Summary of this article
ITAT Chennai grants relief over Rs 85.03 lakh
Gift deeds and financial records supported the claims
Tribunal questioned reliance on donors’ declared income alone
A man who had deposited a sum of Rs 85.03 lakh, he had received as cash gifts, in a bank, has secured relief from the Income Tax Appellate Tribunal (ITAT), Chennai after a long scrutiny.
The tribunal ruled the decision in his favour after it examined the gift deeds, income tax returns (ITRs) and financial documents submitted to establish the genuineness of the situation and the transactions.
This case highlights the importance of maintaining documentary evidence when one receives gifts. This is important even when it is relatives who are exempt from gift tax under applicable income tax provisions.
Why Did the Income Tax Department Question the Gifts?
The man reportedly received the money from his wife, paternal uncles, maternal uncle and brother-in-law between April and September 2016. He formalised the transactions through gift deeds and deposited the cash into his bank account. After the bank noted this substantial cash deposit under the applicable reporting requirements for specified financial transactions, the Income Tax Department initiated an enquiry into the source of the funds. Notices were also issued to the relatives who had given this money.
The donors responded to the notices and confirmed that they had made the gifts. The recipient submitted copies of the gift deeds, income statements and financial statements to support his explanation.
However, the receiver was questioned by the assessing officer whether the relatives had such financial capacity to give away such large amounts of money. The income disclosed in their tax returns and the capital reflected in their balance sheets did not meet the expectations of the explanations. Further, the department treated the Rs 85.03 lakh as unexplained cash credits under Section 68 of the Income-tax Act, 1961. The first appellate authority upheld the assessment on December 29, 2025. After this, the man approached the ITAT Chennai.
Why Did ITAT Chennai Rule in His Favour?
The tribunal also noted that the relatives had independently acknowledged making the gifts in response to departmental notices. Their disclosures in financial statements had not been contradicted by the tax authorities.
On September 18, 2026, the tribunal granted relief in his favour. It had observed that the recipient had discharged his responsibility by providing donor confirmations, gift deeds, ITRs and financial statements. The tribunal also noted that the relatives had acknowledged their contribution.
According to a report by the Economic Times, the tribunal highlighted that doubts about the donors’ sources of funds should have been examined through appropriate proceedings against the donors themselves.
The recipient could not be held liable merely because the assessing officer questioned the relatives’ financial capacity, particularly when their identities and the genuineness of the transactions had not been disputed.
The tribunal further observed that the department had not established that the deposited cash actually belonged to the recipient. It also criticised the authorities for relying just on the relatives’ declared income without adequately examining their accumulated capital.
