Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1999-2000 - Whether opinion formed by Assessing Officer for not accepting assessee's explanation as regards sums found credited in books maintained by him constitutes a prima facie evidence against assessee relating to receipt of money, and if assessee fails to rebut said evidence, same can be used against him by holding that it was a receipt of an income nature - Held, yes - Whether where claim of gift is made by assessee, onus lies on him not only to establish identity of person making gift but also his capacity to make a gift, and that it has actually been received as a gift from donor - Held, yes - Whether a simple identification of donor and showing movement of gift amount through banking channels is not sufficient to prove genuineness of a gift - Held, yes FACTS An amount of Rs. 98,000 was found credited in the assessee's books of account. The assessee claimed that said amount was received by him as gift by two drafts of Rs. 49,000 each from 'M'. The assessee was asked to prove the genuineness of the gift, but he did not lead any evidence except a letter written by his counsel to the Assessing Officer that 'M' had gifted said amount to the assessee on account of love and affection between him (donor) and the assessee (donee). The Assessing Officer issued summons to the donor under section 131 to appear before him for the purpose of recording his statement to prove the genuineness of the gift, but he failed to respond to the said summons. Therefore, the Assessing Officer held that the assessee had failed to prove the genuineness of the gift made by 'M' and treated said amount as income of the assessee from undisclosed sources. On appeal, the Commissioner (Appeals) as also the Tribunal upheld the order of the Assessing Officer. On appeal to the High Court : HELD A plain reading of section 68 shows that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessee offers no explanation about the nature and source of such credit found in the books or the explanation offered by the assessee in the opinion…

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