DR. JIGNESH N.MEHTA, MUMBAI V. ITO WARD 16(2) (5) MUMBAI, MUMBAI

ITA 1539/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7721 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Source of fund; Onus to prove; Set aside
• Section: 68; 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri B.R. Baskaran (AM) & Shri Kuldip Singh (JM) I.T.A. No. 1539/Mum/2021 (A.Y. 2012-13) Dr. Jignesh Natwarlal Mehta 9 Sarang Apartment Bajaj Road, Vile Parel-West Mumbai-400 056. PAN : AAMPM1410G Vs. ITO Ward 16(2)(5) Professional Circle Aayakar Bhavan M.K. Road Mumbai-400 020. (Appellant) (Respondent) Assessee by Shri K. Gopal Department by Shri Kanhiya Lal Kanak Date of Hearing 17.05.2022 Date of Pronouncement 13.07.2022 O R D E R Per B.R.Baskaran (AM) :- The assessee has filed this appeal challenging the order dated 12.07.2021 passed by Learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to the assessment year 2012-13. The assessee is aggrieved by the decision rendered by Learned CIT(A) in respect of following additions:- (a) Gift receipts added u/s 68 of the Act as unexplained cash credits. (b) Addition of cash deposits into bank account treating it as unexplained. 2. The assessee is a dentist. It was noticed that the assessee did not file his return of income when the revenue carried out a Survey operation on 30 th August, 2016. Subsequent thereto, the assessee filed his return of income for the year under consideration on 05-10-2016, beyond the period allowed for filing return of income. The AO issued notice u/s 148 of the Act and thereafter issued notices u/s 143(2)/142(1) of the Act and completed the assessment, inter alia, making above said two additions. Both the above said additions Dr. Jignesh Natwarlal Mehta 2 were confirmed by Learned CIT(A) and hence the assessee has filed this appeal before us. 3. The first issue relates to the assessment of gifts claimed to have been received by the assessee from his in laws. The AO noticed that the assessee has claimed to have received gift aggregating to Rs.11.04 lakhs, consisting of Rs.6.02 lakhs from his father in law and Rs.5.02 lakhs from his mother in law. The AO assessed the same as unexplained cash credit on the reasoning that the assessee has failed to prove the credit worthiness and genuineness of transactions. The Learned CIT(A) also confirmed the same. 4. The Ld A.R submitted that the assessee has received above gifts from his father in law and mother in law out of natural love and affection. Both the donors are senior citizens and the gifts have given in cash out of their past savings. He submitted that both father in law and mother in law are not alive today. However, the assessee has furnished copy of gift deeds executed by both of them at the time of giving gifts. He further submitted that the father in law of the assessee was working as Assistant Collector and mother in law was working as Taluka Development officer. They have been receiving pensions. Further, they also owned agricultural lands in Valsad, from which they have also earned agricultural income. He submitted that the impugned gifts have been given out of their savings from salary income, pension income, agricultural income and other sources of income. Since they were aged, they have distributed their savings to the assessee by way of gifts. He submitted that, since both of them are not alive, the assessee could only furnish copies of gift deeds executed by them. He further submitted that the provisions of sec.68 does not provide that the cash credits should always be assessed as income. It gives an option to the AO not to assess cash credits as income considering the peculiar facts prevailing in a case. He submitted that in the facts of the present case, the assessee could not have furnished any other document/evidence other than the copies of gift deeds. Accordingly, the Ld A.R submitted that the explanations of the assessee should have been Dr. Jignesh Natwarlal Mehta 3 accepted by the AO and Learned CIT(A). Accordingly, the Ld A.R prayed for deletion of the addition. 5. On the contrary, the Ld D.R supported the order passed by Learned CIT(A). He submitted that the assessee has failed to prove the credit worthiness and genuineness of the transactions. 6. We have heard rival contentions and perused the record. Under the provisions of sec.68 of the Act, the initial onus to prove the nature and source of cash credit is placed upon the shoulders of the assessee, i.e., he has to prove the identity of the creditor, the credit worthiness of the creditor and genuineness of the transactions. If the assessee fails to prove the above said three main ingredients, then the AO may assess the cash credit as income of the assessee. As contended by the Ld A.R, an option is given to the assessing officer not to assess cash credits as income of the assessee, meaning thereby, the AO has to examine each cash credit in an objective manner. 7. Now we shall examine the facts prevailing in the instant case. The gifts have been received by the assessee from his father in law and mother in law. Both of them have executed gift deeds on the date of payment of gifts and those deeds have been notarised. These documents have been prepared prior to the commencement of assessment proceedings. Hence the genuineness of the gift deeds cannot be doubted with and in fact, the AO has also not doubted the veracity and genuineness of gift deeds. There is no dispute with regard to the fact that both the donors are retired government servants and were drawing pension. Besides, they have also earned agricultural income. Hence the explanation of the assessee that they were having past savings cannot be altogether ruled out. It is also a fact that one cannot expect such kind of persons to maintain regular books of accounts. Hence, in our view, considering their position, age etc., the existence of their credit worthiness cannot be rejected altogether. The fact is that they have given gifts during their last part of their life, which is quite natural under Indian Culture. It is an admitted Dr. Jignesh Natwarlal Mehta 4 fact that the donors are not alive and hence the assessee could not have produced them before the AO. Hence though the gifts have not been routed through banking channels, the circumstances would show that this explanation cannot be doubted with. Hence, in our view, the genuineness of gifts, in the facts and circumstances of the case, could also not be doubted with. In view of the foregoing discussions, we are of the view that the addition made u/s 68 of the Act cannot be sustained. Accordingly, We set aside the order passed by Learned CIT(A) on this issue and direct the AO to delete the addition made u/s 68 of the Act. 8. The next issue relates to the addition of unexplained cash deposits made into the bank account. The AO noticed that the assessee has made cash deposits into his bank accounts aggregating to Rs.21,85,859/-. After giving set off of gifts amounting to Rs.11,04,000/- and professional receipts of Rs.5,43,782/-, there remained a balance of Rs.5,38,077/-. The AO treated the same as unexplained bank deposits and accordingly assessed it as income of the assessee. The Learned CIT(A) also confirmed the same. 9. The explanation of the assessee with regard to cash deposits are given as under:- Professional receipts (Gross income) - 7,84,320 Gift receipts - 11,04,000 Cash withdrawn from bank redeposited - 2,97,539 --------------- 21,85,859 ========== We notice that the AO has taken professional receipts as Rs.5,43,782/- as against the amount of Rs.7,84,320/- shown in the Income and Expenditure account. Further, the redeposit of cash withdrawn on an earlier occasion has not been considered by the AO. We notice that the assessee has furnished cash flow statement before the tax authorities, but it has not been properly examined by them. In view of the above, we are of the opinion that the assessee has explained the sources of cash deposits made into the bank account. Accordingly, we are of the view that this addition cannot be Dr. Jignesh Natwarlal Mehta 5 sustained. Accordingly, we set aside the order passed by Learned CIT(A) on this issue and direct the AO to delete the addition. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 13.07.2022. Sd/- Sd/- (KULDIP SINGH) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 13/07/2022 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai