9911796707
|
Home
Issues Involved:
1. Whether the sum of Rs. 1 lac received by the assessee as a gift through banking channels from a resident of Nepal is to be considered as income from undisclosed sources and assessed to tax. Summary: Issue 1: Validity of the Gift and its Treatment as Income from Undisclosed Sources The primary controversy in this appeal is whether the sum of Rs. 1 lac received by the assessee as a gift through banking channels from a resident of Nepal should be considered as income from undisclosed sources and assessed to tax. Facts and Arguments: - The assessee received a gift of Rs. 1 lac via a bank draft credited to her bank account in Union Bank of India during the assessment year 1983-84. The donor, Shri R.N. Agarwal, a resident of Nepal, declared that he gifted the amount out of natural love and affection. - The Assessing Officer (A.O.) did not accept the assessee's version due to lack of proper verification and added the sum as income from undisclosed sources without specifying the provision of the Income-tax Act under which this was done. - The Appellate Commissioner (A.C.) ignored the evidence provided by the assessee, including a sworn declaration by the donor and copies of the demand draft and the donor's Income-tax assessment order from Nepal. The A.C. held that the gift was a collusive transaction and a device to evade tax, invoking the Supreme Court's observation in McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148. Tribunal's Findings: - The Tribunal noted that the A.O. added Rs. 1 lac to the assessee's income from undisclosed sources "for want of verification" and not on the grounds of the gift being invalid or non-genuine. - The A.C. invented a new case by holding the gift as non-genuine and a device to evade tax, which was not the original stance of the A.O. - The Tribunal emphasized that the essential conditions for a valid gift, as per section 122 of the Transfer of Property Act, 1882, were satisfied. The donor transferred the money, and the donee accepted it, making the gift complete and valid. - The Tribunal criticized the A.C. for speculating and being biased without concrete evidence, noting that the A.C. unjustifiably ignored the positive and reliable evidence provided by the assessee. - The Tribunal held that the provisions of section 68 of the Income-tax Act were not applicable as the sum was not found credited in the assessee's account books but directly in her bank account. - The Tribunal concluded that the A.C. acted adversely by improving the case of the A.O. and inventing new grounds, which is not permissible. Conclusion: The Tribunal vacated the impugned order and allowed the appeal, holding that there was a valid and complete gift of Rs. 1 lac in favor of the assessee, and the sum should not be treated as income from undisclosed sources.
|
