2014 (6) TMI 365 - AT - Income Tax

Addition of gift u/s 68 of the Act - Proof of bank extract not considered Admission of additional evidence -Held that - FAA was of the view that in order to prove the creditworthiness the assessee had made an attempt to prove the source of the drafts purchased, that evidence was not produced before AO and an additional evidence which could not be admitted unless assessee showed some reasonable cause for not submitting the same before the AO, that no situation had been brought before him - assessee contended that daughter of the assessee had gifted a sum of Rs.5.87 lakhs, that all necessary evidences were produced before the AO/FAA, that additional evidences produced by the assessee would through light on the genuineness and creditworthiness of the donor, that FAA had refused to admit additional evidences that were vital and had direct bearing on the outcome of the appeal - additional evidences produced by the assessee would have bearing on the outcome of the appeal - as the AO/FAA did not have benefit of these documents at the time of hearing thus, the matter is required to be remitted back to the FAA for fresh adjudication Decided partly in favour of Assessee.

Summary

Issues:
1. Addition under section 68 of the Income Tax Act.
2. Admission of additional evidence.
3. Burden of proof regarding genuineness of gifts.

Analysis:
1. The appellant challenged the order of the CIT(A) confirming the addition under section 68 of the Income Tax Act. The Assessing Officer (AO) had added Rs. 5,87,442 as unexplained cash credit, considering a gift from the appellant's daughter from abroad. The AO found discrepancies in the documentation provided by the appellant, such as the lack of bank extracts showing the gift transaction, a plain paper gift deed, and no correlation between the donor's funds and the draft purchased. The AO concluded that the appellant failed to prove the genuineness of the transaction and the creditworthiness of the donor.

2. During the appellate proceedings, the appellant submitted additional evidence to establish the legitimacy of the gifts, including foreign inward remittance certificates, self-declaration by the donor, and related documents. However, the First Appellate Authority (FAA) refused to admit the additional evidence, stating that it should have been presented before the AO unless a reasonable cause for delay was shown. The FAA also highlighted missing links in the documentation, such as the absence of the donor's income tax returns and insufficient proof of the donor's creditworthiness.

3. Upon further appeal, the Tribunal considered the importance of the additional evidence presented by the appellant, which was not previously considered by the AO or the FAA. Recognizing the potential impact of these documents on the case, the Tribunal decided to remand the matter back to the AO for a fresh assessment, taking into account the newly submitted evidence. The Tribunal emphasized the need for a balanced decision based on all available evidence and directed the AO to provide a fair hearing to the appellant. Ultimately, the Tribunal partially allowed the appeal in favor of the appellant, acknowledging the significance of the additional evidence in determining the genuineness of the gifts.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by the parties, and the Tribunal's decision to remand the case for a fresh assessment based on the additional evidence submitted by the appellant.