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Facts
The assessee deposited Rs. 26,36,725 in cash into his bank account. The assessee explained this deposit as cash gifts received from his late father, supported by withdrawal records from his father's account and a gift deed. The Assessing Officer (AO) treated the deposits as unexplained and made an addition under Section 68 of the Act.
Held
The Tribunal noted that while the identity of the father as donor was not disputed, the creditworthiness and genuineness of the gift transaction needed to be tested. Given the peculiar circumstances, especially the father being deceased, the Tribunal decided to admit the gift deed as additional evidence and set aside the matter to the AO for verification.
Key Issues
Whether the cash deposits in the assessee's bank account constituted unexplained income, or if they were genuine gifts from his deceased father, requiring verification of creditworthiness and genuineness of the gift.
Sections Cited
148, 143(2), 142(1), 68
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Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH : MUMBAI
Before: JUSTICE (RETD.) SHRI C.V. BHADANG & SHRI VIKRAM SINGH YADAV
Assessment Year : 2012-13 Nikhil Vinod Raj Rathod Jain, Income Tax Officer, 3rd Floor, Ward-23(2)(6), Jitendra House, vs. Piramal Chamber, 20/28, Marinelines, Mumbai. Mumbai-400002. PAN : ALMPR4342P (Appellant) (Respondent) For Assessee : Shri Gourav Sharma (Virtually present) For Revenue : Shri Rajesh Sakhardande, Sr.DR Date of Hearing : 03-12-2025 Date of Pronouncement : 17-12-2025 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 23-03-2024, pertaining to Assessment Year (AY) 2012-13.
At the outset, it is noted that the Co-ordinate Bench of the Tribunal has passed an order dt. 23-12-2024, dismissing the appeal of the assessee on account of non-prosecution and the said order was subsequently, recalled vide order in MA No. 126/Mumbai/2025 dt. 16-06-2025 and pursuant thereto, the appeal has now come up for hearing before us.
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 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, however, the same has been submitted by way of additional evidence and the same may be admitted in interest of justice. It was submitted that the assessee can produce the original gift deed for necessary verification. It was accordingly submitted that the addition so made by the AO and sustained by the Ld.CIT(A) be directed to be deleted.
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 doubts. It was submitted that the identity of the father as donor was not in serious dispute, but identity alone is not enough, creditworthiness of the donor and genuineness of the gift must also be demonstrated. The assessee provided no proof of his later father‟s financial ability to gift Rs. 26 lakhs in cash, nor any evidence to authenticate that such cash actually changed hands as a gift. Accordingly it was submitted that there is no infirmity in the findings of the AO and that of the Ld.CIT(A) and, therefore, the order so passed by the Ld.CIT(A) should be sustained.
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.
Given the peculiar facts and circumstances of the case where assessee‟s father is no more alive to authenticate the gift transaction, we find that only tangible piece of evidence that remains is the copy of the gift deed as so claimed to be executed by the assessee‟s late father in his favour. Where the contents and execution of the gift deed is subject to necessary verification and examination, we believe that the same will throw the necessary light to authenticate the submissions so made by the assessee. We are therefore, of the considered opinion that it would be relevant in the facts and circumstances of the present case to take the copy of gift deed on record by way of additional evidence and set-aside the matter to the file of the jurisdictional Assessing Officer for necessary verification and examination of the gift deed as well as verify the transactions so reflected in the bank accounts maintained by the assessee and his late father, and decide the matter afresh in accordance with law after providing reasonable opportunity to the assessee. The assessee is also directed to submit the original gift deed and copy of the bank statements before the Assessing officer for necessary verification and also directed to tender necessary assistance to the AO as so directed by him and is at liberty to file necessary submissions/documentation as so advised.