LAW FOR ALL

Gift under income tax - credit-worthiness of the donor = We find that it is not in dispute that the aforesaid two amounts have been deposited by the two partners in their capital account. The partners are income tax payee. They have explained the source as having received gift from various persons, who have also filed their Income Tax Returns and have been assessed accordingly. Merely because, the donors are weavers and they own only one loom would not make any difference. They have filed their Income Tax Returns and have also filed the return under the Gift Tax Act. They have paid the gift tax also. Assessment under the Gift Tax Act has also been made, though the assessments made were summary in nature. In the case of Anil Rice Mills (supra), this Court has held that the assessee can not be asked to prove the source of source or the origin of origin. Taking the various facts enumerated above, we are of the considered opinion that the Tribunal had erred in holding that the amount deposited by the two partners is liable to be added under section 68 of the Act on the ground that the gifts received by the respective partners from the various persons could not be explained as the credit-worthiness of the donors had not been established. The Tribunal had wrongly drawn an adverse inference upon the fact that the donors had filed their Income Tax Return for the Assessment Years 1988-89 to 1991-92 on a single day and further the return for the Gift Tax was filed on 25.08.1992, which was well within the due date. The appellant has explained the nature and source of the deposit and has discharged its burden. The order of the Tribunal on this ground therefore can not be sustained and is liable to be set-aside. The appeal succeeds and is allowed.