The Income Tax Appellate Tribunal (ITAT), Bangalore Bench deleted the addition under Section 68 of the Income Tax Act, 1961 as assessee discharges Burden of proof as to source of gift and the identity of donor.
The assessee, Y.C.Kallinatha is an individual, deriving income from house property, salary from partnership firm, business income and income from other sources. For the assessment year 2011-2012, return of income was filed declaring total income of Rs.59,91,040. The assessment was selected for scrutiny by issuance of notice under section 143(2). The scrutiny assessment u/s 143(3) was completed by determining the total taxable income at Rs.83,53,890. One of the additions made by the Assessing Officer was a sum of Rs.22.50 lakh received from assessee’s brother-in-law, Mr.T.C.Shivakumar.
Aggrieved by the order of the Assessing Officer making the addition of Rs.22.50 lakh, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the addition made by the Assessing Office.
Mr. Ravishankar S.V., Counsel for the assessee has filed a paper book comprising of 71 pages inter alia enclosing the pass book of the donor as well as the donee, sworn statement of donor, written submissions filed before the CIT(A), gift deed of Smt.R.Rajeshwari given to T.C.Shivakumar, copy of return of income for Assessment Year 2011- 2012, copy of balance sheet for the year ending 31.03.2011, etc.
The coram of Accountant Member, B.R.Baskaran and Judicial Member George George K ruled that the assessee in this case has proved the source of gift, the identity of the donor and produced the bank account copy to prove that the amount was received through banking channel. The Assessing Officer had also summoned the donor, who deposed before him confirming the gift. Admittedly, the assessee’s brother-in-law received the gift of sum of Rs.25 lakh from his sister through banking channel vide gift deed dated 10.08.2010. A copy of the gift deed was also furnished to the A.O. The A.O. has not doubted the source available to the sister of T.C.Shivakumar and no inquiry was made in this regard. In other words, the A.O. having not doubted the gift made by the sister of Shri T.C.Shivakumar, which in turn was partly utilized by Shri T.C.Shivakumar for making gift to the assessee, cannot make an addition u/s 68. Since the addition cannot be sustained both u/s 56(2)(vi) nor u/s 68, the same needs to be deleted.
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