2019 (2) TMI 1582 - AT - Income Tax

Unexplained source of repayment of loan - reopening of assessment - HELD THAT - Assessee received a sum of ₹ 5 lakhs by way of small gifts from his friends and relatives. All of such persons, except, Shri Prakash B. Patil, were produced before the AO. They accepted the fact of having given gifts to the assessee - AO doubted their genuineness on certain frivolous issues. Shri Prakash B. Patil, could not appear in person before the AO, but furnished a confirmation letter on 13-12-2010 accepting the making of gift and a copy of his bank account to support the withdrawal of cash and giving of gift. In considered opinion, the assessee cannot be said to have not successfully discharged the burden cast upon him to prove the genuineness of the credits. Therefore, order to delete the addition Addition of sum received on sale of plot of land - HELD THAT - The assessee categorically stated before the AO that he sold a plot of land for ₹ 1,30,000/-. A copy of Profit and loss account of the assessee for the year under consideration also depicts the sale of plot amounting to ₹ 1,30,000/-. Once the income from sale of plot has been accepted by the AO, he could not have rejected the explanation of the assessee towards receipt of ₹ 1,30,000/- for repayment of loan without any valid reason. Therefore, overturn the impugned order on this score. - Decided in favour of assessee.

Summary

Issues:
1. Addition of ?5 lakhs as small gifts.
2. Addition of ?1,30,000 from the sale of a plot of land.

Analysis:
1. The first issue pertains to the addition of ?5 lakhs as small gifts received by the assessee. The Assessing Officer (AO) received information about the repayment of a bank loan by the assessee. The assessee claimed that the loan repayment was facilitated by receiving ?5 lakhs as small gifts from friends and relatives. The AO doubted the genuineness of the gifts, even though most gift-givers were produced before the AO and confirmed giving the gifts. One person, Shri Prakash B. Patil, could not appear but provided a confirmation letter and bank account details. The Tribunal held that the assessee had successfully proven the genuineness of the gifts, and thus, ordered the deletion of the addition of ?5 lakhs.

2. The second issue revolves around the addition of ?1,30,000 received from the sale of a plot of land. The assessee stated before the AO that this amount was from the sale of a plot, which was also reflected in the Profit and Loss account. Despite this, the AO made the addition, which was upheld in the first appeal. The Tribunal noted that once the AO accepted the income from the sale of the plot, he could not reject the explanation for the receipt of ?1,30,000 for loan repayment without a valid reason. Consequently, the Tribunal overturned the addition of ?1,30,000.

In conclusion, the Tribunal allowed the appeal, deleting both the additions. The judgment was pronounced in the Open Court on 4th December 2018.