2015 (9) TMI 964 - HC - Income Tax

Receipt of capital account transactions as a gift rejected - treating the same as income being of a revenue nature - Held that - It has been categorically recorded by the Tribunal that the assessee has not been able to show any relationship with the donor and therefore there could not be any love and affection with the non relative. The assessee had not produced any evidence to show close relationship between him and Abinashi Lal Bajaj. In his statement, Mr. Bajaj also stated that he had not made any gift to any person. Only pay order had been given in lieu of cash. It was thus clear that the gift was not genuine. The gift requires a close association between the donor and the donee except where gifts are made for charity and philanthropic purpose. Mere fact that the amount paid had emanated from bank account of donor would not be sufficient to prove genuineness of gift. - Decided against assessee.

Summary

Issues:
1. Rejection of capital account transactions as a gift and treating it as income.
2. Rejection of documentary evidence without cross-examination of the donor.
3. Determination of chargeable income and real income of the assessee.

Issue 1:
The appellant filed an appeal against the order by the Income Tax Appellate Tribunal, challenging the rejection of capital account transactions as a gift and treating it as income. The appellant declared receiving a gift of Rs. 10 lakhs during the relevant year, supported by documentary evidence. However, the Assessing Officer added the amount as undisclosed income, stating lack of evidence of a genuine gift. The Commissioner of Income Tax (Appeals) upheld the addition, emphasizing the appellant's failure to establish the genuineness of the transactions. The Tribunal also dismissed the appeal, noting the absence of a close relationship between the donor and the appellant. The Tribunal highlighted that the gift lacked genuineness as the donor denied making any gift and only provided a pay order in lieu of cash. The Tribunal's findings were considered factual and not illegal or perverse, leading to the dismissal of the appeal.

Issue 2:
The appellant contested the rejection of documentary evidence substantiating the gift without the cross-examination of the donor. The Tribunal clarified that the donor's statement was recorded by the Investigating Wing and presented to the appellant, who then surrendered the amount as income to avoid litigation. The Tribunal emphasized the appellant's admission after being cornered, indicating the lack of a genuine relationship with the donor. The Tribunal concluded that the appellant failed to prove the authenticity of the gift, making the addition based on admission, rendering the appeal non-maintainable.

Issue 3:
Regarding the determination of chargeable income, the Tribunal highlighted the appellant's inability to demonstrate a close relationship with the donor, essential for a genuine gift. Citing relevant legal precedents, the Tribunal affirmed the decisions of the Hon'ble Supreme Court and the Punjab and Haryana High Court, stating that the appellant's case aligned with those rulings. The Tribunal found no error in the CIT(A)'s order and confirmed the decision. As the findings were factual and not legally flawed, the appeal was dismissed.