Gift from brother upheld as genuine after providing adequate evidence including bank statements and income returns under section 68

ITAT Rajkot allowed the appeal and directed deletion of addition under section 68. The assessee received a gift from brother which AO treated as undisclosed income due to insufficient financial capacity of donor. However, ITAT found assessee provided adequate evidence including gift letter, bank statements, PAN, income returns, and cash book showing sufficient funds were available with both parties. Despite cross-transactions creating suspicion between brothers, ITAT held revenue failed to prove allegations and assessee successfully justified the gift's genuineness and creditworthiness of donor.

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Issues:
The appeal against the order of the Learned Commissioner of Income Tax (Appeals) was filed regarding the addition made for a gift received from the brother, treated as undisclosed income.

Details of the Judgment:

Issue 1: Addition of Gift as Undisclosed Income
The assessee received a gift of Rs. 67,00,000 from his brother, supported by documents like PAN, computation of income, and gift letters. However, the Assessing Officer (AO) considered the gift as bogus due to the donor's alleged lack of financial capacity. The assessee argued that the gift was covered by the amount given to the brother and the donor's financial capacity should be judged based on his financial statements. The assessee also contended that the gifts were given in different installments. The AO's remand report highlighted discrepancies in the cash entries between the brothers. The assessee claimed to have informed the AO about the gift to justify the donor's creditworthiness. The Assessing Officer did not consider the information provided by the assessee.

Issue 2: Appeal to CIT(A) and Subsequent Proceedings
The assessee appealed to the CIT(A), providing additional evidence, but the CIT(A) rejected the contentions. The CIT(A) observed that the assessee did not claim to have given gifts to the donor during the assessment stage. The CIT(A) found contradictions in the assessee's claims and rejected the appeal, confirming the addition of the gift as undisclosed income. The assessee then appealed to the ITAT.

Issue 3: ITAT Decision
The ITAT noted that the assessee had sufficient funds to give the gift to his brother, as evidenced by bank statements and cash book entries. The ITAT found that the gift received was from genuine sources and set aside the CIT(A)'s findings. The ITAT directed the AO to delete the addition made, allowing the assessee's appeal.

The ITAT pronounced the order in favor of the assessee on 06/12/2023 at Ahmedabad.

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