2011 (6) TMI 768 - AT - Income Tax

Summary

Issues Involved: Whether the Ld. CIT(A) was justified in upholding the addition of Rs. 2,30,924 as 'income from undisclosed sources' in the hands of the assessee for the assessment year 2005-06 u/s.143(3) of the Income Tax Act, 1961.

Adjudication of the Issue:

1. The assessee received Rs. 2,30,924 from Capt. R. K. Behram as a gift but could not provide documentary evidence. The Assessing Officer added this amount as income from undisclosed sources. The Ld. CIT(A) declined to admit additional evidence and upheld the AO's decision. The Tribunal noted that the Ld. CIT(A) erred in not considering the evidence submitted by the elderly assessee, especially as the information was to be obtained from abroad. The Tribunal cited legal precedents emphasizing the authority's obligation to consider necessary evidence. Therefore, the Tribunal did not approve the Ld. CIT(A)'s stand.

2. Despite the usual practice of remitting the matter to the Ld. CIT(A) for further adjudication, the Tribunal decided to address the submissions on merits due to the senior citizen status of the assessee, the non-business nature of the assessee, the narrow compass of the issue, and the small amount involved.

3. The assessee provided evidence supporting Capt. Behram's identity through his affidavit, detailing their long-standing relationship and the gift transaction. The Tribunal found no reason to doubt the genuineness of the gift, considering the long-term acquaintance between the parties, the passive income nature of the assessee, and the absence of inconsistencies in the explanations provided.

4. The Assessing Officer noted a discrepancy in the source of the amount received, initially stated as from the husband but later revealed to be from the husband's friend. However, the Tribunal found a plausible explanation for the remittance to the assessee, which was not of an income nature, leading to the decision to delete the impugned additions.

In conclusion, the Appellate Tribunal ITAT MUMBAI allowed the appeal and directed the Assessing Officer to delete the addition of Rs. 2,30,924 as income from undisclosed sources in the hands of the assessee for the assessment year 2005-06.