2015 (6) TMI 519 - AT - Income Tax

Unexplained expenditure u/s.69C - the amounts remitted toward the father s medical treatment - Held that - There is no doubt in the present case as to the source; the assessee s sister, Ms. Hapiping C. Chiang, who is working with Canadian Trust Company, having adequate income/ capital. It is the nature of the credit, however, that the assessee has not been able to satisfactorily prove, so that to that extent it becomes an unexplained credit. In fact, gifts are considered as income, i.e., generally, only on account of the inability to explain or substantiate the nature of the sum credited, which includes the credit to, as in the instant case, the assessee s capital account, even as there is little to doubt qua its source. Thus once there is an unexplained credit, it is open to the AO to hold it as the assessee s income and no further burden lies on the Revenue to show that it is from a particular source. To state differently, the credits would constitute a valid ground for including the same as income u/s. 68, that is, separate and distinct from that for being unable to prove or explain satisfactorily the source of the expenditure. - Decided against assessee. In sum, the facts and circumstances lead to an unmistakable conclusion of the assessee s father being critically ill, and the assessee s sister, living far away, showing her concern and responsibility toward her father as well as appreciation for her brother in looking after him - her father, with whom he was staying, and being in a position to, contributing thereto as her moral obligation. We, accordingly, confirm the addition of ₹ 8,85,102/- found credited to the assessee s capital account in his accounts as his income for the foregoing reasons.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Maintainability of the addition as unexplained expenditure under Section 69C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed an appeal with a delay of 459 days, explaining that the delay was due to initially accepting the decision of the first appellate authority. The assessee only decided to appeal after receiving a penalty order and consulting with his Chartered Accountant, who advised filing the appeal based on a relevant case law. However, the tribunal found no direct correlation between the cited case (CIT vs. Amitabh Bachchan) and the present case. Despite the lack of a satisfactory explanation for the delay, the tribunal leaned towards a liberal approach, following precedents that favor condonation in the absence of mala fides. Therefore, the delay was condoned in the interest of justice, with a cost of Rs. 10,000 imposed on the assessee, payable to the Revenue.

2. Maintainability of the Addition as Unexplained Expenditure under Section 69C:
The principal issue was whether the addition of Rs. 8,85,102 to the assessee's capital account, claimed as a gift from his sister, was maintainable as unexplained expenditure under Section 69C. The assessee argued that the amount was a gift from his sister, a Canadian national, who had planned to visit India but canceled due to their father's illness. The Assessing Officer (A.O.) deemed the amount as unexplained expenditure, as no corresponding expenses were reflected in the assessee's accounts.

The tribunal observed that the expenditure on the sister's visit and the father's medical treatment was not quantified. The assessee's household expenditure was clarified to be Rs. 6,20,292 for the year, contrary to the CIT(A)'s finding of Rs. 1.56 lakhs. The tribunal found no evidence of additional expenses incurred during the sister's visit, deeming the withdrawal of Rs. 30,000 for the visit as adequate. However, the tribunal noted the absence of details regarding the father's illness and medical expenses, which were crucial given the father's advanced age and the sister's concern for his health.

The tribunal scrutinized the sister's remittances, concluding that they were intended to contribute towards the father's medical treatment, despite being labeled as gifts. The tribunal found inconsistencies in the sister's declaration and inferred that the remittances were indeed for medical expenses. The tribunal emphasized that the onus to prove the expenditure's source lies with the assessee, and in the absence of satisfactory proof, the amount could be deemed as unexplained credit under Section 68.

The tribunal affirmed the addition of Rs. 8,85,102 to the assessee's income, rejecting the explanation of the remittance as a gift and concluding that the amount was indeed for the father's medical expenses. The appeal was dismissed, and the addition was confirmed.

Conclusion:
The tribunal condoned the delay in filing the appeal but upheld the addition of Rs. 8,85,102 as unexplained expenditure under Section 69C, concluding that the remittances from the assessee's sister were intended for their father's medical treatment. The assessee's appeal was dismissed.