Tribunal Upholds CIT(A)'s Decision on Bogus Gift; Assessee Prevails on Interest Charge

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 2,24,000 on account of a bogus gift, emphasizing the unreliability of the witness statement and failure to follow due process. Additionally, the Tribunal ruled in favor of the assessee regarding the charging of interest under section 234B of the IT Act, citing jurisdictional High Court judgments and deleting the interest charged. As a result, the appeal by the Revenue was dismissed, and the cross-objection by the assessee was allowed.

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Issues Involved:
- Addition of Rs. 2,24,000 on account of bogus gift
- Charging of interest under section 234B of the IT Act

Analysis:

Issue 1: Addition of Rs. 2,24,000 on account of bogus gift
The appeal was filed by the Revenue against the CIT(A)'s order, challenging the deletion of the addition of Rs. 2,24,000 on account of a bogus gift. The assessee, in response, filed a cross-objection and raised a plea regarding the charging of interest under section 234B of the IT Act. The AO formed an opinion based on the statement of Shri Sameer Mahajan that the assessee paid Rs. 2,24,000 in cash for the gift received. However, the FERA Board exonerated the assessee, stating that no contraventions were prima facie established. The CIT(A) deleted the addition after re-examining the issue in light of the statements of Shri Sameer Mahajan and the immunity granted by the Government for foreign remittances. The Tribunal, after considering the contentions and evidence presented, found that there was no justification for the addition made by the AO. The Tribunal agreed with the CIT(A)'s decision to delete the additions, emphasizing the unreliability of Shri Sameer Mahajan's statement and the failure to follow the rule of audi alteram partem.

Issue 2: Charging of interest under section 234B of the IT Act
The assessee raised a plea in the cross-objection regarding the non-adjudication of ground No. 10 related to charging interest under section 234B. The Tribunal noted that the CIT(A) had indeed adjudicated this issue in the order. However, the Tribunal agreed with the assessee's contention that without a specific direction in the assessment order, interest under section 234B cannot be charged. Citing judgments of the jurisdictional High Court, the Tribunal deleted the interest charged under section 234B of the IT Act. Consequently, the appeal filed by the Revenue was dismissed, and the cross-objection filed by the assessee was allowed.

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