The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition and held that the cash gifts received by the assessee from her close relatives to treat her husband suffering from cancer cannot be treated as "unexplained".
The bench of Anil Chaturvedi (Accountant Member) has observed that the assessee discharged her initial onus by proving the identity, creditworthiness, and genuineness of the transactions. Therefore, the AO cannot insist on the assessee proving the source of the source.
The assessee is an individual stated to be carrying on business as a retail trader of women's suits and other clothing for the past several years. Since her income is below the tax limit prescribed under section 139 of the Income Tax Act, 1961, she has stated that she has not filed the return of income. The assessee deposited Rs. 12,29,500 in Corporation Bank and Federal Bank during the demonetization period.Therefore, the AO issued a notice under section 142(1) of the Income Tax Act, 1961, electronically and manually, asking the assessee to file her return of income for the assessment year. There was no compliance from the part of the assessee. The AO received directions from JCIT, Rohtak under section 144A. The AO issued notice electronically and manually through the postal service under section 142(1) along with a questionnaire.
The assessee filed her reply, claiming that she and her husband had joint accounts with Federal Bank, Corporation Bank, Punjab, and National Bank, and that because her husband has blood cancer, she deposited a sum of Rs. 12,29,500 in the bank to meet his medical expenses. The source of deposits was stated to be out of the rental income of her husband from the property, amounts pertaining to her husband, income from a clothing business, and a sum of relatives. The AO noted that the assessee failed to file the ITRs of both the relatives, namely Rakesh Jain and Kamlesh Devi, for the alleged gifted amounts. The AO noted that the assessee failed to prove the creditworthiness of the donors and the genuineness of the transaction. The AO treated the deposits as unexplained and added them to the income of the assessee as unexplained money under section 69A.
The assessee appealed against the order of the AO before the CIT(A). The CIT(A) confirmed the order of AO.
The assessee submitted that since the husband of the assessee was suffering from cancer, Mr. Rakesh Jain, the brother of the assessee, and Kamlesh Devi, the sister of the assessee, had gifted the amount. In view of the ill health of the assessee's husband, the assessee's sister had gifted the amount out of her family savings, which is generally kept by any household to meet an emergency. The giving of gifts has been confirmed in the affidavit of the donor.
The ITAT held that in times of medical emergencies, the near and dear ones of the family, close friends, and relatives generally pool their resources to help the family in need.
The ITAT directed the deletion of the addition made by the AO and allowed the appeal of the assessee.
Case Title: Ms. Ritu Jain Versus Income Tax Officer
Counsel For Appellant: C.A. Manoj Kumar
Counsel For Respondent: Sr. D.R. Om Prakash