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2017 (11) TMI 320 - AT - Income TaxUnexplained gifts received - capacity of donor to give gifts - Held that - In this case the assessee has claimed to have received a gift of ₹ 11 lacs from his elder sister. The sister had shown statement of income of ₹ 93,112/- for assessment year 2007-08. No return of income was filed. The source of gift in the hands of the sister has been further explained as gift from her two daughters and son at ₹ 3,00,000/-, ₹ 3,50,000/- and ₹ 2,80,000/- respectively. Rest amounts have been claimed to have come from the opening balances in the hands of the assessee. The daughters are still students and the son has just taken up a job. These persons are not filing the return of income. No statement of bank account of the said donor has been produced. No detail of the working of the opening balance in her hand has been produced. The husband of the sister is an accountant without much income. In this factual scenario, we find that it is abundantly clear that the said donor did not have the capacity to grant the gift of ₹ 11 lacs to the assessee. Hence, as the assessee has failed to discharge the onus regarding cogently proving the capacity of the donor to give the gift. Hence, we do not find any infirmity in the order of learned CIT-A. - Decided against assessee.
Issues:
1. Assessment of cash gift received by the assessee from his sister as his income. 2. Rejection of affidavit and declaration of gift by the sister of the appellant. 3. Failure to establish the genuineness of the transaction and creditworthiness of the donor. 4. Upholding the order of the Assessing Officer by the ld. CIT(A). 5. Appeal against the order of the ld. CIT(A) before the Appellate Tribunal ITAT Mumbai. Issue 1: The Assessing Officer treated the cash gift of ?11,00,000 received by the assessee from his sister as his income due to doubts regarding the sister's financial capacity. The sister, not a regular taxpayer, failed to provide evidence supporting the gift. The ld. CIT(A) upheld this treatment, emphasizing the onus on the assessee to prove the source of cash received. Issue 2: The ld. CIT(A) rejected the affidavit and gift declaration of the sister, questioning her creditworthiness and the genuineness of the transaction. The appellant's failure to establish the authenticity of the gift led to the dismissal of the appeal. Issue 3: The genuineness of the transaction and creditworthiness of the donor were crucial factors. The ld. CIT(A) found discrepancies in the claim that the sister gifted ?11,00,000, considering her financial status and lack of substantial evidence supporting the gift. The appellant's failure to prove the legitimacy of the transaction resulted in the dismissal of the appeal. Issue 4: The ld. CIT(A) upheld the Assessing Officer's decision based on the lack of evidence supporting the cash gift claim. Circumstantial evidence and surrounding circumstances indicated inconsistencies in the gift transaction, leading to the affirmation of the addition of ?11,00,000 as the appellant's income. Issue 5: The appeal before the Appellate Tribunal ITAT Mumbai challenged the ld. CIT(A)'s decision. The tribunal, after considering submissions and case laws, affirmed the ld. CIT(A)'s order, emphasizing the sister's incapacity to gift such a substantial amount and the lack of cogent evidence supporting the transaction. In conclusion, the Appellate Tribunal ITAT Mumbai dismissed the appeal, upholding the addition of the cash gift as the appellant's income due to the failure to establish the genuineness of the transaction and the donor's creditworthiness. The tribunal found no infirmity in the ld. CIT(A)'s order, emphasizing the importance of proving the capacity of the donor to give the gift in such cases.
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