[Opinion] Gifts Without Trail? Think Again

Meenakshi Subramaniam – [2026] 184 taxmann.com 451 (Article)

At a tax conference, the speaker asked:

“Now that gift deed is not accepted as proof, after Shilpa Shetty’s case, what will you do ?”

One man said:

“I will ask a detective to find out whether the donor can afford a gift.”

Another fellow said:

“I will risk fights with my father-in-law, mother-in-law and brother-in-law by asking for their bank statements, as they alone give gifts.”

Lastly, one cheeky guy said:

“I will, henceforth, send gifts to my wife telepathically, as it’s the thought that counts.”

In a shocking case [Shilpa Shetty Kundra v. Dy. CIT [2026] 184 taxmann.com 318 (Mum. – Trib.) the Income Tax Tribunal, Mumbai has held that gift deed is no longer a proof. PAN is also not sufficient, in gift cases.

[2026] 184 taxmann.com 318 (Mumbai – Trib.)

Shilpa Shetty Kundra
v.
Deputy Commissioner of Income Tax

The assessee being an individual and having earned income from business or profession and interest income during the assessment year under consideration, has declared her total income at Rs. 10,84,45,500/- by filing return of income dated 04.02.2021, which was selected for complete scrutiny.

The AO on perusing the capital account found that the Assessee has received gift amounting to Rs. 12,54,54,594/- and therefore asked to furnish information, such as name/address of the Donor, PAN, amount, mode of payment, relationship with Donor and evidence with relation thereto.

The Assessee filed her reply dated 09.03.2022, interalia claiming that a gift has been received from her husband Shri Ripusudan Kundra for the year ended 31st March, 2020 relevant to the A.Y 2020-21.

Thereafter, the AO again issued show cause notices, in response to which, the Assessee filed her reply that her husband having PAN AZUPK9777F had gifted to wife out of natural love and affection and to hold the same absolutely forever. The copy of the duly signed ‘Gift Deed’ between husband and wife dated 05.03.2020 having full name, PAN, relation, address, full Particulars, amount and signature of witness was enclosed herewith. Being the gift received from spouse, the genuineness of the above said gift was “beyond doubt.”

The AO considered the reply, but found the same, as not acceptable, mainly on the reason that in spite of repeated opportunities, the Assessee has provided only scanned copy of “gift deed” but no evidence qua mode of payment/receipt was given i.e. no bank statement of Shri Kundra and Ms. Shilpa Shetty Kundra, had been submitted, showing the transfer of funds, regarding gift amounting to Rs. 12,54,54,954/-.

The AO also observed that PAN of Shri Kundra has been provided only, at the fag end, as the case was getting barred on 30.09.2022 so that no further, enquires could be made u/s 133(6) of the Act.

Further, return of income of Shrin Kundra for A.Y 2020-21 is Rs. 27,71,020/-, which does not match with the amount Rs. 12,54,54,954/- as gift given. So, the creditworthiness of Donor could not be established, as even after repeated opportunities, Assessee did not submit any document to prove the creditworthiness of Donor. In the absence of bank statement of, the source of funds paid as gift, remained unexplained. As the source of funds received as gift, has not been explained with complete documentary evidence, the genuineness and creditworthiness of the same has not been established, as required u/s 68 of Act.

Thus, the AO ultimately added the amount of Rs. 12,54,54,594/- to the income of the Assessee, as unexplained credit u/s 68 of the Act, chargeable to tax, as per the provisions of Sec. 115BBE of the Act.

The Assessee being aggrieved challenged the said addition by filing first appeal before Ld. Commissioner. Notices u/s 133(6) were issued to her husband without providing an opportunity of being heard to check the veracity of the allegations. She submitted that to prove the identity, genuineness and creditworthiness of the transaction the following documents were submitted:

i. Copy of duly signed gift deed dated 05.03.2020 along with signature of two witnesses.

ii. Full name of Doner and Donee.

iii. Details of PAN of Doner and Donee.

iv. Relationship between the Donor and Donee.

v. Full address of Doner and Donee.

vi. Acknowledgement of Income Tax Return of Doner for AY 2020-21.

It is pertinent to note that the Assessing Officer failed to adopt the due process of law by issuing summons under section 131 of the Act for carrying out detailed investigation from the Donor, when the Assessing Officer was already having information regarding PAN details, complete residential address and Income Tax Return of the Donor.

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