2018 (5) TMI 1596 - AT - Income Tax

Addition u/s 68 - assessee received gift from her daughter - whether AO and CIT(A) have doubted the creditworthiness of assessee s daughter or assessee? - Held that - It is irrelevant for the assessee to prove as the assessee has brought on record not only the source but source of source also. It is for the revenue to initiate proceedings in the case of T. Veena, if they are not satisfied with the submission of Ms. T. Veena. As far as the assessee is concerned, she had received the gift from her daughter through banking channel, hence, she has proved identity and genuineness of the transaction and for creditworthiness, she had brought on record the bank statement & PAN of her daughter. Therefore, assessee has discharged her part of duty. The sum received as gift from a close relative who was man of means and who had also confirmed the said transaction, could not be added as cash credit - See CIT Vs. Dr. Kodela Siva Prasada Rao 2013 (1) TMI 232 - ANDHRA PRADESH HIGH COURT - Decided in favour of assessee

Summary

Issues:
- Addition of unexplained credit in the bank account under section 68 of the Income Tax Act, 1961.
- Discharge of onus regarding identity, creditworthiness, and genuineness of gifts received from daughter.

Analysis:

Issue 1: Addition of unexplained credit in the bank account under section 68 of the Income Tax Act, 1961

The Assessing Officer (AO) observed credits in the assessee's bank account totaling to ?17,00,000 from her daughter, who had received amounts from loans. The AO doubted the financial capacity of the donor and the genuineness of the transaction, leading to the addition of the amount as unexplained credit. The CIT(A) upheld this decision, stating that the creditworthiness and genuineness of the transaction were doubtful. However, the appellate tribunal noted that the assessee had proven the identity, creditworthiness, and genuineness of the gifts received. The tribunal emphasized that the gifts were transferred through banking channels, the daughter provided sources of funds, and the assessee submitted PAN details and bank statements of the daughter. Citing a relevant case law, the tribunal ruled in favor of the assessee, deleting the addition made by the AO under section 68 of the Act.

Issue 2: Discharge of onus regarding identity, creditworthiness, and genuineness of gifts received from daughter

The tribunal highlighted that the assessee had fulfilled her duty by providing evidence of the identity, creditworthiness, and genuineness of the gifts received from her daughter. The gifts were transferred through legitimate banking channels, and the daughter had sourced the funds from loans, which were duly documented. The tribunal emphasized that the burden of proof had been met by the assessee, and any doubts regarding the daughter's creditworthiness were irrelevant in this context. Referring to a precedent, the tribunal concluded that the gifts received from a close relative, with proper documentation and confirmation, could not be treated as unexplained cash credits. Therefore, the tribunal allowed the appeal of the assessee, ruling in her favor based on the evidence presented and established legal principles.

This comprehensive analysis of the judgment addresses the issues involved, the arguments presented by the parties, and the tribunal's decision based on the legal principles and evidence provided during the proceedings.