Mumbai: The Mumbai Bench of the Income do Appellate Tribunal (on it) has assumed that a Gift 30 lakh received by Bollywood actor Kushal Tandon is not fictitious from his father and cannot be treated as unexplained income.
This was one of the disputed tax issues of the financial year 2013-14 for which the actor filed an appeal with the ITAT. Had the Tribunal retained the gift as an unexplained income (technically known as ‘unexplained cash credit’), the actor would have had to pay tax on it at a whopping 83.25 per cent.
Gifts received from certain relatives (such as parents) are exempt from Income Tax (IT) under Section 56 of the IT Act. However, tax officials scrutinize gifts through a subtle lens to ensure that no foul play is involved and that unaccounted money is not being shown as gifts. If the recipient is unable to confirm the gift, it is treated as an ‘unexplained cash credit’, which is taxed at a higher rate of 60% plus a 25% surcharge and a higher rate of 6%. a punishment. The final tax rate is around 83.25%.
In this case Tandon was asked to provide document Evidence to support the gift transaction. In the year in which the gift was given, the IT return of his father showed an income of only Rs 4.12 lakh. On this basis, the IT officer treated the gift as an ‘unexplained cash credit’ and sought taxation in the hands of the actor accordingly.
Tandon submitted to ITAT that the actor’s limited earnings at that time were not enough to help him meet his expenses. Thus, his father came to the rescue of his only son and gifted this amount from his previous savings. His father, Virendra Tandon, was a regular IT payer and had disclosed gift transactions in his financial statements. A gift deed was also duly presented to the tax authorities.
However, ITAT stated that the IT department failed to take cognizance that the father had gifted the amount out of his previous accumulated savings. In its order, ITAT said, “We agree with the view of the IT officer that the income shown in the tax return of Virendra Tandon was not sufficient. However, a material fact that was lost by the lower tax authorities is that the actor’s father never said that he had gifted the amount out of his income for the year under consideration, but had clearly stated that The same was given by him out of his previous accumulated savings.” The IT department failed to verify whether the accumulated savings arose from his income over the years on which income tax was paid or from any hidden accumulated wealth. Instead, the IT officer went through the assessment, added the ITAT order. Based on all the facts presented to it, the ITAT bench of Accountants Member S Rifour Rahman and Judicial Member Ravish Sood said that 30 as unexplained cash credits The addition of Rs. lakh was devoid of any qualification.
This was one of the disputed tax issues of the financial year 2013-14 for which the actor filed an appeal with the ITAT. Had the Tribunal retained the gift as an unexplained income (technically known as ‘unexplained cash credit’), the actor would have had to pay tax on it at a whopping 83.25 per cent.
Gifts received from certain relatives (such as parents) are exempt from Income Tax (IT) under Section 56 of the IT Act. However, tax officials scrutinize gifts through a subtle lens to ensure that no foul play is involved and that unaccounted money is not being shown as gifts. If the recipient is unable to confirm the gift, it is treated as an ‘unexplained cash credit’, which is taxed at a higher rate of 60% plus a 25% surcharge and a higher rate of 6%. a punishment. The final tax rate is around 83.25%.
In this case Tandon was asked to provide document Evidence to support the gift transaction. In the year in which the gift was given, the IT return of his father showed an income of only Rs 4.12 lakh. On this basis, the IT officer treated the gift as an ‘unexplained cash credit’ and sought taxation in the hands of the actor accordingly.
Tandon submitted to ITAT that the actor’s limited earnings at that time were not enough to help him meet his expenses. Thus, his father came to the rescue of his only son and gifted this amount from his previous savings. His father, Virendra Tandon, was a regular IT payer and had disclosed gift transactions in his financial statements. A gift deed was also duly presented to the tax authorities.
However, ITAT stated that the IT department failed to take cognizance that the father had gifted the amount out of his previous accumulated savings. In its order, ITAT said, “We agree with the view of the IT officer that the income shown in the tax return of Virendra Tandon was not sufficient. However, a material fact that was lost by the lower tax authorities is that the actor’s father never said that he had gifted the amount out of his income for the year under consideration, but had clearly stated that The same was given by him out of his previous accumulated savings.” The IT department failed to verify whether the accumulated savings arose from his income over the years on which income tax was paid or from any hidden accumulated wealth. Instead, the IT officer went through the assessment, added the ITAT order. Based on all the facts presented to it, the ITAT bench of Accountants Member S Rifour Rahman and Judicial Member Ravish Sood said that 30 as unexplained cash credits The addition of Rs. lakh was devoid of any qualification.
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