short Overview : AO was not justified in treating the gifts as unexplained credit and making addition thereof on the ground that there was no occasion for the donor to give gift to his brother, i.e., the assessee.

AO treated the gifts received from brother of assessee as unexplained credit on allegation that there was no occasion for donor to give gifts to his brother and gifts were given periodically according to necessity of assessee and assessee failed to prove the genuineness of the alleged gifts.

It is held that : Gifts are normally made by relatives out of natural love and affection and do not necessarily require any particular occasion. Assessee had discharged his burden by furnishing necessary details before AO. In the absence of anything to show that the transactions were by way of money laundering, AO was not justified in making addition towards gifts when assessee had discharged his burden by proving the identity, genuineness and capacity of the donor.

Decision: In assessee’s favour.

Followed: Vempala Bala Manohar v. ITO [ITA Nos. 6, 8 & 10/Viz/2015, dt. 12-8-2016] : 2016 TaxPub(DT) 4237 (Visakhapatnam-Trib).

 

IN THE ITAT, VISAKHAPATNAM BENCH

V. DURGA RAO, J.M. AND D.S. SUNDER SINGH, A.M.

Vempala Bala Manohar v. ITO

ITA No. 181/Viz/2019

A.Y. 2013-14

6 September, 2019

Assessee by: G.V.N. Hari-Advocate.

Department by: Suman Malik-Senior Departmental Representative

V. Durga Rao, J.M.

This appeal by the assessee is directed against the order of Commissioner (Appeals)-6, Hyderabad, dt. 1-3-2019 for the assessment year 2013-14.

2. The only issue raised by the assessee in this appeal relates to addition of ₹ 12,53,000 on account of gift received from assessee’s brother.

3. Facts of the case, in brief, are that assessee is a Physician deriving income from running hospital and sono scan etc., filed his return of income by declaring total income of ₹ 7,57,080. A survey under section ec. 133A was conducted in the professional premises of the assessee on 6-7-2012. Since it is a survey case, the case of the assessee was selected for scrutiny and after issuing notices, assessment was completed under section ec. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), dt. 23-3-2016. In the assessment order, the assessing officer has noted that on verification of books of account and financial statements of the assessee, it is noticed that the assessee has shown gifts of ₹ 12.53 lakhs from Shri V. Bala Sudhakar. The assessing officer asked the assessee to explain the source of gifts. It was submitted before the assessing officer that he has received a gift from brother-V. Bala Sudhakar who is living in Doha, Qatar. He is an employee in Qatar and his wife also employee and getting salary. The assessee has filed confirmation letter from his brother and also TT vouchers showing the amount deposited in cash at Habib Qatar International Exchange Ltd. and City Exchange, Doha, Qatar. The assessee also filed bank statements in which salary of V. Bala Sudhakar is credited. The assessee also filed his bank statement of HDFC, Visakhapatnam wherein the transaction of gift is reflected. The assessing officer has examined the withdrawals made by the assessee’s brother at Doha Exchange centre and found that the amount withdrawn by the assessee’s brother is not the same amount which is deposited in Habib Qatar International Exchange Ltd. and City Exchange, Doha, Qatar. He further observed that there is no direct evidence to show that money was withdrawn from his bank account to make gifts. The assessee also failed to explain that what is the occasion to give a gift and there is no gift agreement between the donor and donee and creditworthiness is not proved. Therefore, the assessing officer is of the opinion that the gift amount of ₹ 12.53 lakhs is not a genuine gift and treated the same as unexplained investment of the assessee. As the assessee failed to produce the evidence in support of the creditworthiness of the donor as well as availability of the funds to be transferred, the same is added to the total income of the assessee as unexplained income.

4. On appeal, learned Commissioner (Appeals) confirmed the order of the assessing officer.

5. Before us, learned counsel for the assessee has submitted that the assessee is a Doctor and constructing hospital and he received gift from his own brother and filed a confirmation. The gift amount received through the banking channels and therefore the assessing officer is not justified in making the addition as unexplained investment in the hands of the assessee. He further submitted that once assessee proved the gift received through banking channels, if at all the assessing officer is having any doubt, it is the burden on the assessing officer to prove that the money received by the assessee is of his own and not gift from his brother. In this case, no such exercise has been done by the assessing officer, therefore, the orders of the assessing officer and the learned Commissioner (Appeals) are not correct in making the addition under section 68 of the Act. He relied on the decision of the ITAT, Visakhapatnam Bench in assessee’s own case in [ITA Nos. 6, 8 & 10/Viz/2015, dt. 12-8-2016] : 2016 TaxPub(DT) 4237 (Visakhapatnam-Trib) and requested same may be followed.

6. On the other hand, learned Departmental Representative strongly supported the orders of the authorities below.

7. We have heard both the sides, perused the material available on record and orders of the authorities below.

8. In this case, the assessee has received a gift of ₹ 12.53 lakhs from his brother-Shri V.  Bala Sudhakar who is working in Qatar. When the assessing officer asked the assessee about the source of gift, it was submitted that the gift is received from his own brother and his brother’s wife, both are working in Doha, Qatar and his brother is receiving allowances also apart from the salary. The assessee has filed bank statements of his brother-Shri V. Bala Sudhakar who is the donor of the gift. From the facts available on record, the assessee has withdrawn money from his bank account and the same is deposited in Habid Qatar International Exchange Ltd. and City Exchange, Doha, Qatar and the same amount is credited to the assessee’s HDFC Bank account, Visakhapatnam. The case of the assessing officer is that the assessee has withdrawn the amount from his bank account on different dates and subsequently deposited in Habid Qatar International Exchange Ltd. and the same is credited to the assessee’s HDFC bank account, Visakhapatnam. Therefore, the assessing officer is of the opinion that the same amount what was withdrawn from the bank account of the assessee’s brother was not deposited in Habid Qatar International Exchange Ltd. and City Exchange, Doha, Qatar. He further observed that there is no occasion for the donor to give gift to the assessee. There is no gift agreement between the donor and the donee, therefore the assessing officer is of the opinion that the assessee failed to produce the creditworthiness of the donor, hence he treated the entire amount of ₹ 12.53 lakhs as unexplained investment of the assessee. In this case, it is a fact that the assessee has received gift from his own brother-Shri V. Bala Sudhakar, who deposited money in Habid Qatar International Exchange Ltd. and City Exchange, Doha, Qatar, the same amount is deposited in the HDFC bank of the assessee, Visakhapatnam. The assessee has filed bank statement of the HDFC Bank and also the details of the deposits made by the donor- Shri V. Bala Sudhakar in Habid Qatar International Exchange Ltd. and City Exchange, Doha, Qatar. It is also the case of the assessee is that in Qatar, the assessee’s brother (donor) is working and getting salary and other allowances and his wife also working there and the gifts received through banking channels. The assessee also filed confirmation letter from the donor-Shri V. Bala Sudhakar. By considering the above facts, we find that the assessee has discharged his burden casted upon him that the gift received by him is a genuine gift. If at all, the assessing officer has any doubt about the gift transaction, he ought to have made a detailed enquiry and to prove that the gift received by the assessee is not a genuine gift. In this case, no such exercise has been done by the assessing officer. We find that the assessing officer has failed to prove the gift received by the assessee is not a genuine gift and simply addition is made, the same is confirmed by the learned Commissioner (Appeals). In view of the above facts and circumstances of the case, we are of the opinion that the gift received by the assessee cannot be considered as not genuine gift. The assessee has proved the identity of the parties, creditworthiness of the donor and genuineness, therefore, the assessee has discharged burden casted upon him. It is further observed that no occasion is required to receive the gift by the assessee from his brother-Shri V. Bala Sudhakar. Therefore, the assessing officer is not correct in denying the gift received by the assessee is not a genuine gift.

9. Under the similar circumstances, the assessee also received gift in earlier years, the same has been considered by the coordinate bench of the tribunal in assessee’s own case in [ITA Nos. 6, 8 & 10/Viz/2015, dt. 12-8-2016] : 2016 TaxPub(DT) 4237 (Visakhapatnam-Trib) for the assessment years 2009-10 to 2011-12 and held that the gift received by the assessee is a genuine gift from his brother and the addition made by the assessing officer is deleted. Keeping in view of the facts and circumstances of the case and also by considering the decision of the ITAT, Visakhapatnam Bench in assessee’s own case (supra) we are of the opinion that the addition made by the assessing officer and confirmed by the learned Commissioner (Appeals) cannot survive. Accordingly we cancel the order of the learned Commissioner (Appeals). Thus, this appeal filed by the assessee is allowed.

10. In the result, appeal filed by the assessee is allowed.