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Facts
The assessee appealed against additions made by the Assessing Officer (AO) and confirmed by the CIT(A) regarding unexplained gift receipts and unexplained deposits in bank accounts. The case involved substantial amounts claimed as gifts from a brother-in-law, which the AO and CIT(A) treated as undisclosed income.
Held
The Tribunal held that the assessee failed to establish the identity, creditworthiness, and genuineness of the gift transactions, as well as the source of unexplained deposits. Therefore, the additions made by the AO and confirmed by the CIT(A) were sustained.
Key Issues
Whether the amounts received as gifts from a non-resident brother-in-law were adequately explained and supported by evidence. Whether deposits in bank accounts totaling Rs. 5,00,000/- were explained and constituted unexplained income.
Sections Cited
143(2), 142(1), 139(1), 153A, 127, 132, 68, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
�नधा�रती क� ओर से/Assessee by : None राज�व क� ओर से/ Revenue by : Shri Rohit Sharma, CIT DR (Virtual) सुनवाई क� तार�ख/Date of Hearing : 06.02.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 25.02.2025 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 5.7.2019 passed by the ld. Commissioner of Income Tax (Appeals)-2, Jalandhar [hereinafter referred to as ‘CIT(A)’].
2. The Assessee has raised following grounds of appeal:
1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
2 1. That on the facts and in the circumstances of the case and in law, Ld. AO and Ld. CIT (Appeals) erred in making incorrect addition of Rs. 52,218/-being gifts received from Brother-in-Law residing out of India being received through proper banking channel.
2. Non-applicability of Section 68 of Income Tax Act, 1961 as assessee has provided Bank Statements and Foreign Inward Remittance Certificates for all the gifts received.
3. The contention of Ld. AO and Ld. CIT (Appeals) is wrong that the assessee has routed unaccounted funds generated by the flagship company M/s ARK Imports Private Limited and routed these funds from different bank accounts in the name of Anubhav Aggarwal and other group companies i.e. M/s Genex Polyfab Limited, M/s Genex Fincap Private Limited.
4. That on the facts and in the circumstances of the case and in law, Ld. A.O. and ld. CIT(A) erred in making incorrect addition of Rs. 5,00,000/- being amount returned by M/s Oslo Knitwear which was earlier given by Assessee on 26.04.20211.
It emerges out from the record that and other cases of this group are on Board since 29th March 2017. From the Note Sheet entry, it is seen that Shri Tej Mohan Singh, Shri Jasleen Khera and others have appeared from time to time and thereafter all the Counsels have withdrawn their power of attorney and pleaded no instructions. On 26.9.2024, Shri Tej Mohan Singh, Advocate and Shri Sanjay Sood, CA also withdrew their power 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
3 of attorney. It is pertinent to note that as and when a counsel withdrew his power of attorney, it is a duty cast upon him to serve a notice through registered post upon the Assessee informing that he is withdrawing his power of attorney so that Assessee can make alternative arrangement thereafter. The Tribunal is not required to serve a fresh notice. But in the interest of justice and for abundant caution, Tribunal issued fresh notice for hearing to the Assessee for 20.11.2024. But none appeared on behalf of the Assessee. It is 50th occasion that this group has been listed for hearing. The notice was issued through the A.O. and the A.O. has informed that notice has been sent on the last e.mail available with the Department. It is further observed that DCIT, Central Circle, Ludhiana vide his letter dated 7.1.2025 informed the Tribunal that officials from the Range visited the premises of the Assessee which was found locked.
During proceedings before us, the ld. DR informed the Bench that he has been intimated by the Assessing Officer that the Assessee is absconding. We have been apprised that there are large number of cases pending against the head of the group with different investigating agencies. Looking to all these cumulative setting of circumstances would suggest that 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
4 the Assessee is not very much interested in persecuting this appeal. Even otherwise, it is trite (‘S. Velu Palandar Vs. DCIT’, 83 ITR 686 (Mad.)] and incumbent on the authority to decide an appeal on merit in accordance with the principles of natural justice.
Now coming on merits of the case, the brief facts, as enumerated in the assessment order are as under:
The assessee belongs to Genex Group of cases, Ludhiana where a search and seizure operation u/s 132 of the Income Tax Act was conducted on 23.05.2013. During the search operation, various documents were found and seized from the various business and residential premises of the group. Accordingly, the case was centralized u/s 127 of Income Tax Act, 1961 vide order F.No.CIT- I/LDH/TECH/127/2013-14/606 dated 11.06.2013 and a notice u/s 153 A of the IT. Act requiring the assessee to file his return of income was issued on 24.03.2014. 1.2 In response thereto, a return declaring income of Rs. 6,45,850/- was filed by the assessee on 20.04.2015 as was originally filed u/s 139(1) on 11.01.2013. The case was taken up for scrutiny and statutory notices u/s 143(2) & 142(1) along with questionnaire was issued on 13.05.2015 and the same was duly served on the assessee.
1286 -Chd-2019 Anubhav Aggarwal, Ludhiana 5 Subsequently, notices u/s 143(2) & 142(1) issued and complied with. In response to the notices, Sh. Gaurav Gupta, C.A. and Sh. Gaurav Sharma, C.A., authorized representatives of the assessee attended the proceedings with whom the case was also discussed.
The assessee is an individual and having income from salary being employed with M/s Genex Industries Ltd. & M/s Genex Polyfab Ltd. In the year under consideration, the assessee has declared income of Rs. 6,45,850/- from salary and interest income. 2.1 On examination of assessee's bank Account no. 7589 with United Bank of India, Clock Tower, Ludhiana, Account no. 60041269875 with Bank of Maharashtra, Account no. 0-010721-164 with City Bank, Account no. 129-108361-006 with HSBC Bank Ltd. and Account no. 0020N49778001 with Indusind Bank, it is noticed that these bank accounts are credited with an amount of Rs. 52,218/- on different dates as per detail given in Annexure-A enclosed. 2.2 In the course of assessment proceedings, the assessee was asked to explain the source of deposit of Rs. 52,218/- on different dates throughout the year under consideration in the said bank account. The assessee as per his letter dated 07.03.2014 explained that these are gifts received during the 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
6 year under consideration from his brother-in-law Mr. Raman Umarova and in support its contention enclosed the copies of the remittance advices.
2.3 `In this connection it would not be placed to mention here that the assessee, during the period 01.04.2007 to 31.03.2014, received an amount of 1,22,22,39,722/- in the guise of gifts, as per detail given below :-
Period Particulars Amount (In Rs.) 2007-08 Mr. Roman Umaraov 57,43,057/- 2008-09 Mr. Roman Umaraov 66,36,11,825/- 2009-10 Mr. Roman Umaraov 1,62,65,892/- 2010-11 Mr. Roman Umafaov 20,27,66,730/- 2011-12 Mr. Roman Umaraov 52,218/- 2012-13 Ms Swetlana Umaraov 15,17,00,000/- 2013-14 Ms Swetlana Umaraov 78,21,00,000/- Total 1,22,22,39,722/- 2.4 Since the amount received as gifts during the different periods was substantial say more than 122 Crores and are being received continuously op different dates nearly throughout the year(s) and that to without any occasion, the genuineness of receipt of such gifts was required to be examined. Therefore, in order to verify the genuineness of the receipt of gifts as claimed, the assessee was asked to establish the identity, creditworthiness and genuineness of the transactions justifying the receipt of above amounts as gifts as; claimed. He was also specifically asked to establish the 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
7 relationship with the donee supported with documentary evidence. However, the assessee instead of establishing the genuineness of the receipt of above amounts as a gift and the relationship with the donee, filed his objections as per his letter dated 01.03.2016. 2.5 The explanation of the assessee has been considered and found no merit in it. It is a settled law mat no person can make a gift even to his near relative without consideration. It is a matter of record that the above gifts has been received not oil a particular occasion but in a continuous process. Moreover* it is no evident as to whether the gifts as claimed was ever made and the doner had the resource^ to make such gifts of a substantial amount. Since the assessee has failed to establish the identity, creditworthiness and genuineness of the gifts claimed to have been received from his brother-in- law during the year under consideration and as such it b held that the amount of deposits introduced by the assessee in his bank account in the guise of receipt of gifts represents his undisclosed income earned from undisclosed sources which is liable for taxation. Therefore, the amount of Rs. 52,218/- received hi the guise of gifts is held to be assessee's own income earned from undisclosed sources and is therefore added to the income returned. Accordingly, an addition of Rs. 52,218/- is made to the income returned.
1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
8 2.6 On examination of assessee's bank account no. 7589 with United Bank of India, Clock Tower, Ludhiana, it is noticed that this bank account is credited with the following amounts:
Date Amount (In Rs.) 23.03.2012 1,00,000/- 23.03.2012 4,00,000/- Total 5,00,000/- 2.7 In the course of assessment proceedings, the assessee was asked to explain the source of deposit of above amounts in the said bank account. However, no explanation was furnished despite allowing of repeated opportunities. Thus, the source of deposit of Rs. 5,00,000/- in the bank account remained unexplained and is therefore, added to the income returned. Accordingly, an addition of Rs. 5,00,000/- is made to the income returned.
3. With the above observations, the total income of the Assessee is computed at Rs. 11,98,068/- (6,45,850/- + 52,218/- + 5,00,000/-) 6. We have gone through the assessment order passed by the Assessing Officer and the appellate order passed by the ld. CIT(A). We find that the Assessing Officer has passed a speaking order based on various incriminating documents found and seized from various business and residential premise of the group. Against the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A) on 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
9 different grounds. The ld. CIT(A), in our view, has passed a speaking order on merit on each and every issue / ground raised by the Assessee in the appeal. The Assessee dissatisfied with the order of the ld. CIT(A) has filed this appeal before the Tribunal but despite giving fifty opportunities to the Assessee, the Assessee has not complied with and further that all the Counsels and C.A. who had filed their Power of Attorney have also withdrawn in the absence of any instruction from the Assessee.
The ld. DR relied on the order of the CIT(A) and prayed that the appeal of the Assessee deserves to be dismissed.
In our view, both the Assessing Officer and the ld. CIT(A) have passed the assessment order and the appellate order keeping in view the aspect of natural justice. They have considered all the necessary documents, statements and submissions filed by the Assessee. The relevant part of the finding of the ld. CIT(A) is reproduced as under:-
“5.2 I have gone through the assessment order passed by the AO, submissions filed by the appellant and find that an addition of Rs.5,00,000 has been made by the AO on account of unexplained deposits. During the course of assessment proceedings, it was found by the AO that there are certain credits in the bank account 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
10 No. 7589 of the appellant with United Bank of India, Ludhiana which could not be explained. In the absence of any explanation being given by the appellant, the total amount of deposits/credits amounting to Rs. 5,00,000/- was held to be unexplained income for the year under consideration. 5.3 In the course of present proceedings, the appellant has merely stated that these credits in the bank account are on account of receipts from M/s Oslo Knitwear. The appellant has filed a copy of their bank accounts to support his contentions. 5.4 Having considered the material available on record, I find that appellant has not been able to produce any confirmation from M/s Oslo Knitwear regarding the amount received from them. The appellant has also failed to furnish any detail of the purpose for which these amounts were received and proof of identity, sources of income in their hands etc. Thus, I hold that appellant has not been able to furnish any evidence to prove the identity, creditworthiness of these creditors and genuineness of these transactions. Hence, none of the requirements as provided u/s 68 of the IT Act has been satisfied by the appellant. Accordingly, I confirm the addition of Rs. 5,00,000/- made by the AO on this account.”
Since the order passed by the ld. CIT(A) is a speaking order on each issue, therefore, in our considered opinion, there is no need to interfere in the findings given by the ld. CIT(A). Thus, findings given by the ld. CIT(A) on different issues in his Appeal Order are hereby sustained. Accordingly, 1286 -Chd-2019 Anubhav Aggarwal, Ludhiana
11 appeal filed by the Assessee on different grounds are hereby dismissed 10 In the result, appeal of the assessee is dismissed.
Order pronounced on 25.02.2025.