SHIVANI ARVIND VIJ, MUMBAI V. ITO 15(2)(2), MUMBAI

ITA 422/MUM/2010

• Counselvise Citation: 42219914 RSA 2010
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 06-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI PRAKASH
• Assessee Lawyers: TARUN GHIA
• Keywords: Sale consideration of property below Jantri Value; Deemed Gift on Purchase of immovable Property below Jantri value; Gift
• Section: 50C; 56(2)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL MUMBAI - I BENCH MUMBAI . . , / ! ! ! ! , '# '# '# '# BEFORE S/SH. H.L.KARWA,PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 422/MUM/2010, $ $ $ $ % % % % / ASSESSMENT YEAR 2006-07 SHIVANI ARVIND VIJ, 403-1-A, GREEN ACRESS, LOKHANDWALA COMPLEX , ANDHERI EAST, MUMBAI- 400053 VS. ITO 15(2)(2), MUMBAI. PAN: ACPPV8363G ( &' / APPELLANT) ( ()&' / RESPONDENT) &' * / APPELLANT BY : SHRI TARU N GHIA ()&' + * / RESPONDENT BY : SHRI RAVI PRAKASH $ $ $ $ + ++ + ,- ,- ,- ,- / DATE OF HEARING : 06-05-2014 ./% + ,- / DATE OF PRONOUNCEMENT : 08- 05 -2014 $ $ $ $ , 1961 + ++ + 254 )1( ,0, ,0, ,0, ,0, '1 '1 '1 '1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 13.11.2009 OF CIT(A)-26 ,MUMBAI ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: 1.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT RECEIVED CLAIMED GIFT OF AN IMMOVABLE PROPERTY UNDE R A GIFT DEED EXECUTED ON 15.12.2004 AND THEREFORE, FALLING IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06. 2.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT REGISTRATION BY DEED OF CONFIRMATION DATED 01.09.2005 IN RESPECT OF THE CLA IMED GIFT OF AN IMMOVABLE PROPERTY DID NOT RESULT INTO A GIFT IN THE PREVIOUS YEAR RELEVANT TO ASSESS MENT YEAR 2006-07. 3.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISAL LOWING GIFT OF AN IMMOVABLE PROPERTY IN FAVOUR OF THE APPELLANT AND ASSESSING THE VALUE OF GIFT AS INCOME US. 56(2)(V). 4.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT PROVISIONS OF SECTION 56(2)(V) AS THEY STOOD IN THE RELEVANT ASSESSMENT Y EAR ATTRACTED ONLY GIFT OF SUM OF MONEY AND NOT GIFTS IN KIND. 5.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT IN RESPECT OF TRANSACTIONS COVERED BY SECTION 56(2)(V), PROVISIONS OF SECTION 50C COULD NOT BE APPLIED FOR THE RELEVANT ASSESSMENT YEAR. 6.ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT GIFT OF AN IMMOVABLE PROPERTY EVEN THOUGH COVERED BY THE PROVISIONS OF S ECTION 56(2)(V) COULD NOT BE BASED ON VALUATION BY STAMP DUTY AUTHORITIES. 7.THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER A ND DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. ASSESSEE,AN INDIVIDUAL,FILED HER RETURN OF INCOME, ON 26/10/2006,SHOWING TOTAL INCOME OF RS,3, 2 ITA NO. 422/M/2010 SHIVANI ARVIND VIJ. 08,388/-.ASSESSING OFFICER(AO)FINALISED THE ASSESSM ENT U/S.143(3)OF THE ACT,ON 05.12.2008, DETERMINING THE INCOME OF THE ASSESSEE AT RS 32,52, 890/-. EFFECTIVE GROUND OF APPEAL IS ABOUT INVOKING OF PRO VISIONS OF SECTION 56(2)(V)OF THE ACT BY THE AO ABOUT A IMMOVABLE PROPERTY THAT WAS RECEIVED BY THE ASSESSEE BY WAY OF GIFT.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT SHE HAD JOINTLY RECEIVED A GIFT OF IMMOVABLE PROPERTY FROM LALIT KHANNA (HUF),THAT THE ASSESSEE AND HER MOTHER WERE GIVEN A GIFT OF OFFICE PREMISES SITUATED AT PLOT NO.2 & 2A OF VILLAGE MOHILI AT KURLA-ANDHERI ROAD, SAKINAKA, MUMBAI,THAT GIFT WAS CLAIMED TO BE GIVEN OUT OF LOVE AND AFFECTION,THAT THE KHANNAS HA D NO BLOOD RELATIONS WITH WITH THE ASSESSEE OR HER MOTHER. ON QUERY BY THE AO ABOUT INVOKING THE P ROVISIONS OF SECTION 56(2)(V) OF THE ACT,THE ASSESSEE,VIDE HER LETTER,DT.20/11/2008,EXPLAINED TH AT THE GIFT OF OFFICE PREMISES FROM KHANNA FAMILY WAS DUE TO LOVE AND AFFECTION,THAT THERE WERE EXTRE MELY CLOSE RELATIONS BETWEEN THE FAMILIES,THAT THE PROVISIONS OF SECTION 56(2)(V) OF THE ACT WERE NOT ATTRACTED AS IMMOVABLE PROPERTY HAD BEEN RECEIVED AS GIFT,THAT SAID SECTION DEALT WITH MONET ARY TRANSACTIONS.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,AO HELD THAT THE KHANNAS HAD PAID M ONEY BY WAY OF CASH OR CHEQUE FOR PURCHASE OF OFFICE PREMISES,THAT WITHOUT MONEY THEY COULD NOT P URCHASE THE GIFTED PROPERTY,THAT MONEY HAD BEEN CONVERTED IN IMMOVABLE PROPERTY ,THAT THE ASS ESSEE COULD SALE THE PROPERTY AND MIGHT AGAIN CONVERT THE SAME IN MONEY,THAT MONEY COULD BE CONVE RTED IN GOLD,SILVER,AGRICULTURAL LAND,MOTOR VEHICLES,IMMOVABLE PROPERTY,THAT BY SELLING THOSE C ONVERSIONS COULD AGAIN MADE IN TO MONEY,THAT TERM MONEY INCLUDED MOVABLE AND IMMOVABLE ASSETS,TH AT THE ASSESSEE AS WELL AS KHANNA FAMILY HAD FAILED TO PROVE THE ROOT OF THE NATURAL LOVE AN D AFFECTION.AS PER THE AO COST OF THE BUSINESS PREMISES AS PER THE STAMP DUTY VALUATION WAS RS.58, 89,000/-.THEREFORE,HE TREATED OF RS.58, 89, 000/- I.E. RS.29,44,500/-INCOME OF THE ASSESSEE UND ER THE PROVISIONS OF SECTION 56(2)(V) AND TAXED IT AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).AFTER CONSIDERING THE FINDING OF THE AO AND T HE SUBMISSIONS OF THE ASSESSEE, HE HELD THAT IT WAS NOT A SIMPLE CASE OF GIVING A GIFT TO THE RELAT ED PERSON OUT OF NATURAL LOVE AND AFFECTION, THAT REASONS BEHIND TRANSFER OF IMMOVABLE PROPERTY WAS N OT AS CLAIMED IN THE DEED OF CONFIRMATION/ GIFT DEED, THAT THE IMMOVABLE PROPERTY WAS NOT TRANSFERR ED OUT OF NATURAL LOVE AND AFFECTION, THAT SUCH ARRANGEMENT WAS MADE TO COVER UNDER CURRENT AND CAS H TRANSACTIONS OR ANY UNKNOWN TRANSACTION OR MATERIAL FACTS WHICH COMPELLED LALIT KHANNA TO PART WITH SUCH IMMOVABLE PROPERTY TO THE FAMILY MEMBERS OF ARVIND VIJ, THAT IT WAS A CASE OF TRANSF ER OF PROPERTY,THAT THE ASSESSEE HAD PAID STAMP DUTY FOR THE TRANSACTION IN QUESTION, THAT THERE WA S TIME-LEG BETWEEN PREPARING THE GIFT-DEED AND TRANSFER OF PROPERTY, THAT THE GIFT WAS NOT FREE FR OM VARIOUS LIABILITIES TO BE BORNE BY THE DONEES, T HAT ASSESSEE HAD TO PAY MONTHLY MAINTENANCE CHARGES AND MUNICIPAL CHARGES, THAT IT WAS A NORMAL TRANSFER OF PROPERTY,THAT THE ASSESSEE WAS LIABLE F OR THE CONSEQUENTIAL LIABILITIES RELATED WITH OWNERSHIP, THAT IN THE NAME OF GIFT PROPERTY WAS TR ANSFERRED BY LALIT KHANNA (HUF) TO THE ASSESSEE WITH A VIEW TO AVOID PAYMENTS OF TAXES, THAT THE AS SESSEE HAD ADEQUATE ASSETS WITH HER.HE REFERRED TO THE JUDGMENTS OF KRISHNA MOHAN AGRAWAL (28SOT227 ),L.N. DALMIA (207 ITR 89), SUNIL SIDHARTH (156 ITR 509), DURGA PRASAD MORE (82 ITR 5 40), CHAIN SUKH RATHI (270 ITR 36). FINALLY, HE HELD THAT THE IMPUGNED GIFT WAS NOT GENUINE GIFT , THAT THERE WAS NO OCCASION FOR GIVING SUCH GIFT TO UNRELATED PERSON, THAT THERE WAS NO NATURAL LOVE AND AFFECTION FOR GIVING SUCH GIFT,THAT THE LATENT FACT SUGGESTED THAT UNACCOUNTED MONEY FOR ACQUIRING IMMOVABLE PROPERTY OF A FIRM WAS USED, THAT IRRESPECTIVE OF THE INAPPLICABILITY OF THE PROVISIO NS OF 256(2)(V) OF THE ACT, THE ASSESSEE WAS LIABLE FOR ASSESSMENT OF HER SHARE OF RS. 29.44 LAKHS FOR UTILISATION OF UNACCOUNTED MONEY FOR GETTING TRANSFER OF COMMERCIAL PROPERTY IN HER NAME ALONG W ITH HER MOTHER. HE FURTHER HELD THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THERE WAS NO NEED FOR ADDUCING ANY POSITIVE EVIDENCES OF SUCH MONEY GIVEN TO THE DONOR IN LIEU OF RECEIVING THE PROPERTY. HE HELD THAT ADDITION MADE BY THE AO OF RS. 29.44 LAKHS WAS TO BE UPHELD AND GIFT WAS TO BE TREATED AS NON-GENUINE BECAUSE UNACCOUNTED MONEY WAS USED FOR GETTING THE COMMERCIAL PROPERTIES TRANSFERRED IN HER NAME. 3 ITA NO. 422/M/2010 SHIVANI ARVIND VIJ. 4. BEFORE US, AUTHORISED REPRESENTATIVE (AR) ARGUED TH AT AO HAD MADE THE ADDITION U/S 56(2)(V) OF THE ACT, THAT IN THE YEAR UNDER CONSIDERATION ONLY CASH GIFTS WERE COVERED BY THE SECTION, THAT IMMOVABLE PROPERTY WAS MADE PART OF THE SECTION W.E .F. 01.10.2009, THAT LALIT KHANNA HAD GIFTED THE PART OF COMMERCIAL PROPERTY BY A GIFT-DEED TO T HE ASSESSEE BECAUSE OF NATURAL LOVE AND AFFECTION, THAT FATHER OF THE ASSESSEE AND LALIT KHANNA WERE F RIENDS, THAT IN THE CASE OF THE OTHER RECIPIENTS I.E.MOTHER OF THE ASSESSEE DEPARTMENT HAD NOT INVOK ED THE PROVISIONS OF SECTION 56(2)(V) OF THE ACT, THAT AO HAD HELD THAT IT WAS POSSIBLE TO CONVERT TH E IMMOVABLE PROPERTY INTO MONEY, THAT FAA HAD HELD THAT UNACCOUNTED MONEY WAS PAID TO THE DONOR, THAT ENDORSEMENT OF THE STAND TAKEN BY THE AO BY THE FAA WAS NOT AS PER LAW. HE REFERRED TO THE M ATTER OF KOMAL KUMAR BADER (33SOT58)DELIVERED BY JAIPUR BENCH OF ITAT AND STAT ED THAT IN THE SAID DECISION IT WAS HELD THAT IMMOVABLE ASSETS COULD NOT TERMED ANY SUM,AS ENVISA GED BY THE PROVISIONS OF THE SECTION 56(2) (V) OF THE ACT.DR SUPPORTED THE ORDER OF THE AO AND FAA . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.UNDISPUTED FACT OF THE CASE UNDER APPEAL ARE THAT ASSESSEE ALONG WITH HIS MOTHER HAD RECEIVED GIFT OF IMMOVABLE PROPERTY FROM LALIT KHANNA(HUF), THAT THERE WERE FAMILY RELA TIONSHIP BETWEEN THE KHANNAS AND VIJS,THAT AO HAD INVOKED THE PROVISIONS OF SECTION 56(2)(V) O F THE ACT, THAT HE WAS OF THE OPINION THAT GIFT IN KIND WAS ALSO PART OF THE SAID SECTION,THAT THE FAA HAD UPHELD THE ORDER OF THE AO,AS HE WAS OF THE OPINION THAT TRANSFER WAS NOT GENUINE. IT IS KNOWN FACT THAT LEGISLATURE HAS AMENDED THE P ROVISIONS OF SECTION 56, AFTER REPEALING GIFT TAX ACT,1957.THE PURPOSE BEHIND INTRODUCING THE AMENDME NTS TO THE SECTION WAS TO CURB THE TENDENCY OF THE ASSESSEES TO GIVE/RECEIVE GIFTS TO/FROM UNRE LATED PERSONS AND TO ALLOW ONLY GENUINE GIFTS. INITIALLY ONLY MONETARY GIFTS WERE PART OF THE SAID PROVISIONS. LATER ON GIFTS IN KIND WERE ALSO INCLUDED IN THE SECTION.IN THE CASE UNDER CONSIDERA TION GIFT WAS MADE ON 01.09.2005 TO THE ASSESSEE AND THUS AMENDED PROVISIONS APPLICABLE FROM 01.10.2 009 SHOULD NOT HAVE BEEN INVOKED BY THE AO. AT THE RELEVANT TIME ONLY MONETARY GIFTS WERE TO BE TAXED. ON A QUERY BY THE BENCH IT WAS REVEALED THAT THE DEPARTMENT HAD NOT MADE ANY ADDITION IN TH E CASE OF THE CO-RECIPIENT OF THE GIFT I.E.THE MOTHER OF THE ASSESSEE WHO HAD RECEIVED ONE HALF OF THE GIFT.IT IS NOT KNOWN AS TO WHY SAME TRANSACTION HAS BEEN TREATED DIFFERENTLY BY THE DEP ARTMENTAL AUTHORITIES.AS FAR AS ORDER OF THE FAA IS CONSIDERED, HE HAS HELD THAT THE GIFT TRANSACTIO N WAS NOT GENUINE.BUT, HE HAS NOT GIVEN ANY REASONABLE BASIS FOR ARRIVING AT SUCH CONCLUSION.HE HAS POINTED AT SOME INDICATORS THAT RAISE SUSPICION,BUT STRONGEST OF SUSPICION CANNOT FASTEN TAX LIABILITY TO ANY ASSESSEE.WE CANNOT FORGET THE FACT,AS STATED EARLIER,THAT HALF PORTION OF THE GIF T HAS BEEN ACCEPTED A GENUINE GIFT BY THE DEPARTMENT.CONSIDERING THE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE AND RELYING UPON THE ORDER OF THE JAIPUR BENCH OF TRIBUNAL DELIVERED IN THE CA SE OF KOMAL KUMAR BADER (SUPRA), WE REVERSE THE ORDER OF THE FAA. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS DECIDED IN HER FAVOUR. AS A RESULT,APPEAL FIL ED BY THE ASSESSEE STANDS ALLOWED. 2,3 2,3 2,3 2,3 $4, $4, $4, $4, 5 5 5 5 '6 '6 '6 '6 + ++ + 0 0 0 0 #7, #7, #7, #7, + ++ + , , , , 89 8989 89 . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY,2014. '1 + ./% : ;'$ 8 , 2014 / + 0 < SD/- SD/- ( . . / H.L.KARWA ) ( ! / RAJENDRA ) / PRESIDENT '# '# '# '# /ACCOUNTANT MEMBER / MUMBAI, ;'$ /DATE: 08 . 05.2014 4 ITA NO. 422/M/2010 SHIVANI ARVIND VIJ. SK '1 '1 '1 '1 + ++ + (,> (,> (,> (,> ?>%, ?>%, ?>%, ?>%, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT (A) / @ A , 4. THE CONCERNED CIT / @ A 5. DR I BENCH, ITAT, MUMBAI / >B0 (,$ , . . . 6. GUARD FILE/ 0 2 )>, )>, )>, )>, (, (,(, (, //TRUE COPY// '1$ / BY ORDER, C / 8 DY./ASST. REGISTRAR , /ITAT, MUMBAI