2011 (7) TMI 1022 - AT - Income Tax

Undisclosed investment u/s 69 - Gift received from father - Held that - transaction of alleged gift is not even through bank or banking channel and he was not able to explain or substantiate appropriately the source, before the Assessing Officer, about the transaction in question or before the learned Commissioner of Income-tax (Appeals) also, the assessee has not been able to substantiate his claim, when law requires that the mere identification of the donor and even receipt of the gift amount through banking channel was not sufficient to prove the genuineness of the gift and that apart, the source of income of the said donor, who alleged to have gifted the amount to the assessee s father, or how that person did bring such amount in India as he is stated to be in foreign country was not explained nor have any relevant documents in this regard ever been filed - assessee has miserably failed to substantiate its claim of having either received the part amount of the said transaction in gift and has also not even been able to establish that he could himself accumulate such huge amount from the sources disclosed, therefore, in our view, the authorities below are fully justified in making/confirming the disallowance in the amount of Rs. 6,00,000, found to be credited in the assessee s bank account - Decided against assessee.

Summary

Issues Involved:
1. Confirmation of the addition of Rs. 6 lakhs as unexplained investment under section 69.
2. Confirmation of disallowance of Rs. 48,530 being 25 percent of the expenses incurred towards travelling and conveyance, telephone and mobile, vehicle maintenance, driver's salary, depreciation on car, and consultancy charges as personal in nature.

Detailed Analysis:

1. Confirmation of the Addition of Rs. 6 Lakhs as Unexplained Investment under Section 69:

The assessee filed a return of income declaring a total income of Rs. 2,81,930. During scrutiny, the Assessing Officer added Rs. 6 lakhs as unexplained investment under section 69 for the gift/loan received from his father, treating that he had no sufficient sources to advance Rs. 6 lakhs as a gift. The assessee argued that the amount was a gift from his father, who had received Rs. 3,00,000 from his grandson, employed in Germany, and had additional savings from his income and receipts from other children. However, the authorities found this explanation unconvincing. The Commissioner of Income-tax (Appeals) and the Tribunal upheld the addition, noting that the assessee failed to substantiate the claim with credible evidence. The Tribunal emphasized that the mere identification of the donor and receipt of the gift amount was insufficient without proving the genuineness of the gift and the donor's source of income. The Tribunal cited the Supreme Court case of CIT v. P. Mohanakala [2007] 291 ITR 278 (SC), stating that findings based on material on record should not be disturbed without substantial evidence. Consequently, the appeal on this ground was dismissed.

2. Confirmation of Disallowance of Rs. 48,530 as Personal in Nature:

The Assessing Officer disallowed 25 percent of the expenses incurred towards travelling and conveyance, telephone and mobile, vehicle maintenance, driver's salary, depreciation on car, and consultancy charges, amounting to Rs. 48,530, on the grounds that they were personal in nature. The assessee appealed, but reiterated the grounds without presenting substantial arguments or evidence. The Commissioner of Income-tax (Appeals) upheld the disallowance, stating that the personal element could not be ruled out. The Tribunal concurred with this finding, noting that the assessee failed to provide evidence to show that the disallowance was excessive or unreasonable. The Tribunal found no justification to interfere with the conclusion drawn by the authorities and dismissed the appeal on this ground as well.

Conclusion:

The Tribunal upheld the addition of Rs. 6 lakhs as unexplained investment under section 69 and the disallowance of Rs. 48,530 as personal expenses. The assessee's appeals on both grounds were dismissed due to a lack of substantial evidence and failure to convincingly argue against the findings of the lower authorities. The order was pronounced on July 8, 2011.