2012 (8) TMI 370 - AT - Income Tax

Addition u/s 68 - gift received from unrelated party - revenue contending the same to be accommodation entry - addition of commission alleged to have been paid by the assessee for procuring the gift - Held that - It was held in case of Rajiv Tondon vs. ACIT (2007 (7) TMI 40 - HIGH COURT , DELHI) that in a case where donor had absolutely no connection with the assessee and has made gifts to the assessee only because he needed money to buy a house and they wanted to help him. It was not only quite unusual but also quite unnatural. In present case, there is no relationship of the donor with the assessee. There is also no occasion for this gift. The taxing authorities have rightly looked into the surrounding circumstances and drawn the conclusion that gift in this case was not genuine. Addition confirmed - Decided against assessee

Summary

Issues:
1. Validity of the order of the Ld. Commissioner of Income Tax (Appeals)
2. Justification of rejecting the appeal and confirming the addition of gifts
3. Genuineness of the gift and related circumstances
4. Addition of commission alleged to have been paid by the assessee

Analysis:
1. The appeal challenged the order of the Ld. Commissioner of Income Tax (Appeals) dated 12.2.2010 for the assessment year 2000-01, contending it was contrary to law and facts on record.

2. The Ld. Commissioner of Income Tax (A) justified rejecting the appeal and confirming the addition of Rs. 3,00,000 as a gift from Sh. Sanjay Mohan Aggarwal, examining the genuineness and circumstances of the gift.

3. The investigation revealed that the assessee received an accommodation entry of Rs. 3 lacs from Sh. Sanjay Mohan Agarwal, shown as a gift. Despite providing documents like gift deed and affidavit, the Assessing Officer raised concerns about the genuineness of the gift, ultimately taxing it as unexplained cash credit.

4. The Ld. Commissioner of Income Tax (A) found the gift not genuine, noting discrepancies in Sh. Sanjay Mohan Agarwal's balance sheet and his involvement in providing bogus entries. The absence of cross-examination due to Sh. Agarwal's demise further supported the decision to uphold the addition under section 68.

5. The Tribunal considered the absence of a relationship between the donor and the assessee, lack of specified occasion for the gift, and absence of reciprocity, reinforcing the doubts regarding the genuineness of the gift.

6. Referring to the case law of Rajiv Tondon vs. ACIT, the Tribunal highlighted the importance of surrounding circumstances in assessing the genuineness of gifts. In this case, the Tribunal found similarities with the precedent, emphasizing the lack of connection between the donor and the assessee as a crucial factor.

7. Based on the analysis of the circumstances and legal precedents, the Tribunal affirmed the order of the Ld. Commissioner of Income Tax (A), dismissing the appeal and upholding the addition of the gift amount and the alleged commission.

This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments, findings, and legal principles applied in reaching the final decision.