This issue relates to a gift of Rs.50,000 received from the father of the assessee and a gift of Rs.50,000 from the sister-in-law. However, the assessee is unable to explain the occasion of receiving such gifts.
Following are undisputed facts in the above case:
- Gifts have been received through the banking channel
- The identity of the donors is well established.
- Both the donors, i.e., the father and sister-in-law, fall under the category of relatives provided in explanation (e) of section 56(2).
Section 56(2)(v), (vi) & (vii) –
Where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or a Hindu undivided family from any person on or after the 1st day of September 2004 59[but before the 1st day of April 2006], the whole of such sum :
Provided that this clause shall not apply to any sum of money received—
|(a)||from any relative; or|
|(b)||on the occasion of the marriage of the individual; or|
|(c)||under a will or by way of inheritance; or|
|(d)||in contemplation of death of the payer; or|
|60[(e)||from any local authority as defined in the Explanation to clause (20) of section 10; or|
|(f)||from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or|
|(g)||from any trust or institution registered under 60a[60aa[section 12AA]].]|
|Explanation.—For the purposes of this clause, “relative”61 means—|
|(i)||spouse of the individual;|
|(ii)||brother or sister of the individual;|
|(iii)||brother or sister of the spouse of the individual;|
|(iv)||brother or sister of either of the parents of the individual;|
|(v)||any lineal ascendant or descendant of the individual;|
|(vi)||any lineal ascendant or descendant of the spouse of the individual;|
|(vii)||spouse of the person referred to in clauses (ii) to (vi);]|
|62[(vi)||where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April 2006 63[but before the 1st day of October 2009], the whole of the aggregate value of such sum:|
Analysis of Section 56(2):
From a perusal of section 56 sub-section (2) as well as explanation (e), we find that sections 56(2)(v), 56(2)(vi) & 56(2)(vii) which provides a cap of the sum received without consideration by an individual or Hindu Undivided Family (HUF) to be taxed as income from other sources, if amount exceeding the cap provided in these sub-sections is received by the assessee.
However, the above sub-sections 56(2)(v), 56(2)(vi) & 56(2)(vii) shall not be applicable if any sum is received from any relative ( as defined in explanation (e) to section 56).
There is no mention about the occasion to be a necessary condition for receiving any sum from any relative.
In the instant case, the alleged gifts of Rs.50,000/-, Rs.1,00,000/- and Rs.50,000/- for A.Ys. 2004-05, 2005-06 & 2006-07 have been received from relatives of the assessee i.e. father and sister-in-law through account payee cheques/demand draft. Therefore, the same cannot be included in the income of the assessee by any cannon of law.
Hence, the above payments can not be added on account of unexplained gifts for all three assessment years.