The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that cash gifts from a father and father-in-law are not taxable under the Income Tax Act,1961. Krishna Nand Rai,appellant-assessee, filed an appeal challenging the order passed by National Faceless Appeal Centre(NFAC) dated 15.03.2024, which upheld an addition of Rs. 10,80,000 on account of cash deposits.  The assessee argued that the cash deposits were gifts received during his marriage in February 2011 ,Rs. 5,00,000 from his father, Shri Vinod Kumar Rai, and Rs. 5,80,000 from his father-in-law, Shri Avadh Kumar Rai. To support  this, the assessee submitted affidavits from both donors, who affirmed that the amounts were gifted from their agricultural income.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here In addition to the affidavits, the assessee provided supporting documents, including a marriage invitation card, proof of agricultural land, and statements from the donors to validate their claims regarding the source of the funds. However, the Commissioner of Income Tax(Appeals)[CIT(A)] rejected the affidavits, citing discrepancies in the dates mentioned on the stamp papers. Specifically, both affidavits were dated in April 2011, which raised concerns regarding their authenticity. Despite this, the assessee maintained that the gifts were genuine and sourced from agricultural income. A single member bench comprising Madhumita Roy(Judicial Member) examined the evidence in detail and found the claim of the assessee to be credible.

It observed that the supporting documents, such as proof of agricultural income and the marriage card, were consistent and had not been disputed by the authorities. Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here The issue of discrepancies in the affidavits’ dates was viewed as a technicality that did not undermine the substantive evidence provided. The tribunal concluded that the addition was unsustainable, as the assesssee had successfully demonstrated the genuineness of the gifts and their source. As a result the addition of Rs. 10,80,000 was deleted, and the appeal was decided in favor of the assessee.