2012 (12) TMI 26 - AT - Income Tax

Addition u/s 69 - unexplained investments in plot of land - assessee surrendered the amount, however subsequently retracted from statement and contended that same was paid by Mr H - Held that - It is found that impugned amount was disallowed merely on the ground that the impugned payment was paid by cheque dated 14.7.2002. From facts, it is found that it is a typographical error and in fact the payment was made on 14.7.2003 through cheque. Another reason for making the addition was that confirmation was not filed. However, we find that such confirmation was filed from Shri H, therefore, from both the angles, the claim of the assessee deserves to be allowed. Addition u/s 41(1) - amount transferred to the capital account of the assessee, who is a partner in the firm, Bhopal Garage & Service Station from loan account of his brother, in the same firm held as waiver of loan as gift but taxable u/s 41(1) - Held that - From records genuineness of gift is established. Since it is money from the brother in the form of gift, section 41(1) is not attracted - Decided in favor of assessee Credit in the capital account of the assessee from the gifts received in ring ceremony of son - Held that - Receiving of gift was accepted by the Assessing Officer, therefore, this addition is also deleted.

Summary

Issues involved:
1. Disputed payment for land purchase.
2. Transfer of amount to capital account as a gift.
3. Unexplained credit in the capital account from gifts received.

Detailed Analysis:

1. Disputed payment for land purchase:
The appellant contested the order passed by the first appellate authority regarding the payment of Rs.13,20,000 made towards the purchase of land by Shri Henry Garg on behalf of the appellant. The appellant argued that the payment was wrongly dated in the sale deed as 14.7.2002 instead of the correct date, 14.7.2003. The appellant presented evidence, including a statement by Shri Paramjeet Singh Bedia confirming the payment from Shri Henry Garg's account. The confirmation filed by Shri Henry Garg further supported the appellant's claim. The Tribunal found that the payment was indeed made on 14.7.2003 and that the confirmation was filed, leading to the allowance of this ground of the appellant's appeal.

2. Transfer of amount to capital account as a gift:
The next issue involved the transfer of Rs.12,55,000 from the loan account of the appellant's brother to the capital account of the appellant, treated as a waiver of loan but taxable under section 41(1) of the Act. The appellant argued that the amount was gifted by the brother, Shri Sudarshan Singh Bedi, who is an NRI. The gift deed presented as evidence demonstrated the waiver of the outstanding amount by the brother as a gift to the appellant. The Tribunal examined the gift deed and concluded that since it was a gift from the brother, section 41(1) was not applicable, leading to the allowance of this ground of the appellant's appeal.

3. Unexplained credit in the capital account from gifts received:
The final issue pertained to the credit of Rs.1,16,215 in the appellant's capital account from gifts received during a ring ceremony. The appellant argued that such gifts are customary in Punjab families during special occasions and should not be considered unexplained. The Tribunal noted that the gifts received during the ring ceremony were customary and not subject to reciprocity. Additionally, the reassessment was based on investment in property, and the addition made was deemed unnecessary as the gifts were customary and not for reciprocal purposes. Consequently, the Tribunal deleted the addition of Rs.1,16,215. Ultimately, the appeal was allowed in favor of the appellant.