The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the gift received from the mother shall not be termed as unexplained cash credits hence no addition shall be imposed under Section 68 of the Income Tax Act, 1961.
During the year under consideration, the assessing officer observed that there was an increase in the capital from ₹ 14,88,157/- to ₹ 28,77,899/-. The assessee submitted that the capital of the current year included the profit of the current year and a gift given to the assessee by his mother. The assessee submitted the gift deed and bank statement showing a gift of ₹ 11,98,025/-.
The Assessing Officer submitted that the gift was not genuine for the reason that the affidavit demonstrated that the stamp paper used for making the deed of purchase was and the gift deed was written i.e. the date on which the money was transferred.
It was observed that normally gift is given in round figures, whereas in the instant case amount gifted was not so. In view of the above, the Assessing Officer held that the gift of ₹11,98,025/- was an unexplained cash credit in the hands of the assessee.
The assessee submitted that no incriminating material was unearthed during the course of the search, which formed the basis for the addition. The gift deed was discarded by the Assessing Officer on the ground that genuineness of the said could gift deed was in doubt.
However, the gift deed was duly supported by bank transfer from the bank account in which the mother of the assessee is the primary holder to the account of the assessee during the year under consideration. And has not been transferred by way of a single transfer on a single date, but comprises multiple transfers made to the account of the assessee on various dates though under Gift Deed gives a consolidated figure of these multiple transfers.
The Two-member bench comprising of Waseem Ahmed (Accountant member) and Siddhartha Nautiyal (Judicial member) held that the gift deed was an afterthought since the aforesaid transfers were made on dates much prior to the date when the search was carried out at the premises of the assessee and notice under Section 153A of the Income Tax Act was issued to the assessee.
The gifted deed was on a stamp paper and the same was also duly supported by way of bank transfers and the assessee has been able to reasonably explain the source of the gift from his mother. Thus, the additions are liable to be set aside and the appeal of the assessee was allowed.
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