Tribunal directs deletion of unexplained cash credit, citing pre-amendment transaction & friendly relationship.

The Tribunal allowed the appeal, directing the Assessing Officer to delete the addition of Rs. 2,00,000 as unexplained cash credit. The Tribunal found that the provision of section 56(2)(v) was not applicable as the transaction predated the amendment. The Tribunal emphasized that the relationship between the donor and donee was not a prerequisite for a gift, leading to the deletion of the addition based on the established friendly relationship between the parties.

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Issues Involved:
1. Addition of Rs. 2,00,000 received as gift during F.Y. 2004-05 as unexplained cash credit.
2. Applicability of provisions of S.56(2)(v) as amended by Finance Act, 2004.

Analysis:
1. Issue 1 - Addition of Rs. 2,00,000 as unexplained cash credit:
The appellant contested the addition of Rs. 2,00,000 received as a gift, arguing that it was a genuine gift from a close family friend. The appellant provided evidence such as a confirmation letter from the donor, bank statements, and income tax return copy to support the claim. The appellant highlighted the long-standing friendship between the donor and the donee, both being from the same native place. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the addition, questioning the donor's capacity to gift such a substantial amount based on his salary. The CIT(A) deemed the gift unexplained and upheld the addition. However, the Tribunal found that the provision of section 56(2)(v) was not applicable in this case as the transaction occurred before the amendment came into effect. The Tribunal directed the Assessing Officer (AO) to delete the addition, considering the facts and law provisions.

2. Issue 2 - Applicability of provisions of S.56(2)(v):
The Tribunal analyzed the applicability of section 56(2)(v) of the Income Tax Act, as amended by the Finance Act, 2004. The Tribunal noted that the amendment was effective from 1st September 2004, while the gift in question was received on 2nd July 2004, making the amended provisions not applicable. The Tribunal emphasized that the relationship between the donor and donee was not a prerequisite for a gift under the Transfer of Property Act. The Tribunal concluded that the CIT(A) incorrectly applied the amended provision retrospectively, leading to an unsustainable decision. The Tribunal allowed the appeal, directing the AO to delete the addition.

3. General Ground:
The third ground of appeal was of a general nature and did not require separate adjudication in light of the decisions made on the previous grounds.

In conclusion, the Tribunal allowed the appeal, directing the AO to delete the addition of Rs. 2,00,000 as unexplained cash credit, based on the inapplicability of the amended provision of section 56(2)(v) and the established friendly relationship between the donor and the donee.

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