1 day ago
ITAT Rejects ₹85.30 Lakh Gift Addition Despite Donors' Low Income
A taxpayer received ₹85.30 lakh in cash from five relatives.
Tax officials questioned whether the relatives could afford to give so much money.
The taxpayer showed documents describing the gifts and the relatives’ financial details.
The relatives also told the tax department that they had made the gifts.
The tribunal said this evidence was enough to meet the taxpayer’s initial responsibility.
It said low reported income alone does not prove that the gifts were fake.
If officials wanted to investigate where the relatives got the money, they could examine the relatives’ tax assessments.
The tribunal therefore removed the tax addition against the taxpayer.
The Chennai ITAT deleted an ₹85.30 lakh section 68 addition involving cash gifts from five relatives.
The taxpayer submitted gift deeds, income-tax returns, income statements and financial statements for the donors.
All five donors confirmed the gifts in response to notices issued under section 133(6).
Tax authorities questioned whether the donors had sufficient financial capacity, including one donor whose gross receipts were ₹7.38 lakh.
The tribunal said doubts about donors’ fund sources should be examined in their own assessments, not presumed to be unexplained income of the recipient.
- Who
- The taxpayer, five relatives who gave the money, the tax authorities and the Chennai Income Tax Appellate Tribunal.
- What
- The tribunal deleted an ₹85.30 lakh addition treated as unexplained cash credits under section 68.
- Where
- The case was decided by the Chennai Income Tax Appellate Tribunal.
- When
- The gifts were received during financial year 2016-17; the ruling was pronounced on 18 September 2026 for assessment year 2017-18.
- Why
- The taxpayer provided documentary evidence and the donors confirmed the gifts, while the Revenue did not establish that the deposited cash actually belonged to the taxpayer.
Tax Authorities' View
Taxpayer and Tribunal's View
Donors' financial capacity
Tax Authorities' View
The authorities argued that the donors’ reported incomes, financial statements and earlier assessment findings did not demonstrate sufficient capacity to make the cash gifts.
Taxpayer and Tribunal's View
The taxpayer argued, and the tribunal accepted, that authorities had not adequately considered accumulated capital, withdrawals, cash balances and other resources, and that low income alone was insufficient.
Source of the money
Tax Authorities' View
The tax officer treated the ₹85.30 lakh as unexplained cash credits under section 68 after rejecting the explanation for the deposits.
Taxpayer and Tribunal's View
The tribunal held that the taxpayer had established the donors’ identities and the transactions’ genuineness; any deeper inquiry into the donors’ funds should occur in their own assessments.
Key facts
- Case
- Selvaraj Amirtharaj vs Income Tax Officer, Corporate Ward 5(4), Chennai
- Appeal
- ITA No. 372/Chny/2026
- Gift amount
- ₹85.30 lakh
- Number of donors
- Five relatives
- Assessment year
- 2017-18
- Evidence submitted
- Gift deeds, income-tax returns, income statements and financial statements
- Tribunal conclusion
- The taxpayer discharged the initial burden under section 68
Sources
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