In an income tax case of unexplained income, ITAT Ahmedabad ruled in favor of a father who received Rs 4 lakh as a cash gift for his son’s marriage.
Thank you for reading this post, don't forget to subscribe!
AHMEDABAD: In a judgment, the Income Tax Appellate Tribunal (ITAT) Ahmedabad provided relief to a taxpayer, Mr. Manubhai, who faced scrutiny over Rs 4.31 lakh received as cash wedding gifts for his son. While the tax department treated these as unexplained income, ITAT ruled in his favor, stressing the importance of documentation and evidence in such cases.
This case sheds light on how wedding gifts are viewed under Indian tax laws and offers valuable takeaways for taxpayers, as explained ITAT Ahmedabad on August 12, 2025.
Let’s understand the breakdown of the case and what it means for taxpayers:
How Did the Case Start?
- April 11, 2018: Manubhai filed his ITR declaring Rs 4.61 lakh, including salary and presumptive income under Section 44AD from contract work.
- AY 2011–12: Assessing Officer (AO) noticed substantial cash deposits: Rs 14.2 lakh in SBI and Rs 15 lakh in HDFC Bank.
He explained these as: Rs 14.2 lakh (contract income), Rs 9 lakh (sale of agricultural land), Rs 1 lakh (wife’s withdrawals), Rs 5 lakh (wedding gifts & savings).
AO rejected his claim for Rs 14.2 lakh (contract income) and Rs 4.31 lakh (marriage gifts), treating them as unexplained income.
- May 18, 2023: Commissioner of Appeals (CIT-A) upheld the AO’s decision.
- August 12, 2025: ITAT Ahmedabad reversed the decision, ruling in favor of Manubhai.
ALSO READ: Abetment of Suicide Case Against Judge: Govt Lawyer Found Dead in Maharashtra Court
What Did ITAT Ahmedabad Say About Wedding Gifts?
The ITAT bench, comprising Dr. BRR Kumar (Vice-President) and Siddhartha Nautiyal (Judicial Member), observed:
- Manubhai provided a complete list of persons who gave the wedding gifts.
- He also submitted the marriage invitation card and marriage certificate as proof.
- AO failed to conduct any independent inquiry to disprove these claims.
- The Tribunal noted that just because gifts were received before the actual wedding date does not automatically make them non-genuine.
- Importantly, if the gifts were fabricated, Manubhai could have easily claimed them as received on or after the wedding, but he did not. This strengthened his credibility.
Accordingly, ITAT ruled that the AO’s addition was unsustainable and allowed the appeal.
Expert Opinions on the Judgment
Mihir Tanna (Associate Director, S.K. Patodia LLP) highlighted:
- Under Section 44AD presumptive taxation, taxpayers are not required to maintain detailed books of accounts if they opt for presumptive tax.
- As for wedding gifts, the Income Tax Act exempts gifts received on the occasion of an individual’s marriage. However, this exemption does not extend to gifts received for the marriage of a child.
- In this case, the dispute was not about gift provisions but about proving the source of cash deposits.
Dr. Suresh Surana (CA) explained:
- The case underlines the need for robust documentation of wedding gifts.
- Taxpayers must maintain:
- Detailed gift registers (names, amounts, dates).
- Marriage invitation cards and certificates.
- Bank deposit slips to show gifts were received.
- Even though wedding gifts are exempt, taxpayers should declare them under “Exempt Income” in the ITR to maintain transparency.
Key Highlights for Taxpayers
- Maintain Documentation: Keep proper records of who gifted what, along with supporting documents like wedding cards, certificates, and deposit slips.
- Disclose in ITR: Even exempt income, such as wedding gifts, should be declared for transparency.
- Presumptive Tax Relief: If you file under Section 44AD, you are not required to maintain detailed books, but you must be ready with reasonable evidence of your income sources.
- Timing of Gifts Doesn’t Invalidate Them: Gifts received before the wedding date can still be genuine if backed with evidence.