Pranav B Prem

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that wedding gifts cannot automatically be treated as unexplained income merely because they were received prior to the marriage date, especially when the assessee has furnished a complete list of donors and no defects were found in the evidence.

Also Read: ITAT Mumbai: Assessee Not Required To Prove Negative Once Documentary Evidence Is Produced; Deletes Addition Under Section 69C

The Bench comprising Dr. B.R.R. Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) observed that once the assessee has provided credible details of the persons from whom the gifts were received and the Assessing Officer (AO) has not made any independent inquiry to disprove them, the addition made under Section 69A of the Income Tax Act, 1961 cannot be sustained. “The fact that marriage gifts were received prior to the date of marriage itself could not lead to the conclusion that the same are not genuine, when a complete list of persons from whom the gifts were received was duly submitted during the course of assessment proceedings and no specific defect had been pointed out,” the Tribunal observed.

Background

The assessee, Manubhai Dahyabhai Bhoi, a teacher by profession, was also engaged in small contract work during the assessment year 2011–12. The case was reopened under Section 147 of the Act after the assessee failed to file his return of income within the prescribed period. Upon reopening, the assessee filed his return declaring a total income of ₹4,61,800/-, which included salary income and presumptive business income under Section 44AD. During the scrutiny proceedings, the AO noted that the assessee had made substantial cash deposits in his bank accounts—₹14,20,000/- in State Bank of India and ₹15,00,000/- in HDFC Bank.

When asked to explain the source of these deposits, the assessee submitted that they came from:

• ₹14,20,000/- from contract income,

• ₹9,00,000/- from the sale of agricultural land,

• ₹1,00,000/- withdrawn from his wife’s account, and

• ₹5,00,000/- as wedding gifts received on his son’s marriage and personal savings.

While the AO accepted the explanation regarding the sale of agricultural land and withdrawal from the wife’s account, he rejected the explanation for ₹14,20,000/- (contract income) and ₹4,31,500/- (marriage gifts).

Findings of the Assessing Officer and CIT(A)

The AO held that the assessee had not provided sufficient evidence such as bills or vouchers to substantiate his claim of contract income, particularly since there were no similar activities reported in previous or subsequent years. It was also noted that the large cash deposits were made within a short span without any matching withdrawals, raising doubts about the genuineness of the transactions. With respect to the wedding gifts, the AO concluded that since they were received before the actual marriage date, they could not be considered genuine. Accordingly, he treated ₹18,51,500/- as unexplained income under Section 69A, adding it to the total income for A.Y. 2011–12. The CIT(A) upheld the AO’s order, observing that the assessee had not appeared for the appeal hearings and had failed to furnish any additional documents or clarifications.

Assessee’s Submissions Before the ITAT

Before the Tribunal, the assessee contended that he had submitted complete documentary evidence, including invoices for the contract work and a list of individuals who had given wedding gifts. The AO, however, made no independent inquiry to disprove the veracity of these documents. It was argued that merely because such contract work was not reflected in other assessment years could not be a ground to disregard the explanation for the current year. Regarding the marriage gifts, the assessee emphasized that all donor names were disclosed, and there was no allegation of fabrication or inconsistency. The only objection raised by the department was that the gifts were received before the marriage date — a conclusion, the assessee argued, that lacked evidentiary backing.

Tribunal’s Observations

After examining the records, the Tribunal found that the assessee had provided adequate details of contract income and the list of persons from whom the wedding gifts were received. Despite having these details, the AO had failed to conduct any inquiry to contradict the evidence. The Bench noted that even though some marriage gifts were received prior to the wedding, that fact alone was insufficient to treat them as non-genuine. “Had the evidence been an afterthought, the assessee could have shown the date of receipt of such wedding gifts as on or after the marriage date. The fact that some gifts were received before marriage only indicates transparency, not fabrication,” the Tribunal remarked. It further held that the addition made under Section 69A was unsustainable, as the AO had failed to bring any contrary material on record or establish that the deposits represented unaccounted money.

Also Read: ITAT Delhi Refuses To Condone 170-Day Delay In Filing Appeals; Rejects Assessee’s Claim Of CA Negligence For Lack Of Proof

Allowing the appeal, the ITAT directed the deletion of the addition of ₹18,51,500/- made by the AO. “Looking into the evidences placed on record and the totality of circumstances, we are of the view that the addition is not sustainable in the hands of the assessee,” the Tribunal concluded.

Cause Title: Manubhai Dahyabhai Bhoi v. Income Tax Officer

Case No: I.T.A. No.779/Ahd/2025

Coram: Dr. B.R.R. Kumar (Vice President), Siddhartha Nautiyal (Judicial Member)