2006 (9) TMI 166 - HC - Income Tax

Whether Tribunal was justified in confirming the action of the authorities below by upholding the addition made on account of the gift assessee could not establish the relationship with the donor, but merely showed movement through banking channel, which is not a sufficient evidence to prove genuineness of the gift - inherent discrepancies in the statement made by the assessee Tribunal s view is only possible view in the facts and the evidence on record hence assessee s appeal dismissed

Summary

Issues:
1. Confirmation of addition made on account of a foreign gift of Rs. 1 lakh
2. Perversity of findings by the Income-tax Appellate Tribunal
3. Misdirection by the Income-tax Appellate Tribunal in deciding the genuineness of the gift

Analysis:
1. The appellant had shown a foreign gift of Rs. 1 lakh from a donor, which was questioned by the Assessing Officer. The donor's father confirmed that the gift was not genuine. The Commissioner of Income-tax (Appeals) reversed the Assessing Officer's decision, but the Tribunal disagreed, citing the need for the appellant to prove the genuineness of the gift, as established in previous judgments like Lal Chand Kalra v. CIT and Sajan Dass and Sons v. CIT. The Tribunal concluded that the gift was not genuine, emphasizing the importance of proving the donor's identity, credit-worthiness, relationship with the donee, and the occasion of the gift, beyond just the banking channel transaction.

2. The Tribunal referred to Supreme Court judgments in CIT v. Durga Prasad More and Sumati Dayal v. CIT to support its decision that the gift was not genuine. The Tribunal highlighted the improbability of a watchman from a foreign country gifting a substantial amount to the appellant and his family, along with contradictory evidence regarding the donor's identity provided by the appellant. The Tribunal found no merit in the appellant's arguments challenging its findings, as the discrepancies in the appellant's statements remained unexplained.

3. The High Court concurred with the Tribunal's decision, emphasizing that a gift should reflect natural love and affection without any consideration. The Court noted that the appellant failed to justify the discrepancies in his statements, leading to the conclusion that the gift was not genuine. The Court also referenced its previous judgment in a similar case to support the Tribunal's decision. Ultimately, the Court dismissed the appeal, holding that no substantial questions of law arose from the case.