2018 (4) TMI 575 - HC - Income Tax

Addition on account of unsecured loans - transaction shown as gift - Held that - CIT (A) has rightly observed that this is not a gift and taking into consideration that the donor has a sufficient fund and that is not in dispute that the amount which has been paid by the HUF was not having sufficient fund. In that view of the matter, we are confirming the order of CIT (A) and the Tribunal. - Decided in favour of assessee

Summary

Issues:
Appeal challenging Tribunal's judgment on unexplained cash deposits and penalty under section 271D of the Income Tax Act.

Analysis:
1. The High Court addressed the common questions of law and facts in both appeals, focusing on the Tribunal's decision upholding the CIT (A)'s order.
2. The substantial questions of law framed by the Court pertained to the deletion of cash deposits and penalty under section 271D.
3. The appellant's counsel highlighted the Assessing Officer's observations regarding cash deposits in the bank accounts and the conflicting explanations provided by the assessee.
4. The AO imposed a penalty under section 271D citing precedents supporting the penalty for unaccounted money, emphasizing the violation of section 269SS.
5. The CIT (A) considered the donor's financial capacity and the verifiability of cash flow statements, concluding that the gifts were adequately explained.
6. The appellant contested the CIT (A)'s decision, pointing out the inconsistencies in the assessee's statements over time, which the Tribunal failed to address.
7. The respondent supported the lower authorities' decisions, arguing that the gift transactions were not covered under section 269SS.
8. After hearing both parties, the Court upheld the CIT (A) and Tribunal's findings, emphasizing the sufficiency of funds with the donor.
9. Ultimately, the Court ruled in favor of the assessee, dismissing the appeals against the Department's claims.