2015 (12) TMI 346 - AT - Income Tax

Unexplained cash credit - assessee failed to discharge the onus to prove the source of the source to establish the genuineness of the gift and creditworthiness of the donor - Held that - The opening balance on 12/09/2003 in the bank account of the donor was ₹ 8.05 lacs, which was much more than the amount of cheque issued by donor in favour of the assessee as gift. Simply because there is a cash deposit of ₹ 50,000/- on 12/09/2003, creditworthiness of the donor cannot be doubted when there are sufficient balance in the bank account of the donor, which has come out of clearing and not out of cash deposit. Hence, we find that the identity of the donor is admittedly established even as per CIT (A) and source of gift is also established from the bank account of the donor in which there are sufficient deposits by way of clearing in addition to a small deposit of ₹ 50,000/- in cash. It is also seen that the donor is having relation with the donnee because it is observed by learned CIT(A) in Para 4.1.1 of his order that it was submitted before him that the gift was given by uncle and grandmother of the assessee and this contention of the assessee is not controverted by learned CIT(A) or by Learned D.R. of the Revenue. Under these facts, we are of the considered opinion that the addition made by the Assessing Officer and confirmed by CIT(A) is not justified. - Decided in favour of assessee. Addition on account of low withdrawals for house hold expenses - Held that - The house hold expenses of ₹ 3,000/- i.e. ₹ 250/- per month is low, even by standard of pocket money during the period. Also note that the assessee herself has declared income of ₹ 6,20,689/- during the present year. The learned CIT(A) has estimated the additional house hold expenses at ₹ 9,000/- as against ₹ 12,000/- estimated by the Assessing Officer. Considering these facts, we are of the considered opinion that there is no infirmity in the order of learned CIT(A) on this issue. - Decided against assessee.

Summary

Issues Involved:
1. Addition of Rs. 4 lacs as unexplained cash credit
2. Addition of Rs. 9,000 on account of low withdrawals for household expenses

Analysis:

Issue 1: Addition of Rs. 4 lacs as unexplained cash credit

The assessee's appeal contested the addition of Rs. 4 lacs as unexplained cash credit due to failure to prove the source of the gift and creditworthiness of the donor. The CIT(A) upheld the addition, emphasizing that the appellant failed to establish the genuineness of the gift and the donor's creditworthiness. The appellant claimed to have received the gift from her uncle and grandmother, supported by a gift deed. However, the bank account details of the donor revealed cash deposits before issuing the cheque to the assessee. The Tribunal noted that the donor's bank account had sufficient balance from cleared deposits, indicating creditworthiness. The Tribunal disagreed with the CIT(A)'s reliance on certain judgments, finding them inapplicable to the present case. Consequently, the Tribunal deleted the addition of Rs. 4 lacs.

Issue 2: Addition of Rs. 9,000 on account of low withdrawals for household expenses

The second grievance of the assessee was the addition of Rs. 9,000 for low withdrawals for household expenses, as the CIT(A) found the declared expenses to be significantly lower than standard pocket money. The CIT(A) estimated additional household expenses at Rs. 9,000, lower than the Assessing Officer's estimate of Rs. 12,000. The Tribunal upheld the CIT(A)'s decision on this issue, considering the appellant's declared income and the estimated expenses.

In conclusion, the Tribunal partly allowed the assessee's appeal, deleting the addition of Rs. 4 lacs as unexplained cash credit but upholding the addition of Rs. 9,000 for household expenses.