2022 (7) TMI 1012 - AT - Income Tax

Unexplained income - unexplained money under section 69A - gifts received by the assessee from brother and sister - HELD THAT - As assessee has discharged her initial onus by proving the identity, creditworthiness and genuineness of the transactions. A.O. cannot insist the assessee to prove the source of source. A.O. has not pointed out any defect in the Affidavits filed by both the donors viz., Mrs. Kamlesh Devi and Sh. Rakesh Jain and, therefore, the decision of the Hon ble Supreme Court in the case of M/s. Mehta Parikh Co. 1956 (5) TMI 4 - SUPREME COURT relied upon by the assessee is squarely applicable to the facts and circumstances of the case. Further the submission of assessee that her husband was suffering from cancer and for the treatment, a lot of medical expenses was required to be incurred. The aforesaid contention of assessee has not been found to be false. It is a general practice followed that in time of medical emergencies, the near and dear ones of the family, close friends and relatives generally pool their resources to help the family in need. Considering the totality of the facts and circumstances of the case and following the decision of Hon ble Supreme Court in the case of M/s. Mehta Parikh Co. vs., CIT (supra) gifts received by the assessee from her brother and sister cannot be added as unexplained income. We, therefore, direct the deletion of the addition made by the A.O. and allow the grounds of the assessee.

Summary

Issues:
Appeal against CIT(A)'s order sustaining addition of Rs.3,55,000 as unexplained income under section 69A and assessment under section 144 instead of 143(3).

Analysis:
1. The assessee, a retail trader of women suits, did not file income tax return due to income below the tax limit. During demonetization, deposited Rs.12,29,500 in banks for husband's medical expenses. AO treated Rs.3,55,000 as unexplained income under section 69A, adding it to total income.
2. Assessee's appeal before CIT(A) was dismissed, leading to the current appeal. Grounds raised challenge the addition of Rs.3,55,000 and assessment under section 144. Assessee argued gifts from brother and sister for husband's medical expenses were genuine, supported by affidavits.
3. Tribunal noted AO's failure to consider government instructions on exempt limit and press release. Assessee proved identity, creditworthiness, and genuineness of transactions, shifting burden from proving source of source. Affidavits were not contested by AO, applying Supreme Court precedent.
4. Assessee's claim of medical expenses for husband was accepted as plausible. Tribunal, following Supreme Court decision, ruled gifts from brother and sister cannot be treated as unexplained income. Addition of Rs.3,55,000 was directed to be deleted, allowing the appeal.
5. Tribunal's decision was based on the facts presented, emphasizing the importance of considering circumstances and evidence. The appeal was allowed, and the order was pronounced in open court on 21.07.2022.