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Commissioner Of Income Tax v. Arun Kumar Kothari
Factual and Procedural Background
The Revenue filed an income-tax appeal under section 260A of the Income Tax Act, 1961, challenging the order dated 30th September 2009 of the Tribunal, Jaipur Bench ‘B’, which dismissed the Revenue's appeal and affirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of Rs. 30 lakhs made by the Assessing Officer (AO) on account of unexplained gifts. The AO, in the assessment order dated 10th November 2008 for the assessment year 2006–07, disallowed three gifts received by the assessee from his brothers amounting to Rs. 30 lakhs, on the grounds that the assessee failed to prove the creditworthiness of the donors and that the gifts were given without any occasion. The AO added this amount as income and levied tax accordingly. The assessee appealed to the CIT(A), who deleted the addition. The Revenue then appealed to the Tribunal, which dismissed the Revenue's appeal, leading to the present appeal before this Court.
Legal Issues Presented
- Whether the addition of Rs. 30 lakhs made by the AO on account of unexplained gifts is justified in the absence of proof of creditworthiness and occasion for the gifts.
- Whether the findings of the CIT(A) and Tribunal regarding the genuineness of the gifts, identity, and creditworthiness of the donors are liable to be interfered with in this appeal.
- Whether there is a substantial question of law involved in the appeal under section 260A of the Income Tax Act, 1961.
Arguments of the Parties
Appellant's Arguments
- The three gifts totaling Rs. 30 lakhs were given without any occasion and therefore rightly disallowed by the AO.
- The CIT(A) and Tribunal erred in deleting the addition of Rs. 30 lakhs.
- Requested restoration of the AO’s order.
Respondent's Arguments
- Supported the orders of the CIT(A) and Tribunal deleting the addition.
- Asserted that identity, creditworthiness of the donors, and genuineness of the gifts are questions of fact with concurrent findings by the lower authorities.
- Submitted that no substantial question of law arises for consideration in the second appeal.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Commissioner Of Income-Tax v. Padam Singh Chouhan, (2008) 215 CTR (Raj) 303 : (2008) 3 DTR (Raj) 190 | Recognition of gifts as genuine does not require blood or close relationship; gifts can be given out of love, affection, or other considerations; production of gift deeds and affidavits suffice unless evidence of money laundering exists. | The Court relied on this precedent to uphold the findings of the CIT(A) and Tribunal that the gifts from brothers were genuine and could not be added as income. |
| Nek Kumar v. Asstt CIT, (2004) 191 CTR (Raj) 207 : (2005) 274 ITR 575 (Raj) | Supports the principle that genuineness of gifts and creditworthiness of donors are questions of fact. | The Court noted this precedent as supporting the concurrent factual findings of the lower authorities. |
| CIT v. Ram Dev Kumar Chitkmgia, (2008) 217 CTR (Raj) 462 : (2009) 315 ITR 435 (Raj) | Genuineness of gifts is essentially a question of fact; findings by lower authorities should not be interfered with unless perverse or illegal. | The Court applied this precedent to affirm the concurrent factual findings and dismiss the appeal for lack of substantial question of law. |
Court's Reasoning and Analysis
The Court examined the reasons assigned by the CIT(A) and Tribunal for deleting the addition of Rs. 30 lakhs. The CIT(A) considered evidence of the donors' creditworthiness, including gift deeds, bank accounts, income returns, and passports, which were initially refused by the AO but later accepted by the appellate authority. The donors were NRI brothers of the assessee, and there was no reason to doubt their identity or the genuineness of the gifts. The Tribunal concurred with the CIT(A), relying on jurisdictional High Court precedents that recognized gifts as genuine even without a specific occasion and without requiring close relationships, especially when supported by documentary evidence. The Court found no illegality or perversity in the concurrent findings of fact by the CIT(A) and Tribunal and held that the genuineness of the gifts and creditworthiness of the donors are factual matters not to be disturbed in this appeal. Since no substantial question of law arises, the appeal was dismissed.
Holding and Implications
The appeal is dismissed in limine.
The Court upheld the deletion of the addition of Rs. 30 lakhs by the CIT(A) and Tribunal, confirming that gifts received from the assessee’s brothers were genuine and not liable to be taxed as unexplained income. The decision affirms the principle that questions of fact regarding genuineness of gifts and creditworthiness of donors, supported by adequate documentary evidence, should not be interfered with on appeal. No new precedent was set; the ruling applies the settled legal position and has the direct effect of confirming the assessee’s relief.
The Judgment of the Court was delivered by
Narendra Kumar Jain-I, J.:— Heard learned counsel for the parties.
2. The Revenue has preferred this income-tax appeal under s. 260A of the IT Act, 1961 challenging the order dt. 30th Sept., 2009 of Tribunal, Jaipur Bench ‘B’, Jaipur, whereby Tribunal, while dismissing the appeal of the Revenue, affirmed the order of CIT(A) deleting the addition of Rs. 30 lacs made by the AO, on account of unexplained gifts. Briefly stated, the facts of the case are that the AO vide its assessment order dt. 10th Nov., 2008 relating to asst. yr. 2006–07 disallowed the three gifts received by assessee from his brothers amounting to Rs. 30 lacs on the ground that the assessee has not proved the creditworthiness of the gifts and the same have been given on account of love and affection and further that there was no occasion for giving the gifts. Consequently, AO added the said amount of gifts as income and levied the income-tax on the same.
3. Being aggrieved with the order of assessment, the assessee preferred an appeal. The CIT(A)-II, Jaipur vide order dt. 25th March, 2009 allowed the appeal and deleted the addition of Rs. 30 lacs made by AO on account of unexplained gifts. Thereafter, Revenue preferred an appeal before the Tribunal, but the same was dismissed. Hence the present appeal has been preferred on behalf of the Revenue.
4. Submission of Shri R.B Mathur learned counsel appearing on behalf of appellant is that the three gifts worth Rs. 30 lacs were given to assessee by his brothers without any occasion, therefore, the same were rightly disallowed by the AO. He submitted that the CIT(A) as well as the Tribunal both committed an illegality in deleting amount of Rs. 30 lacs. He, therefore, submitted that order of AO be restored. No other argument has been advanced by Shri Mathur, learned counsel for the appellant.
5. Learned counsel for the respondent/assessee supported the order passed by the Tribunal as well as CIT(A) and submitted that identity, creditworthiness of the donor and genuineness of the gifts duly proved by assessee are questions of facts and both the authorities below have recorded a concurrent finding of facts, which cannot be and should not be interefered by this Court. He submitted that no substantial question of law is involved in this second appeal. Therefore, it is liable to be dismissed.
6. We have considered the submissions of learned counsel for the parties and examined the reasons assigned by CIT(A) as well as Tribunal, for deleting the amount of Rs. 30 lacs towards so-called unexplained gifts, added by AO.
7. The CIT(A) has considered all factual as well as legal aspects of the case in detail and has observed that so far as creditworthiness of the donors is concerned, the assessee had gone to file evidence before the AO on 11th Nov., 2008, the date fixed for the same by him, but the AO refused to accept the same. Therefore, assessee sent the relevant documents such as copy of bank accounts, return of income and other relevant documents of donors with regard to their creditworthiness, through registered post to the AO. Copies of these documents were considered by the appellate authority and the same documents were again placed on record in the paper-books filed before Tribunal at page Nos. 11 to 13. These documents are gift deeds, bank accounts of the donors, bank statement of the donors, directorship/partnership, income of the donors and passports of the donors. Learned CIT also considered that donors were NRI and they were brothers of the assessee. In these circumstances, the learned CIT was satisfied about creditworthiness of the donors as well as genuineness of the gift deeds and accepted the claim in respect of gifts, as there was no reason to doubt on the identity and creditworthiness of the donors and the genuineness of the gifts, as expressed by the AO.
8. The finding of the CIT as appellate authority was quoted by Tribunal in its order impugned in this appeal. Learned Tribunal after considering the factual and legal aspects of the matter affirmed the finding of the CIT(A) and dismissed the appeal filed by the Revenue. Para 5 of the order of the Tribunal is reproduced as under:
“5. The first appellate order on the issue is reasoned one to which we concur with in view of the decisions of Hon'ble jurisdictional High Court in the case of Commissioner Of Income-Tax v. Padam Singh Chouhan, (2008) 215 CTR (Raj) 303 : (2008) 3 DTR (Raj) 190 and in the case of Nek Kumar v. Asstt CIT, (2004) 191 CTR (Raj) 207 : (2005) 274 ITR 575 (Raj). In the case of Commissioner Of Income-Tax v. Padam Singh Chouhan (supra) the Hon'ble jurisdictional High Court has been pleased to hold that there is no legal basis to assume that to recognize the gift to be genuine, there should be any blood relationship or any close relationship between the donor and the donee. Instances are not rare, when strangers made gift, out of very many considerations, including arising out of love, affection and sentiments. When the assessee has produced the copies of the gift deeds and the affidavits of the donors, in the absence of anything to show that the act of assessee in claiming gift was an act by way of money laundering, simply because he happens to receive gifts, it cannot be said that, that is required to be added in his income, held the Hon'ble High Court. The case of present assessee before us on the issue stands on better footing as herein the donors are brothers of the assessee wherein there is no room to doubt love and affection amongst them to make the gifts. Besides, the assessee had furnished gift deeds stating the relationship with the donors and that the gifts were made out of natural love and affection, bank accounts of the donors and their passports to support the genuineness of the claimed gifts. Contents of these documents have not been disputed. Under these circumstances, we are of the view that the learned CIT(A) has rightly accepted the claimed gifts of Rs. 30 lacs with direction to the AO to delete the addition made on this account. The first appellate order on the issue is thus upheld.”
9. From the above, it is clear that the CIT(A) as well as Tribunal both were satisfied with regard to identity and creditworthiness of the donors and genuineness of the gifts. Learned Tribunal also satisfied that there is no room to doubt about love and affection of the donors with the assessee as donors were brothers of the assessee. Therefore, gifts could have been given without any occasion and only for the love and affection with the assessee.
10. After considering the reasons assigned by the CIT(A) as well as Tribunal for deleting the amount of gifts, which was wrongly added by the AO, we are satisfied that the reasons assigned by Tribunal as well as CIT(A) are absolutely justified and legal and no interference in the same is called for. Learned Tribunal has also relied upon judgments of this Court reported in Commissioner Of Income-Tax v. Padam Singh Chouhan, (2008) 215 CTR (Raj) 303 : (2008) 3 DTR (Raj) 190 and in the case of Nek Kumar v. Asstt. CIT, (2004) 191 CTR (Raj) 207 : (2005) 274 ITR 575 (Raj).
11. This Court in CIT v. Ram Dev Kumar Chitkmgia, (2008) 217 CTR (Raj) 462 : (2009) 315 ITR 435 (Raj) held that, whether the gift was genuine would essentially be a question of fact and finding of Act recorded in this behalf cannot be interefered with. After considering submissions of learned counsel for the parties, we are of the view that genuineness of the gifts has been accepted by the CIT(A) as well as Tribunal. The identity and creditworthiness of the donors have also been accepted by both the authorities. These are questions of facts and there is a concurrent finding of fact by both the authorities below and no illegality or perversity in the finding recorded by both the authorities below has been pointed out by the learned counsel for the Revenue. The said finding of fact of both the authorities below cannot be interfered with by this Court.
12. The income-tax appeal before this Court lies only on substantial question of law. Since, no substantial question of law is involved in this appeal, therefore, it is liable to be dismissed and is, hereby, dismissed in limine.
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