Saturday, 28 July 2018

HC : Confirms Sec 68 addition for gift from father-in-law despite receipt through banking channels

Andhra Pradesh and Telangana HC confirms ITAT order to uphold Sec 68 addition for gifts received by assessee-invidual from his father-in-law for AY 2005-06, rejects assessee's reliance on co-ordinate bench ruling in context of gift received by assessee from his maternal aunt; Clarifies that “this is not a case where we can import the principle 'what is sauce for the goose is sauce for the gander'", also points out that gift from maternal aunt which was held non-taxable in view of Sec 56(2)(v), was received after the amendment to Sec. 56(2) unlike gift from father in law which was received prior, refuses to apply spirit of said amendment to grant relief; Also rejects assessee’s contention that genuineness of gift cannot be questioned when the identity of the donor is established, payment is through banking channels and a letter of confirmation is also available, clarifies that these three facts could establish the truth of the transaction, but not genuineness, states that "If somebody has made payment to someone else, a statement regarding the same will be true. But the payment need not be genuine."; Takes note of Revenue's contention that undisclosed income earned by the assessee could have been used for round tripping and routed through father-in-law to bring it back as gift, also rejects assessee’s contention that he had no source of income, observing that assessee was a director of real estate company and therefore, raid was carried out at his premises:HC 

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