Gift credit through bank transfer still requires proof of genuineness and donor creditworthiness to avoid unexplained income treatment.

A gift credited through bank transfer from a brother did not automatically qualify for exclusion under Section 56(2) of the Income-tax Act because the assessee still had to satisfy the burden under Section 68 by proving the donor's identity, the genuineness of the transaction and the donor's creditworthiness. Identity was established, but no material was produced to support genuineness or creditworthiness. Mere routing through banking channels and later use of the money was insufficient to explain the nature and source of the credit. The authorities were therefore justified in treating the sum as unexplained income and making the addition.

---

---

Issues: Whether the assessee, who received a large sum by bank transfer as a gift from his brother, discharged the burden under Section 68 of the Income-tax Act, 1961 by proving the identity of the donor, the genuineness of the transaction and the donor's creditworthiness, so as to claim exclusion from tax under Section 56(2) of the Income-tax Act, 1961.

Analysis: The amount received by the assessee from his brother was not in dispute, and the donor's identity was established. However, the assessee did not produce material to prove the genuineness of the gift transaction or the creditworthiness of the donor. Mere transfer through banking channels and subsequent utilisation of the amount did not satisfy the statutory burden. For the benefit of the relative-based exclusion under Section 56(2) to apply, the assessee had to satisfy the requirements of Section 68 by showing a satisfactory explanation of the nature and source of the credit. The authorities were therefore justified in treating the amount as unexplained income.

Conclusion: The assessee failed to discharge the burden under Section 68, and the addition of the amount as income was upheld.

Ratio Decidendi: To avoid addition of a credit entry, the assessee must prove the identity of the creditor, the genuineness of the transaction and the creditor's creditworthiness; proof of receipt through banking channels alone is insufficient.

---