2013 (11) TMI 121 - AT - Income Tax

Unexplained cash credit u/s 68 Held that - Following Rajeev Tandon v. Asst. CIT 2007 (7) TMI 40 - HIGH COURT , DELHI The donor had absolutely no connection with the assessee and they made gifts to the assessee only because he needed money to buy a house and he wanted to help him - this was not only quite unusual but also quite unnatural - It was incredible that a complete stranger would want to gift lakhs of rupees to a person only because that person wanted the amount for purchasing a house - the gifts could not be said to be genuine Decided against the assesse.

Summary

Issues:
- Addition of Rs. 2,00,000 under section 68 of the Income-tax Act, 1961 without justification
- Failure to prove the genuineness of transaction
- Applicability of case laws in the assessee's case

Analysis:
1. Addition under Section 68 of the Income-tax Act:
The assessee received a gift of Rs. 2 lakhs from a person unrelated to them. The Assessing Officer added this amount as unexplained cash credit under section 68 of the Income-tax Act as the creditworthiness of the donor and their capacity to give the gift were not proven by the assessee. The learned Commissioner of Income-tax (Appeals) confirmed this addition, emphasizing the lack of reciprocity of gifts between the donor and the assessee, citing relevant case laws like Rajinder Kumar Mittal v. Asst. CIT and ITO v. Smt. Usha Aggarwal.

2. Failure to Prove Genuineness of Transaction:
The assessee's counsel provided PAN, affidavit, copy of gift deed, and income-tax return to prove the genuineness of the gift. However, it was noted that the creditworthiness of the donor and their capacity to gift the amount were not adequately demonstrated. The Tribunal emphasized the need for the assessee to conclusively prove the actual receipt of the gift and the genuineness of the transaction, as mere identification of the donor and movement of funds through banking channels were deemed insufficient.

3. Applicability of Case Laws:
The Tribunal referred to the judgment in Rajeev Tandon v. Asst. CIT, where gifts from unrelated donors were scrutinized, and the reasons offered by the assessee were found unreasonable and unacceptable. The Tribunal upheld the decision of the learned Commissioner of Income-tax (Appeals) based on precedents and discussions, emphasizing the need for the assessee to establish the genuineness of the transaction beyond mere identification of the donor and fund movement through banking channels.

In conclusion, the Tribunal affirmed the decision of the learned Commissioner of Income-tax (Appeals) to add the gift amount as unexplained cash credit under section 68 of the Income-tax Act, dismissing the appeal filed by the assessee based on the lack of reciprocity in gifts, failure to prove the genuineness of the transaction, and the applicability of relevant case laws in similar contexts.