Case Law Details
Shri M.Balakrishna Hegde Vs DCIT (ITAT Bangalore)
The issue under consideration is whether AO is correct in considering the gift received by the assessee as unexplained gift and made addition u/s 68 when the Gift was received through banking channels?
In the present case, Assessee has received gifts. AO treated the same as unexplained credit under section 68 on the ground that assessee not able to prove the source and creditworthiness of donor. Assessee challenged this on the ground that money had come through banking channels hence it is genuine.
ITAT states that regarding these gifts, assessee could not establish the credit worthiness of the transaction and it is by now a settled position of law that the assessee has to establish identity and creditworthiness of the donor as well as genuineness of the transaction. Regarding 1st gift, deposit in question could not be properly explained even by donor in course of statement recorded by the AO u/s 131 and it is also noted by the AO that this deposit is not on account of conversion of dollars since the donor is NRI whereas other deposits of very smaller amount were on account of conversion of dollars. Hence, it has to be accepted that the creditworthiness of the donor and genuineness of the transaction is not established and under these facts, ITAT find no infirmity in the order of CIT (A) on this issue.
Regarding 2nd gift, it is true that donor could not be located because of his death but it is also true that donor was not related to the assessee in any manner. Merely because money has come through banking channels, genuineness of the transaction is not established, even if we accept that identity and credit worthiness is established. Gift to unrelated person is not a normal human behavior. No relationship with donor has been pointed out whether blood relationship or friendship or any other relationship. Similarly, in respect of 3rd gift, even correct address could not be brought on record by the assessee. This is also not shown that donor is related with assessee in any manner whether blood relationship, friendship or any other relationship. Hence, on this issue, regarding these three gifts, ITAT find no reason to interfere with the order of the CIT(A). Accordingly, appeal raised by assessee is dismissed.
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