The main legal point established in the judgment is that the admission of the donor is not binding if there is evidence to suggest lack of creditworthiness, and once the identity of the donor is disclosed, the burden shifts to the Assessing Officer to prove the source of the credit of the creditor.

Prakash Tatia, C.J. Heard learned counsel for the parties.

2. This appeal is directed against the order dated 20.5.2010 passed by Income Tax Appellate Tribunal, Circuit Bench, Ranchi, (hereinafter referred to as ITAT) in I.T.A. No. 29/Ran/2009 for the assessment year 2005-06, by which ITAT has partly allowed the appeal vide order dated 20th May, 2010. The A. O. in the assessment order has made addition of Rs. 8 lakhs in the income of the assessee, for which contention of the assessee was that the said amount was received in cash by the assessee as gift from his father-in-law, B. N. Sahu. His contention is that he received the amount in cash in the following manner:

(i) 10th April, 2004 : Rs. 2,00,000/-

(ii) 8th May, 2004 : Rs. 1,00,000/-

(iii) 6th August, 2004 : Rs. 2,00,000/-

(iv) 10th October, 2004 : Rs. 3,00,000/-.

The A.O summoned the donor and recorded his statement and after examining the affidavit filed by the donor father-in-law of the assessee, the A. O rejected the contention of the assessee and refused to accept the fact that the said amount was gifted by his father-in-law and plea of gift was declared to be bogus. However, CIT(A) vide order dated 12th November, 2008 set aside the addition of Rs. 8.00 Lakhs by observing that since the donor has at no stage disowned or denied having made the gifts to his son-in-law rather he has admitted that he gifted the amount and, therefore, there was no scope of the investigation by the A.O. The C.I.T.(A) also observed that whatever inconsistency has been pointed out by the A.O. in the stand taken by the donor pertains to the source of funds in his hands. But the donor has no stage disowned or denied having made gifts to his son-in-law. CIT(A) also held that source of gift in the hands of appellant stands explained, although the source of funds in the hands of the donor may not be satisfactorily explained.

3. The Tribunal again considered the reasons given by the A.O. in details and thereafter held that because of the several reasons, the genuineness of the transaction is not proved and therefore, the gift cannot be recognized and the gift in fact has not been taken into effect.

4. Learned counsel for the appellant vehemently submitted that it is a settled law that the assessee can give the details of the donors for identifying him and give particulars so as to put the same before the Assessing Officer, which he did. It is none of the obligation and duty of the assessee to prove to the sources of the funds of the donor and search out from where he got the money. In this case the donor was a retired employee from a Company having bank accounts and he produced copy of the pass-book. He was also an assessee at the income tax and though he may not be assessee at the relevant time, but at the same time he filed an affidavit again admitting that he gifted said amount to the assessee. It is also submitted that the Assessing officer as well as the Tribunal proceeded to draw adverse inference as against the assessee on the basis of some materials, which in the opinion of the A.O. and the Tribunal could have been produced but were not produced. While drawing such adverse inference the A.O and the Tribunal ignored the important fact that assessee and his father-in-law-the donor were even not made aware that the Assessing Officer will inquire into further source of the income of the donor or on the fact that under what circumstances he kept money in his house in cash and how he was bearing his house-hold expenses. Learned counsel further vehemently submitted that if those facts would have been disclosed by the Assessing Officer, the assessee would have made efforts also to draw attention of the Assessing Officer and the Tribunal that such inquiry is against the scope of inquiry. It is vehemently submitted that because of relation of father-in-law and son-in-law, in all probability, for construction of house of son-in-law, father-in-law would gift money particularly, when he was in p