2013 (10) TMI 314 - HC - Income Tax

Genuineness of gifts received from different sources - Respondent assessee had shown receipt of gifts to the tune of Rs. 65,75,272/- from 12 different persons received through 11 demand drafts issued on a single day i.e. on 21.3.2003. One of the gifts amounting to Rs. 4,75,272/- was received from one Michael Gags of USA Held that - Assessing officer had issued the letters under section 133(6) of the Act. Assessing Officer had also called for confirmation letters which were received by it - The assessee had furnished all other requisite documents like copies of DD, gift deed, copy of PAN cards, copy of acknowledgment of returns of the donors along with computation and balance sheet - All the donors were assessed to tax except one who was based at USA - Identity of the donors so also creditworthiness and genuineness of the transaction having been established, gifts were not bogus. Reliance is also placed upon the judgment of Hon ble Gujarat High court in the case of Muralidhar Lahorimal v. Commissioner of Income-tax 2005 (11) TMI 32 - GUJARAT High Court , wherein identity of the donor had been established beyond any semblance of doubt and genuineness of the transaction was also established not only by the receipt of bank draft but also by other contemporaneous record. - Decided against the revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding addition of gifts as unaccounted income and subsequent deletion of the addition.

Analysis:
The case involved a challenge by the Revenue against the order of the Income Tax Appellate Tribunal regarding the addition of gifts as unaccounted income. The Assessing Officer doubted the genuineness of gifts totaling Rs. 65,75,272 received by the assessee from 12 different persons on a single day through demand drafts. Despite confirmations, the Assessing Officer added the amount to the assessee's income due to doubts about the gifts' genuineness. The CIT(Appeals) also upheld this decision, emphasizing the lack of specified occasion for the gifts. However, the ITAT later deleted the addition, leading to the present appeal with substantial questions of law.

The Revenue contended that the Tribunal erred in shifting the burden of proof and highlighted discrepancies in the gifts' circumstances, arguing that the findings were perverse. The counsel relied on relevant court decisions to support the Revenue's position. However, the Court noted the burden on the assessee to provide a reasonable explanation for credited sums, as established in previous cases. The Court referenced a case involving foreign gifts and emphasized the need for a satisfactory explanation to establish the genuineness of gifts.

In the present case, the Tribunal found the donors' identities, creditworthiness, and transaction genuineness established based on documents provided by the assessee. The Tribunal's decision was supported by a previous court ruling emphasizing the importance of donor identity and transaction genuineness. Despite concerns raised by the Revenue about the gifts' circumstances, the Court found the Tribunal's reasoning convincing and upheld the deletion of the addition from the assessee's income computation.

The Court dismissed the Tax Appeal, concluding that the Tribunal's decision was not perverse and did not give rise to any substantial question of law. The Court emphasized that the material presented by the assessee and the Tribunal's reasoning provided sufficient grounds to support the decision to delete the addition of the gift amount from the income computation.