Wedding Gifts Cannot be Treated as Unexplained Income Without Evidence: ITAT

Wedding Gifts Cannot be Treated as Unexplained Income Without Evidence: ITAT

Introduction

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that wedding gifts cannot be automatically treated as unexplained income without evidence. The Tribunal allowed the appeal of the assessee, Manubhai Dahyabhai Bhoi, against the order of the CIT (Appeals).

Factual Background

The assessee had made substantial cash deposits in his bank accounts, amounting to ₹14,20,000/- in State Bank of India (SBI) and ₹15,00,000/- in HDFC Bank. The assessee claimed that the deposits were from various sources, including contract income, sale of agricultural land, and gifts received on his son's marriage.

Procedural Background

The Assessing Officer held that ₹18,51,500/- remained unexplained under section 69A of the Act, comprising ₹14,20,000/- of unexplained contract income and ₹4,31,500/- of unexplained marriage gifts. The CIT (Appeals) dismissed the assessee's appeal, and the assessee approached the ITAT.

Contentions of Parties

Assessee: The assessee submitted that the gifts were genuine and supported by evidence, including a complete list of persons from whom the gifts were received.

Revenue: The revenue contended that the gifts were unexplained income, as they were received prior to the date of marriage. The Assessing Officer did not conduct any independent inquiry to rebut the evidence placed on record by the assessee.

Reasoning and Analysis

The bench of Dr. BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) held that the Assessing Officer had not given any specific finding to rebut the evidence placed on record by the assessee. The Tribunal opined that the addition was not sustainable in the hands of the assessee, as the gifts were genuine and supported by evidence.

Implications

The ITAT's decision highlights the importance of evidence-based assessment and the need for the revenue to conduct independent inquiries to rebut the evidence placed on record by the assessee.

In this case the assessee was represented by Mr. Sulabh Padshah, Advocate. Meanwhile the respondent was represented by Mr. Pratik Sharma, Advocate.