2021 (9) TMI 588 - AT - Income Tax

Addition u/s 68 r.w.s. 115BBE - assessment framed u/s 143(3) - amount being inheritance from his father by way of will - Burden to prove - necessary ingredients of creditworthiness of the donor and genuineness of the transactions were not proved - HELD THAT - The assessee filed letter of confirmation from Mr. Mustafa Husain, Dubai who is one of the three sons of late Shri M.F. Husain certifying that the amount was given to the assessee by way of inheritance out of his father estate pursuant to his will. The assessee has discharged the onus cast upon it by filing these evidences before the authorities below and the authorities below have not carried out any further investigation to prove that the facts as placed by the assessee before the Revenue Authorities are unproved or false. The case of the assessee finds support from the decision of Indo-Aden Salt Manufacturing Trading Co. (P) Ltd. Vs CIT 1986 (3) TMI 342 - SUPREME COURT in which it has been held that where the assessee has disclosed primary facts then the burden shifts to the Revenue. In the instant case also the assessee has filed all the necessary evidences before the authorities below. However, no further investigation was carried out - once identity of the person giving the money is established and other evidences are placed before the AO pointing that entry is not fictitious then initial burden lying on the assessee can be said to be fully discharged. Under these circumstances, we are not in agreement with the conclusion drawn by the Ld. CIT(A). - Decided in favour of assessee.

Issues involved:
- Challenge to order of Commissioner of Income Tax (Appeals) regarding addition of inherited amount
- Interpretation of sections 68 and 69A of the Income Tax Act
- Burden of proof on the assessee to explain the source of funds
- Evaluation of evidence provided by the assessee to support inheritance claim

Issue 1: Challenge to CIT(A) order on addition of inherited amount
The appeal was against the Commissioner of Income Tax (Appeals) order upholding the addition of INR 4,39,07,574 as made by the Assessing Officer under sections 68 and 115BBE of the Income Tax Act for the assessment year 2013-14. The assessee contended that the amount was inherited from the estate of the father, a renowned painter, Late Shri M.F. Husain. The CIT(A) affirmed the addition under section 69A of the Act, considering the explanation of gift being changed to inheritance unsubstantiated, leading to dismissal of the appeal.

Issue 2: Interpretation of sections 68 and 69A of the Income Tax Act
The Assessing Officer treated the amount as unexplained cash credit due to lack of proof regarding creditworthiness of the donor and genuineness of the transaction. The CIT(A) upheld the addition under section 69A, emphasizing the need for substantiation of inheritance claim. The appellant argued that the CIT(A) erroneously ignored the evidence presented, including the will of Late Shri M.F. Husain, to establish the source of the credited amount. The appellant contended that the provisions of section 69A were not applicable as the money was reflected in the bank account and maintained in the books, thus challenging the application of this section.

Issue 3: Burden of proof on the assessee to explain the source of funds
The appellant, son of Late Shri M.F. Husain, provided documents to support the inheritance claim, including a confirmation letter from Mr. Mustafa Husain certifying the remittance as part of the inheritance share. The appellant argued that the authorities failed to conduct further investigation to refute the evidence presented. The appellant relied on legal precedents to assert that once the identity of the donor is established, and evidence suggests the transaction is genuine, the burden on the assessee is discharged. The appellant highlighted that the funds were received through proper banking channels, and no cash was involved in the transaction.

Issue 4: Evaluation of evidence provided by the assessee to support inheritance claim
The Tribunal found that the appellant had sufficiently proven the source of the credited amount through the inheritance from Late Shri M.F. Husain's estate. The Tribunal referred to legal precedents supporting the appellant's position, emphasizing the importance of establishing the identity of the donor and the genuineness of the transaction. The Tribunal concluded that the appellant had met the burden of proof by providing relevant evidence, and the authorities had failed to discredit the presented facts. Therefore, the Tribunal set aside the CIT(A) order and directed the Assessing Officer to delete the addition.

This detailed analysis of the judgment addresses the issues raised in the appeal and provides a comprehensive understanding of the legal interpretations and evidentiary considerations involved in the case.

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