Ingredients of a genuine gift transaction
For proving a gift to be genuine, the assessee-donee is required to prove the existence of natural love and affection between the donor and donee, voluntary nature of the gift and the occasion for giving gifts; for a gift to be genuine, what should appear to any quasi-judicial authority is that the donors and donee are so close to each other that the donors are prompted to part away their dear money in favour of the donee.
RELEVANT EXTRACTS:
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14. We have considered the rival submissions and perused the material on record. In our considered view, the order passed by the Id. CIT(A) cannot be sustained. The undisputed facts are that gift was given by two persons namely, Smt Badrun-nisan Hanfi and Shri Habib-bur Rehman, who were claimed to be related to Shri Sirajul Hassan Hanfi, who was stated to be composer contractor with the company M/s Gyan Securities Pvt Ltd, whose director is the assessee. He worked with the company as a contractor between 1970s and early 80s. Thereafter, Shri Sirajul Hassan Hanfi shifted to Jeddah, Saudi Arabia. Somewhere in the financial year 1993-94, wife of Shii Siiajul Hassan Hanfi and maternal son-in-law of Sfari-Siraju J Hassan Hanfi chose to give gifts of Rs.6 lakhs and Rs.7,40,000/-respectively to the assessee from their alleged NRE accounts. 15. The facts argued in favour of the gifts being genuine are:
(i) Gifts were transferred through banking channels.
(ii) Existence of NRE accounts from which gifts were given are not disputed,
(iii) The credits into NRE accounts came from outside India,
(iv) Identity of donors is established through NRE accounts,
(v) Creditworthiness of the donors is established because no one else could deposit money into NRE account,
(vi) There is'no evidence that it is the assessee's money which is routed through NRE accounts by way of hawala or otherwise,
(vii) There is a relationship between assessee and the donors inasmuch as Shri Sirajul Hassan Hanfi was a composer contractor and he taught the assessee the art of composing and further that when assessee visited Saudi Arabia, arrangements for stay in Jeddah was made by Shri Sirajul Hassan Hanfi.
16. In our view, these facts are not enough to establish either the identity of the donors or their creditworthiness. The question of holding that transactions are genuine is too remote to be given even a thought of acceptance. Inspite of repeated requests by the Assessing Officer to produce the donors for examination, the assessee failed to do so. If the donors had any acquaintance with the assessee, or they had any semblance of love or affection with the assessee, which was claimed to be existing as they have given a sum of Rs.6 lakhs or Rs.7,40,000/- to the assessee by way of gift, they could have come forward to bail out the assessee by producing themselves before the Assessing Officer in support of alleged transaction of gifts. Now, we come to the basic ingredients required to be proved u/s 68. So far as identity of donors is concerned, we are not convinced as to who has given gifts to the assessee. Copies of their passport which could have been used to verify the signatures of the donors on the letters of gift were not produced. It was also not explained as to how the money into the NRE accounts claimed to be belonging to the donors was transferred and whether such transfer was actually done by the alleged donors as the linkage between transfer from the accounts of donors to the NRE account in India was not established. The claim of the assessee that in the NRE account of the donors only the donors can deposit money is not acceptable because at the direction of any third party, money can be credited into a NRE account operated by owner's represetatives. It is not for the Assessing Officer to prove that money into NRE account had come from a third source and not from the donors. It is for the assessee to show that money in the NRE account which is maintained and operated through authorized representatives in India, had actually come from the alleged donors. We, cannot uphold the claim of the assessee that merely because money had come into NRE account of donors, it must have actually been transferred by the donors. It is necessary to establish the nexus between money deposited in NRE account and the donors, which the assessee has failed to do so.
17. For proving a gift to be genuine, the assessee/donee is required to prove the existence of natural love and affection, voluntary nature of the gift and occasion for giving gifts. For a gift to be genuine, what should appear to any quasi-judicial authority is that the donors and. donee are so close to each other that the donors are prompted to part away their dear money in favour of the donee. The assessee should show the existence of natural love and affection between the donors and- donee. A love and affection would be presumed to be natural between natural siblings, close friends for many years, or between blood relations. If it is established that donors and donee are closely related by blood or very close friends for many years then presumption of love and affection can be raised. An assessee/donee can show the existence of love and affection with donors by showing long standing acquaintance / relationship, frequent visits, family photographs on different occasion and at different time intervals, mutual help at the time of need, deep knowledge about family and finance of each other, how the blood relation of donee know the doner and vice-versa etc. For a love and affection to be natural, the bondages must be time tested. However, presumption so raised would be rebuttable. The Assessing Officer can collect material by way of questioning the donors and donee or any other witness or collect any other material to show that the alleged claim of love and affection is not true as there were disputes/family quarrels, parting away, not having correspondence for many years, not exchanging mutual gifts for long time or not attending to family functions for long time, which could indicate that donors and donee had physically as well as emotionally lived apart for long. If Assessing Officer is able to show this with evidence then presumption of love and affection could be rebutted and onus will shift back to the assessee to show by other evidence that gifts were still genuine though natural love and affection cannot be 'established.
18. In case of any other set of donors and donee, not related by blood, or not close friends, not close relatives or no such intimate bondages are shown, then presumption of natural love and affection cannot be raised. The onus will remain on the assessee to show as to what prompted the donors to give gift to the donees.
19. In our considered view, the gift flows from the rich person to a person of lesser worth whereas the presents flows from the person of lesser worth to a person of higher worth. A present is out of respect and reverence and is generally given by persons of equal status or person of lower status to higher status. Even though money has flown from the bank account in the present case, but that is not sacrosanct unless it is proved that money was actually transferred by the donors and that donors are men of worth.
21. So far as occasion being an ingredient in accepting the gift as genuine is concerned, we are of the considered view that the existence of an occasion such as religious ceremony, birthdays, anniversaries or any such occasions can only raise a presumption in favour of gifts being genuine and it is for the Assessing Officer to rebut such presumption. But where no such occasion is present, then onus will remain on the assessee to prove that gift was still genuine. In the present case, there is no evidence that there • was any occasion to give gifts. Further, there is nothing on record to show that the donors i.e Smt Badrun-nisan Hanfi and Shri Habib-bur Rehman, maternal son-in-law of Shri Sirajul Hassan Hanfi had any contact with the assessee. Even if for the sake of argument we accept that Shri Sirajul Hassan Hanfi had some contacts with the assessee as he was a composer contractor in late 70s or early 80s, but that does not prove that Smt Badrun-nisan Hanfi or Shri Habib-bur Rehman had any contact with the assessee unless the two are prompted by Shri Sirajul Hassan Hanfi to give gifts.
22. The relevant question now arises as to why not Shri Sirajul Hassan Hanfi himself came forward to give gift if he had any actionable acquaintance with the assessee. But in our view, that will also not establish that Shri Sirajul Hassan Hanfi had any love and affection for the assessee. There is vast difference between acquaintance and love and affection. A person having love and affection with other will certainly have acquaintance with him but vice versa is not true. There is a gap of more than 10 years when Shri Sirajul Hassan Hanfi is stated to have left India and settled in Jeddah, Saudi Arabia. Merely because Shri Sirajul Hassan -Hanfi made arrangements for the stay of the assessee at Jeddah, it does not-prove that any love and affection had developed between the two. Such comforts can be provided by acquaintances also, and merely because they had acquaintance, it does not mean that there was existence of any love and affection between them. When Shri Alok Gautam was examined by the Assessing Officer, he could not tell the real name of children of Shri Sirajul Hassan Hanfi, he did not attend marriage of any of three sons and two daughters of Hanfi, the year of marriage was also not known to the assessee. The assessee could not tell the names of family members of Shri Hanfi who were residing at Lucknow. The assessee did not know where Hanfi stayed during his visit to Lucknow, he did not know the ownership or existence of any immovable or residential property of Shri Hanfi, no exchange of gifts took place between the two other than the one in question. The assessee did not know whether one donor Shri Habib-bur Rehman knew Arabic or not. He did not have contact numbers of the donors. The assessee could not tell the name of donor's father-in-law.
23. In addition to above, the Assessing Officer pointed out several defects/deficiencies in the facts sheet submitted by the assessee for disbelieving that gifts are genuine. The letter-cum-certificate issued by the donors were undated, letter given by Shri Habib-ur Rehman was signed by his wife, the details about the bank account were either not filled in the letters sent by the donors or the numbers of bank account given were incorrect, signatures of Smt Badrun-nisan Hanfi as given on the letter and -as signed on the cheque did not match—one Raj Banking and Finance Corporation was involved in transferring the money to NRE account of Shri Hanfi etc. These facts did not inspire confidence that transactions related to gifts were genuine. In nut-shell, we notice that —(i) There is no relationship between the donors and donee. Actually, donors are strangers to the assessee. No evidence is filed as to how the two are known to each other.
(ii) There is no occasion for making gift.
(iii) There is no evidence that there was any love and affection or friendship between the donors and donee.
(iv) There is no evidence that there was any business transaction between the donors and the assessee and therefore, it could not be believed that how a stranger would part away his savings to give gifts to any unknown persons sacrificing his chances of bettering his living conditions with that money.
(v) There is no evidence that assessee or his family members has given gift to the members of donors family at any time.
(vi) In fact, the two belonged to different faiths/religion. The entire transaction of gift is apparently unusual as behaviour of the donors is queer.
(vii) The gifts are apparently bogus because they have been given to an assessee of means and having multiple sources of income.
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