2022 (11) TMI 1049 - AT - Income Tax

Addition u/s 68 in respect of jewellery - genuineness of gift of jewellery - gift from relative - HELD THAT - For the grandmother giving gift to the granddaughter i.e. assessee herein, in our considered opinion, no occasion need to be proved. It is out of natural love and affection. Why the grandmother had gifted only to one lady member of the family i.e. assessee herein and not to other lady members, as pointed out by CIT(A) in his second contention, is not the lookout of the Revenue. It is the will and desire of the donor i.e. grandmother. We find that the gift deed has been duly accepted by the donee i.e. assessee herein and the gift is complete in all aspects. In any case, we find that this gift is only received by the assessee from grandmother which has been accepted by the grandmother in her gift deed as well as in her affidavit. Hence, the same would be exempt from tax in terms of Section 56(2)(vii) of the Act as the same falls within the meaning of relative . It is not in dispute that what is received as gift is only jewellery weighing 417 gms. Hence, what is received is only gift in kind. Accordingly, the provisions of Section 68 per se could not be invoked in the instant case. It is trite law and the bare reading of the provisions of Section 68 are very clear that the said provisions could be made applicable only for sums received in cash or cheque or demand draft for which satisfactory explanation could not be given by the assessee. In the instant case no cash or cheque has been received by the assessee as gift. The assessee has received only jewellery weighing 417 gms as gift as stated supra from her grandmother. In view of the aforesaid observations, we have no hesitation in deleting the addition - Appeal of assessee allowed.

Summary

Issues:
1. Condonation of delay in filing appeal due to Covid.
2. Justification of addition made under section 68 of the Income Tax Act regarding jewellery worth Rs.11,25,900.

Analysis:

1. The Tribunal noted a delay of 77 days in filing the appeal by the assessee, attributing it to the Covid period. Citing the relaxation provided by the Supreme Court, the delay was condoned, and the appeal was admitted for adjudication.

2. The main issue revolved around the addition made under section 68 of the Income Tax Act concerning jewellery valued at Rs.11,25,900. The Assessing Officer (AO) treated the amount credited to the capital account as an unexplained cash credit. The AO raised concerns regarding the lack of reasons mentioned for the gift, the unregistered gift deed, absence of corroborative evidence, undisclosed jewellery in financial statements, and the absence of evidence to prove the donor's ownership of the jewellery.

3. The Tribunal examined the evidence presented by the assessee, including a gift deed and agricultural land holdings of the grandmother. It was established that the jewellery gifted was from the grandmother's Streedhan, and the grandmother's agricultural income justified her not filing tax returns. The Tribunal dismissed the AO's contentions, emphasizing the genuineness of the gift and the exemption under Section 56(2)(vii) as the gift fell within the meaning of "relative." Since the gift was in the form of jewellery, not cash, the provisions of Section 68 were deemed inapplicable, leading to the deletion of the addition.

4. Ultimately, the Tribunal allowed the appeal of the assessee, ruling in favor of the genuineness of the gift of jewellery and the exemption under the Income Tax Act. The decision was pronounced on 30/09/2022.