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of <h1>Tribunal upholds CIT(A)'s decision on gifts classification and taxation, dismissing revenue's appeals.</h1> <h3>Deputy Commissioner of Income-tax, Central Circle-11, New Delhi Versus Mayawati</h3> Deputy Commissioner of Income-tax, Central Circle-11, New Delhi Versus Mayawati - [2010] 42 SOT 59 (DELHI) Issues Involved:1. Quashing of assessment due to non-service of notice under section 143(2).2. Genuineness of gifts received by the assessee.3. Taxability of gifts received under section 56(2)(v) and section 28.Issue-wise Detailed Analysis:1. Quashing of Assessment Due to Non-Service of Notice under Section 143(2):The CIT(A) quashed the assessment for the assessment year 2004-05 on the ground that the mandatory notice under section 143(2) was not served within the prescribed period. The department argued that the notice was issued and sent by registered post within the statutory period. However, the CIT(A) found discrepancies in the department's records and concluded that the notice was not served on time. The Tribunal upheld the CIT(A)'s decision, emphasizing the importance of proper record-keeping and the procedural requirements for issuing notices.2. Genuineness of Gifts Received by the Assessee:For the assessment year 2004-05, the CIT(A) held that the gifts amounting to Rs. 8,29,25,107 were genuine, based on the evidence provided by the assessee. The Tribunal upheld this finding, noting that similar issues in earlier years had been resolved in favor of the assessee. The Tribunal referred to its previous order in the assessee's case for the assessment year 2003-04, where it was held that the gifts were genuine, considering the identity and capacity of the donors and the voluntary nature of the gifts.3. Taxability of Gifts Received under Section 56(2)(v) and Section 28:For the assessment years 2005-06 and 2006-07, the assessee received gifts, some of which were offered for taxation under section 56(2)(v) as 'income from other sources' while others were claimed as non-taxable. The Assessing Officer taxed the gifts up to Rs. 25,000 under section 28 as 'income from business or profession,' arguing that these were vocational receipts due to the assessee's political activities. The CIT(A) disagreed, holding that the gifts were personal in nature, received on the occasion of the assessee's birthday, and should be treated uniformly under section 56(2)(v). The Tribunal upheld the CIT(A)'s decision, emphasizing that the gifts were given out of personal admiration and love for the assessee's social work and not for any political quid pro quo.Conclusion:The Tribunal dismissed the revenue's appeals for all three assessment years, upholding the CIT(A)'s decisions on quashing the assessment due to non-service of notice, accepting the genuineness of the gifts, and treating the gifts uniformly under section 56(2)(v) rather than splitting them into different heads of income. The Tribunal's decision was based on a thorough examination of the facts, evidence, and relevant case laws, ensuring that the gifts were correctly classified and taxed according to the legislative intent.
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