Presumption that agriculturists donor have meagre source of income not correct – ITAT

Presumption that donors have meagre source of income because they are agriculturists may not be appropriate – ITAT

ABCAUS Case Law Citation
ABCAUS 3573 (2022) (01) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the addition made by the CIT(A) towards the unexplained source for credit card payments.

The assessee was an individual engaged in business. He filed his return of income for the relevant assessment year declaring total income of Rs. five lakhs.

Subsequently, his case was taken up for scrutiny under CASS. During the course of scrutiny assessment proceedings, it was observed by the Assessing Officer (AO) that the assessee had made payment of more than twelve lakhs towards credit card payment to various Banks.

On query, the assessee produced two gift deeds viz., one from his Father and another from his brother. Since both the donors were agriculturists, the AO opined that the identity, creditworthiness and genuineness of the transactions could not be established and therefore he made addition of the full amount in the hands of the assessee. 

On appeal, the CIT(A) confirmed the addition.

The Tribunal opined that before the Authorities below, the assessee had furnished gift deeds from with their full particulars. Therefore, the identity of both the persons were established.

The Tribunal further opined that the presumption of the Revenue that the donors have meagre source of income because they are agriculturists may not be appropriate.

Also, the Tribunal pointed out that Revenue Authorities had not made any further enquiry to establish the genuineness of   their presumption. Moreover, the Revenue Authorities were in possession of the particulars of the donors by which they could  have made further enquiries.

The Tribunal also noted that as apparent from the return filed by the assessee, he was having source of income for more than Rs. 5 lakhs during the relevant assessment year.

In view of the above, the ITAT deleted the addition made and allowed the appeal in favour of the assessee.  

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