Unexplained Income Addition Deleted for Properly Documented Gifts from Relatives

Clipped from: https://taxguru.in/income-tax/unexplained-income-addition-deleted-properly-documented-gifts-relatives.html

Rajneesh Narula Vs DCIT (ITAT Chandigarh)

In the case of Rajneesh Narula Vs DCIT (ITAT Chandigarh) for the assessment year 2017-18, the assessee appealed against the CIT (Appeals) decision confirming an addition of Rs. 36,05,000, treated as income from unexplained sources. The assessee had received this amount as cash gifts from close relatives, including his parents, spouse, brother, and father-in-law. He submitted affidavits from the donors and copies of their audited accounts and balance sheets reflecting the gifted amounts. The Assessing Officer did not question the creditworthiness of the donors, and the Departmental Representative failed to rebut these evidences. The ITAT held that since the gifts were received from close relatives, were documented in audited accounts, and the donors’ financial credibility was undisputed, there was no justification for the addition. Consequently, the ITAT deleted the addition and allowed the assessee’s appeal, setting aside the orders of the lower authorities. The order was pronounced on 6th November 2025.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

The present appeal has been preferred by the assessee against the order dated 10.06.2025 of the Commissioner of Income Tax (Appeals) NFAC, Delhi [in short ‘the CIT (Appeals)] pertaining to 2017-18 assessment year.

2. The assessee in this appeal is aggrieved by the action of the CIT (Appeals) in confirming the addition made by the AO of Rs.36,05,000/- by the Assessing Officer ( in short ‘the AO’) treating the said amount received from the close relatives as income of the assessee from unexplained sources.

3. At the outset, the ld. counsel for the assessee has submitted that the assessee had duly furnished the relevant evidences in the shape of affidavits of his close relatives i.e. father, mother, wife, brother and father-in-law, from whom the assessee had received gifts in cash. He has further submitted that the assessee has also furnished the copies of the audited accounts and balance sheet of the donors and the aforesaid amounts of gifts were duly reflected therein. Even the AO has not doubted the credit worthiness of the donors.

4. The ld. DR could not rebut the aforesaid factual aspects of the case.

5. In view of this, since the gifts have been received from close relatives and credit worthiness of the donors has also not been doubted and further the amounts of gifts have been duly reflected in audited accounts, therefore, in my view, there is no justification on the part of the lower authorities in making/confirming the impugned addition and the same is accordingly ordered to be deleted.

6. In the result, appeal of the assessee stands allowed.

Order pronounced on 06t^h November,2025.