2013 (1) TMI 573 - HC - Income Tax

Addition u/s 68 - rejecting the gift received by appellant - reopening of assessment - Held that - As specific information was received that the loans/credit entries given by Ganga Ram Agarwal Group of Companies who were indulging in giving bogus entries and therefore, the assessment has rightly been reopened as it is based on relevant materials and information. So far as the factum of gift is concerned perusing the gift deed even though the donor and donee belonged to the same religion, but the relationship has not been mentioned. It is not clear as to whether the donor was related to the donee or not. Further, notice u/s 133(6) was sent and no reply was filed. It was the obligation and duty of the appellant to give the address or to produce the donor because the appellant was claiming that she had received the amount of Rs. 5 lakhs as gift, which is not liable to tax. She having failed to discharge the burden, the authorities have rightly treated it as income - against assessee.

Issues:
1. Addition of Rs. 5,00,000/- under section 68 of the Income Tax Act
2. Justification of confirming the proceeding under section 147 of the Act
3. Validity of rejecting the gift received by the appellant
4. Legal correctness in disbelieving the transaction of genuine gift

Analysis:
1. The appellant contested the addition of Rs. 5,00,000/- under section 68 of the Income Tax Act, claiming it as a gift received. However, the Assessing Officer disbelieved the gift and added the amount to the appellant's income. The Commissioner of Income Tax (Appeals) partly allowed the appeal but upheld the addition of Rs. 5 lakhs as a gift. The Tribunal, in the impugned order, dismissed the appeal, stating that the appellant failed to substantiate the gift adequately. The High Court upheld the Tribunal's decision, emphasizing that the appellant did not provide sufficient evidence to prove the gift's authenticity, leading to the addition being treated as income.

2. The initiation of proceedings under section 147 of the Act was challenged by the appellant, arguing that there was no substantial material to justify reopening the assessment. However, the High Court disagreed, stating that specific information indicated the involvement of Ganga Ram Agarwal Group of Companies in providing bogus entries. The Court held that the assessment was rightly reopened based on relevant information, rejecting the appellant's claim of insufficient grounds for initiating the proceedings under section 147.

3. The appellant raised concerns about the rejection of the gift received, supported by relevant documents and evidence. The High Court examined the gift deed and noted that while the donor and donee shared the same religion, the relationship between them was not specified. Additionally, the appellant failed to provide the donor's address or produce them despite a notice under section 133(6) remaining unanswered. The Court emphasized the appellant's duty to substantiate the gift claim to avoid taxation, concluding that the authorities correctly treated the amount as income due to the appellant's failure to discharge the burden of proof.

4. The issue of disbelieving the transaction of a genuine gift and confirming the addition of Rs. 5,00,000/- under section 68 of the Act was also addressed. The High Court reviewed the evidence and upheld the Tribunal's decision, stating that the order did not have any legal flaws. The Court emphasized the appellant's responsibility to establish the authenticity of the gift, which was not adequately fulfilled, leading to the dismissal of the appeal and confirmation of the addition as income.

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