Addition under Section 68 for NRI son's gift unjustified when assessee provides sufficient evidence of genuineness and donor's capacity

ITAT Mumbai held that addition u/s 68 regarding gift received from NRI son was unjustified. AO relied solely on unverified Google searches and newspaper reports without conducting independent inquiry or cross-verification. Assessee provided sufficient evidence establishing genuineness of gift and donor's financial capacity through bank statements showing adequate funds. AO failed to rebut or discredit assessee's evidence. Revenue could not provide contradictory material. Addition was baseless and decided against revenue.

---

---

Issues:
- Appeal against order of National Faceless Appeal Centre under Income-tax Act, 1961 for Assessment Year 2011-12.
- Addition of Rs. 3 crore as unexplained cash credit under section 68 of the Act.
- Challenge to the genuineness of the gift received by the assessee from her son.
- Allegation of colorable device to invest in Indian Security market.
- Burden of proof on the assessee regarding the source of money and credit entries under section 68 of the Act.

Analysis:
1. The appeal was filed against the order of the National Faceless Appeal Centre under the Income-tax Act for Assessment Year 2011-12. The case involved the addition of Rs. 3 crore as unexplained cash credit under section 68 of the Act. The assessee received the gift from her son, an NRI, and the genuineness of the transaction was challenged by the revenue. The Assessing Officer (AO) raised concerns about the creditworthiness of the donor, the son of the assessee.

2. The revenue's grounds of appeal questioned the allowance of the entire gift amount claimed by the assessee and the deletion of the addition made under section 68. The revenue argued that the donor's funds were generated from a hedge fund banned by SEBI, indicating lack of creditworthiness. The revenue relied on the impugned assessment order, emphasizing the absence of creditworthiness as the basis for the addition.

3. The assessee, on the other hand, contended that she had provided necessary details and evidence to establish the genuineness of the gift. The donor had sufficient funds in his bank account at the time of gifting the amount to the assessee. The assessee's submissions included bank statements and the identity of the donor, shifting the burden of proof to the AO. The assessee's argument was supported by the Ld. CIT(A)'s decision in her favor.

4. The Ld. AR highlighted that the donor's bank account balance before and after the gift transaction demonstrated creditworthiness. The ban on the hedge fund by SEBI was lifted, and the AO's reliance on unverified sources for the addition was baseless. The evidence provided by the assessee was not refuted during the assessment.

5. Upon review, the Tribunal found that the assessee had substantiated the genuineness of the gift and the donor's financial capacity. The AO's reliance on unverified information and lack of independent inquiry to challenge the donor's credibility were noted. The grounds raised by the revenue were dismissed, upholding the Ld. CIT(A)'s decision in favor of the assessee.

6. In conclusion, the appeal of the revenue was dismissed, affirming the deletion of the addition of Rs. 3 crore as unexplained cash credit under section 68 of the Income-tax Act for Assessment Year 2011-12. The Tribunal found no infirmity in the appellate order and pronounced the decision accordingly.

---