2025 (2) TMI 235 - AT - Income Tax

Unregistered gift deed from deceased father valid when original document presented and source established through agricultural land sale

ITAT Chandigarh held that an assessee successfully explained undisclosed cash deposits as gifts from her deceased father through an unregistered gift deed ... Undisclosed cash deposit in the bank account - onus to prove - assessee explained that she had received the said amount by way of gift from her late father and submitted a copy of Halfia Bian/gift deed executed by her Late Father as well as copy of the sale deed executed by her Late Father whereby he has sold his agriculture land HELD THAT:- A registered gift deed will no doubt have an edge over an unregistered gift deed, at the same time, mere nonregistration of the said gift deed is not sufficient to dislodge the existence and contents of such gift deed, more so where the original gift deed has been presented for verification before the AO and the AO has failed to carry out any further verification/examination and without bringing any adverse material on record. As far as non-production of the bank account statement of the assessee’s late father is concerned, the assessee has tried to obtain the bank statement of her late father, but the same couldn’t be obtained inspite of her best efforts, however where the mode of gift is clearly in cash, the bank statement even if produced would only corroborate the gift deed and cannot dislodge the gift deed and the contents and source of such gift which is otherwise clearly established. Assessee has thus discharged the necessary onus in terms of explaining the nature and source of receipt in her bank account by way of gift of money from her late father and even the creditworthiness and source of funds in the hands of the her late father has been duly demonstrated, being the sale proceeds of agriculture land, a factum which has been separately verified and accepted in the assessment proceedings undertaken u/s 147 r/w 143(3) of the Act. AO was not justified in treating the gift received by the assessee from her late father as her income from undisclosed sources. Decided in favour of assessee. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment were:Whether the addition of Rs. 40,00,000 to the assessee's income as income from undisclosed sources was justified.Whether the assessee had adequately explained the source of the cash deposits in her bank account, purportedly received as a gift from her late father.The validity and sufficiency of the evidence provided by the assessee to substantiate the claim of the gift.ISSUE-WISE DETAILED ANALYSIS1. Addition of Rs. 40,00,000 as Income from Undisclosed SourcesRelevant legal framework and precedents: The assessment was based on Section 69A of the Income Tax Act, which deals with unexplained money. The section allows for the money found to be deemed as income if the assessee offers no explanation about the nature and source or if the explanation is unsatisfactory.Court's interpretation and reasoning: The Tribunal examined whether the assessee had sufficiently discharged the onus of proving the source of the cash deposits. The Tribunal considered similar cases where the explanation of gifts was accepted based on corroborative evidence.Key evidence and findings: The assessee claimed that the amount was a gift from her late father, supported by a 'Halfia Bian' (gift deed) and a sale deed of agricultural land executed by her father. The AO found the gift deed unregistered and self-serving, and noted the absence of a bank statement to corroborate the cash withdrawal by the father.Application of law to facts: The Tribunal noted that the assessee provided a plausible explanation supported by documentation. The lack of a bank statement was not deemed critical due to the nature of the gift being in cash, which was corroborated by the sale deed.Treatment of competing arguments: The Tribunal compared the AO's skepticism against the assessee's evidence and efforts to substantiate her claim. The Tribunal found that the AO did not bring any adverse material to counter the assessee's claim effectively.Conclusions: The Tribunal concluded that the assessee had adequately explained the source and nature of the cash deposit, and the addition of Rs. 40,00,000 as income from undisclosed sources was unjustified.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: The Tribunal emphasized, 'The assessee has thus discharged the necessary onus in terms of explaining the nature and source of receipt in her bank account by way of gift of money from her late father and even the creditworthiness and source of funds in the hands of her late father has been duly demonstrated.'Core principles established: The judgment reinforced the principle that the onus of proof regarding the source of funds lies with the assessee, but once a plausible explanation supported by evidence is provided, the burden shifts to the Revenue to disprove the claim.Final determinations on each issue: The Tribunal allowed the appeal, directing the AO to delete the addition of Rs. 40,00,000 from the assessee's income, thereby granting relief to the assessee.