relied upon against the appellant without giving opportunity of cross examination? (vi) whether the observation of the Tribunal that the assessing officer provided opportunity to the assessee to cross examine Sri Mohd. Shamim Khan but that opportunity was not availed of is correct and based on any material while on the date fixed, the Assessing Authority could not produce Sri Mohd. Shamim Khan for cross examination'? (vii) whether the addition under Section 69C is legally justified and based on material? (viii) whether on the facts and circumstances of the case, the provision of Section 69C is applicable while no expenditure has been incurred? (ix) whether the Tribunal is justified in not adjudicating the real submission with regard to interest namely that since interest could not be charged in the order, same could not be charged in notice of demand?
(2.) BRIEFLY stated the facts giving rise to the present appeals are as follows: All the appellants received gift from one person, namely, Sri Mohd. Shamim Khan, son of Late Sri Hamid Ullah Khan, R/o 3/547, Khan Alampura, Saharanpur (U.P.). It was claimed that Mohd. Shamim Khan was holding NRI status and the gifts were given out of his NRI account. It was claimed that Sri Mohd. Shamirn Khan had given the following gifts to various appellants: (i) M/s. Vijentra Kr. Jain & Sons Rs. 2,00,000 (ii) Smt. Sushma Jain W/o Rajesh Jain Rs. 2,00,000 (iii) Sh. Sanjay Kr. Jain S/o Sukhmal Chand Jain Rs. 50,000 (iv) Rakesh Kr. Jain Rs. 50,000 (v) Smt. Reena Jain W/o Sanjay Jain. Rs. 2,00,000 (vi) M/s. Avinash Chand & Sons Rs. 1,00,000 (vii) M/s. Jagdish Chand & Sons Rs. 2,00,000 (viii) M/s. Gurubachan Lal & Sons Rs. 1,00,000 (ix) Smt. Usha Chawla Rs. 2,00,000 All the appellants had filed their return declaring their income. The assessing officer made a detailed enquiry about the genuineness of the gifts and found the following facts, which are reproduced below from his order: (a) A copy of the bank account of the donor No. 14477 with Central bank of India, Shahid Ganj, Saharanpur, wherefrom the gift has been made was obtained. A perusal of this account revealed that most of the credits of substantial amount were in round figures. Since credits in a N.R.E. account should be out of Foreign remittances, the credits in round figures appeared to be doubtful. (b) Credit vouchers pertaining to this account No. 14477 were examined. It was seen that most of these credits were on account of clearing of cheques of local Banks as such Punjab National Bank, Shahid Ganj, Saharanpur and Allahabad Bank, Saharanpur. Enquiries from these banks revealed that the cheques from Allahabad bank were issued from Saving bank account No. 3896/18 in the joint names of Smt. Farhat Khanam (w/o appellant) & Mohd. Shamim Khan (appellant). The cheques from P.N.B. were issued out of Saving bank account No. 39112 in the name of the appellant himself. (c) A perusal of these Savings account revealed that the cash has been deposited in these accounts and the money has been transferred to the account from which gifts have been made by clearing cheques e.g., cash of Rs. 2,30,000 has been deposited in Saving bank account No. 39112 on 27 -1 -1995 of Mohd. Shamim Khan and a sum of Rs. 2,00,000 has been transferred to the above mentioned account on 31 -1 -1995. Similarly, cheques have been issued from the other accounts after depositing cash in the same. (d) Summons were issued to Sh. Mohd. Shamim Khan and his statement was recorded by the assessing officer on 12 -12 -1997. He stated on oath that his family consisted of himself, his wife, one widow mother and two younger brothers. One brother was appointed Station Master in Railways on compassionate grounds after the death of his father who was also working in the Railways as Guard. The other brother was running a medical store by name M/s. Popular Medical Store at Gonda. Regarding movable and immovable properties owned by him and other family members, he received on marriage and one plot in the name of his wife of approximately 150 sq. yds. at Gonda. He denied having any other movable or immovable property. It was further stated by him that he was running a shop at Gonda which was on a rent of Rs. 450 per month. At present, he was residing in a rented house at Gonda on a rent of Rs. 500 per month. (e) Regarding the various gifts made by him, it was stated by Shri Mohd. Shamim Khan that one Shri K. Singh, CA, court Road, Saharanpur approached him when he came to know that he was an NRI. He was enticed into making such gifts on a commission of 10 per cent i.e., on a gift of Rs. 2,00,000, he got Rs. 2,20,000 in cash which was deposited by him in such Saving bank accounts and from there the money was transferred to his account from where gift was made. If was stated by him that it was stated by Sh. K. Singh that there would be no legal or other problems if he did so. (f) Regarding the persons to whom Shri. Mohd. Shamim Khan made gifts, he stated that he had neither met these persons ever nor had any sort of relations with them or their families. He reiterated that such cheques had been issued by him on the directions of Sh. K. Singh.
(3.) THE assessing officer came to the conclusion that all the nine appellants were family members of two groups and it was quite unbelievable that Sri Mohd. Shamim Khan would go on giving huge gifts to various family members without any consideration. Proceedings under Section 147/148 of the Act were initiated as the assessing officer had reason to believe that sum claimed to have been received as gift was purchased of NRI gift by paying 10 per cent commission and, therefore, chargeable to tax under Section 69C of the Act. The appellants filed their reply in which it was stated that the return already filed may be treated as return in compliance to notice under Section 148 of the Act.;