2024 (5) TMI 392 - AT - Income Tax

Addition u/s 68 - unexplained gifts received from family members - proof to justify the sources of gifts rendered - Onus to prove - CIT(A) deleted addition on the basis that the AO has made huge additions but has not made any reference with regard to identity, creditworthiness, and genuineness of the gift givers - Also AO has not made any effort to rebut the submissions made by the assessee and has made additions without giving any reasons for the same - HELD THAT - Gift received from assessee's real brother - From the perusal of the gift deed entered we find that the donor is the younger brother of the assessee and out of natural love and affection gave Rs. 97,35,000 as a gift to the assessee. From the perusal of the ITR acknowledgement of assessee's brother, he has earned a total income of Rs. 37,48,84,100 during the year under consideration. Therefore, we are of the considered view that Mr. Sunil B. Dalal had sufficient creditworthiness to gift to the assessee. AO has also not disputed the creditworthiness of Mr. Sunil B. Dalal. Further, in view of the fact that the donor/gift giver is the younger brother of the assessee, the genuineness of the transaction cannot also be doubted. Gift received from assessee's mother - Nothing has been brought on record to doubt the genuineness of the transaction of grant of gift by a mother to her son. The fact that the assessee s mother had a total income of Rs. 1,21,100, as per her return of income for the assessment year 2020-21, also supports the claim of the assessee that the gift of Rs. 1,50,000 was out of her past savings along with the current year income. Therefore, we find no basis for doubting either the genuineness of the transaction or the creditworthiness of the donor. Gift received from assessee's real sister - From the perusal of the copy of the ITR acknowledgement and statement of income for the assessment year 2020-21, assessee sister had an interest income of Rs. 8,45,318, which resulted in a total income of Rs. 7,74,920 as per her return of income. Thus, creditworthiness of sister cannot be doubted to give a gift of Rs. 1,50,000 to the assessee. Further, in the absence of any contrary material being brought on record by the Revenue, the genuineness of the gift of Rs. 1,50,000 to the assessee by his sister cannot also be doubted. Gift received from HUF - karta of the HUF is Assessee's father - we find that B.M. Dalal HUF had cash in hand of Rs. 10,28,953. From the capital account of B.M. Dalal HUF, we find that the HUF earned commission and brokerage of Rs. 1,26,830 and long-term capital gains of Rs. 1,40,000 during the year under consideration. Therefore, in view of the aforesaid, we are of the considered opinion that the creditworthiness of B.M. Dalal HUF has been sufficiently proved. Further, in the absence of any contrary material being brought on record by the Revenue, the genuineness of the gift to the assessee by his father s HUF cannot also be doubted. Thus AO has not brought any material on record to controvert the submissions made by the assessee. Therefore, CIT(A) rightly deleted the addition made by the AO. Decided in favour of assessee.

Summary

Issues Involved:

1. Deletion of addition of Rs. 1,01,85,001 made by the AO u/s 68 of the Act.
2. Whether the assessee satisfied the conditions of identity, creditworthiness, and genuineness of the transaction for the gifts received.

Summary:

1. Deletion of Addition u/s 68 of the Act:

The Revenue challenged the deletion of the addition of Rs. 1,01,85,001 made by the AO u/s 68 of the Act by the learned CIT(A). The AO had added the said amount to the total income of the assessee, treating it as unaccounted cash credit, as the assessee failed to justify the sources of the gifts received.

2. Satisfaction of Conditions (Identity, Creditworthiness, and Genuineness):

- Identity: The identity of the gift givers was not in dispute. The assessee provided the gift deeds, ITR copies, bank statements, and PAN cards of the gift givers.

- Creditworthiness and Genuineness:
- Sunil B. Dalal (Brother): The gift of Rs. 97,35,001 was from the assessee's younger brother, who had a total income of Rs. 37,48,84,100 during the year. The AO did not dispute his creditworthiness, and the genuineness of the transaction was accepted.
- Urmila Dalal (Mother): The gift of Rs. 1,50,000 was from the assessee's mother, who had a total income of Rs. 1,21,100. The gift was from her past savings and current year income. The genuineness and creditworthiness were accepted.
- Pragnya Shah (Sister): The gift of Rs. 1,50,000 was from the assessee's sister, who had an interest income of Rs. 8,45,318 and a total income of Rs. 7,74,920. The genuineness and creditworthiness were accepted.
- B.M. Dalal HUF (Father's HUF): The gift of Rs. 1,50,000 was from the assessee's father's HUF, which had a total income of Rs. 2,47,930 and cash in hand of Rs. 10,28,953. The genuineness and creditworthiness were accepted.

Conclusion:

The learned CIT(A) rightly deleted the addition made by the AO as the assessee provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the gifts received. The AO did not bring any contrary material on record to dispute the assessee's claims. Therefore, the appeal by the Revenue was dismissed. The order was pronounced in the open Court on 06/05/2024.