The Assessee claimed that the gifts considered for tax purposes were exempted as they were received from Non-Resident Indians (NRI), and the addition of Rs. 46,44,150/- by the respondent was illegal and unjustifiable. The Assessment Officer held that the NRI gifts were not genuine, and the Income Tax Appellate Tribunal upheld the assessment, confirming the addition of Rs. 46,44,150/- as part of the assessee’s undisclosed income. The Assessee is now before the court, aggrieved by the decision.
The appellant argued that the nature of payment with regard to gifts was established through affidavits filed by donors, and therefore, the onus was on the respondent to prove the gifts’ liability for tax. However, the appellant received gifts from 29 persons hailing from Kerala while residing in Tamil Nadu, and there was no acceptable explanation as to the nature of their relationship. On enquiry with two donors, it came to light that on receipt of a commission of Rs. 1,00,000, gifts were arranged by them in favour of the assessee. Most of the assessee’s relatives reiterated the same version, which created doubts in the respondent’s mind about the creditworthiness and genuineness of the gifts received by the Assessee. Therefore, after proper analysis of books of accounts and other documents, the gifts were subjected to the liability of tax, as the appellant had failed to establish their onus.
Furthermore, the appellant’s case regarding receipt of gifts did not fall under any of the five categories mentioned in section 56(2)(x), and thus, the burden shifted to the assessee to rebut the same. The Supreme Court in the case of CIT v. P.Mohanakala (2007) 161 Taxmann 169 (SC), which was relied upon by the respondent before the Tribunal, held that the burden of proof shifts to the assessee in such cases.
The definition of “gift” is something voluntarily transferred by one person to another without compensation, while “commission” means “money that one gets for selling something.” On enquiry with two donors, one had deposed about the arrangement of gifts to the assessee on receipt of commission, whereas the other had stated that no gift was proffered. Thus, it is apparent that the gifts received by the assessee were not actual gifts. Therefore, the court upheld the Tribunal’s order, which is perfectly valid and in favour of the revenue.
In conclusion, the appellant’s plea that the gifts were exempt from tax was rejected, as the appellant failed to establish their onus. The court upheld the Tribunal’s decision, as the gifts received by the assessee were not actual gifts but rather a way to circumvent tax liability.
Related Assessment year : 2002-03) – [P. R. Ganapathy v. DCIT(C) (2022) 143 taxmann.com 122 (Mad.)
