TMI Blog2004 (7) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... -1998 was sought to be revised by the learned CIT under section 263 on the ground that the assessee had received gifts of ₹ 10,00,000 each from NRI accounts in the name of Shri Vinodkumar Ghai and Devid Paramjit Gill but the assessment record revealed that the Assessing Officer had not properly examined the identity, capacity and creditworthiness of the donors nor did he properly consider the source of funds involved in the said gifts. A notice under section 263(1), therefore, was issued by the learned CIT to the assessee and in his reply to the said notice filed on behalf of the assessee on 28-6-1999, it was submitted that the evidence in the form of memo of gifts, affidavits of the donors, bank confirmation certificates as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 121 (Delhi) has held that it is the duty of the assessee to establish by necessary evidence that the gift claimed to have been received from abroad is genuine. Moreover, it is also necessary for the assessee to prove the financial capacity of the donor to make the gift. In this regard necessary evidence in the shape of the income earned by the donor as also the financial status at the time of making the gift would be necessary. The Delhi Tribunal in the case of D.C. Rastogi (HUF) v. ACIT, 57 ITD 295 (Delhi Bench) held that it is a well established principle of law that in the case of cash credits, the onus is on the assessee to establish the identity and capacity of the creditor, as also the genuineness of the transaction. Similar is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness of the donors and the Assessing Officer having accepted the genuineness of the said gifts after examining the said evidence, there was no error in his assessment order which was prejudicial to the interest of the revenue. He submitted that the learned CIT, however, exercised his powers under section 263 to set aside the same mainly for the reason that the creditworthiness or financial capacity as well as the source of funds in the hands of donors was not established during the course of assessment proceedings, which was not correct. According to him, the receipt of gifts by the assessee from the donors through NRE accounts was duly established on evidence and since no credits in Indian currency were permissible in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish the financial capacity or creditworthiness of the donors and, therefore, there was a clear failure on the part of the assessee to discharge the primary onus in terms of explaining the credits appearing in his books for the year under consideration in the form of gifts from two donors. He submitted that the Assessing Officer, however, accepted the said gifts without making any efforts to verify the source of funds in the bank accounts of the said donors from which the gifts were given by them. He contended that there was thus a clear failure on the part of the Assessing Officer to make the necessary enquiries before accepting the gifts shown by the assessee which was called for in the facts and circumstances of the case and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have made further enquiries before accepting the statements made by the assessee in his return. A useful reference for this purpose can be made to the decision of Hon'ble Supreme Court in the case of Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 and the case of Smt. Taradevi Aggarwal v. CIT [1973] 88 ITR 323 . It is incumbent on the Assessing Officer to further investigate the facts stated in the return when circumstances would make such an enquiry prudent and his order becomes erroneous if such an enquiry has not been made by him. When the Assessing Officer is expected to make an enquiry of a particular item of income and he does not make an enquiry as expected, that would be a ground for the CIT to interfere with the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge the onus lies on the assessee in the matter of explaining cash credit under section 68. To the similar effect is the decision of Hon'ble Delhi High Court in the case of Sajandas Sons v. CIT [2003] 264 ITR 435 cited by the learned DR wherein their Lordships of Hon'ble jurisdictional High Court have held that a mere identification of the donor and showing the moment of the gift amount through banking channels was not sufficient to prove the genuineness of the gift since the claim of gift was not made by the assessee and the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it had actually been received as a gift from the donor. In the present case, such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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