2023 (2) TMI 1373 - HC - Income Tax

Addition u/s 68 - whether the assessee was able to establish the genuineness of the gift received by the assessee? - whether the assessee has been able to establish the identity and creditworthiness of the donor? - HELD THAT - CIT(A) in his order the fact that the donor had a NRE account in ING Vysya Bank and the said Bank directly addressed to the AO confirming about the NRE account maintained by the donor and a cheque for Rs. 25 Lacs in favour of the assessee was debited to the NRE account. CIT(A) also notes that the assessee has furnished his business details directly to the AO and on the other hand, AO has failed to bring any positive material on record to show that the gifts are not genuine and there was no material brought on record by the revenue to suggest any nexus between the assessee and the gift received by his wife. Thus, on appreciation of the facts the CIT(A) allowed the appeal. Tribunal on its part re-appreciated the factual position and noted that the identity of the donor has been well established by the documents produced and thus the assessee has discharged the initial onus cast upon the assessee to establish the identity, genuineness as well as the creditworthiness of the donor. The burden shifts on the revenue to establish it otherwise. This having not been done by the revenue, we are of the view that the CIT(A) as well as the Tribunal rightly granted relief in favour of the assessee.

Summary

Issues:
1. Whether the Tribunal arrived at a conclusion without considering relevant materials, making the findings unreasonable and perverse.
2. Whether the Tribunal applied the principle of law wrongly in a specific case.
3. Whether the Tribunal was justified in holding the burden of proof lies on the revenue and not the assessee.

Analysis:
The High Court of Calcutta heard an appeal filed by the revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The main issue was whether the genuineness of a gift received by the assessee was established. The Tribunal had remanded the matter to the Assessing Officer to consider documents filed by the assessee, but the Assessing Officer did not comment on those documents and faulted the assessee for not producing the donor's income tax return. The Tribunal found no grounds to interfere with the Commissioner of Income Tax's order. The revenue contended that the genuineness of the gift was not proven due to the relationship between the parties.

The Commissioner of Income Tax (Appeals) considered whether the assessee established the identity and creditworthiness of the donor. It was noted that the donor had a NRE account in a bank, which confirmed the transfer of funds to the assessee. The assessee provided business details, and the Assessing Officer failed to produce evidence to suggest the gifts were not genuine. The CIT(A) allowed the appeal based on these facts. The Tribunal re-evaluated the situation and found that the donor's identity was established by documents, shifting the burden to the revenue to prove otherwise. As the revenue failed to do so, the Court upheld the relief granted to the assessee.

In conclusion, the Court dismissed the appeal, answering the substantial questions of law against the revenue. The decision was based on the assessee's successful establishment of the gift's genuineness and the revenue's failure to provide contrary evidence.