While hearing the case of Kamlesh Parwani, the Mumbai bench of Income Tax Appellate Tribunal (ITAT) confirmed the addition made by the Assessing Officer since the Assessee and family received huge gifts and failed to prove any relationship with the donor.
The assessee in the instant case being a resident individual engaged in the business of manufacturing of chairs and filed his return of income for the assessment year and declared his total income at Rs. 6,27,570.
During the course of assessment proceedings, the Assessing Officer (AO) noticed that the Assessee received gifts worth Rs.28 lakhs during the year from four persons including Rs.2 lakhs each from Reena Dhankani & Harish Dhankani. It was further noted by the AO that the Assessee has received similar gifts in previous years also. The Assessee and his family members regularly received similar gifts from other family members as well as outsiders.
The bench found that the Assessee has failed to submit any documentary evidence to prove the relationship between the donor regarding the gift worth Rs.2 lakhs and accordingly the AO added the same to the total income of the Assessee on as unexplained cash under section 68 of the Income Tax Act 1961 and recomputed the return and declared total income at Rs. 14,27,570 as against the earlier return by holding that the Assessee failed to demonstrate his relationship with the donors and also could not prove the financial capacity of the donors to make such gifts.
On appeal CIT(A) uphold the stand of the AO and confirmed the addition made by him. Aggrieved by the order of the authority the Assessee approached the Tribunal on further appeal.
After analyzing the above-narrated facts deeply, the Tribunal bench comprising of Judicial Member Mahavir Singh and Accountant Member Manoj Kumar Aggarwal uphold the decision of the lower authorities and observed that “the assessee miserably failed to prove the genuineness of the stated gifts”.
The division bench further observed that “While perusing the order of the lower authorities it can be noticed that the Assessee could only prove the identity of the donor but failed to establish the creditworthiness and genuineness of the gifts with a cogent material. The donors had no relationship with the Assessee and despite that huge gifts were received by the Assessee as well as his other family members during the assessment year”. Consequently, the appeal filed by the Assessee was dismissed.
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