2014 (12) TMI 1211 - HC - Income Tax

Genuity of gifts - whether ITAT was right in law in directing the A.O. to reconsider the genuineness of the gifts when the addition made by treating the gift as not genuine is justified? - Held that - Counsel for the parties are ad-idem that as the Tribunal has based its opinion on an earlier order which has been set-aside, it would be necessary for the Tribunal to adjudicate the appeal filed by the assessee afresh and in accordance with law. In view of the consensus between counsel for the parties, the appeals are allowed. The order passed by the ITAT is set-aside and the Tribunal is directed to decide the appeals afresh and in accordance with law within six months from the date of receipt of a certified copy of this order.

Summary

Issues:
1. Validity of gifts made by a donor to the assessee and his brothers.
2. Direction to reconsider the genuineness of gifts.
3. Offset of any addition with the surrender in the firm.
4. Deletion of addition made on account of NRI gifts and restoration of the issue to the Assessing Officer.

Issue 1:
The first issue revolves around the validity of gifts made by a donor to the assessee and his two brothers. The Tribunal was questioned on whether the gifts were genuine without adjudicating upon the capacity of the donor. The Tribunal's decision was challenged by the revenue, arguing that the Tribunal should have considered the donor's capacity. The Court noted the consensus between the parties that the Tribunal's decision was based on an earlier order that had been set aside. Consequently, the Court allowed the appeals, setting aside the ITAT's order and directing the Tribunal to decide the appeals afresh within six months.

Issue 2:
The second issue concerns the direction to reconsider the genuineness of the gifts by the Income Tax Appellate Tribunal (ITAT). The ITAT was instructed to review the genuineness of the gifts, which had been treated as not genuine. The revenue contended that the addition made should stand, citing a judgment of the Punjab & Haryana High Court. However, the Court, considering the need for a fresh adjudication due to the earlier order being set aside, allowed the appeals and directed the Tribunal to decide the matter afresh within six months.

Issue 3:
The third issue involves the direction that any addition sustained in the hands of the assessee should be offset with the surrender in the firm where the assessee is a partner. The Tribunal's decision to offset any addition with the surrender in the firm was challenged. The Court, acknowledging the necessity for a fresh adjudication due to the earlier order being set aside, allowed the appeals and directed the Tribunal to decide the matter afresh within six months.

Issue 4:
The final issue pertains to the deletion of an addition made on account of NRI gifts and the restoration of the issue to the Assessing Officer (AO) with certain directions. The Tribunal had deleted the addition but simultaneously restored the issue to the AO for further consideration. The revenue challenged this decision, but the Court, considering the need for a fresh adjudication due to the earlier order being set aside, allowed the appeals and directed the Tribunal to decide the matter afresh within six months.