TaxTMI 
TaxTMI 
2013 (11) TMI 176
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....for the gift, credit worthiness of the donor except stating that the donor is doing business in bakery, departmental store and real estate at Al-Ain, UAE. Therefore, the assessing officer added the above said sum of Rs.35.00 lakhs to the total income of the assessee. The AO noticed that the purchase of materials like sand, boulders, metals, jellies, sand etc. are not supported by proper bills except by 'bought notes'. The wages/labour charges were supported only by self made vouchers. The closing work in progress declared by the assessee was found to be an estimate. Hence, the AO opined that the inflation of expenses under these circumstances cannot be ruled out. Accordingly, he made a round sum disallowance of Rs.2.00 lakhs to cover up the deficiencies. Aggrieved, the assessee carried the matter in appeal before Ld CIT(A), but could not succeed. Hence, the assessee has come before us in appeal. 4. The Ld counsel for the assessee submitted that the assessee has discharged the burden of proof placed upon him u/s 68 of the Act by proving the identity of the donor, credit worthiness of the donor and genuineness of the transactions. He submitted that the donor has filed an affidavit....
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....hifts to the assessing officer. In this regard, it would be apposite here to extract the observations made by Hon'ble Delhi High Court in the case of Premnath Goel and Co. Vs. CIT (2004)(271 ITR 390) below:- "Section 68 of the Act requires an assessee to prove the credits appearing in his books of account, as to the nature and source of such amounts, so that if the explanation furnished is not satisfactory, the Assessing Officer can treat it as the assessee's income. The assessee is required to prove three important conditions namely, (i) the identity of the creditor (ii) the capacity of the creditor to advance the money and (iii) the genuineness of the transaction. What evidence would be sufficient to establish the said conditions or what material would be relevant in a particular case, would depend on the facts of each case. Based on the above said principle, if we analyse the facts prevailing in the instant case, we notice that the assessee has filed a confirmation letter from the donor, an affidavit from the donor and a certificate obtained from M/s Palm General Trading LLC. From the order of Ld CIT(A), we notice that the assessee has received the impugned amo....
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....od he was paid 4 lakhs Dirhams on 15.4.2003, 4 lakhs Dirhams on 16.10.2003 and 3 lakhs Dirhams on 1.3.2004 towards the investment and share of profits and also to submit a report regarding the creditworthiness of the person in the light of the additional evidence given. 3. Shri R.V. Vishwanathan, Chartered Accountant, Authorised Representative of the assessee who attended the case was asked to furnish detailed evidences in this regard. It was reiterated by him that the sum of Rs. 35 lakhs credited in the Capital account of the as is the amount received from his own brother Shri E. Hamza Bava and the remittances were through banking channels from UAE and that the source of funds for his brother stands explained by way of certificate from the above mentioned company. It was stated by him that he has no other evidences other than what I already filed with the Deptt. 4. Though a sum of Rs. 356 lakhs has come to India to the assessee's bank accounts by way of Demand Drafts from UAE on various dates from April 2003 to Nov. 2003, this is not through the NRE accounts from Hamza Bava and though a certificate from M/s. Palm General Trading (LLC), UAE has been filed with regard to evide....
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....e of any material to establish the nexus between the funds of the donor and the demand drafts. Hence, in our view, the genuineness of the transactions cannot be considered to have been established. 11. Regarding credit worthiness of the donor, we fully agree with the observations made by Ld CIT(A) in para 11 of his order, which reads as under:- "11. To start with, I find that the appellant did not receive the gift amounts through banking channel as claimed by the learned counsel for the appellant in the first written submissions. The gift amounts have been received by the appellant by way of DDs and no nexus has been established between the source of funds for procuring these DDs by the donor and his earnings in the NRE bank account. A copy of the bank account for the relevant period of the donor has not been placed on record. It is seen that the donor claims to have received funds on retirement as under:- Date Amount (in Dirhams) Approx. equivalent amount in rupees 15.04.2003 4 lakhs Rs. 40 lakhs 16.10.2003 4 lakhs Rs. 40 lakhs 01.03.2004 4 lakhs Rs. 40 lakhs Whether the above amounts received were applied for the purpose of making gift....