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Facts
The assessee, an individual, filed her income tax return for AY 2018-19 declaring business income and income from other sources, and opted for the presumptive taxation scheme. Her case was selected for scrutiny. The Assessing Officer (AO) made an addition of Rs. 1,78,17,600/- by treating a gift received from her husband as undisclosed income under Section 69A of the Income Tax Act, 1961, as he was not satisfied with the evidence of genuineness, relationship, and creditworthiness of the donor.
Held
The Tribunal noted that the gift was from the husband to his wife, which falls under the definition of 'relative' as per the Act and is therefore exempt under Section 56(2)(x). The Tribunal also observed that Section 69A of the Act is not applicable to immovable property, but rather to 'money, bullion, jewellery or other valuable article'. The Tribunal found that the assessee had sufficiently discharged the onus of proving the genuineness, source, and creditworthiness of the gift.
Key Issues
1. Whether the gift received from the husband is taxable under Section 69A of the Income Tax Act. 2. Whether the gift received from a relative is exempt from tax under Section 56(2)(x) of the Income Tax Act.
Sections Cited
Section 69A, Section 56(2)(x), Section 143(2), Section 142(1), Section 44ADA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
आदेश / O R D E R Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year 2018-19, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) [in short, “CIT(A)”] dated 01.08.2025 which in turn arises out of an assessment order passed by Assessing Officer dated 26.04.2021.
Although, this appeal filed by the assessee, for assessment year 2018-19, contains multiple ground of appeals, however, at the time of hearing we have carefully perused all the grounds raised by the assessee and noted that the solitary grievance of the assessee in this appeal is that Ld. CIT(A) has erred in confirming addition of Rs.1,78,17,600/-, on account of genuine gift received from husband, out of natural love and affection.
1. 1. 1. 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual.The assessee filed return of income in ITR-4 for assessment year (AY) 2018-19 on 24.07.2018, declaring income from business and profession of Rs.4,52,134/- and income from other sources of Rs.39,991/- and assessee has opted for presumptive taxation scheme u/s 44ADA of the Act thereby declaring gross receipts at Rs.4,52,134/-. The assessee`s case was selected under CASS for complete scrutiny to examine the issue “exempt income”. The notice u/s 143(2) of the Act was issued electronically on the assessee, on 22.09.2019. The notice u/s 142(1) of the Act, dated 18.11.2020 was issued to the assessee calling for the details as appended in the notice. In response to the various notices, the assessee submitted details and documents before the assessing officer.During the assessment proceedings, the assessing officer observed from the return of income filed by the assessee, that the assessee has claimed to have received a sum of Rs.1,78,17,600/- as gift, from her husband, out of natural and love and affection. The said sum of Rs.1,78,17,600/-, has been claimed by the assessee, as exempt. However, the assessing officer was of the view that assessee has not produced sufficient evidence to prove the genuineness of the gift, relationship with the donor and documents evidencing the creditworthiness of the donor. Therefore, assessing officer made addition, in the hands of the assessee, under the provisions of Section 69A of the Act to the tune of Rs.1,78,17,600/-.
4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before Ld. CIT(A) who has confirmed the action of Assessing Officer. The ld.CIT(A) noticed that there is no element of natural love and affection, and genuineness of the gift has not been proved by the assessee, therefore, ld.CIT(A) confirmed the addition made by the assessing officer.
5. Feeling aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
6. Learned Counsel for the assessee vehemently argued that assessee received the gift from her husband out of natural love and affection, and for that assessee produced registration receipt, during the assessment proceedings, before the assessing officer. The Ld. Counsel for the assessee, further argued that the property under consideration was transferred, as a gift. Whether gift deed is registered or not, is not a material thing, however, the important thing which is to be kept in mind is that the gift was given by husband to his wife, out of natural, love and affection and there is a relationship as husband and wife. That is, wife has received the gift from her husband out of natural love and affection, has to be seen, to prove the genuineness of the gift. Therefore, learned Counsel contended that addition made by the assessing officer may be deleted.
On the other hand, Ld. Senior -DR for the Revenue submitted that gift deed is not registered with the appropriate authority, therefore, this gift should not be treated as a valid transaction. Apart from this, learned DR for the Revenue relied on the findings of the assessing officer.
8.We have heard both the parties and perused the materials available on record. We note that assessee appeared before Assessing Officer, during remand proceeding and submitted relevant documents and evidences. The Ld. CIT(A) has adjudicated the issue based on the remand report received from the Assessing Officer. We have gone through the gift deed, which is placed at paper book page No. 117 and noted that it is a gift given by Husband to his wife, and assessee, being wife, under consideration, received the gift, out of natural love, and affection. We find that the gift deed is registered with the appropriate authority. The assessee got married to Jaysukhbhai Ranpariya on 23.07.2004, the copy of marriage certificate and affidavit are at Pages. 07 to 11 of the paper book. Further, even from the name of assessee, in the assessment order, clarifies that Jaysukhbhai is the husband of the assessee, under consideration. An additional confirmation can also be seen by pursuing the Aadhar Card of the assessee, which proves that Jaysukhbhai is the husband of the assessee, vide paper book pages. 12 to 13. The properties have been received by the assessee, as a gift from her husband and she has herself declared the same properties in her income tax return (ITR). A description of the properties, in the capital account and Ledger account has been mentioned by the assessee. Details of the properties gifted to the assessee by her husband on 17.06.2017 and 19.06.2017, are as under: Sr,No Property details (as per assessee’s Value (Rs) Sale deed Nos. (purchased by . ITR) the husband) 1 RS No.1084 Plot No.719 17,03,000 4311 2 RS No.1084 Plot No.718 17,03,000 4342 3 Siddhi apartment flat No.G/1 19,30,600 343 4 RS No.1084 Plot Nos. 123/1 to 1763 [plots 123/1 to 123/5] 123/7 1765 [plots 123/6 to 123/10] 123/9 to 123/14 1,24,81,000 1767 [plots 123/11 to 123/16] 123/22 4351 [plots 12317 to 12322]
Total 1,78,17,600 The above plots have been purchased by the husband by way of registered sale deeds. Copy of Registered Sale Deeds Nos. 4341, 4342, 343, 1763, 1765, 1767 and 4351 by which the husband has purchased the immovable properties are placed at pages no. 14 to 252 of the paper book. The copy of encumbrance Page | 4 certificates containing entries pursuant to execution of Sale Deeds are placed at pages. 253 to 262 of the paper book.
We also find that Shri Jaysukhbhai, husband of the assessee executed various Power of Attorney in favor of his brother Dharmesh Muljibhai Ranpariya with respect to the immovable properties to execute a gift deed in favour of his wife, assessee, under consideration. The copy of the Power of Attorney for Plot Nos. 718 and 719 dated 18.05.2017, for Plot Nos. 123/1 to 123/22 dated 17.06.2017 and for Siddhi Apartment dated 18.05.2017 are placed at pages. 285 to 307 of the paper book. Pursuant to the Power of Attorney, gift deeds were executed by the POA holder for the aforementioned tabulated properties, transferring them in favour of the wife on 17.06.2017 and 20.06.2017. The registration receipts acknowledging the four gift deeds are placed at pages. 308 to 311 of the paper book. The amounts contained therein are exactly as declared by the assessee. The transfer to the assessee-wife, by way of gift was also declared in the capital account of Jaysukh Ranpariya. The assessee submitted before the lower authorities, copy of income tax return, (ITR) Acknowledgment along with Balance Sheet, Profit and Loss Account, Capital account, Ledger, New Residency Plot Purchase ledger Account, Siddhi Appartment Flat Purchase Ledger account etc, are placed in the paper book pages 312 to 324. Therefore, we note that aforesaid gifts squarely fall within the exemption of section56(2)(x) of the Act. The provisions of section 56(2)(x) of the Act, are reproduced below, for ready reference as follows: “(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017, (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property: (B) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause: Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of agreement for transfer of such immovable property: Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub- clause as they apply for valuation of capital asset under those sections; However, as per the proviso, the clause does not apply property received from a relative. Provided that this clause shall not apply to any sum of money or any property received- (I) from any relative; or (II) on the occasion of the marriage of the individual, or (III) under a will or by way of inheritance; or (IV) in contemplation of death of the payer or donor, as the case may be, or (V) from any local authority as defined in the Explanation to clause (20) of section 10; or (VI) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (VII) from or by any trust or institution registered under section 12A or section 12AA; or (VIII) by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (230) of section 10; or (IX) by way of transaction not regarded as transfer under clause (i) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vich) or clause (vid) or clause (vii) of section 47; or (X) from an individual by a trust created or established solely for the benefit of relative of the individual. Relevant portion of the Explanation is as follows: "Explanation-For the purposes of this clause, "relative" means- (i) spouse of the individual;"
From a conspectus of the aforesaid facts and evidences, it is clear that the addition has been made on the basis of the value of the immovable properties declared by the assessee which have in fact been received by her from her husband by way of gift. It is a gift received from relative mentioned in the above section. This is a category of transfer under Section 56(2)(x) of the Act which are, from the plan language of the statute not taxable and hence no addition can be made in the hands of the assessee.
The relevant part of the Hon'ble Finance Ministers Speech is reproduced as under:
"102. Hon'ble Members are aware that I abolished the gift tax in 1997. That decision remains, but a loophole requires to be plugged to prevent money laundering. Accordingly, purported gifts from unrelated persons, above the threshold limit of Rs.25,000, will now be taxed as income. Gifts received from blood relations, lineal ascendants and lineal descendants, and gifts received on certain occasion like marriage will continue to be totally exempt."
From the above speech of the Hon'ble Finance Minister, it is abundantly clear that gifts received from blood relations, lineal ascendants and lineal descendants, and gifts received on certain occasion like marriage will be totally exempted from tax. In the assessee`s case under consideration, the Wife received the gift from Husband, therefore, it is exempt from tax.
Therefore, we note that since the donor and donee are husband and wife, the gift is tax-exempt by virtue of the exception of receiving a gift from a "relative." The gift was given by the virtue of the Birthday of the husband of the assessee having the birthday as 18.06.1979 coupling with the fact that the marriage anniversary of the assessee with Jaysukh Ranpatiya was coming up the very next Month on 23.07.2017, that is, completing 14 years of marriage. It is genuine love of husband towards his wife and the same has been categorically exempted by the law itself. The aadhar card of the husband of assessee for confirming his birthday was submitted by the assessee before the lower authorities. It has been demonstrated that the donor is the husband of the assessee and marriage certificate has been submitted by the assessee, before lower authorities.The assessee, under consideration, has received immovable property, as gift, which has been demonstrated to belong to the donor, having been purchased by way of registered sale deed reflected in his balance sheet. Hence, financial capacity of the husband to gift has also been demonstrated. Therefore, we note that the assessee has sufficiently discharged the onus of explaining the source of the gift, genuineness of the gift, and relation with the donor and creditworthiness of the donor. Therefore, based on the above factual position, the addition made by the assessing officer needs to be deleted.
We also find that the addition was made by the assessing officer u/s.69A of the Act. However, section 69A of the Act, only applies to "money, bullion, jewellery or other valuable article." It is a settled position that "other valuable article" attains a constricted meaning because of the words that precede it. These words cannot be ignored. The immovable property does not fall in the same genus as money, bullion and jewellery and hence section 69A of the Act is not at all applicable to the facts of the case. The provisions of section 69A of the Act is reproduced below for ready reference:
“Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion,jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion,jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.
From the above provisions of section 69A of the Act, it is evidently clear that this section is applicable only where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account. However, in the assessee`s case, under consideration, the property given as a donation, by the husband, was recorded in the books of account and shown in the Balance Sheet. Therefore, provisions of section 69A are not applicable to the assessee under consideration. Therefore, considering these factual position narrated above, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed.
In the result, appeal filed by the assessee is allowed.