2010 (5) TMI 612 - AT - Income Tax

Addition - unexplained gifts - . That the majority of the donors have been produced before the Assessing Officer during the remand proceedings and they have confirmed having given gifts to the assessee - It is a settled law that onus to prove the gift claimed to have been received by the assessee is upon the assessee - In this case, the identity of the donors is not in dispute but the creditworthiness of the donor as well as the genuineness of the gift is seriously disputed by the Assessing Officer which is sustained by the CIT(A) - the assessee and his family members claimed to have received gifts year after year on seventy one occasions and sum total of the gifts was amounting to Rs. 34,74,571 - It is against all human probabilities that the relatives who are much poorer than the assessee are giving gifts to the assessee and his family members number of times without any reciprocal gifts from the assessee s side - it is evident that none of them are assessed to tax and their only source of income claimed to be is agriculture income - Held that assessee has not been able to establish the creditworthiness of the donors as well as genuineness of transaction in respect of gifts from viz. S/Shri Devrajbhai Jevrajbhai, Manubhai Chaganbhai Savani, Chhaganbhai Diyalbhai, Ashokbhai Chhaganbhai and Nareshbhai H. Lakhani - the addition made by the Assessing Officer is reduced by Rs. 23,720 and the remaining addition of Rs. 4,45,000 (Rs. 4,68,720 minus Rs. 23,720) is sustained - Appeals are partly allowed

2021 (3) TMI 1046 - AT

Issues Involved:
1. Addition of Rs. 7,65,000 on account of alleged unexplained gifts.
2. Addition of Rs. 7,10,500 on account of unexplained gifts.
3. Addition of Rs. 4,68,720 on account of unexplained gifts.
4. Addition of Rs. 3,03,651 on account of unexplained gifts.
5. Addition of Rs. 1,90,000 on account of unexplained gifts.

Detailed Analysis:

1. Addition of Rs. 7,65,000 on Account of Alleged Unexplained Gifts:

The assessee received gifts totaling Rs. 7,65,000 from various donors, most of whom were relatives. The assessee claimed to have discharged the onus of proving the gifts by producing the donors and providing evidence of their income sources. However, the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] found discrepancies. The AO noted that the demand drafts (DDs) were purchased in cash and had consecutive serial numbers, raising suspicion. The CIT(A) noted that the donors failed to prove their creditworthiness and the genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee failed to establish the creditworthiness of the donors and the genuineness of the gifts, citing the Supreme Court's decision in Sumati Dayal v. CIT.

2. Addition of Rs. 7,10,500 on Account of Unexplained Gifts:

The assessee received gifts totaling Rs. 7,10,500 from various donors. Similar to the first issue, the AO and CIT(A) questioned the creditworthiness of the donors and the genuineness of the transactions. The Tribunal found that the donors were not assessed to tax, and their only source of income was agriculture, with insufficient evidence to support their income claims. The Tribunal upheld the CIT(A)'s decision, stating that the assessee failed to prove the creditworthiness of the donors and the genuineness of the gifts.

3. Addition of Rs. 4,68,720 on Account of Unexplained Gifts:

The assessee received gifts totaling Rs. 4,68,720 from various donors. The Tribunal found that the assessee failed to produce sufficient evidence to prove the creditworthiness of the donors and the genuineness of the transactions. The only exception was a gift of US $500 from the assessee's daughter settled in the USA, which was accepted as genuine due to the creditworthiness of the donor's husband. The remaining gifts were not substantiated, and the Tribunal upheld the addition of Rs. 4,45,000, reducing the total addition by Rs. 23,720.

4. Addition of Rs. 3,03,651 on Account of Unexplained Gifts:

The assessee received gifts totaling Rs. 3,03,651 from various donors. The Tribunal found that the assessee failed to prove the creditworthiness of the donors and the genuineness of the transactions. Similar to the previous issue, the Tribunal accepted a gift of US $500 from the assessee's daughter as genuine. The remaining gifts were not substantiated, and the Tribunal upheld the addition of Rs. 2,80,000, reducing the total addition by Rs. 23,651.

5. Addition of Rs. 1,90,000 on Account of Unexplained Gifts:

The assessee received gifts totaling Rs. 1,90,000 from various donors. The Tribunal found that the assessee failed to prove the creditworthiness of the donors and the genuineness of the transactions. The Tribunal upheld the addition of Rs. 1,90,000, as the assessee did not provide sufficient evidence to substantiate the gifts.

Conclusion:

The Tribunal upheld the additions made by the AO and CIT(A) in most cases, emphasizing the need for the assessee to prove the creditworthiness of the donors and the genuineness of the transactions. The Tribunal relied on the principles established in Sumati Dayal v. CIT and other relevant judicial pronouncements to conclude that the assessee failed to discharge the onus of proving the gifts. The appeals were dismissed except for minor reductions in specific cases where the assessee provided sufficient evidence to substantiate the gifts.

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