DCIT v. Lalita Devi Agarwal

Case snapshot

Sections / provisions: 56; 68

Questions before the Court / Tribunal

• NRI gift, donor capacity and documentary evidence: The reported order concerns a gift received from the taxpayer's NRI son. It is said to accept banking and donor-capacity evidence and reject the addition after considering the complete documentary record. The primary order should be used for the exact section and any SEBI-related allegation.

Material facts and background

The brief facts of the case are that the assessee was non-filer in impugned

assessment year. The case was reopened on the basis of information received from DIT(investigation) and notice u/s 148 was issued to assessee. In response to the same the assessee filed her return on 08.08.2018 declaring an income of Rs 18,840/-.During the reassessment proceeding, the ld. AO asked the genuineness of the transaction related to the gift received by the assessee amount to Rs.3 Crores from her son Shri. Barun Agarwal, an NRI, by way RTGS. Total amount of Rs.3 Crores was received by the assessee from her son on 14.03.2011, 17.03.2011 as a gift. The assessee gave unsecured loan of Rs.2.7 Crores to M/s. Mangalam

Vanijya Ltd. on 04.06.2011 and also purchased its shares. The assessee received some principal amount with interest from this company during A.Y. 2011-12. A summon u/s 133(1A) of the Act was issued to M/s. Mangalam Vanijya Ltd. calling for certain details/documents, which was returned back by the postal authority with a remark unclaimed. Further, after examination of the evidence forwarded by Dy. Director (Inv)-ll, Ranchi, it was found that not only the assessee but her husband, Sh. Bishwanath Agarwal, also have received sum of Rs.3 Crores from her son, Shri Barun Agarwal. From these gifts, husband and wife both invested amount to Rs.2.7 crores to M/s. Mangalam Vanijya Pvt. Ltd as unsecured loan and also purchased some shares. Further M/s. Mangalam Vanijya Pvt. Ltd. repaid some principal as well as interest and from these receipts ofassessee and her husband. The said amount wastransferred by the parent to their son, Sh. Barun Agarwal. Finally, the assessment was framed u/s 144 of the Act. The A.O. added the amount of Rs 3,00,00,000/- as unexplained cash credit u/s 68 of the Act for absence of creditworthiness of donori.e. son of the assessee.The aggrieved assessee challenged the...

The Ld.DR vehemently agued and placed that in the assessment the

addition is confirmed amount to Rs.3 crores related to the gift from assessee’s son which is lack of creditworthiness. The genuineness of the transaction is not a question here, but the addition under section 68 was confirmed due to the absence of creditworthiness of the donor. Further, he stated that the donor’s fund was generated from the hedge fund, which was banned in India by the SEBI.

Therefore, he fully relied on the impugned assessment order and prayed for dismissing the impugned appeal order. 5.

The Ld.AR argued that the assessee had complied the noticesand shifting

Appellant / assessee submissions

6. It is further stated by the ld. AR that the ld. AO alleged about the donation of hedge fund in India by the foreign national. But the ban was duly withdrawn by the SEBI. This restriction is not vitiated the gift. There was sufficient balance in donor’s bank account before and after transferring the gifted amount to mother. The onus was shifted to the ld. AO by submitting the evidence and the ld. AO had never rejected the evidence submitted by the assessee during the assessment proceeding. 7.

documents available on record. The assessee received the impugned gift from her son, who is a NRI. The details of the bank transfer were submitted to the Ld. AO, and these documents clearly established that the donor had sufficient funds to make the gift. Copies of the relevant bank account statements have been annexed at APB pages 31-34.With respect to the SEBI guidelines referenced, the Ld. AR submitted that the SEBI order imposing the alleged ban was duly withdrawn. Despite this, for the purpose of making the addition, the Ld. AO primarily relied on information sourced from a Google search and local

newspaper reports, without conducting any cross-verification or independent inquiry to substantiate the claims. The addition appears to have been made in a baseless manner, solely relying on unverified newspaper reports. Notably, the evidence provided by the assessee was not rebutted or discredited by the Ld. AO. The genuineness of the gift has not been questioned, and the donor's financial capacity to provide the gift was sufficiently demonstrated. The donor's bank account showed adequate funds at the time of executing the gift, thereby establishing creditworthiness. The Ld. AO appears to have undertaken verification through online searches and local media reports about the donor, but even these steps did not provide conclusive evidence to challenge the donor's credibility. The actions of the assessee for investing the gifted amount in an Indian company and subsequently receiving and returning the funds to the donor are unrelated to the issue of addition under Section 68 of the Act. The Ld. DR was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. Upon review, we find no infirmity in the appellate order under challenge....

Revenue / respondent submissions

newspaper reports, without conducting any cross-verification or independent inquiry to substantiate the claims. The addition appears to have been made in a baseless manner, solely relying on unverified newspaper reports. Notably, the evidence provided by the assessee was not rebutted or discredited by the Ld. AO. The genuineness of the gift has not been questioned, and the donor's financial capacity to provide the gift was sufficiently demonstrated. The donor's bank account showed adequate funds at the time of executing the gift, thereby establishing creditworthiness. The Ld. AO appears to have undertaken verification through online searches and local media reports about the donor, but even these steps did not provide conclusive evidence to challenge the donor's credibility. The actions of the assessee for investing the gifted amount in an Indian company and subsequently receiving and returning the funds to the donor are unrelated to the issue of addition under Section 68 of the Act. The Ld. DR was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. Upon review, we find no infirmity in the appellate order under challenge....

Court / Tribunal analysis and reasoning

Therefore, he fully relied on the impugned assessment order and prayed for dismissing the impugned appeal order. 5.

her onus by submitting the bank details and the identity of the donor. He stated that related to the creditworthiness, there is sufficient balance in the bank account of the donor at the time of gift. The son gifted the amount to his mother and the bank entries are reflected on 14/03/2011 and 17/03/2011 amount to Rs.1.5 crore each. The Ld.AO asked for the return for 3 years of the donor, but it is evident that the donorwas an NRI, and no return was filed in India. He finally stated that the assessee adduced the evidence by submitting the bank account and the identity of donor. It is pertinent to mention that gift was executed in relation mother and son. The allegation made by the Ld.AO is totally baseless which ison the basis of the report from the daily local newspaper. The Ld.AR fully relied on the impugned appeal order, paragraphs 7.3 to 7.5 which are reproduced as below: “7.3 The Burden of proof is on the assessee who is required to offer an explanation to the satisfaction of the Assessing Officer so as not to attract the mischief of section 68 or for that matter section 69A. From a careful perusal of the judicial decisions on the subject, it is established that primary onus...

newspaper reports, without conducting any cross-verification or independent inquiry to substantiate the claims. The addition appears to have been made in a baseless manner, solely relying on unverified newspaper reports. Notably, the evidence provided by the assessee was not rebutted or discredited by the Ld. AO. The genuineness of the gift has not been questioned, and the donor's financial capacity to provide the gift was sufficiently demonstrated. The donor's bank account showed adequate funds at the time of executing the gift, thereby establishing creditworthiness. The Ld. AO appears to have undertaken verification through online searches and local media reports about the donor, but even these steps did not provide conclusive evidence to challenge the donor's credibility. The actions of the assessee for investing the gifted amount in an Indian company and subsequently receiving and returning the funds to the donor are unrelated to the issue of addition under Section 68 of the Act. The Ld. DR was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. Upon review, we find no infirmity in the appellate order under challenge....

Operative decision and relief

documents available on record. The assessee received the impugned gift from her son, who is a NRI. The details of the bank transfer were submitted to the Ld. AO, and these documents clearly established that the donor had sufficient funds to make the gift. Copies of the relevant bank account statements have been annexed at APB pages 31-34.With respect to the SEBI guidelines referenced, the Ld. AR submitted that the SEBI order imposing the alleged ban was duly withdrawn. Despite this, for the purpose of making the addition, the Ld. AO primarily relied on information sourced from a Google search and local

newspaper reports, without conducting any cross-verification or independent inquiry to substantiate the claims. The addition appears to have been made in a baseless manner, solely relying on unverified newspaper reports. Notably, the evidence provided by the assessee was not rebutted or discredited by the Ld. AO. The genuineness of the gift has not been questioned, and the donor's financial capacity to provide the gift was sufficiently demonstrated. The donor's bank account showed adequate funds at the time of executing the gift, thereby establishing creditworthiness. The Ld. AO appears to have undertaken verification through online searches and local media reports about the donor, but even these steps did not provide conclusive evidence to challenge the donor's credibility. The actions of the assessee for investing the gifted amount in an Indian company and subsequently receiving and returning the funds to the donor are unrelated to the issue of addition under Section 68 of the Act. The Ld. DR was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. Upon review, we find no infirmity in the appellate order under challenge....

dismissed. Order pronounced in the open court on 02nd day of December 2024. Sd/(B.R. BASKARAN) ACCOUNTANT MEMBER Mumbai,दिन ां क/Dated: 02/12/2024 Pavanan

Authorities and precedents appearing in the judgment

• Mumbai vs Room No.623
• Hindustan Tea Trading Co. Ltd. vs CIT 263 ITR 289 (Kol) once the

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on NRI gift, donor capacity and documentary evidence. The operative result is classified as Allowed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with NRI gift, donor capacity and documentary evidence. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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