2018 (2) TMI 1357 - AT - Income Tax

Unexplained cash credits u/s 68 - genuineness of gift receipt - Held that - The documentary evidence placed on record by the assessee in his attempt to substantiate the genuineness of the gift transaction under consideration does not inspire any confidence - the assessee had not only failed to discharge the onus as stood cast upon him, but rather, a perusal of the facts clearly reveals that the explanation tendered by him was clearly a result of an afterthought to wriggle out of the unexplained cash deposits in his bank accounts with DCB Bank - the assessee had absolutely failed to discharge the onus as regards proving the genuineness and veracity of the gift transaction under consideration, therefore, uphold the view of the CIT(A) that the assessee had raised a bogus claim of having received a gift of ₹ 5,00,000/- from his aunt Mrs. Anis Jariwala. - Decided against assessee Addition of entire cash deposits made during the year under consideration in his SB A/C instead of restricting the same to the peak credit - Held that - Merely raising of a claim that an addition in respect of the cash deposits in the bank account was liable to be restricted after telescoping the cash deposits/withdrawals in the said bank account cannot be summarily accepted, unless the assessee is able to substantiate on the basis of irrefutable evidence that the amounts withdrawn were thereafter parked by way of re-deposit in the bank account - unable to find ourselves to be in agreement with the claim raised by the assessee that the addition in respect of the cash deposits of ₹ 14,33,500/- in his SB A/c No. 0261010003562 was liable to be restricted to the extent of the peak credit of ₹ 6,55,350/-. We thus uphold the order of the CIT(A) and sustain the addition of ₹ 14,33,500/- made by him in the hands of the assessee. - Decided against assessee

Summary

Issues Involved:
1. Acceptance of a gift of ?5,00,000.
2. Addition of ?14,33,500 as unexplained cash credits.
3. Restriction of addition to peak cash credit of ?6,55,350.

Issue-wise Detailed Analysis:

1. Acceptance of a Gift of ?5,00,000:
The assessee claimed to have received a gift of ?5,00,000 from his aunt, Mrs. Anis Jariwala, for the medical treatment of her brothers. The Assessing Officer (A.O.) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected this claim due to several material defects in the supporting documents:
- The confirmation letter from the donor was undated.
- There was no mention of the mode of the gift.
- The assessee failed to provide the donor's bank passbook to substantiate the transaction.
The CIT(A) also found it implausible that the gift was necessary given the sufficient funds in the assessee's bank account. The Tribunal upheld the CIT(A)'s view, agreeing that the claim of the gift was an afterthought to explain unexplained cash deposits. The Tribunal concluded that the assessee failed to discharge the onus of proving the genuineness of the gift transaction.

2. Addition of ?14,33,500 as Unexplained Cash Credits:
The A.O. added ?14,33,500 as unexplained cash credits in the assessee's bank account No. 02610100035662 with DCB Bank, which the assessee had not disclosed initially. The assessee contended that this account belonged to Mr. Arshad Aziz Bemani, a relative and friend, and was jointly held for convenience. However, the CIT(A) observed that the assessee was the first account holder and dismissed the claim due to lack of supporting evidence. The Tribunal found no reason to disagree with the CIT(A)'s findings, as the assessee did not provide any material evidence to substantiate the claim that the deposits and withdrawals were made by Mr. Arshad Aziz.

3. Restriction of Addition to Peak Cash Credit of ?6,55,350:
The assessee argued that the addition should be restricted to the peak cash credit of ?6,55,350 instead of the entire ?14,33,500. The CIT(A) rejected this claim due to the absence of evidence showing that the cash withdrawals were re-deposited in the same account. The Tribunal upheld this decision, stating that the assessee failed to provide irrefutable evidence to support the claim that the withdrawn amounts were re-deposited. Consequently, the addition of ?14,33,500 was sustained.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the CIT(A)'s order in its entirety. The Tribunal agreed with the findings that the gift of ?5,00,000 was not genuine and that the addition of ?14,33,500 as unexplained cash credits was justified. The plea to restrict the addition to the peak cash credit was also rejected due to lack of evidence. The appeal was pronounced dismissed on 14.02.2018.