2016 (5) TMI 1148 - HC - Income Tax

Genuity of gift from father - transaction routed from Bahrain to Singapore to India - Held that - Tribunal was satisfied that the assessee had not discharged her burden by proving the creditworthiness of her father, the identity of the parties and the genuineness of the transaction and on facts, we fully endorse that conclusion. One is also at a loss to understand why, if her father was stationed in Bahrain as claimed by the appellant and if he wanted to gift his salary income earned in that country to his daughter living in India, he should transfer the amount to Singapore and then to India, instead of directly transferring the amount from Bahrain itself. It was in the aforesaid circumstances that the Tribunal confirmed the order of the Commissioner of Income Tax (Appeals), upholding the addition. The findings entered into by the Tribunal are entirely factual and on facts, once the theory of gift by father is rejected, the question of Section 56(2) of the Act does not arise at all. Unexplained bank deposit - Held that - Tribunal has noted that in the absence of any details with regard to earning of income and the persons from whom the money was received, the Assessing Officer has rightly treated the entire amount as income. Insofar as the unexplained credit to the extent of ₹ 10,77,219/- is concerned, the Tribunal has taken note of the fact that the assessee has shown the same as loan from others in the cash flow statement. However, having regard to the fact that the assessee had not explained the identity of the persons from whom the loan was allegedly availed of, the creditworthiness of his creditors and the genuineness of the transaction, the Tribunal confirmed the order of the Assessing Officer, taking the aforesaid amount as income of the assessee. Tribunal has also confirmed the repayment made to the HDFC Bank, as income of the assessee, for the reason that even such payment could not be explained by the assessee before the lower authorities. Insofar as ₹ 2,91,600/- is concerned, the Tribunal agreed with the assessee that the same cannot be added to his income. With respect to ₹ 5,00,000/- incurred by the assessee towards foreign travel expenses is concerned, the Tribunal has held that the source of such expenditure was neither disclosed before the Assessing Officer nor disclosed in his cash flow statement. It was for that reason the Tribunal confirmed the addition to the extent of ₹ 5,00,000/-. Addition on account of unexplained investment - Held that - The Tribunal has held that the said issue had already been contested in the appeal in relation to the assessment year 2002-03, where the Tribunal has ordered deletion of amounts withdrawn from the bank. Since facts were identical, similar view was taken with respect to these assessment years also and accordingly the Tribunal has ordered deletion of addition to the extent of amounts withdrawn from the bank. We are satisfied that the aforesaid being the factual background, the findings in Tribunal s order are entirely factual and these appeals do not give rise to any question of law

Summary

Issues Involved:
1. Legality of assessment under Section 153A of the Income Tax Act.
2. Addition of unexplained credits in bank accounts.
3. Addition of unexplained investments in property.
4. Addition of unexplained investments and profits from the sale of land.
5. Addition of unexplained investments transferred from foreign accounts.
6. Addition of unexplained bank deposits and credits in various assessment years.
7. Addition on account of unexplained foreign travel expenses.
8. Addition on account of unexplained investments in multiple assessment years.

Detailed Analysis:

1. Legality of Assessment under Section 153A of the Income Tax Act:
The first issue raised was the legality of the assessment under Section 153A of the Income Tax Act in the absence of search proceedings/search warrant. The representative of the assessee conceded that there was a search in the case of the appellant, leading to the withdrawal of this contention.

2. Addition of Unexplained Credits in Bank Accounts:
For the assessment year 2006-07, the Tribunal confirmed the addition of Rs. 3,33,815/- as unexplained credit in the bank account, as the appellant could not explain the source of the deposit despite claiming it was from garment business trading receipts.

3. Addition of Unexplained Investments in Property:
The Tribunal upheld the addition of Rs. 7,10,000/- as unexplained investment in property for the assessment year 2006-07, as the appellant failed to provide any material or explanation about the source of funds for the investment.

4. Addition of Unexplained Investments and Profits from Sale of Land:
For the assessment year 2007-08, the Tribunal confirmed the addition of Rs. 38,39,969/- towards unexplained investment in the bank account and profit from the sale of land. The appellant's explanation that the deposits were made from the sale proceeds of land was not substantiated with details or transactions, leading to the confirmation of the addition by the Tribunal.

5. Addition of Unexplained Investments Transferred from Foreign Accounts:
For the assessment year 2008-09, the Tribunal upheld the addition of Rs. 6,67,68,547/- on account of unexplained investments. The appellant claimed this amount was gifted by her father, an Aircraft Maintenance Engineer, from his salary income. However, the Tribunal found the transaction suspicious as the funds were transferred from Singapore to India through a conduit account, and the appellant failed to prove the creditworthiness of her father or the genuineness of the transaction.

6. Addition of Unexplained Bank Deposits and Credits in Various Assessment Years:
For the assessment year 2002-03, the Tribunal upheld the addition of Rs. 36,67,010/- as unexplained bank deposits and credits. The appellant could not explain the source of the deposits, and the Tribunal noted that the appellant was not maintaining any books of account and had received large amounts from various persons without disclosing their details.

7. Addition on Account of Unexplained Foreign Travel Expenses:
The Tribunal confirmed the addition of Rs. 5,00,000/- towards foreign travel expenses for the assessment year 2002-03, as the appellant did not disclose the source of such expenditure in his cash flow statement.

8. Addition on Account of Unexplained Investments in Multiple Assessment Years:
For the assessment years 2003-04 to 2008-09, the Tribunal addressed the addition on account of unexplained investments. The Tribunal ordered the deletion of amounts withdrawn from the bank, as the facts were identical to the assessment year 2002-03. The Tribunal directed the deletion of specific amounts year-wise but confirmed the remaining additions due to the lack of explanation regarding the source of receipts.

Conclusion:
The Tribunal's findings were entirely factual, and the appellants failed to raise any substantial question of law. The appeals were dismissed as they did not give rise to any question of law under Section 260A of the Income Tax Act.