2003 (11) TMI 279 - AT - Income Tax

Assessment u/s 143(3) noted certain credit entries in the Saving Bank account - addition on account of foreign gifts - Genuineness of the gift transactions - HELD THAT - It was admitted that it might have been received prior to 31st March 1994 but at the same time maintaining that proceeds were actually credited in the previous year relevant to the next assessment year. We find that the basis given by the CIT(A) for allowing relief is not correct. Where the payment is received by cheque it relates back to the date when such cheque is accepted and not when it is not deposited or encashed. The Hon ble Supreme Court in the case of CIT vs. Ogale Glass Works Ltd. 1954 (4) TMI 3 - SUPREME COURT has laid down to this extent. Since the cheque in question was received by the assessee prior to the close of the financial year we are satisfied that the issue for consideration of the genuineness of the gift arose in this very year. In our considered opinion the learned CIT(A) erred in considering that the date of receipt is one falling in the subsequent assessment year. His order is therefore reversed to this extent. Coming to the merits of the case it is found that the addition was made by the AO on the same facts as were prevailing in the case of gift received from Sh. Mohinder Handa which has been discussed supra. Here also the AO had not brought any material on record to disapprove the assessee s contention and evidence in support of the genuineness of the gift. Thus we hold that the addition was not called for and rightly deleted. In the result the appeal stands dismissed.

Summary

Issues:
The appeal involved the deletion of additions made by the Assessing Officer on account of foreign gifts totaling Rs. 1,85,000 and Rs. 61,788 for the assessment year 1994-95.

Deletion of Rs. 1,85,000 Addition:
The Assessing Officer (AO) made the addition due to lack of authentication regarding the source of the foreign gifts received by the assessee. The CIT(A) deleted the addition after the assessee provided evidence including a photocopy of a cashier's check and a letter from the gift donor. The Tribunal upheld the deletion, emphasizing that the AO failed to rebut the assessee's explanation and did not bring any material to negate the evidence presented. The Tribunal stressed the importance of the genuineness of the transaction and the identity of the donors, ultimately confirming the deletion of the addition based on precedent.

Deletion of Rs. 61,788 Addition:
The AO added this amount as income from a foreign gift, but the CIT(A) deleted the addition, stating that the credit related to the next assessment year. The Tribunal disagreed with the CIT(A)'s reasoning, citing that the cheque received by the assessee related back to the date of acceptance, not when it was deposited. As the cheque was received before the close of the financial year, the Tribunal held that the addition was not justified and rightly deleted. The Tribunal reversed the CIT(A)'s decision on the date of receipt issue and confirmed the deletion of this addition as well.

In conclusion, the Tribunal dismissed the appeal, upholding the CIT(A)'s decision to delete both additions of Rs. 1,85,000 and Rs. 61,788 made by the AO on account of foreign gifts for the assessment year 1994-95.