Wife's cash gift exempted under section 69A but deceased father's gift addition upheld due to insufficient documentation

The ITAT Hyderabad ruled on unexplained money additions under section 69A. The tribunal deleted a Rs. 10 lakh addition for cash gift from assessee's wife, accepting her confirmation and income return as sufficient proof since spouses fall under exempt relatives category. However, it upheld Rs. 2.40 lakh addition for alleged gift from deceased father due to lack of supporting documentation or income return. The tribunal also deleted Rs. 5 lakh addition for cash withdrawal from partnership firm, finding adequate proof through firm's confirmation and financial records. Addition for undocumented opening cash balance was sustained. The appeal was partly allowed.

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Issues Involved:
1. Fair Opportunity to the Appellant
2. Addition of Rs. 18,05,200/- as Unexplained Cash Credit under Section 69A
3. Taxation under Section 115BBE
4. Consideration of Evidence for Source of Deposits
5. Explanation of Deposits in Bank Accounts

Summary:

1. Fair Opportunity to the Appellant:
The appellant contended that the First Appellate Authority did not provide a fair opportunity to present his case. However, the judgment does not specifically address this procedural issue in detail.

2. Addition of Rs. 18,05,200/- as Unexplained Cash Credit under Section 69A:
The Assessing Officer observed that the assessee made cash deposits totaling Rs. 18,05,200/- during the financial year 2016-17, which were not properly explained. Consequently, the entire amount was added to the total income as "Unexplained Money" under Section 69A read with Section 115BBE of the Income Tax Act, 1961.

3. Taxation under Section 115BBE:
The addition of Rs. 18,05,200/- was brought to tax under Section 115BBE, which deals with the tax on income referred to in Sections 68, 69, 69A, 69B, 69C, or 69D.

4. Consideration of Evidence for Source of Deposits:
The assessee claimed that Rs. 10 lakhs were received as a gift from his wife, Rs. 2.40 lakhs from his father, and Rs. 5 lakhs were withdrawn from M/s. Apollo Multi Specialty Hospital, where he is a partner. The Assessing Officer and CIT(A) did not accept these explanations due to the lack of supporting documentary evidence like gift deeds and bank statements.

5. Explanation of Deposits in Bank Accounts:

Addition of Rs. 10 lakhs:
The CIT(A) disallowed the cash gift from the wife due to the absence of a gift deed and supporting bank statements. However, the Tribunal found that the wife, being a relative under Section 56(2)(vii), had the capacity to gift Rs. 10 lakhs, and the Revenue cannot disbelieve the confirmation given by the wife. Thus, the addition of Rs. 10 lakhs was deleted.

Addition of Rs. 2.40 lakhs:
The CIT(A) and Tribunal upheld the addition of Rs. 2.40 lakhs, as the assessee failed to provide substantial evidence to authenticate the cash gift from his father, who did not file a return of income.

Addition of Rs. 5 lakhs:
The Tribunal found that the assessee and his wife were partners in M/s. Apollo Multi Specialty Hospital, and the firm had confirmed the withdrawal of Rs. 5 lakhs. The financials of the firm showed the capital account debited by Rs. 5 lakhs. Thus, the addition of Rs. 5 lakhs was deleted.

Addition of Rs. 65,200/-:
The Tribunal upheld the addition of Rs. 65,200/- as the assessee did not provide documentary evidence to show that the amount was available with him.

Conclusion:
The appeal of the assessee was partly allowed, with deletions of Rs. 10 lakhs and Rs. 5 lakhs from the total addition, while the additions of Rs. 2.40 lakhs and Rs. 65,200/- were upheld. The order was pronounced on 15th November 2023.

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