The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on account of the appellant’s failure to prove the genuineness of heavy denomination cash gifts, upheld the addition Under Section 69A of the Income Tax Act, 1961
The aforesaid decision was made by the Delhi ITAT, when an appeal was filed before it by the assessee, as against order the dated 11.01.2021,passed in appeal no. 10293/2018-19, for the assessment year 2015-16, by the Commissioner of Income Tax (Appeals), New Delhi (F.A.A.), in regard to the appeal before it, arising out of assessment order dated 31.12.2018, u/s 153A/143(3) of I.T. Act, 1961, passed by ACIT, Central Circle-16, New Delhi (the A.O).
The facts of the case were that a search and seizure operation was carried out on Deepak Talwar Group on 22.06.2016 and the case of appellant was also covered under search.
Accordingly, the case of Appellant for the above Assessment Year was taken up for search and seizure assessment under Section 153A r.w.s. 143(3) and subsequently a notice under section 142(1) of the Income Tax Act was issued to the Appellant.
The appellant filed her return of income for the A.Y. 2015-16 on 06.12.2018, declaring total income of Rs. l,52,780/-whereas the assessment had been framed at an income of Rs. 39,52,780/, subsequent to which the AO made additions of Rs. 3,50,000, u/s 69A, on account of unexplained cash deposit, as well as an addition Rs. 34,50,000/, u/s 69Aon account of unexplained money credit.
The situation was such that, during the year under consideration, the assessee had deposited a cash total, amounting to Rs. 3,50,000/- around in her bank account, and in this respect, the appellant claimed that the source of the cash deposited in her bank account was on account of gifts received from various relatives, family members on different occasions like Birthday, Raksha Bandhan, Diwali, Milestones achievements etc.
It was claimed that as per section 56 of the Act, gift received from the family Members and relatives, do not come under the purview of Income Tax and that the same are exempt for the Tax. However, the AO considered the plea to be after thought and considered the cash deposited as unexplained cash.
Further, during the assessment proceedings the appellant was asked toexplain a credit entry of Rs. 34,50,000/- in her Indian bank statement with a narration “by RTGS- HSBC0400002-Karina Kapoor channel”, with regard to which the explanation given by the assessee was dissatisfactory.
Thereafter, an addition was made by the AO on this account but the same was deleted by the CIT(A), and it is in respect of the other addition made by the AO with regard to the unexplained cash deposit as claimed by the assessee to be received from her family members and relatives, that the instant appeal is preferred before the Delhi Income Tax Appellate Tribunal Bench.
The grounds of the assessee’s appeal being that the CIT(A) has erred in law and on facts, while confirming the addition of Rs. 3,50,000/- on account of unexplained cash deposit u/s 69A r.w.s 115BBE of the act, while the appellant left no stone unturned to give the lawful evidence of receipt of such amount during the appeal proceedings and no incriminating material to substantiate the confirmation of the impugned addition were found by the CIT(A), that he confirming of the addition for Rs. 3,50,000/- is without appreciating the evidence furnished and without producing any incriminating material been found in this regard, and further that the CIT(A) has erred in law and facts while confirming the addition of Rs. 3,50,000/- on account of unexplained cash deposit u/s 69A r.w.s 115BBE of the act, while not appreciating that the appellant has received the impugned amount as a gift in her bank account from her relatives and that as per the provisions laid in Sec 56(2)(vii) of the act, the gifts received from relatives is not taxable in the hand of the recipient, and hence that the confirming such of addition for Rs. 3,50,000/- is bad in law, which is liable to be deleted.
Hearing the opposing contentions of either sides as submitted by Sh. Lakshay Gupta, CA & Sh. Rajat Vaishnaw, Adv, on behalf of the assessee, and by Mohd. Gayasuddin Ansari, the CIT(DR), on behalf of the Revenue, the Delhi Bench of the ITAT observed:
“The bench is of considered opinion that the cash/monetary gifts on the occasion referred by the assessee are either customary or out of token of love and affection and intended to be in lieu of material gifts reasonably given on the occasion or as good omen (shagun). These cash gifts, unlike Pin Money are ‘a little something” or ‘spending money’ to be spent on trivial needs or to create a memory of the event and cash gift itself.”
“However, when an assessee deposits these collected amounts of cash gifts in bank, and thus creates a capital or investment out of these cash gifts, the assessee is expected under law to offer a reasonable explanation of the sources and justification of the occasions and the relationships, to have received heavy denomination cash gifts or beyond threshold limits. Further that under what circumstances these cash gift amount got accumulated over the period, so as to be deposited a lump sum, in particular FY. In the case in hand there is nothing factual or substantial to disagree with the reasons of Ld. CIT(A). The burden was on assessee to give ‘satisfactory explanation’ for the purpose of Section 69A of the Act.”, the coram comprising of Shamim Yahya, the Accountant Member, and Anubhav Sharma, the Judicial Member further noted.
Thus, dismissing the assessee’s appeal the Delhi Bench of the Tribunal held that,
“The assessee certainly failed to bring forth evidence sufficient discharge that burden. So, the Ld. CIT(A) was justified to sustain the addition. No interference is called for. Accordingly, there is no substance in the ground no 3 and same is decided against the assessee. Consequently, the appeal of assessee is dismissed.”
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