THE COMMISSIONER OF INCOME TAX vs. SANDEEP GOYAL

Facts

The Revenue is in appeal against the Income Tax Appellate Tribunal's (ITAT) order for assessment year 1998-99. The assessee had declared an income of `304990/-. The Assessing Officer (AO) questioned foreign remittances totaling `14,58,759/- received by the assessee from various donors, including `5,00,000/- from Pritam Singh and `9,58,759/- from Jagdish Vijh, Parmod Tandon, Gurpreet Kaur, and Manpreet K. Sehdev. The assessee claimed these were gifts from family friends to help set up an MRI Scan unit. The AO added the entire amount to the assessee's income, disbelieving the genuineness of the gifts from unrelated persons. The Commissioner of Income Tax (Appeals) deleted `7,71,759/- (from Jagdish Vijh, Gurpreet Kaur, Manpreet K. Sehdev, and Parmod Tandon) but confirmed the addition of `5,00,000/- from Pritam Singh. The ITAT dismissed the Revenue's appeal regarding the deletion of `9,58,759/- and partly allowed the assessee's appeal on the `5,00,000/- issue, remanding it to the AO.

Held

The High Court held that the alleged foreign gifts received by the assessee from persons with whom he had no relationship were not genuine. The Court found that the assessee's plea of donors being family friends was insufficient to establish the genuineness of substantial gifts from unrelated individuals. The Court referred to several of its own previous decisions, including 'The Commissioner of Income Tax, Jalandhar Vs. M/s Udham Singh & Sons, Goraya' (decided on 20.12.2013), which in turn relied on 'Lal Chand Kalra Versus CIT' (1981), 'Jaspal Singh Versus CIT' (2006), 'Sajan Dass and Sons Versus CIT' (2003), and 'Commissioner of Income Tax, Karnal Versus Puneet Singh' (2011). These precedents established that mere identification of donors and banking channel transactions are not enough to prove the genuineness of a gift. The assessee must prove the donor's means and that the gift was for natural love and affection. The Court noted that the pendency of a Special Leave Petition (SLP) against a relied-upon judgment did not invalidate the precedent. Therefore, the question was answered in favor of the Revenue, and the appeal was allowed, leading to the deletion of the `9,58,759/- from the assessee's income being reversed.

Key Issues

1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in law in accepting the genuineness of gifts totaling `9,58,759/- from unrelated persons, especially when there was no occasion for such large gifts? Assessee's Contention: The assessee contended that the donors were family friends who came forward to help him establish an MRI Scan unit. The ITAT accepted the genuineness of these gifts. Revenue's Contention: The Revenue argued that the donors were unrelated to the assessee, and there was no occasion for them to provide such substantial gifts. The AO initially rejected the gifts, and the Revenue appealed against the ITAT's decision to accept their genuineness. The Revenue relied on various High Court decisions concerning the genuineness of foreign gifts from strangers. Note: The issue regarding the `5,00,000/- gift from Pritam Singh was remanded by the ITAT and was not part of this appeal.