2011 (12) TMI 629 - AT - Income Tax

Summary

Issues involved: Assessment of NRE gifts u/s 68 of the Income Tax Act for the assessment year 2005-06.

Assessment of NRE Gift:
- The AO found that late Shri Prakash K. Rajani and Mr. Pawan S. Rajani received NRE gifts from relatives.
- The AO accepted the identity and genuineness of the gifts but questioned the creditworthiness of the donors.
- The CIT(A) deleted the additions made by the AO based on additional evidence provided by the assessees.
- The CIT(A) emphasized the need to establish the identity, capacity, and genuineness of the transaction u/s 68 of the Act.
- The CIT(A) considered various evidences including visiting cards, bank letters, trade licenses, and property documents to prove creditworthiness.
- The revenue appealed against the CIT(A)'s decision, arguing doubts about the genuineness of the gifts based on the number of recipients.
- The assessee contended that creditworthiness was proven with evidence of remittances from abroad and assets owned by the donors.
- The ITAT upheld the CIT(A)'s decision, stating that the assessee had discharged the onus of proving creditworthiness, identity, and genuineness of the gifts.
- The ITAT distinguished the present case from previous case laws cited by the revenue, as the gifts were not deemed bogus and creditworthiness was established.
- Both appeals of the revenue were dismissed by the ITAT, affirming the CIT(A)'s orders.