A Chennai resident received ₹85.03 lakh in cash gifts from relatives and deposited the amount in his bank account. According to The Times of India, the Income Tax Department treated this as unexplained income and issued notices to both the recipient and the donors. The recipient eventually succeeded in challenging the tax addition before the Income Tax Appellate Tribunal (ITAT) Chennai on September 18, 2026.
The recipient received cash gifts from his wife, paternal uncles, maternal uncle and sister's husband, all falling within the definition of 'relative' under Income Tax law. As reported by The Times of India, the gifts were made between April and September 2016. The recipient formalized the transactions through gift deeds and submitted comprehensive documentation including copies of gift deeds, donors' income tax returns, income statements and financial statements to substantiate his claim.
The Income Tax Assessing Officer in Chennai questioned whether the donors had sufficient financial capacity to make such substantial cash gifts. According to The Times of India, the officer noted that the income disclosed by relatives in their ITRs and capital reflected in their balance sheets did not correspond with the value of the gifts they made to the recipient. The Commissioner of Appeals (CIT A) also upheld the addition of ₹85.3 lakh in respect of the gifts received and passed its order on December 29, 2025.
ITAT Chennai ruled that the recipient had discharged the initial burden under Section 68 by furnishing confirmations from donors, gift deeds, copies of their income tax returns and financial statements. As reported by The Times of India, the tribunal observed that suspicion cannot replace legal evidence and noted that donors themselves had disclosed the gifts in their respective financial statements. The tribunal emphasized that unless a particular provision specifically requires otherwise, an assessee generally cannot be required to prove the source of funds when creditor identity and transaction genuineness are established.
Sarthak Prashar, Director at Grant Thornton Bharat, explained that the recipient succeeded because he produced adequate evidence to establish the identity of relatives and the genuineness of gift transactions. According to The Times of India, gifts from specified relatives under Section 92(5)(g) are not taxable even when their value exceeds ₹50,000. However, the case highlights that while gifts may be exempt from tax, tax authorities can still examine transaction genuineness and require appropriate evidence.
