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2024 (12) TMI 200 - AT - Income TaxAddition u/s 68 - money received by the assessee as a Gift from her son who is a NRI - HELD THAT - AO primarily relied on information sourced from a Google search and local newspaper reports without conducting any cross-verification or independent inquiry to substantiate the claims. The addition appears to have been made in a baseless manner solely relying on unverified newspaper reports. Notably the evidence provided by the assessee was not rebutted or discredited by the AO. The genuineness of the gift has not been questioned and the donor s financial capacity to provide the gift was sufficiently demonstrated. The donor s bank account showed adequate funds at the time of executing the gift thereby establishing creditworthiness. AO appears to have undertaken verification through online searches and local media reports about the donor but even these steps did not provide conclusive evidence to challenge the donor s credibility. The actions of the assessee for investing the gifted amount in an Indian company and subsequently receiving and returning the funds to the donor are unrelated to the issue of addition u/s 68 of the Act. D.R was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. Decided against revenue.
Issues:
- Appeal against order of National Faceless Appeal Centre under Income-tax Act, 1961 for Assessment Year 2011-12. - Addition of Rs. 3 crore as unexplained cash credit under section 68 of the Act. - Challenge to the genuineness of the gift received by the assessee from her son. - Allegation of colorable device to invest in Indian Security market. - Burden of proof on the assessee regarding the source of money and credit entries under section 68 of the Act. Analysis: 1. The appeal was filed against the order of the National Faceless Appeal Centre under the Income-tax Act for Assessment Year 2011-12. The case involved the addition of Rs. 3 crore as unexplained cash credit under section 68 of the Act. The assessee received the gift from her son, an NRI, and the genuineness of the transaction was challenged by the revenue. The Assessing Officer (AO) raised concerns about the creditworthiness of the donor, the son of the assessee. 2. The revenue's grounds of appeal questioned the allowance of the entire gift amount claimed by the assessee and the deletion of the addition made under section 68. The revenue argued that the donor's funds were generated from a hedge fund banned by SEBI, indicating lack of creditworthiness. The revenue relied on the impugned assessment order, emphasizing the absence of creditworthiness as the basis for the addition. 3. The assessee, on the other hand, contended that she had provided necessary details and evidence to establish the genuineness of the gift. The donor had sufficient funds in his bank account at the time of gifting the amount to the assessee. The assessee's submissions included bank statements and the identity of the donor, shifting the burden of proof to the AO. The assessee's argument was supported by the Ld. CIT(A)'s decision in her favor. 4. The Ld. AR highlighted that the donor's bank account balance before and after the gift transaction demonstrated creditworthiness. The ban on the hedge fund by SEBI was lifted, and the AO's reliance on unverified sources for the addition was baseless. The evidence provided by the assessee was not refuted during the assessment. 5. Upon review, the Tribunal found that the assessee had substantiated the genuineness of the gift and the donor's financial capacity. The AO's reliance on unverified information and lack of independent inquiry to challenge the donor's credibility were noted. The grounds raised by the revenue were dismissed, upholding the Ld. CIT(A)'s decision in favor of the assessee. 6. In conclusion, the appeal of the revenue was dismissed, affirming the deletion of the addition of Rs. 3 crore as unexplained cash credit under section 68 of the Income-tax Act for Assessment Year 2011-12. The Tribunal found no infirmity in the appellate order and pronounced the decision accordingly.
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