2019 (2) TMI 242 - HC - Income Tax

Court affirms Income Tax Appeal dismissal, adds unexplained cash credit under Section 68.

N. Rajgopal Versus The Addl. Commissioner of Income Tax, Range -23 (3), Mumbai

The High Court upheld the Tribunal's decision, dismissing the Income Tax Appeal. The Court affirmed that the gifts were not genuine, leading to the ... Addition u/s 68 - genuineness of gifts - jurisdiction of the AO making the addition - Held that:- It is true, as pointed out by assessee that when the Additional Commissioner passed the order of assessment, Section 2(7A) did not contain a specific reference of an Additional Commissioner. However, when the statute has been amended with retrospective effect, the effect of such amendment must be applied to the pending proceedings as in the present case. Non-applying such amendment in the present proceedings would destroy the retrospectivity granted to it by the legislature. This contention of the assessee is, therefore, rejected. The assessee claimed to have received an amount of ₹ 25.90 Lacs (rounded off) which at the relevant time was sizable. The assessee failed to even produce must basic details pertaining to the donors. He had never claimed any relations with such persons. The assessee, in plain terms, even failed to establish the donors donee relationship as well as to disturb the stand of the Assessing Officer that the factum of unknown persons giving such sizable gifts without any occasion runs contrary to basis probability of human conduct. All in all, the entire issue is based on facts. The CIT(A) and the Tribunal concurrently held that the gifts were not genuine. Minimum consequences of such findings would be that the amount in question would be the assessee's unexplained cash credit to be brought to tax in terms of Section 68 - Decided against assessee. Issues:Challenge to Tribunal's judgment confirming the addition of gifts to assessee's income under Section 68 of the Income Tax Act, 1961.Jurisdiction of Additional Commissioner of Income Tax acting as Assessing Officer.Analysis:Issue 1: Challenge to Tribunal's JudgmentThe appellant challenged the Tribunal's decision confirming the addition of gifts to the assessee's income under Section 68 of the Income Tax Act, 1961. The Assessing Officer and the Commissioner of Income Tax (Appeals) had previously held that the gifts of Resurgent India Bonds were not genuine. The Tribunal rejected the appeal, emphasizing the lack of evidence establishing the genuineness of the gifts. The Tribunal noted that the assessee failed to provide basic details about the donors and did not demonstrate any relationship between the donor and the donee. The Tribunal concluded that the gifts lacked evidence of mutual love and affection, a key requirement for genuine gifts. The Tribunal's decision was based on factual findings, and the appeal was dismissed.Issue 2: Jurisdiction of Additional CommissionerThe appellant raised a question regarding the jurisdiction of the Additional Commissioner of Income Tax to act as an Assessing Officer in the case. The appellant contended that the Additional Commissioner was not competent to pass the assessment order, citing Section 2(7A) of the Act. However, the Commissioner rejected this contention, and the Tribunal did not address this issue. The High Court analyzed the retrospective amendment under the Finance Act, 2007, which included the Additional Commissioner in the definition of 'Assessing Officer' from 1.6.1994. The Court held that the retrospective effect of the amendment must be applied to pending proceedings. Failure to apply the amendment would negate the legislature's intent for retrospectivity. Consequently, the Court rejected the appellant's jurisdictional argument.In conclusion, the High Court upheld the Tribunal's decision, dismissing the Income Tax Appeal. The Court affirmed the findings that the gifts were not genuine, leading to the addition of the amount to the assessee's unexplained cash credit under Section 68 of the Income Tax Act, 1961. The judgment focused on factual determinations regarding the lack of evidence supporting the genuineness of the gifts, emphasizing the importance of establishing relationships and mutual affection in gift transactions.