The Income Tax Appellate Tribunal (ITAT) has exonerated UP Chief Minister Mayawati, accepting her contention that the gifts received by her "out of natural love" and "affection" cannot be treated as taxable income. The BSP chief had declared Rs 13.29 lakh as her income for the assessment year 2003- 04.

ITAT bench of I.P. Bansal and R.C. Sharma on December 21 last year passed an order quashing the order of the Commissioner of Income Tax (CIT) Delhi (central I) to reopen the Dalit leader's case. "CIT was wrong in exercising his jurisdiction u/ s 263, as assessment order passed by the assessing officer (AO) was neither erroneous nor prejudicial to the interests of revenue," the ITAT order said.

Mayawati was similarly let off by the ITAT on November 30, 2007, in an income tax assessment case, which caused a lot of political hue and cry. But the IT department had challenged the ITAT order in the Delhi High Court.

However, the Union Finance Ministry chose not to challenge similar orders of the ITAT that gave a clean chit to External Affairs Minister Pranab Mukherjee and Railway Minister Lalu Prasad in I-T cases.

While the previous income tax case pertained to the normal scrutiny of Mayawati's earnings for 2003- 2004, in this case the CIT had exercised his powers vested in Section 263 of the I- T Act of 1961 to reopen the case of the same year on the grounds that the gifts she had received were because of her vocation or profession - politics.

The CIT, in his order of March 31 last year, had also said that the assessment order of Mayawati's I-T returns was "erroneous" and "prejudicial to the interest of revenue". The CIT cited an example and said the AO failed to look into the fact that one of the donors had given her a gift on the directions of late BSP president Kanshi Ram and also since she had become UP chief minister. The CIT treated these gifts as income earned from the profession of politics.

The Dalit leader's counsels, Rakesh Gupta and Ashwani Taneja, challenged the CIT order in the ITAT on the grounds that the commissioner had "erred in law and on facts" in holding that the AO did not examine claim of gifts from O.P. Khandaria and Ajay Agarwal and did not conduct proper inquires during the course of assessment.

Mayawati had also challenged that the gifts from the two persons should be treated as "income from other sources". The March 30, 2006, assessment order stated that Mayawati and her family members had received gifts to the tune of Rs 6.18 crore. "From the perusal of details filed by assesse (Mayawati) and her family, it was noted by the AO that 129 people had donated the gifts ranging between Rs 2 lakh to Rs 10 lakh to assesse and her family members on different dates and out of the total gifts of Rs 13.10 crore, gifts worth Rs 9.78 crore were received by them between April 2002 and September 2003," the ITAT order said.

"It was noted that assesse had received gifts worth Rs 2.97 crore, which included immovable properties," the order added.

Among others, the BSP chief had received a gift of Rs 1 lakh from advocate Khandaria, who claimed that he paid Mayawati due to "natural love" and "affection" he has for her ever since she was his student at the law college.

The other contentious donor was Agarwal, who is the grandson of Seth Mukund Lal - the promoter of renowned Mukund Steel Ltd. Agarwal gave her a gift to the tune of Rs 10 lakh, again out of " natural love, affection and respect" for the excellent work she has done for the downtrodden.

According to the ITAT judgement, Mayawati's counsel Gupta also said that "the AO was conscious about the gifts received by the assesse (BSP chief) from various persons and wherever the AO was satisfied, the addition was not made in the order".