Cash Gift to be taxed in year in which it was received and not in year it was Traced by Department: ITAT

Cash Gift to be taxed in year in which it was received and not in year it was Traced by Department: ITAT

DCIT, Lucknow Vs. Gaurav Agarwal

(Order pronounced in the open court on 07/06/2022)

The assessee had received cash gifts of Rs. 5,38,000 in the name of his minor son. The Assessing Officer issued a show cause notice to explain the cash gift received of Rs. 5,38,000 by minor son on the occasion of his birthday. In the reply, the assessee submitted that part of the cash gift received was spent on organizing the get-together by family members and the remaining amount was within the limit of provisions of Section 56 of the Act. The Assessing Officer held that the cash gift received by the minor son falls in the ambit of Section 56(1)(vii) of the Act and thus added the same to the income of the assessee. Appeal before CIT(A): It was submitted before the ld. CIT(A), a specific ground was taken that the amount of Rs. 5,38,000 falls in the previous year 2014-15 relevant to the AY 2015-16 but the ld. CIT(A) instead of deleting the addition held that since the diary was seized in F.Y. 2016-17 relevant to the AY 2017-18, therefore the addition is sustained. Appeal before ITAT: Tribunal found that the assessee in his written submissions before ld. CIT(A) had specifically raised the issue of the year of tax of such gift, which is apparent from the order of ld. CIT(A), where he has reproduced the written submissions of the assessee. It was held that ld. CIT(A) instead of deleting the addition, which falls in the AY 2015-16 sustained the addition and did not consider the submissions of the assessee. The gift was received in the previous year 2014-15 which falls in AY 2015-16 which was admitted by both the parties and the present case pertains to AY 2017-18, therefore, in this year the gift received in AY 2015-16 cannot be taxed, therefore, the grounds taken by the assessee were accepted and the appeal filed by the assessee was allowed. Therefore, the appeal filed by the assessee was allowed. To Read Judgment Download PDF Given Below: