Tribunal allows appeal, deletes additions of gifts and sale proceeds, citing genuineness and lack of valid reason

The Tribunal allowed the appeal, deleting both additions of Rs. 5 lakhs as small gifts and Rs. 1,30,000 from the sale of a plot of land. The genuineness of the gifts was proven by the assessee, leading to the deletion of the first addition. The Tribunal held that the AO could not reject the explanation for the receipt of Rs. 1,30,000 without a valid reason after accepting the income from the sale of the plot. The judgment was pronounced on 4th December 2018.

---

---

Issues:
1. Addition of Rs. 5 lakhs as small gifts.
2. Addition of Rs. 1,30,000 from the sale of a plot of land.

Analysis:
1. The first issue pertains to the addition of Rs. 5 lakhs as small gifts received by the assessee. The Assessing Officer (AO) received information about the repayment of a bank loan by the assessee. The assessee claimed that the loan repayment was facilitated by receiving Rs. 5 lakhs as small gifts from friends and relatives. The AO doubted the genuineness of the gifts, even though most gift-givers were produced before the AO and confirmed giving the gifts. One person, Shri Prakash B. Patil, could not appear but provided a confirmation letter and bank account details. The Tribunal held that the assessee had successfully proven the genuineness of the gifts, and thus, ordered the deletion of the addition of Rs. 5 lakhs.

2. The second issue revolves around the addition of Rs. 1,30,000 received from the sale of a plot of land. The assessee stated before the AO that this amount was from the sale of a plot, which was also reflected in the Profit and Loss account. Despite this, the AO made the addition, which was upheld in the first appeal. The Tribunal noted that once the AO accepted the income from the sale of the plot, he could not reject the explanation for the receipt of Rs. 1,30,000 for loan repayment without a valid reason. Consequently, the Tribunal overturned the addition of Rs. 1,30,000.

In conclusion, the Tribunal allowed the appeal, deleting both the additions. The judgment was pronounced in the Open Court on 4th December 2018.

---