TaxTMI 
TaxTMI 
2017 (3) TMI 742
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.... is in this background, the assessee has filed these appeals framing the following questions of law for consideration of this court: "i) Whether the Department is right in law to enquire and insist the assessee to prove the source of the donor, when the assessee discharges his primary burden that the subject amount has received by way of Gift from his brother (relative) through banking channel? Were not the authorities below in error as regards their interpretation about Section 68 of the Income Tax Act, 1961? ii) Is not the onus and burden of proof on the department to probe into and establish by itself the source of the donor placed abroad when the assessee establishes the fact that he received the amount by way of gift from his brother (exempted under Section 56(2) through banking channel? iii) Whether on the facts and circumstances of the case the authorities below were justified in holding that a sum of Rs. 1,66,01,834/- is the undisclosed income of the assessee?" 2. Briefly stated, the facts of the case are that the assessee is the Director of a private limited company known as Core Fundamental and Developers Private Limited. In his return for the assessment year 2009-....
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....ments of the Gauhati High Court in Nemi Chand Kothari v. Commissioner of Income Tax [264 ITR 254 (Gauhati)] and the Delhi High Court in Commissioner of Income Tax v. Value Capital Services Private Limited [(2008) 307 ITR 334] and ITA 429/2003 (Commissioner of Income Tax v. Dhooti Pearls and Investment Limited). On the other hand, the learned Senior Counsel for the Revenue argued that it is plain and evident that the assessee, despite various opportunities granted, did not prove the requirements of Section 68 of the Act. Therefore, according to him, the amount cannot escape assessment at the hands of the assessee. 6. We have considered the submissions made. 7. The fact that an amount of 1,66,01,834/- Rs. was received by the assessee from his brother Sudeep Thomas by bank transfer in instalments during the assessment year is not in dispute. Assessee claimed benefit of exemption under Section 56(2) of the Income Tax Act. A reading of Section 56 shows that, it deals with income from other sources. As per this Section, income from every account which is not to be excluded from total income shall be chargeable to income tax under the head, income from other sources, if it is not charge....
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....dentity of the creditor or anyone of the other conditions of Section 68, the assessee cannot claim to have discharged his burden. 10. Bearing in mind these principles, if the facts that are available in this case are appreciated, it is obvious that though the assessee had established the identity of the creditor, viz. his own brother, the assessee has not succeeded in establishing either the genuineness of the transactions, the capacity or creditworthiness of the creditor. The fact that the amount received by him has been through banking channels, or that the amount has been utilised by him in any particular manner would not improve the case of the assessee. According to us, the genuineness of the transaction and the creditworthiness of the creditor ought to have been proved by the assessee by producing necessary documents with respect to the monetary ability of the creditor to make such substantial gifts to the assessee. Although it is seen from the records that, assessee and his brother had at different points of time promised to make available documents to prove these requirements of Section 68, such documents were not made available at any stage of the proceedings. In fact, ev....
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.... actually belongs to, or was of, the Assessee himself. In other words, while Section 68 gives the liberty to the Assessing Officer to enquire into the source/ sources from where the creditor has received the money, Section 106 makes the Assessee liable to disclose only the source(s) from where he has himself received the credit and it is not the burden of the Assessee to show the source(s) of his creditor nor is it the burden of the Assessee to prove the creditworthiness of the source(s) of the sub-creditors. If Section 106 and Section 68 are to stand together, which they must, then, the interpretation of Section 68 has to be in such a way that it does not make Section 106 redundant. Hence, the harmonious construction of Section 106 of the Evidence Act and Section 68 of the Income Tax Act will be that though apart from establishing the identity of the creditor, the Assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the Assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the Assessee and the ....