MOHAN ANAND Vs. ASSTT. COMMISSIONER

JUDGEMENT

(1.) This appeal by the assessed is directed against the order passed by Commissioner (Appeals) on 27 -3 -1991, in relation to assessment year 1982 -83.

(2.) THE facts concerning this case are that the assessed was managing director of M/s Kapri International (P) Ltd. and director of M/s Dior International (P) Ltd. Both the companies were controlled by the assessed and the members of his family. Search and seizure proceedings were conducted on 6 -7 -1983, and certain incriminating documents were found and seized from the assessed's premises. Original assessment was made on 17 -6 -1985, on total income of Rs. 82,942. The Commissioner considered the order of the assessing officer to be erroneous and prejudicial to the interests of the revenue and resorting to provisions of Sec. 263, he set aside the order to be framed afresh vide his order dated 9 -12 -1986. Subsequently assessment was completed by assessing officer under Sec. 143(3) read with Sec. 263 on 28 -2 -1989, at Rs. 6,19,940.

(3.) THE first grievance of the assessed in this appeal relates to the addition of Rs. 3,84,544 on account of foreign gifts. During the course of search operations, some documents containing receipts of certain amounts in foreign currency were recovered. It was observed by the assessing officer that the gifts of Rs. 1,92,307 each appeared in the bank accounts of Master Sanjeev Anand and Sandeep Anand, the minor sons of assessed with Canara. Bank, Lajpat Nagar, New Delhi, on 26 -3 -1982. It was further noticed that there was a withdrawal of Rs. 1,90,000 each in the two accounts on 29 -3 -1982, in favor of M/s. Dior International (P) Ltd. and M/s. Kapri International (P) Ltd. as a result of which 1,900 shares of Rs. 100 each were allotted to Master Sandeep Anand in Kapri International and 1,900 shares of Rs. 100 each of Dior International were allotted in the name of Master Sanjeev Anand. The assessing officer called upon the assessed to establish the genuineness of the gifts and file full evidence regarding alleged gifts received from foreigners with respect to the identity, capacity to advance and the evidence that the amount of gifts emanated from the funds of the foreigner. In the absence of satisfactory evidence having been given by the assessed, the assessing officer held that the gifts were undisclosed income of the assessed and the shares purchased by the minor sons in the two companies were benami holdings of the assessed. In consequence of the earlier order passed by Commissioner under Sec. 263, the assessing officer also found that the companies agreed to surrender a sum of Rs. 4 lakhs, in the settlement proceedings with the department, to cover under invoicing and foreign gifts. He opined that if the amount of foreign gifts was relatable to surrendered income of Rs. 4 lakhs, then the amount in question was to be assessed as deemed dividend under Sec. 2(22)(e) of the Income Tax Act, 1961, as the amount was utilised by the assessed by way of purchase of shares in the benami names of his minor sons. In the final analysis, the assessing officer confirmed the impugned addition from two angles, viz., first, the unexplained foreign gifts and second, deemed dividend under Sec. 2(22)(e).