Verification of family remittances is required before treating them as unexplained income; assessment remanded for fresh adjudication.

Family remittances cannot be treated as unexplained income without verifying the remitters' source of income and creditworthiness. Where the taxpayer has disclosed the remitters' identity and relationship, notices to the remitters are required before an adverse inference is drawn. Failure to undertake that verification is a procedural defect. The assessment was set aside for fresh adjudication, requiring verification of the remittances and an opportunity for the taxpayer to produce relevant documents.

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Issues: Whether an assessment treating family remittances as unexplained income could be sustained without issuing notices to the remitters for verification of their source of income and creditworthiness.

Analysis: The assessee had disclosed the identity and relationship of the remitters. Verification of the remitters' income and capacity was required before drawing an adverse inference regarding the remittances. The failure to issue notices to the remitters constituted a procedural error requiring fresh assessment, with an opportunity to furnish relevant documents.

Conclusion: The assessment was set aside for fresh adjudication after verification of the remittances and affording the assessee an opportunity to produce documents.

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