The Mumbai bench of income tax appellate tribunal (ITAT) has set aside orders against actor Shilpa Shetty in a tax dispute involving an alleged gift of ₹12.54 crore from her husband Raj Kundra, directing a fresh examination by the assessing officer (AO).
In its order earlier this week, the tribunal held that while Ms Shetty, the assessee, had submitted certain documents, she failed to fully discharge the primary onus required under Section 68 of the Income Tax Act to prove the genuineness of the transaction.
The bench says, "...Ms Shetty, though before us has filed complete ITRs of her husband for the assessment year (AY)19-20 and AY20-21, however, failed to establish the transaction clearly. Further, she also failed to establish the source of her husband for gifting such huge amount in clear manner and with substantive documents. Even otherwise complete ITRs and the Punjab National Bank statement as filed by Ms Shetty before us were not made available before the authorities below, despite being asked specifically. Thus, in our view Ms Shetty deserve no leniency however, considering the peculiar facts and circumstances specific to the effect as well that Ms Shetty though filed certain details and documents but not discharged her prima facie onus cast under Section 68 of the Act completely by filing complete details and clarifications and relevant documents and in the absence of relevant details and documents and clarification, which she admittedly failed to file or offer, the issue involved also remained to be adjudicated in its right perspective and proper manner."
"...considering the peculiar facts and circumstances in totality for proper and just decision of the case and substantial justice, we are inclined to remand the instant case to the file of the jurisdictional AO (JAO) for decision afresh, suffice it to say by affording reasonable opportunity of being heard to Ms Shetty," ITAT says in the order.
The case relates to AY20-21, where Ms Shetty claimed to have received a gift of ₹12.54 crore from her spouse. In support, she furnished a gift deed, permanent account number (PAN) details, address, relationship proof, and acknowledgement of the donor’s income tax return (ITR).
However, the AO treated the amount as unexplained cash credit, observing that despite repeated opportunities, Ms Shetty failed to submit key documents such as the bank statements of both parties showing the actual transfer of funds. The officer also noted that Mr Kundra’s ITRs did not appear to be commensurate with the amount gifted, and that the source of funds was not established.
The commissioner of income tax (appeals) (CIT-A) upheld the addition, agreeing that Ms Shetty had not adequately proved the genuineness of the transaction.
On further appeal, the ITAT observed that even before it, Ms Shetty could only produce a joint account statement from Punjab National Bank (PNB), which did not clearly reflect the movement of the gifted amount. The tribunal noted that the gift deed and affidavits did not specify the mode of transfer, bank account details, or the source of funds.
It also pointed out discrepancies in the donor’s income disclosures, including a lack of clarity in foreign asset reporting and the absence of correlation between any alleged overseas remittance and the gift amount.
The tribunal emphasised that merely submitting a gift deed, PAN and ITR acknowledgement is not sufficient to prove the genuineness of a transaction under Section 68. A clear trail of funds and the source of the donor must be established.
At the same time, noting that some material had been placed on record and further verification was required, the ITAT set aside the orders of the lower authorities and remanded the matter back to the AO for fresh adjudication.
The tribunal directed that the case be re-examined after giving an adequate opportunity to the assessee to present supporting evidence.
(ITA No.996/M/2025 Date: 13 March 2026)
FAQs on New Income Tax Act: What Changes for Common Taxpayers
Moneylife Digital Team
23 March 2026
The income-tax (I-T) department has issued a comprehensive set of frequently asked questions (FAQs) to guide taxpayers through the transition to the Income-tax Act, 2025, which will come into effect from 1 April 2026, replacing the...
New Income Tax Rules from 1st April: HRA Exemption Extended to 8 Cities, Fewer Forms, but Landlord Disclosure Now Mandatory
Moneylife Digital Team
20 March 2026
Bringing meaningful relief for salaried taxpayers through extended house rent allowance (HRA) exemptions and simplified filing, while introducing new disclosure requirements including mandatory disclosure of landlord-tenant...
Charitable Trusts Need Not Have ‘Irrevocable’ Clause in Trust Deed for Tax Registration: Bombay High Court
Bar
and
Bench
20 March 2026
The Bombay High Court has held that charitable trusts in Maharashtra cannot be denied income tax registration or renewal merely because their trust deeds do not contain an “irrevocability” clause to expressly indicate that their...
Income Tax Department Clarifies Error in Advance Tax ‘Nudge’ Emails after Taxpayers Flag Inaccurate Transaction Details
Moneylife Digital Team
14 March 2026
Several chartered accountants (CAs) and taxpayers have reported that individuals across the country recently received 'nudge' emails from the Income Tax Department regarding advance tax payments. The emails suggested that the...
