2018 (3) TMI 1185 - HC - Income Tax

High Court upholds legitimacy of cash deposits as gifts, dismisses Revenue's appeal.

Commissioner of Income Tax, Puducherry Versus Latha Rajee Mathew

The High Court dismissed the Revenue's appeal regarding cash deposits in the respondent-assessee's bank accounts, totaling Rs. 93,11,000/- during the ... Genuineness of Gift from her mother and her husband - whether donors in question had the funds to make a gift to the respondent-assessee for the purpose of admission of her son in a medical college - Held that:- Assessee had sufficiently been able to explain that the sum of ₹ 93,11,000/- was received by her by way of gift from her mother and her husband respectively. The materials on record reveal that the gift from the mother was to fund for admission of her grand son to a private medical college. - Decided against revenue Issues Involved:1. Legitimacy of the cash deposits as undisclosed income.2. Explanation of the sources of the cash deposits.3. Applicability of Section 260A of the Income Tax Act, 1961.4. Determination of substantial question of law.Detailed Analysis:1. Legitimacy of the Cash Deposits as Undisclosed Income:The Revenue's appeal challenges the Income Tax Appellate Tribunal's order which dismissed the Revenue's appeal against the Commissioner of Income-Tax (Appeals). The core issue was whether the cash deposits totaling Rs. 93,11,000/- in the respondent-assessee's bank accounts during the Assessment Year 2011-12 should be treated as undisclosed income. The Assessing Officer had initially treated these amounts as undisclosed income due to the respondent-assessee's inability to explain the sources of the funds.2. Explanation of the Sources of the Cash Deposits:The respondent-assessee claimed that Rs. 60,00,000/- was received as a gift from her mother for her son's admission to a medical college, and Rs. 30,61,000/- was received from her husband. The Commissioner of Income Tax (Appeals) accepted these explanations, noting that the mother had sufficient funds from the sale of her land, as evidenced by a remand report. Similarly, the Tribunal found that the husband also had sufficient funds, though the exact source was unexplained. Both the Commissioner of Income Tax (Appeals) and the Tribunal concluded that the gifts were legitimate and directed the deletion of the addition made by the Assessing Officer.3. Applicability of Section 260A of the Income Tax Act, 1961:Section 260A outlines the conditions under which an appeal can be made to the High Court, specifically requiring a substantial question of law. The High Court emphasized that an appeal under this section is permissible only if it involves a substantial question of law. The court referred to precedents, including the Supreme Court's rulings in Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. & Mfg. Co. Ltd. and Hero Vinoth Vs. Seshammal, which provide guidelines for determining what constitutes a substantial question of law.4. Determination of Substantial Question of Law:The High Court found that the case did not involve any substantial question of law. The Tribunal's findings were based on factual determinations that the respondent-assessee's mother and husband had sufficient funds to make the gifts. The court noted that it is not within its purview to re-evaluate the factual findings of the Tribunal unless there is a substantial question of law. The court also referenced the Supreme Court's decision in M.Janardhana Rao Vs. Joint Commissioner of Income Tax, which held that the principles under Section 100 of the Code of Civil Procedure apply to Section 260A of the IT Act.Conclusion:The High Court concluded that there was no substantial question of law involved in the appeal. The Tribunal had sufficiently explained the legitimacy of the cash deposits as gifts from the respondent-assessee's mother and husband. Consequently, the appeal was dismissed with no costs.This comprehensive analysis ensures that all relevant issues are covered in detail, preserving the legal terminology and significant phrases from the original text.