2012 (7) TMI 129 - AT - Income Tax

Addition warranted u/s 68 - assessee contested that the identity and financial capacity of the donor and genuineness of the transaction which is through banking channel - Held that - In case of gift from Smt. Neelam Kumari, though in the photocopy of gift deed it was mentioned that gift was given by donor out of natural love & affection, however, appellant failed to furnish evidence showing that the donor was related to him by way of relationship or friendship. In spite of sufficient opportunity, the assessee failed to produce the L/h of Smt. Neelam Kumari. Even the complete address of L/h was not furnished - survey at the office premises of Shri D K Agarwal, CA, reveled that as many as 292 trusts are being operated from the aforesaid address with no actual business being conducted. This clearly indicate that Narmada Benefit Trust was created with the sole intention of defrauding the revenue by providing fictitious entries in respect of gift etc. There are unexplained cash deposits in the bank account of aforesaid trust, in such circumstances gift advanced by Smt. Neelam Kumari cannot be held as genuine gift. In the case of Ratan Singh from whom gift of Rs.2 lacks received though his L/h has confirmed the facts, however, copy of bank accounts was not produced. During the concerned year, the total income of Ratan Singh was only Rs.1,49,750 and from the copy of his capital account produced by L/h it appears that Late Shri Ratan Singh has given gift of Rs.5,10,000. Appellant failed to produce bank statement or books of account of late Shri Ratan Singh, in such circumstances creditworthiness of Ratan Singh remained unproved. A person having measure income of Rs.1,49,750 cannot have sufficient fund to give gift to the tune of Rs.5,10,000 - Decided against assessee. Additional ground challenging jurisdiction u/s 147 as the reasons recorded with regard to escapement of income are not specific but are general in nature - Held that - As the assessee did not point out any mistake in the original order, in the light of section 254(2) which provides power to ITAT to amend the order with a view to rectifying any mistake apparent from the record, passed by it under sub-section (1), no reason exists so as to disturb the original finding of the I.T.A.T. that neither any mistake in this regard has been pointed out by the assessee at the time of hearing nor such mistake has been pointed in M.A. order by the Tribunal - against assessee.

Issues Involved:
1. Sustaining the addition of Rs.1,00,000/- representing a gift from Smt. Neelam Kumari.
2. Sustaining the addition of Rs.2,00,000/- representing a gift from Shri Ratan Singh.
3. Disbelieving the gifts supported by documentary evidence and statements.
4. Alleged arbitrary disbelieving of evidence without contrary evidence.
5. Jurisdiction under section 148 based on general reasons without verification.
6. Sustaining an addition of Rs.3,00,000/- despite reasons for Rs.1,00,000/-.
7. Applicability of Section 68 when amounts are not recorded in the assessee's books of accounts.

Detailed Analysis:

1. Sustaining the Addition of Rs.1,00,000/- Representing a Gift from Smt. Neelam Kumari:
The Tribunal upheld the addition of Rs.1,00,000/- received as a gift from Smt. Neelam Kumari, finding that the assessee failed to prove the identity and creditworthiness of the donor. Despite the submission of a gift deed and bank statements, the Tribunal noted that the donor's identity remained in doubt, and her creditworthiness was not established. The Tribunal emphasized that merely providing documents without corroborative evidence does not suffice to prove the genuineness of the gift.

2. Sustaining the Addition of Rs.2,00,000/- Representing a Gift from Shri Ratan Singh:
The Tribunal also upheld the addition of Rs.2,00,000/- received from Shri Ratan Singh. Although the legal heir of the donor, Shri Vijay Singh, confirmed the gift, the Tribunal found that the identity and creditworthiness of the donor were not satisfactorily proven. The Tribunal pointed out the lack of documentary evidence supporting the donor's financial capacity and the suspicious nature of the transactions.

3. Disbelieving the Gifts Supported by Documentary Evidence and Statements:
The Tribunal examined the documentary evidence and statements provided by the assessee but found them insufficient to establish the genuineness of the gifts. The Tribunal highlighted that the burden of proof lies on the assessee to demonstrate the identity, creditworthiness, and genuineness of the transactions. The Tribunal found that the evidence provided did not meet these criteria.

4. Alleged Arbitrary Disbelieving of Evidence Without Contrary Evidence:
The Tribunal rejected the assessee's contention that the authorities arbitrarily disbelieved the evidence without bringing any contrary evidence on record. The Tribunal reiterated that the onus of proving the genuineness of the gifts lies on the assessee, and the evidence provided was inadequate to substantiate the claims.

5. Jurisdiction Under Section 148 Based on General Reasons Without Verification:
The Tribunal addressed the additional ground challenging the jurisdiction under section 148, stating that the reasons recorded for reopening the assessment were specific and not general. The Tribunal found that the reasons related to the alleged gift of Rs.1,00,000/- from Smt. Neelam Kumari were clear and justified the reopening of the assessment.

6. Sustaining an Addition of Rs.3,00,000/- Despite Reasons for Rs.1,00,000/-:
The Tribunal dismissed the ground regarding the addition of Rs.3,00,000/- when the reasons recorded were for Rs.1,00,000/-. The Tribunal noted that once the assessment is reopened, the authorities are entitled to examine and make additions for any other income that may have escaped assessment.

7. Applicability of Section 68 When Amounts Are Not Recorded in the Assessee's Books of Accounts:
The Tribunal found that the provisions of Section 68 were applicable as the assessee maintained books of accounts, and the amounts in question were credited in these books. The Tribunal dismissed the assessee's argument that Section 68 should not apply as the amounts were not recorded in the books of accounts.

Conclusion:
The Tribunal dismissed the appeal, upholding the additions made by the Assessing Officer and confirmed by the CIT(A). The Tribunal emphasized the importance of proving the identity, creditworthiness, and genuineness of the transactions, which the assessee failed to do. The Tribunal also found that the reopening of the assessment under section 148 was justified based on specific reasons recorded by the Assessing Officer.

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