ITAT Deletes 2.11 Cr Addition for Gifts Received on the Occasion of Marriage

The assessee filed his return for AY 2013-14, declaring a total income of Rs. 1.3 crore. He reported receiving Rs. 2.11 crore as gifts on the occasion of his marriage on 08.12.2012: Rs. 2 crore from his cousin and Rs. 11.35 lakh from a family friend. The gifts were supported by notarized gift deeds. The AO rejected the exemption claim under Section 56(2)(vii) on the ground that the gifts were credited to the assessee’s account after the date of marriage, 18.12.2012 and 02.01.2013, respectively. He alleged the transaction was a sham and involved routing funds between relatives.

The CIT(A) upheld the AO’s findings. Aggrieved, the assessee appealed before the ITAT.

Issue Raised: Whether gifts given on the occasion of marriage but credited after the wedding date can be treated as exempt under the proviso to Section 56(2)(vii), and whether documentary evidence dispels suspicions of a fraudulent transaction.

Tribunal’s Decision: The ITAT emphasised that the phrase “on the occasion of marriage” must be interpreted reasonably, focusing on the intent and occasion rather than the timing of credit. It found no evidence to support the AO’s charge that the assessee was used as a benami or that the gifts were sham.According to the Tribunal, both gifts were received on the occasion of the marriage, and the delay in bank clearance didn’t disqualify them under the proviso to Section 56(2)(vii). The assessee had provided proper gift deeds and shown that the donors had the necessary identity, creditworthiness, and intent.

The assessee net worth was over Rs. 131 crore, and he had sufficient assets to justify the gift. The cheque was handed over on the wedding day but got cleared ten days later, which is a common delay during wedding ceremonies. The second gift from the assessee was confirmed through a corrected foreign remittance certificate (Form 10H), which corrected a previous bank error. The Tribunal noted that the AO’s approach was too technical and ignored the real-life context of gift receipt and clearing cycles.

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