ITO Vs. SHAMMI SACHDEVA

JUDGEMENT

(1.) THIS appeal is preferred by the revenue against the order of the Commissioner (Appeals) on a solitary ground that the Commissioner (Appeals) has erred in deleting the addition of Rs. 2,24,000 on account of bogus gift. The assessed has also filed the cross -objection in which besides supporting the order of the Commissioner (Appeals) he has raised a plea that the Commissioner (Appeals) has not adjudicated ground No. 10 relating to charging of interest of Rs. 21,204 under section 234B of the Income Tax Act, 1961 (hereinafter called the Act).

(2.) I have heard the rival submissions and carefully perused the orders of the authorities below and documents placed on record and noticed that the return of income filed by the assessed was processed on 13 -10 -1992. Subsequently, the Department of Enforcement Directorate had conducted investigation in the case of Shri Sameer -Mahajan, who had given gifts to various beneficiaries in India out of his NRI account No. 99 maintained with the New Bank of India, defense Colony, New Delhi. The statement of Shri Mahajan was recorded by the Enforcement Directorate on 29 -10 -1991, wherein he had admitted that the cheques issued from his above bank account were not gifts, but in consideration, he had received cash to the equivalent amount and premium thereon at 12 per cent from the beneficiaries. The assessed is one of the beneficiaries, who had alleged to have received a gift of Rs. 2,00,000 from Shri Sameer Mahajan. On the basis of the statement of Shri Sameer Mahajan, the assessing officer formed an opinion that the assessed has paid Rs. 2,24,000 in cash to Shri Sameer Mahajan for purchase of the above gifts. He accordingly issued a notice under section 148 on 10 -3 -1998 with the prior approval of the CIT and in response thereto, the assessed filed return declaring income of Rs. 53,270. In response to the notice under section 143(2) the assessed has filed letter dated 23 -4 -1999 and 6 -10 -1999 stating therein that consequent to the statement of Shri Sameer Mahajan, the assessed was also summoned by the Enforcement Directorate to examine the contravention of provisions to section 9 of the FERA Act. Not accepting the Explanation of the assessed, the FERA department levied a penalty of Rs. 10,000 against which an appeal was filed before the FERA Board and vide its order dated 16 -12 -1997, the FERA Board has exonerated the assessed by holding that it has not been prima facie established by the authorities that the assessed has made contraventions of the provisions of section 9. Copies of the orders of the FERA Board were filed before the assessing officer with the request that since nothing has been established on record that the assessed has made the payment of cash of Rs. 2,24,000 in order to receive a gift of Rs. 2,00,000, no addition can be made on account of bogus gifts. The assessing officer was not satisfied with the Explanations of the assessed and he accordingly made an addition of Rs. 2,24,000 in the hands of the assessed against which an appeal was filed before the Commissioner (Appeals) and the Commissioner (Appeals) re -examined the issue in the light of the statements of Shri Sameer Mahajan. Before the Commissioner (Appeals), the assessed has placed reliance upon the immunity granted by the Government. Being satisfied with the Explanations of the assessed, the Commissioner (Appeals) deleted the addition.

(3.) NOW the revenue has carried the matter before the Tribunal and placed heavy reliance upon the order of the assessing officer.