2012 (5) TMI 420 - HC - Income Tax

Addition U/S 69 - genuineness of gift - collusive transaction - Held that - the appellants failed to discharge the primary onus and failed to establish the genuineness of the transaction and the creditworthiness of the donor to make the gift and the surrounding circumstances have rightly been noted by the Tribunal as well as the revenue authorities in reaching to the conclusion that the transaction of gift was not a genuine transaction. - Decided against the assessee

Summary

Issues:
Appeals against common order involving the same issues.

Analysis:
1. The appeals were filed against a common order passed by ITAT for assessment years 2000-2001 and 2001-2002. The appellants were issued notices under Section 153A of the Income Tax Act following a search on their premises. The assessing officer added certain amounts received as gifts to the appellants' total income under Section 69 of the Act, considering them collusive transactions. The Commissioner of Income Tax (Appeals) and ITAT upheld this addition, doubting the genuineness of the gifts and the creditworthiness of the donors.

2. The appellant's counsel argued that the revenue authorities and ITAT erred in not accepting the genuineness of the gifts and not applying the proper tests from previous judgments. The Commissioner (Appeals) extensively examined the appellants and found discrepancies, such as the lack of knowledge about the gifts' use, absence of family or social relations with the donors, and inadequate funds in the donors' bank accounts to support the gifts.

3. The ITAT affirmed the lower authorities' findings, emphasizing the lack of relation between the donors and appellants, unestablished capacity of the donors to give such gifts, and the failure to disprove the genuineness of the gifts and the donors' creditworthiness. The appellant's contentions were deemed to be pure findings of fact, not shown to be erroneous or perverse.

4. The appellant relied on various judgments to support their case, including the Delhi High Court's ruling in CIT v. Mrs. Sunita Vachani, where the tribunal's findings on gift genuineness were upheld as factual. Similarly, the Gauhati High Court's decision in Nemi chand Kothari v. CIT highlighted the importance of proving the genuineness of transactions and the creditor's creditworthiness, which the appellants failed to do.

5. The appellant's reliance on the judgment in CIT v. Mayawati by the Delhi High Court and Murlidhar Lahorimal v. CIT by the Gujarat High Court was deemed inapplicable to the present case due to differing factual circumstances where the donors' capacity and genuineness of gifts were proven. Ultimately, the court found no substantial question of law in the appeal, as the concurrent factual findings by the revenue authorities and ITAT were upheld, leading to the dismissal of the appeals.