PROSPERR.IO

In a significant ruling clarifying the taxability of gifts received on the occasion of marriage, the Income Tax Appellate Tribunal (ITAT), Mumbai, in the case of Dhruv Sanjay Gupta vs. Joint Commissioner of Income Tax, Range 27(1), Navi Mumbai (ITA No. 5749/MUM/2024, dated June 20, 2025), held that the timing of cheque realization—post-marriage—does not defeat the exemption under the then-applicable Section 56(2)(vii) of the Income Tax Act, 1961.

While Section 56(2)(x), which replaced Section 56(2)(vii) from April 1, 2017, now governs the taxability of gifts, the proviso exempting gifts received “on the occasion of the marriage of the individual” remains intact. This judgment, though based on the old provision, holds continued relevance for interpreting the scope of the marriage-related gift exemption under the current legal regime.

Background of the Case:

The assessee, Mr. Dhruv Sanjay Gupta, filed his return of income on July 31, 2013, declaring total income of ₹1.30 crore. During scrutiny assessment under Section 143(3), the AO made additions totaling ₹2.11 crore, treating the following gifts as taxable:

• ₹2 crore received from Mr. Anil Kumar Goel (first cousin, paternal grandfather’s side).
• ₹11.35 lakh (USD 21,000) received from Mr. Siddharth Jatia, a family friend from Singapore.

The AO's key contention was that the gifts were not received “on the occasion of marriage”, as the credit dates of these funds in the assessee’s bank account fell after the marriage date.

Core Legal Issue: Meaning of “On the Occasion of Marriage”:

Section 56(2)(vii)(b) exempts gifts received by an individual from taxation if such gifts are received on the occasion of the individual’s marriage. The AO adopted a narrow interpretation, focusing solely on the date of cheque clearance rather than the occasion of the gift. Both the Commissioner of Income Tax (Appeals), NFAC, and the AO denied the exemption, viewing the transactions as potentially sham in nature.

Key Facts Considered by the Tribunal:

• Marriage Date: December 8, 2012 (undisputed).
• First Gift:
• ₹2 crore by cheque from Mr. Anil Kumar Goel, issued on the marriage date.
• Credited to assessee’s account on December 18, 2012.
• Donor's bank account had insufficient funds on the cheque date; funds were later arranged from other relatives, including the assessee’s grandfather.
• The assessee transferred the received amount back to the grandfather for investment purposes the next day.
• Second Gift:
• USD 21,000 (₹11.35 lakh approx.) from Mr. Siddharth Jatia.
• Cheque dated December 4, 2012, i.e., prior to the marriage.
• Initially misclassified by the bank as export proceeds.
• Corrected by a later bank certificate, confirming it was a gift.

Assessing Officer's Observations:

• The AO argued the lack of funds on the cheque date and the timing of credit proved the gift was not genuinely associated with the marriage.
• The transfer of funds by the assessee to his grandfather the next day was viewed as indicative of a circular or sham transaction.
• The AO also refused to accept the corrected bank certificate for the second gift, maintaining that it was not a genuine gift.

Tribunal’s Analysis and Ruling:

1. Liberal Interpretation of "Occasion of Marriage":

The Tribunal emphasized that the term "on the occasion of marriage" must be broadly interpreted. It cannot be confined strictly to the wedding day. The key factor is the intention and context of the gift, not the banking mechanics involved.

"Cheques often take days to clear, and such delays cannot rob a genuine marriage-related gift of its character."

2. Genuineness and Financial Standing of Donors:

• Mr. Mr. Anil Kumar Goel had a net worth exceeding ₹131 crore with substantial annual income.
• Temporary low balance was not indicative of incapacity or mala fide intent.
• No evidence of layering or return of funds that would indicate tax evasion.

3. Flow of Funds Not Circular:

• The Tribunal found the assessee’s re-transfer of funds to his grandfather was for investment purposes.
• Interest earned from the investment was duly declared and taxed, supporting the transparency of the transaction.

4. Validity of Bank Clarification:

• The corrected certificate from Union Bank of India for the second gift was accepted.
• The initial misclassification was treated as an administrative error.

5. AO's Approach Criticized:

The ITAT strongly criticized the AO’s “microscopic” and “mechanical” approach, noting that it did not align with the commercial and social realities of Indian weddings.

Conclusion & Implications:

The ITAT’s decision in Dhruv Sanjay Gupta’s case reinforces a practical and purposive interpretation of tax provisions related to personal gifts. The Tribunal decisively held that gifts received in connection with marriage remain exempt, even if the bank credit or fund realization occurs slightly after the wedding date, as long as the intention and occasion are clearly linked and the gift is genuine.

Although the case pertains to Section 56(2)(vii), which applied to gifts received prior to April 1, 2017, its reasoning remains highly relevant under the current Section 56(2)(x), which continues to exempt marriage-related gifts. Taxpayers and practitioners can draw on this judgment to resist overly narrow or formalistic interpretations by revenue authorities in similar factual contexts.

Prosperr.io is a simple platform to manage your personal income tax. It helps you save and automates tax tasks. It gives you the knowledge to make smart financial choices, keeping your money where it belongs. Click here to book your FREE tax assessment call

Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. Readers are advised to consult with a qualified tax advisor or legal professional for specific advice tailored to their individual circumstances, particularly regarding reassessment proceedings and claiming refunds. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the content of this article.