Unexplained cash credit under section 68: gifts accepted after donors' books and means corroborated, addition deleted.

Decision concerns unexplained cash credits treated as gifts from identified donors; tribunal noted donors had sufficient means and maintained accounting records, and the assessee discharged the onus by proving identity, genuineness and creditworthiness of donors, resulting in deletion of the addition. Reliance was placed on prior authorities. Gifts from relatives were held not taxable in recipients hands under the relevant taxation provision, and the revenues challenge was dismissed. The determination turned on corroboration of donor sources and satisfaction of the three-limb test for cash credits.

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Issues: Whether the addition of Rs.1,21,00,000 made under section 68 of the Income-tax Act, 1961 treating cash gifts received by the assessee as unexplained cash credit can be sustained.

Analysis: Applicable legal framework includes section 68 (unexplained cash credit) and section 56(2)(vii) (exemption for sums received from relatives). The donors were brothers-in-law and thus fall within the definition of "relative" under section 56(2)(vii). Documentary material available on record comprised donors' confirmations, income-tax returns, balance sheets and computations of income showing substantial incomes (approx. Rs.83.98 lakhs and Rs.80.81 lakhs) and recorded entries reflecting the gifts. The assessing officer's basis for addition was non-production of gift deeds without challenging the donors' identity or their financial capacity. Precedent supports that where the assessee discharges the initial onus by establishing identity, genuineness and creditworthiness of donors through corroborative documents, the burden shifts to the revenue to prove otherwise.

Conclusion: The addition of Rs.1,21,00,000 under section 68 is not sustainable and is deleted; decision is in favour of the assessee.

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