No additions towards gifts if assessee duly produced declarations of donors confirming gifts: ITAT

Case details: Smt. Tapasi Singh v. ITO - [2021] 128 taxmann.com 318 (Kolkata - Trib.)

Judiciary and Counsel Details

• • P.M. Jagtap, Vice President.
  • Bisweshwar Ghosh, Adv., for the Appellant.
  • Jayanta Khanra, JCIT, Sr. DR for the Respondent.

Facts of the Case

Assessee introduced fresh capital and the source of the same was explained as a gift. In support of her claim of having received the said gifts, tax particulars of the donors were furnished by her. She also furnished copies of relevant cheques as well as the declarations of the donors confirming the gifts. To verify assessee’s claim, summons under Section 131 were issued by Assessing Officer (AO) to all the donors enquiring their attendance.

However, none of the donors appeared before AO for their examination. Even assessee failed to produce donors for the examination before AO. Keeping in view this failure and the fact that none of the donors had blood relations with assessee, AO held that the identity and creditworthiness of the donors and the genuineness of the transactions involving gifts were not established. Therefore, AO treated all the gifts as unexplained cash credit and made addition under Section 68.

Assessee contended that the gifts were made through account payee cheques, which was a third-party corroboration authenticating the genuineness of the transactions. Further, all the donors were income tax assessees, and they made the gifts out of their tax-paid accumulated capital. She also furnished a copy of their Income-tax return acknowledgments and computation sheet.

ITAT Held

On appeal, Kolkata ITAT held that all the donors who had given the gifts were engaged in the business. They had declared their business income in the returns of income filed regularly. Moreover, all the gifts were given to assessee by account payee cheques. Their declarations confirming the gifts given to assessee were also furnished on record, giving all the relevant particulars, including the Permanent Account Number of donors. The primary onus to establish the identity and creditworthiness of the donors, as well as the genuineness of the relevant transactions involving gifts, was duly discharged by assessee by producing the relevant documentary evidence. Thus, AO was not justified in treating the gifts received by assessee as unexplained cash credit under Section 68 merely based on doubts and suspicion.