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

ITA 2244/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7115 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 09-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Earning of tax free income; Retrospective amendment
• Section: 143(3); 56(2); 143(1); 56

Judgement Text

, B- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER . ITA NO. 2244/AHD/2017 / ASSTT. YEAR: 2014-15 SHRI GYANCHAND M. BARIDA BARIDA MANSION, KAPASI BAZAR, KALUPUR, AHMEDABAD- 380002 PAN:ACW PB6 217 G VS. ITO WARD- 1(2)(2), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI VINOD TANWANI, SR. DR ' #$% /DATE OF HEARING : 02/07/2019 &' $% /DATE OF PRONOUNCEMENT: 25/07/2019 () / O R D E R PER MADHUMITA ROY- JM : THE INSTANT APPEAL FILED BY ASSESSEE IS DIRECTED AG AINST THE ORDER PASSED BY THE LD. CIT(A)-10, AHMEDABAD DATED 22.08.2017 ARISIN G OUT OF THE ORDER DATED 09.12.2016 PASSED BY THE ITO WARD-1(2)(2), AHMEDABA D UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHEREBY AND WHEREUNDER THE ADDITION TO THE TUNE OF RS. 59,65,32 0/- AS AGAINST THE RETURN INCOME OF RS. 9,40,320/- HAS BEEN CONFIRMED FOR ASSESSMEN T YEAR 2014-15. 2. THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF IN COME ON 29.09.2014 DECLARING TOTAL INCOME AT RS. 9,40,320/-. THE MATT ER WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND FINALLY ADDITION TO THE TUNE OF RS. 59,65,320/- UNDER SECTION 143(3) OF THE ACT WAS MADE BY THE AO. ITA NO. 2244/AHD/2017 A.Y. 2014-15 2 3. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE RECEIVED A GIFT OF RS. 50,00,000/- FROM HIS HUF NAMELY GYANCHAND M. BA RADIA (HUF) WHICH WAS MADE THROUGH A DECLARATION DATED 16.07.2013 EXECUT ED ON A STAMP PAPER NOT EVEN NOTARIZED. WHILE DETERMINING TOTAL INCOME TO A.Y. 2012-13 THE LD. AO MADE AN ADDITION OF RS. 1,02,00,000/- WHICH WAS RECEIVED BY THE ASSESSEE AS A GIFT IN THAT YEAR UNDER CONSIDERATION TREATING THE SAME AS ASSES SEES INCOME FROM OTHER SOURCES. SINCE THE SAME WAS CONFIRMED BY THE APPEL LATE STAGE THE DETAILS OF THE INSTANT GIFT IN QUESTION TO THE TUNE OF RS. 50,00,0 00/- WERE ASKED FOR. THE REPLY GIVEN BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE AND THE SAME WAS ULTIMATELY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL THE SAME WAS CONFIRMED ON THE BASIS OF THE ORDER PASSED BY THE PREDECESSOR IN ASSESSEE S OWN CASE FOR A.Y. 2012-13 WHICH IS MENTIONED THAT PAGE 6 OF THE CIT(A)S ORDER AGAINST THE ASSESSEE. 4. THE SAID HUF COMPRISES OF KARTA AND SELF I.E. THE APPELLANT SHRI GYANCHAND M. BARIDA, HIS WIFE RAJKUMARI AND THEIR SON RAKESH WHO ARE THE RELATIVES PRESCRIBED UNDER SECTION 56(2). ACCORDING TO THE LD . AO THE HUF IS NOT ONE OF THE RELATIVES AS DEFINED IN THE EXPLANATION (E) T O THE SECTION 56(2)(VII) AND, THEREFORE, THE GIFT SO RECEIVED FROM THE HUF IS NOT ENTITLED TO GET THE BENEFIT UNDER THE SECOND PROVISO TO SECTION 56(2)(VII) AND, THUS, THE SAME HAS BEEN TAXED AS AN INCOME FROM OTHER SOURCES UNDER SECTION 56 R.W.S. 68 OF THE ACT. THE ASSESSEES CASE IS THIS THAT THE HUF IS A GROUP OF INDIVIDUALS AND SUCH INDIVIDUALS ARE THE RELATIVES SPECIFIED UNDER CLAUSE (E) OF THE EXPLA NATION TO SECTION 56(2)(VII) AND, THEREFORE, THE SAID GIFT CANNOT BE TAXED AS AN INCO ME OF THE APPELLANT. 5. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL THE LD. DR RELIED UPON THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE PASSED IN ITA NO. 1072/AHD/2016 FOR A.Y. 2012-13 ADDITION WHEREOF WAS CONFIRMED. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE NEITHER ANY ADJOURNMENT HAS BEEN SOUGHT FOR. ITA NO. 2244/AHD/2017 A.Y. 2014-15 3 WE HAVE HEARD THE LD. DR AND ALSO GONE THROUGH THE RECORDS AVAILABLE BEFORE US CAREFULLY INCLUDING THE ORDER PASSED BY T HE CO-ORDINATE BENCH IN ASSESSEES OWN CASE CONFIRMING SUCH ADDITION MADE I N THE A.Y. 2012-13 TO THE TUNE OF RS. 1,02,00,000/-. THE RELEVANT PORTION IS WHEREOF AS FOLLOWS:- 4. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY C ONTENDS 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 COURT'S JUDGMENT (SUPRA) THAT THE INCO ME 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. ASSES SEE/KARTAS WIFE AND SON (SUPRA) ARE ALREADY COVERED IN RELATIVE DEFINITION CLAUSES A AND E OF THE EXPLANATION (E) (SUPRA). HE STATES ASSESSING OFFICER AND THE CIT(A) HAVE COM MITTED BOTH ILLEGALITY AS WELL AS IRREGULARITY IN ASSESSING THE SUM IN QUESTION U/S. 68 OF THE ACT. HE FILES A PAPER BOOK COMPRISING OF ASSESSEES ADMISSIONS DATED 17.08.201 5 FILED BEFORE THE CIT(A), HUFS BANK PASS BOOK INDICATING RELEVANT SUM TRANSFER, ASSESSE S LETTER DATED 10.12.2015 SUBMITTED IN PROCEEDINGS. HUFS BANK PASS BOOK FROM 13.03.2012 T O 23.03.2012, LETTER DATED 10.01.2016 IN CONTEXT OF ASSESSING OFFICERS VERIFICATION, ASS ESSING OFFICERS REMAND REPORT AND SUBMISSIONS DATED 01.02.2016 AGAINST THE REMAND FIN DINGS THE ABOVE CASE LAWS AS WELL AS OTHER CO-ORDINATE BENCHS DECISIONS HARSHADBHAI DAH YALAL VAIDHYA (HUF) VS. ITO (2013) 155 TTJ (AHD) 71, MUMBAI CO-ORDINATE BENCH DECISION IN SHRI HEMAL D. SHAH VS. DCIT DATED 08.03.2017 IN TTA NO.2627/MUM/2015 AND DCIT VS. ATE EV V. GALA IN ITA NO.1906/MUM/2014 DATED APRIL 19, 2017. HE THEREFORE SEEKS ACCEPTANCE OF INSTANT APPEAL. 5. MR. SHAHS LATTER CONTENTION AS PER ASSESSEES P LEADINGS 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 PRESSING FOR ASSESSEE'S THIRD SUBSTANTIVE GROUND SEEKING INTEREST DEDUCTION OF RS.5,819/- CLAIMED U/S. 57(II I) OF THE ACT. 6. LEARNED DEPARTMENTAL REPRESENTATIVE APPEARING AT REVENUE'S BEHEST STRONGLY SUPPORTS BOTH THE LOWER AUTHORITIES' FINDINGS ADDIN G ASSESSEE'S 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 VALIDI TY OF ASSESSEE'S GIFT CLAIM AS RECEIVED FROM THE HUF AMOUNTING TO RS. 1,02,00,000/- COMING THROU GH BANKING CHANNEL. BOTH THE LOWER AUTHORITIES ARE OF THE VIEW THAT AN HUF DOES NOT CO ME UNDER THE SPECIFIED CATEGORY OF A RELATIVE IN SECTION 56(2)(VII) AS APPLICABLE W.E.F. 01.10.2009. THE ASSESSEE'S MAIN RELIANCE IS ON THIS TRIBUNAL'S RAJKOT BENCH DECISION IN VINEETK UMAR RAGHAVJIBHAI BHALODIA VS. ITO (SUPRA) ACCEPTING A SIMILAR GIFT CLAIM OF INDIVIDUA L ASSESSEE FROM HUF. THE REVENUE HAS PREFERRED TAX APPEAL NO. 1326/2011 AGAINST THE SAME BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. THE SAME STOOD ADMITTED ON 23.10.2012 FOR FI NAL ADJUDICATION. 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. R ELEVANT 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.25,0 00/- AS APPLICABLE UPTO 01.10.2009. THEN CAME CLAUSE (VII) W.E.F. 01.10.2009 SPECIFYING THE SAME TO BE APPLICABLE BOT H IN CASE OF AN INDIVIDUAL AS WELL AS HUF RECIPIENTS. THE LEGISLATU RE SUBSTITUTED 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 RETROSPECTIVE EFFECT FROM 01.10.2009. THE ASSESSEE IS FAIR ENOUGH IN NOT DISPUTING THE FACT THAT THE FORMER CA TEGORY IN CLAUSE (I) OF (E) DEFINING A ITA NO. 2244/AHD/2017 A.Y. 2014-15 4 'RELATIVE' QUA AN INDIVIDUAL RECIPIENT DOES NOT INC LUDE AN HUF AS A DONOR. THE LEGISLATURE HAS INCORPORATED CLAUSE (II) THEREIN TO DEAL WITH A N INSTANCE OF AN HUF DONEE ONLY RECEIVING GIFTS FROM ITS MEMBERS. WE REFER TO BOARD'S CIRCULA R NO. 1/2011 R.W. EXPLANATORY CIRCULAR FOR FINANCE ACT, 2009, MAKES IT CLEAR IN LATTER'S CLAUS E NO.24.2 THAT SECTION 56(II) IS AN ANTI-ABUSE PROVISION. WE ALSO QUOTE HON'BLE APEX COURT'S JUDGM ENT IN CIT V. SODRA DEVI [1957] 32 ITR 615 (SC), SMT. TARULATA SHYAM V. CIT (1977) 108 ITR 345 (SC) AND KESHAVJI RAVJI & CO. V. CIT (1990) 183 ITR 1 (SC) TO OBSERVE THAT PRINCIPLE S OF LITERAL INTERPRETATION IN RESPECT OF THE RELEVANT CONTEXT VIS-A-VIS THE LEGISLATION INTENTIO N 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 H AS ACCEPTED AN HUF TO BE A DONEE IN CLAUSE (II) OF THE 'RELATIVES' DEFINITION. WE APPLY NECESS ARY IMPLICATION PRINCIPLE TO CONCLUDE IN THESE FACTS THAT THE LEGISLATIVE INTENT IS VERY CLEAR THA T AN HUF IS NOT TO BE TAKEN AS A DONOR IN CASE OF AN INDIVIDUAL RECIPIENT. LEARNED COUNSEL'S RELIA NCE ON SURJIT LAL CHHABDA (SUPRA) IS THEREFORE NOT ACCEPTABLE IN THIS PECULIAR LEGISLATI VE BACKDROP OF FACTS AND CIRCUMSTANCES. LEARNED CO-ORDINATE BENCH (SUPRA) SEEM TO HAVE FOLL OWED 'BHOLADIA' 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 TREAT THE SAME A S FINDING PRECEDENTS AS PER (1993) 202 ITR 222 (AP) CIT VS. B. R. CONSTRUCTIONS (FB). THE ASSESSEE'S FORMER PLEA OF HAVING RECEIVED A VALID GIFT FROM HIS 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 THE AMOUNT I N QUESTION IS EXEMPT U/S. 10(2) OF THE ACT. WE FIND NO MERIT IN THE INSTANT ALTERNATIVE PLEA AS WELL SINCE A GIFT SUM WHICH IS NOT ALLOWABLE UNDER THE RELEVANT SPECIFIC CLAUSE CANNOT BE ACCEPT ED TO BE AN EXEMPT INCOME U/S. 10(2) OF THE ACT. WE THUS TREAT INSTANT LATTER PLEA TO BE MAINL Y TECHNICAL IN NATURE DEVOID OF MERIT. WE FIND THAT THE ISSUE IS COVERED AGAINST THE ASSE SSEE IN TERMS OF THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 1072/AHD /2017 FOR A.Y. 2012-13 AND RESPECTFULLY RELYING UPON THE SAME IN THE ABSENCE O F ANY CHANGE CIRCUMSTANCES WE DECIDE THE ISSUE AGAINST THE ASSESSEE. THUS, THE OR DER PASSED BY THE LD. CIT(A) IS HEREBY CONFIRMED. ASSESSEES APPEAL IS THUS DISMIS SED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. [ORDER PRONOUNCED IN THE COURT ON 25-07-2019.] SD/- SD/- ( WASEEM AHMED ) ( MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/07/2019 TANMAY TRUE COPY ()$*+,(+ /COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. - / THE RESPONDENT. 3. ' . / CONCERNED CIT ITA NO. 2244/AHD/2017 A.Y. 2014-15 5 () ' / BY ORDER / / 0 (DY./ASSTT. REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION : 02-07-2019 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER. : 02-07-2019 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 24-07-2019 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 24-07-2019 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 30-07-2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 30-07-2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER : 4. ' . ( ) / THE CIT(A) 5. +12 , / DR, ITAT, 6. 234# / GUARD FILE.