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[2007] 164 Taxman 512 (Punjab & Haryana)/[2009] 311 ITR 377 (Punjab & Haryana)/[2008] 214 CTR 223 (Punjab & Haryana) [2007] 164 TAXMAN 512 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax, Jalandhar v. Kulwant Industries* M.M. KUMAR AND AJAY KUMAR MITTAL, JJ. IT REFERENCE NO. 104 OF 1998 JULY 26, 2007 Section 68 of the Income-tax Act, 1961 - Cash Credits - Assessment year 1989-90 - In respect of credit appearing in capital account of partner of assessee firm, partner claimed same as gift from NRI - Not satisfied with explanation, Assessing Officer made addition - Donor was real maternal uncle of donee and gift had been made from NRE Account maintained by donor and remittances in such account could only be made from foreign exchange - Gift had been made through cheque by banking channel - Whether addition made by Assessing Officer could be sustained - Held, no FACTS One of the partners of assessee-firm was asked to explain the credits, which appeared in his capital account, which he claimed as gift by Non-resident Indian. Not satisfied with the explanation, Assessing Officer treated it as un-explained income of assessee credited in the capital account of the partner and made addition. On appeal Commissioner (Appeals) deleted the said addition. On appeal, by the revenue, the Tribunal upheld the order of Commissioner (Appeals). On reference : HELD In the instant case donor was real maternal uncle of the donee, i.e., brother of his mother, and the gift had been made from the NRE Account maintained by the donor and remittance in such an account could only be made from foreign exchange. The account had been found to be genuine as per the findings recorded by the Assessing Officer and duly accepted by the Tribunal. The identity of the donor stood established and the gift had been made through cheque by banking channel. Therefore, all the necessary ingredients of gift as laid down by Supreme Court in CIT v. Dr. R.S. Gupta [1987] 165 ITR 36/30 Taxman 546A and Sonia Bhatia v. State of U.P. AIR 1981 SC 1274 stood satisfied and it was not open to any challenge. Moreover, the revenue had sought to raise all questions of fact as…

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