Neutral impactEconomy
₹85.30 lakh cash gifts from relatives: ITAT says donors’ low income alone isn’t enough to reject genuine gifts
Mint 1 hr ago·28 Sept 2026, 3:32 am
An Income Tax Appellate Tribunal (ITAT) in Chennai recently ruled that cash gifts received by a taxpayer from five relatives cannot be automatically rejected as unexplained income. The tribunal deleted a tax addition of ₹85.30 lakh after the taxpayer provided gift deeds, income tax returns, and financial statements. Crucially, all five donors confirmed the transactions in writing. The tribunal held that the initial burden of proof under Section 68 of the Income Tax Act was discharged by the taxpayer.
This ruling clarifies a key aspect of tax compliance for retail investors. It emphasizes that simply showing a donor has low income is not enough to invalidate a gift. Instead, the taxpayer must provide supporting documentation to prove the source of funds. For investors, this case highlights the importance of maintaining proper records for gifts received from family members to avoid scrutiny.
Moving forward, tax authorities will likely focus more on verifying the genuineness of gifts through corroborative evidence. Taxpayers should ensure they have proper documentation, such as gift deeds and donor confirmations, to defend against potential tax demands. This case serves as a reminder that while gifts are generally exempt, they must be substantiated with proof to withstand tax scrutiny.
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- Category: Economy.
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