2013 (12) TMI 1062 - AT - Income Tax

Tribunal allows Revenue's appeal, remits matter for fresh assessment on loans and cash deposits

Assistant Commissioner of Income Tax, Company Circle-IV(3) Versus Masanam Veerakumar

The Tribunal partially allowed the Revenue's appeal, overturning the CIT(A)'s decision to delete the addition of the gift received from the mother's ... Gift received – definition of 'relative' as provided under Explanation to section 56(2)(v) - Held that:- A perusal of the term 'relative' used in the section clearly shows that mother's sister's son does not fall within the definition of 'relative' - The amount received by the assessee from mother's sister's son does not qualify for the benefit – Decided in favour of Revenue. Loan taken – Held that:- The assessee has failed to substantiate his claim with documentary evidence either during the assessment proceedings or appellate proceedings with respect to identity and genuineness of the lenders of the loan - The documents which were produced before the CIT(A) were never submitted by the assessee before the Assessing Officer, which is in violation of Rule 46A – The issue was restored for fresh decision. Issues:Assessment of gifts received, loans obtained, and cash deposits made by the assessee for the assessment year 2006-07.Analysis:The appeal before the Appellate Tribunal ITAT Chennai involved the assessment of gifts, loans, and cash deposits made by the assessee for the assessment year 2006-07. The Assessing Officer had made additions to the income declared by the assessee based on gifts received, loans obtained, and cash deposits made. The Assessing Officer disallowed the gift received from the mother's sister's son, questioned the identity of lenders for loans, and found the source of cash deposits unclear. The CIT(A) accepted the contentions of the assessee and allowed the appeal in full, leading to the Revenue filing a second appeal before the Tribunal challenging the CIT(A)'s order.Regarding the gift received from the mother's sister's son, the Revenue contended that the CIT(A) erred in deleting the addition as the relative did not fall within the definition provided under section 56(2)(v). The Tribunal found that the term 'relative' as defined in the Act did not include mother's sister's son, thus reversing the CIT(A)'s decision and allowing the Revenue's appeal on this issue.In relation to loans obtained and cash deposits made, the Tribunal noted that the assessee failed to provide sufficient documentary evidence to substantiate the claims during the assessment or appellate proceedings. The CIT(A) did not afford the Assessing Officer an opportunity to defend the assessment order, and the documents submitted before the CIT(A) were not presented to the Assessing Officer, violating Rule 46A of the Income Tax Act. Therefore, the Tribunal decided to remit the matter back to the Assessing Officer to reevaluate the evidence provided by the assessee regarding the genuineness of lenders for loans and the explanation for cash deposits, allowing the grounds of appeal for statistical purposes.Conclusively, the Tribunal set aside the CIT(A)'s order and partially allowed the Revenue's appeal, directing a fresh assessment by the Assessing Officer on the issues of loans obtained and cash deposits made by the assessee for the assessment year 2006-07.