New Delhi, Sept. 28 -- Receiving a large cash gift from relatives does not by itself settle the tax treatment. When such a transaction is questioned, the recipient may have to establish who gave the money, whether the gifts were genuine and whether the donors had the financial capacity to make them.

A recent Chennai Income Tax Appellate Tribunal (ITAT) ruling has highlighted the importance of the evidence available with the recipient and the donors. The tribunal deleted a Rs.85.30 lakh addition made under section 68 of the Income-tax Act after finding that the taxpayer had produced gift deeds, income-tax returns and financial statements of the donors, while the donors themselves had confirmed the gifts before the tax department.

The rul...