While hearing the case of Sri Chilukurthi Veeraiah vs. Income Tax Officer, Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that Assessing Officer (AO) should give reasonable opportunity to produce evidence to assessee to examine source of gift.
Assessee, in the instant case is an individual deriving income from salary, house property and other sources and he filed his return of income for the relevant assessment year and declared total income of Rs. 3,89,000.
During the course of assessment proceedings the AO has completed the assessment proceedings under section 143(3) of the Income Tax Act 1961 by making addition of Rs 11 lakhs on account of gift received by the assessee from his relatives.
On appeal, CIT(A) also upheld the decision of the AO and accordingly confirmed the addition made by him.
However, the assessee approached the Tribunal on further appeal. Before the bench, the counsel of the assessee, Advocate A.V. Raghu Ram submitted that it is a fact that the assessee has received gift of Rs.11 lakhs from his relatives, but the AO never gave him an opportunity to produce the parties who gave gifts to him and the proof documents. He further stated that the AO made the addition without considering the real facts and this activity of the Officer is not justiciable.
After considering the above narrated facts, the tribunal bench including Accountant Member B.Ramakotaiah observed that before the bench the assessee explained that an amount of Rs 11 lakhs was gifts from three persons. But the same cannot be produced before the lower authorities, because they did not give him an opportunity to clarify his side.
The division bench further clarified that the sources of gifts can be examined by AO by giving opportunity to assessee to produce the persons before AO or adducing evidence which can be verified or got verified by AO.
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