2011 (8) TMI 1184 - AT - Income Tax

Summary

Issues Involved:
1. Limitation issue regarding orders served u/s 143(3) r.w.s. 147 of the Income Tax Act.
2. Addition of amounts received as gifts under section 68 of the Income Tax Act.

Summary:

Limitation Issue:
The first common issue in these appeals concerns the limitation issue regarding orders served u/s 143(3) r.w.s. 147 of the Income Tax Act. The assessee's counsel conceded that this issue would not be pressed. Consequently, the Tribunal dismissed this issue as not pressed.

Addition of Amounts Received as Gifts:
The second common issue pertains to the addition of amounts received as gifts, which the Assessing Officer (AO) treated as unexplained under section 68 of the Income Tax Act. The AO received information from the Investigation Wing indicating that the assessee was a beneficiary of bogus gift entries. The AO added these gifts as unexplained income since the donors were untraceable and did not respond to summons.

The CIT(A) upheld the AO's additions, emphasizing that the primary onus of proving the genuineness of cash credits u/s 68 lies on the assessee. The assessee must prove the identity of the creditor/donor, the genuineness of the transaction, and the capacity of the creditor/donor to give such sums. The CIT(A) concluded that the assessee failed to prove the genuineness of the transactions and the capacity of the donors, despite providing various documents.

The Tribunal examined the facts and circumstances, noting that the assessee had provided affidavits, income-tax returns, balance sheets, PAN cards, and bank statements of the donors. The Tribunal found that the AO did not verify the income-tax records of the donors and did not pursue the matter further despite having the necessary details. The Tribunal cited the decision of the Hon'ble Calcutta High Court in CIT Vs. Eastern Commercial Enterprises, which held that a person indulging in double speaking cannot be considered truthful.

The Tribunal also referred to the Mumbai Bench's decision in ACIT Vs. Mrs. Uttara S. Shorewala, which supported the view that the assessee had discharged the initial onus by proving the identity and capacity of the donors. The Tribunal concluded that the revenue did not make sufficient efforts to verify the creditworthiness of the donors and that the assessee had provided all necessary details.

The Tribunal further cited the Hon'ble Gujarat High Court's decision in DCIT v Rohini Builders and the Hon'ble Apex Court's decision in CIT, Orissa -vs.- Orissa Corporation P. Ltd., which supported the assessee's position. The Tribunal held that the assessee had discharged the burden of proof and that the revenue's conclusions were unreasonable.

Conclusion:
The Tribunal reversed the orders of the lower authorities and allowed the appeals of the assessee, concluding that the additions made by the AO were not justified. The appeals were allowed, and the order was pronounced in open court on 12.08.11.