Case Law Details

Case Name : Prem Kumar Chowdhary Vs CIT (Income Tax Appellate Tribunal “B” Bench, Kolkata)
Appeal Number : ITA No. 1103/Kol/2012
Date of Judgement/Order : 16/06/2015
Related Assessment Year : 2002-03

Brief Facts of the Case and Question of Law

Brief Facts:

The Appellant-assessee’s children (one minor son and three minor daughters) have received gifts of Rs. 5 Lakhs each. The Assessing officer has treated the same as not genuine and added back in the computation of income from concealed sources under the head “Other Sources”.

The gifts were received by children from four close friends of the assessee. The donors had received back share application money from various Private Limited companies. The donors had made multiple investments in share application money in cash in small quantities not exceeding Rs. 20000/-

Question of Law:

Whether the Assessing officer is right in treating the gifts as not genuine and contending that gifts can only be received from related person in the impugned year?

Whether, on the facts and in the circumstances of the case, the CIT(A) is right in law in upholding the additions made by Assessing officer?

Contention of the Revenue:

The Revenue was of the contention that the donors were not genuine and were not relatives of the Assessee.

Further he stated that as the share application money were paid in cash and were below 20000/-, the genuineness of the transactions could not be established.

The Revenue also contended that the Share application money was received back just before gifting the same. Hence the gifts were sham and were used as a tool to bring back money to the capital account of the Asseessee without paying necessary taxes.

Case Laws relied upon:

Hon’ble Delhi High Court in the case of K.L.Agarwal vs CIT 190 ITR 303 (Del)

Hon’ble Supreme Court in CIT v.P.Mohanakala [2007] 291 ITR 278

Contention of the Assessee:

The Assessee contented that the gifts were backed by sufficient documents like bank pass book, duly notarized gift deed, affidavit of the donors and also the confirmation by the donors explaining the source of such gifts; also no defect was pointed out by Assessing officer.

The Assessee also contented that law does not prohibit of making gift even with the person, who is not related in the impugned year as the genuineness of the transaction together with identity and capacity of the donors is relevant.

Case Laws relied upon:

Hon’ble Delhi High Court in the case of CIT vs Ms. Mayavati 338 ITR 0563

Held by the Tribunal:

The donors were examined u/s 131 of the Income Tax Act and therefore the identity of the donors and source of the gift remains explained.

In the impugned year the blood relation is not necessary for the gift to be a genuine gift, but the relationship matters a lot. In all the probabilities the gift is found to be genuine as the donors have explained the source of gift, copy of bank accounts, income tax return. Therefore the creditworthiness of the donor is proved by the assessee.

Therefore, the appeal is allowed.

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