RAJINDER SINGH ,SHIMLA vs. INCOME TAX OFFICER, SHIMLA, SHIMLA

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ITA 233/CHANDI/2024Status: DisposedITAT Chandigarh07 April 2025AY 2016-17Bench: SHRI RAJPAL YADAV (Vice President), SHRI KRINWANT SAHAY (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO erred in appreciating the facts and that the money received was a gift from the son. The alleged irregularity of direct transfer from company accounts was explained.

What were the facts?

The assessee received Rs. 2,21,43,304/- from his son, which was treated as a deemed gift and added to his income. The AO initially accepted the returned income but later made the addition after a Section 263 order.

What were the issues?

Whether the amount received from the son was a valid gift not taxable under Section 56, despite being transferred directly from company accounts.

Which sections of the Income-tax Act were involved?

Section 56,Section 143(2),Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY

For Appellant: Shri Ashwani Kumar, CA, Shri V.K.Gulati, Advocate and Ms. Muskan Garg, CA
For Respondent: Shri Ved Parkash Kalia, Sr.DR
Hearing: 25.02.2025Pronounced: 07.04.2025

the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 22.01.2024 passed for assessment year 2016-17.

2.

The solitary grievance of the assessee is that ld. CIT(A) has erred in confirming the addition of Rs.2,21,43,304/- A.Y.2016-17 2 which was added by the AO by treating it as a deemed gift under Section 56 of the Income Tax Act, 1961.

3.

The brief facts of the case are that assessee has filed his return of income on 21.09.2016 declaring total income of Rs.12,20,350/-. The case of the assessee was selected for a limited scrutiny and a notice under Section 143(2) was issued and served upon the assessee. The ld. AO has passed a scrutiny assessment under Section 143(3) on 15.10.2018.

He accepted the returned income of the assessee. The ld. Commissioner thereafter took cognizance under Section 263 of the Income Tax Act. He was of the opinion that the AO has not investigated the issue of foreign remittance amounting to Rs.2,21,43,304/- which was alleged to be received by the assessee from his son as a gift. The ld. CIT passed a 263 order on 12.03.2021 and set aside the assessment order directing the AO to frame denovo assessment.

4.

The ld. AO has passed a fresh assessment order under Section 143(3) read with Section 263 of the Act on 30.03.2022 and made addition of Rs.2,21,43,304/-.

ITA No.233/CHD/2024 A.Y.2016-17 3

5.

The appeal to the CIT(A) did not bring any relief to the assessee.

6.

With the assistance of ld. Representative, we have gone through the record carefully. It emerges out from record that assessee's son Shri Gagandeep Singh is resident of Australia. He was Director in two companies, M/s G.G.

Sales and Marketing Pty Ltd. According to the assessee, it was a gift from his son which is not taxable under Section 56(ii)vii) of the Act, being taken from blood relative. The ld. AO has erred in disbelieving this fact. We find that assessee has filed two Paper Books running into 67 pages and 39 pages. It has also filed audited accounts of G.G. Sales and Marketing Pty Ltd. The company has given loan to shareholders which was transferred to the assessee. The only fault at the end of the assessee is that his son instead of first transferring the amounts to his personal account and thereafter transferring it to India, directly requested his companies where he was a Director to transmit the money from the company’s accounts. The company has shown assessee's son as the debtor in its audited account. A.Y.2016-17 4 Complete details have been submitted before the AO. To our mind, AO has erred in appreciating the facts in right perspective. Once it has been demonstrated that the money has percolated to the assessee from his son, then no addition ought to have been made. The alleged irregularity by receipt of money directly from the company’s accounts has duly been explained by the assessee. Therefore, we allow the appeal of the assessee and delete the additions.

7.

In the result, appeal is allowed.

Order pronounced on 07.04.2025.

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