2010 (12) TMI 1202 - AT - Income Tax

Tribunal upholds revenue appeal, reinstates addition of unexplained cash credit under IT Act section 68.

The Income Tax Officer, Ward 1 (1), Bhavnagar Versus Shri Satishkumar Kantilal Shah (HUF),

The Tribunal allowed the revenue's appeal, setting aside the CIT(A)'s order and restoring the AO's addition of Rs. 9,51,257/- as unexplained cash credit ... - Issues Involved:1. Deletion of addition of Rs. 9,51,257/- as unexplained cash credit u/s 68 of the IT Act.2. Satisfaction of the explanation offered by the assessee regarding the creditworthiness of the donor.3. Consideration of the judgment of the Hon'ble Supreme Court in the case of CIT Vs. P. Mohankala & Others.4. Whether the CIT(A) was justified in deleting the addition made by the AO.Summary:Issue 1: Deletion of addition of Rs. 9,51,257/- as unexplained cash credit u/s 68 of the IT ActThe AO added Rs. 9,51,257/- to the assessee's income as unexplained cash credit u/s 68, questioning the creditworthiness of the donor, Smt. Bhanumati J. Doshi, and the genuineness of the gift. The CIT(A) deleted the addition, accepting the assessee's submission that the gift was received through International Banking Channel and that the primary onus to prove the creditworthiness was discharged by providing necessary documents.Issue 2: Satisfaction of the explanation offered by the assessee regarding the creditworthiness of the donorThe AO contended that the assessee failed to produce sufficient evidence to prove the donor's creditworthiness, such as the bank pass book, salary certificate, and balance sheet. The CIT(A) accepted the documents provided by the assessee, including the gift deed, bank certificate, passport copy, and the donor's income tax return, as sufficient to prove the genuineness and creditworthiness of the donor. However, the Tribunal found that these documents did not conclusively prove the donor's financial capacity or the genuineness of the gift.Issue 3: Consideration of the judgment of the Hon'ble Supreme Court in the case of CIT Vs. P. Mohankala & OthersThe Tribunal referred to the Supreme Court's judgment in CIT Vs. P. Mohankala & Others, which emphasized that mere identification of the donor and movement of the gift amount through banking channels are not sufficient to prove the genuineness of the gift. The Tribunal noted that the CIT(A) failed to consider this judgment while deleting the addition.Issue 4: Whether the CIT(A) was justified in deleting the addition made by the AOThe Tribunal concluded that the CIT(A) was not justified in deleting the addition, as the assessee failed to prove the donor's creditworthiness and the genuineness of the gift. The Tribunal restored the AO's order, emphasizing that the assessee did not provide sufficient evidence to satisfy the conditions of section 68 of the IT Act.Conclusion:The Tribunal allowed the revenue's appeal, setting aside the CIT(A)'s order and restoring the AO's addition of Rs. 9,51,257/- as unexplained cash credit u/s 68 of the IT Act. The Tribunal emphasized the need for concrete evidence to prove the creditworthiness of the donor and the genuineness of the gift, in line with the Supreme Court's judgment in CIT Vs. P. Mohankala & Others.