TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 2247
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.... a partner were assessed to income-tax and that they did not file returns of income upto the A.Y. under consideration and that the firm's books of accounts were not audited. 4. CIT(A) erred in ignoring the fact that the gift declaration document is a dumb document without even mentioning the relationship between the donor and the donee. 5. CIT(A) erred in ignoring the fact that vide the letter filed before A.O. on 05-12-2015, the assessee ahd stated that "during the FY. 2013-14, a sum of Rs. 1,83,00,000/- has been received as cash gifts from others on various occasions and has been offered to tax", whereas in the appellate proceedings the assessee contended that the gift was received from one person on a single day and that the gift was exempt u/s 56(2)(vii). 6. CIT(A) erred in holding that the gift is exempt u/s 56(2)(vii) ignoring the fact that the assessee himself admitted the said sum received as income from other sources (and had not claimed it as exempt u/s 56(2)(vii)). 7. CIT(A) erred in deleting the addition made of Rs. 1,82,34,150/- towards the cash deficit in the cash book. 8. CIT(A) erred in holding that as the cash gift recei....
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.... to cover up the negative cash balance disclosed in her books of accounts. It was observed by him that the assessee in the guise of aforesaid gift transactions had introduced in the books of accounts the cash sourced from her unexplained sources. Accordingly, the AO based on his aforesaid deliberations held the amount of Rs.1.83 crores (supra) received by the assessee as an unexplained cash credit u/s 68 of the Act. The AO vide his order u/s 143(3) dated 30.12.2016, after inter alia, making the aforesaid additions determined the income of the assessee at Rs. 6,32,81,250/-. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 7. The assessee during the course of the appeal proceedings, had claimed before the CIT(A) that the subject cash gift of Rs. 1,83,00,000/- (supra) was received by her on 05.03.2014 from Smt. D. Rajeswaramma, grandmother of her husband. The assessee based on her aforesaid fresh claim assailed the addition of Rs.1.83 crore (supra) that was made by the AO u/s 68 of the Act. It was further stated by the assessee that as the subject amount was received by her from her relative, but was wrongly disclosed as income from other sources, thus,....
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....ed on the aforesaid facts/details collated by him, observed that the claim of the assessee of having received a cash gift of Rs. 1.83 crore (supra) from Smt. D. Rajeswaramma (supra), which in turn was stated to have been sourced out of the cash withdrawal made by the latter from her "capital account" with M/s R.R. Estates & Projects for the year ending 31.03.2014 did not have any sanctity as no return of income was either filed by the said firm nor by the partner, i.e. Smt. D. Rajeswaramma (supra). Accordingly, the AO vide his "remand report" objected to the veracity of the claim of the assessee of having received a cash gift of Rs. 1.83 crore (supra) from Smt. D. Rajeswaramma (supra). Also, the AO drawing support from the fact that both the assessee and M/s R.R. Estates and Projects (PAN: AAKFR7024H) shared the same address in Bangalore, thus, held a firm conviction that the assessee had come up with a concocted story to relate the unexplained cash credits in her books of accounts with the withdrawals made from the aforementioned firm. 10. The CIT(A) after receiving the aforesaid "remand report" of the AO, made available a copy of the same to the assessee to rebut the observati....
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....proceedings failed to come forth with the requisite details regarding the alleged gift transactions, viz., the identity and creditworthiness of the donors, as well as the occasion on which the gifts were received by her, therefore, the AO for the said reason had held the amount of Rs.1.83 crores (supra) received by the assessee on 31.03.2014 as unexplained cash credit u/s 68 of the Act. 15. Ostensibly, the assessee in the course of the proceedings before the CIT(A) had come up with a new set of facts, viz. (i) the cash gift of Rs. 1.83 crore (supra) was received by her from Smt. D. Rajeswaramma, i.e husbands grandmother; and (ii) that the subject cash gift was actually received by her from Smt. D. Rajeswaramma on 05.03.2014 and was inadvertently posted in the "books of accounts" on 31.03.2014. As observed herein above, the assessee, to substantiate her claim of having received the cash gift of Rs. 1.83 crore (supra) from Smt. D. Rajeswaramma (supra), had in the course of the remand proceedings filed with the AO, a "declaration" of the said person, which reads as under: 16. On a careful perusal of the aforesaid "declaration", it transpires that though the alleged donor had sta....
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....ently done with a motive, i.e., for projecting the availability of sufficient cash balance on 05.03.2014 for sourcing the cash payment of Rs. 3,83,50,000/- to M/s R.R Enterprises on 05.03.2014, and thus, nullifying the separate addition that was made by the A.O on account of deficit/negative cash balance of Rs.1,82,34,150 (supra) on the said date i.e 05.03.2014. We are of the firm conviction that not only the claim of the assessee of having received the cash gift of Rs.1.83 crores (supra) from Smt. D. Rajeswaramma is nothing but a colorable device, the brainchild of an afterthought- a concoct story hatched to explain the cash credits in her books of accounts; but also by preponing the receipt of the said amount to 05.03.2014 (supra), as against that as was earlier claimed before the A.O based on the entry in the books of accounts to have been received on 31.03.2014, is nothing but an attempt on her part to undo the negative/deficit cash balance on 05.03.2014 in her books of accounts and seek a consequential deletion of the separate addition Rs. 1,82,34,150 (supra) made by the A.O. We find it incomprehensible that now when the assessee in her documents filed in the course of assessm....
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.... restore the addition made by the AO. The Ground of appeal No. 7 raised by the revenue is allowed in terms of our aforesaid observations. 19. The Grounds of appeal Nos. 8 & 9 being general are dismissed as not pressed. 20. Resultantly, the appeal filed by the Revenue is allowed in terms of our aforesaid observations. Order pronounced in the Open Court on 16th May, 2025. ============= Document 1 ut B.Srilakslimi, Nellore. 6.4 I have considered the findings of the Assessing Officer in the assessment order and remand report and written submissions of the appeilant carefully. The Assessing Officer made an addition of Rs.1,83,00,000/- in the order of assessment on the ground that the appeilant had not established the identity of donor, credit-worthiness and genuineness of the gift recorded in the books of accounts. Subsequently, during the course of remand proceedings, the appellant had submitted the declaration of confirmation of gift from D. Rajeshwaramma, the grandmother (i.e. husband's mother's mother), dated 5.3.2014, as under :- "DECLARATION I. D. Rajeswaramma, W/o Sri D.Shankar Reddy, residing at Mudivarthi Village, Nellore District- 524137 do hereby solemn....
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....ch 2014 D Rajeswaramma Particulars Amount(in Rs.) 2014 | Particulars Amount(in Rs.) Drawings 35,000,000 By Balance b\d 5,538,499 Share of Los 1.193 ] By Capital Overdrawn 29.462.693 Total 35,001,193 Total $5,001,193 D Rajeswaramma 2014 | Particulars Capital Account of Indiramma for the year ended 31st March 2014 Particulars Amount(in Rs.) Particulars Amount(in Rs.) To Share of Loss 1,193 |By Balance byd 5,538,500 53%.308 Total 5,538,500 5,538,500 6.6 During the course of remand proceedings, the AR of the appellant Sri K. Srinivasulu appeared before the AO on 25.7.2018 and filed the day book of the firm M/s.R.R. Estates & Firms, Bangalore, for verification. The AO also addressed a letter dated 26.6.2018 to DCIT, Central Circle-1(3), Bengalore, requesting to provide copy of return of income for AY 2014-15 filed by M/s.R.R. Estates & Projects, Bangalore, and also to confirm the withdrawal of cash of Rs.3.5 crores by the partner Smt.D.Rajeshwaramma, on 5.3.2014, as claimed by the assessee. In response, DCIT, Central Circle-1(3), Bengalore, has informed vide letter dated 18.7.2018 that the assessee M/s.R.R. Estates & Projects, Bangalore,....
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....admission of the claim relying on the decision of the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd., Vs. CIT, 229 ITR 383 (SC), and decision of the Bombay High Court in the case of CIT Vs. Pruthvi Brokers & Shareholders reported in 349 ITR 336 (Bombay). On consideration of the legal position enunciated by the Hon'ble Supreme Court of India and Bombay High Court in the cases cited supra. I am of the considered view that appellant's claim for treating an amount of Rs. 1.83 Crores as exempt u/s.56(2)(vii) of the I.T. Act. The plea for rejection of the fresh claim by the AO merely on the basis of conjectures and surmises is not acceptable. Thus in this case, the identity of the donor, the credit-worthiness of the donor and genuineness of the transaction was established by the appellant through Page 23 of 36 is also seen that assessee has not filed any return for Asst. Year 2014-15 (screen shot enclosed). It can also been observed that the assessee has not filed Form-3CD for any of Assessment years. Therefore, the information sought by you is not available for furnishing you the same." 6.7 The AO disbelieved the sources of gift declaration of Rs.....