S.68: Cash credits- Gifts- Search and seizure-Block assessment-Failing to prove genuineness of gifts,
Addition is held to be proper. (S.158BC)
Pursuant to a search conducted at the residential premises of the assessees who were father and son, it was found that the assessees received gifts from certain parties. The Assessing Officer noted that most of the donors were friends and not relatives, as claimed, and the gifts were not received on any special or ceremonial occasion. He added the amounts as undisclosed income under section 68 of the Income-tax Act, 1961. The first appellate authority deleted on the basis that, firstly, they could not be said to be undisclosed and, secondly, no material to doubt the genuineness of the credits or gifts was found during the search. On appeal by the Department, it was held that there was no mention of the credits in the returns of income furnished by the assessee from year to year. It was only as a result of search that the credit transactions were found, and which the assessee was unable to satisfactorily explain to the Assessing Officer. No gifts had been given by the assessees to any of their close friends and relatives, including those from whom gifts were being regularly received over the years. Further, none of the donors were produced for examination before the Assessing Officer. No evidence in support of their financial capacity was submitted.
The receipt of the credit through the banking channel, or confirmation by the creditor or donor, was itself not sufficient to prove the gifts in terms of section 68.There was nothing to explain to why the gifts should be made by the assessee's father's friends and ex-employees. There were materials and information found as a result of search to discredit the gifts as not genuine. The additions made by the Assessing Officer were to be upheld. (Block period 1-4-1990 to 12-10-2010)
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