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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Anubhav Sharma
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-9, New Delhi dated 22.10.2019.
Following grounds have been raised by the assessee:
“1 That both the lower authorities were not justified in making and confirming the assessment order u/s 143(3) since the same was not in accordance with the Principals of Natural Justice and not in accordance with the provisions of the Income Tax Act. 2 That the Ld. AO was not justified in making an addition of Rs. 8,53,89,440/- u/s 68 by treating the gift received from father as unexplained for the sole reason that assessee could not produce him. The notice was issued by the Ld. AO at 21:04 on 29.12.2018 to produce the donor on 30.12.2018 at 11:30AM from Hong Kong which is impossible.
ITA No. 1098/Del/2020 2 Umesh Saraf 3 That under the facts and circumstances of the case both the lower authorities were not justified in making and sustaining the addition of Rs. 8,53,89,440/- u/s 68 by treating the gift received from father as unexplained.”
The solitary issue involved in the appeal pertains to addition of Rs. 8,53,89,440/- received as “Gift” by the assessee from his “father” Sh. Radhe Shyam Saraf on 29-10-2015 of Honk Kong Dollars (HKD) 10,10,000, the converted value in INR being Rs. 8,53,00,000/-. The AO inquired into the identity, genuineness and creditworthiness of the donor who is the father of the assessee. The Assessing Officer directed the assessee to produce his father Sh. R.S. Saraf for his confirmation and recording of his statement. Since, the assessee failed to produce the donor on the designated date, the Assessing Officer held that genuineness of the gift is doubtful and brought the gift amount to tax.
Aggrieved, the assessee filed appeal before the ld. CIT(A) who affirmed the order of the Assessing Officer. The action of the ld. CIT(A) necessitated filing of appeal before us.
Heard the arguments of both the parties and perused the material available on record.
The pertinent facts are as under:
• The assessee filed return of income on 04.08.2016 declaring an income of Rs.1,75,78,000/-. • The assessee received an amount of Rs.8,53,89,440/- (10,100,000 HKD) as gift from his father Sh. R.S. Saraf who is the permanent resident of Hong Kong.
ITA No. 1098/Del/2020 3 Umesh Saraf • The show cause notice has been issued by the Assessing Officer on 23.12.2018 to file the details by 24.12.2018 i.e. the assessee has been given one day time to file the details sought. • The assessee replied on 26.12.2018 giving the copy of the bank statement showing the credit of Rs.8,53,89,440/- (10,100,000 HKD) on 29.10.2015. • The assessee has filed gift declaration from the donor Sh. R.S. Saraf stating that the gift has been given out of natural love and affection to is son Sh. Umesh Saraf, the assessee. • The donor has submitted that the gift amount has been given by order No. 13791302. • The donor has submitted that the amount has been credited into the A/c No. 8002291075 of LGT Bank. • The copy of the bank statement reflecting the fact that the payment has been made from Sh. R.S. Saraf, Ratna Saraf, Flat D 204, Caine Mansion, 80-88 Caine Road, Hong Kong has been produced. • The copy of the identity card of Sh. R.S. Saraf proving the permanent identity of Hong Kong and the copy of the Indian Passport reflecting the same address as in the bank statement has been produced. • The date of birth of Sh. R.S. Saraf is 15.08.1930. It was submitted that the donor Sh. R.S. Saraf was an NRI for more than four decades and is the Chairman and Founder of Saraf Hotel Enterprises operating hotels with 3300 operational rooms and employee strength of 5300 personnel.
ITA No. 1098/Del/2020 4 Umesh Saraf • The Indian income of Sh. R.S. Saraf was Rs.60,43,520/- and also reflects receipts from sale of assets at Column No. 5 under the capital gains of Rs.9,89,89,127/-. The ITR of the assessee for the A.Y. 2017-18 reflects shares and securities of Rs.119,94,29,500/-. • Against these evidences, the Assessing Officer required the assessee to produce the donor on 30.12.2018 at 11:30 AM for recording of the statement. • The said notice has been issued on 29.12.2018 at 9:04 PM which leaving effectively 13 hours of time to produce the father of the assessee from Caine Road, Hong Kong to C.R. Building, I.P. Estate, New Delhi.
Thus, from the above, we find that the identity of the donor who is the father of the assessee has been established through the ITR, Passport and permanent residency card of Hong Kong. The creditworthiness is proved by the fact that the donor is having enough sources to the tune of Rs.119 Cr. as per the ITR, and also received an amount of Rs.9,89,89,127/- on sale of shares as reflected in the ITR and an established hotelier. The donor is about 85 years old and the amount has been gifted to his own son through a gift deed proves the genuineness of the transactions. The addition has been made solely on the basis of failure of the assessee to produce his father (donor) who is 85 years old, staying at Hong Kong before the authorities within a span of 13 hours. Since, all ingredients of identity, genuineness and creditworthiness have been proved beyond doubt, we hereby hold that no addition on account of the gift received by the assessee is called for.
ITA No. 1098/Del/2020 5 Umesh Saraf 8. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 17/10/2022.
Sd/- Sd/- (Anubhav Sharma) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 17/10/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR