Receiving Gifts Before Wedding Date Cannot Be Treated as Ungenuine Without Proof: ITAT Deletes ₹4.31 Lakh Unexplained Cash Deposit Addition [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition made by the Assessing Officer (AO), holding that gifts received before a wedding date cannot be treated as ungenuine without contrary evidence.

Manubhai Dahyabhai Bhoi, a teacher by profession, was assessed for A.Y. 2011-12 after substantial cash deposits were noticed in his bank accounts. The AO accepted certain sources of funds such as sale proceeds from agricultural land and withdrawals from his wife’s account but treated deposits of Rs. 14,20,000 claimed as contract income and Rs. 4,31,500 claimed as marriage gifts as unexplained under section 69A of theIncome Tax Act.

The AO reasoned that the gifts were received before the wedding date which was considered unusual. On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition through an ex-parte order, observing that the assessee had not responded to notices.

The assessee then approached ITAT, arguing that he had furnished a detailed list of donors supporting the marriage gifts. The assessee’s counsel further argued that the AO had not carried out any independent inquiry to disprove these evidences and that rejecting them only because the gifts were received before the wedding was unjustified.

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The two-member bench comprising Dr. BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) considered the rival submissions and the record. The tribunal observed that a complete list of donors for the wedding gifts was furnished and no defect was pointed out by the AO.

The tribunal explained that the mere fact that gifts were received before the date of marriage cannot by itself lead to the conclusion that they are not genuine. The tribunal observed that the assessee had offered the contract income to tax under section 44AD and had placed invoices and details of parties on record.

The tribunal held that the AO failed to verify the evidence and that the CIT(A) decided the matter without considering the material placed on record.

The tribunal deleted the addition of Rs. 4,31,500 relating to marriage gifts along with the other addition, holding that the total unexplained cash deposit of Rs. 18,51,500 was not sustainable. The appeal of the assessee was allowed.

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