2018 (9) TMI 1091 - AT - Income Tax

Validity of assessment being beyond jurisdiction of the AO - addition u/s 68 and 69 - Held that - CIT (A) has considered the fact that the additions made by the AO are only with respect to the unexplained source of addition to the capital account and, therefore, the AO has not travelled beyond the scope of selected scrutiny. Even otherwise, when the assessee can challenge the further addition made by the AO which is beyond the scope of limited scrutiny and, therefore, such addition made by the AO would not nullify the entire assessment proceedings when the jurisdiction assumed by the AO by issuing the notice under section 143(2) was one of the issues in the assessment. When the ld. CIT (A) has finally deleted the addition made by the AO, then this issue does not germane to the present proceedings. Addition on account of gift - assessee has claimed the gift of ₹ 8,00,000/- received from Smt. Poonaj Kanjani stated to be the Aunt of the assessee and non-resident Indian based at UAE - Held that - We find that the AO has raised the pertinent objection regarding the claim of gift received from Smt. Poonam Kanjani and assessee has failed to satisfy the requirement as per the provisions of section 68 of the Act. Accordingly, we do not find any error or illegality in the impugned orders of the authorities below. - Decided against assessee

Summary

Issues:
1. Jurisdiction of the Assessing Officer (AO) in making additions beyond the scope of scrutiny.
2. Addition of ?8,00,000 as unexplained gift received through banking channel.

Issue 1: Jurisdiction of the AO
The AO initiated scrutiny proceedings based on the increase in the capital account of the assessee. The AO made an addition of ?3,20,000 under sections 68 and 69 of the IT Act, which was later deleted by the ld. CIT (A). The Tribunal noted that the AO's jurisdiction was challenged by the assessee, but since the ld. CIT (A) had already granted relief by deleting the addition, the issue of jurisdiction was considered irrelevant. The Tribunal upheld the decision of the ld. CIT (A) stating that the AO had not exceeded the scope of selected scrutiny, and hence, the appeal on this ground was dismissed.

Issue 2: Addition of ?8,00,000 as unexplained gift
The assessee claimed to have received ?8,00,000 as a gift from an NRI Aunt, Smt. Poonam Kanjani, through a transfer from Shri Raj Kumar of Hyderabad. The AO disallowed the claim, adding the amount under section 68 as unexplained cash credit. The ld. CIT (A) upheld the AO's decision due to the lack of evidence proving the gift's genuineness. The Tribunal observed that the assessee failed to establish the link between the alleged gift giver and the actual source of the funds. Despite producing a bank certificate, the assessee did not provide concrete evidence supporting the claim of a gift from Smt. Poonam Kanjani. As a result, the Tribunal affirmed the decisions of the lower authorities, concluding that the addition under section 68 was justified, and the appeal was dismissed.

In conclusion, the Tribunal upheld the decisions of the lower authorities regarding both issues, dismissing the appeal of the assessee.