2020 (4) TMI 790 - AT - Income Tax

Addition u/s 68 - gifts received from the assessee s son - Suspicion on source of source - HELD THAT - In the instant case, the AO did not doubt the genuineness of the gift received from his son. The AO s suspicion was the source of source i.e. donor, Sri Adika Manohar Rao. Since the assessee has discharged his burden by placing evidence with regard to receipt of gift from his son, we do not find any reason to make addition in the hands of the assessee. The source was established by the assessee, the occasion of the gift received by the assessee s son was also explained. Therefore, we do not find any reason to doubt the genuineness of the receipt of gift by his son, Sri Bhimana Sujit Raviteja. Hence, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. Limited scrutiny for mismatch of sales turnover - addition u/s 68 or 69A without the prior approval of the Principal CIT, Vijayawada - as per the provisions of law, the case cannot be converted to full scrutiny as per the instructions of CBDT without the approval of the Ld.CIT - HELD THAT - Since we have adjudicated the ground on merits and allowed the appeal of the assessee, we consider it is not necessary to adjudicate the additional ground raised by the assessee. Accordingly, the appeal is of the assessee is allowed.

Summary

Issues:
1. Addition of ?5,00,000 made by the Assessing Officer and confirmed by the CIT(A).
2. Failure to prove the genuineness of the transaction.

Analysis:
Issue 1: The appeal was filed against the addition of ?5,00,000 made by the Assessing Officer, which was confirmed by the CIT(A). The assessee explained that the amount was received from his son as a gift from his father-in-law for the son's marriage. The AO rejected this explanation, citing insufficient withdrawals by the father-in-law from his bank account. However, the Tribunal observed that the father-in-law had withdrawn a sufficient amount from his account during the relevant period. The Tribunal found that the assessee had provided evidence regarding the gift received from his son, establishing the source of the amount. As a result, the Tribunal set aside the CIT(A)'s order and allowed the appeal of the assessee.

Issue 2: The CIT(A) upheld the addition, stating that the assessee failed to prove the genuineness of the transaction. However, the Tribunal, after considering the evidence presented, found that the source of the amount was established by the assessee. The Tribunal noted that the occasion for the gift was explained, and there was no reason to doubt the genuineness of the transaction. Therefore, the Tribunal concluded that the addition made by the AO was not justified. Additionally, the assessee raised an additional ground regarding the conversion of the case to full scrutiny without prior approval. Since the appeal was allowed on merits, the Tribunal did not find it necessary to adjudicate this additional ground. Consequently, the appeal of the assessee was allowed, and the addition made by the AO was set aside.

In conclusion, the Tribunal ruled in favor of the assessee, setting aside the addition of ?5,00,000 made by the Assessing Officer and confirmed by the CIT(A). The Tribunal found that the assessee had provided sufficient evidence to establish the source of the amount and the genuineness of the transaction, leading to the allowance of the appeal.