Sri [Name Redacted] V. Income Tax Appellate Tribunal, Visakhapatnam

ITTA/500/2010

AI Insights

The case involves an appeal under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Visakhapatnam. The appellant, a rice mill proprietor, had received gifts from three individuals during the assessment year 2005-2006, which he claimed were genuine. However, the Assessing Officer and subsequent authorities found that the appellant failed to prove the identity, financial capacity, and genuineness of the gift transactions for two of the donors. The Tribunal upheld the disallowance of these gifts as undisclosed income. The appellant contested this decision, but the High Court found no grounds to interfere with the Tribunal's decision, citing the lack of documentary evidence to support the claims of the donors' creditworthiness and the genuineness of the gifts.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 805360 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 30-08-2010
• Assessment Year: misc
• Other Referred Cases: Saroj Aggarwal v. Commissioner of Income-Tax, U.P
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: C KODANDARAM
• Keywords: Assessment; Creditworthiness; Gift; Income Tax; Undisclosed income
• Section: 260-A

Judgement Text

"THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN I.T.T.A. No.500 of 2010 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) This appeal under Section 260-A of the Income Tax Act is preferred against the order of the Income Tax Appellate Tribunal, Visakhapatnam in ITA No.119/Vizag/2009 dated 18.09.2009. The appellant herein is the proprietor of a rice mill. For the assessment year 2005-2006, he filed a return on 27.10.2005 admitting to an income of Rs.55,500/-, and agricultural income of Rs.72,000/-. During the course of assessment proceedings, the Assessing Officer noticed that the appellant had received gifts from three persons i.e., Rs.2,00,000/- from one Sri Palli Rama Murthy, Rs.1,50,000/- from Sri G. Sanyasi Naidu and Rs.1,50,000/- from Sri M. Satyanarayana. On the ground that the assessee had failed to establish the ingredients required for a valid gift i.e., (1). the identity of the donor; (2). his financial capacity to make such gift; and (3). the genuineness of the gift transaction, the assessing authority treated the alleged gift amounts received from Sri G. Sanyasi Naidu and Sri M. Satyanarayana as undisclosed income of the assessee. The Commissioner of Income-Tax (Appeals), in his order dated 05.02.2009, held that the gift received by the appellant from Sri Palli Rama Murthy, his father-in-law, for Rs.2,00,000/- was a genuine transaction. The CIT (Appeals) disallowed the other two gifts of Rs.1,50,000/- each said to have been given by Sri G. Sanyasi Naidu and Sri M. Satyanarayana. Aggrieved thereby the appellant filed an appeal before the I.T.A.T. The Tribunal, in the order under appeal, held that except for oral contentions, no documentary evidence was placed on record regarding the credit worthiness of the donors, and genuineness of the gift; undisputedly the gift was given in cash without any occasion; there was no direct relationship between the assessee and the donors; they were distant relatives; the onus to prove the genuineness of the gift was on the assessee, and he was required to place all relevant evidence to prove the creditworthiness of the alleged donors, and the genuineness of the gift; and the assessee had not placed any evidence with regards the occasion for which the gifts were made to the asseessee, as also the financial position of the donors. Sri C. Kodandaram, Learned Senior Counsel appearing on behalf of the appellant, would submit that, while the assessee was the cousin brother’s son of Sri M. Satyanaranaya, he was the cousin sister’s son of Sri G. Sanyasi Naidu; Sri M. Satyanarayana, in his oral evidence, had stated that he had brought up the assessee and, with a view to provide him cash assistance at the time of construction of the rice mill, had made a gift of Rs.1.5 lakhs; and regarding their creditworthiness, while Sri M. Satyanarayana had stated that he had derived the income from agricultural activities of Rs.2,00,000/-; Sri G. Sanyasi Naidu had stated that he has getting salary income of Rs.3,300/- per month from the postal department, and he derived agricultural income of Rs.1.50 lakhs after meeting all expenses. A perusal of the statements, on which the Learned Senior Counsel placed reliance, would reveal that, while the alleged donors claimed to have made the gift from out of their agricultural income, no documentary evidence was placed on record to establish that they derived agricultural income between Rs.1,50,000/- to Rs.2,00,000/- in that year. The Assessing Officer, the CIT (Appeals), and the Tribunal, have all held that the assessee had failed to establish the creditworthiness of the alleged donors. On the basis of the material on record, the authorities have concluded that the appellant had failed to establish the creditworthiness of the creditors. An appeal, under Section 260-A of the Income Tax Act, can be entertained only on a question of law, and this Court would not interfere with the findings of fact recorded by the Tribunal, save perversity or a finding based on no evidence. The finding recorded by the Tribunal is on the basis of the material on record, and cannot be said to be either perverse or to be based on no evidence. The judgment relied on by the Learned Senior Counsel in Saroj Aggarwal v. Commissioner of Income-Tax, U.P[1] is misplaced. In Saroj Aggarwal1, the Supreme Court held that a hyper-technical or a legalistic approach should be avoided. The view we have taken is neither based on a hyper-technical nor a legalistic approach. All the authorities (the assessing authority, CIT (Appeals) and the Tribunal) have come to a similar conclusion that the creditworthiness of the donors have not been established by the assessee. We are satisfied that the conclusions arrived at by the authorities below is on the basis of the material on record. We see no reason, therefore, to interfere with the order under appeal. The appeal fails and is, accordingly, dismissed. ______________ V.V.S.RAO, J ____________________________ RAMESH RANGANATHAN,J Date: 30.08.2010 MRKR [1] 56 (1985) ITR 497 "