Case Law Details
BatHina Srilakshmi Vs ITO (Andhra Pradesh High Court)
The Andhra Pradesh High Court considered an appeal filed against the order of the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, relating to the assessment year 2014–15. The appellant had originally filed a return declaring an income of Rs.2,48,490. During assessment proceedings, the Assessing Officer observed that the appellant had a cash balance of Rs.2,01,83,834 as on 01.03.2014 but had made cash payments exceeding the available amount. This resulted in a negative cash balance of Rs.1,82,34,150 as on 26.03.2014. The Assessing Officer treated this deficit as income from unexplained sources, rejecting the appellant’s claim that the amount was covered by cash gifts of Rs.1.83 crores.
The appellant challenged the assessment before the Commissioner of Income Tax (Appeals), who accepted her explanation regarding receipt of cash gifts and allowed the appeal. The department then appealed to the ITAT, which reversed the Commissioner’s decision and upheld the assessment order.
Before the Assessing Officer, the appellant had submitted that she received cash gifts from unspecified “others” and provided self-signed receipt vouchers for Rs.1.83 crores. The Assessing Officer rejected this explanation due to lack of details regarding the identity, creditworthiness, and reasons for such gifts, concluding that the claim was an attempt to explain the negative cash balance.
At the appellate stage, the appellant changed her stand, stating that the cash gift of Rs.1.83 crores was received from her grandmother on 05.03.2014, though it was recorded in the books on 31.03.2014. She further claimed that her grandmother had withdrawn Rs.3.5 crores from her capital account in a firm, M/s. R.R. Estates and Projects, Bangalore, to make the gift. The Assessing Officer disputed this explanation and obtained information indicating that the firm had not filed its income tax return for the relevant assessment year. Based on this, the Assessing Officer questioned the credibility of the claim.
The Commissioner of Income Tax (Appeals) accepted the declaration made by the grandmother and held that the objections raised by the Assessing Officer were not justified. However, the ITAT disagreed and held that the alleged cash gift could not be accepted, as the source of funds in the hands of the grandmother was not established and there was no material to demonstrate her financial capacity. The Tribunal also noted that the grandmother had passed away in 2016.
Before the High Court, the appellant argued that the Tribunal erred in rejecting the explanation accepted by the Commissioner. However, the Court agreed with the Tribunal’s findings. It observed that the appellant failed to establish the source of funds in the hands of the grandmother and did not provide sufficient evidence to support the claim of receiving the cash gift.
The Court also highlighted an inconsistency in the appellant’s statements. At the assessment stage, the appellant claimed to have received gifts from unspecified “others,” whereas at the appellate stage, she specifically attributed the gift to her grandmother. The Court held that if the claim were genuine, the appellant would have identified her grandmother at the initial stage itself. This inconsistency further weakened the credibility of the appellant’s explanation.
In view of these factors, the High Court found no reason to interfere with the Tribunal’s order. The appeal was dismissed, and the order of the ITAT was upheld. Pending miscellaneous petitions, if any, were also closed, with no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
Heard Sri P. Pavan Kumar Rao, learned counsel appearing for the appellant, and Sri Y.N. Vivekananda, learned Standing Counsel appearing for the respondents.
2. This appeal is filed against the judgment of the Income Tax Appellate Tribunal Hyderabad ‘B’ Bench, Hyderabad, dated 16.05.2025 in ITA.No.83/Hyd/2019 relating to the assessment order 2014-15 of the appellant.
3. The appellant had initially filed a return of income declaring her income as Rs.2,48,490/-. In the course of the assessment proceedings, the assessing authority found that the appellant had a cash balance of Rs.2,01,83,834/- on 01.03.2014 but had made certain cash payments, which exceeded the amount available with her. On that basis, the assessing authority took the view that no explanation has been given regarding the deficit/negative cash balance of Rs.1,82,34,150/-, as on 26.03.2014, and therefore, held the said negative cash balance as her income from unexplained sources. This view was taken by the Assessing Officer, after rejecting the contention of the appellant that she had received cash gifts of Rs.1.83 crores.
4. Aggrieved by the said order of assessment, the appellant approached the Commissioner of Income Tax, Appeal, Tirupathi. The Commissioner accepted the explanation given by the appellant as to how she had received such cash gifts and allowed her appeal. Against this order, dated 28.11.2018, the department went in appeal before the Appellate Tribunal which reversed the order of Commissioner, Appeals, by the aforesaid order dated 16.05.2025.
5. The appellant, before the assessing officer had filed a letter, dated 05.12.2016, stating that cash gifts were received by her from “others” and had filed self signed receipt vouchers, for the amount of Rs.1.83 crores. As the details of these “others” were not furnished, the assessing officer had rejected such a claim on the ground that the appellant had not established the identity or creditworthiness of the donors or the reasons for which she received such gifts. The assessing officer took the view that the said exercise, by the appellant, was only to cover up the negative cash balance.
6. At the stage of appeal, the appellant contended that she had received a cash gift of Rs.1.83 crores on 05.03.2014, from her grandmother and that this gift, though received on 05.03.2014, was wrongfully posted in the books of account on 31.03.2014. The appellant was called upon to explain the source of income of the grandmother of the appellant, who is said to have given such a gift to the appellant. In response, the appellant contended that her grandmother had withdrawn Rs.3.5 crores from her capital account in a firm, named M/s. R.R Estates and Projects, Bangalore, in which she was a partner. This claim of the appellant was disputed by the assessing authority, before the Commissioner, Appeals. The Assessing Officer obtained information in relation to the accounts of M/s. R.R Estates and Projects from the Income tax authorities in Bangalore. In response to the query raised by the Assessing Officer, the income tax authorities in Bangalore informed the assessing officer that M/s. R.R. Estates and Projects had not filed its return of income for the assessment year 2014-15. The assessing officer on this basis had contended that no sanctity can be given to such claims as M/s. R.R. Estates and Projects, Bangalore itself had not filed any income tax returns. The Commissioner of Income Tax had held that the objections of the assessing officer were not justified as a declaration had been given by the grandmother of the appellant regarding the gift made by her and the same should be accepted. The Appellate Tribunal did not accept this view of the Commissioner and had held that the alleged gift of Rs.1.83 crores in cash, to the appellant cannot be believed as the source of income of the donor herself was suspect and there was no material to show that she had such a source of income. It may also be noted that the grandmother of the appellant had passed away in the year 2016 itself.
7. Sri P. Pavan Kumar Rao would contend that the Tribunal could not have taken such a view, as the Commissioner was correct in accepting the declaration made by the grandmother of the appellant.
8. We are in agreement with the view of the Tribunal that the claim of the appellant, that she received a cash gift from her grandmother cannot be accepted as the sources of such funds, in the hands of the grandmother of the appellant, have not been placed before the authorities. Another aspect, which has also been raised by the Tribunal, is the fact that the appellant, at the stage of assessment, had merely stated that she had received cash gifts from “others” while she took the stand, at the stage of appeal, that such cash gifts had been given to her by her grandmother. If this was true, the appellant would have named her grandmother as the source of her gift, and would not have stated that she had received gifts from “others”.
9. For all the aforesaid reasons, we do not find any ground to interfere with the order of Tribunal and this Appeal is dismissed.
As a sequel, pending miscellaneous petitions, if any, shall stand closed. There shall be no order as to costs.
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