2018 (3) TMI 212 - AT - Income Tax

Reopening of assessment - assessee as the beneficiary of accommodation entries - addition u/s 68 - Held that - It is an admitted fact that when the matter was restored by the Tribunal to the file of the Assessing Officer with a direction to adjudicate the issue afresh by making further enquiries to find out the genuineness of the gift, creditworthiness of the donor, source of money for the pay order and to ascertain the relationship between the assessee and the donor and the occasion and purpose of gift, the assessee did not fulfill all the above direction of the Tribunal and only partially fulfilled. Even during the remand proceedings also despite opportunity given, the assessee failed to comply with the direction of the Tribunal. It is the submission of the assessee that due to his old age, he could not contact the donor at the relevant time and obtain necessary details for the examination of the Assessing Officer. Also if given an opportunity he will produce the donor along with relevant details since he is now in a position to produce him. Considering all it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the donor and genuineness of the transactions and the other direction as given by the Tribunal in the earlier order - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Validity of the assessment order.
2. Genuineness of the gift transaction.
3. Creditworthiness of the donor.
4. Compliance with the Tribunal's directions.
5. Adequacy of the opportunity given to the assessee to substantiate his claim.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The appeal filed by the assessee challenges the validity of the assessment order dated 20.11.2012, which was upheld by the CIT(A) on 21.10.2015. The assessee contends that the order is perverse to the law and facts of the case, as the burden under Section 68 of the Income Tax Act, 1961, regarding the receipt of the gift of ?10,51,000/- was already discharged.

2. Genuineness of the Gift Transaction:
The Assessing Officer (AO) had initially added ?10,51,000/- to the total income of the assessee under Section 68, as the assessee failed to prove the genuineness of the gift received from Shri Sudhir Sachdeva. The CIT(A) deleted the addition, but the Tribunal restored the issue to the AO for fresh adjudication to verify the genuineness of the gift, the relationship between the assessee and the donor, and the occasion for the gift. Despite opportunities, the assessee could not produce the donor or provide sufficient evidence to substantiate the genuineness of the transaction.

3. Creditworthiness of the Donor:
The AO and the CIT(A) questioned the creditworthiness of the donor, Shri Sudhir Sachdeva, as his bank account showed an opening balance of only ?4843/-, and the money was received and immediately paid out, raising doubts about the genuineness of the transaction. The assessee failed to provide the necessary details to establish the donor's creditworthiness, such as the donor's bank account statement and income tax return for the relevant year.

4. Compliance with the Tribunal's Directions:
The Tribunal had directed the AO to make further inquiries to verify the genuineness of the gift, the creditworthiness of the donor, the source of money for the pay order, and the relationship between the assessee and the donor. The assessee partially complied with these directions but failed to produce the donor for examination or provide all the required details. The Tribunal noted that the assessee did not fulfill all the directions given in the earlier order.

5. Adequacy of Opportunity Given to the Assessee:
The assessee argued that due to old age, he could not contact the donor and obtain the necessary details during the assessment proceedings. The Tribunal, considering the interest of justice, decided to give the assessee one final opportunity to substantiate the identity and creditworthiness of the donor and the genuineness of the transaction. The Tribunal directed the assessee to produce a copy of the order before the AO within one month and cooperate for early completion of the assessment.

Conclusion:
The Tribunal allowed the appeal filed by the assessee for statistical purposes, restoring the issue to the file of the AO with a direction to give the assessee one final opportunity to substantiate his claim. The AO is to complete the assessment within six months from the end of the month in which the copy of the order is filed before him, and the assessee is directed not to seek any adjournment and to cooperate with the AO. If the assessee fails to comply, the AO is at liberty to pass an appropriate order as per law. The order was pronounced in the open court on 07th February, 2018.

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