2007 (12) TMI 242 - AT - Income Tax

Summary

Issues Involved:
1. Validity of assessment u/s 148/143(3).
2. Levy of interest u/s 234B and 234C.
3. Confirmation of additions u/s 68 regarding gifts received by the assessees.

Summary:

1. Validity of Assessment u/s 148/143(3):
The assessees contended that the assessment framed u/s 148/143(3) was arbitrary, unjust, and illegal. However, the Tribunal found this ground to be of a general nature without specific details. Consequently, this ground was rejected as it required no adjudication.

2. Levy of Interest u/s 234B and 234C:
The Tribunal noted that the issue of interest levy u/s 234B and 234C is consequential and does not require separate adjudication. The Assessing Officer will consider it while giving appeal effect.

3. Confirmation of Additions u/s 68:
The core issue was the genuineness of the gift transactions. The Assessing Officer had added the amounts received as gifts to the income of the assessees u/s 68, citing lack of proof regarding the donors' capacity and the genuineness of the transactions. The CIT(A) confirmed these additions, holding that the assessees failed to establish the genuineness of the gifts despite proving the identities and creditworthiness of the donors.

The Tribunal upheld the CIT(A)'s findings, emphasizing that the gifts were unusual and unnatural, given that the donors had no relationship with the assessees and had not given similar gifts to their own family members. The Tribunal referred to precedents, including the Apex Court's decision in CIT v. P. Mohanakala and the Delhi High Court's decision in Rajiv Tandon v. Asstt. CIT, which supported the view that the genuineness of gift transactions must be scrutinized considering human probabilities and surrounding circumstances.

The Tribunal concluded that the gift transactions were not genuine and should be treated as the assessees' income from undisclosed sources. Although the additions were initially made u/s 68, the Tribunal held that they should be made u/s 69A, as the amounts were found credited in the assessees' bank accounts without satisfactory explanation.

Conclusion:
The Tribunal dismissed the appeals, upholding the CIT(A)'s order with a modification that the additions should be made u/s 69A instead of u/s 68.