Cash gift during marriage is custom and no addition to income : ITAT

Facts of the case

The assessee had submitted a return of income for the AY 2017–18 on August 3, 2018, admitting a total income of Rs. 12,990. To verify significant cash deposits made during the demonetization phase, the case was chosen for limited scrutiny. During the course of assessment proceedings , the AO discovered that the assessee had deposited Rs. 18 lakhs into a bank account during the demonetization period

When asked to explain the source of the cash deposits, the assessee said that she made the Rs. 7.5 lakhs worth of cash deposits out of her own savings. Additionally, her brother gave her a present of Rs. 4.5 lakhs for her daughter’s wedding. The amount of Rs. 8 lakhs she had received as a leasing advance for a property registered in her daughter’s name was also explained. Additionally, a balance of Rs. 6 lakhs was taken out of the same bank account before the demonetization phase. The AO, however, was not satisfied with the explanation furnished by the assessee  and rejcted all  the grounds of which is explain above. Therefore, confirmed the addition of Rs.18 lakhs towards cash deposits during demonetization period u/s.69A of the Act.

Observation of case

We have heard from both sides, looked through the documentation, and reviewed the orders issued by the authorities below. There is no dispute with regard to the fact that the assessee has made cash deposits during demonetization period. In fact, according to information the AO had obtained from the banks, the assessee had put money into a bank account during the time of demonetization. The assessee has clarified the source of the cash deposits. The assessee’s initial justification for financial deposits comes from a lease deposit she got from Mr. Babu for a property registered in her daughter’s name. According to the document of the Lease Deed between Mrs. Aarthi and Mr. Babu that we have reviewed, the daughter of the assessee was given a cash payment of Rs. 8 lakhs. The assessee claimed that said sum of Rs.8 lakhs was received from her daughter and deposited into bank account. We determine that the AO did not doubt the Lease Deed that the Assessee’s daughter entered into with Mr. Babu. Although if the AO and Ld.DR had doubts about the authenticity of the Lease Deed, only the AO had actually expressed them. As a result, the evidence submitted by the assessee cannot be disregarded on that basis. We therefore believe that the AO erred by failing to consider the cash lease deposit received during the demonetization period as a source for cash deposits. As a result, we order the AO to accept the lease deposit as a source for cash deposits during the demonetization period and to subtract Rs. 8 lakhs from the total addition made pursuant to Section 69A of the Act.

Coming to the claim of a marriage present, the assessee claims that she was given an amount of Rs. 4 lakhs as a marriage gift in occasion of the weddings of her daughter. The assessee has submitted a donor list. According to it, the assessee asserts that roughly 400 people gave him a wedding gift. The assessee was unable to submit the donors’ oentire addresses or other information without a statement. Therefore, it is challenging to believe the assessee’s assertion that she received a Rs. 4 lakh marriage gift in honour of her daughter’s nuptials. However, there is still a tradition in India for guests and family members to present gifts at weddings based on their social standing and financial situation. As a result, we are of the considered opinion that the assessee can be awarded advantage of a sum of Rs. 2 lakhs as marriage gift received on the occasion of her daughter’s wedding. This is because it is customary in India to give and receive marriage gifts.As a result, we instruct the AO to accept the source for cash deposits from the Rs. 2 lakh marriage present that was received and to remove the addition that was made in accordance with Section 69A of the Act to that extent.

The assessee claimed that her brothers gave two lakhs each as marriage gifts on the occasion of her daughter’s marriage, for which the assessee has filed a sworn affidavit filed by Mr. Madhu & Mr.Raja. We find that first of all so called Affidavit filed by donors claiming given marriage gift to her daughter on 19.05.2016, they have used stamp papers purchased on 13.07.2022. Therefore, the claim of a marriage gift from her brothers cannot be recognised on this basis alone. However, the truth remains that it is also customary in India that brothers to offer their sisters some money during marriages, depending on their social standing and financial situation. Therefore, the claim of the assessee that she has received marriage gift from her brothers cannot be totally ruled out. In light of these facts and Indian custom, we believe that the assessee is entitled to a reasonable portion of the marriage gift she has requested. We therefore give the AO the go-ahead to accept the Rs. 2 lakhs in wedding gifts from her brothers as a source for financial contributions and to remove the addition n made u/s.69A of the Act, towards cash deposits to the extent of Rs.2 lakhs out of marriage gift received from her brother.

Conclusion

Appeal filed by the assessee is partly allowed. In conclusion, the assessee was able to provide source explanations for a total of Rs.12 lakhs of the total cash deposits of Rs.17 lakhs, of which Rs.8 lakhs were received as a cash lease deposit, Rs.2 lakhs as gifts given to her daughter’s wedding, and a further sum of Rs.2 lakhs from her brothers as marriage gifts. Since the assessee was unable to provide a source for the addition made in accordance with Section 69A of the Act, we instruct the AO to maintain the addition made in accordance with Section 69A to the extent of Rs. 5 lakhs.

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