Addition u/s 69A for cash gifts received on the occasion of marriage deleted

Addition u/s 69A for cash gifts received on the occasion of marriage and deposited in bank deleted

ABCAUS Case Law Citation:
ABCAUS 3715 (2023) (04) ITAT

In the instant case, the assessee had challenged the order passed by the ational Faceless Appeal Centre (NFAC)/CIT(A) in confirming the addition u/s 69A of the Income Tax Act, 1961 (the Act) for cash deposited in bank post demonetisation.

The return of appellant assessee was selected for scrutiny under the  CASS guidelines for the reason that the assessee had deposited large amount of cash during the demonetization period.

The assessee was asked to explain the source of the same and before the Assessing Officer (AO), the assessee submitted that out of the total cash deposited, part amount pertained to earlier savings and the most of the cash had been received by the assessee as wedding gifts from the friends and relatives.

However, the submission of cash gift received at the occasion of her marriage did not find merit with the AO who made an addition of that part as unexplained u/s 69A of the Act.

The assessee approached the First Appellate Authority and submitted before it that the assessee had got married during the demonetisation period and the impugned amount had been received by the assessee as wedding gifts from the friends and relatives.

It was also submitted that such wedding gifts were exempt in terms of Section 56(2)(X) of the Act. The assessee also submitted a copy of her wedding invitation card and also a list containing the names of friends and relatives along with amount received from them as gifts at the time of her marriage.

The NFAC, however, observed that the assessee had not provided any address, PAN or contact details of friends and relatives and no confirmations had also been provided and further the assessee had not adduced any evidence to prove as to how much amount was received in demonetized currency and how much amount was received in new currency. 

However, the NFAC accepted the fact of marriage of the assessee having been solemnized and gave a finding that the assessee should be allowed benefit of 50% of the deposits and the rest should be sustained.

The Tribunal observed that the NFAC has itself accepted the fact of the assessee’s marriage having been solemnized during the relevant period and also accepted that the 50% of the gifts amount received was eligible for exemption in terms of Section 56(2)(X) of the Act.

However, the Tribunal noted that the NFAC had not given any cogent reason for accepting only 50% of the amount as gifts received during the marriage and has thus, proceeding on a mere estimation which lacks sound reasoning and logic. 

ITAT observed that it was not the case of the Department that the marriage was not solemnized and it was also not the case of the Department that the assessee did not receive the amount of cash gifts from friends and relatives.  Therefore, accepting only a part i.e. 50% of the said cash deposits as genuine defy logic and this action could not be upheld.

Accordingly, the ITAT set aside the order of the NFAC and directed the Assessing Officer to treat the entire gifts as being exempt u/s 56(2)(X) of the Act.

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