Case Law Details
Shri P. Vijayadeva Reddy Vs The Assistant Commissioner of Income Tax (ITAT Bangalore);
As per the assessment order, the AO has noted that an amount of Rs. 1 crore was credited by the assessee to his capital account on this account that he has received a gift of Rs. 1 crore from his father being a property gifted by his father. As per the remand report dated 29.10.2013 available on page no. 5 of the paper book also, it is reported by the AO that the dispute is regarding credit of Rs. 1 crore in respect of alleged gift of property by father of the assessee and the assessee could not establish the gift because the property in question is purchased by the assessee’s father jointly with Shri Ramesh Reddy on 27.11.2004 and gift deed is not reregistered and therefore, the claim of the gift is not acceptable because the same is not registered gift deed.To this extent, AO is correct that in the absence of registered gift deed, receipt of an immovable property by way of gift is not acceptable but in spite of this, addition is not justified because this is not the case of the AO that any property apart from the alleged to be property received by way of gift without valid gift deed received by the assessee for which the assessee is not able to explain the source. The only property in question is the same property which has been shown by the assessee as having been received as gift by him by way of gift from his father.
In our considered opinion, whether the gift is valid or not, addition is not justified on this account because if the gift is valid then it cannot be said that the assessee has made unexplained investment and even if the purchase by the donor is explained by the donor, it has to be added in the hands of the donor in the year of purchase of the property by the donor. If the gift is invalid then the assessee is not even owner of any property and therefore, no question arises for making addition in the hands of the assessee in respect of that property which is not even owned by the assessee and in that case also, addition if any may be made in the hands of the donor if the donor is not able to explain the source of investment. In this view of the matter, we hold that the addition made by the AO and confirmed by the CIT (A) of Rs. 1 crore is not justified.
Full Text of the ITAT Order is as follows:-
Per Shri A.K. Garodia, Accountant Member
Please become a Premium member. If you are already a Premium member, login here to access the full content.
