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Facts
The assessee received gifts totalling Rs. 2,11,35,523/- on the occasion of his marriage. Rs. 2 crores were from Shri Anil Kumar Goel and Rs. 11,35,523/- from Shri Siddharth Jatia. The Assessing Officer treated these gifts as sham transactions, arguing they were received after the marriage based on cheque clearing dates and donor's bank balance.
Held
The Tribunal held that the expression "on the occasion of marriage" in Section 56(2)(vii) cannot be given a restricted meaning. Gifts associated with the event of marriage are covered, regardless of the exact timing of the transaction or fund transfer. The additions made by the Assessing Officer were based on surmises and conjectures.
Key Issues
Whether gifts received on the occasion of marriage, even if cleared or credited after the marriage date, are exempt under Section 56(2)(vii) of the Income Tax Act.
Sections Cited
143(3), 56(2)(vii), 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1069875490(1), dated 23.10.2024 passed against the assessment order by Joint Commissioner of Income Tax, Range-27(1), Mumbai, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 19.01.2016 for Assessment Year 2013-14.
2. Grounds taken by the assessee are reproduced as under:
1. 1. The learned CIT ((Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 2 crores u/s. 56(2)(vii)(a) of the Income Tax Act without appreciating the fact that the said amount was received as a gift by the appellant from Mr. Anil Kumar Goel on the occasion of his marriage.
2. The learned CIT ((Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 11,35,523/- u/s. 56(2)(vii)(a) of the Income Tax Act without appreciating the fact that the said amount was received as a gift by the appellant from Mr. Siddharth Jatia on the occasion of his marriage.
3. The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the above additions on conjectures and surmises without appreciating fact that all necessary evidences in relation to the gifts have been submitted to the assessing officer during the course of the hearing.
Brief facts of the case are that assessee filed his return of income on 31.07.2013 reporting total income at Rs.1,30,15,040/-. In the year under consideration, assessee had received Rs.2,11,35,523/- as gift on occasion of his marriage. This amount consists of Rs.2 Crores from Shri Mr. Anil Kumar Goel and balance of Rs.11,35,523/- received from Shri Siddharth Jatia. Assessee got married on 08.12.2012, fact of which is not in dispute. Assessee claims that he received the said gifts on the occasion of his marriage. Shri Anil Kumar Goel is his first cousin from the paternal grandfather. Amount of Rs.2Crores from Shri Anil Kumar Goel was received by cheque No.603989 dated 08.12.2012 drawn on Royal Bank of Scotland, Chennai branch, India. A memorandum of gift dated 08.12.2012 was executed for the said gift. The cheque for the gift was cleared and credited to the bank account of the assessee on 18.12.2012, i.e., after the date of marriage. The second gift was received by the assessee from Shri Siddharth Jatia. In this respect, he received a gift of US$ 21,000 equivalent to Rs.11,35,523/-. It was submitted that Shri Siddharth Jatia is a family friend and is from Singapore. For this gift, a cheque vide No.080096, 2.1. According to the assessee, these gifts were received on the occasion of his marriage and therefore, is exempted under the proviso to section 56(2)(vii). However, according to the ld. Assessing Officer, these gifts were received by the assessee after the occasion of the marriage, based on dates of clearing of cheques and amount getting credited to the bank account of the assessee. He thus, held that these transactions of gift received by the assessee are sham transactions wherein assessee has been used as a benami to build up his capital.
Claim of the assessee is that ld. Assessing Officer has taken a microscopic view of the meaning “on the occasion of marriage” without going into the intent of the proviso to section 56(2)(vii), since the cheques were realised at a later date which were given by the respective donors and were received by the assessee on the occasion of his marriage. While treating the transaction of gift as sham transaction, ld. Assessing Officer observed in his order that there was a meagre balance in the bank account of the donor, Shri Anil Kumar Goel as on 13.12.2012 at Rs.7,523/-. Also, on 16.12.2012, the balance was only Rs.8,39,201/-. It was only on 17.12.2012 that the donor received Rs.1.40 Crores from one, Shri Pinku Bagmar and Rs.50 lakhs from grandfather of the assessee, i.e., Shri Devki Nandan Gupta. It was out of these funds that the cheque of gift given to the assessee was encashed and funds got transferred to the bank account of the assessee. According to the ld. Assessing Officer, the funds got transferred much after the date of marriage which occurred on 08.12.2012. He took a view that no person can give a gift of money on a particular day which he does not possess or does not actually have.
Dhruv Sanjay Gupta AY 2013-14 On the date of cheque i.e. 08.12.2012, Shri Anil Kumar Goel did not have sufficient balance in his bank account to give the gift of Rs.2 Crores which was actually transferred to the assessee on 18.12.2012 after the receipt of moneys from Shri Pinku Bagmar and Shri Devki Nandan Gupta. Thus, he concluded that the amounts received by the assessee as gifts are not covered under the proviso to section 56(2)(vii), since the same were not received on the occasion of marriage but much later after the marriage. Ld. Assessing Officer also made an observation that gift received by the assessee was transferred back to Shri Devki Nandan Gupta on 19.12.2012. According to the ld. Assessing Officer, if assessee has received the gift for his marriage, then what was the need for him to transfer the same on the next day to Shri Devki Nandan Gupta. Based on these observations, ld. Assessing Officer concluded that transaction of gift is a sham transaction and assessee has been used as benami in the transactions between Shri Anil Kumar Goel and Shri Devki Nandan Gupta for building up of capital without incidence of tax.
3.1. In respect of the second gift from Shri Siddharth Jatia, ld. Assessing Officer enquired from the bank by issuing notice u/s.133(6) about the said transaction. Based on this enquiry, ld. Assessing Officer noted that the said credit of amount of Rs.11,35,523/- mentioned by the bank is against export advance proceeds USD 4779.85 by Manish Export. Based on this fact, ld. Assessing Officer concluded that it is not a gift received on the occasion of marriage but a sum received by the assessee without any consideration and therefore chargeable to tax.
3.2. Assessee has placed all the corroborative documentary evidences in respect of both the gifts, including gift deeds which are notarised and copy of the bank statement of the donor. Ld. CIT(A) had confirmed the addition so made in the hands of the assessee, despite elaborate submissions made. Assessee also furnished a correct certificate from the bank in respect of the second gift to clarify and present correct factual position, since a wrong certificate was issued by the bank mentioning incorrect facts.
Before us, ld. Counsel for the assessee reiterated the factual position furnished before the authorities below which are already narrated in detail in the above paragraphs. He asserted that the conclusion drawn by ld. Assessing Officer are based on conjectures and surmises without disproving the corroborative documentary evidences placed on record. He also strongly submitted that identity and credit worthiness of both the donors is established beyond any doubts and genuineness of the transaction is also well established. In respect of gifts from Shri Anil Kumar Goel, he referred to his balance sheet as on 31.03.2013, to demonstrate the networth which he carried having total investments in equity shares and other assets totalling to Rs.131,86,35,212/- with a meagre unsecured loan for credit card of Rs.14,500/-. From this, it was asserted that Shri Anil Kumar Goel is a high networth individual having his own capital of Rs.131.88 crores. He also pointed to his income and expenditure account to reflect the quantum of income earned by him during the year which amounts to Rs.11.41 crores. Thus, he had all the means to give a gift of Rs.2 crores to his cousin on the occasion of his marriage. According to him, what the concern of the ld. Assessing Officer is, on the timing of clearance of cheque only. The marriage occurred on 08.12.2012, when Dhruv Sanjay Gupta AY 2013-14 the cheque was gifted to the assessee. It got cleared and the amount got credited into his bank account on 18.12.2012, i.e., immediately after 10 days of the marriage ceremony. This brief gap of 10 days is normal to such transaction, when the assessee is occupied with his marriage ceremonial functions and may lead to such time gap for realisation of the amount gifted at the time of marriage.
4.1. Further, ld. Assessing Officer doubted on the bank statement entries of Shri Anil Kumar Goel. Ld. Counsel referred to the bank statement placed in the paper book to demonstrate that Shri Anil Kumar Goel had been advancing funds to certain persons out of his own funds which has been subsequently realised and out of which the cheque for the gift was cleared. Flow of funds in the said bank statement evidently demonstrates that sufficient funds were always available with the donor and there is no occasion of bouncing of cheque as unpaid on account of insufficiency of funds.
4.2. In respect of assessee utilising the amount of gift he received from Shri Anil Kumar Goel by making a payment to Shri Devki Nandan Gupta, his grandfather, the same was invested for the purpose of earning interest income which he did earn amounting to Rs.13,58,772/-. It was also submitted that Shri Devki Nandan Gupta had his own capital of Rs. 19 crores as on 31.03.2013 and there was no need to route the transaction for the purpose of building of capital as alleged by ld. Assessing Officer which is nothing but based on presumption without any basis.
Dhruv Sanjay Gupta AY 2013-14 4.3. In respect of the second gift from Shri Siddharth Jatia, ld. Counsel clarified that conclusion drawn by ld. Assessing Officer is based on incorrect fact, since the bank from where the information was called, furnished an incorrect certificate in respect of the impugned transaction. To this effect, ld. Counsel pointed to certificate of foreign inward remittance in Form No.10H issued by Union Bank of India, dated 02.02.2013 placed in the paper book at page 14. This certificate mentions the correct factual position in respect of the impugned transaction of gift of USD 21,000. This certificate mentions the purpose of remittance as gift.
4.4. Per contra, ld. Sr. DR placed reliance on the orders of the authorities below.
We have heard both the parties and gone through the material on record. We have also given our thoughtful consideration to the submissions made before us, including documentary evidences placed on record in the paper book. It is undisputed fact that marriage of the assessee occurred on 08.12.2012. He received the gifts from the aforesaid two donors on the occasion of his marriage for which corroborative documentary evidences are placed on record. In the case of first gift from Shri Anil Kumar Goel, assessee has evidentially demonstrated identity and credit worthiness of the donor as well as the genuineness of the transaction by giving financial statements and his bank account statement. In the case of second gift, the addition was made based on an incorrect certificate from the bank, for which assessee has placed on record the correct factual position by way of certificate of foreign inward remittance issued by Union Bank of India against which nothing contrary has been placed on record.
Dhruv Sanjay Gupta AY 2013-14 5.1. We note that ld. Assessing Officer has taken a microscopic view of the term used in proviso to section 56(2)(vii) relating to “on the occasion of marriage”. The expression “on the occasion of marriage” used in proviso to section 56(2)(vii) cannot be given restricted meaning. When the gift is associated with the event of marriage, the immediate reason or cause for the gift is the marriage of the recipient, it would be covered by the said expression and the relationship between the gift and the marriage is the relevant factor and not the time of making the gift. Proviso to section 56(2)(vii) contains certain events and conditions on which the provisions contained in clause (vii) to section 56(2) shall not apply in respect of any sum of money or any property received by the individual. Clause(b) of the said proviso mentions that it shall not apply to any sum of money or any property received “on the occasion of marriage of an individual”.
5.2. The observations made by the authorities below are more of surmises and conjectures in nature rather than bringing any cogent material on record to disprove the documents and the explanations furnished by the assessee. Taking into account all the documentary evidences and explanations, we find that the gifts received by the assessee on the occasion of his marriage, though the amount were credited at a later date, which is 10 days after the date of marriage in the case of gift received from Shri Anil Kumar Goel and 15 days in the case of gift received from Shri Siddharth Jatia, i.e., on 02.01.2013 since the cheque was issued from the Singapore branch of the bank of the donor, are covered by the proviso to section 56(2)(vii) as the same are received by the assessee on the occasion of his marriage. Microscopic view taken by the ld. Assessing Officer of the expression “on the occasion of marriage” to receive a gift on the day of marriage as well as to get the account credited on the same date is devoid of
In the result, appeal of the assessee is allowed.