Finding that the respondent has satisfactorily explained the source of funds of Rs. 4.24 lacs in her bank account to be obtained from her brother on account of relinquishment of her share in an ancestral property, the Mumbai ITAT confirmed the decision of the CIT(A) in deleting the additions made by the AO under Section 68 of the Income Tax Act on account of unexplained cash credit, based on suspicion, and ignoring the documentary & third-party evidence filed by the respondent.
The Division Bench comprising Justice (Retd.) C.V. Bhadang (President) and Vikram Singh Yadav (Accountant Member) observed that even though the Release Deed mentions that the relinquishment was without consideration, which is one of the reasons why the AO chose to make the addition, the respondent had produced the confirmation from her brother. Further, the Memorandum of Family Arrangement before the Release Deed records that the respondent was to relinquish her 1/4th undivided share in the ancestral property for a consideration of Rs. 4.24 crores.
Additionally, the Bench found that the respondent has produced the remittance advice from Standard Chartered Bank, which records the purpose of transfer as “inheritance”, and the Memorandum of Transfer also shows that, in consequence of the relinquishment, the name of the respondent was deleted from the Record of Rights. Accordingly, the Tribunal dismissed the appeal in favour of the respondent.
In this case, the dispute arose when the respondent-taxpayer had filed her return declaring a total income of Rs. 9.85 lacs, as according to the AO, the respondent had received a sum of Rs. 4.24 crores in her bank account from her brother. Even though the respondent claimed that said amount was received as consideration for relinquishing her undivided 1/4th share in the ancestral property in favour of her brother, and had produced the remittance advice, the copy of the Memorandum of Transfer recorded on the Share Certificate, and the Memorandum of Family Arrangement, the AO refused to accept the explanation of the respondent only on the ground that she had failed to file the confirmation of her brother. The AO opined that the respondent had routed her own undisclosed income through the bank account of her brother, and therefore, made an addition under Section 68. On appeal, the CIT(A) deleted the addition, which culminated in a second appeal before the ITAT.
Appearances:
Advocate Swapnil Choudhary, for the Appellant/ Department
Advocate Murli Alidas Teckchandani, for the Respondent/ Taxpayer
