2008 (2) TMI 417 - HC - Income Tax

Addition on account of Gifts received ITAT deleted the the addition of Rs. 4, 50, 000 Rs. 2, 50, 000 and Rs. 2, 00, 000 which have been received on account of gift Held 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 even strangers make gifts 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 the 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.

Summary

Issues:
Appeal against deletion of addition of Rs. 4,50,000 received as gifts without established relationship - Justification of Tribunal's decision questioned.

Analysis:
The High Court analyzed the case where the Revenue appealed against the deletion of an addition of Rs. 4,50,000 as gifts by the Tribunal. The substantial question of law framed was whether the Tribunal was justified in deleting the addition of the said amount received as gifts when no relation was established from whom the gifts were received, questioning the perversity of the Tribunal's finding.

The Court reviewed the orders of the Assessing Officer, Commissioner, and Tribunal. The Assessing Officer doubted the genuineness of the gifts due to deposits made by the donor before gifting and subsequent withdrawals by the assessee. The Commissioner, however, held that the gifts were made out of love and affection, supported by gift deeds and donor affidavits. The Commissioner found the gifts genuine, noting sufficient cash balances in donor accounts on the gift dates. The Tribunal upheld this finding based on precedents.

The Court emphasized that blood or close relationships are not necessary to authenticate gifts, as even strangers can gift out of various considerations like love and affection. The production of gift deeds and donor affidavits by the assessee, without evidence of money laundering, was deemed sufficient to validate the gifts without the need for a blood relation requirement.

Conclusively, the Court ruled against the Revenue, dismissing the appeal as the gifts were deemed genuine based on the evidence provided by the assessee. The judgment upheld the Tribunal's decision, emphasizing the lack of legal basis to add the gift amounts to the assessee's income without concrete evidence of wrongdoing.