Unexplained cash credits under section 68 fail where gift documents, banking records and donor capacity establish a genuine foreign remittance.

Amounts received as gifts from the assessee's son were not to be treated as unexplained cash credits under section 68 where the assessee produced a gift deed, bank statements, remittance details, donor confirmation, overseas employer records and evidence of receivables supporting the donor's capacity. The transfers were made through banking channels as foreign remittances, and the documents supported the donor's identity, creditworthiness and the genuineness of the transaction. The essential requirements of a valid gift-absence of consideration, transfer and acceptance-were also satisfied. As the assessee discharged the initial onus and the Revenue failed to disprove the gifts or show that the sums were the assessee's own unexplained income, the addition was held unsustainable.

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Issues: Whether the gifts received from the assessee's son could be treated as unexplained cash credits under section 68 of the Income-tax Act, 1961 despite the documentary evidence produced to establish the donor's identity, creditworthiness and the genuineness of the transaction.

Analysis: The assessee produced the gift deed, bank statements, remittance details, confirmation of the donor, balance sheet material of the foreign employer and a certificate showing receivables due to the donor. The material showed that the transfers were made through banking channels as foreign remittances and that the donor had sufficient overseas earning capacity, even though his Indian return reflected low income. The requirements of a valid gift, namely absence of consideration, transfer and acceptance, were also found to be satisfied. On these facts, the assessee discharged the initial onus, and the Revenue did not bring material to disprove the gifts or to establish that the amounts represented the assessee's own unexplained income.

Conclusion: The addition under section 68 was not sustainable and the deletion made by the appellate authority was upheld.

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