ITAT Gives Son Relief in ₹13.04 Lakh Cash Deposit Case After Accepting Mother’s Gold-Sale Gift Evidence

The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has granted relief to a taxpayer whose bank cash deposits of ₹13.04 lakh were treated as unexplained income by the Income Tax Department. The tribunal accepted his explanation that the money came from a cash gift of ₹16 lakh received from his mother, who had sold her old gold jewellery.

The case involved two transactions that attracted tax scrutiny: an investment of ₹20,23,778 in immovable property and cash deposits of ₹13,04,900 in a bank account.

In its order dated October 6, 2026, in Jhutha Ram v. ITO, the tribunal accepted the supporting documents relating to the mother’s gift and directed deletion of the remaining ₹13.04 lakh addition.

Why Did the Income Tax Department Issue a Notice?

The dispute concerned Assessment Year 2012-13. The taxpayer had not originally filed an income tax return for that year.

The Income Tax Department received information indicating that he had invested ₹20,23,778 in an immovable property, including stamp duty and registration charges. It also identified cash deposits of ₹13,04,900 in his bank account.

The Assessing Officer reopened the assessment by issuing a notice under Section 148 of the Income-tax Act on March 29, 2019.

In response, the taxpayer filed his return on December 3, 2019, declaring income of ₹2,14,997.

However, the assessing officer treated both the property investment and cash deposits as unexplained and made additions to the taxpayer’s income.

Mother Sold Gold Jewellery and Gifted ₹16 Lakh

During the proceedings, the taxpayer explained that his mother had gifted him ₹16 lakh in cash on February 2, 2012.

According to his explanation, the money came from the sale of her old gold jewellery.

The supporting documents included:

• Gold jewellery valuation of ₹18,36,230 as of March 31, 2011, prepared by a registered valuer.
• Sale of 642.300 grams of gold jewellery for ₹16,10,567.
• A cash gift of ₹16 lakh from the mother to her son.
• A notarised gift deed signed in the presence of two witnesses.

The taxpayer also submitted that he deposited a total of ₹16,05,000 into his bank account between February 4 and March 31, 2012.

Why Did the Assessing Officer Question the Gift?

The tax authorities questioned the explanation on several grounds.

One concern was that the gold jewellery sale documentation mentioned the total weight of the ornaments but did not provide an item-by-item description.

The assessing officer also questioned why the sale proceeds had not first been deposited into the mother’s bank account.

Another objection related to the difference between the total jewellery weight recorded in the valuation report and the 642.300 grams actually sold.

The taxpayer’s representative argued that invoices for old jewellery transactions commonly mention the aggregate weight rather than separately describing every ornament. He also explained that the mother had sold only part of her jewellery.

CIT(A) Had Already Deleted the Property Investment Addition

The taxpayer initially appealed against the reassessment order before the Commissioner of Income Tax (Appeals), or CIT(A).

The appellate authority deleted the addition of ₹20,23,778 relating to the property investment. However, it upheld the separate addition of ₹13,04,900 concerning unexplained cash deposits.

The taxpayer then approached the Jaipur ITAT to challenge the remaining cash deposit addition.

ITAT Accepts Gift Deed and Registered Valuation Evidence

After examining the documents and submissions, the tribunal found that the gift deed clearly recorded the transfer of ₹16 lakh from the mother to her son.

The bench also considered the bank deposits made shortly after the gift, the notarised document, the signatures of two witnesses and the registered valuer’s report.

It noted that the gift had come from the taxpayer’s mother, who qualified as a relative under Section 2(41) of the Income-tax Act.

The tribunal observed that the mother had gifted part of the proceeds from selling her gold jewellery and that the transaction was supported by documentary evidence.

It therefore held that the addition made by the assessing officer was liable to be deleted.

The Jaipur ITAT allowed the taxpayer’s appeal and removed the remaining ₹13,04,900 addition.

What Does This Ruling Mean for Taxpayers Receiving Family Gifts?

The decision highlights the importance of maintaining a clear documentary trail when receiving substantial financial gifts from family members.

Although monetary gifts from specified relatives, including parents, are generally exempt under the applicable provisions of Section 56 of the Income-tax Act, the source and genuineness of a transaction may still be examined during tax scrutiny.

Documents that may help establish the nature and source of a gift include:

• A properly executed gift deed.
• Evidence identifying the donor and recipient.
• Supporting documents showing the donor’s source of funds.
• Gold valuation reports and jewellery sale invoices, where applicable.
• Bank statements and records showing the movement of money.

The ruling is based on the particular evidence and facts considered by the tribunal. It does not mean that every cash gift or unexplained bank deposit will automatically receive similar treatment.

Taxpayers should also distinguish between the tax treatment of a gift received by a family member and any separate tax implications arising from the donor’s sale of assets.