2015 (8) TMI 649 - AT - Income Tax

Addition u/s 68 on account of gift received from NRI relative - Held that - The assessee is a widow who has received a gift from her late husband s sister, who is an NRI based in Hong Kong. The gift was received on the occasion of her grand daughter s marriage. So far as the transaction of gift is concern, the same is evidenced from the bank statement of the assessee; remittance advice of Dena bank; bank statement of the donor, Smt. Kanakwari Nahata; foreign remittance advice issued by HSBC bank Hong Kong. It has been further brought on record that the money in bank account of the donor had come from M/s Keen Jade Ltd, a family owned concern, wherein the donor was one of the Directors, alongwith her husband and daughter-in-law. From the bank account of M/s Keen Jade Ltd, it is seen that on 5.2.2009 an amount of US 100,035. has been debited and has been credited to the bank account of the donor on 5.2.2009, itself. On the same date it has been remitted to the assessee s bank account in India. This fact is evident from the HSBC account of the donor. Thus, the flow of transaction and the financial capacity of the donor stands amply proved. Not only that, the assessee had also filed the Income Tax Return of M/s Keen Jade Ltd., wherein the donor has been shown as a Director of the Company. From all these details and evidence not only the genuineness of the transaction is proved but also the creditworthiness/ financial capacity of the donor. The assessee s primary onus has been discharged. Here, in this case, the donor is a close relative who has given the gift confirmation in a gift deed giving all the particulars of the gift to the assessee. The reasoning given by the ld.CIT(A) is purely based on hypotheses and premises, like the gift always needs to be reciprocal and why would younger sister-inlaw will give gift to elder sister-in-law without any reciprocity. Therefore, the findings of the ld. CIT(A) is reversed and the addition made u/s 68, stands deleted. - Decided in favour of assessee.

Summary

Issues:
Addition of Rs. 48,61,232/- u/s 68 of the Income Tax Act, 1961 on account of gift received from NRI relative.

Analysis:
1. The assessee appealed against the order of the Ld.CIT(A)-25, Mumbai regarding the addition of Rs. 48,61,232/- u/s 68 of the Act, on account of a gift received from an NRI relative for the assessment year 2009-10.

2. The Assessing Officer (AO) added the gift amount to the total income of the assessee u/s 68 as the genuineness of the gift transaction was not proven. The AO raised concerns about the financial capacity of the donor and the lack of complete bank account details of the donor. The AO emphasized discrepancies and added the gift amount to the total income of the assessee.

3. Before the Ld.CIT(A), the assessee submitted detailed written submissions and various pieces of evidence to establish the genuineness of the gift and the financial capacity of the donor. The Ld.CIT(A) confirmed the addition, questioning the lack of reciprocity in the gift and citing Indian customs regarding gifts from younger sister-in-law to elder sister-in-law.

4. The Appellate Tribunal considered the evidence presented, including bank statements, remittance advice, and financial statements of a family-owned concern from where the gift originated. The Tribunal noted the flow of transactions and financial capacity of the donor, emphasizing that the primary onus of the assessee was discharged. The Tribunal criticized the Ld.CIT(A)'s reasoning based on presumptions and customs, highlighting the importance of analyzing facts and evidence before relying on case laws.

5. The Tribunal reversed the Ld.CIT(A)'s findings, stating that the addition made u/s 68 was unjustified. The Tribunal emphasized the need to analyze facts and evidence before applying case laws, concluding that the addition of Rs. 48,61,232/- stands deleted. The appeal of the assessee was allowed.

6. In conclusion, the Tribunal ruled in favor of the assessee, highlighting the importance of proving the genuineness of transactions and the financial capacity of donors in cases involving gifts. The Tribunal stressed the significance of analyzing facts and evidence before making decisions based on legal precedents.