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1. Justification of addition of credits in the names of minors. Detailed Analysis: The judgment by the Appellate Tribunal ITAT Patna addressed the issue of whether the addition of credits in the names of minors was justified. The Income Tax Officer (ITO) had added the credits in the names of minors as income under section 68 during the assessment under section 143(3) of the Act. The assessee explained that the minors had received petty gifts and had filed returns of income under the amnesty scheme. However, the ITO did not accept this explanation, leading to the addition of the credits. The assessee then appealed to the CIT(A) and submitted confirmation letters from the gift donors to support the source of the credits. The CIT(A) found the letters to be similarly worded and lacking credibility, confirming the addition of credits. The Appellate Tribunal considered the arguments presented by the assessee's counsel, stating that the amounts were paid through "Account payee" cheques, meaning that the provisions of section 68 did not strictly apply. However, the Tribunal emphasized that it was incumbent upon the assessee to satisfactorily establish the nature and source of the credit, whether in cash or by cheque. The Tribunal noted that no substantial inquiry was conducted by the ITO into the credits, and the assessee was not given an opportunity to provide evidence in support of the credits. The Tribunal further analyzed the evidence provided by the assessee, which included confirmation of gifts from donors and the filing of returns under the amnesty scheme. The Tribunal highlighted that the primary burden on the assessee to explain the credits stood discharged, as no substantial inquiry was made by the ITO or the CIT(A) into the sources of the credits. Referring to previous judgments, the Tribunal emphasized that the failure to issue summons under section 131 absolved the assessee from further duty, ultimately proving the credits. Additionally, the Tribunal distinguished various cases cited by both parties to support their arguments, concluding that the burden to explain the credits in the names of third parties had been met by the assessee. The Tribunal criticized the CIT(A) for focusing on superficial aspects of the evidence rather than the substance of the matter, emphasizing that income-tax authorities should not reject evidence without attempting to disprove the sources provided by the assessee. Ultimately, the Tribunal held that the assessee had successfully established the identity of the creditors, their capacity to advance the money, and the genuineness of the transactions. In contrast, the income-tax authorities failed to discharge their burden of proving that the credits were not properly explained. Consequently, the addition of credits in the names of minors was deemed unjustified, and the appeal by the assessee was accepted, leading to the deletion of the addition.
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