JIGNESH V. CHAUHAN,MUMBAI vs. ITO 14(2)(4), MUMBAI

The present appeal has been preferred by the assessee against the order dated 03.10.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

The assessee in this case has agitated the confirmation of addition of Rs.15,21,000/- as undisclosed income under section 69A of the Income Tax Act. The brief facts of the case are that the Assessing Officer (hereinafter referred to as the AO) had received information that the assessee had deposited cash of Rs.15,21,000/- in his saving bank account. On being asked to explain the source of the above amounts, the assessee submitted to the AO that he had received gifts out of natural love and affection from relatives i.e. from 2 Shri Jignesh V. Chauhan father, wife and three brothers amounting to Rs.12,86,000/- and the remaining amount of Rs.2,35,000/- was deposited out of his own on capital/savings/income of the year. The AO observed that all the alleged gifts were in cash and the donors had not sufficient capacity to give gifts to the assessee. He therefore rejected the explanation given by the assessee and added the above amount of Rs.15,21,000/- as unexplained income of the assessee under section 69A of the Act.

We have heard the rival contentions and have also gone through the records. It is an admitted fact on the file that all the gifts have been received by the assessee from his close relatives i.e. father, wife and three brothers. The gifts are of small amount ranging from Rs.1.95 lakhs to 2.92 lakhs. The assessee has produced on file the copy of income returns of the donors to show that the donors were earning income and it cannot be said that they had no capacity to give gifts of the above stated amounts. The donors have confirmed that they have gifted the above stated amounts to the assessee. The AO has not called upon the donors to ask for their source of income. He has merely presumed that the donors have not sufficient capacity to give the gifts to the assessee. However, this fact also cannot be ignored that the gifts are of the small amount ranging from Rs.1.95 lakhs to 2.92 lakhs. The donors are assessable to income tax. They have filed the confirmations regarding giving the gifts to the assessee. The amount of Rs.2.35 thousand which the assessee has shown as out of his own capital/savings and income for the year under consideration is also nominal. Under such circumstances, we do not find any justification on the part of lower authorities in disbelieving the explanation submitted by the assessee without examining and enquiring or calling upon the 3 Shri Jignesh V. Chauhan donors. The additions therefore made in this of the assessee are not sustainable in the eyes of law and the same are accordingly ordered to be deleted.

In the result, the appeal of the assessee is hereby allowed.