Book-entry gifts require real transfer and factual proof of genuineness, not mere absence of physical cash delivery.

Section 4(5A) of the Wealth-tax Act was treated as addressing the real and effective transfer required for a valid gift, including gifts made by book entries, and not as a conclusive bar to examining a pre-insertion transaction. A book-entry gift is not invalid merely because there is no physical handing over of cash; genuineness depends on surrounding facts such as acceptance by the donees, supporting entries, available credit balance, and whether the donor retained control. Mere self-serving acceptance in another proceeding is insufficient. Where the factual inquiry is incomplete, the matter requires fresh verification of the transaction's true nature.

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Issues: (i) Whether section 4(5A) of the Wealth-tax Act, 1957 could be applied to a gift made before its insertion; (ii) whether a gift effected by book entries was genuine and whether the matter required further factual inquiry.

Issue (i): Whether section 4(5A) of the Wealth-tax Act, 1957 could be applied to a gift made before its insertion.

Analysis: A gift of movable property may be made by registered instrument or by delivery. In the context of book-entry gifts, the provision was treated as explaining the need for real and effective delivery rather than introducing a new rule inconsistent with existing law. On that view, its principle could be applied even where the gift transaction preceded its commencement. Alternatively, the provision was also treated as not having retrospective operation in a manner that would defeat the assessee's case without proper factual examination.

Conclusion: The provision was not a conclusive bar against examining the pre-insertion gift transaction, and the assessee was not denied relief solely on that basis.

Issue (ii): Whether a gift effected by book entries was genuine and whether the matter required further factual inquiry.

Analysis: A book-entry gift is not invalid merely because there is no physical handing over of cash. The decisive enquiry is whether the surrounding circumstances show a real and effective transfer, including acceptance by the donees, supporting entries in the relevant books, available credit balance, and whether the donor retained control after the transfer. Mere self-serving acceptance of the gift in another proceeding was held insufficient to prove genuineness. As the factual enquiry on these matters was incomplete, the matter required reconsideration by the assessing authority.

Conclusion: The finding of non-genuineness was set aside and the issue was remitted for fresh assessment after proper factual verification.

Final Conclusion: The appellate orders were disturbed, and the assessment issue concerning the alleged gift was sent back for fresh decision after full enquiry into the true nature of the transaction.

Ratio Decidendi: A gift recorded by book entries is valid only if the surrounding circumstances show a real and effective transfer of money, and the genuineness of such a transaction must be determined on proper factual enquiry rather than on the basis of mere absence of physical delivery or self-serving admissions.

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