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Issues Involved:
1. Deletion of addition on account of gift received by the assessee. 2. Deletion of addition on account of unexplained investment in property. 3. Deletion of addition on account of unexplained cash credits. Summary: Issue 1: Deletion of Addition on Account of Gift Received by the Assessee The Department contested the deletion of Rs. 64,997 added by the AO, arguing the gift received by the assessee from a foreign party in US dollars was not genuine. The AO concluded that the gift was an investment from undisclosed sources since the assessee was not related to the donor, Shri Ramesh Chawla. The CIT(A) deleted the addition, stating that the absence of a blood relationship does not invalidate the genuineness of the gift. The Tribunal upheld the CIT(A)'s decision, noting that the identity and capacity of the donor were established and supported by documentary evidence, including letters and bank drafts. The Tribunal also referenced case law, such as CIT vs. Mrs. Sunita Vachani and Ashwani Kumar Gard vs. AO, to support the decision. Issue 2: Deletion of Addition on Account of Unexplained Investment in Property The AO added Rs. 1,60,875 based on a valuation report, which estimated the cost of construction higher than what the assessee declared. The CIT(A) deleted the addition, arguing that the AO had no authority to refer the case to the Valuation Officer without finding defects in the books of account. The Tribunal agreed, citing case law such as CIT vs. Pratapsingh Amrosingh Rajendra Singh and ITO vs. Sethna Ice & Cold Storage, which held that the AO cannot refer to a Valuation Officer without evidence of undervaluation. The Tribunal upheld the CIT(A)'s decision, finding no justification for the addition. Issue 3: Deletion of Addition on Account of Unexplained Cash Credits The AO added Rs. 33,500 for unexplained cash credits, stating that the assessee failed to produce confirmatory letters from two depositors and questioned the financial capacity of the third. The CIT(A) deleted the addition, noting that confirmatory letters were indeed filed and the AO did not further investigate the genuineness of the deposits. The Tribunal upheld the CIT(A)'s decision, emphasizing that the onus was on the Department to prove the deposits were not genuine, which the AO failed to do. The Tribunal referenced Jhaveribhai Beharilal & Co. vs. CIT to support the requirement for the AO to summon creditors and verify their statements. Conclusion: The Tribunal dismissed the Department's appeal, upholding the CIT(A)'s deletions of the additions on all three issues.
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