INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unexplained gift - No relation between assessee and donor

Assessee received Rs. 3,00,000 by way of gifts. AO required assessee to furnish details of donors from whom gifts of Rs. 3,00,000 were received. Assessee filed gift deeds along with affidavits from donors. After examining the same, AO required assessee to explain the relationship between assessee and donor. Assessee submitted that these three donors were neither part of his family nor relatives of assessee. Accordingly, AO treated gift amount as unexplained credit under section 68 and made addition. Held: When there was no relation between assessee and donors, question of love and affection did not arise, meaning thereby assessee could not establish natural love and affection with assessee by the donor which was very much essential for proving genuineness of the gifts. Even otherwise, after examining gift deeds, Income Tax particulars and bank accounts of donors, AO noticed that all the three donors had shown returned income which was very meagre and funds were credited in bank accounts of all the donors on the date when gift deeds were made. In fact in case of one of the donors, cheque for gift amount was dishonoured due to inadequate funds. Accordingly, it was clear that assessee circulated his own unaccunted money in the guise of gifts and, therefore, AO was justified in making addition.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2005-06

SUBSCRIBE FOR FULL CONTENT