Shri Gyanchand M. Bardia, Ahmedabad V. The Income Tax Officer, Ward - 1(2)(2), Ahmedabad

ITA 1072/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6053 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Gift; Earning of tax free income
• Section: 143(3); 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 1072/AHD/2016 (AS SESSMENT YEAR: 2012-13) GYANCHAND M. BARDIA BARDIA MANSION, KAPASIA BAZAR, AHMEDABAD 380 002 APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(2)(2), 1 ST FLOOR, PRATYAKASH KAR BHAVAN, PANJRAPOLE, AMBAWADI, AHMEDABAD RESPOND ENT PAN: ACWPB6217G /BY ASSESSEE : SHRI RAJESH C. SHAH, A.R. /BY REVENUE : SHRI V. K. SINGH, SR. D.R. /DATE OF HEARING : 14.02.2018 /DATE OF PRONOUNCEMENT : 21.02.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE CIT(A)-4, AHMEDABADS ORDER DATED 14.03.2016, IN CA SE NO. CIT(A)-4/467/WD- 1(2)(2)/15-16 (OLD APPEAL NO.: CIT(A)10/640/WD-1(2) (2)/14-15), AFFIRMING ASSESSING OFFICERS ACTION MAKING ADDITION OF RS.1, 02,00,000/- QUA GIFT RECEIVED FROM HUF, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 1072/AHD/16 [GYANCHAND M. BARDIA VS. ITO ] A.Y. 2012-13 - 2 - 2. WE ADVERT TO THE RELEVANT FACTS QUA ASSESSEES S OLE SUBSTANTIVE GRIEVANCE QUA THE GIFT IN QUESTION AMOUNTING TO RS.1,02,00,000/- RECEIVED FROM HUF ADDED BY BOTH THE LOWER AUTHORITIES U/S.68 OF THE ACT. THER E IS NO DISPUTE ABOUT THE FACT THAT THE EPONYMOUS HUF IN QUESTION CONSISTS OF ASSESSEE- KARTA, HIS WIFE RAJKUMARI AND SON RAKESH. THE ASSESSEE HAS RECEIVED THE SUM OF R S.1,02,00,000/- BY WAY OF BANKING CHANNEL ONLY. HE CLAIMED THE SAID AMOUNT T O BE A GIFT WITHOUT CONSIDERATION COVERED U/S. 56(2)(VII) OF THE ACT AS INSERTED BY THE FINANCE ACT, 2009 W.E.F. 01.10.2009. CASE RECORDS SUGGEST THAT THE A SSESSING OFFICER WENT INTO A DETAILED DISCUSSION IN ASSESSMENT ORDER DATED 11.02 .2015 TO REJECT ASSESSEES CLAIM TO BE COVERED U/S.56(2)(VII)(C), 2 ND PROVISO (A) R.W. EXPLANATION (E) THERETO DEFINING A RELATIVE OF AN INDIVIDUAL RECEIPIENT NOT INCLUD ING AN HUF AS A DONOR. MANY JUDICIAL PRECEDENT CAME TO BE QUOTED FROM ASSESSEE SIDE BEFORE THE ASSESSING OFFICER I.E. SURJIT LAL CHHABDA VS. CIT (1975) 101 ITR 776 (SC) THAT AN HUF CONSTITUTES ALL PERSONS LINEALLY DESCENDED FROM A C OMMON ANCESTOR INCLUDING THEIR MOTHERS, WIVES OR WIDOWS ALONGWITH UNMARRIED DAUGHT ERS. HIS RELIANCE ON CO- ORDINATE BENCH DECISION IN VINEETKUMAR RAGHAVJIBHAI BHALODIA VS. ITO (2011) 140 TTJ (RAJKOT) 58 ACCEPTING THE SIMILAR GIFT IN CASE OF INDIVIDUAL FROM HUF STOOD REJECTED AS PER LEGISLATIVE AMENDMENTS IN THE ABOVE STATUTORY PROVISION. ALL THIS LED TO THE IMPUGNED ADDITION BEING MADE IN ASSESSEES H ANDS. 3. THE CIT(A) CONFIRMS ASSESSING OFFICERS ACTION A S UNDER: 7.1 AS MENTIONED IN THE ASSESSMENT ORDER, THE APPE LLANT HAS SHOWN GIFT OF RS.1,02,00,000/- FROM HIS OWN HUF I.E. GYANCHAND MU LCHAND BARDIA (HUF). THE AO STATED IN THE ASSESSMENT ORDER THAT HUF CANNOT G IVE GIFT TO THE MEMBER OF THE HUF, THEREFORE, AO ASSESSED THE INCOME UNDER THE HE AD INCOME FROM OTHER SOURCES. THE APPELLANT CONTENDED THAT AS PER AMENDE D PROVISIONS OF THE ACT, THE GIFT GIVEN BY MEMBER OF THE HUF TO THE HUF IS NOT T AXABLE INCOME. THE APPELLANT RELIED UPON THE CASE LAW OF VINEETKUMAR RAGHAVJIBHA I BHALODIA V/S ITO IN ITA NO.583 (RJT) 2007 DATED 17-05-2011 DELIVERED BY THE HON'BLE ITAT BENCH, RAJKOT. 7.2 THE REASON FOR MAKING ADDITIONS AND THE SUBMISS IONS MADE BY THE APPELLANT ALONGWITH CASE LAW CITED HAVE BEEN CAREFULLY GONE T HROUGH. AS PER PROVISIONS OF THE ACT RELEVANT TO THE YEAR UNDER CONSIDERATION, GIFT FROM HUF TO ANY MEMBER OF THE HUF IS NOT EXEMPT FROM TAXABLE INCOME. IT IS OTHER WAY THAT THE GIFT FROM MEMBER TO THE HUF IS EXEMPT FROM TAX. THE APPELLANT CONTEN DED THAT IT IS IMPLIED WHEN GIFT FROM MEMBER TO HUF IS EXEMPT FROM TAX, SAME WAY GIF T FROM HUF TO MEMBER IS ITA NO. 1072/AHD/16 [GYANCHAND M. BARDIA VS. ITO ] A.Y. 2012-13 - 3 - ALSO TAX FREE. BUT THE APPELLANT FORGETS THE DIFFER ENCE THAT THE KARTA OF THE HUF MANAGES THE AFFAIRS OF THE HUF AS TRUSTEE OF THE HU F AND ON BEHALF OF OTHER MEMBERS. WHEN THE HON'BLE PARLIAMENT BROUGHT AMENDM ENT TO THE STATUTE DECLARING GIFT FROM MEMBER TO HUF AS TAX FREE, BUT IT WAS NOT CONSIDERED PROPER TO MAKE GIFT FROM HUF TO MEMBER AS TAX FREE. BECAUSE, IF SUCH PROVISIONS ARE MADE, THE KARTA OF HUF MAY MISUSE THE PROVISIONS AND GIFT THE CORPUS OF THE HUF TO HIMSELF, AS OTHER MEMBERS OF THE HUF HAVE NO CONTRO L OVER MANAGING AFFAIRS OF THE HUF. THEREFORE, CONTENTION OF THE APPELLANT IS FOUN D LEGALLY NOT ACCEPTABLE, HENCE IT IS REJECTED. 7.3 FURTHER IN A GIFT, THERE HAS TO BE GIFT DEED, O NE HAS TO BE DONOR AND OTHER SHOULD BE DONEE. DONEE SHOULD EXPRESSLY GIVEN CONSE NT ACCEPTING THE GIFT IN THE GIFT DEED. THERE IS NO SUCH DOCUMENT PRODUCED BY THE APP ELLANT. 7.4 REGARDING THE CASE LAWS RELIED UPON BY THE APPE LLANT, THE CASE LAWS PERTAIN TO THE PERIOD BEFORE THE AMENDMENT BROUGHT TO THE P ROVISIONS RELATED TO GIFT FROM MEMBER TO HUF CONSIDERED AS EXEMPT FROM TAX. THEREF ORE, WITH DUE RESPECT TO THE HIGHER JUDICIAL AUTHORITY, THE CASE LAW CITED BY TH E APPELLANT IS NOT FOUND RELEVANT TO THE APPELLANT'S CASE. THEREFORE, IT IS NOT RELIE D UPON. 7.5 AS DISCUSSED ABOVE, THE ADDITIONS MADE BY THE A O BY REJECTING THE CLAIM OF THE APPELLANT AND TREATING INCOME UNDER THE HEAD IN COME FROM OTHER SOURCES IS FOUND JUSTIFIED, HENCE CONFIRMED. THIS GROUND OF AP PEAL IS DISMISSED. 4. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CON TENDS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW OR AS WELL AS ON FACT S IN REJECTING ASSESSEES GIFT CLAIM BEING RECEIVED FROM THE HUF IN QUESTION COMPRISING OF THE THREE FAMILY MEMBERS ONLY. HE QUOTES HONBLE APEX COURTS JUDGMENT (SUP RA) THAT THE INCOME TAX ACT DOES NOT POSTULATE A SEPARATE DEFINITION OF AN HUF AS THE SAME HAS TO BE APPLIED AS IN HINDU LAW. MR. SHAH SEEKS TO EMPHASIZE THAT THE OTHER TWO HUF MEMBERS I.E. ASSESSEE/KARTAS WIFE AND SON (SUPRA) ARE ALREADY C OVERED IN RELATIVE DEFINITION CLAUSES A AND E OF THE EXPLANATION (E) (SUPRA). HE STATES ASSESSING OFFICER AND THE CIT(A) HAVE COMMITTED BOTH ILLEGALITY AS WELL A S IRREGULARITY IN ASSESSING THE SUM IN QUESTION U/S.68 OF THE ACT. HE FILES A PAPE R BOOK COMPRISING OF ASSESSEES SUBMISSIONS DATED 17.08.2015 FILED BEFORE THE CIT(A ), HUFS BANK PASS BOOK INDICATING RELEVANT SUM TRANSFER, ASSESSES LETTER DATED 10.12.2015 SUBMITTED IN REMAND PROCEEDINGS, HUFS BANK PASS BOOK FROM 13.03 .2012 TO 23.03.2012, LETTER DATED 10.01.2016 IN CONTEXT OF ASSESSING OFFICERS VERIFICATION, ASSESSING OFFICERS REMAND REPORT AND SUBMISSIONS DATED 01.02.2016 AGAI NST THE REMAND FINDINGS ALONGWITH THE ABOVE CASE LAWS AS WELL AS OTHER CO-O RDINATE BENCHS ITA NO. 1072/AHD/16 [GYANCHAND M. BARDIA VS. ITO ] A.Y. 2012-13 - 4 - DECISIONS HARSHADBHAI DAHYALAL VAIDHYA (HUF) VS. IT O (2013) 155 TTJ (AHD) 71, MUMBAI CO-ORDINATE BENCH DECISION IN SHRI HEMAL D. SHAH VS. DCIT DATED 08.03.2017 IN ITA NO.2627/MUM/2015 AND DCIT VS. ATE EV V. GALA IN ITA NO.1906/MUM/2014 DATED APRIL 19, 2017. HE THEREFOR E SEEKS ACCEPTANCE OF INSTANT APPEAL. 5. MR. SHAHS LATTER CONTENTION AS PER ASSESSES PL EADINGS IS THAT BOTH THE LOWER AUTHORITIES HAVE NOT DECIDED HIS ALTERNATIVE SUBMIS SION TO BE COVERED U/S.10(2) OF THE ACT. LEARNED COUNSEL IS FAIR ENOUGH IN NOT PRE SSING FOR ASSESSEES THIRD SUBSTANTIVE GROUND SEEKING INTEREST DEDUCTION OF RS .5,819/- CLAIMED U/S. 57(III) OF THE ACT. 6. LEARNED DEPARTMENTAL REPRESENTATIVE APPEARING AT REVENUES BEHEST STRONGLY SUPPORTS BOTH THE LOWER AUTHORITIES FINDI NGS ADDING ASSESSEES ALLEGED GIFT AMOUNT OF RS.1,02,00,000/- RECEIVED FROM HIS HUF. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. CASE FILE PERUSED. THE FIRST DISPUTE BETWEEN THE PARTIES IS QUA VALIDITY OF ASSESSEES GIFT CLAIM AS RECEIVED FROM THE HUF AMOUNTING TO RS.1,02,00,00 0/- COMING THROUGH BANKING CHANNEL. BOTH THE LOWER AUTHORITIES ARE OF THE VIE W THAT AN HUF DOES NOT COME UNDER THE SPECIFIED CATEGORY OF A RELATIVE IN SECTI ON 56(2)(VII) AS APPLICABLE W.E.F. 01.10.2009. THE ASSESSEES MAIN RELIANCE IS ON THI S TRIBUNALS RAJKOT BENCH DECISION IN VINEETKUMAR RAGHAVJIBHAI BHALODIA VS. I TO (SUPRA) ACCEPTING A SIMILAR GIFT CLAIM OF INDIVIDUAL ASSESSEE FROM HUF. THE RE VENUE HAS PREFERRED TAX APPEAL NO. 1326/2011 AGAINST THE SAME BEFORE THE HONBLE J URISDICTIONAL HIGH COURT. THE SAME STOOD ADMITTED ON 23.10.2012 FOR FINAL ADJUDIC ATION. THE FACT HOWEVER REMAINS THAT MUCH WATER HAS FLOWN DOWN THE STREAM S INCE THE ABOVE CO-ORDINATE BENCH DECISION. THE ASSESSMENT YEAR THEREIN IS 2005 -06. RELEVANT STATUTORY PROVISION AT THAT POINT OF TIME WAS SECTION 56(2)(V ) OF THE ACT. THIS FOLLOWED CLAUSE (VI) IN SECTION 56(2) INCREASING THE AMOUNT OF RS.50,000/- FROM EARLIER LIMIT OF RS.25,000/- AS APPLICABLE UPTO 01.10.2009. THEN CAME CLAUSE (VII) W.E.F. ITA NO. 1072/AHD/16 [GYANCHAND M. BARDIA VS. ITO ] A.Y. 2012-13 - 5 - 01.10.2009 SPECIFYING THE SAME TO BE APPLICABLE BOT H IN CASE OF AN INDIVIDUAL AS WELL AS HUF RECIPIENTS. THE LEGISLATURE SUBSTITUTE D CLAUSE (E) TO EXPLANATION IN SECTION 56(2)(VII) DEFINING THE TERM OF RELATIVE TO BE APPLICABLE IN CASE OF AN INDIVIDUAL ASSESSEE AS WELL AS HUF; WITH RETROSPECT IVE EFFECT FROM 01.10.2009. THE ASSESSEE IS FAIR ENOUGH IN NOT DISPUTING THE FACT T HAT THE FORMER CATEGORY IN CLAUSE (I) OF (E) DEFINING A RELATIVE QUA AN INDIVIDUAL RECI PIENT DOES NOT INCLUDE AN HUF AS A DONOR. THE LEGISLATURE HAS INCORPORATED CLAUSE (II ) THEREIN TO DEAL WITH AN INSTANCE OF AN HUF DONEE ONLY RECEIVING GIFTS FROM ITS MEMBE RS. WE REFER TO BOARDS CIRCULAR NO. 1/2011 R.W. EXPLANATORY CIRCULAR FOR F INANCE ACT, 2009, MAKES IT CLEAR IN LATTERS CLAUSE NO.24.2 THAT SECTION 56(II) IS AN A NTI-ABUSE PROVISION. WE ALSO QUOTE HONBLE APEX COUTS JUDGMENT IN CIT V. SODRA DEVI [ 1957] 32 ITR 615 (SC), SMT. TARULATA SHYAM V. CIT (1977) 108 ITR 345 (SC) AND K ESHAVJI RAVJI & CO. V. CIT (1990) 183 ITR 1 (SC) TO OBSERVE THAT PRINCIPLES OF LITERAL INTERPRETATION IN RESPECT OF THE RELEVANT CONTEXT VIS--VIS THE LEGISLATION I NTENTION HAVE TO BE APPLIED HERE AS THERE IS NO AMBIGUITY IN DEFINITION OF A RELATIVE IN RESPECT TO AN INDIVIDUAL DONEE IN THE ABOVE DEFINITION CLAUSE. COUPLED WITH THIS, THE LEGISLATURE ITSELF HAS ACCEPTED AN HUF TO BE A DONEE IN CLAUSE (II) OF THE RELATIV ES DEFINITION. WE APPLY NECESSARY IMPLICATION PRINCIPLE TO CONCLUDE IN THES E FACTS THAT THE LEGISLATIVE INTENT IS VERY CLEAR THAT AN HUF IS NOT TO BE TAKEN AS A D ONOR IN CASE OF AN INDIVIDUAL RECIPIENT. LEARNED COUNSELS RELIANCE ON SURJIT LA L CHHABDA (SUPRA) IS THEREFORE NOT ACCEPTABLE IN THIS PECULIAR LEGISLATIVE BACKDROP OF FACTS AND CIRCUMSTANCES. LEARNED CO-ORDINATE BENCH (SUPRA) SEEM TO HAVE FOLLOWED BH OLADIA CASE LAW WHICH IS NO MORE APPLICABLE IN VIEW OF SUBSEQUENT LEGISLATIVE D EVELOPMENTS VIDE FINANCE ACT, 2012 W.E.F. 01.10.2009 (SUPRA). WE THUS DO NOT TRE AT THE SAME AS FINDING PRECEDENTS AS PER (1993) 202 ITR 222 (AP) CIT VS. B. R. CONSTR UCTIONS (FB). THE ASSESSEES FORMER PLEA OF HAVING RECEIVED A VALID GIFT FROM HI S HUF IS THEREFORE DECLINED. 8. LEARNED COUNSEL AT THIS STAGE REFERS TO ASSESSE S ALTERNATIVE PLEA THAT THE CIT(A) HAS NOT ADJUDICATED THE LATTER GROUND THAT T HE AMOUNT IN QUESTION IS EXEMPT U/S.10(2) OF THE ACT. WE FIND NO MERIT IN THE INST ANT ALTERNATIVE PLEA AS WELL SINCE A GIFT SUM WHICH IS NOT ALLOWABLE UNDER THE RELEVANT SPECIFIC CLAUSE CANNOT BE ITA NO. 1072/AHD/16 [GYANCHAND M. BARDIA VS. ITO ] A.Y. 2012-13 - 6 - ACCEPTED TO BE AN EXEMPT INCOME U/S.10(2) OF THE AC T. WE THUS TREAT INSTANT LATTER PLEA TO BE MAINLY TECHNICAL IN NATURE DEVOID OF MER IT. 9. THIS ASSESSEES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 21 ST DAY OF FEBRUARY, 2018.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 21/02/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 4 5 / GUARD FILE. BY ORDER / . // . /0