N.P.GUPTA, J. - (1.) THIS appeal by the revenue, is against the judgment of learned Tribunal dated 09.01.2004. By the said judgment, the learned Tribunal decided four appeals; two by the assessee, and two by the revenue, relating to assessment years 1994 -95 and 1995 -96. Out of them, the present appeal relates to Appeal No. 372, decided by the learned Tribunal, being appeal by the revenue, relating to the assessment year 1995 -96. This appeal was admitted vide order dated 23.05.2006, by framing following substantial questions of law: I. Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was right in holding the NRI gifts as genuine ignoring the fact that the assessee failed to prove the capacity of the donor who is stranger as gift was not made on any social occasion? II. Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was right in confirming the order passed by the learned CIT(A) deleting the addition of Rs. 1,20,000/ - made by the A.O. treating the gifts as arranged by the assessee by utilizing his undisclosed income?
(2.) THE necessary facts are, that the case of the assessee was, that a notice under Sec.142 was issued alleging, that a bogus gift of Rs. 1,51,000 in NRI Account was received in the name of assessee's minor son, and there were other bogus gifts from four persons, being Smt.Godavari Devi, Ravi Kumar, Yogesh Kumar and Pradeep Kumar. Other aspects of the notice, we need to go into, as they are not involved before us. The Assessing Officer made addition with respect to these gifts, finding them to be not genuine, and added as income from undisclosed sources. The matter was carried in appeal before the learned Commissioner, and the learned Commissioner allowed the appeal. Regarding the gift of Rs. 1,51,000, it was found, that during the course of assessment proceedings, the Assessing Officer required production of donor Ravi Kumar, the assessee provided complete particulars and postal address of the donor, and requested the AO to make direct verification, by post, or otherwise, at the cost of the assessee, the AO also mentioned about the FAX message received from the donor, confirming the gift. In such circumstances, it was found, that the donor could not be compelled to appear in person, and also found, that otherwise the amount of gift from an NRI, out of the money standing to his credit in a NRE Account, in any bank of India account, is exempted from gift tax, and the attempt on the part of the assessing officer to bring such amount under existing taxing provision, without appropriate material, or tangible evidence, deserves to be discouraged. So far the four other gifts are concerned, in this regard, it was also found, that the addition has been made without any justification, particularly when identity of the donors has not been doubted, and the sources of gifts are very old credit, in the respective accounts of the donors, who are existing assessees of income tax. It was also found, that the genuineness of the transactions cannot be questioned, particularly when, the transactions are through bank, and no evidence against such transactions has been collected, in support of the adverse finding. Various other reasons were also given, and it was found that additions deserve to be deleted, and were accordingly deleted.
(3.) THE learned Tribunal, in the appeal, discussing the gift of Rs. 1,51,000 found, that in the instant case, it is not disputed that the donor is an NRI, and a man of means, because the AO has not questioned his credit worthiness. It is also found not in dispute, that the amount was received by the minor son of the assessee from NRE account of the donor, ofcourse it was found true, that no deposits were made in the NRE account, except realization from foreign country i.e., and that only foreign exchange can be deposited in NRE Account, and there is nothing to show, that the assessee received the money back, after giving cheque to his minor son, and thus the AO was found to be not justified in finding the gift as an arranged gift. Then the consideration of reciprocity, also was negated, as gift is made without any consideration, and under natural love and affection. Various other judgments were also considered in this regard, and followed. Then, discussing the gift of Rs. 1,20,000, again, it was found, that donors were assessed to income tax, their identity was not in doubt, although all of them were having financial capacity to give gifts, transactions were through banking channel, thus, it was found, that AO has made additions merely, on the basis of presumption and assumptions, which is not tenable, as the requirement of law was, only to prove the identity, and credit worthiness, and genuineness, of the transactions, which were found to be duly proved by the assessee.;