Gift from Brother-in-Law Exempted from Tax: ITAT Deletes Addition against Narotam Sekhsariya’s Relative [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has recently granted relief to one of the relatives of the Ambuja Cements Ltd, holding that the gift received from brother-in-law is exempted from income tax.

The assessee received a gift from his brother-in-law, Shri Narotam Sekhsariya, the founder of Ambuja Cements Ltd. while completing the assessment proceedings, the Assessing Officer asked the assessee to prove the identity, creditworthiness, and genuineness of the above gift.

In reply, the assessee categorically mentioned that the said Shri Narotam Sekhsariya was the brother-in-law of the assessee being the founder of Ambuja Cements Ltd. and remained its Managing Director till recently. Shri Narotam Sekhsariya was the 40th richest Indian according to Forbes.com. Details of his net worth and the credential were also mentioned in the said reply.

However, the AO further directed to produce the donor before him to prove the genuineness of the transaction of 16 crores along with evidence of his identity, creditworthiness and genuineness of transaction. The assessee produced the relevant documents of the said Shri Narotam Sekhsariya to prove his identity and creditworthiness.

The Tribunal found that the details of the donor starting from PAN number, capital gain statement, bank statement, and others is annexed to the paper book, which was duly placed before the authorities below.

It was further noted that when Shri Narottam Sekhkaria was not brought to the Learned AO by the assessee no further enquiry was conducted by him, no record against the assessee was also brought. Apart from that, the creditworthiness and/or genuineness of the transaction though doubted by the Learned AO, the same has not been proved by any cogent document in favor of the revenue.

“Further that we find that the Learned AO acted beyond his jurisdiction by raising doubts regarding the relationship of the assessee and the donor ignoring the statutory provision in this regard as already been highlighted by the assessee before him in his written reply dated 04.02.2015. Without rebutting the submission made by the assessee the order of addition was made by the Learned AO. Further that, whether the gift so received by the assessee from his brother-in-law is exempted from tax under section 56 of the Act has been considered on a wrong notion. Instead of relative as provided by the statute “blood relative” has been considered by the Learned AO and as a result whereof addition was made which is absolutely erroneous as rightly pointed out by the Learned CIT(A) as it reflects from the order impugned. Thus, in the absence of any infirmity in the order passed by the Learned CIT(A) we decline to interfere with the same,” the Tribunal said.