Case Law Details
Y. C. Kallinatha Vs ACIT (ITAT Bangalore)
The assessee had received a gift of Rs.22.50 lakh from Shri T.C.Shivakumar, who is brother-in- law of the assessee. The assessee had considered the transaction not coming within the purview of section 56(2)(vi) of the I.T.Act since gift was received from a relative covered under the definition of “relative”as given in Explanation to section 56(2)(vi) of the I.T.Act. During the course of assessment proceedings, confirmation was filed by the donor. The A.O. summoned the donor Shri T.C.Shivakumar and a sworn statement was recorded from him wherein he had categorically stated on oath that he has gifted money as claimed by the assessee through banking channel. The donor has also stated why he chose to gift the money. As regards the source of gift by Shri T.C.Shivakumar to the assessee, it was stated that he received a gift from his sister Smt.R.Rajeshwari for a sum of Rs.25,00,000 on 10.08.2010. Out of Rs.25 lakh received by Shri T.C.Shivakumar, a sum of Rs.22.50 lakh was gifted to the assessee on 12.08.2010. It was stated that all the transactions are through banking channel and furnished a copy of gift deed (gifting a sum of Rs.25 lakh to Shri T.C.Shivakumar, by his sister). The Assessing Officer held that the donor did not have the means to make the gift and concluded the gift is to be presumed to have been received by the assessee from the sister of Shri T.C.Shivakumar. According to us, this conclusion of the A.O. is based on irrelevant facts. On facts on record, it is clear that the assessee had received gift from his brother-in-law and not from Smt.R.Rajeshwari. Therefore, the provisions of section 56(2)(vi) of the I.T.Act will not have application on facts of the given case.
No Section 68 addition if Assessee proved the source of gift, the identity of the donor and produced the bank account copy
As regards whether the addition can be sustained u/s 68 of the I.T. Act, we are of the view that the assessee in this case has proved the source of gift, the identity of the donor and produced the bank account copy to prove that the amount was received through banking channel. The Assessing Officer had also summoned the donor, who deposed before him confirming the gift. Admittedly, the assessee’s brother-in-law received the gift of sum of Rs.25 lakh from his sister through banking channel vide gift deed dated 10.08.2010. A copy of the gift deed was also furnished to the A.O. The A.O. has not doubted the source available to sister of Shri T.C. Shivakumar and no inquiry was made in this regard. In other words, the A.O. having not doubted the gift made by the sister of Shri T.C. Shivakumar, which in turn was partly utilized by Shri T.C.Shivakumar for making gift to the assessee, cannot make an addition u/s 68 of the I.T.Act. Since the addition cannot be sustained both u/s 56(2)(vi) nor u/s 68 of the I.T. Act, the same needs to be deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 05.02.2016. The relevant assessment year is 2011-2012.
2. The solitary issue raised is whether the CIT(A) was justified in confirming addition of Rs.22,50,000.
3. Brief facts of the case are as follow:
The assessee is an individual, deriving income from house property, salary from partnership firm, business income and income from other sources. For the assessment year 2011-2012, return of income was filed declaring total income of Rs.59,91,040. The assessment was selected for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. The secrutiny assessment u/s 143(3) of the I.T. Act was completed vide order dated 18.02.2014 by determining the total taxable income at Rs.83,53,890. One of the additions made by the Assessing Officer was a sum of Rs.22.50 lakh received from assessee’s brother-in-law, Mr. T. C.Shivakumar. The relevant finding of the Assessing Officer in making the addition, reads as follow:-
“9. As above, it is seen that Mr. T. C. Shivakumar has claimed to have received a gift of Rs.25,00,000 from his sister Mrs. R. Rajeshwari, w/o. B. C. Ramesh, Mysore, on 10.08.2010 and has gifted Rs.22,50,000 out of the same on 12.08.2010 to assessee Mr. Y. C. Kallinatha, who is the brother in law of Mr. T.C. Shivakumar. It is quite apparent from the above that assessee Mr. T. C. Kallinatha has received the amount from Mrs. R. Rajeshwari. Mr.T.C. Shivakumar has only been a conduit for transfer of money from Mrs. R. Rajeshwari to assessee Mr.Y.C.Kallinatha. This transaction is not covered in the exception provided under section 56(2)(iv) proviso which provides for exception to cash receipt being taxed in the hands of recipient when it is received from a relative.Mrs.R.Rajeshwari does not fall within the definition of `relative’as provided in the proviso to section 56(2)(iv). Considering the same the receipt of Rs.22,50,000 is taxable in the hands of assessee. It is ordered accordingly.”
4. Aggrieved by the order of the Assessing Officer making the addition of Rs.22.50 lakh, the assessee preferred an
appeal to the first appellate authority. The CIT(A) confirmed the addition made by the Assessing Office. The relevant finding of the CIT(A) reads as follow:-
“7.5 Considering the facts of the case in its totality, it cannot be accepted that Mr.T.C.Shivakumar would have gifted Rs.22,50,000/- to the appellant. It was clearly a strategy adopted by the appellant to receive the amount of Rs.22,50,000/- via Mr. T. C. Shivakumar, so as to escape the applicability of the provisions of section 56(2)(vi) of the Act. Therefore, taking into consideration all material facts and the circumstantial evidences available in this case, and applying the test of human probabilities, the explanation of the appellant that he has received an amount of Rs.22,50,000/- from his brother-in-law Mr. T. C. Shivakumar, cannot be accepted as real. Therefore, the addition of Rs.22,50,000/- made as unexplained cash credit in the hands of the appellant is hereby confirmed. The ground of appeal raised in this regard is accordingly, dismissed.”
5. Aggrieved by the order of the CIT(A), the assessee has preferred this appeal before the Tribunal. The learned Counsel for the assessee has filed a paper book comprising of 71 pages inter alia enclosing the pass book of the donor as well as the donee, sworn statement of donor, written submissions filed before the CIT(A), gift deed of Smt.R.Rajeshwari dated 10.08.2010 given to Shri T.C.Shivakumar, copy of return of income for Asst.Year 2011- 2012, copy of balance sheet for the year ending 31.03.2011, etc. The learned AR reiterated the submissions made before the Income-tax Authorities.
6. The learned Departmental Representative, on the other hand, supported the order of the A.O. and the CIT(A).
7. We have heard rival submissions and perused the material on record. The assessee had received a gift of Rs.22.50 lakh from Shri T.C.Shivakumar, who is brother-in- law of the assessee. The assessee had considered the transaction not coming within the purview of section 56(2)(vi) of the I.T.Act since gift was received from a relative covered under the definition of “relative”as given in Explanation to section 56(2)(vi) of the I.T.Act. During the course of assessment proceedings, confirmation was filed by the donor. The A.O. summoned the donor Shri T.C.Shivakumar and a sworn statement was recorded from him wherein he had categorically stated on oath that he has gifted money as claimed by the assessee through banking channel. The donor has also stated why he chose to gift the money. As regards the source of gift by Shri T.C.Shivakumar to the assessee, it was stated that he received a gift from his sister Smt.R.Rajeshwari for a sum of Rs.25,00,000 on 10.08.2010. Out of Rs.25 lakh received by Shri T.C.Shivakumar, a sum of Rs.22.50 lakh was gifted to the assessee on 12.08.2010. It was stated that all the transactions are through banking channel and furnished a copy of gift deed (gifting a sum of Rs.25 lakh to Shri T.C.Shivakumar, by his sister). The Assessing Officer held that the donor did not have the means to make the gift and concluded the gift is to be presumed to have been received by the assessee from the sister of Shri T.C.Shivakumar. According to us, this conclusion of the A.O. is based on irrelevant facts. On facts on record, it is clear that the assessee had received gift from his brother-in-law and not from Smt.R.Rajeshwari. Therefore, the provisions of section 56(2)(vi) of the I.T.Act will not have application on facts of the given case.
7.1 As regards whether the addition can be sustained u/s 68 of the I.T. Act, we are of the view that the assessee in this case has proved the source of gift, the identity of the donor and produced the bank account copy to prove that the amount was received through banking channel. The Assessing Officer had also summoned the donor, who deposed before him confirming the gift. Admittedly, the assessee’s brother-in-law received the gift of sum of Rs.25 lakh from his sister through banking channel vide gift deed dated 10.08.2010. A copy of the gift deed was also furnished to the A.O. The A.O. has not doubted the source available to sister of Shri T.C. Shivakumar and no inquiry was made in this regard. In other words, the A.O. having not doubted the gift made by the sister of Shri T.C. Shivakumar, which in turn was partly utilized by Shri T.C.Shivakumar for making gift to the assessee, cannot make an addition u/s 68 of the I.T.Act. Since the addition cannot be sustained both u/s 56(2)(vi) nor u/s 68 of the I.T. Act, the same needs to be deleted. In this context we rely on the following judicial pronouncements:-
(i) Amit Jain v. DCIT [2012] 149 TTJ 528 (Jodhpur – Trib]
(ii) Dr.Vempala Bala Manohar v. ITO [2016] 50 ITR (T) 567.
(iii) Pendurthi Cnandrashekar v. DCIT [2018] 407 ITR 179 (AP & Telangana).
7.2 Therefore, we delete the addition of Rs.22.50 lakh made by the A.O. and confirmed by the CIT(A). It is ordered accordingly.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 29th day of July, 2021.
