TMI Blog2017 (3) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee challenging the order of the Income Tax Appellate Tribunal, Cochin Bench in ITA 19/2014 concerning the assessment year 2009-2010. The issue raised in this appeal is confined to assessment of an amount of 1,66,01,834/- as the income of ₹ the assessee on the ground that he failed to prove the genuineness of the transaction and the capacity of the donor, his brother, to advance the money as required under Section 68 of the Income Tax Act. The said order was confirmed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal by dismissing the appeals filed by the assessee. It is in this background, the assessee has filed these appeals framing the following questions of law for consideration of this court: i) Whether the Department is right in law to enquire and insist the assessee to prove the source of the donor, when the assessee discharges his primary burden that the subject amount has received by way of Gift from his brother (relative) through banking channel? Were not the authorities below in error as regards their interpretation about Section 68 of the Income Tax Act, 1961? ii) Is not the onus and burden of proof on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney has been gifted by his brother. His brother is a Non Resident Indian employed in Dubai having substantial earnings. The money has been transferred from his bank account in Abudabi Commercial Bank to the assessee's bank, and has been utilised by the assessee, the manner of which has also been explained to the Assessing Officer. 5. According to the learned counsel, once these factual aspects are proved to his satisfaction, the Assessing Officer ought to have accepted the explanation offered by the assessee and exempted the amount from the assessment under Section 56(2) of the Act. In support of this plea, counsel invited our attention to the judgments of the Gauhati High Court in Nemi Chand Kothari v. Commissioner of Income Tax [264 ITR 254 (Gauhati)] and the Delhi High Court in Commissioner of Income Tax v. Value Capital Services Private Limited [(2008) 307 ITR 334] and ITA 429/2003 (Commissioner of Income Tax v. Dhooti Pearls and Investment Limited) . On the other hand, the learned Senior Counsel for the Revenue argued that it is plain and evident that the assessee, despite various opportunities granted, did not prove the requirements of Section 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of Section 68 has been considered by the Apex Court in its judgment in CIT v. P. Mohankala [2007] 291 ITR 278 (SC) . Following the said judgment, this Court considered an identical question in the judgment in I.T.A. No.210/2010 and connected case. In that judgment, this Court reiterated that a reading of Section 68 shows that identity of the creditor, the genuineness of the transaction and the creditworthiness of the creditor are the conditions that are required to be established by an assessee. It was held that once these three essential requirements are prima facie proved by the assessee, then the onus would shift to the Department and that merely by establishing the identity of the creditor or anyone of the other conditions of Section 68, the assessee cannot claim to have discharged his burden. 10. Bearing in mind these principles, if the facts that are available in this case are appreciated, it is obvious that though the assessee had established the identity of the creditor, viz. his own brother, the assessee has not succeeded in establishing either the genuineness of the transactions, the capacity or creditworthiness of the creditor. The fact that the amount rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, or was of, the assessee himself. Thereafter, the High Court, on a harmonious construction of Section 106 of the Evidence Act and Section 68 of the Act, held as under: What, thus, transpires from the above discussion is that while Section 106 of the Evidence Act limits the onus of the Assessee to the extent of his proving the source from which he has received the cash credit, Section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s) of the creditor, but also of his (creditor's) subcreditors and prove, as a result, of such inquiry, that the money received by the Assessee, in the form of loan from the creditor, though routed through the subcreditors, actually belongs to, or was of, the Assessee himself. In other words, while Section 68 gives the liberty to the Assessing Officer to enquire into the source/ sources from where the creditor has received the money, Section 106 makes the Assessee liable to disclose only the source(s) from where he has himself received the credit and it is not the burden of the Assessee to show the source(s) of his creditor nor is it the burden of the Assessee to prove the creditworthiness of the source ..... X X X X Extracts X X X X X X X X Extracts X X X X
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