Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 0806 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-04-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
25-02-2016
Assessment Year
2006-2007
Appeal Filed On
24-04-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR(SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.199(ASR)/2015 ASSESSMENT YEAR:2006-07 PAN:AFQPS6538G SMT. KANTRA SPROO VS. INCOME TAX OFFICER, L/H OF LATE SH. ARJAN NATH SAPROO WARD-3(1), C/O R-8, GROUND FLOOR, SRINAGAR. SOUTH EXTENSION PART-II, KASHMIR ( J & K ) NEW DELHI-110049. (APPELLANT) (RESPONDENT) APPELLANT BY: WRITTEN SUBMISSIONS RESPONDENT BY: SH.R.K. SHARDA, DR DATE OF HEARING: 25/02/2016 DATE OF PRONOUNCEMENT: 28/04/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07 AGAINST THE LD. CIT(A)S ACTION IN CONFIRMING THE ADDITION OF RS. 5 LACS MADE BY THE AO TO THE ASSESSEES INCOME. 2. THE FACTS ARE THAT THE ASSESSEE RECEIVED A SUM O F RS. 5 LACS FROM HIS NEPHEW SH. B.L. SAPROO. THE AO MADE THE ADDITIO N BY INVOKING THE PROVISIONS OF SECTION 56(2)(V) OF THE INCOME TAX AC T, 1961. THE LD. CIT(A) CONFIRMED THE ADDITION. 3. BEFORE THIS BENCH, AN APPLICATION UNDER RULE 26 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, HAS BEEN FILED FOR BRI NGING ON RECORD SMT. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 2 KANTI SAPROO WIFE OF THE ASSESSEE, WHO EXPIRED ON 0 9.06.2012. THE REPORT OF THE CONCERNED ITO HAS BEEN RECEIVED. THE SAID RE PORT DOES NOT CHALLENGE THE SAID APPLICATION, WHICH IS ACCOMPANIE D BY AN AFFIDAVIT OF THE SAID SMT. KANTI SAPROO. ACCORDINGLY, SMT. KANTI SAPROO IS TAKEN ON RECORD AS THE LEGAL HEIR OF THE DECEASED ASSESSEE, SH. ARJAN NATH SAPROO. 4. ON BEHALF OF THE ASSESSEE, THE FOLLOWING WRITTEN SUBMISSIONS HAVE BEEN FILED, CHALLENGING THE IMPUGNED ORDER, WHICH W RITTEN SUBMISSIONS WILL BE DEALT WITH IN EXTENSO, IN THE SUCCEEDING PA RAGRAPHS: MAY IT PLEASE YOUR HONOUR THAT THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LD. CO MMISSIONER OF INCOME TAX APPEALS IS BAD IN LAW AND IS BEING CHALLENGED ON THE BASIS OF SUBMISSIONS STATED HEREUNDER IN SERIATIM. 1. HISTORY OF THE CASE A. THE APPELLANT - LATE MR. ARJAN NATH SAPROO DURING THE FINANCIAL YEAR 2005-2006 RECEIVED A REVOCABLE GIFT OF RS.5. 00 LACS FROM HIS NEPHEW MR. B.L. SAPROO S/O MR. SOOM NATH SAPROO R/O GURGAON, HARYANA WHICH WAS RECEIVED BY CHEQUE NO 36 7629 DT. 06/03/2006 DRAWN ON STATE BANK OF INDIA, GURGAON, H ARYANA. B. THE APPELLANT DURING THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007 DECLARED THE SAID GIFT B Y WAY OF CREDIT TO HIS CAPITAL ACCOUNT IN THE BALANCE SHEE T FILED BEFORE THE LD. ASSESSING OFFICER DULY SUPPORTED BY RELEVA NT DOCUMENTARY EVIDENCE INCLUDING THE GIFT DEED EXECUT ED BY MR. B.L. SAPROO AT THE TIME OF ISSUANCE OF BANKER CHEQU E. C. THE GIFT DEED EXECUTED BY THE PARTIES INTER ALIA WA S PLACED BEFORE THE LD. ASSESSING OFFICER TO PROVE THAT THE GIFT RE CEIVED BY THE ASSESSEE IS INCOMPLETE BEING LOADED WITH A RIDER BY THE GIVER TO REVOKE AND RECEIVE BACK THE MONEY ANY TIME HE MAY C HOOSE TO AT HIS ABSOLUTE DISCRETION. (COPY OF GIFT DEED IS EN CLOSED AS ANNEXURE-1). D. THE LD. ASSESSING OFFICER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS INVOKED SECTION 56(2)(V) OF THE INCOME TAX ACT, 1961 ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 3 ON THE PRETEXT THAT MONEY RECEIVED WITHOUT CONSID ERATION BY WAY OF REVOCABLE GIFT BY THE APPELLANT FROM HIS NE PHEW MR. B.L. SAPROO AMOUNTING TO RS.5.00 LACS IS NOT COVERED BY THE DEFINITION OF THE BLOOD RELATIVES UNDER PROVISO TO SECTION 56( 2)(V) BUT OVERLOOKED THE CONTENTS OF THE GIFT DEED WHICH SPEC IFICALLY PROVIDED FOR THE DONORS EXCLUSIVE RIGHT OF REVOC ATION OF THE SAID GIFT AT ANY TIME WHICH WAS SUBJECT TO HIS ABSOLUTE DISCRETION. E. THE LD. ASSESSING OFFICER WHILE SEEKING EXPLANATION S FROM THE APPELLANT WITH REGARD TO THE GIFT U/S 56(2)(V) OF T HE ACT DID NOT TAKE COGNIZANCE OF THE GIFT DEED FILED BY THE APPE LLANT IN SUPPORT OF THE GIFT WHEREIN THE PARTIES HAD MUTUALLY AGREED THAT THE GIFT SHALL BE REVOCABLE AT THE OPTION OF DONOR AT ANY TI ME AFTER THE GIFT WAS MADE. F. THE APPELLANT FILED REPLY TO THE QUERY RAISED BY TH E LD. ASSESSING OFFICER WITH REGARD TO DEFINITION OF RELATIVE AS PR OVIDED UNDER PROVISO TO SECTION 56(2)(V) OF THE ACT WITH THE RE PLY THAT THE GIFT BY MR. B.L. SAPROO IS DULY COVERED BY THE DEFINIT ION BEING GIFT FROM BLOOD RELATION AND ALSO IS EXEMPT FROM TAX IN VIEW OF THE FACTUM THAT THE SAID GIFT WAS REVOCABLE SINCE INCEP TION. G. THE LD. ASSESSING OFFICER UNILATERALLY PROCEEDED TO HOLD THE SAID GIFT AS NOT HIT BY PROVISO TO SECTION 56(2)(V) OF T HE ACT AND PROCEEDED TO ADD THE SAME TO THE INCOME OF THE APPE LLANT IN THE COMPUTATION OF INCOME FRAMED IN THE ASSESSMENT ORDE R PASSED ON30/12/2008. H. THE APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LD. ASSESSING OFFICER FILED APPEAL BEFORE THE LD. CIT A PPEALS, J&K CIRCLE ON 30/01/2009. 2. APPEAL BEFORE THE APPELLATE AUTHORITY THE APPELLANTS APPEAL FILED BEFORE THE APPELLATE A UTHORITY WAS AGITATED ON THE FOLLOWING GROUNDS :- A. THAT THE AMOUNT OF RS.5.00 LACS RECEIVED BY THE AP PELLANT DOES NOT FALL WITHIN THE DEFINITION OF MONEY RECEIVED WI THOUT CONSIDERATION AS ENUMERATED U/S 56(2)(V) OF THE ACT AND FURTHER DOES NOT FALL WITHIN THE DEFINITION OF A GIFT AS DE FINED U/S 2(XII) OF THE GIFT TAX ACT, 1958. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 4 B. THAT THE VALID ESSENTIALS OF A GIFT WHICH HAVE TO BE COMPLIED WITH/FULFILLED TO ENABLE A TRANSACTION TO BE CALLED A VALID GIFT IS LACKING IN THIS TRANSACTION BETWEEN THE APP ELLANT AND HIS NEPHEW SINCE THE GIFT MADE BY THE NEPHEW TO HIS UN CLE WAS INCOMPLETE BEING LOADED WITH AN UNRESTRICTED POWER TO TAKE IT BACK THE NEXT MINUTE. C. THAT CONDITIONAL/REVOCABLE GIFT BEING OUTSIDE THE PREVIEW OF A VALID GIFT DOES NOT CONSTITUTE A GIFT RECEIVED BY A NY PERSON TO BE SUBJECTED TO TAX UNDER PROVISIONS OF SECTION 56(2)( V) OF THE ACT AND THEREFORE CAN NOT BE SUBJECTED TO TAX AS ANY SU M OF MONEY RECEIVED WITHOUT CONSIDERATION UNDER ANY PROVISIONS OF THE ACT. D. THAT THE APPELLANT BEING A SENIOR CITIZEN HAVING A TTAINED MORE THAN 75 YEARS OF AGE WHO IS NOT CARRYING ON ANY KI ND OF PROFESSION OR OCCUPATION AND MERELY HAD HIS SUSTENA NCE ON PENSION INCOME FROM GOVERNMENT SERVICE WHEREIN HE H AS RETIRED MORE THAN 15 YEARS BEFORE CAN NOT BE DEEMED TO BE I N RECEIPT OF ANY INCOME DIRECTLY OR INDIRECTLY BY WAY OF SUCH GI FTS RECEIVED WHICH CAN BE SUBJECTED TO TAX. E. THAT THE NOTICE OF REVOCATION OF GIFT TOGETHER WIT H DETAILS OF AMOUNTS PAID IN CONSEQUENCE THERETO AS REFUND BY TH E APPELLANT TO MR. B.L. SAPROO ON 27/03/2011 DULY EVIDENCED BY THE BANK STATEMENTS IN ITSELF PROVE CONCLUSIVELY THAT THE A MOUNT RECEIVED BY THE APPELLANT IN THE FINANCIAL YEAR 2005-2006 W AS A TEMPORARY LOAN IN THE GARB OF AN REVOCABLE GIFT. S UCH, TEMPORARY LOANS IN ITSELF DOES NOT CONSTITUTE ANY SUM OF MONEY RECEIVED WITHOUT CONSIDERATION WITHIN THE MEANING OF SECTIO N 56(V)(2) OF THE ACT AND THUS OUTSIDE THE PERVIEW OF BEING SUBJ ECT TO ANY TAX UNDER INCOME TAX ACT. 3. FINDINGS OF THE APPELLATE AUTHORITY THE LD. APPELLATE AUTHORITY WHILE DISPOSING OFF THE APPEAL FILED BY THE APPELLANT HAS DECIDED THE APPEAL AGAINST THE APPELLANT BASED ON PRESUMPTIONS AND ASSUMPTIONS WHICH ARE CHALLENGED PARA WISE AS PER THE APPELLATE ORDER PASSED :- A. THAT UNDER PARA (I) OF THE ORDER THE LEARNED COMMI SSIONER OF APPEALS HAS PROCEEDED TO HOLD THAT THE GIFT CANNOT BE REVOKED AFTER ACCEPTANCE. THER E CANNOT BE ANY GIFT DEED OF REVOCABLE GIFT AT THE OPTION OF TH E DONOR. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 5 WITH REGARD TO THE ABOVE CONCLUSION OF THE LEARNED APPELLATE AUTHORITY, THE APPELLANT SUBMITS AS UNDER :- A. THAT THERE HAS BEEN A PAYMENT OF RS.5.00 LACS BY MR . B.L. SAPROO NEPHEW OF THE ASSESSEE TO ASSESSEE HIMSELF B Y WAY OF A/C PAYEE CHEQUE. THE IMPUGNED PAYMENT IS SUBJEC T TO CONDITIONALTIES AS IMPOSED BY THE GIVER AND AS EVID ENCED BY THE DEED EXECUTED AT THAT TIME WHEREIN THE PAYMENT TRANSFERRED TO THE ASSESSEE WAS REVOCABLE AT ANY TI ME AFTER TRANSFER AT THE OPTION OF THE GIVER. THEREFORE, THE TRANSACTION OF TRANSFER OF MONEY BY NEPHEW TO HIS UNCLE DOES NO T FALL WITHIN THE DEFINITION OF A PROPER GIFT AS DEFINED U NDER VARIOUS ACTS. B. THAT THE RECIPIENT HAS NEVER BEEN VESTED WITH ABS OLUTE OWNERSHIP OF THE PROPERTY TRANSFERRED BY MR. B.L. S APROO WHICH WAS ATTACHED WITH A RIGHT OF REVOCATION WITH OUT NOTICE BY HIM SINCE IN TERMS OF THE GIFT DEED EXECUTED BY HIM AT THE TIME OF TRANSFER OF PROPERTY THE GIFT DEED INTER AL IA PROVIDED AS UNDER : G I F T - D E E D BE IT KNOWN TO ALL THAT I, BUSHAN LAL SAPROO S/O S H. SOOM NATH SAPROO R/O DEVINDER VIHAR, GURGAON, HARYANA DO HEREBY DECLARE THAT I HAVE GIFTED THE FOLLOWING SUM TO MY UNCLE - SH. ARJAN NATH SAPROO S/O PT. L ATE RAM CHAND SAPROO AS PER DETAIL GIVEN UNDER :- CHEQUE NO. & DATE DRAWN ON AMOUNT GI FTED (RS.) 367629 DT.06/03/2006 STATE BANK OF INDIA, 5,00,000/= DLF QUTAB E NCLAVE, GURGAON, HA RYANA. ---------------- TOTAL : 5,00,000/= --------------- I, FURTHER DECLARE THAT THE AMOUNT GIFTED AS SHOWN ABOVE OUT OF LOVE & AFFECTION TOWARDS HIM HAS BEEN DULY DELIV ERED TO THE DONEE WHO HAS ACCEPTED THE SAME AND HE IS FREE TO D EAL WITH THE MONEY SO GIFTED BY ME TO HIM IN ANY MANNER. I FURTHER DECLARE THAT THE ABOVE GIFT IS HOWEVER RE VOCABLE AT ANY TIME HEREINAFTER DURING MY LIFE TIME AND THE DO NEE SHALL BE BOUND TO HONOUR ANY REVOCATION HEREINAFTER OF THE SAID GIFT BY THE DONOR BY EXPRESS OR IMPLIED CONSENT. WITNESSES : 1] ____SD/-________ SD/- ---------------- ------ ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 6 ________________ [ DO NOR ] PAN : AHOPS1 245A SD/- ----------- ---------- [ DONEE ] PAN : APQPS6538G THE COPY OF GIFT DEED EXECUTED BY MR. B.L. SAPROO I S ANNEXED AS ANNEXURE-1. C. THAT THE LD. APPELLATE AUTHORITY HAS WRONGLY PROC EEDED TO CONCLUDE THAT THERE CAN NOT BE ANY GIFT DEED OF REV OCABLE GIFT AT THE OPTION OF THE DONOR. IN THIS REGARD, THE AS SESSEE SUBMITS THAT THE CONCLUSIONS AS PUT FORTH BY THE LD . APPELLATE AUTHORITY ARE UNFOUNDED ON THE FOLLOWING GROUNDS :- 1. UNDER EXPLANATION (B) TO THE PROVIS IONS OF SECTION 4(5) OF THE WEALTH-TAX ACT THE WORD IRREVOCABLE TRA NSFER HAS BEEN DEFINED UNDER THE SAID SECTION AS UNDER : (B) THE EXPRESSION IRREVOCABLE TRANSFER INCLUDES A TRA NSFER OF ASSETS WHICH, BY THE TERMS OF THE INSTRUMENT EFFECTING IT, IS NOT REVOCABLE FOR A PERIOD EXCEEDING SIX YEARS OR DURING THE LIFETIME OF THE TRANSFEREE, AND UNDER WHICH THE TRANSFEROR DERIVES NO DIRECT OR INDIRECT BENEFIT, BUT DOES NOT INCLUDE A TRANSFER OF ASSETS IF SUCH I NSTRUMENT. (I) CONTAINS ANY PROVISION FOR THE RE-TRANSFER, DIRECT LY OR INDIRECTLY, OF THE WHOLE OR ANY PART OF THE ASSETS OR INCOME THERE FROM TO THE TRANSFEROR, OR (II) IN ANY WAY GIVES THE TRANSFEROR A RIGHT TO RE-ASSU ME POWER, DIRECTLY OR INDIRECTLY, OVER THE WHOLE OR ANY PART OF THE ASSETS OR INCOME THERE FROM;] AS SUCH, THE UNILATERAL CONCLUSION OF THE LD. APPEL LATE AUTHORITY THAT A GIFT CAN NOT BE REVOCABLE AT THE OPTION OF THE DO NOR IS WITHOUT ANY BASIS AND DOES NOT STAND THE TEST OF LAW AS LAID DO WN UNDER VARIOUS ACTS. 2 THAT A GIFT U/S 122 OF THE TRANSFER OF PROP ERTY ACT 1882 HAS TO BE CONCLUSIVE AND IRREVOCABLE TO QUALIFY TO BE C LASSIFIED AS A VALID GIFT. IN EVENT OF THE GIFT BEING REVOCABL E WHOLLY OR IN PART AT THE MERE WILL OF DONOR, THE GIFT IN ITSELF IS VO ID EITHER IN PART OR IN FULL AND THEREFORE DOES NOT CONSTITUTE A VALID G IFT U/S 122 OF ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 7 THE TRANSFER OF PROPERTY ACT, 1882. TO SUPPORT THE ABOVE SUBMISSIONS THE ASSESSEE ALSO PLACES HIS RELIANCE ON THE DECIDED CASE OF BOMBAY HIGH COURT IN CGT V. DR. R. B. KAMDIN [1974] 95 ITR 476, (COPY ENCLOSED AS ANNEXURE-2) WH EREIN IT HAS BEEN HELD THAT UNDER SECTION 126 OF THE TRANSFER OF PROPERTY ACT IRREVOCABILITY OF THE GIFT IS ONE OF THE ESSENTIAL FEATURES OF THE GIFT TO QUALIFY AS A VALID TRANSFER UNDER LAW. THE PLAIN READING OF SECTION 126 OF THE TRANSFER OF PROPERTY ACT, 1882 CLEARLY STATES THAT A GIFT CAN BE REVOKED IN ANY OF THE CASES IN WHICH IF IT WERE A CONTRACT, IT MIGHT BE RESCINDED . THE FULL TEXT OF SECTION 126 OF THE TRANSFER OF PROPERTY ACT, 1882 I S REPRODUCED FOR THE READY REFERENCE OF YOUR HONOUR. SECTION 126 - WHEN GIFT MAY BE SUSPENDED OR REVOKED THE DONOR AND DONEE MAY AGREE THAT ON THE HAPPENING OF ANY SPECIFIED EVENT WHICH DOES NOT DEPEND ON THE WILL O F THE DONOR A GIFT SHALL BE SUSPENDED OR REVOKED; BUT A GIFT WHICH THE PARTIES AGREE SHALL BE REVOCABLE WHOLLY OR IN PART, AT THE MERE W ILL OF THE DONOR, IS VOID WHOLLY OR IN PART, AS THE CASE MAY BE. A GIFT MAY ALSO BE REVOKED IN ANY OF THE CASES (SAVE WANT OR FAILURE O F CONSIDERATION) IN WHICH, IF IT WERE A CONTRACT, IT MIGHT BE RESCINDED . SAVE AS AFORESAID, A GIFT CANNOT BE REVOKED. NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED TO AFFECT THE RIGHTS OF TRANSFEREES FOR CONS IDERATION WITHOUT NOTICE. ILLUSTRATIONS (A) A GIVES A FIELD TO B, RESERVING TO HIMSELF, WITH B S ASSENT, THE RIGHT TO TAKE BACK THE FIELD IN CASE B AND HIS DESC ENDANTS DIE BEFORE A. B DIES WITHOUT DESCENDANTS IN AS LIFETIME. A MA Y TAKE BACK THE FIELD. (B) A GIVES A LAKH OF RUPEES TO B, RESERVING TO HIMSEL F, WITH BS ASSENT, THE RIGHT TO TAKE BACK AT PLEASURE RS. 10,0 00 OUT OF THE LAKH. THE GIFT HOLDS GOODS AS TO RS. 90,000, BUT IS VOID AS TO RS. 10,000, WHICH CONTINUE TO BELONG TO A.. THEREFORE IN LIGHT OF ABOVE PROVISION OF LAW THE GI FT RECEIVED BY THE APPELLANT HAD BEEN VOID AB INITIO. ACCORDINGLY A GIFT WHICH IS RECOGNIZED AS VOID UNDER LAW DOES NOT TANTAMOUNT TO A VALID TRANSFER QUALIFYING FOR TAX U/S 56(2)(V)OF THE INCO ME TAX ACT, 1961. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 8 3. THAT U/S 63 OF THE INCOME TAX ACT, 1961 THE DEF INITION OF REVOCABLE TRANSFER HAS BEEN CLEARLY STATED AS UNDE R : A) A TRANSFER SHALL BE DEEMED TO BE REVOCABLE IF (I) IT CONTAINS ANY PROVISION FOR THE RE-TRANSFER D IRECTLY OR INDIRECTLY OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS TO TH E TRANSFEROR, OR (II) IT, IN ANY WAY, GIVES THE TRANSFEROR A RIGHT T O RE-ASSUME POWER DIRECTLY OR INDIRECTLY OVER THE WHOLE OR ANY PART O F THE INCOME OR ASSETS ; (B) TRANSFER INCLUDES ANY SETTLEMENT, TRUST, COVENANT, AGREEMENT OR ARRANGEMENT. 4. THAT AS PROVIDED U/S 6(2) OF THE GIFT-TAX ACT, 19 58 'WHERE A PERSON MAKES A GIFT WHICH IS NOT REVOCABLE FOR A SPECIFIED PERIOD, THE VALUE OF THE PROPERTY GIFTED SHALL BE T HE CAPITALISED VALUE OF THE INCOME FROM SUCH PROPERTY DURING THE PERIOD FOR WHICH THE GIFT IS NOT REVOCABLE' D. THAT UNDER PROVISIONS OF THE ABOVE STATED LA WS THE CONCEPT OF REVOCABLE/ IRREVOCABLE GIFT IS CLEARLY AND UNAMBIGU OUSLY DEFINED AND SUBSISTENCE OF SUCH GIFTS IS RECOGNIZED UNDER L AW. SINCE THE DONOR IS A PRINCIPLE PERSON RESPONSIBLE FOR THE GIF T, THE DONOR HAS AN OVERRIDING TITLE TO DECIDE THE TERMS OF GIFT AS TO WHETHER TO MAKE AN OUTRIGHT GIFT OR A REVOCABLE GIFT AND THE SAME IS E XPRESSLY STATED IN THE INSTRUMENT OF THE GIFT ITSELF WHICH HAS BEEN EX AMINED BY THE LD. ASSESSING OFFICER AS WELL AS BY THE APPELLATE AUTHO RITY . E. THAT THE DISTINCTION BETWEEN THE REVOCABLE AND IRREVOCABLE GIFTS HAS ITSELF BEEN DEFINED UNDER PROVISIONS OF S ECTION 63 OF THE INCOME TAX ACT, 1961 IN CLEAR CUT TERMS WHICH CLA RIFIES DISTINCTION BETWEEN PERMANENT TRANSFERS & REVOCABLE TRANSFERS DEPENDING UPON THE BASIC TERMS OF TRANSFER BETWEEN THE TRANSF EROR AND THE TRANSFEREE. THEREFORE THE FINDINGS/CONCLUSIONS C ONFIRMED BY THE LD. CIT APPEALS, THAT A GIFT CAN NOT BE REVOCABLE A RE BASELESS AND IMAGINARY & WITHOUT MANDATE OF LAW IN LIGHT OF ABOV E SUBMISSIONS AND THE POSITION DEFINED BY THE LAW. THEREFORE, THE ASSESSEE HUMBLY SUBMITS BEFORE THE H ONBLE BENCH THAT THE CONCLUSIONS OF THE LD. APPELLATE AUTHORITY IN NOT RECOGNIZING THE REVOCABLE TRANSFER RECEIVED BY THE ASSESSEE UND ER LAW IS NOTHING BUT MISCARRIAGE OF JUSTICE AND BAD IN LAW. THE ASS ESSEE ALSO SUBMITS THAT ALL SUCH REVOCABLE GIFTS WHICH ARE DIC TATED AT THE WHIMS AND FANCIES OF THE DONOR ARE OUTSIDE THE PURV IEW OF A VALID ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 9 GIFT AND THEREFORE IN OTHER WORDS CAN NOT BE CLASSI FIED AS COMPLETE GIFTS WHICH ARE NEITHER RECOGNIZED AS VALID TRANSFE RS UNDER TRANSFER OF PROPERTY ACT, 1882 OR UNDER GIFT TAX ACT, 1958 & CANNOT BE SUBJECT TO LEVY OF INCOME TAX UNDER PROVISIONS OF SECTION 56 (2)(V) OF THE ACT UNDER ANY PRETEXT. THE APPELLANT SUBMITS T HAT THE TRANSACTION BETWEEN THE ASSESSEE AND HIS NEPHEW UND ER APPEAL IS NOTHING BUT A TEMPORARY LOAN EXCHANGED BETWEEN TW O PARTIES WHICH WAS RETURNABLE TO THE GIVER AT ANY TIME FROM THE DATE GIVEN AND AS SUCH UNDER ANY INTERPRETATION OF LAW CAN NOT BE CLASSIFIED/TERMED AS MONEY RECEIVED WITHOUT CONSIDE RATION AND SUBJECTED TO LEVY OF TAX ARBITRARILY. B. THAT UNDER PARA (II) OF THE APPELLATE ORDER TH E APPELLATE AUTHORITY HAS AGAIN WRONGLY PROCEEDED TO HOLD AS UN DER :- EVEN IF IT IS NOT A PROPER GIFT THE APPELLANT IS LIABLE TO EXPLAIN THE SOURCE OF THE AMOUNT OF RS.5.00 LACS RECEIVED FROM MR. BHUSHAN LAL SAPROO, WHICH HAS NOT BEEN EXPLAINED BEFORE THE ASSESSING OFFICER. THE CONCLUSIONS OF THE LD. APPELLATE AUTHORITY ARE CHALLENGED BEING GROSSLY INCORRECT ON THE FOLLOWING GROUNDS. A. THAT THE LD. APPELLATE AUTHORITY ON THE FACE OF THE ORDER PASSED IS ITSELF IN CONTRADICTION TO WHAT HAS BEEN STATED BY HIM AT PARA 1 OF THE ORDER UNDER APPEAL BEFORE THE HONBLE BE NCH ABOUT THE VALIDITY OF THE GIFT RECEIVED BY THE ASSESSEE. THE CONCLUSIONS ARRIVED AT BY THE LD. CIT APPEALS IN THE ORDER ITSE LF THAT EVEN IF IT IS NOT A PROPER GIFT ARE IN ITSELF CONCLUSIVE TO PROVE THAT THE LD. APPE LLATE AUTHORITY WAS BY & LARGE SATISFIED WITH THE SUBMISSION OF THE ASSESSEE THAT A TRANSFER BETWEEN APPELLANT AND HIS NEPHEW IS NOT A VALID GIFT BUT A VOID TRANSFER NOT RECOGNIZED UNDER LAW A S A VALID TRANSFER BUT IN SPITE OF HAVING HIS OWN DOUBTS ABOU T THE CAPTIONED TRANSFER HAS PROCEEDED TO HOLD THAT THE P ROOF OF PAYMENT BY THE DONOR HAS NOT BEEN PROVED. THE FIND INGS OF THE LD. APPELLATE AUTHORITY IN THIS REGARD ARE GROSSLY MISLEADING AS NO SUCH COMMENTS/FINDINGS HAVE BEEN MADE BY THE LD. ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORD ER PASSED U/S 143(3) OF THE ACT THAT THE ASSESSEE AT ANY TIME HAS FAILED TO PROVE THE SOURCE OF GIFT BY THE DONOR. B. THAT THE APPELLANT SUBMITS THAT AT NO STAGE DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS CONFRONTED/ASKED TO PR ODUCE EVIDENCE WITH REGARD TO THE SOURCE OF INCOME/FUNDS BY THE DONOR ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 10 TO JUSTIFY THE AMOUNT RECEIVED BY THE APPELLANT. NO SUCH COMMENTS HAVE BEEN RECORDED BY THE LD. ASSESSING OF FICER IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS FAILED TO PROD UCE ANY EVIDENCE WITH REGARD TO THE SOURCE OF FUNDS WITH T HE DONOR. THE APPELLATE AUTHORITY IN ORDER TO COVER UP HIS OWN AP PREHENSIONS ABOUT THE VALIDITY OF THE GIFT/TRANSFER AS CLAIMED BY THE ASSESSEE HAS GROSSLY EXCEEDED HIS JURISDICTION BY WRONGLY ST ATING CONTRARY TO THOSE MATTERS NOT RECORDED IN THE ASSESSMENT ORD ER. C. THAT THE APPELLANT HAS VOLUNTARILY FURNISHED PROOF OF SOURCE AND CAPACITY OF THE DONOR DURING APPELLATE PROCEEDINGS BY ENCLOSING COPY OF THE INCOME TAX ACKNOWLEDGEMENT RETURN FOR T HE ASSESSMENT YEAR 2008-2009 FILED WITH ASSESSING OFF ICER, GURGAON, HARYANA UNDER PAN # AHOPS1245A SHOWING A RETURNED INCOME OF RS.11,16,119/= FOR THE ASSESSME NT YEAR 2008-09. THE INCOME OF THE DONOR IN ITSELF IS P ROOF OF THE FACT D. THAT MR. B.L. SAPROO HAS BEEN A RETIRED SENIOR ARMY OFFICER & THEREFORE SUFFICIENT DISPOSABLE INCOME & FUNDS TO JUSTIFY GIFT OF RS.5.00 LACS TO THE APPELLANT. FAILURE BY THE LD. ASSESSING OFFICER WITH REGARD TO NON-INVOCATION OF PROVISION S OF SECTION 68 OF THE INCOME TAX ACT, 1961 AGAINST THE DONOR DOES NOT ENTITLE THE LD. APPELLATE AUTHORITY TO PROCEED AND DECIDE AGAIN ST THE ASSESSEE ON PRESUMPTIONS ONLY. E. THE APPELLANT SUBMITS THAT THE GENERAL BELIEF ABOU T THE PROVISION OF THE SECTION 56(2)(V) OF THE ACT AT THE TIME ASSE SSMENT WAS THAT EVEN IF IT IS AN INTEREST FREE UNSECURED LOAN, SAM E SHALL ALSO BE CONSIDERED AS SUM OF MONEY RECEIVED WITHOUT CONSI DERATION WITHIN THE MEANING OF SECTION 56(2)(V) OF THE ACT. THEREFORE IT WOULD NOT MAKE ANY DIFFERENCE FOR THE APPELLANT TO PROVE THE SOURCE OF MONEY RECEIVED UNLESS IT WAS HIT BY THE P ROVISO TO SECTION 56(2)(V) OF THE ACT, .THIS POSITION IS NOW SETTLED IN THE DECISION OF CHANDRAKANT H. SHAH VS. INCOME TAX OFFI CER ITAT, MUMBAI C BENCH ITA NO. 3966/MUM/2008; ASST. YR. 2005-06. (COPY ENCLOSED AS ANNEXURE-3) WHEREIN IT H AS BEEN HELD THAT UNSECURED INTEREST FREE LOAN SHALL NOT B E COVERED U/S 56(2)(V), C. THAT UNDER PARA (III) OF THE APPELLATE ORDER THE LD . APPELLATE AUTHORITY HAS HELD AS UNDER : THAT THE APPELLANT HAS CHANGED ITS STAND NOW FROM WHAT WAS STATED BEFORE THE ASSESSING OFFICER. EARLIER HE WA S CONTESTING THE GENUINENESS OF GIFT FROM RELATIVE BUT NOW HE IS QUE STIONING THE VERACITY OF THE SAME GIFT. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 11 THE APPELLANT SUBMITS THAT AS STATED BY THE LD. AS SESSING OFFICER IN THE ORDER ITSELF THAT THE APPELLANT WAS ASKED TO SHOW CAUSE AS TO WHY THE AMOUNT RECEIVED AS GIFT FROM MR . B.L. SAPROO MAY NOT BE ADDED TO THE TAXABLE INCOME OF THE APPEL LANT U/S 56(2)(V) OF THE ACT. THE LD. ASSESSING OFFICER NEIT HER ASKED THE ASSESSEE/APPELLANT TO PROVE THE SOURCE OF INCOME OF MR. B.L. SAPROO IN SO FAR AS HIS CAPACITY TO PAY THE AMOUNT TO THE ASSESSEE AS GIFT NOR THE VERACITY OF THE GIFT IN RE LATION TO THE GIFT DEED PLACED ON RECORD BEFORE HIM. THE APPELLANT SU BMITS THAT HE WAS PROVIDED OPPORTUNITY ONLY TO EXPLAIN AS TO WHET HER THE TRANSACTION BETWEEN THE NEPHEW AND THE APPELLANT WA S COVERED UNDER THE DEFINITION OF RELATIVE AS DEFINED U/S 56( 2)(V) OF THE ACT WHICH THE APPELLANT HAS DULY REPLIED BUT AT NO STAG E DURING ASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER MA DE ANY COMMENTS WITH REGARD TO THE CONTENTS IN THE COPY OF GIFT DEED SUBMITTED ALONG WITH OTHER DOCUMENTARY EVIDENCE. T HE APPELLANT SUBMITS THAT AS HAS BEEN STATED ABOVE THE GENERAL BELIEF THE PROVISION OF THE SECTION 56(2)(V) OF THE ACT AT THE TIME ASSESSMENT WAS THAT EVEN IF IT IS AN INTEREST FREE UNSECURED LOAN, SAME SHALL ALSO BE CONSIDERED AS SUM OF MONEY RECEIVED WITHO UT CONSIDERATION WITHIN THE MEANING OF SECTION 56(2)( V) OF THE ACT. THEREFORE IT WOULD NOT MAKE ANY DIFFERENCE FOR THE APPELLANT TO PROVE THE SOURCE OF MONEY RECEIVED UNLESS IT IS HIT BY THE PROVISO TO SECTION 56(2)(V) OF THE ACT. AS SUCH, IN ABSENC E OF ANY CLARIFICATION ASKED FOR BY THE LD. ASSESSING OFFICE R OR ANY OPPORTUNITY PROVIDED TO THE APPELLANT TO EXPLAIN HI S POSITION WITH REGARD TO THE REVOCABLE GIFT AND THE CAPACITY OF TH E DONOR TO PAY THE SUM OF MONEY THE CONCLUSIONS OF THE LD. APPELL ATE AUTHORITY ARE UNFOUNDED AND DEVOID OF ANY MERITS. D. THAT UNDER PARA NO. (IV) OF THE APPELLATE ORDER THE LD. APPELLATE AUTHORITY HAS HELD AS UNDER : MERE REPAYMENT TO THE DONOR AFTER MORE THAN FIVE Y EARS DOES NOT SERVE THE PURPOSE. THIS HAS BEEN DONE WITH A MOTIV E TO GIVE IT A COLOUR OTHER THAN GIFT. THE PASSAGE OF MORE THAN FIVE YEARS SPEAK THE TRUTH OF CERTAIN MOTIVE BEHIND THE TRANSA CTION. THE APPELLANT SUBMITS THAT SINCE THE GIFT WAS REVO CABLE FROM THE INCEPTION IN UNAMBIGUOUS TERMS AS EVIDENCED BY THE DEED, MERE REVOCATION BY THE DONOR AT ANY POINT OF TIME IN ACC ORDANCE WITH THE TERMS OF GIFT HAS NOT BEEN DONE WITH AN ULTERIO R MOTIVE BUT THE OPTION OF THE REVOCATION WHICH THE DONOR HAD DELIBE RATELY ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 12 RESERVED UNTO HIMSELF WAS EXERCISED ON 27/03/2011A ND IN ACCORDANCE WITH THE REVOCATION NOTICE THE AMOUNTS H AVE BEEN REFUNDED TO THE DONOR AS PER THE DETAILS GIVEN BELO W, THERE CANNOT BE ANY PRESUMPTION WITH REGARD TO ANY MOTIVE S OF A LAW ABIDING CITIZEN WITHOUT PLACING ANY CONCRETE EVIDEN CE ON RECORD TO ESTABLISH AND PROVE THAT THE APPELLANT HAD SOME ULT ERIOR MOTIVE TO REPAY THE AMOUNT BACK WHEN DEMANDED BY THE DONOR . 5. CONCLUSIONS OF THE APPELLATE ORDER THE CONCLUSIONS ARRIVED AT BY THE LD. APPELLATE AU THORITY STATED AT THE CONCLUSION OF THE ORDER ARE AS UNDER :- IN VIEW OF THE ABOVE, I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE APPELLANT AND UPHOLD THE ADDITION. THE APPELLANT HUMBLY SUBMITS THAT THE LD. APPELLATE AUTHORITY BEFORE WHOM THE APPELLANT HAD FILED THE APPEAL HAS SUMMARILY DISMISSED THE ARGUMENTS OF THE APPELLANT IN RESPECT WHEREOF NEITHER ANY JUSTIFIABLE AND LEGAL REASONS HAVE BEEN PLACED ON RECORD TO UPHOLD THAT THE SUBMISSIONS OF THE APPELLANT HAS BE EN INADEQUATE OR INCORRECT . THE LD. APPELLATE AUTHORITY HAS FAILED TO PASS A SPEAKING ORDER WITH RESPECT TO THE EACH & EVERY SUBMISSIONS FURNISHED BY THE APPELLANT AND THEREFORE THE ORDER PASSED IS WITHOUT APPLICATION OF PROPER MIND AND AGAINST PRINCIPLES OF NATURAL JUSTI CE. 6. SUPPORTING ARGUMENTS BASED ON THE SUBMISSIONS HEREINABOVE THE APPELLANT WOULD HUMBLY LIKE TO SUBMIT BEFORE THE HONBLE BENCH AS UNDER :- A. THAT THE AMOUNT OF RS.5.00 LACS RECEIVED BY THE APP ELLANT DOES NOT AT ALL FALL WITHIN THE DEFINITION OF MONEY RECEIVED WITHOUT CONSIDERATION AS ENUMERATED U/S 56(2)(V) OF THE INC OME TAX ACT, 1961 NOR THE SAID TRANSACTION DOES FALL WITHIN THE DEFINITION OF GIFT AS PER SECTION 2(XII) & (XXIV) OF THE GIFT TAX ACT, 19 58 AND THEREFORE APPLICATION OF PROVISIONS OF SECTION 56(2)(V) ON TH E SAID TRANSACTION IS IMPROPER AND AGAINST CANNONS OF NATURAL JUSTICE. B. THAT TO CONSTITUTE A VALID GIFT THERE HAS TO BE A TRANSFER OF PROPERTY EITHER BY WAY OF OWNERSHIP OR BY WAY OF PROFIT. ME RE HANDING OVER THE PROPERTY WITH AN UNRESTRICTED POWER TO TAKE IT BACK THE NEXT MINUTE OR ANY TIME IS NOT ENOUGH TO CONSTITUTE A VA LID GIFT WHICH IS NOT CONSIDERED AS A VALID TRANSFER UNDER TRANSFER O F PROPERTY ACT, 1988. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 13 C. THAT THE APPELLANT HAS PROVED BY DOCUMENTARY EVIDEN CE CONCLUSIVELY THAT THE GIFT OF RS.5.00 LACS FROM MR. B.L. SAPROO HAS BEEN REVOCABLE FROM DAY ONE AT THE DISCRETION OF TH E DONOR AND SUCH GIFTS WHICH ARE DICTATED BY WHIMS AND FANCIES OF TH E DONOR DOES NOT CONSTITUTE A GIFT WHICH CAN BE CONSTRUED AS AMOUNTS RECEIVED WITHOUT CONSIDERATION WHEREIN PROVISIONS OF SECTION 56(2)(V) OF THE ACT CAN BE INVOKED AND THE LIABILITY TO TAX DETERM INED IN AN ARBITRARY AND PRESUMPTIVE MANNER. D. THAT THE APPELLANT HAS CONCLUSIVELY PROVED THAT MR . B.L. SAPROO THE DONOR OF THE AMOUNT HAD ADEQUATE FUNDS AVAILABLE WI TH HIM TO JUSTIFY PAYMENT OF RS.5.00 LACS TO HIS UNCLE. AS S UCH, THE CAPTIONED TRANSACTION BETWEEN THE APPELLANT AND HIS NEPHEW IS NEITHER IN RELATION TO AVOIDANCE OF ANY TAX LIABILITY NOR WITH AN ULTERIOR INTENSION TO CIRCUMVENT ANY PROCESS OF LAW OF THE L AND IN FORCE. THE TRANSACTION OF RS.5.00 LACS BETWEEN THE APPLICANT A ND HIS NEPHEW IS IN OTHER WORDS A TEMPORARY LOAN GIVEN BY THE NEP HEW TO HIS UNCLE WITH A RIGHT TO ASK FOR REPAYMENT OF SAME AT ANY GI VEN TIME WITHOUT JEOPARDIZING OWN FINANCIAL INTERESTS. THEREFORE UN DER THE CIRCUMSTANCES AND IN THE FACTS OF THE CASE AT THE M OST ASSESSING OFFICER COULD HAVE INVOKED PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT 1961. E. THAT THE APPELLANT BEING A AGED PERSON HAVING RE TIRED FROM SERVICES OF J&K GOVERNMENT MORE THAN FIFTEEN YEARS BACK HAS NOT BEEN ENGAGED IN ANY COMMERCIAL OR VOCATIONAL ACTIVI TY SINCE RETIREMENT BUT HAS BEEN SOLELY MAKING HIS LIVING ON PENSION INCOME AND SOME INTEREST INCOME RECEIVED FROM BANK DEPOSIT S. AS SUCH, THERE CAN BE NO ULTERIOR MOTIVE FOR SUCH APPELLANTS TO HAVE RECEIVED MONEY WITHOUT CONSIDERATION ONLY TO CONCEAL HIS INC OME UNDER ONE PRETEXT OR THE OTHER. THE TOTAL INCOME OF THE APPE LLANT FROM PENSION AND INTEREST FOR THE FINANCIAL YEAR 2005-06 RELEV ANT TO ASSESSMENT YEAR 2006-2007 HAS BEEN RS.215110/= ONLY WHICH ITSE LF SPEAKS OF THE UNREASONABLE ADDITION TO HIS INCOME ON PRESUMPT IONS AND DISBELIEFS. F. THAT THE APPELLANT HAS CONCLUSIVELY PROVED BEFORE THE LD. APPELLATE AUTHORITY THAT THE DONOR WITH THE PASSAGE OF TIME A T HIS OWN SWEET WILL AND DISCRETION HAS EXERCISED HIS OPTION FOR RE VOCATION OF THE GIFT AND THE APPELLANT FORTHWITH REPAID THE G. AMOUNTS BACK ON 27/03/2011 BY A/C PAYEE CHEQUES WH ICH ARE EVIDENCED BY THE BANK STATEMENT OF THE APPELLANT AN D CONFIRMED BY THE DONOR LEAVING NO ROOM FOR APPREHENSION AND EST IMATION THAT THE AMOUNTS RECEIVED BY THE APPELLANT HAVE BEEN DIRECTL Y OR INDIRECTLY ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 14 HIS CONCEALED INCOME WHICH HAS BEEN INTENDED TO BE REGULARIZED BY WAY OF GIFT DEED. IN THIS CASE THE APPELLANT HAS R ECEIVED MONEY BY A/C PAYEE CHEQUES AND REFUNDED THE AMOUNT BACK BY A/C PAYEE CHEQUES, THERE IS NO BENEFIT DERIVED BY THE APPELL ANT ULTIMATELY ON WHICH THE TAX COULD BE LEVIED UNDER ANY PROVISIONS OF THE LAW. H. THE ASSESSEE FURTHER SUBMITS THAT THE VERY ESSENTIA L INGREDIENT WITHOUT CONSIDERATION IMBEDDED IN THE SECTION 56(2 )(V) IS ALTOGETHER MISSING IN THIS TRANSACTION FOR THE REASON THE THE DONER HAS RETAINED THE POWER OF REVOCATION OF THE GIFTED PROPERTY DULY ACCEPTED BY THE DONE. THEREFORE REPAYMENT OF THE SAID AMOUNT ITSELF TANTAMOUNT TO CONSIDERATION AS HAS BEEN DECIDED IN THE CASE OF CH ANDRAKANT H. SHAH VS. INCOME TAX OFFICER ITAT, MUMBAI C BENCH ITA NO. 3966/MUM/2008; ASST. YR. 2005-06. (COPY ENCLOSED AS ANNEXURE-3) I. THAT THE APPELLANT HAS BREATHED HIS LAST ON 10 TH SEPTEMBER, 2012 AS PER COPY OF HIS DEATH CERTIFICATE SUBMITTED BEFO RE THE HONBLE BENCH ON 08/06/2015 AND THEREFORE THE CASE OF THE A SSESSEE ALSO DESERVES DUE CONSIDERATION IN VIEW OF THE SAID FACT THAT THE APPELLANT IS NO MORE ALIVE AND THE PRINCIPLES OF NA TURAL JUSTICE DEMAND NO HARM TO HIS LEGAL HEIRS AS THE LOAN FRO M THE NEPHEW STANDS ALREADY PAID BY HIM DURING HIS LIFE ITSELF. BASED ON THE FACTS & CIRCUMSTANCES OF THE C ASE AND THE SUBMISSIONS GIVEN HEREINABOVE, THE ADDITIONS TO THE INCOME OF THE APPELLANT BY THE LD. ASSESSING OFFICER IS COERCIVE AND EXCESSIVE AND CONTRARY TO THE ESTABLISHED PRINCIPALS OF LAW LAID DOWN BY THE INCOME TAX ACT NOR BY THE DICTUM OF CASES DECIDED BY HONBLE COURTS AND THE MATTER HAS NOT BEEN DULY CONSIDERED AND DISCUSSED BY THE LD. ASSESSING OFFICER IN THE ASSESSMENT ORDE R PASSED U/S 143(3) OF THE ACT BEFORE MAKING THE ADDITION TO TH E INCOME OF THE APPELLANT. SUMMING UP, THE APPELLANT HUMBLY PRAYS HAT THE ORDE R PASSED BY THE LD. ASSESSING OFFICER BASED ON ASSUMPTIONS AND PRESUMPTIONS WITHOUT PROPER APPLICATION OF MIND IS FIT TO BE QUA SHED AND APPROPRIATE RELIEF DUE TO THE APPELLANT UNDER LAW B E GRANTED TO MEET ENDS OF JUSTICE. 5. THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMP UGNED ORDER. 6. THE WRITTEN SUBMISSIONS HAVE BEEN PERUSED. THE L D. DR HAS BEEN HEARD. THE MATERIAL PLACED ON RECORD HAS BEEN CAREF ULLY GONE THROUGH. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 15 7. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE B ROTHER OF THE ASSESSEE, I.E., FATHER OF THE ASSESSEE WAS COVERED BY THE DEFINITION OF RELATIVE, AS GIVEN BY THE PROVISO TO SECTION 56(2 )(V) OF THE ACT AND THAT, THEREFORE, THE LINEAL DESCENDENT OF THE SAID BRO THER OF THE ASSESSEE WAS COVERED BY SUCH DEFINITION, BEING RELATIVE TO THE A SSESSEE BY BLOOD. IT WAS ALSO SUBMITTED THAT SINCE THE GIFTS BY BLOOD RELATI VES ARE COVERED BY THE SAID DEFINITION, THE GIFT RECEIVED BY THE ASSESSEE WAS EXEMPT FROM TAX. 8. THE AO REJECTED THE ASSESSEES STAND, OBSERVIN G THAT SON OF BROTHER IS NOT LINEAL DESCENDENT OF THE RECIPIENT OF GIFT AND SO HE IS NOT COVERED UNDER THE DEFINITION OF RELATIVE WITHIN T HE MEANING OF THE PROVISO TO SECTION 56(2)(V) OF THE ACT. 9. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT THE AMOUNT OF RS. 5 LACS RECEIVED WAS A TEMPORARY RECEIPT IN THE HANDS OF THE ASSESSEE, SINCE THE GIFT WAS REVOCABLE AT THE DISCRETION OF THE DONOR, THE TRANSACTION THEREBY NOT BEING COVERED UNDER SECTION 56 OF THE ACT AND THE DONOR HAD SERVED NOTICES FOR REVOCATION OF THE GIFT AND THE MONEY HAD BEEN RETURNED TO THE DONOR BY THE ASSESSEE ON 2 7.03.2011. IT WAS SUBMITTED THAT SINCE THE GIFT WAS AN INVALID GIFT A ND HAD BEEN REPAID, IT COULD NOT BE ADDED UNDER THE PROVISIONS OF SECTION 56 OF THE ACT. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 16 10. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITIO N BY OBSERVING AS FOLLOWS: I HAVE CONSIDERED THE RIVAL ARGUMENTS AND FIND THAT THE CONTENTION OF THE APPELLANT ACCEPTABLE BECAUSE OF FOLLOWING RE ASONS: I) THE GIFT CANNOT BE REVOKED AFTER ACCEPTANCE. THERE CANNOT BE ANY GIFT DEED OF REVOCABLE GIFT AT THE OP TION OF THE DONOR. II) EVEN IF IT IS NOT A PROPER GIFT THE APPELLANT IS LI ABLE TO EXPLAIN THE SOURCE OF THE AMOUNT OF RS.5 LACS RECEI VED FROM SH. BHUSHAN LAL SAPROO, WHICH HAS NOT BEEN EXPLAINED BEFORE THE ASSESSING OFFICER. III) THE APPELLANT HAS CHANGED ITS STAND NOW FROM WHAT WAS STATED BEFORE THE ASSESSING OFFICER. EARLIER HE WAS CONTESTING THE GENUINENESS OF GIFT FROM RELATIVE BU T NOW HE IS QUESTIONING THE VERACITY OF THE SAME GIFT. IV) MERE REPAYMENT TO THE DONOR AFTER MORE THAN FIVE YE ARS DOES NOT SERVE THE PURPOSE. THIS HAS BEEN DONE WITH A MOTIVE TO GIVE IT A COLOUR OTHER THAN GIFT. THE PAS SAGE OF MORE THAN FIVE YEARS SPEAK THE TRUTH OF CERTAIN MO TIVE BEHIND THE TRANSACTION. IN VIEW OF THE ABOVE, I DO NOT FIND ANY MERIT IN TH E ARGUMENTS OF THE APPELLANT AND UPHELD THE ADDITION. 11. THE FIRST OBSERVATION OF THE LD. CIT(A) IS THAT A GIFT CANNOT BE REVOKED AFTER ACCEPTANCE AND THERE CANNOT BE ANY G IFT DEED OF REVOCABLE GIFT AT THE OPTION OF THE DONOR. THIS OBS ERVATION DOES NOT FAVOUR THE ADDITION BEING CONFIRMED. THE GIFT DEED, AS REPRODUCED HEREINABOVE, CLEARLY SHOWS THAT THE AMOUNT WAS BEIN G TRANSFERRED, BUT SUCH TRANSFER WAS IRREVOCABLE AT THE INSTANCE O F THE TRANSFEROR. IT IS TRITE THAT A DOCUMENT HAS TO BE READ AS A WHOLE, IN ORDER TO GATHER THE INTENTION BEHIND THE TRANSACTION. A READING OF THE GIFT DEED SHOWS ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 17 THAT THOUGH THE TERM EMPLOYED IS GIFT, THE TRANSF EROR INTENDED TO TRANSFER THE SOURCE OF RS. 5 LACS TO THE ASSESSEE O NLY TEMPORARILY. THIS FACT IS ALSO CONFIRMED BY THE FACT OF ISSUANCE OF R EVOCATION NOTICES BY THE TRANSFEROR TO THE ASSESSEE. IT ALSO GETS BUTTRE SSED BY THE VERY RELEVANT FACT OF RETURN OF THE AMOUNT BY THE ASSESS EE TO THE TRANSFEROR ON 27.03.2011, WHICH FACT HAS ALSO BEEN AFFIRMED BY THE LD. CIT(A). IT SHOWS AS COVERED IN THE WRITTEN SUBMISSIONS THAT TH E ASSESSEE WAS NEVER VESTED ABSOLUTE OWNERSHIP OF THE AMOUNT TRANS FERRED. THE TRANSFER OF THE AMOUNT OF RS. 5 LACS TO THE ASSESS EE WAS A REVOCABLE TRANSFER AND IT WAS IN FACT REVOKED. THE NOMENCLA TURE EMPLOYED IS NOT DETERMINATIVE OF THE TRANSACTION, AS IS WELL SE TTLED. IN FACT, BY MAKING THIS OBSERVATION, THE LD. CIT(A) HAS HIMSELF ACCEPTED THAT THE TRANSACTION WAS NOT A GIFT. IT WAS A TEMPORARY TRAN SFER OF MONEY, WHICH WAS REVOKED AT THE OPTION AND INSTANCE OF THE DONOR. 12. THE LD. CIT(A) HAS NEXT OBSERVED THAT EVEN IF IT WAS NOT A PROPER GIFT, THE ASSESSEE WAS LIABLE TO EXPLAIN THE SOURCE OF THE AMOUNT, WHICH HAD NOT BEEN DONE BEFORE THE AO. THIS EVIDENTLY IS INCORRECT. THE LD. CIT(A) HAS HIMSELF OBSERVED AT PAGE 5 OF HIS ORDER THAT THE ASSESSEE HAD EXPLAINED BEFORE THE AO THAT THE AMOUNT HAD BEEN RECEIVED AS A GIFT FROM THE LINEAL DESCENDENT/SON OF HIS BROTHER AND THAT THE GIFTS FROM BLOOD RELATIVES WERE EXEMPT FROM TAX. EVEN THE LD. CIT(A) HAS CHALLENGED THE PROPRIETY OF THE GIFT . MOREOVER, WHEREAS ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 18 THE AO NEVER QUESTIONED THE TRANSACTION, THE LD. CI T(A) HELD, WRONGLY, ON THE BASIS OF MERE ASSUMPTIONS AND PRESUMPTIONS, DISREGARDING THE EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE AO, THAT THE ASSESSEE HAD NOT EXPLAINED THE SOURCE OF THE AMOUNT RECEIVED . RATHER, IT IS NOWHERE IN DISPUTE THAT THE AMOUNT CAME TO THE ASSE SSEE FROM HIS NEPHEW, SH. B.L. SAPROO. THEREFORE, THE SOURCE OF T HE RECEIPT STOOD DULY EXPLAINED. ASKING THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE IS, IN MY CONSIDERED VIEW, ASKING TOO MUCH O F THE ASSESSEE, PARTICULARLY WHEN NO SUCH ISSUE WAS RAISED BY THE A O AND ALSO WHEN THE AMOUNT STOOD REPAID. FURTHER, THE ASSESSEE HAD ALSO FILED BEFORE THE LD. CIT(A), THE ACKNOWLEDGMENT OF THE INCOME TA X RETURN OF THE TRANSFEROR FOR THE ASSESSMENT YEAR 2008-09, SHOWING A RETURNED INCOME OF RS.11,16,119/-, WHICH ACKNOWLEDGMENT HAS NOT BEEN DISCUSSED IN THE IMPUGNED ORDER. 13. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESS EE HAD CHANGED HIS STAND FROM THAT TAKEN BEFORE THE AO. TH IS, HOWEVER, ALSO DOES NOT ACT AS A DETRIMENT TO THE ASSESSEES CASE , EVEN IF THE TRANSFER, AS STATED, IS TAKEN TO BE INTEREST FREE U NSECURED LOAN. IT AMOUNTS TO MONEY RECEIVED, WHICH MONEY WAS RETURNED . MOREOVER, EVEN BEFORE THE AO, THE ASSESSEE HAD OFFERED THE EXPLANATION OF THE TRANSACTION BEING A GIFT, WHICH POSITION DOES NOT U NDERGO ANY CHANGE IN VIEW OF THE DOCUMENT OF TRANSFER, AS PER WHICH, THE TRANSFER WAS A ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 19 REVOCABLE TRANSFER. REVOCATION NOTICES WERE ISSUED AND THE MONEY WAS ULTIMATELY RETURNED. 14. THE NEXT OBSERVATION OF THE LD. CIT(A) IS THAT THE MERE REPAYMENT AFTER MORE THAN FIVE YEARS WAS DONE WITH A MOTIVE TO CHANGE THE COLOUR OF THE TRANSACTION FROM THAT OF A GIFT. HERE, AGAIN, THE OBSERVATION OF THE LD. CIT(A) IS ERRONEOUS. THE FACT REMAINS THAT THE TRANSFER WAS REVOCABLE A TRANSFER, AT THE INSTA NCE OF THE TRANSFEROR, WHICH FACT HAS NOT BEEN DISPUTED. RATHER, TO REITER ATE, REVOCATION NOTICES WERE ISSUED BY THE TRANSFEROR AND IN RESPON SE TO SUCH NOTICES, THE TRANSFER WAS REVOKED AND THE MONEY WAS RETURNED TO THE TRANSFEROR. THE LD. CIT(A) TALKS OF CERTAIN MOTIVE BEHIND THE TRANSACTION. HOWEVER, AS TO WHAT SUCH CERTAIN MOTI VE COULD BE, DOES NOT HAVE ANY REFERENCE TO WHATSOEVER IN THE IMPUGNE D ORDER. THIS OBSERVATION OF THE LD. CIT(A) IS ALSO BASED ONLY ON ASSUMPTIONS AND PRESUMPTIONS AND THE SAME CANNOT STAND IN THE EYE OF LAW. 15. THUS, THE TRANSACTION IN QUESTION HAS NEITHER B EEN SHOWN TO HAVE BEEN UNDERTAKEN TO AVOID ANY TAX LIABILITY, NO R TO HAVE BEEN UNDERTAKEN FOR ANY ULTERIOR INTENTION OF THE ASSES SEE TO CIRCUMVENT ANY LEGAL PROCESS. IT WAS A TEMPORARY ADVANCEMENT O F THE MONEY BY THE TRANSFEROR TO THE ASSESSEE AND THE AMOUNT WAS R EPAID WHEN ASKED FOR, AS PER THE TRANSFER DOCUMENT. ITA NO.199(ASR)/2015 ASSESSMENT YEAR: 2006-07 20 16. IN VIEW OF THE ABOVE DISCUSSION, FINDING MERIT IN THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE, THE SAME IS ACCEPTED. THE ORDER OF THE LD. CIT(A) IS REVERSED. THE ADDITI ON IS DELETED. 17. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/04/ 2 016. SD/- (A.D. JAIN) JUDICIAL MEMBER /SKR/ DATED: 28/04/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SMT. KANTA SAPROO L/H OF LATE SH. ARJA N NATH SAPROO, NEW DELHI. 2. THE ITO WARD 3(1), SRINAGAR 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.
