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| Teacher Wins ITAT Case on ₹3.5 Lakh Gift from Daughter – A Lesson in Tax Laws |
A recent ruling by the Income Tax Appellate Tribunal (ITAT), Delhi has become a strong reminder that genuine family gifts cannot be taxed unfairly. The case involved a teacher who received a ₹3.5 lakh cash gift from her daughter. When she deposited this amount into her bank account, the Income Tax Department issued a notice under Section 148 (reassessment), questioning the source of funds.
The tax officer even added the amount back to her income under Section 68 (unexplained cash credit), arguing that the daughter had low balances and lacked financial capacity. The teacher appealed, and the matter went up to the ITAT.
ITAT’s Verdict
The ITAT ruled in favour of the teacher. It noted that:
- The donor (daughter) was a close relative, hence the gift was exempt under Section 56(2)(x).
- The teacher had provided evidence of source and relationship.
- Cash deposits and withdrawals alone could not justify rejection of the gift.
As a result, the addition under Section 68 was deleted.
Key Tax Lessons
- Gifts from relatives are exempt – Parents, children, spouses, and certain other relatives fall under the exemption list.
- Document the gift – Use a gift deed/letter and preferably transfer funds through banking channels.
- Maintain evidence – Bank statements, deposit slips, and financial history of the donor strengthen your case.
- Cash gifts attract more scrutiny – Though legal, they are harder to defend compared to digital transfers.
Why This Case Matters
The ruling proves that taxpayers should not fear unwarranted additions if they can substantiate the genuineness of a gift. It also reminds us that while family gifts are tax-free, proper documentation and proof of source are essential.
📖 Read the full Economic Times coverage here:
Teacher got Rs 3.5 lakh cash gift from daughter, fought IT notice & won at ITAT Delhi (Economic Times)