Cash Gift Received from Father taxed as unexplained deposits on failure to prove creditworthiness

Facts giving rise to the present appeal are that the Assessing Officer (“AO”) received AIR information regarding cash deposit aggregating to Rs.10,00,000/- in the Saving Bank Account of the assessee during the Financial Year 2009-10. The case of the assessee was re-opened u/s 147 of the Act. Thereafter, a notice dated 29.03.2017 u/s 148 of the Income tax Act, 1961 (“the Act”) was issued after obtaining prior approval from CIT, Ghaziabad. In response thereto, the Ld.AR of the assessee attended the proceedings. During the course of proceedings, the assessee was called upon to explain the source of cash deposited of Rs. 10,50,000/- in his Saving Bank Account. In response thereto, the assessee filed his explanation. However, the explanation of the assessee was not found acceptable to the AO. He therefore, made addition of Rs. 10,00,000/- treating unexplained deposits in the saving bank account of the assessee and thus assessed the income at Rs. 10,00,000/-.

Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions of the assessee, dismissed the appeal. Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before the Tribunal.

Before tribunal, Ld. Sr. DR submitted that the assessee failed to explain the source of cash deposits. The only contention of the assessee before the authorities below was that the amount was received as a gift from his father. He submitted that the assessee has merely filed an affidavit. However, creditworthiness of the donor could not be proved by the assessee by furnishing the requisite evidences. Therefore, the authorities below were justified in confirming the addition. ITAT observed that finding of Ld.CIT(A) is not rebutted by the assessee by placing the requisite details and evidences. The explanation of the assessee regarding cash deposited in his bank account was stated to be a gift received from his father. An affidavit by the father of the assessee was also filed. However, the assessee could not prove the creditworthiness of the donor by furnishing the supporting evidences regarding creditworthiness of the donor. The assessee was required to prove the creditworthiness of the donor. Therefore, it confirmed the addition made by the authorities and thereby dismissed the appeal filed by the assessee.