INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Creditworthiness of son-in-law accepted in assessment year 2012-13 -

During the relevant previous year, there was an increase in the capital account of the assessee. AO called upon assessee to explain the increase in share capital of the assessee which he explained that his son in law had given a loan to assessee in the previous year relevant to assessment year 2012-13. During the previous year relevant to assessment year 2015-16, i.e., on 25-3-2015 son-in-law gifted unsecured loan to his father in law, i.e. Assessee out of love and affection. AO took the view that assessee failed to prove the source of income and creditworthiness of his son in law and therefore, a sum was liable to be added under section 68. Held: In the light of the order of assessment for assessment year 2012-13 passed in the case of assessee accepting the genuineness of the loan given by Assessee's son-in-law to the assessee, the source, capacity and genuineness of gift of the very same sum in the assessment year 2015-16 stands established. The only reason assigned by the revenue authorities for rejecting the plea of assessee in assessment year 2015-16 was that creditworthiness and source of income of assessee's son-in-law was not established. Gift by assessee's son-in-law had never been disputed nor disbelieved. Since AO had accepted the creditworthiness of assessee's son-in-law in assessee's assessment for assessment year 2012-13, the sum in question which was added as unexplained under section 68 had to be deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

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