The Bombay bench of the Income Tax Appellate Tribunal (ITAT) has held that a gift of Rs. 30 lakh received by actor Kushal Tandon from his father was not bogus and, therefore, could not be treated as his unexplained income. Gifts received from certain relatives (such as parents) are exempt from income-tax under section 56 of the Income-Tax Act.
If the recipient of the gift is unable to prove that it was, in fact, a gift, it is treated by the I-T department as ‘unexplained cash credit’ or unexplained income which is taxed at a very high rate of 60% plus 25% surcharge and a 6% penalty.
Kushal was asked to provide documentary evidence to support his claim that it was a gift. His father’s I-T return for the financial year (2013-14) in which the gift was made, showed an income of Rs. 4.12 lakh only. On this ground, the I-T officer held this gift as an unexplained cash credit and sought to tax it in the actor’s hand. However, the ITAT pointed out that the I-T department had failed to appreciate the material fact that the father had gifted the sum of Rs. 30 lakh out of his past accumulated savings.