2009 (10) TMI 576 - AT - Income Tax

Addition of gift items lying with the assessee as income of the assessee - during assessment proceedings the assessee has stated to have received gift - assessee is not able to produce the donors before the AO though the declaration of gifts - no finding by the Departmental authorities that they are not having sufficient income to make the disputed gifts to the assessee and their identities are doubted - action in rejecting the claim of the assessee basing on only non-existence of relationship between the donor and the donee cannot be a ground to brand the gifts as non-genuine Appeal allowed

Summary

Issues:
Challenge to addition of gift items as income of the assessee.

Analysis:
The appeal was filed against the order of the learned CIT(A) Central, Jaipur, where the assessee challenged the addition of gift items as income. The assessee received gift amounts from two individuals but could not produce the donors before the AO. The AO added the gift amounts as income, which was upheld by the CIT(A). The assessee argued that the identity and financial capacity of the donors were not in question, citing previous tribunal decisions and High Court rulings. The Departmental Representative contended that the assessee failed to produce the donors for examination, leading to the rejection of the claim. However, the Tribunal found that the Departmental authorities did not provide any positive material to establish the gifts as non-genuine. The Tribunal referred to previous cases where the mere absence of a blood relationship between the donor and donee did not make the gifts non-genuine. The Tribunal concluded that the Departmental authorities' rejection of the claim based solely on the lack of relationship was not sustainable without concrete evidence of the gifts being a guise for money laundering. Therefore, the appeal of the assessee was allowed, and the orders of the Departmental authorities were set aside, directing to accept the gifts as claimed.

The interest under sections 234A and 234B of the Act would be calculated by the AO after giving effect to the decision on gifts. The Tribunal emphasized that the Departmental authorities failed to provide substantial evidence to prove the gifts as non-genuine, and the absence of a blood relationship alone was insufficient to brand the gifts as such. The Tribunal relied on previous judgments to support its decision in favor of the assessee. The appeal was allowed, and the orders of the Departmental authorities were set aside, directing to accept the claim of the assessee regarding the gifts.