Genuine gift claims through NRE accounts require proof of donor identity, creditworthiness and transaction genuineness beyond banking entries.

Gifts credited through NRE accounts are not treated as genuine merely because funds moved through banking channels; the assessee must prove the donor's identity, creditworthiness and the genuineness of the transaction. Where donors are not produced, confirmatory letters are defective, the link between the alleged donors and credited funds is not established, and the surrounding facts do not support natural love, affection or occasion for gifting, tax authorities may apply the test of human probabilities and disregard the apparent form of the transaction. The result is that such credits can be treated as unexplained income, with the additions sustained in favour of the Revenue.

---

---

Issues: Whether gifts received through NRE accounts were genuine and whether the additions made by the Assessing Officer as unexplained income were justified.

Analysis: The assessee was required to establish the identity of the donors, their creditworthiness, and the genuineness of the alleged gifts. Mere movement of funds through banking channels and the existence of NRE accounts did not by themselves prove that the amounts originated from the stated donors. The donors were not produced despite opportunity, the confirmatory letters were found defective, the nexus between the alleged donors and the money credited in the NRE accounts was not established, and the surrounding circumstances did not support a finding of natural love, affection, or occasion for gifting. The Tribunal applied the test of human probabilities and held that the apparent form of the transaction could be disregarded where the surrounding facts made the claim improbable.

Conclusion: The assessee failed to discharge the burden of proving the gifts as genuine, and the additions as unexplained income were upheld in favour of the Revenue.

Final Conclusion: The Revenue's appeal succeeded and the deletion made by the first appellate authority was reversed, restoring the assessment additions.

Ratio Decidendi: In a claim of gift, the assessee must prove the donor's identity, creditworthiness, and the genuineness of the transaction, and the tax authorities may look beyond banking entries to the surrounding circumstances and human probabilities.

---