1995 (6) TMI 66 - AT - Income Tax

Summary

Issues Involved:
1. Addition of gifts received from non-resident Indians u/s 68.
2. Applicability of section 68 to amounts received by cheques or drafts.
3. Burden of proof on the assessee to establish identity, capacity, and genuineness of gifts.
4. Protective assessment and its implications.

Summary:

1. Addition of Gifts Received from Non-Resident Indians u/s 68:
The assessee claimed to have received gifts from non-resident Indians, which were not accepted as genuine by the revenue authorities. The assessee failed to establish the identity and financial capacity of the donors, as well as the genuineness of the gifts. The CIT(Appeals) and ITAT confirmed the additions of Rs. 96,496 and Rs. 6,692, holding that the burden of proof was not discharged satisfactorily by the assessee. The ITAT referenced the Delhi High Court decision in CIT v. Sophia Finance Ltd. to support their view.

2. Applicability of Section 68 to Amounts Received by Cheques or Drafts:
The assessee contended that section 68 was applicable only to cash deposits and not to amounts received by cheques or drafts. This contention was rejected by the CIT(Appeals) and ITAT, which held that the term "any sum found credited in the books" in section 68 includes sums received by any mode, including cheques or drafts. The ITAT cited the Delhi High Court decision in CIT v. Sophia Finance Ltd. to emphasize that section 68 is widely worded and not restricted to cash transactions.

3. Burden of Proof on the Assessee:
The ITAT reiterated that in cases of cash credits or gifts, the onus is on the assessee to establish the identity of the creditors/donors, their financial capacity, and the genuineness of the transaction. The assessee failed to provide sufficient evidence, such as the financial status of the donors or their present addresses, which would allow for proper verification. The ITAT emphasized that mere confirmations from the donors were insufficient to discharge the burden of proof.

4. Protective Assessment:
The ITAT addressed the issue of protective assessment, where the income was assessed in the hands of the assessee on a protective basis, pending final determination in the case of Shri D.C. Rastogi. The ITAT directed the CIT(Appeals) to dispose of the issue in accordance with the law, based on the final decision in the case of Shri D.C. Rastogi.

Other Relevant Details:
- In the case of minor son of Shri D.C. Rastogi, the ITAT confirmed the addition of gifts totaling Rs. 47,095 as income from undisclosed sources, except for birthday presents amounting to Rs. 6,400, which were accepted as genuine.
- For the mother of Shri D.C. Rastogi, a gift of Rs. 50,000 from an NRI was not accepted as genuine due to lack of evidence of the donor's financial capacity and the genuineness of the gift.
- In another case, gifts totaling Rs. 2,11,521 from four donors were treated as income from undisclosed sources due to insufficient evidence of the donors' financial capacity and the genuineness of the gifts.

The appeals were partly allowed, with specific issues set aside for fresh consideration by the Assessing Officer or CIT(Appeals) based on the final decisions in connected cases.