Revenue's appeal dismissed as Rs. 10.93 crore gift from Belgian brother through NRE account proved genuine under section 68

The ITAT Surat dismissed the Revenue's appeal against deletion of addition u/s 68. The assessee received a gift of Rs. 10.93 crore from a Belgian national brother through NRE account. The AO added this amount as unexplained income citing unverifiable donor address and lack of evidence. The CIT(A) deleted the addition after establishing donor's identity through notarized gift deed, creditworthiness via foreign balance sheet showing Rs. 86.12 crore capital, and genuineness through proper banking channels from Emirates NBD to Axis Bank NRE account. The ITAT upheld CIT(A)'s decision, noting PO Box addresses are common abroad and the AO failed to verify the provided Dubai address.

---

---

Issues Involved:
1. Admission of additional evidence by CIT(A) without providing an opportunity to the Assessing Officer.
2. Deletion of addition of Rs. 10,93,00,000/- made on account of unexplained credits in the guise of gifts under section 68 of the Income Tax Act, 1961.
3. Failure of the assessee to prove the identity, creditworthiness, and capacity of the donor, and the genuineness of the transaction.

Summary:

1. Admission of Additional Evidence:
The Revenue contended that the CIT(A) violated the principles of natural justice by admitting additional evidence without providing an opportunity for the Assessing Officer to be heard, as required under section 250(2) of the Income Tax Act and Rule 46A(3) of the Income Tax Rules.

2. Deletion of Addition of Rs. 10,93,00,000/-:
The Assessing Officer had made an addition of Rs. 10,93,00,000/- as unexplained credits under section 68 of the Act, claiming the amount was received as a gift from Mr. Girdharbhai Gajera, an NRI. The AO argued that the assessee failed to establish the creditworthiness of the donor and the genuineness of the transaction. The CIT(A) deleted this addition, observing that the source of the amount was from the donor's 100% owned company, Amazone Gems DMCC, and the funds were transferred through proper banking channels, establishing the genuineness, creditworthiness, and identity of the transaction.

3. Proof of Identity, Creditworthiness, and Genuineness:
The CIT(A) found that the donor's identity was established through various documents, including a notarized gift deed and bank statements. The creditworthiness was demonstrated by the donor's substantial capital in his foreign company, Amazone Gems DMCC, which had a capital balance of Rs. 86.12 crore as on 31-12-2016. The genuineness of the transaction was supported by the flow of funds through the donor's NRE bank account in India, sourced from his overseas bank account in Dubai, and corroborated by audited books of Amazone Gems DMCC.

Final Decision:
The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. It was concluded that the CIT(A) had appropriately addressed the issues of identity, creditworthiness, and genuineness of the transaction, and there was no valid reason to interfere with the findings. The appeal filed by the Revenue was dismissed.

Order Pronounced:
The order was pronounced on 17/01/2024 in the open court.

---