2019 (6) TMI 438 - AT - Income Tax

Addition u/s 68 - unexplained deposits in the bank account - creditor submitted that the amount was given out of her streedhan received from her father - HELD THAT - No evidence was furnished by the assessee either before the Assessing Officer or before the ld.CIT(A) or before the Tribunal to establish that she had received streedhan of ₹ 50,000/- and given the same as hand loans to the various persons. The creditor is not an income-tax assessee. No details such as names and addresses of the persons to whom the hand loans were given, date of lending, interest received and the date of repayment etc. were filed. The letter filed by the creditor is a general letter without furnishing specific information, such as the date of receipt of streedhan and the cash flow till April, 2014. Therefore, we are unable to accept the contention of the assessee that the loan received from Smt. G.Lakshmi Bhavani as a genuine. The assessee failed to prove the creditworthiness and genuineness of the source, hence, we do not find any infirmity in the order of the ld. CIT(A) and the same is upheld. Loan from Sri Kodali Murali Mohan - the assessee has furnished the confirmation letter and also evidence for agricultural land holdings. The Assessing Officer simply scrutinized the confirmation letter and made the addition instead of examining the donor. Since the assessee prima-facie has furnished the evidence for agricultural land holdings and also explained in the confirmation letter that creditor was having salary income and agricultural income, the Assessing Officer required to examine the source in detail in the hands of the donor before making the addition. Therefore, we are of the considered opinion that the issue should be remitted back to the file of the Assessing Officer to examine the creditworthiness and genuineness of the source of gift and decide the issue on merits. - Appeal of the assessee allowed for statistical purpose.

Summary

Issues:
1. Addition made under section 68 of the Income Tax Act.
2. Validity of addition challenged before the ld. CIT(A).
3. Appeal before the Tribunal challenging ld. CIT(A)'s order.
4. Loan received from wife and gift received from another party.

Analysis:

Issue 1: Addition made under section 68 of the Income Tax Act
The Assessing Officer observed cash deposits in the assessee's bank accounts and added an amount under section 68 of the Act. The assessee provided confirmation letters from parties but failed to substantiate the sources. The ld. CIT(A) upheld the addition under section 69A, citing lack of nexus between the claimed amounts and bank deposits.

Issue 2: Validity of addition challenged before the ld. CIT(A)
The assessee challenged the ld. CIT(A)'s order both technically and on merits. The technical challenge regarding the addition under sections 68 and 69 was dismissed. The remaining challenge related to the merits of the unexplained deposits in the bank account.

Issue 3: Appeal before the Tribunal
The assessee appealed before the Tribunal, arguing against the additions made by the Assessing Officer. The Tribunal considered the loan from the wife and gift from another party separately.

Issue 4: Loan received from wife and gift received from another party
Regarding the loan from the wife, the Tribunal found the evidence provided insufficient to establish the genuineness of the loan. The appeal on this issue was dismissed. However, concerning the gift from the other party, the Tribunal noted that the assessee had provided evidence of agricultural land holdings and the source of income of the donor. The Tribunal remitted the issue back to the Assessing Officer to examine the creditworthiness and genuineness of the gift source before making a decision. The Tribunal allowed the appeal on this issue for statistical purposes.

In conclusion, the Tribunal partly allowed the appeal filed by the assessee, remitting one issue back to the Assessing Officer for further examination while dismissing the appeal on another issue.