2013 (7) TMI 659 - HC - Income Tax

Tribunal reverses AO's decision on undisclosed income; High Court rules in favor of revenue

Commissioner of Income Tax Versus Smt. Kamlesh Rani

The Income Tax Appellate Tribunal reversed the Assessing Officer's decision to add Rs.2,22,000 as undisclosed income from a disputed gift received by the ... Undisclosed income - Bogus or genuine gifts - Tribunal held that Assessing Officer has failed to discharge the burden of proving that the gift is not genuine - Held that:- It would be appropriate to point out that the donee addressed a letter to the Department, not only denying the gift but also stating that he did not open the account from which the gift was made to the private respondent - Decided n favour of the revenue. Case relied on by assessee; Commissioner of Income Tax, Karnal v. Puneet Chugh [2011 (2) TMI 532 - PUNJAB AND HARYANA HIGH COURT] not to be relied upon. Issues:1. Disputed gift received by the respondent from an N.R.E. account.2. Addition of undisclosed income by the Assessing Officer.3. Deletion of additions by the Income Tax Appellate Tribunal.4. Questions of law regarding the genuineness of the gifts and undisclosed income.Issue 1: Disputed gift received by the respondent from an N.R.E. account:The Assessing Officer added Rs.2,22,000 as undisclosed income, considering the gift received by the respondent from an N.R.E. account as bogus. The C.I.T. (Appeals) and the Assessing Officer's decisions were reversed by the Income Tax Appellate Tribunal, stating that the Assessing Officer failed to prove the gift's genuineness. The Tribunal admitted the appeal based on questions of law regarding the financial capacity of the donor, relationship with the assessee, and the event of making the gifts. The Tribunal's decision was challenged by the revenue.Issue 2: Addition of undisclosed income by the Assessing Officer:The Assessing Officer added Rs.2,22,000 as undisclosed income, alleging that the gift received by the respondent was not genuine. The C.I.T. (Appeals) dismissed the appeal, leading the assessee to file an appeal before the Income Tax Appellate Tribunal. The Tribunal deleted the addition, emphasizing that the Assessing Officer failed to discharge the burden of proving the gift's authenticity.Issue 3: Deletion of additions by the Income Tax Appellate Tribunal:The Income Tax Appellate Tribunal deleted the addition of Rs.2,22,000 made by the Assessing Officer, stating that the Assessing Officer did not prove the alleged gift's genuineness. The Tribunal also deleted the addition of Rs.20,000 made by the Assessing Officer as commission paid by the assessee for arranging the alleged gifts. Additionally, the Tribunal deleted the addition of Rs.2.20 lacs made by the Assessing Officer towards the assessee's undisclosed income under Section 68 of the Income Tax Act, 1961.Issue 4: Questions of law regarding the genuineness of the gifts and undisclosed income:The questions of law raised in the appeals were answered in favor of the revenue in a previous judgment. The Counsel for the respondent argued that the revenue did not discharge the onus to establish that the assessee did not offer any explanation or that the explanation provided was unsatisfactory. The respondent's counsel highlighted that the person allegedly making the gift denied it in a letter to the Department and stated not opening the bank account from which the gift was made. However, the High Court found no reason to accept the arguments raised by the respondent's counsel and allowed the appeals in favor of the revenue, setting aside the Tribunal's order.