TMI Blog2005 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ivered by D.A. Mehta J.-The Income-tax Appellate Tribunal, Ahmedabad Bench "A", has referred the following two questions under section 256(2) of the Income-tax Act, 1961 ("the Act"), at the instance of the assessee: "(1) Whether, on the facts and circumstances of the case, the Income-tax Officer was justified in reopening the assessment under section 147(a) of the Income-tax Act? (2) Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the addition of Rs. 50,000 in the total income of the assessee is income from undisclosed sources?" The assessment year is 1981-82 and the accounting period is Samvat Year 2036. The assessee, an individual, had filed a return of income accompanied by a copy of his capital account in the partnership firm where he was a partner. The capital account contained a credit entry showing a sum of Rs. 50,000 as gift received. The assessment was originally completed on August 25, 1981, under section 143(1) of the Act. On June 30, 1981, Shri Ramji Nanji, the donor, had filed a return of gift in respect of the above stated gift of Rs. 50,000 and the assessment came to be completed under section 15(3) of the Gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been completed and tax levied and collected from the donor, the same amount could not be treated as an income in the hands of the assessee; secondly, the reopening of completed assessment beyond the period of four years was bad in law, there being full and true disclosure of all material facts; and thirdly, on the merits, the addition was not warranted, the assessee having discharged the onus which lay on it by producing the donor and acceptance of the gift by the donor as well as establishing the capacity of the donor. He has placed reliance on the decision in the case of CWT v. K.N. Shanmughasundaram [1998] 232 ITR 354 (SC) in respect of the first proposition. Mr. M.R. Bhatt, learned senior standing counsel appearing on behalf of the respondent-Revenue, supported the order of the Tribunal. According to him, the view adopted by the Tribunal was a possible view on the facts of the case, and hence, this court should not undertake an exercise of reappreciating the evidence in its advisory jurisdiction. It was also submitted that whether the gift-tax proceedings had been completed or not in the hands of the donor, was not germane for the purposes of deciding the taxability of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation offered by the assessee is not, in the opinion of the assessing authority, satisfactory, then the sum so credited may be charged to tax as income of the assessee of the previous year. The apex court, in the case of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570, has laid down that the word "may" indicated the intention of the Legislature that a discretion was conferred on the Assessing Officer in the matter of treating the source of investment/credit which had not been satisfactorily explained as income of the assessee, but it was not obligatory to treat such source of income in every case where the explanation offered was found to be not satisfactory. As section 68 of the Act denotes, once there is a credit in the books maintained by the assessee, the primary onus is on the assessee, namely, to offer an explanation as to the nature and source of the credit. What would be the degree of the onus and what should be the extent of explanation in such circumstances, is succinctly laid down by this court in the decision in the case of CIT v. Pragati Co-operative Bank Ltd. [2005] 278 ITR 170. Suffice it to state that an assessee can be asked to prove the source of credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the donor; the area of the land held by the donor, etc. At best, these could be factors for the donor to be called upon to explain the source of the funds in his hands, but that could not be a ground for disbelieving a gift which had admittedly been received by the assessee as a gift and being treated as undisclosed income of the assessee. Having gone through the statements of the donor as well as the assessee, it is apparent that despite minor discrepancies, the factum of the gift having been made has been accepted by the donor and in the circumstances, it cannot be stated that the credit entry in the capital account of the assessee did not reflect the true picture. The assessee had shown the same as "gift received". The assessee tendered an explanation and nothing has been brought on record to even hold for a moment that the said explanation is not satisfactory. Though the same is stated as a conclusion, the reasoning for stating so is as to disbelieving source of source. In these circumstances, the impugned order of the Tribunal cannot be sustained. In relation to the apex court decision in the case of S.P. Jaiswal [1997] 224 ITR 619, on which reliance has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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