TMI Blog2006 (4) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... account of gift alleged to be received by the assessee and deletion of addition of Rs. 76,000 on account of loan. 3. Rival contentions have been heard and records perused. The brief facts of the case are that the assessee constructed a residential house, the cost of which was shown at Rs. 2,50,000 before ADIT (Investigation). Considering the cost of construction low, reference was made to the DVO who has determined the cost of construction at Rs. 11.86 lakhs and period of construction was mentioned from July, 1994 to April, 1996 vide valuation report dt. 20th Sept., 1996. The AO further observed that valuation of the said house mainly pertains to the asst. yrs. 1995-96 and 1996-97. As no specific amount of cost of construction was determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d their relation with the assessee and their source of income. The AO stated that all these persons were not assessable to income-tax and their income always remained below taxable limit, they cannot have capacity to make such gifts. The AO, therefore, held that assessee failed to prove genuineness of the gifts and that no supporting evidence for loan of Rs. 76,000 was also produced. The assessee's claim both for gifts and loans was not accepted by the AO. 4. By the impugned order, the CIT(A) observed that as per the cash flow statement submitted before the AO, Rs. 1,56,000 was received by the assessee during the period relevant to asst. yr. 1993-94, likewise Rs. 2,10,000 was received during the period relevant to asst. yr. 1994-95 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the gift of Rs. 30,000 received from Ishwar Dass. 6. However, in respect of remaining three donors, he confirmed the action of the AO. 7. Aggrieved by the above order of CIT(A), both the assessee and Revenue are in appeal before us. Assessee is aggrieved for confirmation of addition in respect of three donors amounting to Rs. 90,000 whereas Revenue is aggrieved for deletion on account of gifts of Rs. 4,10,000 and loan of Rs. 76,000. 8. It was argued by leaned Authorised Representative that CIT(A) after appreciation of all the materials found that gifts were received by the assessee from close relatives. The donors have also furnished their affidavits, but the CIT(A) was not justified in confirming the gifts received from Dilip Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not assessed to tax. We have carefully gone through the cash flow statement placed in the record, which as per the certificate furnished by the learned Authorised Representative were also produced before the AO and which has been narrated by the AO in his assessment order at p. 2 para 3. As per the cash flow statement, the assessee has explained receipt of gifts in each assessment year which was utilized by him for the respective assessment year in construction of house. Each assessment year is separate and there is no reason for making addition in respect of gifts received in years earlier to the year for which assessment is being framed. Even while invoking deeming provisions for making addition, IT Act does not empower the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, who was running a shop of cold drinks since last 12 years. All these persons, in their statements have categorically accepted the fact of giving the gift, reason. for giving the gift and their source of income. There is no dispute to the well settled legal proposition that not only identity and genuineness of the gifts is required to be proved, but the creditworthiness of the donor is also required to be established. In the instant case, we found that in respect of all these three donors, not only identity and genuineness was established, but also the creditworthiness to advance the impugned amount of gifts. Since the gifts were given by the close relatives, the essential ingredient of valid gift, that it should be out of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X
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