2013 (12) TMI 371 - HC - Income Tax

Gift from stranger - Held that - The Assessing Officer and the CIT (A) were justified in holding that the gift in question was bogus and the Tribunal committed patent error in accepting the gift as genuine - The donor had no relationship with the assessee - He had no occasion to give the gift - He was not produced - His financial capacity was not established - His bank statement was not produced - The Tribunal failed to appreciate these facts - It committed patent error of law in holding that the assessee discharged onus on him to prove the genuineness of the gift - NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - The assessee was also required to substantiate that the donor had the means and the gift was genuine which he had failed to establish - Even when the donor had the means to make the gifts, there being neither any relationship nor there being any circumstance to show natural love and affection of the donor for the donee nor there being any occasion to make such gifts to the assessee and the authority of jurisdictional High Court being against the assessee - Decided against assessee.

Summary

Issues Involved:
Validity of foreign gifts received by the assessee and family members, addition of gift amount to total income, dispute over genuineness of gifts, capacity of donors, legal justification of addition to income.

Analysis:

1. The appeal under Section 260-A of the Income Tax Act, 1961 raised the substantial question of law regarding the validity of gifts received by the assessee from foreign donors. The Assessing Officer added the gift amount to the total income of the assessee, alleging concealment of income and inaccurate particulars. The Commissioner of Income Tax (Appeals) disagreed and deleted the addition, but the Income Tax Appellate Tribunal reversed the decision, leading to the current appeal.

2. The main contention of the appellant was that the donors had the capacity to give the gifts, and the acceptance of the gifts was confirmed by the assessee. On the other hand, the revenue argued that there was no specific occasion or relationship to justify the gifts. The Assessing Officer doubted the genuineness of the gifts, considering them compensatory payments from undisclosed sources.

3. The Income Tax Appellate Tribunal upheld the Assessing Officer's decision, emphasizing that the donors were not closely related to the assessee, and there was no apparent reason for the substantial gifts. The Tribunal found no justifiable grounds for the gifts and deemed them non-genuine, leading to the addition of the gift amount to the assessee's income.

4. Referring to previous judgments, the Tribunal highlighted the importance of proving the natural love and affection of the donor, financial capacity, and genuineness of the gift. In this case, the lack of a relationship, occasion, or natural affection between the donor and donee, along with the failure to establish the donor's financial capacity, led to the rejection of the gifts as genuine.

5. The High Court upheld the Tribunal's decision, citing the lack of relationship, natural affection, or occasion for the gifts. The authority of the jurisdictional High Court supported the decision, dismissing the appeal due to the absence of merit. The judgment emphasized the need to establish the genuineness of gifts through evidence of natural love and affection, financial capacity of the donor, and a valid occasion for the gifts.