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Facts
The assessee deposited Rs. 40.46 lacs in her bank account. The AO initiated reassessment proceedings under Section 148 as no return was filed. The assessee explained the source as a gift of Rs. 40 lacs from her late father, who had sold agricultural land for Rs. 64.20 lacs and executed a gift deed (Halfia Bian) for the amount. The AO rejected the explanation and sustained the addition, which was upheld by the CIT(A).
Held
The Tribunal held that the assessee had discharged the onus to explain the nature and source of the cash deposit. The father's creditworthiness and source of funds from the sale of agricultural land were duly demonstrated and accepted in his own assessment proceedings under Section 147 r.w. Section 143(3). The non-registration of the gift deed or non-production of the father's bank statement were not considered fatal to the explanation as the gift was in cash.
Key Issues
Whether the cash deposit of Rs. 40 lacs in the assessee's bank account, claimed as a gift from her late father, constitutes income from undisclosed sources, given the father's demonstrated creditworthiness and the existence of a gift deed and sale deed for his agricultural land.
Sections Cited
148, 143(2), 142(1), 143(3), 147, 69, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCHES, “SMC”
Before: SHRI. VIKRAM SINGH YADAV, AM
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt. 24/11/2023 pertaining to Assessment Year 2011-12 wherein the assessee has challenged the sustenance of addition of Rs. 40,00,000/- made by the AO.
Briefly the facts of the case are that basis information that the assessee has deposited a sum of Rs. 40.46 lacs in her bank account maintained with Punjab National Bank, Kharar and the fact that the assessee has not filed her return of income for the year under consideration, reasons were recorded and noticed under section 148 dt. 28/03/2018 was issued by the AO. In response, the assessee filed her return of income declaring income of Rs. 85,948/- and thereafter notice under section 143(2) and 142(1) were issued calling for necessary information and documentation. Regarding source of cash deposit in her bank account, the assessee submitted that she has received gift of Rs. 40.00 lacs from her Late Father, Shri Ajit Singh who has since expired on 25/09/2018. In support of her explanation, she submitted a copy of Halfia Bian dt. 07/09/2010 executed by her Late Father as well as copy of the sale deed executed by her Late Father on 07/09/2010 whereby he has sold agriculture land for a sum of Rs. 64.20 Lacs. The submissions and documentation so filed by the assessee were considered but not found acceptable to the AO and an amount of Rs. 40.00 lac was treated as income from undisclosed sources and brought to tax in the hands of the assessee and the relevant findings of the AO read as under:
“4. Perusal of replies of the assessee nowhere reveals availability of cash of Rs. 40.00 lacs with Sh. Ajit Singh as on 07.09.2010. Moreover, during assessment proceedings, except a copy of ‘Halfia Bian’ dated 07.09.2010, which itself is a self serving document, hence, the same cannot be relied upon. Further, the same has not been got registered with the Competent Authority. Moreover, on the one hand, vide the said ‘Halfia Bian’ dated 07.09.2010, Sh. Ajit Singh has stated that he has gifted a sum of Rs. 40.00 lacs consequent upon sale of his land. However, on the other hand as per sale deed dated 07.09.2010, Sh Ajit Singh did not receive any cash consequent upon such sale. Rather, the sale consideration was received by him by way of six cheques dated 06.09.2010 & 07.09.2010, the clearance of which within a day or two is under doubt. If otherwise, the reply of the assessee is accepted to be true, then the said cheques must have been credited in the bank account of Sh. Ajit Singh, out of which the said amount of gift of Rs. 40.00 lacs must have been withdrawn in cash. However, during assessment proceedings, the assessee has failed to furnish the statement of such bank account of Shri Ajit Singh out of which the said amount of Rs. 40.00 lacs must have been withdrawn in cash so as to enable Shri Ajit Singh to make such a gift of Rs. 40.00 lacs in cash. Moreover, in the absence of documentary evidence coupled with the fact that since Sh. Ajit Singh has expired, therefore, in the absence of his cross examination, the veracity of such an unregistered ‘Halfia Bian’ is highly under doubt.
Therefore, in view of the above discussion, the reply of the assessee is not acceptable. Hence, the cash deposit of Rs. 40.00 lacs in her bank account is treated to be the income of the assessee as her income from undisclosed sources. Therefore, the amount of Rs. 40.00 lacs is treated to the income of the assessee from undisclosed sources.”
Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said addition. Against the said findings and the directions of the Ld. CIT(A), the assessee is in appeal before us.
During the course of hearing, the Ld. AR submitted that regarding source of cash deposit in the bank account so maintained by the assessee, the assessee has submitted all requisite documentation and the explanation and same has been summarily rejected basis suspicion without any credible evidence in the hands of the AO. It was submitted that the assessee has received an amount of Rs. 40.00 Lacs as gift from her Late Father and in support, the assessee has submitted a copy of the gift deed as well as the copy of the sale deed duly executed by her late father who has sold agriculture land for a consideration of Rs. 64.20 lacs. It was submitted that the gift deed was executed on the same day, the day the sale deed was executed and thereafter out of the sale consideration so received by her late father, an amount of Rs. 40.00 lacs has been given to the assessee by way of a gift which has been subsequently deposited by the assessee in her bank account on 13/09/2010- 16/09/2010 in four installments of Rs. 10.00 lacs each.
5. It was further submitted that as required by the AO, the assessee also submitted the original gift deed so executed by her Late Father. It was accordingly submitted that necessary evidence and documentation in possession of the assessee has been duly submitted before the AO and again before the Ld. CIT(A). However the same has not been appreciated and the addition has been sustained by the Ld. CIT(A).
It was further submitted that the assessee has not only submitted the source of cash deposit being the gift so received from her father but also the source of gifts in the hand of her late father which is in the form of consideration received by him from sale of agriculture land. It was accordingly submitted that merely the fact that the assessee could not furnish the copy of the bank statement of her late father, which the assessee couldn’t produce inspite of her best efforts, the source of the gift cannot be doubted which is otherwise supported in terms of the gift deed as well as registered sale deed.
In support, reliance was placed on the Coordinate Jaipur Benches decision in case of Smt. Shweta Goyal Vs. ITO in dt. 08/04/2021, Coordinate Delhi Benches in case of Narender Kumar Vs. ITO in dt. 19/10/2022 and Coordinate Kolkata Benches in case of Smt. Tapasi Singh Vs. ITO in ITA No. 491/Kol/2020 dt. 30/04/2021.
It was further submitted that the assessment in case of the assessee’s late father has since been completed by ITO Ward 3(5) vide his order passed under section 143(3) r.w.s 147 dt. 05/10/2018. It was submitted that the case of the assessee’s father was reopened basis information that he had sold immovable property amounting to Rs. 64.20 lacs and thereafter after considering the submission of the assessee, the return of income has been accepted. It was accordingly submitted that the credit worthiness and the source of the gift so given by the father is therefore duly demonstrated by the sale deed as well as the fact that the transaction has been accepted in the assessment proceedings of her late father. It was accordingly submitted that the assessee has discharged necessary onus in terms of explaining the nature and the source of the cash deposited in her bank account and the addition so made be directed to be deleted.
Per contra, the Ld. DR has submitted that the assessee has failed to discharge the necessary onus cast on her in terms of explaining the nature and source of cash deposit. It was submitted that the assessee has merely submitted an unregistered gift deed and the same couldn’t be verified as the father of the assessee has since expired and further, the bank account statement of the asssessee’s father was also not produced. She has accordingly relied on the findings of the lower authorities.
Heard the rival contentions and purused the material available on record. A similar matter came up for consideration recently before the Chandigarh Benches, where the undersigned was one of the party, in case of Rashmi vs ITO (ITA NO. 406/Chd/2024) and it would be relevant to refer to the discussions and findings therein which read as under:
“10. We have heard the rival contentions and purused the material available on record. In the instant case, the reasons were recorded on the basis of information that Rs 30 lacs in cash has been found deposited in the bank account of the assessee and income has escaped assessment in the hands of the assessee. Thereafter, during the assessment proceedings, basis bank statement obtained from the bank, it was found that there was another cash deposit of Rs 9 lacs and thus, total cash found deposited in the bank account of the assessee was to the tune of Rs 39 lacs and the assessee explained that she had received the said amount by way of gift from her husband. The AO accepted the explanation of the assessee that the amount has been received by her by way of gift from her husband, however, the quantum of gift so received was restricted to Rs. 10,73,125/- and after allowing credit for such amount, the AO brought to tax remaining sum of Rs. 28,26,875/- as unexplained income under Section 69 of the Act in the hands of the assessee.
If we look at the provisions of Section 69, it talks about the assessee having made investments which are not recorded in the books of account, if any maintained by her for any source of income and the assessee offers no explanation about the nature and source of such investment. In the instant case, what has been found were cash deposits in the bank account of the assessee and as such, no investment has been found by the AO, therefore, the question of invocation of provisions of section 69 doesn’t arise in the instant case.
12. Even if we were to ignore the fact that the AO has wrongly invoked section 69 and section 69A should have been invoked, section 69A interalia provides that where in any financial year, the assessee is found to be the owner of any money and such money is not recorded in the books of account, if any, maintained by her for any source of income and the assessee offers no explanation about the nature and source of such money, in that case only, the money so found may be deemed to be income of the assessee for such financial year. Therefore, there has to be a finding by the AO that the assessee is the owner of cash so found deposited in her bank account and there has to be necessary examination/verification which is required to be carried out. No doubt, the money has been found deposited in her bank account and the initial onus is on the assessee to explain the nature and source of such deposit. But once she has explained that the amount has been received by her by way of gift from her husband from sale proceeds of agricultural land and the amount has been deposited by her husband on the same date when the sale deed was executed and the said explanation is corroborated by way of gift deed executed by her husband, the personal appearance of her husband before the AO, evidence in support of sale of agriculture land by her husband and source of such gifts by way of agreement to sell and registered sale deed, we find that the initial onus cast on the assessee has been duly discharged and the real owner of the money is clearly not the assessee but the husband of the assessee and on this count as well, the addition cannot be made in the hands of the assessee.
Notwithstanding the invocation of specific deeming provisions, the factum of gift of money from the donor (assessee husband) to the donee (assessee) has not been disputed by the AO which is duly supported by both written and oral evidence in form of gift deed and confirmation by the donor who physically appeared before the AO and confirmed the making of gift of money to donee. The gift of money has flown in the bank account of the assessee by way of deposit by husband of the assessee in two tranches – Rs 30 lacs on 03/05/2011 and Rs 9 lacs on 09/05/2011 and in such circumstances, we are unable to sustain the findings of the AO in effectively breaking up these two tranches of flow of money and restricting to Rs. 10,73,125/- more so where the creditworthiness and source of funds in the hands of the donor has been duly demonstrated, being the sale proceeds of agriculture land, a factum which has been separately verified and accepted in the assessment proceedings undertaken in hands of the donor.
In light of the aforesaid discussions and in the entirety of facts and circumstances of the case, the addition so made by the AO is hereby deleted and the AO is directed to grant necessary relief to the assessee.”
11. In the instant case as well, there were cash deposits in the bank account of the assessee to the tune of Rs 40 lacs and the assessee explained that she had received the said amount by way of gift from her late father, Shri Ajit Singh and in support of her explanation, she had submitted a copy of Halfia Bian/gift deed executed by her Late Father as well as copy of the sale deed executed by her Late Father whereby he has sold his agriculture land for a sum of Rs. 64.20 Lacs. It is noted that the sale deed for the agriculture land was executed by Shri Ajit Singh on 07/09/2010 and on the same day, he had executed the Halfia Bian/gift deed in presence of a witness and the notary public wherein he has stated that out of sale proceeds of the agriculture land, he is gifting a sum of Rs 40 lacs to his daughter, the assessee which was subsequently deposited in the bank account of the assessee. In my view, a registered gift deed will no doubt have an edge over an unregistered gift deed, at the same time, mere non- registration of the said gift deed is not sufficient to dislodge the existence and contents of such gift deed, more so where the original gift deed has been presented for verification before the AO and the AO has failed to carry out any further verification/examination and without bringing any adverse material on record. As far as non-production of the bank account statement of the assessee’s late father is concerned, the assessee has tried to obtain the bank statement of her late father, but the same couldn’t be obtained inspite of her best efforts, however, in my view, where the mode of gift is clearly in cash, the bank statement even if produced would only corroborate the gift deed and cannot dislodge the gift deed and the contents and source of such gift which is otherwise clearly established. The assessee has thus discharged the necessary onus in terms of explaining the nature and source of receipt in her bank account by way of gift of money from her late father and even the creditworthiness and source of funds in the hands of the her late father has been duly demonstrated, being the sale proceeds of agriculture land, a factum which has been separately verified and accepted in the assessment proceedings undertaken u/s 147 r/w 143(3) of the Act. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case, in my opinion, the AO was not justified in treating the gift received by the assessee from her late father as her income from undisclosed sources. The addition so made by the AO and sustained by the ld CIT(A) is hereby deleted and the AO is directed to grant necessary relief to the assessee.
In the result, the appeal of the assessee is allowed.
(Order pronounced in the open Court on 05.02.2025.)