Wedding Gifts Not Taxable under Income Tax: ITAT deletes ₹10 Lakh Cash Deposit Addition [Read Order]
ITAT held that the wedding gifts were customary and exempt from tax. They also deleted ₹10 lakh under section 69A, and allowed ₹10,000 deduction under section 80TTA on interest
Wedding Gifts
Wedding Gifts
The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ), while deleting an addition of ₹10L made as unexplained cash deposit under Section 69A of the Income Tax Act, 1961, held that wedding gifts are customary in Indian culture and are exempted from tax.
The appellant-assessee, Shruthi Kishore is an individual employed with Pramata Knowledge Solution Pvt. Ltd. and had filed her return of income for the Assessing Year (AY) 2017-18 by declaring a total income of ₹3,54,460.
The case was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) to verify a cash deposit of ₹10,00,000 during the demonetisation period. A notice under section 143(2) dated 25.09.2018 was issued and so the assessee explained that the deposit was from cash received as wedding gifts on 16.10.2016, enclosing her marriage invitation card.
The Assessing Officer (AO) proceeded to finalize the assessment as best judgment as per section 144. The cash deposit by the appellant was treated as unexplained money as per section 69A of the Act, and the same was added to her total income.
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The AO held that the marriage invitation alone was insufficient to prove the source and also added ₹11,263 as interest income by denying the deduction under section 80TTA.
The assessee submitted before the Commissioner of Income Tax (Appeals) ( CIT(A) ) that she was unaware of the notices as they were sent by email, and observed them only after the assessment was passed.
The CIT(A) upheld the section 144 assessment but directed the AO to verify the claim by checking donor details and creditworthiness, and set aside the matter for fresh assessment. Aggrieved, the assessee appealed to the Tribunal.
The appellant submitted that gifts received on the occasion of marriage are part of Indian tradition. She relied on precedents such as the ITAT ruling in N. Sunitha v. ITO (2000) and the decision of the Bombay High Court in M. Komal Wazir v. DCIT (2000) and argued that marriage gifts cannot be taxed under section 69A in case of a lack of individual donor proof.
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It was submitted that the deduction under section 80TTA was available and should be allowed on the interest income.
The Tribunal Bench comprising Waseem Ahmed (Accountant Member) and Keshav Dubey (Judicial Member) observed that in Indian society, marriage is a socio-cultural event where it is customary to receive gifts, including cash, from relatives and friends.
Such gifts are often undocumented and the absence of receipts cannot be grounds to treat them as unexplained money. The assessee’s explanation which was supported by her husband’s travel records was genuine. The section 56(2)(vii) exempts such gifts.
The tribunal also directed the AO to allow the ₹10,000 deduction under section 80TTA on savings bank interest. The appellant was represented by Krishna Upadhya, while Ganesh R. Ghale represented the revenue.
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