2008 (5) TMI 295 - AT - Income Tax

Summary

Issues:
- Addition of Rs. 7 lakhs under section 68 of the Act
- Genuineness of the gift received by the assessee
- Coercion in recording the statement of the assessee

Analysis:
1. Addition of Rs. 7 lakhs under section 68 of the Act:
- The Revenue appealed against the deletion of the addition of Rs. 7 lakhs made by the Assessing Officer under section 68 of the Act. The Assessing Officer inferred that the gift was not genuine based on the statement of the donee, the assessee. However, the assessee filed various documents to prove the genuineness of the gift, including a confirmatory letter, passport copy of the donor, and bank details. The learned CIT(A) directed the Assessing Officer to treat the gift as genuine and deleted the addition.

2. Genuineness of the gift received by the assessee:
- The learned CIT(A) found that the Assessing Officer was unjustified in treating the gift as non-genuine despite the supporting documents provided by the assessee. The CIT(A) noted that the gift was genuine based on the evidence presented, including the relationship between the assessee and the donor, the donor's creditworthiness, and the identity of the donor. The CIT(A) highlighted that the delay in executing the gift deed did not invalidate the genuineness of the gift. The CIT(A) also observed that the statement of the assessee recorded under section 131 showed signs of mental coercion, which was not a valid basis to reject the genuineness of the gift.

3. Coercion in recording the statement of the assessee:
- The assessee contended that the statement recorded by the Assessing Officer was under mental coercion, leading to the surrender of the genuine gift as income. The assessee retracted the statement through an affidavit, emphasizing that the statement was not binding. The donor supported the claim of the assessee through a confirmatory letter and an affidavit, stating that the gift was given out of natural love and affection. The Tribunal considered all submissions and evidence, concluding that the order of the CIT(A) was legally sound, and declined to interfere with the decision. The appeal filed by the Revenue was dismissed.