SUNIL RAMAKRISHNA ,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-5(2)(1), BANGALORE

Per Shri Jason P Boaz, A.M. : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-5, Bangalore dt.28.06.2018 for the Assessment Year 2015-16.

2.2 Aggrieved by the order of assessment dt.21.11.2017 for Assessment Year 2015-16, the assessee preferred an appeal before the CIT (Appeals) – 5, Bangalore. The learned CIT (Appeals) dismissed the assessee's appeal vide the impugned order dt.28.06.2018.

3.1 The assessee, being aggrieved by the order of the CIT (Appeals) – 5, Bangalore dt.28.6.2018 for Assessment Year 2015-16, has preferred this appeal wherein he has raised the following grounds :-

“1. The order of the CIT (Appeals) is erroneous on the facts and in the law. On the facts and in the circumstances of the case he ought not to have dismissed the appeal. 2. The Assessing Officer and CIT (Appeals) erred on facts and in law in making addition of Rs.10,50,000 of gift from aged father, and there is no provision under the law to tax the same.”

3.2.1 The learned Authorised Representative for the assessee was heard in the matter and also put forth written submissions which are extracted hereunder :-

3.2.2 In support of the submissions put forth the assessee cited / placed reliance on the following :-

(i) SOP dt.10.01.2018 issued by CBDT.

(ii) Cited Sec.56(2)(vii)(c) of the Act to submit that gift from father is not income.

(iii) CIT Vs. P. Mohanakala (2007) 161 Taxman 169 (SC).

(iv) LIC of India Vs. CIT (1996) 219 ITR 410 (SC).

In view of the above, it was prayed that the addition of Rs.10.5 lakhs made by Assessing Officer on account of unexplained gift be deleted and assessee's appeal be allowed.

3.3.1 Per contra, the learned Departmental Representative for Revenue supported the orders of the authorities below in holding that the genuineness of gift is not established as the capacity of the assessee's father to give such a gift and genuineness of the said transaction are not proved. According to the learned Departmental Representative, the Assessing Officer, on a perusal of the details filed by the assessee, noticed that the assessee had shown an amount of Rs.10.50 lakhs as cash gift received from his father. On being queried in this regard, the assessee furnished a gift deed, the genuineness of which was not accepted by the Assessing Officer, as the assessee's father was never an income tax assessee nor could any proof be brought on record by the assessee to establish that his father had the credit worthiness / capacity to gift cash of an amount of Rs.10.50 lakhs or the genuineness of the transaction. It was submitted that on appeal before the learned CIT (Appeals) also, the assessee could not place any material evidence to establish the genuineness of the aforesaid cash gift of Rs.10.50 lakhs and therefore the learned CIT (Appeals) had correctly upheld the addition made in this regard by the Assessing Officer.

3.3.2 According to the learned Departmental Representative, the written submissions put forth by the learned Authorised Representative in no way establishes the genuineness of the cash gift of Rs.10.50 lakhs as the assessee, even at this stage has failed to establish that his father had the credit worthiness and capacity to advance the aforesaid gift. The undisputed fact that the assessee's father neither maintained a regular bank account nor filed returns of income only go to confirm the fact that he neither had the capacity nor credit worthiness to advance the aforesaid loan. The learned Departmental Representative contends that the findings rendered by the Hon'ble Apex Court in the case of P Mohanakala (supra) actually supports the case of Revenue and since the assessee was not able to offer any proper, plausible or acceptable explanation in respect of the cash credit of Rs.10.50 lakhs in his books of account, the authorities below have correctly brought to tax the said unexplained cash gift in the assessee's hands under Section 68 of the Act.

It is submitted that the decision in the case of LIC Vs. CIT (supra), cited by the assessee, is not applicable to the case on hand as it was rendered in a different context. It is further submitted that the provisions of Sec.

56(2)(vii)(c) are not applicable to the facts of the case on hand and the SOP issued by CBDT though issued subsequent to the order of assessment, the requirements therein has been carried out by the authorities below. The learned Departmental Representative prays that in view of the above, the orders of the authorities below be upheld.

3.4.1 I have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. The undisputed facts that emerge from the record in the case on hand are that in the course of assessment proceedings, the Assessing Officer noticed that he had shown an amount of Rs.10.50 lakhs as a gift received in cash from his father. The assessee, on being queried in this regard, furnished a gift deed dt.25.9.2017. On examination thereof and other connected material, the Assessing Officer held that the assessee had failed to establish the genuineness of the said gift for the reasons that the assessee's father had never filed Income Tax Returns and also since the credit worthiness and capacity of the father to gift cash of Rs.10.50 lakhs to the assessee was not proved; brought the same to tax in the assessee's hands as unexplained / unproved gift.

On appeal, the learned CIT (Appeals) upheld the addition made by the Assessing Officer observing that the assessee was not able to place on record any material evidence to establish the genuineness of the aforesaid cash gift of Rs.10.50 lakhs.

3.4.2 In appellate proceedings before me also, the assessee was not able to bring on record any material evidence to prove, either the genuineness of the transaction of the aforesaid gift transaction by establishing the credit worthiness and capacity of his father to make the gift from any proved source of income OR to controvert the findings of the authorities below. I have also carefully perused the submissions put forth by the learned Authorised Representative of the assessee (supra) and find that apart from making claims therein, even at this stage, the assessee has failed to establish the credit worthiness and capacity of his father to advance such a huge cash gift from any known or established sources of income. This factual view draws support from the fact that the assessee's father was never an income tax assessee and did not apparently have or operate any regular bank account. I have, with respect perused the decision of the Hon'ble Apex Court in the case of LIC Vs. CIT (supra) cited by the learned Authorised Representative, and concur with the view of the Revenue that this decision would not come to the rescue of the assessee in the case on hand as it was rendered in a different context.

3.4.3 In fresh arguments put forth before me, the learned Authorised Representative contends that the aforesaid gift from father to the assessee cannot be taxed in the hands of the assessee in terms of Sec.

56(2)(viic) of the Act. On a careful perusal of Sec. 56(2)(viic) and the proviso thereto, and the factual matrix of the case on hand as discussed above, I am of the view that the provisions thereof would not apply as the assessee has failed to prove with material evidence that he had actually received a cash gift of Rs.10.50 lakhs from his father (i.e. relative); apart from the claim made to that effect. While it is true a gift deed dt.25.9.2017 was filed in this regard before the Assessing Officer, the same is only a self serving documents bereft of corroboration by any material evidence to establish both the credit worthiness and capacity of the father to give a cash gift of Rs.10.50 lakhs and in the absence of any corroborative material evidence in this regard, I am of the considered view and hold that the impugned orders of the authorities below on this issue are upheld and the assessee's claims, being bereft of any merit, are to be rejected. Consequently the grounds raised by the assessee on this issue are dismissed.

Order pronounced in the open court on the 12th day of Oct., 2018.