Himanshu Garg, New Delhi vs Assessee

This appeal by the assessee is directed against the order passed by

the CIT(A) on 31.8.2010 in relation to the assessment year 2006-07. ITA No.4761/Del/2010

2. We have heard the ld. DR. There is no appearance from the side of

the assessee. One adjournment application was filed, which stands

rejected. As such, we are proceeding to dispose of this appeal ex parte

qua the assessee.

3. First ground of the appeal is against the confirmation of addition of

Rs.50,000/- made u/s 68 of the Income-tax Act, 1961 (hereinafter also

called 'the Act') .

4. Succinctly, the assessee claimed to have received a gift of

Rs.50,000/- from one Shri Raj Kumar, which was declared in the books

of account. In the absence of any confirmation from the donor, the AO

treated it as income of the assessee u/s 56(2)(v) of the Act. The assessee

filed application under Rule 46A of the Income-tax Rules, 1962 before

the ld. CIT(A) submitting confirmation of the donor who had passed

away on 24.1.2007. Relationship between the assessee and the donor

was also disclosed, who happened to be brother of the assessee's mother.

In view of this relation, the ld. CIT(A) held that the provisions of

Section 56(2)(v) were not applicable. However, considering the bank

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statement of the donor, which, before the credit of Rs.55,000/- prior to

transfer of Rs.50,000/- to the assessee, had a small balance of Rs.429/-

he, confirmed the addition by treating it as unexplained cash credit.

5. It is obvious that the gift was received by the assessee from the

brother of his mother. Merely because the balance in the account of the

donor was less before the transaction, cannot be a reason to treat the gift

as bogus. The Assessing Officer refused to accept the capacity etc. of

the donor without examining him. Since the donor is no more alive,

there cannot be any further investigation in this regard. Considering the

smallness of the amount and the relationship between the donor and the

donee and the further fact that the donor is no more alive, we accept the

genuineness of the gift received by the assessee. Accordingly, this

addition is deleted. This ground is allowed.

6. The second ground is against the confirmation of addition of

Rs.2,04,843/- made by the AO u/s 68 of the Act. The facts apropos this

ground are that the AO noticed cash deposits in the assessee's capital

account maintained with M/s Ganesh Traders totaling to Rs.3,55,000/-.

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The AO got convinced to the extent of Rs.1,46,187/-. He, therefore,

made addition for the remaining amount of Rs.2,04,843/-. The

assessee's explanation about the amount received from certain relatives

and other parties, did not persuade the AO. During the course of first

appellate proceedings, the assessee filed confirmations of all the 15

depositors with their Permanent Account Nos. and also copies of their

income-tax returns. The assessee submitted that some of those

documents could not be filed before the AO for want of time. The ld.

CIT(A) called for the remand report. The AO refused to accept the bona

fide of the source of the amount by holding that such confirmations were

expected to be filed before him and not the CIT(A). The ld. first

appellate authority upheld the addition by observing that there was only

remote likelihood of such amounts having been received.

7. Having heard the ld. DR and perused the relevant material on

record, we find from the impugned order that the assessee furnished

confirmations from all the depositors having advanced small amounts

ranging between Rs.17,000/- to Rs.19,500/-. Not only that, the assessee

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also filed cash flow statement by which the amount received from these

persons was returned during the year itself. We find that the AO has

simply referred to the cash deposits in the capital account of the assessee

without narrating the amounts withdrawn. Once a particular amount is

received from a person which is credited to the capital account and,

thereafter, amount is returned to such person by showing as withdrawal

in the capital account, it is not permissible to accept the withdrawal

aspect and reject the receipt from such relatives without any further

investigation. Here is a case in which no investigation has been carried

out by the AO to ascertain the veracity of these squared up creditors.

Considering the totality of facts and circumstances of the instant case,

we are satisfied that the assessee sufficiently discharged the onus cast

upon him to prove the genuineness of these credits. This ground is

allowed.

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8. In the result, the appeal is allowed.

The order pronounced in the open court on 30.04.2015.

Sd/- Sd/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 30th April, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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