2008 (4) TMI 417 - AT - Income Tax

Summary

Issues Involved: Department's appeal u/s 2001-02 against addition of Rs. 2 lacs to assessee's income as gift from real brother settled in the USA.

Issue 1: Addition of Rs. 2 lacs as gift income

The AO added Rs. 2 lacs to the assessee's income, claiming it as a gift from his real brother settled in the USA. The assessee provided documentary evidence including an affidavit from the donor, NRE account details, and a certificate of the donor's salary. The CIT(A) deleted the addition, prompting the Department's appeal. The Department argued that the CIT(A) erred in not following a previous court decision and highlighted the lack of reciprocal gifts from the assessee to the donor. However, the assessee relied on a different court decision supporting the deletion of such additions based on gift deeds and donor affidavits.

Issue 2: CIT(A)'s Decision and Rationale

The CIT(A) considered the gift from the real brother, a non-resident settled in the USA, as genuine based on the donor's affidavit and supporting documents. The donor's gross salary, the voluntary nature of the gift, and the source of funds from an NRI account were all taken into account. The CIT(A) found the evidence provided by the assessee to be substantial and unrefuted by the Department. The CIT(A) concluded that the addition was unwarranted as the genuineness and creditworthiness of the gift were established through documentary evidence.

Issue 3: Comparison with Previous Court Decisions

The Department's reliance on a previous court decision was deemed unfounded by the ITAT. The facts of the present case, involving a gift from a real brother settled abroad, were distinguished from the case cited by the Department. The ITAT emphasized that the donor's relationship, capacity to gift, and the voluntary nature of the gift were crucial factors in determining the genuineness of the transaction. The ITAT found no merit in the Department's arguments regarding the lack of reciprocal gifts or the donor's gifts to other family members, as the focus remained on the nature of the gift from the real brother.

Issue 4: Rejection of Department's Contentions

The ITAT dismissed the Department's contentions regarding the absence of reciprocal gifts and the donor's gifts to other family members as irrelevant to the core issue of the gift's genuineness. The ITAT also refuted the Department's attempt to draw parallels with a different court decision involving unrelated donors and multiple aliases. The ITAT upheld the CIT(A)'s decision based on the specific facts and evidence presented in the case, emphasizing the genuine nature of the gift from the real brother settled in the USA.

Conclusion

The ITAT confirmed the CIT(A)'s decision to delete the addition of Rs. 2 lacs to the assessee's income, considering the gift from the real brother as genuine and supported by substantial documentary evidence. The Department's appeal was dismissed, highlighting the importance of establishing the genuineness and creditworthiness of gifts through verifiable documentation.