AALOK KHANNA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is assessee's appeal under s. 260A of the IT Act, calling in question tenability of an order dt. 5th Jan., 2010, passed by the Tribunal, Bench Indore in the matter of disallowing a sum of Rs. 1,52,67,939, which the assessee claims has to be exempted from payment of tax on the ground that it is a 'gift' received by the assessee from non-resident Indians. The only question of law proposed in this appeal is as to whether the order of the Tribunal upholding the aforesaid addition made by the AO under s. 68 of the IT Act, is a perverse and arbitrary finding.

(2.) Facts which are necessary for deciding the issue in question goes to show that for the financial year 2001-02, the assessee filed a return of income showing the income received from M/s. Narmada Enterprises--a proprietary concern, owned by the assessee. The assessee showed deriving income from salary, house, business and shares. It was stated that the assessee's proprietary concern is engaged in manufacturing tin containers, tin components and also carries on C & F Agencies. During the year in question, the assessee declared a gross profit of Rs. 1,07,23,593 against a turnover of Rs. 27,43,13,559. During the course of assessment, the AO found that the assessee had received 'gifts' from two non-resident Indians namely--one Shri M. Musa from Dubai; and another Shri V. Balan from Singapore. The amount of 'gift' received from these persons were Rs. 66,88,753 and Rs. 85,79,186 respectively. The AO requested the assessee to prove the genuineness of the said 'gift'. Even though the assessee proved the genuineness of the donors so also the credit-worthiness of the donor, but as the genuineness of the 'gift' was not established, the AO disallowed the entry and subjected the 'gift' for payment of tax. On an appeal being filed, the CIT(A) allowed the same and held that once the assessee has proved the genuineness of the donor and the creditworthiness of the transaction, it was not necessary to do anything more and, therefore, deleted the entry. Aggrieved thereof, an appeal was filed before the Tribunal by the Revenue and the Tribunal having interfered into the matter, doubting the genuineness of the 'gift' made and having made the addition, this appeal by the assessee under s. 260A of the Act.

(3.) Shri A.K. Shrivastava, learned senior advocate appearing for the appellants, took us through the orders passed by the AO, the CIT(A) and the Tribunal and tried to emphasize that once the genuineness of the donors and the creditworthiness of the donor is established by the assessee, then the requirement of s. 68 of the FT Act is fulfilled and the AO and the Tribunal committed error in interfering with the matter.