B.K. LOKESH,BANGALORE vs. ACIT, BANGALORE

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ITA 1265/BANG/2012Status: DisposedITAT Bangalore12 August 2016AY 2003-045 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that for gifts, human probability, relationship, occasion, and donor creditworthiness are crucial. For property sale advances, the assessee failed to establish that these were accounted for as sale proceeds. Therefore, the additions were upheld.

What were the facts?

The assessee appealed additions made by the AO for gifts received in AY 2003-04 and 2004-05, and for property sale advances in AY 2007-08. The assessee provided gift deeds and affidavits but lacked evidence of relationship, occasion, and donor creditworthiness.

What were the issues?

Whether the assessee established the genuineness and creditworthiness of gift donors and whether property sale advances were substantiated as sale proceeds.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCH ‘A’, BANGALORE

Before: SHRI A.K.GARODIA, ACCOUNANT MEMBER (SMC)

For Appellant: Shri Ashok Kulkarni, Advocate
For Respondent: Shri Tshering Ongda, JCIT

O R D E R PER SHRI A. K. GARODIA, A.M.:

All these three appeals are filed by the assessee. Since common issues are involved in all these appeals, all these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.

2.

In A.Y. 2003 – 04, the grievance of the assessee is about addition made by the A.O. of Rs. 15,00,000/- on account of gift said to have been received by the assessee. In A.Y. 2004 – 05, the grievance of the assessee is about addition made by the A.O. of Rs. 9,25,000/- on account of gift said to have been received by the assessee. In A.Y. 2007 – 08, the grievance of the assessee is about addition made by the A.O. of Rs. 9,00,000/- on account of property sale advance said to have been received by the assessee in course of real estate business of the assessee.

3.

It was submitted by the assessee that Gift deed of one donor in A. Y. 2003 – 04 and affidavits of two donors in that year are available on pages 3 to 4, 5 and 7 respectively of the paper book for that year and similarly for A. Y. 2004 – 05, affidavits of three donors in that year are available on pages 3, 4 and 6 respectively of the paper book for that year.

At this juncture, a query was raised by the bench as to whether, relationship between the donors and the assessee donnee is available on record and as to whether the date and occasion of gifts and creditworthiness of the donors is available on record, it was submitted by the learned AR of the assessee that there is no relationship between these donors and the assessee donnee and there is no occasion of gifts also and for creditworthiness of the donor, the assessee cannot ask the person to provide evidence of his credit worthiness.

4.

Learned DR of the revenue supported the orders of the authorities below.

5.

I have considered rival submissions. This is by now, a settled position of law that in respect of acceptability of gift, human probability is very important and in the absence of any relationship and occasion of gift, the human probability of receiving such huge amount of gift is generally very bleak. Moreover, this is also settled position of law that for the section 68, the assessee has to establish credit worthiness of the creditor or donor apart from his identity and genuineness of the transaction. In the absence of any relationship and occasion of gift, genuineness of the transaction is not beyond doubt and nothing is produced about credit worthiness of the donors. Regarding this contention that how the assessee donnee can ask the donor to prove his credit worthiness, I feel that once the A.O. has questioned the acceptability of gift on any pretext, the assessee can very much ask the donor, if he really exists to help the assessee and any person, who has given such huge gift to the assessee, will readily come forward to provide necessary evidence about his credit worthiness. Therefore, I feel that no interference is called for in the orders of the learned CIT (A) for A.Y. 2003 – 04 & 2004 – 05 because the assessee has failed to establish genuineness of the gift transaction and credit worthiness of the said donors.

6.

Similarly, for A.Y. 2007 – 08 also, the assessee has not established the credit worthiness of the persons from whom the assessee is claiming receipt of advances. Regarding this contention that these advances are received in course of real estate business of the assessee, the bench posed a query to the learned AR of the assessee as to when the sale to these persons have taken place and whether these advances were ultimately taken as sale proceeds in the present year or any later year, learned AR of the assessee could not show that these amounts were ultimately taken as sale proceeds in the present year or any later year. Hence, this is not relevant that the assessee is in real estate business and as per the claim of the assessee, these amounts were received as advance for sale of real estate because the assessee could not establish this that these amounts were accounted for in the present year or in any later year as sale proceeds.

Hence, in this year also, I find no reason to interfere in the order of CIT (A).

7.

In the result, all three appeals of the assessee are dismissed.

Order pronounced in the open court on the date mentioned on the caption page.

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