2003 (11) TMI 28 - HC - Income Tax

Genuineness of the gift - Assessing Officer noticed deposits in the assessee s bank account - though the assessee had admittedly produced the bank statements the Assessing Officer did not raise any query with regard to the capacity of the donors to make the gift - From the assessment order we find that the only ground on which the genuineness of the gifts has been doubted is the alleged failure on the part of the assessee to establish relationship between the donor and the donee. - In support of the gifts copies of the gift deeds affidavits of the donors extracts from their bank accounts and bank certificate with reconfirmation letters were filed by the assessee - Both the lower appellate authorities have recorded a categorical finding that by producing the aforementioned documents the assessee has discharged the onus which lay on him with regard to the genuineness of the gifts. Revenue appeal dismissed

Summary

Issues:
Assessment of gifts from NRIs under section 68 of the Income-tax Act, 1961 for the assessment year 1994-95.

Analysis:

The judgment revolves around the assessment of gifts received by the assessee from two NRIs during the assessment year 1994-95. The Assessing Officer added the gift amounts to the total income of the assessee under section 68 of the Income-tax Act, suspecting the gifts to be a means of converting black money earned through real estate business. The Commissioner of Income-tax (Appeals) observed that the onus of proving the identity and resources of the donor for making the gift lay on the assessee. The Commissioner concluded that the assessee had discharged this onus by providing copies of gift deeds, affidavits, and other supporting documents, establishing the genuineness of the gifts.

The Revenue, dissatisfied with the Commissioner's decision, appealed to the Tribunal. The Tribunal upheld the decision, noting that the assessee had submitted substantial evidence supporting the genuineness of the gifts. The Revenue then appealed to the High Court, arguing that the capacity of the donors to make such significant gifts was not proven, and there was no evidence of a relationship between the parties. The Revenue cited a previous court decision to support their argument.

The High Court disagreed with the Revenue's contentions, emphasizing that the onus was on the assessee to establish the donor's identity and capacity to gift. The Court noted that the Assessing Officer did not question the capacity of the donors when presented with the evidence. Both the lower appellate authorities had found that the assessee had fulfilled the onus regarding the genuineness of the gifts by providing relevant documents. The Court concluded that the findings were factual and did not raise any substantial legal questions, leading to the dismissal of the appeal.

In summary, the judgment clarifies the burden of proof on the assessee regarding gifts received, the importance of providing substantial evidence to establish the genuineness of gifts, and the significance of factual findings by appellate authorities in such cases.