The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that there is no prohibition in law in accepting of cash gifts by NRIs from the family members and the addition cannot be made by the income tax department alleging the same as an ‘unusual practice’.
The assessee, Atul H Patel is an individual and an NRI being resident of Auckland, New Zealand since 2003. The Assessing Officer, while concluding the assessment proceedings, observed that there was cash deposits in the bank account of the assessee amounting to ₹ 11,44,000.00, the source of which was not explained and treated the same as unexplained cash credit under section 68 of the Income Tax Act, 1961 and made the addition to the total income of the assessee.
Shri ParimalSinh B. Parmar, the counsel appeared for the assesseecontended that he has accepted gift of ₹ 6.44 lakhs and 5 lakhs from his father and the brother which was used for purchasing the residential property in Vadodara. According to the assessee, the father and the brother were engaged in the agricultural activity on the land held by them in their personal capacity as well as on the land of other parties.
On first appeal, the CIT-A confirmed the addition by observing that it is very unusual that a wealthy NRI is accepting gifts from his father and the brother who are claimed to be agriculturist.
A bench of Shri Waseem Ahmed, Accountant Member and Shri SiddharathaNautiyal, Judicial Member observed thatthe revenue has not brought anything on record in support of its contention that amount deposited by the assessee is not out of the cash gift.
“To our understanding, merely the difference in time between the cash deposited in the bank viz a viz cash received as gift cannot authorize the revenue authorities to draw inferences against the assessee until and unless some documentary evidence are brought on record contrary to the arguments of the learned AR for the assessee. Admittedly, it is very unusual that a wealthy NRI is accepting the gift from his father and the brother. Generally, the practice is different in the society. As such the NRI make gift to the relatives. But we find that there is no prohibition for the NRI for accepting the gifts from the relatives. In the absence of any prohibition, no adverse inference can be drawn against the assessee based on the prevailing system in the society,” the Tribunal said.
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