2023 (6) TMI 112 - AT - Income Tax

Addition u/s 69 - cash deposits unexplained - cash-gift received - time gap between gifts received and cash deposited in bank a/c. - HELD THAT - CIT(A) observation regarding his observation that gifts were made in cash and not through banking channel we find merit in the submission of Ld. AR that the assessee s father received sale consideration of property in cash and that is why he made cash gift to assessee. Regarding cash-gift received from mother we find merit in the submission of Ld. AR that mother being a lady used to keep cash with her. In fact this practice of ladies keeping cash is widely known to everyone. Therefore making a gift of Rs. 1, 50, 000/- out of such cash held by her is justified. Regarding another observation of CIT(A) that the assessee had not specified any occasion i.e. birth-day wedding anniversary etc. on which the gifts were given although normally people give complementary gifts on these occasions we find that the assessee has received gift from family members namely father and mother for personal use which do not require any special occasion like birthday marriage etc. The affidavit given by donors being father and mother themselves speak that they made gifts to assessee for personal use . Therefore the observations made by CIT(A) are mere suspicious an presumptions which are not strong enough to negate the assessee s factual submissions. We accept all sources explained by assessee as genuine except the gift of Rs. 1, 00, 000/- claimed to have been received from grandmother wherein affidavit is given by assessee himself for supporting his own case which unless corroborated by some independent or corroborative evidence cannot be accepted. Decided in favour of assessee partly.

Summary

Issues Involved:
1. Validity of cash deposits treated as unexplained income under Section 69 of the Income-tax Act, 1961.
2. Acceptance of affidavits and explanations provided by the assessee regarding the sources of cash deposits.

Summary:

Issue 1: Validity of Cash Deposits Treated as Unexplained Income
The assessee filed a return of income for AY 2009-10 declaring Rs. 1,49,900/-. The Assessing Officer (AO) initiated action under Section 147 to assess cash deposits of Rs. 14,76,000/- made in the assessee's bank account. The AO issued notices under Sections 148, 143(2), and 142(1), to which the assessee responded. The AO found the explanations for the cash deposits unsatisfactory, treating Rs. 12,63,000/- as unexplained and making an addition under Section 69 of the Act. The assessee claimed the deposits were sourced from cash gifts received from family members and cash withdrawals from his own account. The AO noted discrepancies such as the time gap between receiving gifts and depositing them, and the fact that all gifts were in cash.

Issue 2: Acceptance of Affidavits and Explanations Provided by the Assessee
The Commissioner of Income-Tax (Appeals) [CIT(A)] upheld the AO's decision, stating that affidavits from relatives do not prove the genuineness of transactions without authentic evidence. The CIT(A) raised doubts about the mode of payment for a property sale by the assessee's father and questioned why cash transactions were preferred over bank transactions. The CIT(A) also noted the lack of specific occasions for the gifts and the financial capability of the donors.

Tribunal's Findings:
1. Cash Gift from Father: The Tribunal accepted the affidavit from the assessee's father, noting that the sale of a residential flat provided a legitimate source for the gift. The Tribunal found the father's affidavit credible and the time gap between receiving the gift and depositing it reasonable, considering the assessee's explanation of contemplating a house purchase.

2. Cash Gift from Mother: The Tribunal accepted the mother's affidavit, acknowledging that the sum of Rs. 1,50,000/- was not substantial given her age and the explanation of accumulated household savings.

3. Cash Gift from Grandmother: The Tribunal did not accept the affidavit provided by the assessee himself due to a lack of independent corroborative evidence.

4. Cash Withdrawal from Own Bank Account: The Tribunal accepted the explanation and evidence of cash withdrawal from the assessee's bank account, noting no contrary evidence from the department.

Conclusion:
The Tribunal directed the AO to delete the addition of Rs. 11,63,000/- while upholding the addition of Rs. 1,00,000/- related to the alleged gift from the grandmother. The appeal was partly allowed. The Tribunal emphasized that affidavits and factual submissions should not be dismissed based on mere suspicion and that the department must provide concrete evidence to counter the assessee's claims.