2010 (10) TMI 600 - AT - Income Tax

Addition - Genuineness of the gift - the assessee claimed to have received gift from Mr.Brian Fernandes who was stated to be husband of assessee s friend Mrs.Venetia Fernandes. No evidence worth the name except copy of memorandum from Mrs. Venetia Fernandes was filed at the assessment stage - In order to establish the genuineness of the gift the onus was upon the assessee to establish the identity and capacity of the donor along with the genuineness of the transaction - The passport of Mrs.Venetia Fernandes (wife of donor) could not be held to be a valid document to prove the genuineness of the gift received from the donor - The learned CIT(A) went on to hold that it was the duty of the A.O. to investigate further if he had any doubt about the creditworthiness of the donor and bring more material on record so as to justify its rejection - set aside the impugned order and restore the matter to the file of A.O. for taking a fresh decision as per law after allowing a reasonable opportunity of being heard to the assessee - appeal is allowed for statistical purposes

Summary

Issues:

1. Deletion of addition of Rs.13,57,265 made by the Assessing Officer regarding a gift received by the assessee.
2. Admission of additional evidence in contravention of provisions or rule 46A.

Analysis:

1. The appeal was against the deletion of an addition made by the Assessing Officer regarding a gift of Rs.13,57,265 received by the assessee from an NRE friend. The Assessing Officer considered the gift as bogus due to lack of supporting documentary evidence like NRE account copy, bank statement, passport of the donor, and proof of remittance from abroad. The Commissioner of Income-tax (Appeals) deleted the addition based on additional evidence in the form of a copy of the passport of the donor's wife. However, the Tribunal found this reasoning flawed as the gift was received from the husband of the donor's wife, not the wife herself. The Tribunal emphasized that the onus was on the assessee to establish the identity, capacity of the donor, and the genuineness of the transaction. The Tribunal disagreed with the Commissioner's view that the Assessing Officer should have conducted further investigation, as the assessee failed to provide the requested documentary evidence. Therefore, the Tribunal set aside the order and remanded the matter to the Assessing Officer for a fresh decision, emphasizing the need for the assessee to furnish all necessary documents to prove the genuineness of the gift.

2. The second issue pertained to the admission of additional evidence by the Commissioner of Income-tax (Appeals) without calling for a remand report from the Assessing Officer. The Tribunal found this action unjustified, especially since the Assessing Officer had already requested specific documentary evidence from the assessee, which was not provided. The Tribunal highlighted that no evidence was presented to show compliance with the Assessing Officer's requirements. Consequently, the Tribunal concluded that the Commissioner's decision to admit additional evidence without verifying compliance with the Assessing Officer's requests was not appropriate. As a result, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of following due process and providing all necessary documents to substantiate claims during assessments.