TMI Blog2014 (3) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... r - The legal position involved clearly did not engage the attention of the Tribunal, deserved from it - partners of the assessee firm had not been maintaining their own books of accounts. Any credit found unexplained and ingenuine was to be accounted for in the books of accounts of the assessee firm only - sequelly such credit was to be treated as income of the firm for the year in such ingenuine and unexplained credits were found in its books of accounts - thus, the finding of the Tribunal and that of the CIT(A) had gone wrong in reversing the finding of the AO which are restored, as unexplained and ingenuine credit in the capital account of the partner Sat Pal Singh in the book of accounts of the assessee firm in absence of any separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm, Rs.1 lac had been credited through cheque received from NRI Harjit Singh. On further enquiry, the AO had noticed that this amount had been received from an acquaintance of the partner of the firm as a gift. Finding no reasonable connection of the gift with the partner or the firm, addition of Rs.1 lac was made in income for the year of the assessee. Following observations were made by the AO: In this case, the point to be seen is that a person residing abroad has not sent or gifted a single penny to his family members residing in India and as such, the story of gifting the huge amount of Rs. One lakh to Sh. Satpal Singh cannot be accepted as a genuine one. From the detailed discussion made above, one can reach to a irres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Considering the facts and the circumstances of the case alongwith evidence on record, I am of the view that the gifts stands duly explained with reference to the identity of the donor, his paying capacity as well as genuineness of the transaction. The addition of Rs. One lakh made on this account is, therefore, deleted. 5. Aggrieved with this order of the CIT(A), the revenue had gone in appeal before the Tribunal, though the Tribunal had agreed with it that it was not a genuine gift but still had refused to interfere with order of the CIT(A) whereby deletion of the addition made by the AO had been made. Observations of the Tribunal rejecting claim of the revenue are to the following effect: In this case, there was a credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which had been opened on 4.6.1987 with huge deposits therein in Central Bank of India, Hoshiarpur. This account was left with only nominal credit balance of Rs.595/- as on 18.7.1989 and entire deposits in this NRI account had been withdrawn by way of cheques issued by the NRI account holder i.e. Donor in this case; (ii) Donor Harjit Singh has very close relations in India but had not made gift to any of his such relatives; (iii) There was no occasion for making this gift; (iv) There was no connection of the donor with the donee except for the distant relationship through wife of the donee. Rs.1 lac was a huge amount in 1988. There is no explainable relationship of the gift with the donee; and, (v) Though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarged onus on him to prove the genuineness of the gift. Its order is, thus, perverse. In identical situation, this Court held that NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor. Observations of this Court in Jaspal Singh v. CIT [2007] 290 ITR 306 (Punj. Har.) are: 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. Reference in this regard may be made to the judgment of this Court in Lal Chand K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been maintaining their own books of accounts. Any credit found unexplained and ingenuine thus was to be accounted for in the books of accounts of the assessee firm only and sequelly such credit was to be treated as income of the firm for the year in such ingenuine and unexplained credits were found in its books of accounts. At this stage, for quick reference, provision of Section 68 of the Act is reproduced as below: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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