Whether amount received from relative is exempt under income tax Act?

We have considered the issue and are of the opinion that the matter is to be re-examined by the Assessing Officer afresh. The contention that the provisions of section 56(1)(v) regarding the amount received from the relative was not there before Revenue authorities. Moreover it is to be established that the person who gifted money is assessee’s sister as claimed. It was also to be  established that the said sister is working as Dentist in U.K. The audit certificate placed before the CIT (A) with reference to the creditworthiness should have been admitted and examined by the CIT (A) which was not done. Therefore, without going to the merits of various claims, we restore the issue to the file of the Assessing Officer to consider the additional evidence filed before the CIT (A) and also examine other contentions afresh. The assessee is directed to furnish the necessary evidence to the Assessing Officer to substantiate the claims. Needless to state that adequate opportunity should be given to assessee in the consequential assessment proceedings. With these directions the issue of gift is restored to the file of the Assessing Officer to examine afresh on the basis of facts and law.

In order to take benefit of sec 68 of receipt of amount from relative exempt under sec 56(1) the definition of relative should be fulfilled

Court
INCOME TAX APPELLATE TRIBUNAL

Brief:
The short issue in the present appeal by the assessee is with reference to addition of Rs.9,45,000/-, a gift received from the sister of the assessee brought to tax under section 68 of the Income Tax Act. The Assessing Officer was of the view that the assessee did not furnish any creditworthiness of the donor, assessee’s sister who is claimed to be a Dentist in the United Kingdom. The assessee filed additional evidences before the CIT (A) which were not admitted and the CIT (A) confirmed the addition. Before us, the learned Counsel submitted that the Assessing Officer wrongly invoked the provisions of section 68 whereas the amount received from her sister being a relative is exempt under the provisions of section 56(1)(v) which is applicable to the assessment year under consideration. Since the Assessing Officer wrongly invoked the provisions of section 68 on the amount which was not taxable under section 56(1)(v), the addition per se cannot be sustained. It was further submitted that the assessee furnished the relevant evidence with reference to creditworthiness of the donor by an audit certificate dated 28.5.2009 by way of additional evidence which was not admitted by the CIT (A) and therefore, the assessee has no objection if the matter is re-examined by the Assessing Officer. The learned Departmental Representative relied on the orders of the CIT (A).

Judgement

IN THE INCOME TAX APPELLATE TRIBUNAL

Anita S. Katara Vs. Income Tax Officer

Date of Judgement: 21/02/2012

O R D E R

The short issue in the present appeal by the assessee is with reference to addition of Rs.9,45,000/-, a gift received from the sister of the assessee brought to tax under section 68 of the Income Tax Act. The Assessing Officer was of the view that the assessee did not furnish any creditworthiness of the donor, assessee’s sister who is claimed to be a Dentist in the United Kingdom. The assessee filed additional evidences before the CIT (A) which were not admitted and the CIT (A) confirmed the addition.

2. Before us, the learned Counsel submitted that the Assessing Officer wrongly invoked the provisions of section 68 whereas the amount received from her sister being a relative is exempt under the provisions of section 56(1)(v) which is applicable to the assessment year under consideration. Since the Assessing Officer wrongly invoked the provisions of section 68 on the amount which was not taxable under section 56(1)(v), the addition per se cannot be sustained. It was further submitted that the assessee furnished the relevant evidence with reference to creditworthiness of the donor by an audit certificate dated 28.5.2009 by way of additional evidence which was not admitted by the CIT (A) and therefore, the assessee has no objection if the matter is re-examined by the Assessing Officer. The learned Departmental Representative relied on the orders of the CIT (A).

3. We have considered the issue and are of the opinion that the matter is to be re-examined by the Assessing Officer afresh. The contention that the provisions of section 56(1)(v) regarding the amount received from the relative was not there before Revenue authorities. Moreover it is to be established that the person who gifted money is assessee’s sister as claimed. It was also to be  established that the said sister is working as Dentist in U.K. The audit certificate placed before the CIT (A) with reference to the creditworthiness should have been admitted and examined by the CIT (A) which was not done. Therefore, without going to the merits of various claims, we restore the issue to the file of the Assessing Officer to consider the additional evidence filed before the CIT (A) and also examine other contentions afresh. The assessee is directed to furnish the necessary evidence to the Assessing Officer to substantiate the claims. Needless to state that adequate opportunity should be given to assessee in the consequential assessment proceedings. With these directions the issue of gift is restored to the file of the Assessing Officer to examine afresh on the basis of facts and law.

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