Gift From Family Members Do Not Require Any Special Occasion: ITAT Deletes Addition

The Indore Bench of the Income Tax Appellate Tribunal (ITAT) has deleted that addition and held that gifts from family members do not require any special occasion.

The bench of Vijay Pal Rao (Judicial Member) and B.M. Biyani (Accountant Member) has observed that all sources explained by the assessee were genuine except the gift of Rs. 1,00,000 claimed to have been received from the grandmother.

The assessee/appellant filed his return of income, declaring a total income of Rs. 1,49,900/- earned from salary, profession, and other sources. The department took action for the assessment of cash deposits that had been made by the assessee in a bank account. The notices were issued, in response to which the assessee made submissions from time to time.

During the assessment process, AO found that the assessee had made cash deposits. When the AO asked the assessee to explain the source of deposits, the assessee submitted that the cash gift was received from his father, mother, and grandmother, and the cash withdrawal was from the assessee’s own bank account, which remained unutilized and therefore re-deposited.

However, the AO was not satisfied with the submissions of the assessee. The AO noted that the affidavits appeared to be an afterthought. All gifts have been received in cash. There was a time gap between gifts received and cash deposited in the bank account. Finally, the AO treated the deposits of Rs. 12,63,000 as unexplained and made additions.

The assessee submitted that the assessee's father received sale consideration for the property in cash, which is why he made a cash gift to the assessee. Regarding gifts received from her mother and grandmother, the assessee explained that they were ladies who generally keep certain cash with them, and out of the cash so held, they made gifts to the assessee; there is nothing wrong with cash gifts. The gifts received from the father, mother, and grandmother do not require any special occasion.

The Tribunal noted that the affidavits given by the donors, being father and mother, themselves speak of making gifts to the assessee for "personal use".

"Regarding the cash gift of Rs. 1,00,000/- claimed to have been received from the late grandmother, we find that the affidavit supporting the gift is given by the assessee himself. Although the reason given by the assessee is that grandmother had already expired in the year 2015, we do not find any strong, cogent, or independent evidence by which it can be conclusively proved that the assessee had actually received a gift of Rs. 1,00,000 from grandmother. In our mindful consideration, the affidavit is given by the assessee himself to support his own case, which, unless corroborated by some independent or corroborative evidence, cannot be accepted. Finding no such evidence, we are unable to accept this source as genuine," the ITAT noted.

The tribunal directed the AO to delete the addition, and the remaining addition of Rs. 1,00,000/-, which was given by the grandmother, was upheld.

Case Title: Shri Hemant Pandya Versus ITO

Case No.: ITA No. 173/Ind/2022

Date: 22.05.2023

Counsel For Appellant: V.N. Dubey, Ibrahim Kannodwala

Counsel For Respondent: Ashish Porwal

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