2013 (10) TMI 313 - HC - Income Tax

High Court upholds Tribunal decision on unexplained cash credit deletion in income tax case

The High Court upheld the Income Tax Appellate Tribunal's decision to delete the addition of Rs. 74,40,000 on account of unexplained cash credit in a case ... Genuineness of gifts received from different sources - Gifts to the tune of Rs. 74,40,000/- from 24 different persons received through 24 demand drafts issued in December 2002 – Held that:- Assessing officer had issued the letters under section 133(6) of the Act. Assessing Officer had also called for confirmation letters which were received by it - The assessee had furnished all other requisite documents like copies of DD, gift deed, copy of PAN cards, copy of acknowledgment of returns of the donors along with computation and balance sheet - All the donors were assessed to tax except one who was based at USA - Identity of the donors so also creditworthiness and genuineness of the transaction having been established, gifts were not bogus. Reliance is also placed upon the judgment of Hon’ble Gujarat High court in the case of Muralidhar Lahorimal v. Commissioner of Income-tax [2005 (11) TMI 32 - GUJARAT High Court], wherein identity of the donor had been established beyond any semblance of doubt and genuineness of the transaction was also established not only by the receipt of bank draft but also by other contemporaneous record. - Decided against the revenue. Issues:Challenge to the deletion of addition on account of unexplained cash credit. Allegation of improper appreciation of facts and material by the Appellate Tribunal.Analysis:The case involved a challenge by the Revenue against the order of the Income Tax Appellate Tribunal regarding the addition of Rs. 74,40,000 on account of unexplained cash credit. The respondent had shown receipt of gifts from 24 different persons through demand drafts, but the Assessing Officer doubted the genuineness of the gifts due to various reasons, including lack of personal appearance of the assessee and absence of relations between the donor and donee. The CIT(Appeals) concurred with the Assessing Officer's findings, leading to the appeal before the ITAT. The Revenue contended that the Tribunal erred in shifting the burden of proof and highlighted the unrelated donors from a moderate economic background gifting a substantial amount on the same day. The Revenue relied on legal precedents to support its argument that the Tribunal's findings were perverse.The High Court analyzed the legal precedents cited by the Revenue, emphasizing the burden on the assessee to provide a satisfactory explanation for unexplained credits. The Court discussed a case where foreign gifts were found non-genuine due to lack of satisfactory explanation. Additionally, the Court referenced a case stating that mere identification of donors and movement of gifts through banking channels might not establish genuineness. In the present case, the Tribunal found that the identity, creditworthiness, and genuineness of the donors were established through documents provided by the assessee, including DD copies, gift deeds, and PAN cards. Despite concerns raised by the Assessing Officer and CIT(A), the Tribunal concluded that the gifts were genuine based on the material presented by the assessee.The High Court upheld the Tribunal's decision, stating that the Tribunal provided sufficient and acceptable reasons for accepting the genuineness of the gifts and the creditworthiness of the transactions. The Court acknowledged the suspicious nature of the gifts but concluded that the material proof presented was enough to support the deletion of the addition from the assessee's income computation. The Court found no perversity in the Tribunal's conclusion, dismissing the tax appeal based on the cogent reasoning provided by the Tribunal and the lack of substantial legal questions arising from the case.