NIKHIL VINOD RAJ RATHOD JAIN,MUMBAI vs. WARD 23(2)(6) , MUMBAI, MUMBAI

There is also a delay in filing the present appeal as pointed out by the Registry. After hearing both the parties and perusing the material placed on record, we find that there was reasonable cause for the delay in filing the present appeal and hence, the delay is hereby condoned and appeal is admitted for adjudication.

In the appeal, the limited issue relates to addition of Rs. 26,36,725/- towards cash deposits in the bank account maintained by the assessee.

Briefly stated, facts are that the case of the assessee was reopened basis information that the assessee had deposited cash of Rs. 26,36,725/- in his bank account. Subsequently, notice u/s. 148 of the Act was issued and in response, the assessee filed his return of income. Thereafter, notices u/s. 143(2) and 142(1) of the Act were issued and after issue of show cause dt. 03-12-2019, the AO brought to tax a sum of Rs. 26,36,725/- as un-explained deposits, invoking provisions of section 68 of the Act.

The assessee thereafter carried the matter in appeal before the Ld.CIT(A), who has since sustained the order and the findings of the AO and against the said order, the assessee is in appeal before us.

During the course of hearing, the Ld. AR submitted that cash deposit into the assessee‟s bank account on various dates were out of cash withdrawals by his father from his bank account and which were given as a gift to the assessee. It was submitted that the cash withdrawn by the 3 assessee‟s father from his bank account as well as the cash deposited by the assessee into his bank account are matching in respect of dates and amount and without appreciating the same, the AO has simply treated the explanation given by the assessee as an afterthought. It was submitted that the AO has stated that where the father of the assessee wants to help his son i.e., the assessee, then he could have transferred money to the assessee‟s account by NEFT/RTGS, cheque etc. It was submitted that the AO failed to appreciate that the said mode of transfer was not the popular methods of transferring funds in the financial year 2011-12 and in any case, the same would have led to delay of couple of days in terms of receiving the funds, which was not feasible as the assessee has incurred losses in commodity exchange, which needs to be set off as there would have been chances of imposition of interest and penalty which could cause further financial burden on the assessee. It was submitted that in any case, law does not require that the gift of money has to be given necessarily through the bank transfer and cash gift from the assessee‟s father was therefore neither an afterthought nor prohibited. It was submitted that in the instant case, the assessee has satisfied all the three requirements and has discharged the onus in terms of section 68 of the Act in terms of identity and creditworthiness and genuineness of the transaction. It was submitted that as far as the identity of the doner is concerned, the same has not been disputed by the AO. The relevant details of the assessee‟s father, the name, address and PAN details and his bank details are already placed on record. As far as the creditworthiness of the assessee‟s father is concerned, it was submitted that the same is supported from the bank statement of assessee father‟s bank account and regarding the genuineness of the gift transaction, it was submitted that the same is supported by the gift deed and matching bank entries. It was submitted that the assessee couldn‟t submit copy of the gift deed earlier,

In his submissions, the Ld. DR drawn our reference to the findings of the AO, wherein he has observed that the assessee‟s father had substantial cash dealings of his own in terms of sale and purchase in cash. It was submitted that the assessee had submitted before the AO that his late father had gifted him the cash, withdrawing equivalent amounts from the father‟s bank account on corresponding dates and asserted the cash was needed to cover losses from commodity trading. It was submitted that the AO found his explanation doubtful as the father‟s bank account statements showed substantial cash dealings for his own purposes (sale and purchase) and a genuine gift would ordinarily be given via bank transfer i.e., NEFT/cheque, rather than unaccounted cash. It was submitted that the AO has issued final show cause on 03-12-2019 and the assessee even failed to respond to the said notice, which shows that the assessee has no further evidence for clarification and basis that the AO has proceeded to tax the sum of Rs. 26,36,725/- u/s. 68 of the Act. It was submitted that no substantive evidence was presented to prove the father‟s capacity to give such a large cash gift or the genuineness of the transaction in terms of confirmation from father or documentation of the gift apart from a late-created gift deed which has been submitted for the first time before the Tribunal as evidenced from the certificate of the assessee submitted as part of assessee‟s paperbook which would require necessary verification and examination. It was also submitted that merely naming the donor does not suffice if the surrounding circumstances raise

We have heard the rival contentions and perused the material available on record. The issue under consideration relates to nature and source of cash deposits in the bank account maintained by the assessee. The assessee has tendered his explanation that cash so deposited is out of cash gift received by him from his late father from time to time and the deposits in his bank account matches with the withdrawal from the father‟s bank account and to support his explanation, he has submitted copy of his bank statement, the bank statements of his father‟s bank account and also a copy of gift deed which apparently has been submitted for the first time before this Tribunal. In this regard, we agree with the contention of the ld DR that besides the identity of the donor, the creditworthiness and genuineness of the gift transaction need to tested. The ld DR has also raised his apprehension on submission of copy of gift deed as late-created gift deed for the first time as well as questioned the financial ability of assessee‟s late father to gift Rs. 26 lakhs in cash (given the cash deposits and withdrawals were made towards sale and purchase transactions by assessee‟s late father as part of his own business dealings) and absence of any independence evidence/witness to authenticate that such cash actually changed hands as a gift.

In the result, the appeal of the assessee is allowed for statistical purposes.