The Income Tax Appellate Tribunal, Mumbai, ruled that the gift from a brother is not chargeable to tax in the hands of the assessee being relative.
The bench found that the assessee filed his return of income declaring total income of Rs. 19,88,600/-. In the computation of income, assesse has already disclosed income from other sources being interest income of Rs. 40,500/- which has been once again added by the AO while processing the return. Therefore, same is double addition.
The tribunal noted that the CIT(A) directed the AO to verify and allow the claim of the assessee.
The bench found that there is no need of verification when the relevant document submitted by the assessee clearly shows that there is a double addition of the income.
Accordingly, the tribunal directed the assessing officer to delete the addition of Rs. 40,500/- to the total income of the assessee.
The bench further found that the assessee has mentioned that there is a gift from his brother of Rs. 20,00,000/- which is an exempt gift under the provisions of section 56(2)(x)(a) of the Act. However, the above amount was shown in Column No. 16(d) stating that amounts not credited to the profit and loss account. In fact, it should have been disclosed in clause no. 16(e). However, the fact remains that assessee has received the gift of Rs. 20,00,000/-.
The tribunal noted that the bank account of the donor from Bank of Baroda and from ICICI Bank are also submitted. The Bank of Baroda account is NRE Savings Bank Account of the donor from which the available fund shows that cheques have been issued out of the funds available with the donor. Similarly, the ICICI Bank Account also showed that the assessee has continuous balance available for the last several months.
The bench observed that as such the gift from a brother is not chargeable to tax in the hands of the assessee being relative. Assessee has proved identity, creditworthiness and genuineness of the gift received as well as relationship with Donor.
Facts
The assessee is an individual, proprietor of A-1 Trading Company engaged in the business of trading in plastic granuals.
He filed his return of income declaring total income of Rs. 19,88,600/-. This return was processed. The income of the assessee is computed at Rs. 40,29,099/-.
The CPC computed the business income at Rs. 39,88,595/- where the appellant has shown business income of Rs. 19,48,091/-. The addition is with respect to gift received of Rs. 20,00,000/- from non-resident brother of the assessee.
Further, a sum of Rs. 40,500/- has been taxed double as income from other sources of income. The assessee preferred an application u/s 154 of the Act. However, the order u/s 154 of the Act was passed on 02.08.2022 rejecting request for rectification.
The assessee filed before National Faceless Appeal Centre raising the ground of appeal that gift received from brother of the assessee who is resident of UAE of Rs. 20,00,000/- has been considered as income of the assessee whereas the addition was shown as exempt receipt. Further, a sum of Rs. 40,500/- has been taxed double.
Assessee submitted the passport of the brother of the assessee and the copies of cheques issued by him, and bank statements of his brother. The CIT(A) held that though assessee has proved identity but has not discharged the genuineness of the above gift, therefore, in the absence of creditworthiness of the donor and genuineness the AO has correctly added the income.
With respect to the double addition of Rs. 40,500/-, he directed the AO to verify and allow the deduction. Accordingly, the appeal of the assessee was dismissed.
Conclusion
The tribunal concluded that the amount of Rs. 20,00,000/- received by the assessee clearly shows that the above amount is not the income of the assessee. Despite the information being available with the lower authorities, an addition is made to the total income of the assessee.
In view of the facts, the bench directed the Assessing Officer to delete the addition of Rs. 20,00,000/- in the hands of the assessee being a gift received from his non-resident brothers whose identity, creditworthiness and genuineness is proved.
Case Details
Case Name: Abul Wais Abdus Salam v/s ITO
Citation: ITA No.515/Mum/2024
Tribunal: ITAT Mumbai
Coram: Shri Prashant Maharishi, Accountant Member