2015 (6) TMI 135

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....7, the assessees have preferred the present Tax Appeals for consideration of the following substantial question of law which were framed while admitting the matters: "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in treating the gift of Rs. 2,00,000/- as unexplained income of the assessee under Section 68 or section 69 of the Income Tax Act, 1961?" 2. The assessees were given Rs. 2 lakhs as gift by a nonresident Indian by way of a cheque from his Non Resident External Account. The Assessing Officer held that since the financial capacity of the donor is not proved under section 68, Rs. 2 lakhs is added as unexplained cash credit. On appeal the CIT (Appeals) allowed th....

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....taxmann.com 176 (Gujarat). 4. Mr. K.M. Parikh, learned advocate for the revenue supported the impugned order passed by the Tribunal. He submitted that the Tribunal has considered the fact that the assessees failed to prove the three ingredients viz. identity, genuineness and creditworthiness of the donor under sections 68 & 69 of the Act and that crediworthiness was not established in a meaningful manner. He has relied upon a decision of the Delhi High Court reported in Commissioner of Income Tax vs. Shri Anil Kumar reported in [2007] 292 ITR 552 (Delhi) and a decision of the Punjab & Haryana High Court in the case of Tirath Ram Gupta vs. Commissioner of Income Tax reported in 304 ITR 145. 5. We have carefully considered the submissio....

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...., it is not probable that the assessee received Rs. 50,000/- or any part thereof as a gift from Ramji Nanji, the donor.. Instead of addressing itself to the requirement of Section 68 of the Act, the Tribunal has adopted an approach which, to say the least, is unwarranted in law. The Tribunal states that motivation for making the gift is not established. This finding is neither here nor there. The assessee was called upon to explain the credit entry found in its capital account. The assessee pointed out that it had received a gift from Shri Ramji Nanji. Shri Ramji Nanji appears before the assessing officer and confirms the fact of having made the gift. He produces evidence in support of the source from which the funds for making the gift are....

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....source of the funds in his hands, but that could not be a ground for disbelieving a gift which had admittedly been received by the assessee as a gift and being treated as undisclosed income of the assessee. 15. Having gone through the statements of the donor as well as the assessee, it is apparent that despite minor discrepancies, the factum of the gift having been made has been accepted by the donor and in the circumstances, it cannot be stated that the credit entry in the capital account of the assessee did not reflect the true picture. The assessee had shown the same as gift received. The assessee tendered an explanation and nothing has been brought on record to even hold for a moment that the said explanation is not satisfactory. Tho....

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....th the adjudicating authorities have given cogent and sufficiently acceptable reasons for arriving at positive conclusions that such gifts are genuine and the transactions are creditworthy." 5.2 As far as the decision of Harishbhai Raojibhai Patel (supra) is concerned, this Court observing that the gift amount was paid through cheque upheld the Tribunal's order deleting the addition of cash credit made by the Assessing Officer. 5.3 So far as the decision cited by Mr. Parikh is concerned, in the case of Shri Anil Kumar (supra), the Delhi High Court held that mere identification of the donor and establishing movement of gift through banking channels, would not be sufficient to establish their genuineness. Similar view has been taken by ....