2015 (10) TMI 1400 - AT - Income Tax

Unexplained cash credit - Held that - As regards to Shri Vivek Chaudhary assessee was in receipt of an average salary of 6,208/- the preponderance of the probability indicates that the alleged gift by the donor cannot be accepted. A person receiving merely 6,000/- as salary deposits of 2 lakhs in his bank account and immediately thereafter gives a gift of 2 lakh cannot be accepted as genuine. Hence, the gift of 2 lakh from Shri Vivek Chaudhary has rightly been treated by Authorities below as unexplained cash credit in the hands of the assessee. As regards other donors, the adverse inference has been drawn only on the basis that their returns of income were low. We find that there is no presumption that personal receiving small income cannot make small savings. On the facts of this case, we find that the small amount of savings as claimed by the donors cannot be rejected. In these circumstances when the confirmations is there, identity is established and return of income is also on record and no adverse features have been noticed in their bank account, the small amount given by them as gift to the assessee cannot be added in the hands of the assessee. Accordingly, except for the gift from Shri Mahabir Pd. Sharma, which we have conformed as above, the gifts from other three person added by the AO as unexplained cash credit in the hands of the assessee is deleted. - Decided partly in favour of assessee.

Summary

Issues:
1. Non-compliance with the direction of the Hon'ble ITAT 'A' Bench, Kolkata.
2. Confirmation of the order passed by the Ld. Assessing Officer.
3. Addition of 7 lakh as unexplained cash credit.

Analysis:
1. The appeal raised concerns regarding the Assessing Officer's failure to comply with the direction of the Hon'ble ITAT 'A' Bench, Kolkata, dated 07.5.2008. The Tribunal had instructed a re-adjudication of the matter after considering all material evidence, including information from the donors. However, upon re-examination, it was found that the alleged donors had minimal income, some gifts were made from cash deposits on the same date, and the donors were unavailable for personal examination. Consequently, the AO added back the gifts as unexplained cash credit, a decision upheld by the Ld. CIT(A).

2. The Ld. Counsel contended that the Authorities below did not follow the Tribunal's directions, but the Tribunal clarified that the issue was readjudicated afresh as per its directive. The AO presented a tabulated comparison of gift receipts and the donors' return income, highlighting discrepancies. Notably, in one instance, a donor deposited cash just before issuing a cheque, casting doubt on the authenticity of the gift. The Tribunal agreed that such circumstances indicated the gift was unexplained cash credit, upholding the decision for one donor but overturning it for others with no adverse features in their bank accounts.

3. Ultimately, the Tribunal partially allowed the appeal, deleting the unexplained cash credit for three donors besides one. The decision was based on the assessment of each donor's financial situation, the timing of transactions, and the overall credibility of the gifts. By confirming some additions and deleting others, the Tribunal aimed to ensure a fair and just resolution based on the evidence presented.

This comprehensive analysis highlights the key issues addressed in the judgment, the arguments presented by the parties, and the Tribunal's reasoning behind its decision to partially allow the appeal.