The AO says my gift is taxable because there is no registered gift deed. Is a deed required?
No. The exclusion for a receipt from a relative turns on the relationship, not on the paperwork. Rs. 80 lakh that came to the assessee through banking channels from his sister's husband was outside the charge although no contemporaneous deed existed - the deed was drawn up nine years later before a notary abroad - and the whole addition sustained by the first appellate authority was deleted. The Tribunal gave a second reason as well: the Gift-tax Act has not been in operation since 1 October 1998, so no deed is called for. Questions about where the donor's own money came from are questions for the donor.
Decided by the ITAT (ITAT Kolkata Bench 'C' - George Mathan (Judicial Member) and Rakesh Mishra (Accountant Member); order delivered by Rakesh Mishra, AM; ITA No. 2199 (Kol.) of 2024; AY 2012-13) on 2025-11-04, reported as [2025] 180 taxmann.com 265 (Kol.)(Trib.); (2025) 215 ITD 675 (Kol.)(Trib.); (2026) 134 ITR (Trib.) 510 (Kol.)(Trib.); ITA No. 2199 (Kol.) of 2024; AY 2012-13. It bears on section 56(2)(vii) of the Income Tax Act 1961, in Gifts, Shares & Angel Tax and Evidence & Burden of Proof matters.
Two recurring departmental objections are dealt with here in one order. The first is the absence of a deed, which the officer treats as showing the gift is not genuine; the Tribunal's answer is that the statute conditions the exclusion on the donor being a relative and on nothing else. The second is the source-of-source enquiry, which the Tribunal put where it belongs - on the donor, not the recipient. The relationship still has to be proved, and the banking trail is what proves the receipt.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The assessee, a non-resident, returned Rs. 20,28,740 for AY 2012-13. After summons under s.131 from the investigation wing on large-value transactions and a notice under s.133(6), the case was reopened under s.148 and the total income assessed at Rs. 1,50,28,740 with a demand of Rs. 69,82,460. The first appellate authority deleted Rs. 50 lakh as a transfer between the assessee's own accounts and confirmed a total of Rs. 1,00,28,740 - that is, an addition of Rs. 80 lakh sustained. That Rs. 80 lakh had been credited directly into the assessee's Kotak Mahindra Bank account from the non-resident external account of Mr Sajal Kundu, the husband of the assessee's sister, through banking channels in 2011-12. A gift deed was made on 4 August 2020, notarised before a notary in California, recording that transfer. The objections taken below were that the deed was executed abroad and not in India, that it did not bear the recipient's signature and that it was made nine years after the transaction, which was said to put its genuineness in question; and that of two deposits into the donor's account - Rs. 23,41,630.36 on 14 December 2011 from the sale of a mutual fund and Rs. 55,00,000 on 20 December 2011 - the source of the Rs. 55 lakh was unexplained. The Rs. 55 lakh is that deposit into the donor's account, not the addition made on the assessee.
The appeal was allowed and the whole Rs. 80 lakh sustained by the first appellate authority was deleted; nothing was restored to the Assessing Officer. Section 56 does not require a valid gift deed: the section itself provides that a sum received from a relative as defined is not liable to be assessed under it, and the source of the amount being from a relative was not in question (para 10). A second and independent reason is given at para 8 - for the purposes of s.56 there is no need or requirement of any gift deed, the Gift-tax Act having ceased to operate from 1 October 1998. The donor is the spouse of the assessee's sister, and para 8 holds in terms that the spouse of the sister of the assessee is covered as a relative: the limb is the entry for the spouse of a person referred to in the earlier items, read with the entry for a brother or sister of the individual, and not the entry for a brother or sister of the spouse. On the unexplained Rs. 55 lakh the Tribunal held that any addition on that account lay in the hands of the brother-in-law and not in the hands of the assessee (para 12).
The Tribunal rested the exclusion on a single fact - that the sum was received from a relative as defined - and declined to add a documentary condition the statute does not contain (para 10). It gave a second, independent reason at para 8: the Gift-tax Act has not been in operation since 1 October 1998, so no deed is called for. Its criticism of the assessment is that the Assessing Officer questioned the validity of the deed without examining whether the source of the amount received from the relative had been validly explained (para 9), and it recorded against the Revenue that the Assessing Officer made no comment in the remand report when the documents were forwarded to him by the first appellate authority under letters of 17 November 2022 and 3 May 2023. On the source of the donor's own deposit, the first appellate authority had dismissed the ground because the source of the Rs. 55 lakh from the sale of a mutual fund remained unexplained, without even stating in which year the mutual fund investment was made; the Tribunal held that any addition on that account lay in the donor's hands. Following Atul H. Patel, and the documentary evidence of receipt from a relative having been furnished and the money having come through banking channels, there was no occasion to insist on a gift deed (para 13).
However, section 56 of the Act for exemption from assessing any sum received which exceeds Rs. 50,000/-, does not require a valid gift deed but it is provided in the section itself that if the amount is received from a relative as defined therein, the same is not liable to be assessed u/s 56 of the Act.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. The exclusion for a receipt from a relative turns on the relationship, not on the paperwork. Rs. 80 lakh that came to the assessee through banking channels from his sister's husband was outside the charge although no contemporaneous deed existed - the deed was drawn up nine years later before a notary abroad - and the whole addition sustained by the first appellate authority was deleted. The Tribunal gave a second reason as well: the Gift-tax Act has not been in operation since 1 October 1998, so no deed is called for. Questions about where the donor's own money came from are questions for the donor. This was decided by the ITAT (ITAT Kolkata Bench 'C' - George Mathan (Judicial Member) and Rakesh Mishra (Accountant Member); order delivered by Rakesh Mishra, AM; ITA No. 2199 (Kol.) of 2024; AY 2012-13) and bears on section 56(2)(vii) of the Income Tax Act 1961. It is reported as [2025] 180 taxmann.com 265 (Kol.)(Trib.); (2025) 215 ITD 675 (Kol.)(Trib.); (2026) 134 ITR (Trib.) 510 (Kol.)(Trib.); ITA No. 2199 (Kol.) of 2024; AY 2012-13. Two recurring departmental objections are dealt with here in one order. The first is the absence of a deed, which the officer treats as showing the gift is not genuine; the Tribunal's answer is that the statute conditions the exclusion on the donor being a relative and on nothing else. The second is the source-of-source enquiry, which the Tribunal put where it belongs - on the donor, not the recipient. The relationship still has to be proved, and the banking trail is what proves the receipt. If it applies to you, the first step is this: Prove the relationship first and the documentation second - the donor's identity, the family link and the banking trail do the work that a deed is assumed to do.
The assessee, a non-resident, returned Rs. 20,28,740 for AY 2012-13. After summons under s.131 from the investigation wing on large-value transactions and a notice under s.133(6), the case was reopened under s.148 and the total income assessed at Rs. 1,50,28,740 with a demand of Rs. 69,82,460. The first appellate authority deleted Rs. 50 lakh as a transfer between the assessee's own accounts and confirmed a total of Rs. 1,00,28,740 - that is, an addition of Rs. 80 lakh sustained. That Rs. 80 lakh had been credited directly into the assessee's Kotak Mahindra Bank account from the non-resident external account of Mr Sajal Kundu, the husband of the assessee's sister, through banking channels in 2011-12. A gift deed was made on 4 August 2020, notarised before a notary in California, recording that transfer. The objections taken below were that the deed was executed abroad and not in India, that it did not bear the recipient's signature and that it was made nine years after the transaction, which was said to put its genuineness in question; and that of two deposits into the donor's account - Rs. 23,41,630.36 on 14 December 2011 from the sale of a mutual fund and Rs. 55,00,000 on 20 December 2011 - the source of the Rs. 55 lakh was unexplained. The Rs. 55 lakh is that deposit into the donor's account, not the addition made on the assessee. The matter was decided on 2025-11-04 by the ITAT (ITAT Kolkata Bench 'C' - George Mathan (Judicial Member) and Rakesh Mishra (Accountant Member); order delivered by Rakesh Mishra, AM; ITA No. 2199 (Kol.) of 2024; AY 2012-13). On those facts the ITAT held as follows. The appeal was allowed and the whole Rs. 80 lakh sustained by the first appellate authority was deleted; nothing was restored to the Assessing Officer. Section 56 does not require a valid gift deed: the section itself provides that a sum received from a relative as defined is not liable to be assessed under it, and the source of the amount being from a relative was not in question (para 10). A second and independent reason is given at para 8 - for the purposes of s.56 there is no need or requirement of any gift deed, the Gift-tax Act having ceased to operate from 1 October 1998. The donor is the spouse of the assessee's sister, and para 8 holds in terms that the spouse of the sister of the assessee is covered as a relative: the limb is the entry for the spouse of a person referred to in the earlier items, read with the entry for a brother or sister of the individual, and not the entry for a brother or sister of the spouse. On the unexplained Rs. 55 lakh the Tribunal held that any addition on that account lay in the hands of the brother-in-law and not in the hands of the assessee (para 12).
The Tribunal rested the exclusion on a single fact - that the sum was received from a relative as defined - and declined to add a documentary condition the statute does not contain (para 10). It gave a second, independent reason at para 8: the Gift-tax Act has not been in operation since 1 October 1998, so no deed is called for. Its criticism of the assessment is that the Assessing Officer questioned the validity of the deed without examining whether the source of the amount received from the relative had been validly explained (para 9), and it recorded against the Revenue that the Assessing Officer made no comment in the remand report when the documents were forwarded to him by the first appellate authority under letters of 17 November 2022 and 3 May 2023. On the source of the donor's own deposit, the first appellate authority had dismissed the ground because the source of the Rs. 55 lakh from the sale of a mutual fund remained unexplained, without even stating in which year the mutual fund investment was made; the Tribunal held that any addition on that account lay in the donor's hands. Following Atul H. Patel, and the documentary evidence of receipt from a relative having been furnished and the money having come through banking channels, there was no occasion to insist on a gift deed (para 13). In the words reproduced by the source cited on this page: "However, section 56 of the Act for exemption from assessing any sum received which exceeds Rs. 50,000/-, does not require a valid gift deed but it is provided in the section itself that if the amount is received from a relative as defined therein, the same is not liable to be assessed u/s 56 of the Act." The decision followed or applied Atul H. Patel v. ITO [2022] 138 taxmann.com 454/195 ITD 297 (Ahd.)(Trib.) - followed at para 13.
It was decided by the ITAT on 2025-11-04 and is reported as [2025] 180 taxmann.com 265 (Kol.)(Trib.); (2025) 215 ITD 675 (Kol.)(Trib.); (2026) 134 ITR (Trib.) 510 (Kol.)(Trib.); ITA No. 2199 (Kol.) of 2024; AY 2012-13. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 56(2)(vii), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the whole Rs. 80 lakh sustained by the first appellate authority was deleted; nothing was restored to the Assessing Officer. Section 56 does not require a valid gift deed: the section itself provides that a sum received from a relative as defined is not liable to be assessed under it, and the source of the amount being from a relative was not in question (para 10). A second and independent reason is given at para 8 - for the purposes of s.56 there is no need or requirement of any gift deed, the Gift-tax Act having ceased to operate from 1 October 1998. The donor is the spouse of the assessee's sister, and para 8 holds in terms that the spouse of the sister of the assessee is covered as a relative: the limb is the entry for the spouse of a person referred to in the earlier items, read with the entry for a brother or sister of the individual, and not the entry for a brother or sister of the spouse. On the unexplained Rs. 55 lakh the Tribunal held that any addition on that account lay in the hands of the brother-in-law and not in the hands of the assessee (para 12). It arises in Gifts, Shares & Angel Tax and Evidence & Burden of Proof matters, on section 56(2)(vii) of the Income Tax Act 1961, and was decided by ITAT Kolkata Bench 'C' - George Mathan (Judicial Member) and Rakesh Mishra (Accountant Member); order delivered by Rakesh Mishra, AM; ITA No. 2199 (Kol.) of 2024; AY 2012-13. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Route the gift through banking channels and keep the remittance advices; here the money moved bank to bank from the donor's account into the recipient's ordinary bank account, and that trail is what carried the case. Where the officer asks for the donor's source of funds, take the point that the enquiry lies against the donor and not against the recipient - any addition on that account is to be made in the donor's hands. Identify the limb of the Explanation on your own facts: the husband of the assessee's sister comes in as the spouse of a brother or sister of the individual, which is a different entry from a brother or sister of the spouse. Where documents are filed in remand proceedings, hold the Revenue to the remand report - the Assessing Officer's silence on the documents forwarded to him counted against him here.
Validity check could not be completed. Unverified. The order has been read in full and nothing on its record shows any later judicial treatment; the other records returned alongside it are commentary articles, which are not treatment. The order was about nine months old at the time of this reading, so silence is unsurprising and proves nothing either way. The requirement for good law is not met and the status stays where it is. Two things now strengthen the entry without touching the status: the decision no longer stands alone, since it follows Atul H. Patel v. ITO [2022] 138 taxmann.com 454/195 ITD 297 (Ahd.)(Trib.) at para 13 and the case review records it as followed, and the ratio can be quoted from the court rather than from a reporter's paraphrase. One thing weakens it and should be published: the order is internally loose on the charging clause. The year in issue is AY 2012-13 and the provision reproduced at para 7 and applied throughout is s.56(2)(vii), but the concluding para 13 refers to the exemption for the purpose of s.56(2)(x), and the submission recorded at para 11 cites the clause differently again. The order therefore cannot be cited as a considered statement about either clause number. On scope rather than supersession, s.56(2)(vii) governs receipts between 1 October 2009 and 31 March 2017; for a receipt on or after 1 April 2017 the charge is s.56(2)(x), and from 1 April 2026 it is s.92 of the Income-tax Act, 2025, which excludes a receipt from any relative on the same footing. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has been read in full. It is ITA No. 2199 (Kol.) of 2024, AY 2012-13, Kolkata Bench 'C', George Mathan (Judicial Member) and Rakesh Mishra (Accountant Member), who delivered it, decided 4 November 2025 and reported at [2025] 180 taxmann.com 265, (2025) 215 ITD 675 and (2026) 134 ITR (Trib.) 510. The surname is Mishra; the truncated form on the earlier source page was a typographical error there. Three things are now settled. The limb of the relative definition is identified at para 8: the donor is the husband of the assessee's sister, so he comes in as the spouse of a brother or sister of the individual and not as a brother or sister of the spouse. The amounts are as set out in the facts above - the sustained addition was Rs. 80 lakh and the Rs. 55 lakh is a deposit into the donor's account whose source the first appellate authority found unexplained. And the decision follows Atul H. Patel v. ITO [2022] 138 taxmann.com 454/195 ITD 297 (Ahd.)(Trib.), so the statement that no authority was relied on is withdrawn. The sentence previously quoted here was the reporting site's paraphrase and has been replaced with para 10. One defect on the face of the order should be known before it is cited: the concluding para 13 refers to the exemption for the purpose of s.56(2)(x), although the year is AY 2012-13 and the provision reproduced at para 7 and applied throughout is s.56(2)(vii). The order is internally loose on the clause number. Nobody has confirmed the order still stands. The order is internally loose on the charging clause, so it cannot be cited as a considered statement about either clause number. It does not decide anything about the donor's own position: it holds only that any addition on the unexplained Rs. 55 lakh lies in his hands, and that question was not before the Tribunal. Para 13 records that the assessee relied on several other decisions but names none of them, so that thread cannot be followed. No later decision has considered it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the whole Rs. 80 lakh sustained by the first appellate authority was deleted; nothing was restored to the Assessing Officer. Section 56 does not require a valid gift deed: the section itself provides that a sum received from a relative as defined is not liable to be assessed under it, and the source of the amount being from a relative was not in question (para 10). A second and independent reason is given at para 8 - for the purposes of s.56 there is no need or requirement of any gift deed, the Gift-tax Act having ceased to operate from 1 October 1998. The donor is the spouse of the assessee's sister, and para 8 holds in terms that the spouse of the sister of the assessee is covered as a relative: the limb is the entry for the spouse of a person referred to in the earlier items, read with the entry for a brother or sister of the individual, and not the entry for a brother or sister of the spouse. On the unexplained Rs. 55 lakh the Tribunal held that any addition on that account lay in the hands of the brother-in-law and not in the hands of the assessee (para 12).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
I received money from my HUF. Is it taxable because an HUF is not my 'relative'?
My step-sister gifted me a flat. Can the department tax it because we are not blood relations?
My mother gifted shares to my HUF. Is she a 'relative' of the HUF?
The Assessing Officer has charged my client under section 56(2)(x) on the stamp-duty difference. When he sells the property, does he pay capital gains on that same amount all over again?