VANSHIKA MEHROTRA, LUCKNOW V. ITO-6(5), LUCKNOW

ITA 213/LKW/2022

AI Insights

The case revolves around an appeal by Vanshika Mehrotra against the order of the National Faceless Appeal Centre (NFAC), which sustained an addition of Rs.6,14,500/- to her income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer, who considered the unexplained cash deposit of Rs.12,29,000/- during the demonetization period as unexplained income under Section 69A of the Income Tax Act. The assessee contended that the amount was received as wedding gifts, which are exempt under Section 56(2)(X). The NFAC accepted the fact of marriage and the receipt of gifts but arbitrarily allowed exemption for only 50% of the amount. The Tribunal found this estimation without sound reasoning and logic, leading to the decision to exempt the entire amount.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123086 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH GIDWANI
• Keywords: Gift; Set aside
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.213/LKW/2022 A.Ys. 2017-18 ITO 6 (5), Lucknow Vs. Vanshika Mehrotra, 405/4 Near Happy Hours School, Chaupatiyan Road Sarai Mali Khan, Lucknow PAN BFGPM 8828G (Respondent) (Appellant) Shri Punit Rohatgi, Advocate Appellant by Shri Harish Gidwani, DR Respondent by 18/04/2023 Date of hearing 19/04/2023 Date of pronouncement O R D E R This appeal has been preferred by the assessee against the order dated 03.10.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2017-18. 2. The brief facts of the case are that the assessee had filed return of income declaring income of Rs.4,33,190/- and the assessee’s case was selected for scrutiny under the CASS guidelines for the reason that the assessee had deposited cash amounting to Rs.14,78,550/- during the demonetization period i.e. between 08.11.2016 to 30.12.2016. The assessee was asked to explain the source of the same and before the Assessing Officer, the assessee submitted that out of the total cash deposited, Rs.2,49,500/- pertained to earlier savings. Accordingly, the Assessing Officer proceeded to make an addition of the remaining amount of Rs.12,29,000/- as unexplained u/s.69A of the Income Tax Act, 1961 (hereinafter called ‘the Act’). 2 ITA No. 213/Lkw/2022 3. Aggrieved, the assessee approached the ld. First Appellate Authority and submitted before it that the assessee had got married on 16.11.2016 and the impugned amount of Rs.12,29,000/- had been received by the assessee as wedding gifts from the friends and relatives. It was also submitted that such wedding gifts were exempt in terms of Section 56(2)(X) of the Act. The assessee also submitted a copy of her wedding invitation card and also a list containing the names of friends and relatives along with amount received from them as gifts at the time of her marriage. The NFAC, however, observed that the assessee had not provided any address, PAN or contact details of friends and relatives and no confirmations had also been provided and further the assessee had not adduced any evidence to prove as to how much amount was received in demonetized currency and how much amount was received in new currency. However, the NFAC accepted the fact of marriage of the assessee having been solemnized and gave a finding that the assessee should be allowed benefit of 50% of the deposits and the rest should be sustained. Thus, in effect, the NFAC sustained the addition of Rs.6,14,500/-. 4. Aggrieved, the assessee has now approached this Tribunal, challenging the sustenance of addition by the NFAC, by raising the following grounds of appeal: “1. MARRIAGE GIFT RECIEVED BY THE ASSESSEE WHICH IS EXEMPT u/s 56(2)(X) of IT ACT. BUT THE LEARNED CIT (APPEALS) IS WRONG IN SUSTAINING THE ADDITION RS. 614500/- U/S 69A. As the assessee got married on 16th of November 2016 and Rs. 1229000/- is being received by the assessee as wedding gifts from relatives and friends. This amount is added back to the income of the assessee by the assessing officer and the learned CIT allowed only 50% of the addition is not good in the eye of law because section 56 of the income tax act also said that, the gifts received by newly-wed couples from their immediate family are not taxable in India. Be it cash, stock, jewelry, house, or property, regardless of its value such 3 ITA No. 213/Lkw/2022 wedding gifts are exempt from taxes under Section 56 of the Income Tax Act.” 5. The ld. AR submitted that the assessee had duly submitted a list of friends and relatives, who had given the amount of Rs.12,29,000/- as gifts during the course of the marriage and he reiterated that the NFAC has duly accepted the fact of the assessee’s marriage having been solemnized on 16.11.2016. It was submitted that under such circumstances, the NFAC was legally and factually incorrect in sustaining the impugned addition to the tune of 50% without assigning any reason. 6. Per contra, the ld. Sr. DR, submitted that the cash deposits should be considered in the backdrop of the demonetization and further, the NFAC had already granted adequate relief to the assessee in this regard even though the assessee had not furnished addresses or PAN of the friends and relatives and nor had given breakup of the amount received in demonetized currency and the amount received in new currency. 7. I have heard the rival submissions and have also gone through the material on record. I have also gone through the list of friends and relatives, which had been submitted by the assessee in support of her contention. It is seen that the NFAC has itself accepted the fact of the assessee’s marriage having been solemnized on 16.11.2016 and has also accepted that the 50% of the gifts amount received was eligible for exemption in terms of Section 56(2)(X) of the Act. However, the NFAC has not given any cogent reason for accepting only 50% of the amount as gifts received during the marriage and has thus, proceeded on a mere estimation which lacks sound reasoning and logic. It is not the case of the Department that the marriage was not solemnized and it is also not the case of the Department that the assessee did not receive the amount of cash gifts from friends and relatives. Thus, accepting only a part i.e. 50% of the said cash deposits as genuine defy logic 4 ITA No. 213/Lkw/2022 and this action cannot be upheld. Accordingly, I set aside the order of the NFAC and I direct the Assessing Officer to treat the entire gifts amounting to Rs.12,29,500/- as being exempt u/s. 56(2)(X) of the Act. 8. In the result, the appeal of the assessee stands allowed. (Order pronounced in the open court on 19/04/2023) Sd/- (SUDHANSHU SRIVASTAVA) JUDICIAL MEMBER Aks – Dtd. 19 /04/2023 5 ITA No. 213/Lkw/2022 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) Departmental Representative (5) Guard File By order Assistant Registrar