M.M.Kumar, J. - (1.) This appeal filed under Section 260 A of the Income Tax Act, 1961 (for brevity 'the Act') prays for quashing order dated 26.10.2006 (Annexure P.1) passed by the Income Tax Appellate Tribunal (for brevity 'the Tribunal') holding that the deletion of Rs. 6,00,000/- by the Commissioner of Income Tax ( Appeals) (for brevity 'the CIT(A)') which were added by the Assessing Officer by rejecting the genuineness of the gift, was absolutely incorrect. On the basis of the order passed by the Tribunal in ITA No.158 / Chandi/ 1997 in respect of assessment year 1993- 94 the Assessee has claimed that following substantive question of law would arise for determination of this Court: " 1. Whether the action of respondents No. 1 and 3 is arbitrary in assessing the income of the Appellant's wife as income in the hands of the Appellant ; 2. Whether the action of respondents no. 1 and 3 in not accepting the gift of Rs. 18,00,000/- given by S. Gurmit Singh to the appellant and his wife is discriminatory after having accepted the same for the assessment year 1990-91 for the gift of Rs.16.94 lacs received from Balwant Singh, father of the present donor; and 3. Whether the respondents no. 1 and 3 have not appreciated the facts and evidence properly, brought on record showing the genuineness of the gift."
(2.) On 31.3.1992, the appellant has filed his income tax return, for the assessment year 1993-94, declaring his total income at Rs.92,300/-. It was processed under Section 143(1)(a) of the Act on 8.5.1995. Thereafter search and seizure operations were carried out on 11.8.1995. The notices under Section 127 of the Act and notices under Sections 143(2) and 142(1) of the Act alongwith detailed questionnaire were issued to the appellant. He was asked to explain the amount of Rs. 6,00,000/- received by him in his bank account maintained with the Bank of Baroda, Parliament Street, New Delhi and Rs. 12,00,000/- received by the appellant's wife in her bank account. He filed reply to those notices and questionnaire by submitting all the requisite documents. The Assessing Officer passed the assessment order on 29.3.1996 under Section 143(3) of the Act by treating Rs. 18,00,000/- as income from undisclosed sources assessable to his income. The Assessing Officer also enhanced the house hold expenses from Rs. 83,700/- to Rs. 1,44,000/-.
(3.) The appellant challenged the order of the Assessing Officer before the CIT (A) and vide order dated 6.12.1996, the CIT(A) deleted the addition of Rs. 18,00,000/- in the hands of the assessee and also the addition of Rs. 60,300/- made on account of house hold expenses. With regard to deletion of Rs. 6,00,000/- received as gift by the appellant from one Gurmit Singh, the CIT(A) adopted the following reasoning: " In the normal course, probably, receipt of such substantial gifts from foreigner could be viewed with great suspicion in the absence of blood relations in between the donor and the donee but in the present case, facts suggest that even though there is no blood relationship between the family of the assessee and that of Shri Gurmit Singh, but still two families are very close to each other and may be for the reasons as stated by the assessee that late Shri Balwant Singh, father of Gurmit Singh was the "DHARAM BHAI' of assessee's wife Mrs. Manjit Kaur and Mrs. Manjit Kaur tied "RAKHI" to Shri Balwant Singh. The possibility of some of the friendly relationship developing into closer than blood relationship, is very common and therefore, it cannot be said that only gifts given by blood relation could be considered as genuine and not gifts given by close friends with whom the relationship might have been developed even closer to that of blood relationship. Keeping in view the reliance placed by the AO on the decision of the Hon'ble Punjab and Haryana High Court, it is apparent that facts of the said case and that of assessee's case are nowhere comparable because gifts to assessee and his wife are not from a stranger and there is also nothing to show that donor has any more important liability to meet than giving the gifts to the assessee and his wife." " Taking into account that all transactions are through bank and through normal banking channel as also through the NRI A/C, there cannot be any doubt with regard to genuineness thereof, especially in view of the facts brought on record during the course of hearing before me and noted earlier. The facts clearly indicate that the AO had proceeded on incorrect presumption that the assessee could operate the NRI account and has issued cheque to himself and his wife. But the facts clearly indicate otherwise and support the claim of the assessee that the said NRI account has been operated only by Shri Gurmit Singh and not by the assessee. Therefore, the genuineness of transaction can also not be doubted.";