Gift not bogus if Assessee proves identity / creditworthiness of donor & genuineness of transaction

In this case the case of revenue was weak for the reasons that AO did not summon the donors. He had issued the letters under section 133(6) of the Act. Assessing Officer had also called for confirmation letters which were received by it. The assessee also had furnished all other requisite documents like copies of DD, gift deed, copy of PAN cards, copy of acknowledgment of returns of the donors along with computation and balance sheet.
The AO had not taken exercise of cross examination of tax records of donors to establish whether they had sources to donate sums donated.
Most important thing which the AO must enquire is whether his assessee had potential source of income which could yield black income and so the assessee could resort to introduce his black money as white money by way of gifts, or other form of capital receipts or non-taxable income. Such potential sources can be “make easy money posts” as politicians, bureaucrats etc, coming ot power where there is scope of making fast money or if the assessee had earned taxable income and such income is understated and balck money received is routed in banks in form of gifts as can be in case of sale of landed property at very low disclosed consideration etc.
The AO must work hard if he want to succeed in additions he made.If additions are made just for making addition and to harass assessee and raising huge demands, the fate will be like one we have in this case and also in case of Miss. Mayawati.