Cash Gift from Brother and Sister during Medical Emergencies cannot be treated as 'Unexplained': ITAT deletes Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has, while deleting an addition under section 69A of the Income Tax Act, 1961 has held that the cash gift from brother and sister cannot be treated as “unexplained.”

The assessee, Ms. Ritu Jain contended that in view of the ill health of her husband, assessee’s sister had gifted the said amount out of her family savings which is generally kept by any household to meet the contingency. The assessee further contended that the giving of gift has been confirmed in the affidavit of the donor.

The assessee further relied on the press release dated 18.11.2016 wherein the Government announced that small deposits made by housewives etc., would not be questioned by the I.T. Department in view of the fact that the present exemption of Tax is Rs.2.5 lakhs and also referred to Instruction No.03/17 dated 21.02.2017 which was SOP for verification of cash deposits.

Shri Anil Chaturvedi, Accountant Member observed that in the instant case the A.O. made an addition of Rs.3,55,000/- by treating gifted amount of Rs.1,80,000/- and Rs.1,75,000/- from Mrs. Kamlesh Devi and Sh. Rakesh Jain respectively as unexplained money under section 69A of the I.T. Act, 1961 without taking into consideration of the Government Instruction No.3/2017 dated 21.02.2017 and press release dated 18.11.2016 (supra) wherein the present exempt limit for income tax is Rs.2.5 lakhs.

“In my view, the assessee has discharged her initial onus by proving the identity, creditworthiness and genuineness of the transactions. Therefore, the A.O. cannot insist the assessee to prove the source of source. Further, the A.O. has not pointed out any defect in the Affidavits filed by both the donors viz., Mrs. Kamlesh Devi and Sh. Rakesh Jain and, therefore, the decision of the Hon’ble Supreme Court in the case of M/s. Mehta Parikh & Co. vs., CIT (supra), relied upon by the assessee is squarely applicable to the facts and circumstances of the case. Further the submission of assessee that her husband was suffering from cancer and for the treatment, a lot of medical expenses was required to be incurred. The aforesaid contention of assessee has not been found to be false. It is a general practice followed that in time of medical emergencies, the near and dear ones of the family, close friends and relatives generally pool their resources to help the family in need,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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