Motor car purchased by cash gift from wife and mother-ITAT upheld addition for unexplained cash as mere filing confirmations not sufficient to prove creditworthiness and genuineness of the transaction.
ABCAUS Case Law Citation:
ABCAUS 2674 (2018) (12) ITAT
Important Case Laws Cited/relied upon:
Bharati Pvt. Ltd., 111 ITR 951
United Commercial and Industrial Company Pvt. Ltd., 187 ITR 596
Blowell Auto (P) Ltd., vs. ACIT 11 DTR 91
CIT vs. Suresh Kumar Kakar (2010) 324 ITR 231
Anandasayanam P. Pillai vs. CIT (2017) 88 taxmann.com 730
Ashok Chaddha vs. ITO (2011) 14 taxmann.com 57
The case of the assessee was selected for scrutiny with the reason of purchase of motor vehicle by cash. The assessee explained the source of the cash paid as having received gift from mother and wife out of accumulated cash with them.
The assessee filed copy of the affidavit confirming the payment of cash for purchase of car along with copy of the bank statement of the wife.
TheAO however, noted that no documentary evidence to substantiate the creditworthiness of the spouse and mother who had advanced cash to the assessee were furnished. According to him, the bank account of the assessee as well his wife showed that payment from the banks accounts were online payments of the purchases made and petty cash withdrawals to meet out the day-to-day expenses.
In the absence of any evidence of source of cash amount given to the assessee, the AO found that assessee failed to prove creditworthiness of these persons as well as genuineness of the transaction in the matter
The AO relied upon decision of the Hon’ble High Court in which it was held that“mere filing of the affidavit in which the creditors have confirmed the loan transactions but did not disclose their source of income, creditworthiness and genuineness of the transaction not established, addition under section 68 justified.”
The AO, accordingly, made addition on account of unexplained cash u/s 68 of the Act.
The CIT(A) allowed relief to the assessee regarding his own cash in hand. However,confirmed the remaining addition stating that the assessee failed to prove creditworthiness of spouse and the mother and genuineness of the transaction in the matter.
Before the Tribunal, the assessee reiterated the submissions made before the authorities below and referred to the confirmation of the family members namely mother and the spouse which were filed before the authorities below.
It was submitted that both the ladies had ‘Stree Dhan’ with them and accumulated funds available with them and the gift was made out of that.
The Tribunal observed that the assessee merely claimed that the ladies were having accumulated amounts with them out of their old/accumulated source of income and that they had amounts available out of ladies kitty and received on festivals.
The Tribunal opined that the above submissions were general assertions without any evidence and would not support the case of the assessee. The bank account of the assessee and his wife revealed that there were petty transactions carried-out. These facts clearly showed that mere filing of the affidavits/confirmations of both the ladies were not sufficient to discharge burden upon the assessee to prove their creditworthiness and genuineness of the transaction.
The Tribunal further observed that both the ladies in their confirmations did not explain as to what was their source of giving cash amount to the assessee. It was merely stated that the amounts have been given out of love and affection.
The Tribunal opined that considering the totality of the facts and circumstances of the case, it was clear that it was unaccounted cash of the assessee which assessee tried to explain receiving through his wife and mother, which assessee failed to substantiate through any relevant and cogent evidence.
The Tribunal stated that it is well settled law that burden is upon assessee under section 68 of the Act to prove identity of the persons who have given amounts to the assessee, their creditworthiness and genuineness of the transaction. However, assessee failed to produce any documentary evidence to prove the creditworthiness of these ladies and genuineness of the transaction in the matter.
Accordingly,the Tribunal confirmed the addition and dismissed the appeal of assessee.
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