32 (2010) 126 ITD 145 (AGRA) (TM)
Avnish Kumar Singh v. ITO
A.Y. 2002-03. Dated : 30-4-2009
S. 68 — Provisions of S. 68 cannot be invoked when source of the gift is properly explained and also when the donor himself appears before the Assessing Officer (AO), confirming the gift made.
Facts :
1. The assessee received an amount of Rs.2,50,000 as a gift from Mr. Rakesh Walia (donor), a resident of Delhi. The donor was friend of the assessee’s father, and had received some help from the assesse’s father earlier. So he had made a gift to the assessee.
2. The assessee, during assessment, produced before the AO copy of deed of declaration of gift dated 24-1-2002 executed by the donor, his affidavit confirming the gift with his complete address, a copy of his PAN Card and proof that he is an old income tax-assessee, a photocopy of his ration card, a copy of accounts of the donor in the books of Balaji Trading Corporation, Delhi (Balaji) and his Balance Sheet as on 31-3-2001. Also the donor himself was produced before the AO and he confirmed the gift and also gave reasons to the AO for giving the gift.
3. The AO observed that the donor himself was a person of low financial status having monthly income of Rs.5,000. He has no fixed assets of his own including any immovable property or fixed deposits. He had a deposit of Rs.1,25,000 with Balaji, from which he received Rs.2,46,000 which he forwarded to the assessee as gift. However the reason of deposit with Balaji was not explained.
4. The Assessing Officer was satisfied with the identity of the owner, however he was not satisfied with the source of the income. So he invoked the provisions of S. 68 which was upheld by the CIT(A).
Held :
1. The ITAT observed that there could be two possibilities of the situation :
Possibility 1 :
Genuiness of the gifts stands to be proved in the lights of all the evidences brought on record by the assessee (in the favour of the assessee).
Possibility 2 :
Considering the creditworthiness and capacity of the donor and closeness and natural love and affection between the donor and the donee, the source of the gift is doubtful (in the favour of Revenue).
2. S. 68 provides for charging the sum credited in the books of the assessee as the income of the assessee, if the assessee offers no explanation as to the nature and source of the same.
3. Since the assessee has explained the nature and sources of the credit by way of a gift, which satisfactorily explains the genuineness of the gift, it cannot be added to the income of the assessee as unexplained income u/s.68.