2015 (9) TMI 1117 - HC - Income Tax

Treating the gift as unexplained income - whether Tribunal is justified in upholding the addition of ₹ 1,75,000/- received as gift by the appellant from his sister especially considering the fact that an amount of ₹ 5,00,000/- also received as gift from the same sister was allowed to be deducted by accepting the same Income Tax Return and bank Statement? - Held that - A perusal of the order passed by the Tribunal shows that no cogent and convincing reasons have been given by the Tribunal for not accepting the additional evidence in the form of gift deed and confirming the addition of ₹ 1,75,000/-. Consequently, the matter is remanded back to the Tribunal for deciding it afresh in accordance with law after hearing learned counsel for the parties and taking into consideration the additional evidence produced by the assessee-appellant before the Tribunal.

Summary

Issues:
1. Treatment of gift as unexplained income
2. Justification of upholding the addition of gift amount
3. Acceptance of additional evidence in the form of gift deed

Analysis:
1. The appellant challenged the treatment of a gift as unexplained income, arguing that the gift was genuine and supported by relevant documents. The Assessing Officer initially added the gift amounts as income due to lack of documentation. The CIT(A) accepted additional evidence for a larger gift but upheld the addition of a smaller gift amount. The Tribunal partly allowed the appeal but confirmed the addition of the smaller gift amount, leading to the current appeal.

2. The appellant contended that the Tribunal erred in rejecting the additional evidence in the form of a gift deed for the smaller gift amount. The Tribunal's decision lacked sufficient reasoning for not accepting the gift deed and confirming the addition. The appellant's argument was that since a larger gift from the same sister was accepted, the smaller gift should also have been accepted. The respondent argued that the appellant failed to provide a confirmatory letter or gift deed verifying the smaller gift amount.

3. The Tribunal's order highlighted the absence of a valid reason for rejecting the additional evidence of the gift deed and confirming the addition of the smaller gift amount. The Tribunal emphasized the importance of proper documentation and confirmation for gifts, noting that acceptance of one gift did not automatically validate another gift without proper verification. The matter was remanded back to the Tribunal for a fresh decision considering the additional evidence presented by the appellant.

In conclusion, the High Court remanded the case back to the Tribunal for a fresh decision, emphasizing the need for proper documentation and verification of gifts to determine their treatment as income. The Tribunal was directed to reconsider the matter in accordance with the law after hearing both parties and evaluating the additional evidence provided by the appellant.