Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2008 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (5) TMI 641 - HC - Income TaxAdditions in the income u/s 68 - transferable bonds gifted by the NRI to resident - bonds were purchased against US dollars - doubt the genuineness of the gift - Burden to prove the nature and source of the transaction - Maturity amount credited in the bank account of the assessee - Exemption 5(iiie) of the GT Act by the Finance (No. 2) Act of 1991 - whether the said amount can be treated as the income of the assessee for the year under consideration? - HELD THAT:- Sec 68 came up for consideration before the various High Courts. The Courts have held that assessee has to prove three conditions; (1) identity of the creditor; (2) capacity of such creditor to advance money; and (3) genuineness of the transactions. Shankar Industries vs. CIT [1978 (3) TMI 91 - CALCUTTA HIGH COURT]; C. Kant & Co, vs. CIT[1980 (6) TMI 21 - CALCUTTA HIGH COURT]; Jalan Timbers vs. CIT [1996 (8) TMI 83 - GAUHATI HIGH COURT]. In the case of ss. 68 and 69 of the Act, the assessee has to prove the nature and source of the deposit or investment, as the case may be. As held by the various High Courts and apex Court in Sreelekha Banerjee vs. CIT [1963 (3) TMI 47 - SUPREME COURT], CIT vs. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] to prove the nature and source, the assessee has to prove the identity of the person, the genuineness of the transaction and capacity to pay. If all the aforesaid three conditions are proved the burden shifts on the Revenue to prove that the amount belongs to the assessee. CIT vs. United Commercial & Industrial Co. (P) Ltd.[1989 (5) TMI 18 - CALCUTTA HIGH COURT], M.A. Unneeri Kutty vs. CIT [1991 (9) TMI 31 - KERALA HIGH COURT]. We are of the view that there is no reason to doubt the genuineness of the gift by Sri K.C. Kapadia to the assessee. In any view of the matter, the assessee was able to establish the nature and source of the money. The nature and source of the money found deposited in the bank account of the assessee were the maturity amounts of the four bonds which were purchased by Sri K.C. Kapadia on 1st Oct., 1998. Therefore, so far as year under consideration is concerned, the nature and source are fully established. There is no evidence to show that the deposit in the bank account was the income from other sources of the assessee for the year under consideration. Therefore, Order of the CIT is liable to be set aside and it is held that that ITO has erred in treating the maturity amount of the four Resurgent India bonds as an income from other sources in the AY 2004-05. In the result, writ petition is allowed. The impugned order of the CIT is set aside. There shall be no order as to costs.
|