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2016 (5) TMI 24 - AT - Income TaxGifts received from daughter - addition as unexplained cash credit u/s 68 - Held that - We find from the records that the monies have been transferred by daughter Mrs. Fariah Rahman, who is a resident of Manchester, United Kingdom, to her father (assessee herein) as gift which are duly supported by her bank statements and affidavit confirming the gift. The fact that she is a resident of Manchester and employed therein is not in dispute. The affidavit filed by the daughter is also not in dispute. The fact that the monies were transferred by Mrs. Fariah Rahaman from her UK bank account in pound sterlings to her Indian Bank account is not in dispute. It is not the case of the Learned AO that the assessee had channellised his undisclosed income through hawala channels to UK and got it back in the guise of gift from his daughter - Decided in favour of assessee Amount received from wife - addition as unexplained cash credit u/s 68 - Held that - We find from the records that the assessee has received ₹ 5,70,000/- as loan from his wife Mrs. Chasfida Rahman. The assessee also explained that his wife had received gift from her mother. It was also explained that her mother who was 82 years old and lying in death bed , sold her property and gave the share attributable to the assessee s wife. Hence it was proved that out of income of mother in law of assessee, she has gifted the same to her daughter (assessee s wife) . It is a common practice in any family to distribute the assets to the children which includes out of sale of property to avoid any legal disputes and to maintain the harmony of the family. In the instant case, we find that the assessee has proved source of source. Moreover, the wife of the assessee had even appeared before the Learned AO and confirmed the fact of advancing loan to the assessee. In these circumstances, we find that the Learned CITA had rightly deleted the said addition - Decided in favour of assessee Transfer from one bank to another bank account - addition as unexplained cash credit u/s 68 - Held that - We find from the records that the assessee has merely transferred certain amounts from his Bombay Mercantile Cooperative Bank account to his HSBC account. We find that the Learned AO had almost added all the credits in the bank account maintained with Bombay Mercantile Cooperative Bank account of the assessee. Having said so, he ought not to have held that the said bank account is not disclosed by the assessee for the purpose of making this addition of ₹ 4,50,000/-. Even otherwise, the various credits that were otherwise added as income in previous grounds itself, would act as a source for making this fund transfer to HSBC account . Ultimately, it is only a question of fund transfer from one bank account (i.e Bombay Mercantile Cooperative Bank) to HSBC Bank account. There is no question of any element of income involved therein. The source is explained by the Learned AO himself and hence it does not become unexplained. Hence the provisions of section 68 of the Act cannot be applied to the facts of the instant case - Decided in favour of assessee Sale proceeds as unexplained cash credit u/s 68 - Held that - It is not in dispute that the credits in the subject mentioned bank account to the tune of ₹ 6,89,410/- represents sale proceeds of trading business for which income is already offered to tax u/s 44AF of the Act. Hence there is no question of treating the said sale proceeds as unexplained cash credit u/s 68 of the Act. Hence we find no infirmity in the order of the Learned CIT(A) in this regard - Decided in favour of assessee Investment made in mutual funds - unexplained investment - Held that - It is not in dispute that the cheques for purchase of two mutual funds were issued from HSBC bank account of the assessee. The immediate source of credit for issuing these cheques was explained to be funds transferred from Bombay Mercantile Cooperative Bank to the extent of ₹ 3,50,000/- and remaining ₹ 5,50,000/- received from his wife. We find that the Learned AO had already given a finding that Bombay Mercantile Cooperative Bank account is maintained by the assessee while making certain additions that were adjudicated in previous grounds. We also find that assessee had indeed received certain monies as loans from his wife Mrs Chasfida Rahman which were credited in HSBC bank account of the assessee. This issue was adjudicated in previous grounds hereinabove. We find that the assessee had duly explained the source for purchase of mutual funds and had also offered the short term capital gains on redemption of the same which has also been taxed by the Learned AO. In these circumstances, there is no scope for treating the investment in mutual funds of ₹ 9,00,000/- as unexplained - Decided in favour of assessee Amount transferred from two minor daughters bank account to the bank account of the assessee - Held that - It is not in dispute that the monies were transferred from two minor daughters bank account to the account of the assessee. It is not in dispute that the bank statements of two minor daughters were also produced before the Learned AO. It is not the case of the Learned AO that the assessee had chanellised his undisclosed income in the bank account of the two minor daughters and had received it back in cheques from them. Nothing prevented the Learned AO to enquire about the sources of credits in the bank account of the two minor daughters. In these circumstances, we find that the Learned CITA had rightly deleted the addition - Decided in favour of assessee
Issues Involved:
1. Addition of ?3,69,000/- as unexplained cash credit under Section 68 of the Income Tax Act. 2. Addition of ?5,70,000/- as unexplained cash credit under Section 68 of the Income Tax Act. 3. Addition of ?4,50,000/- as unexplained cash credit under Section 68 of the Income Tax Act. 4. Addition of ?6,89,410/- as unexplained cash credit under Section 68 of the Income Tax Act. 5. Addition of ?9,00,000/- as unexplained investment. 6. Addition of ?3,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act. Detailed Analysis: 1. Addition of ?3,69,000/- as unexplained cash credit under Section 68 of the Income Tax Act: The issue revolves around whether the sum of ?3,69,000/- claimed as gifts from the assessee’s daughter could be added as unexplained cash credit. The Assessing Officer (AO) doubted the creditworthiness of the daughter and added the amount as unexplained cash credit. However, the CIT(A) found that the source and creditworthiness of the donor were proven through bank statements and an affidavit from the daughter. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal on this ground. 2. Addition of ?5,70,000/- as unexplained cash credit under Section 68 of the Income Tax Act: The AO added ?5,70,000/- credited in the assessee’s bank account as unexplained cash credit, despite the assessee's explanation that it was a loan from his wife, who received it as a gift from her mother. The CIT(A) accepted the explanation and deleted the addition. The Tribunal agreed with the CIT(A), noting that the source was adequately explained and the wife had confirmed the loan before the AO. Hence, the revenue's appeal on this ground was dismissed. 3. Addition of ?4,50,000/- as unexplained cash credit under Section 68 of the Income Tax Act: The AO added ?4,50,000/- transferred from the assessee's Bombay Mercantile Cooperative Bank account to his HSBC account as unexplained cash credit, arguing that the former account was not disclosed. The CIT(A) deleted the addition, and the Tribunal upheld this decision, noting that it was merely a fund transfer between the assessee's own accounts and the source was already explained. Thus, the revenue's appeal on this ground was dismissed. 4. Addition of ?6,89,410/- as unexplained cash credit under Section 68 of the Income Tax Act: The AO added ?6,89,410/- credited in the assessee’s bank account as unexplained cash credit, despite the assessee's explanation that it was from his trading business, already taxed under Section 44AF. The CIT(A) deleted the addition, and the Tribunal upheld this decision, noting that the credits were indeed from the trading business and had already been taxed. Therefore, the revenue's appeal on this ground was dismissed. 5. Addition of ?9,00,000/- as unexplained investment: The AO added ?9,00,000/- invested in mutual funds as unexplained investment, questioning the source of funds. The assessee explained that the funds came from his wife and his Bombay Mercantile Cooperative Bank account. The CIT(A) accepted this explanation and deleted the addition. The Tribunal upheld the CIT(A)'s decision, noting that the source of funds was adequately explained and the short-term capital gains from the investment were already taxed. Thus, the revenue's appeal on this ground was dismissed. 6. Addition of ?3,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act: The AO added ?3,00,000/- transferred from the assessee’s minor daughters’ bank accounts as unexplained cash credit, doubting their source of income. The CIT(A) deleted the addition, and the Tribunal upheld this decision, noting that the bank statements were produced and the AO did not prove that the assessee had channeled undisclosed income through his daughters' accounts. Therefore, the revenue's appeal on this ground was dismissed. Conclusion: The Tribunal dismissed the revenue's appeal on all grounds, upholding the CIT(A)'s decisions to delete the additions made by the AO under various sections of the Income Tax Act. The Tribunal found that the sources of the credits and investments were adequately explained and substantiated with evidence.
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