TMI Blog2017 (3) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not within the knowledge of the assessee at all, is not required to be proved by the assessee. The addition we find has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessees income only. This cannot be the basis of making an addition under a deeming provision, section 68 in the present case. We reject the contention of the learned D.R. that the assessee has failed to prove the capacity and genuineness of the transaction by not filing the copies of income tax returns as also copies of bank statements of the donors in their countries of residences. In view of the above, we hold that the assessee has adequately discharged its onus of proving identity of the donor, capacity of the donor as also the genuineness of the transaction being in the nature of gift received from brothers and, therefore, there is no reason to make any addition under section 68 on account of unexplained credit. The addition so made of ₹ 45,00,000/-, is therefore, deleted. - Decided in favour of assessee. - ITA No.1075/Chd/2013 - - - Dated:- 22-2-2017 - SHRI BHAVNESH SAINI, JUDICIAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmations on plain paper alongwith copies of passport from these persons during the course of assessment proceedings. The Assessing Officer asked the assessee to further furnish the following information in respect of the persons from whom the alleged gifts were received : (i) Copies of the returns of income of the persons from whom the so called gifts were received. (ii) The sources of income of the donor abroad. (iii) Capacity of the donor to give the gift. (iv) Copy of bank account maintained by the donor abroad. 5. No documentary evidence was filed by the assessee. The Assessing Officer, therefore, treated the said gifts as unexplained money of the assessee u/s. 68 of the Act and made an addition of ₹ 45 lacs to the income of the assessee. 6. During the appellate proceedings, the assessee stated that she had discharged her onus of explaining the gifts received by her by way of filing confirmations of the donors, bank statements and copies of the passport of the donors, confirmation letters from the bank that the said gifts were made from NRE accounts of the donors. The assessee stated that the donors were her real brothers and in view of the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged by way of filing the following documents : (i) Passports of the donors placed at Paper Book page Nos.16 17 proving the identity of the donors. (ii) Copies of bank accounts of the donors from which the gift was given, being NRE accounts, placed at Paper Book page Nos.20 21 showing the genuineness of the gift and capacity of the donors. (iii) Certificate from Indian Bank certifying transfer from NRE account placed at Paper Book page Nos. 18 19 again proving the genuineness and capacity of the donors. (iv) Confirmation of the said gifts from the donors placed at Paper Book page no. 14 15. 8. The Ld. counsel of the assessee further stated that the source and capacity of the donors had been duly proved by the balance appearing in their NRE bank accounts. The Ld. counsel of the assessee also pointed out that in the case of Shri Tarsem Kumar his NRE account shows a opening balance of ₹ 33,40,059/- which was enough to make the gift of ₹ 33 lacs to his sister, the assessee and also pointed out that there were no deposits during the year in this account of Shri Tarsem Kumar. Therefore, in view of these facts, the Ld. counsel of the assessee stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below. The issue before us in the present appeal pertains to addition being made under section 68 of the Act, which requires the assessee to satisfactorily explain the nature and source of any sum found credited in the books of the assessee. The onus is on the assessee to offer a satisfactory explanation of the credits and it is well settled that in order to discharge the onus the assessee must prove the following : (i) Identity of the creditor (ii) Capacity of the creditor to advance money and (iii) Genuineness of the transaction 12. In the present case, the explanation offered by the assessee relating to the cash credit of ₹ 45 lacs is that they were gifts received from her two brothers S/Shri Tarsem Kumar and Pirthi Chand. As evidence of the same the assessee filed the following documents : (i) Copies of the passports of the donors (ii) Copies of NRE accounts of donors from which the gifts were given. (iii) Certificate from bank stating that the said amount was transferred from NRE accounts of the donors. (iv) Confirmations from the donors that they had given the gifts of the said amounts to their sister, the assessee. 13. It is the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intained in the countries of their residences i.e. U.K and Italy where the two brothers stayed. 15. As for the capacity of the donors to make the gift, it is not disputed that the said gifts have been made from NRE account of the donors in Indian Bank, Ambala. On going through the bank accounts, we find that there was enough balance in both the accounts to make the said gifts to their sister. In the case of Shri Tarsem Kumar, we find that there was an opening balance of ₹ 33,40,059/- in the beginning of the year. The gift given by Shri Tarsem Kumar to the assessee is ₹ 33 lacs. Further there are no deposit in this bank account during the year. What emerges, therefore, is that the gift has been made from the opening balance, in the NRE account of the donor meaning thereby that in the first place there was sufficient balance with the donor to make the gift as at the beginning of the year itself which adequately proves the capacity of the donor to make the gift. Coupled with it, the fact that no sum was credited in the said account during the year, we agree with the Ld. counsel of the assessee that no addition on account of undisclosed income in any case can be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d through bank, and four of the gifts are by the blood relations, apart from the fact, that blood relationship is not necessary. There is no tangible material, collected by the AO, to show anything, which may cast any doubt on the genuineness of the gifts, or to establish, that the purported transactions of gifts, were otherwise transactions of money laundering, or the like. In that view of the matter, since the authorities below, i.e. CIT(A) and the Tribunal, have examined the matter on correct parameters, and have arrived at a conclusion, in favour of the assessee, the findings do not require any interference. 18. The decision of the Hon'ble Delhi High Court in the case of CIT v. Suresh Kumar Kakar (2010) 324 ITR 231, relied upon by the Ld. Counsel for the assessee, reiterates the above proposition as follows at para 3 4 of the order: 3. Insofar as the identity is concerned, that is an admitted position that the gifts were made by the mother to the son. With regard to the creditworthiness, the assessee has been able to discharge the onus cast upon him by furnishing the bank statement of his mother (donor) as also the confirmation certificate from the mother confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and demonstrate. It is for this reason only that the source of source, which is not within the knowledge of the assessee at all, is not required to be proved by the assessee. The Hon'ble Punjab and Haryana High Court, while dealing with an identical issue in the case of Jawahar Lal Oswal (supra), has categorically held at pg 27 of its order:, An arrangement between a donor and another is an arrangement between the donor and his source of money. The onus to probe and prove this aspect lies upon the Revenue and not upon the assessee, particularly where the income is being dealt with under a deeming provision. A person who receives a gift, is not required to prove the source of the money of his donor 20. The addition we find has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessees income only. This cannot be the basis of making an addition under a deeming provision, section 68 in the present case. The Hon'ble Punjab and Haryana High Court in the case of Jawahar Lal Oswal (supra) has dealt with the said issue as follows: A deeming provision requires the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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