Loading judgment…
Facts
The assessee received a gift of Rs. 45 lakhs from her daughter, which was claimed as exempt income. The Assessing Officer (AO) disallowed this exemption, adding the amount to the assessee's total income due to lack of creditworthiness of the daughter.
Held
The Tribunal held that the assessee had sufficiently proved the source of the funds, tracing it back to the assessee's husband, who had adequate funds. The daughter's creditworthiness was established to the extent of the gift amount received from her father and subsequently gifted to the assessee.
Key Issues
Whether the addition made by the AO on account of gift received from daughter, citing lack of creditworthiness, is warranted when the source of the gift is adequately established.
Sections Cited
143(2)
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assesseec challenging the Order of the learned CIT(A), for not allowing appeal filed by the assessee by making addition of Rs.45 lakhs in the hands of the assessee as assessee could not establish the credit worthiness of Ms. Kruthika Pathi Sanjay (assessee’s daughter).
Briefly stated, the facts of the case are that assessee filed return of income on 14.10.2016 declaring total income of Rs.75,91,870/- and an exempt income of Rs.63,44,216/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued to the assessee. Subsequently, other statutory notices were issued to the assessee. In response to the notices the documents were filed by the assessee. It was noted that the assessee has received Rs.45 lakhs Page 2 of 4 as gift from her daughter Ms. Kruthika Pathi Sanjay on two different dates i.e., on 09.10.2015 amounting to Rs.25 lakhs and on 19.10.2025 of Rs.20 lakhs. The said gift was treated as exempt income. During the course of assessment proceedings, it was observed that the assessee had claimed total exempt income of Rs.63,44,216 including the gift received from relatives of Rs.59,75,000/- which consists of Rs.45 lakhs of gift revived from her daughter. On examination of the gift of Rs.45 lakhs, the bank statement of Ms. Kruthika Pathi Sanjay was also examined and it was noted that there is deposit of huge amount of Rs.30 lakhs and Rs.15 lakhs credited on 05.10.2015 and 08.10.2015 which is transfer received and before that there is minimum balance of Rs.40,389.61/- and thereafter the amount has been transferred to her mother (assessee). The AO did not accept the submission made by the assessee that the daughter Ms. Kruthika Pathi Sanjay had received gift from her father. Thereafter, the same amount was given as gift to her mother and the AO did not accept the creditworthiness of daughter and added back the amount to the total income of the assessee. The learned Counsel reiterated the submissions made before the lower authorities and submitted that the assessee has proved the source of source with credible evidence the amount was received as gift by her daughter from her father and the same was given as gift to her mother (assessee). Therefore, the creditworthiness is proved. The assessee is a partner in two partnership firms and her husband is also a partner in the partnership firms and husband of the assessee has also creditworthyness and referred to the return of income filed by the assessee’s husband. Assessee has filed Paper Book including the case laws, containing 114 pages. Therefore, the source of the source is proved by the assessee. Both the authorities have observed that there is no opening balance in the bank statement of daughter Ms. Kruthika Pathi Sanjay and he relied on the following judgments:
CIT vs Sanjeev Jain [2023] 150 taxmann.com 487 (Calcutta) CIT vs Ramesh Suri [2015] 57 taxmann.com 84 (Delhi) ITO vs Smt. Ichudevi L. Choraria [2015] 59 taxmann.com 453 (Mumbai - Trib.)
The learned DR relied on the Order of the lower authorities.
Considering the rival submissions, here the dispute is only regarding gift of Rs.45 lakhs received from assessee’s daughter Ms. Kruthika Pathi Sanjay. We noted from the documents submitted by the assessee and from the bank statements of Ms. Kruthika Pathi Sanjay that there is a transfer of money received on two doccasions amounting to Rs.45 lakhs (Rs.30 lakhs and Rs.15 lakhs) on 05.10.2015 and 08.102.15 and the same amount has been given as gift to the assessee. During the proceedings before the lower authorities, assessee has proved the source of source i.e., husband of the assessee. On going through the financial statements, we noted that Shri. Pathi Sanjay (husband of the assessee) has sufficient fund to give gift to his daughter and the daughter has given the same amount as gift to her mother (assessee). Accordingly, creditworthiness is proved to the extent of the amount received as gift. Accordingly, the addition made by the AO is not warranted.
In the result, appeal filed by the assessee is allowed.