No Need Of Any "Occasion" For Receipt Of Gift By The Assessee: ITAT

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that there need not be any "occasion" for the assessee to receive a gift.

The two-member bench of T.R. Senthil Kumar (judicial member) and Annapurna Gupta (accountant member) noted that the assessee received the gift from his own brother, who has been a non-resident since 1966. The allotment of shares was made under the NRI quota to the assessee's brother in the USA. Thus, the source and genuineness are being proved beyond doubt.

The respondent/assessee is an individual and a doctor by profession. The assessee filed his Return of Income, declaring total income. The case was selected for scrutiny. The Assessing Officer noticed that the assessee had received a gift in the form of various company shares. The assessee also gifted Rs. 1,06,65,848 to his relatives during the financial year and sought an explanation.

The assessee replied that he received the gifts in the form of shares and debentures from his brother residing in the U.S.A., which were made out of natural love and affection.

The AO treated the gift as unexplained and added Rs. 3,06,13,009 as the income of the assessee and demanded tax.

The assessee filed an appeal before the Commissioner of Income Tax (Appeals). During the appellate proceedings, the assessee filed additional evidence, namely, DMAT A/c opening details by an NRI brother, evidence of the purchase of shares by an NRI brother that was gifted to the assessee, and a bank statement of Axis Bank Ltd. of an NRI brother showing debit entries for gifts made to the assessee.

The CIT(A) determined that the AO accepted the assessee's brother's purchase of shares under the NRI quota, with funds coming from the assessee's brother's NRE bank account. Thus, the AO satisfied the genuineness of the gift but doubted the "occasion of the gift" in the absence of any family functions, namely marriage, etc.

The tribunal held that the whole approach of the AO was perverse, which cannot be sustained in law, and therefore the deletion by the CIT(A) does not require any interference.

Case Title: ITO Versus Dr. Satish Natwarlal Shah

Citation: ITA No. 379/Ahd/2020

Date: 19-10-2022

Counsel For Appellant: CIT/DR Samir Tekriwal

Counsel For Respondent: None

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