2015 (1) TMI 287 - HC - Income Tax

Receipt of cash as gift from unrelated person - foreign gifts - Whether on the facts and in the circumstances of case, the Hon'ble ITAT was justified in law in accepting the genuineness of gifts at ₹ 9,58,759/- especially when there was no occasion to receive huge gifts from unrelated persons - Held that - assessee was not having blood relations with any of the donors. The plea taken by the assessee was that they were his family friends and had come forward to help him to set up a MRI Scan Centre. It was found that there was no occasion to make the gifts either by close relations or strangers. Dr. Jagjit Singh, father of donors Gurpreet Kaur and Manpreet K. Sahdev admitted that he had received cash gift from his daughters. It was found unbelievable that instead of giving any gift or monetary help to some charitable organization, a large number of strangers had chosen the assessee to make alleged cash gift running in lacs of rupees. Though, in the report of Assessing Officer submitted on the basis of additional facts and evidence produced by the assessee, the transactions in dispute were not doubted, but the fact remains that the donee was not having blood relations with the donors. - Alleged foreign gifts in favour of the assessee by persons are not genuine. - Decided in favour of Revenue.

Summary

Issues:
- Appeal against order of the Income Tax Appellate Tribunal relating to foreign gifts
- Justification of accepting the genuineness of gifts totaling Rs. 9,58,759

Analysis:
1. The revenue appealed against the Income Tax Appellate Tribunal's order regarding foreign gifts. The Tribunal remanded the transaction of Rs. 5,00,000 to the Assessing Officer, pending before the CIT(A), and not part of the current appeal.

2. The appeal was admitted to consider the genuineness of gifts totaling Rs. 9,58,759. The main question was whether the Tribunal was justified in accepting these gifts from unrelated persons, as per the second substantial question of law raised.

3. The assessee received foreign remittances from various donors for setting up an MRI Scan unit. The Assessing Officer doubted the genuineness of the gifts due to lack of relation between the donors and the assessee.

4. The CIT(A) found the gifts from certain donors genuine based on reports and evidence. However, the gift of Rs. 5,00,000 from Pritam Singh was not accepted as genuine due to lack of close relationship and awareness about the donor's antecedents.

5. Both the assessee and the revenue appealed before the Tribunal. The Tribunal confirmed the deletion of Rs. 9,58,759 but remanded the Rs. 5,00,000 transaction for reassessment. The revenue appealed against this decision.

6. The High Court focused on the genuineness of the gifts, emphasizing the lack of blood relations between the assessee and the donors. Previous court judgments were cited to support the position that foreign gifts from unrelated persons are not considered genuine unless natural love and affection and financial capacity of the donor are proven.

7. The High Court concluded that the foreign gifts received by the assessee were not genuine, as there was no evidence of natural love and affection or financial capacity of the donors. The appeal was allowed in favor of the revenue, upholding the decision against the assessee.