1995 (6) TMI 62 - AT - Income Tax

Assessing Officer, Gift Tax, Income From Undisclosed Sources, Minor Child, Unexplained Money

Summary

Issues Involved:
1. Genuineness of gifts received by minor children.
2. Onus of proving the validity of the gifts.
3. Assessability of the gifts in the hands of the father.

Detailed Analysis:

Genuineness of Gifts Received by Minor Children:
The assessee claimed that his minor children received gifts from various donors, all residing in Calcutta, while the donees lived in Meerut. The Assessing Officer (AO) conducted an enquiry and found several discrepancies, such as:
- The donors were not found at the given addresses.
- The bank drafts were prepared from two banks in Calcutta, despite donors having different localities.
- Stamp papers and gift-tax challans were prepared by the same person.
- Some donors did not file gift-tax returns, and their financial capacity to make such gifts was questionable.

The AO concluded that the gifts were bogus, manipulated by the father of the children, and treated them as income from undisclosed sources.

Onus of Proving the Validity of the Gifts:
The assessee provided affidavits, balance sheets, and gift-tax returns to establish the genuineness of the gifts. However, the AO found that:
- The donors' financial capacity was not sufficient to make such gifts.
- The affidavits were not reliable as they were self-serving statements.
- The gifts did not accord with human probabilities, considering the financial status of the donors.

The CIT(A) initially accepted the assessee's evidence, stating that the onus was discharged by providing the necessary documentation and that the non-availability of donors at the given addresses was not sufficient to discredit the gifts.

Assessability of the Gifts in the Hands of the Father:
The Tribunal held that:
- The onus of proving the identity, creditworthiness, and genuineness of the gifts lay on the assessee.
- The evidence provided by the assessee was not sufficient to establish the genuineness of the gifts.
- The AO was justified in treating the gifts as income from undisclosed sources, considering the improbability of the gifts and the financial status of the donors.

The Tribunal concluded that the amounts purportedly received as gifts by the minor children should be assessed in the hands of the father, as the minors had no independent means of earning income. The Tribunal upheld the AO's decision to add the amounts to the father's income under sections 68 and 69A of the Income-tax Act.

Conclusion:
The Tribunal allowed the revenue's appeals, restoring the additions made by the AO. The Tribunal found that the assessee failed to discharge the onus of proving the genuineness of the gifts and that the amounts should be assessed as the father's income from undisclosed sources.