2014 (8) TMI 692 - HC - Income Tax

Unexplained gifts - Donee denied to make gifts - burden to prove - ITAT deleted the addition only on the ground that no opportunity was provided for cross-examination - gifts given to brother's children - Held that - Shri Surendra Bihari Agrawal was having own minor children, when it is so, then why he will give the gifts to the children of his brother - no cheque was received from the firm and he has not given any gifts to anybody - Regarding the cross-examination, the assessee has not availed the opportunity as stated by the AO - On the basis of the statement made by the donor, the burden has shifted upon the assessee as decided in Sumati Daya Vs. CIT 1980 (9) TMI 3 - SUPREME COURT - the gifts are not genuine as stated by the AO as well as by the FAA - The Tribunal has deleted the addition merely only on the ground that no opportunity was provided for cross-examination - fact remains that assessee never availed it - transaction is not genuine but colorable thus, the Tribunal has wrongly deleted the addition, it is not desirable in the circumstances of the case - The money is routed indirectly from the firm to the assessee's account under the garb of the gifts Decided in favour of Revenue.

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act, 1961 against the judgment of the Income Tax Appellate Tribunal.
2. Addition of unexplained gifts of Rs. 42,00,000.
3. Opportunity for cross-examination not availed by the assessee.
4. Dispute between brothers affecting the genuineness of the gifts.
5. Burden of proof on the assessee in light of donor's statement.
6. Tribunal's deletion of the addition based on lack of cross-examination opportunity.

Analysis:
1. The appeal was filed under Section 260-A of the Income Tax Act, 1961 against the Income Tax Appellate Tribunal's judgment for the assessment year 2001-02.
2. The case involved the addition of Rs. 42,00,000 as unexplained gifts received by the assessee from his minor children, which the Assessing Officer deemed as bogus but was accepted by the Tribunal as genuine.
3. The department argued that the donor, the brother of the assessee, denied giving any gifts and the assessee did not avail the opportunity to cross-examine him, raising doubts about the genuineness of the gifts.
4. The genuineness of the gifts was further questioned due to a dispute between the brothers and the donor's claim against the assessee for outstanding debt, casting doubt on the motive behind the alleged gifts.
5. The burden of proof shifted to the assessee based on the donor's statement, and the Tribunal's reliance on the lack of cross-examination opportunity was deemed insufficient as the assessee never utilized the chance provided.
6. Ultimately, the High Court set aside the Tribunal's order, reinstating the addition of Rs. 42,00,000 as the gifts were considered not genuine, being routed indirectly from the firm to the assessee's account under the guise of gifts.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the court's reasoning leading to the final decision in the case.