TaxTMI 
TaxTMI 
2005 (11) TMI 32
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.... The capital account contained a credit entry showing a sum of Rs. 50,000 as gift received. The assessment was originally completed on August 25, 1981, under section 143(1) of the Act. On June 30, 1981, Shri Ramji Nanji, the donor, had filed a return of gift in respect of the above stated gift of Rs. 50,000 and the assessment came to be completed under section 15(3) of the Gift-tax Act, 1958, vide order dated March 17, 1986. On the same day, i.e., March 17, 1986, the Assessing Officer, having jurisdiction over the assessee, recorded reasons to the effect that he believed that the assessee had failed to furnish fully and truly all material facts relevant for assessment of his income chargeable to tax and hence such income had escaped assessment within the meaning of section 147(a) of the Act. Notice under section 148 of the Act was issued and served on the assessee on the same day, namely, March 17, 1986. According to the Assessing Officer, the gift of Rs. 50,000 received by the assessee on July 29, 1980, was not a genuine gift and was liable to be taxed as unexplained income being the credit in the capital account. During the course of reassessment proceedings, the Assessing ....
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....g to him, the view adopted by the Tribunal was a possible view on the facts of the case, and hence, this court should not undertake an exercise of reappreciating the evidence in its advisory jurisdiction. It was also submitted that whether the gift-tax proceedings had been completed or not in the hands of the donor, was not germane for the purposes of deciding the taxability of the amount in the hands of the assessee and correct income had to be taxed in the hands of the right person regardless of any other proceedings that might have taken place under the Act or under the Gift-tax Act. In support of this proportion, he placed reliance on the decision of the apex court in the case of S.P. Jaiswal v. CIT [1997] 224 ITR 619, with special reference to the observations at pages Nos. 625 and 626 of the Reports. He urged that the ratio of the said decision be extended and applied to the facts of the present case. On the merits, the submission was that the Assessing Officer had carefully analysed the evidence, including statements of the assessee and the donor, and given cogent reasons for disbelieving the explanation tendered by the assessee. The said order had been approved and upheld b....
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....ee, namely, to offer an explanation as to the nature and source of the credit. What would be the degree of the onus and what should be the extent of explanation in such circumstances, is succinctly laid down by this court in the decision in the case of CIT v. Pragati Co-operative Bank Ltd. [2005] 278 ITR 170. Suffice it to state that an assessee can be asked to prove the source of credit in the books, but cannot be asked to prove the source of the source. Unfortunately, as noted hereinbefore, the Tribunal has proceeded on an entirely fallacious premise, when it is observed, "We have to decide the question about the genuineness of the gift on the balance of probabilities and, in our view, 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 his capital account. The assessee pointed ....
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....ought on record to even hold for a moment that the said explanation is not satisfactory. Though the same is stated as a conclusion, the reasoning for stating so is as to disbelieving source of source. In these circumstances, the impugned order of the Tribunal cannot be sustained. In relation to the apex court decision in the case of S.P. Jaiswal [1997] 224 ITR 619, on which reliance has been placed on behalf of the Revenue, suffice is to state that the same was in the context of applicability or otherwise of the provisions of sections 60 and 61 of the Act. There the court was called upon to decide whether, on the facts before it, there was a transfer of income where there was no transfer of the assets from which the income arises. The provision itself requires that, in such circumstances, such income shall be included in the total income of the transferor. Therefore, the observations on which reliance has been placed cannot carry the case of the Revenue any further. The submission that the ratio of the decision should be extended and applied in the present set of circumstances cannot be accepted for the simple reason that sections 60 and 61 fall under Chapter V of the Act, which....