SHRI USHABEN H. GHADIA, MUMBAI V. DYC CIT -CC-1(1), MUMBAI

ITA 618/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6196 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Source of fund; Set aside
• Section: 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Before Shri Shamim Yahya, Accountant Member I.T.A. No. 618/Mum/2021 (Assessment Year 2014-15) Ushaben H Ghadia 1702/1703, Mill Grand Plot No.71B, Sector-11, Kharghar Navi Mumbai-410 210 PAN : AALPG1400B Vs. DCIT,CC-1(1) 9 th Floor Prathishta Bhawan Old CGO Annexe M.K.Road Mumbai-400 020 (Appellant) (Respondent) Assessee by Shri Hiral Sejpal Department by Shri T.Sankar, Sr.AR Date of Hearing 10.01.2022 Date of Pronouncement 23 .03.2022 O R D E R Per Shri Shamim Yahya (AM) :- This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-47 dated 10.03.2021 and pertains to assessment year 2014-15. 2. Grounds of appeal read as under:- Ground No. 1 1.1 On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax (Appeals}-47 Mumbai ['the CIT(A)'], erred in upholding the additions made by the Deputy Commissioner of Income Tax, Central Circle - 1(1) ('the AO') amounting to Rs. 1,99,725/- u/s 68 of the Income Tax Act, 1961 ('the Act'} in respect of the gifts received from Haribhat Vekariya alleging that the creditworthiness of the lender was not established. 1.2 The CIT(A) erred in - • Disregarding the factual and legal submissions made by the appellant at the time of appeal; ITA No.618/M/2021 2 • Not making any further investigation with respect to the claim; and • Verifying the source of source of the lender. 1.3 The Appellant therefore prays that the AO be directed to delete the aforesaid additions amounting to Rs. 1,99,725/-. Ground No. 2: 2.1 On the facts and circumstances of the case and in law, the CIT(A) erred in disallowing the deduction claimed u/s 80C on account of tuition fees paid amounting to Rs. 75,539/-. 2.2 The appellant prays that such disallowance of deduction made be allowed. 3. Brief facts of the case are that the appellant is an individual having source of income from business income, income from house property and income from other sources. The appellant is also a partner in the partnership firm M/s. Millennium Associates. A search action u/s 132(1) was conducted on 28.01.2015 at the residential premises of the appellant. The appellant has received the gift of Rs. 5,35,000/- from Smt. Hansaben Vagasiya and gift of Rs. 1,99,725/- from Shri Haribhai Vekariya, being a person covered by the definition of 'relative' under Explanation (e) to Section 56(2) of Income lax Act, 1961, which have been disallowed and added back as unexplained gifts. 4. Upon assessees appeal, ld.CIT(A) deleted the addition for Rs. 5,35,000/- by holding as under:- “I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. Ground nos. 2 & 3 deal with the addition of Rs. 5,35,000/-made by the AO as unexplained gift received from Smt. Hansaben Vagasiya, sister of the assessee. While completing the assessment the AO added the same amount in the hands of the assessee primarily in the grounds that returned income of donor was only Rs. 2,19,480/-. The assessee, during the course of appellate proceedings has argued that Smt. Hansaben Vagasiya is regularly assessed to tax since last several years and derives income from commission, interest and other sources. It has been stated that the donor has given loans to several persons in the past, where interest of Rs. 1,95,480/- has been received during the year and similarly incomes have been received in the past as also in subsequent years. The in this regard also produce ITA No.618/M/2021 3 bank statement of Smt. Hansaben Vagasiya,the donor. From the perusal of bank statement it is gathered that no cash deposits have been made therein. Since the donor is a close relative and is been assessed to tax and no cash deposits as such has been made in the bank account before giving gift to the assessee, it could not be said that gift given by her was improper or unexplained. Accordingly the addition made by the AO in this regard is directed to be deleted.” 5. Ld.CIT(A) upheld the addition of Rs. 1,99,725/- by holding as under:- “I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. In these grounds the assessee has disputed the addition of Rs. 1,99,725/- made by the AO as unexplained gift from Shri Haribhai Vekariya. While completing the assessment the AO held that the donor is not assessed to tax and his sources of income are unknown. Further the AO observed even the bank statement of the donor was not given by the assessee and therefore he treated the gift as unexplained. During the course of appellate proceedings the assessee however argued that Shri Haribhai Yekariya is uncle of the assessee and derives income from agriculture. It has been mentioned that he owns 20 acre of agricultural land at Saurashtra and in this regard some 7/12 extract of land ownership was also given. The assessee accordingly argued that gift given by Shri Haribhai Vskariya may be treated as explained. I have considered the arguments of the assessee and facts of the case. Admittedly the donor is not being assessed to tax and therefore the sources of his income are not clear. Secondly the gift has been given through demand draft and not through cheque therefore it can be safely assumed That the demand draft was made through deposition of cash. Though the donor owns some agricultural land but it does not clearly establish that he actually earned sufficient income from the source so that he could have generated enough surplus, after meeting his own expenses, to give gift to the present assessee. Further no proof of earning agricultural income, like sale of agricultural produce etc. has been furnished by the assessee. In these circumstances the gift given by him to the assessee could not be treated as explained. Therefore addition made by the AO in this regard is upheld.” 6. Against the above order, assessee is in appeal before the ITAT for the sustenance of addition of Rs. 1,99,725/-. ITA No.618/M/2021 4 7. I have heard both the parties and perused the records. I find that ld.CIT(A) has deleted the first addition of Rs.5,35,000/-, but he has upheld the addition of Rs.1,99,725/-,the reasoning by which ld.CIT(A) has deleted the first addition in any considered opinion duly applies to the second addition. The revenue is not in appeal against the decision of first addition. 8. I note that it is not the case that revenue did not have the name and address of the person giving the gift. It is also not the case that the enquiry was made and the said person has failed to respond. The ld.CIT(A) has also accepted that the said person is having agricultural income and agricultural land. By no stretch of imagination, it can be presumed that people having agricultural income cannot make a small savings to give a small amount of loan or gift. Addition by such presumption without making any cogent enquiry is not sustainable in law. Accordingly, the addition sustained by the ld.CIT(A) is liable to be set aside. I direct accordingly. 9. As regards ground No.2, ld. Counsel of the assessee submitted that she will not be pressing for the same. Hence the same is dismissed as not pressed. 10. In the result, assessee’s appeal is partly allowed. Pronounced in the open court on 23 .03.2022 Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 23 .03.2022 Thirumalesh, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) ITA No.618/M/2021 5 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai