2025 (4) TMI 854 - AT - Income Tax

Addition on account of gift from mother - HELD THAT - Addition has been made by the ld. AO on account of gift received from the mother which was duly depicted in the balance sheet of the assessee. During the course of hearing the assessee filed a gift deed dated 15.01.2008 which is signed by the mother of the assessee and witnessed by the Gopal Das Rathe. In the gift deed it was stated that the gift was made out of the personal saving of the mother and handed over to the assessee which was accepted by the assessee out of love and affection. We are inclined to accept the same without restoring the issue either to CIT (A) or ld. AO by considering the smallness of amount involved as the restoration would unnecessary waste of time and resources of the department. Disallowance made u/s 57 - assessee has claimed expenses from interest received from the bank and others under the head expenses and interest - AO disallowed 40% on estimated basis thereby making disallowance - HELD THAT - The claim of the assessee has been rejected on estimated basis at the rate of 40% by the AO without there being any basis for such estimation and disallowance. In our opinion even if the assessment is framed u/s 144 of the Act even then the AO has to made the assessment on reasonable and comparable basis but in the present case the ld. AO has not given any reason for the same and so was done by the ld. CIT (A). Considering these facts and circumstances we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. The appeal is allowed.

ISSUES PRESENTED and CONSIDERED

The Tribunal considered two core issues in the appeals filed by the assessee:

1. Whether the delay in filing the appeals should be condoned due to the misunderstanding regarding the requirement of submitting a physical copy of the appeal.

2. Whether the additions made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the gift from the assessee's mother and the disallowance of expenses claimed under Section 57 of the Income Tax Act were justified.

ISSUE-WISE DETAILED ANALYSIS

1. Condonation of Delay in Filing Appeals

- Relevant Legal Framework and Precedents: The Tribunal considered the principles of condonation of delay, which generally require a demonstration of sufficient cause for the delay. The Tribunal has the discretion to condone delays if the reasons provided are bona fide and genuine.

- Court's Interpretation and Reasoning: The Tribunal found that the delay was due to the assessee's mistaken belief that filing an online appeal was sufficient and that a physical copy was not necessary. The Tribunal acknowledged this as a genuine misunderstanding.

- Key Evidence and Findings: The Tribunal reviewed the condonation petition and the explanations provided by the assessee's counsel, which clarified the timeline and the reasons for the delay.

- Application of Law to Facts: Based on the facts and the genuineness of the reasons provided, the Tribunal exercised its discretion to condone the delay.

- Conclusions: The Tribunal condoned the delay and admitted the appeals for adjudication.

2. Addition of Rs. 1 lakh as Gift from Mother

- Relevant Legal Framework and Precedents: The issue involved the addition made by the AO on account of a gift received by the assessee from his mother, which was challenged by the assessee.

- Court's Interpretation and Reasoning: The Tribunal noted that the proceedings before both the AO and the CIT(A) were ex-parte, meaning the assessee did not have the opportunity to present his case. The Tribunal reviewed the gift deed submitted by the assessee, which confirmed the gift from the mother.

- Key Evidence and Findings: The gift deed dated 15.01.2008, signed by the mother and witnessed, was crucial evidence supporting the assessee's claim.

- Application of Law to Facts: The Tribunal found the evidence sufficient to establish the genuineness of the gift and decided not to restore the issue to the lower authorities due to the small amount involved.

- Conclusions: The Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition of Rs. 1 lakh.

3. Disallowance of Rs. 3,70,080 under Section 57

- Relevant Legal Framework and Precedents: The issue concerned the disallowance of expenses claimed under Section 57 of the Income Tax Act, which pertains to deductions available for income from other sources.

- Court's Interpretation and Reasoning: The Tribunal observed that the AO had disallowed 40% of the claimed expenses on an estimated basis without providing a clear rationale or basis for such estimation.

- Key Evidence and Findings: The Tribunal noted the lack of evidence or reasoning provided by the AO and CIT(A) to justify the disallowance.

- Application of Law to Facts: The Tribunal emphasized that even under best judgment assessment (Section 144), the AO must base the assessment on reasonable and comparable grounds, which was not done in this case.

- Conclusions: The Tribunal set aside the order of the CIT(A) and directed the AO to delete the disallowance of Rs. 3,70,080.

SIGNIFICANT HOLDINGS

- The Tribunal held that the delay in filing the appeals was due to a bona fide misunderstanding and condoned the delay, allowing the appeals to be admitted.

- On the issue of the gift from the mother, the Tribunal concluded that the evidence provided was sufficient to establish the genuineness of the gift, leading to the deletion of the addition.

- Regarding the disallowance under Section 57, the Tribunal found that the AO's estimation lacked a reasonable basis, and therefore, the disallowance was unjustified.

- Verbatim Quote: "Considering the facts on record and submissions of the counsel of the assessee, I am inclined to accept the same without restoring the issue either to ld. CIT (A) or ld. AO by considering the smallness of amount involved as the restoration would unnecessary waste of time and resources of the department."

- The Tribunal emphasized the importance of reasonable and evidence-based assessments, especially in ex-parte proceedings, reinforcing the need for transparency and fairness in tax assessments.

- Both appeals filed by the assessee were allowed, with the Tribunal directing the deletion of the contested additions.

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