2016 (1) TMI 527 - AT - Income Tax

Addition as undisclosed income - revenue not accepting the fact that the said amount was gifted to the assessee by her father - Held that - The appellant has submitted a confirmation dated 17/11/2011 from Shri P.M. Lodha where he had confirmed that he had gifted a sum of ₹ 3.90 lacs in cash to her daughter Smt. Neelmani Jain (Appellant), wife of Shri B.K. Jain on 10th of July, 2008. Further in the said letter, it is stated that the amount has been gifted as his natural love and affection to her. This amount was withdrawn by him (Donor) from his savings bank account No. 001201009312 with ICICI Bank, Subhash Nagar, CScheme, Jaipur. So in the light of this, it is clear that the observation of the ld CIT(A) is not correct that the money was withdrawn and kept by the donor for 15 days and then gifted to the appellant. The correct factual position as appearing from the record is that the amount was withdrawn on 10th July, 2008 and on the same date, the money was gifted to the appellant and thereafter the appellant after spending a part of amount, deposited remaining amount of ₹ 3,59,031/- in her and her son s bank accounts. As regards, non appearance of the donor Shri P.M. Lodha before the Assessing Officer, it was submitted that the donor Shri P.M. Lodha is over 85 years of age and because of his age he could not appear before the Assessing Officer. However, he has submitted his statement dated 17/11/2011 as well as produced a copy of his bank statement, which proves beyond doubt that he has gifted an amount of ₹ 3.90 lacs to his daughter. Further on query from the Bench that if the donor Shri P.M. Lodha can go to the bank to withdraw the amount, what stops him from making an appearance before the Assessing Officer. The ld AR has submitted that the donor Shri P.M. Lodha had not gone to the bank as well and the money was withdrawn through self cheque and he has sent one of his family s member to withdraw the amount. So given the above factual position (substantiated by appellant through appropriate documents), the identity, creditworthiness as well as genuineness of the gift transaction has been proved and in the light of above, the addition made by the Assessing Officer and confirmed by the ld CIT(A) U/s 68 of the Act is deleted. - Decided in favour of assessee.

Summary

Issues:
1. Addition of undisclosed income of Rs. 3,90,000.
2. Genuineness of the gift transaction from father to daughter.
3. Non-appearance of donor before the Assessing Officer.
4. Confirmation of the addition of Rs. 3,90,000 by the authorities.

Issue 1: Addition of Undisclosed Income
The Assessing Officer found cash deposits in the bank accounts of the assessee and her son and questioned the source of these deposits. The assessee claimed to have received a gift of Rs. 3.90 lacs from her father, supported by a confirmation and bank account details. However, the Assessing Officer doubted the genuineness of the gift due to circumstantial evidence, like the manner of cash withdrawal by the father and lack of a gift deed. The Assessing Officer added the amount to the assessee's income under Section 68 of the Income Tax Act.

Issue 2: Genuineness of the Gift Transaction
The assessee contended that the gift was genuine, supported by a gift deed and the donor's bank account details. The ld CIT(A) raised doubts about the gift's genuineness, citing the delay between cash withdrawal by the father and deposit by the daughter, as well as the discrepancy in the father's personal expenses. The ld CIT(A) concluded that the surrounding circumstances did not support the genuineness of the gift.

Issue 3: Non-Appearance of Donor
The donor, an elderly individual, did not appear before the Assessing Officer due to age-related reasons. However, he submitted a statement and bank statement confirming the gift. The tribunal noted that the donor's absence did not negate the genuineness of the gift, as substantiated by appropriate documents and explanations provided by the assessee.

Issue 4: Confirmation of Addition by Authorities
Both the Assessing Officer and ld CIT(A) confirmed the addition of Rs. 3.90 lacs as undisclosed income, questioning the genuineness of the gift transaction. However, the tribunal found that the gift's genuineness was established through documentary evidence and explanations provided by the assessee, leading to the deletion of the addition under Section 68 of the Act.

In conclusion, the tribunal allowed the appeal of the assessee, ruling in favor of the genuineness of the gift transaction and deleting the addition of Rs. 3.90 lacs as undisclosed income.