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Issues Involved:
1. Addition of Rs. 2,00,000 as unexplained gift under Section 68. 2. Validity of CIT(A)'s decision differing from ITAT, Allahabad in 90 ITD 203. 3. Compliance with Section 68 provisions. 4. Addition of Rs. 8,00,000 as loans from grandsons. 5. Addition of Rs. 15,770 out of Telephone and Vehicle Expenses. 6. Legality of CIT(A)'s order against facts and natural justice. Detailed Analysis: 1. Addition of Rs. 2,00,000 as Unexplained Gift under Section 68: The assessee received gifts totaling Rs. 2,00,000 from three ladies: Smt. Reema Srivastava, Smt. Maya Devi, and Smt. Suman Srivastava. The Assessing Officer (AO) found the gifts non-genuine based on several observations: - The donors had insufficient income to save such amounts. - They lacked bank accounts, movable or immovable properties. - Gifts were given without any occasion or relationship with the assessee. - The AO concluded that these gifts were arranged affairs to evade taxes. The CIT(A) confirmed the AO's findings, emphasizing that the onus was on the assessee to prove the creditworthiness of the donors and the genuineness of the transactions. The CIT(A) noted that mere filing of income tax returns by the donors did not establish their creditworthiness. 2. Validity of CIT(A)'s Decision Differing from ITAT, Allahabad in 90 ITD 203: The assessee argued that the CIT(A) did not provide valid grounds for differing from the ITAT, Allahabad's decision in 90 ITD 203. However, the CIT(A) and the Tribunal upheld the AO's findings, focusing on the lack of creditworthiness and genuineness of the donors. 3. Compliance with Section 68 Provisions: The assessee claimed compliance with Section 68 by providing the identity and income tax returns of the donors. However, the AO and CIT(A) found that the donors' financial capacities were not substantiated, and the transactions lacked genuineness, thus not satisfying Section 68 requirements. 4. Addition of Rs. 8,00,000 as Loans from Grandsons: The assessee received loans totaling Rs. 8,00,000 from his grandsons, who had received gifts from various ladies. The AO found these gifts non-genuine, citing similar reasons as in the Rs. 2,00,000 gift case: - Donors had low incomes and no significant assets. - Gifts were given without any occasion or relationship. - The transactions appeared to be arranged to convert unaccounted money. The CIT(A) upheld the AO's findings, and the Tribunal agreed, noting that the gifts lacked genuineness and thus the loans from grandsons were also non-genuine. 5. Addition of Rs. 15,770 out of Telephone and Vehicle Expenses: The AO disallowed Rs. 15,770 out of telephone and vehicle expenses due to lack of supporting bills and vouchers. The Tribunal partially allowed the assessee's appeal, restricting the disallowance to 10% of the claimed expenses, considering the business activities of the assessee. 6. Legality of CIT(A)'s Order Against Facts and Natural Justice: The assessee argued that the CIT(A)'s order was against facts, statutory provisions, and principles of natural justice. However, the Tribunal found that the CIT(A) and AO had followed due process and provided sufficient reasoning for their conclusions. Conclusion: The Tribunal upheld the AO's and CIT(A)'s findings regarding the non-genuine nature of the gifts and loans, confirming the additions under Section 68. The disallowance of telephone and vehicle expenses was partially reduced. The appeal was partly allowed, providing limited relief to the assessee.
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