COMMISSIONER OF INCOME TAX Vs. KULWANT INDUSTRIES

JUDGEMENT

(1.) THE revenue has approached this Court by challenging order dated 16 -12 -1997 passed by the Income Tax Appellate Tribunal, Amristsar Bench, Amritsar (for brevity 'the Tribunal') in ITA No. 312(ASR)/ 1991 in respect of assessment year 1989 -1990. The revenue succeeded in persuading the Tribunal to refer the following question of law under Section 256(1) of the Income Tax Act, 1961 (for brevity 'the Act') for the opinion of this Court:

(2.) FACTS as emerge from the statement of the case are that M/s Kulwant Industries, Jalandhar ( to be referred as 'assessee') is a partnership firm, which has four partners. The assessee firm drives its income from manufacture and sale of oil Engine parts. It filed its return on 25 -08 -1989 declaring an income of Rs.1,00,040/ -and the assessment was completed by the Assessing Officer vide order dated 29 -11 -1989 under Section 143(3) of the Act. One of the partners Sh.Jaswinder Singh, who enjoyed 15% of the share in the assessee firm was asked to explain the credits, which appeared in his capital account amounting to Rs.25,000/ -., which he claimed as gift by Non -Resident Indian. The Assessing Officer made an addition of Rs.25,000/ -by treating the same as un -explained income credited in the capital account of Sh. Jaswinder Singh -partner.

(3.) NO one has put in appearance on behalf of the respondent despite service. After hearing the learned Counsel for the revenue, we find that the findings recorded by the Tribunal are unassailable. It has been categorically found by the Tribunal that the gift is genuine for the reason that the donor is the real maternal uncle of the donee i.e. brother of his mother. It has further been found that gift was made from the NRE account maintained by the donor and remittance in such an account could only be made from foreign earnings. The account has also been found to be genuine as per the findings recorded by the Assessing Officer which have been duly approved by the Tribunal. The identity of the donor stands established and the gift has been made by banking channel through cheque. For the aforementioned view, we place reliance on a judgment of Hon'ble the Supreme Court in the case of C.I.T. v. : [1987]165ITR36(SC) .