2006 (9) TMI 143 - HC - Income Tax

Addition made on gifts received from various non-residents - creditworthiness and genuineness of the gifts - HELD THAT - It is well-settled that mere identification of donor and showing the movement of gift amount through banking channel is not enough to prove genuineness of the gift. The assessee was required to establish that the donor had the means and the gift was genuine for natural love and affection. We have dealt with this aspect of the matter at length in our judgment in Subhash Chander Sekhri v. Deputy CIT 2006 (7) TMI 160 - PUNJAB AND HARYANA HIGH COURT . We are of the view that the concurrent findings of fact recorded by the authorities that the gifts in question were not genuine are pure findings of fact and no substantial question of law arises. The appeal is accordingly dismissed.

Issues:
1. Appeal against the order of the Income-tax Appellate Tribunal for the assessment year 1998-99.
2. Substantial questions of law regarding the addition made on account of gifts.
3. Establishing the identity, creditworthiness, and genuineness of the gifts received.
4. Assessment of the genuineness of gifts from non-residents and other individuals.
5. Comparison with previous judgments on the validity of gifts from strangers.
6. Interpretation of legal precedents regarding proving the genuineness of gifts.
7. Distinction of judgments relied upon by the assessee from the current case.
8. Analysis of the findings of fact regarding the genuineness of the gifts.

Analysis:
The appeal was filed against the Income-tax Appellate Tribunal's order for the assessment year 1998-99, raising substantial questions of law regarding the addition made on account of gifts received by the assessee. The Tribunal had questioned the genuineness of the gifts totaling to a significant amount, emphasizing the need to establish the identity, creditworthiness, and genuineness of the donors. The assessee had claimed to have received gifts from non-residents and other individuals, with specific scrutiny on the gifts received from Smt. Surinder Kaur, Sh. Jagdev Singh, Sh. D. S. Chahal, and Berjinder Pal Singh. The Assessing Officer raised doubts on the identity of the donors and the genuineness of the gifts, highlighting discrepancies and lack of close relationships between the donors and the assessee.

The Assessing Officer provided detailed reasons for questioning the gifts received from Smt. Surinder Kaur, emphasizing the lack of familial connections, the donor's history of not gifting to her own family members, and inconsistencies in the documentation provided. Similar reasons were cited for questioning the gifts from Sh. Jagdev Singh and Sh. D. S. Chahal. However, the matter concerning the gift from Berjinder Pal Singh, the nephew of the assessee, was remanded for further assessment. The counsel for the assessee argued that the Tribunal's findings were perverse and the gifts should have been considered genuine, citing judgments from the Delhi High Court supporting gifts from strangers.

The High Court, however, rejected the submissions, emphasizing the requirement to prove the genuineness of gifts beyond mere identification and banking transactions. Legal precedents were cited to highlight the burden on the assessee to establish the donor's means and the genuine nature of the gifts based on natural love and affection. The court distinguished the judgments relied upon by the assessee, noting that the Tribunal's findings on the genuineness of gifts were factual determinations. Referring to a previous judgment, the court concluded that no substantial question of law arose from the concurrent findings that the gifts in question were not genuine. Consequently, the appeal was dismissed.

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