ACIT 24(3), MUMBAI V. RAKESH KUMAR GARODIA, MUMBAI

ITA 4528/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2480 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITIN R WAGHMODE
• Assessee Lawyers: JITENDRA SINGHAR
• Keywords: Gift; Depreciation; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 56(2); 147; 148; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUMBAI BEFORE SHRI B.R.BASKARAN, AM & SHRI PAWAN SIN GH, JM ITA NO.4528/MUM/ 2013 (ASSESSMENT YEAR : 2006-07) ACIT 24(3), ROOM NO.413,7 TH FLOOR, BKC, BANDRA (E), MUMBAI-400051. VS. SHRI RAKESH KUMAR GARODIA, GOVIND NAGAR, PAWAN BAUG ROAD, MALAD (WEST), MUMBAI-400061. PA N/GIR NO.: AAAPG8736D ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI NITIN R. WAGHMODE (DR) ASSESSEE BY : SHRI JITENDRA SINGH(AR) DATE OF HEARING : 11/07/2016 DATE OF PRONOUNCEMENT: 20/07/2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-34, MUMBAI DATED 05.03.2013 FOR ASSESSMENT YEAR (AY)-2006-07. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM AND H OLDING THAT THE REOPENING PROCEEDINGS U/S.147 OF THE ACT INITIATED BY THE AO WAS BAD 'IN LAW AND BASED ON CHANGE OF OPINION DESPITE THE TRUTH THAT NEITHER AO RAISED QUERY ON NON- APPLICABILITY OF SECTION 56(2)(V) NOT ASSESSEE GAVE ANY CLARIFICATION DURING ORIGINAL ASSESSMENT PROCEEDINGS, HENCE NO APPLICATI ON OF MIND; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THE REOPENING U/S.147 BAD I N LAW, IGNORING THAT THE REOPENING IS DONE WITHIN 4 YEARS FROM THE END OF RE LEVANT ASSESSMENT YEAR; 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ADJUDICATING THE APPEAL IN FAVOUR O F ASSESSEE WHEN THE GIFT RECEIVED FROM HUF CANNOT BE TREATED AS EXEMPT AS HU F DOES NOT COMPRISE IN THE DEFINITION OF CLOSE RELATIVE AS PER THE PROV ISIONS OF SECTION 56(2)(V) OF THE ACT AND THUS LD.CIT(A) NOT BELIEVING UNAMBIGUOU S LANGUAGE OF AFORESAID SECTION.' THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APP ELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH M AY BE NECESSARY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 24.07.2006. THE RETURN OF INCOME WAS SELECTED FO R SCRUTINY. AFTER ISSUING NOTICE U/S. 143(2) AND 142(1) AND CONSIDERING THE R EPLY THEREOF, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 14.11.2008. SUBSEQUENTLY, THE CASE WAS RE-OPENED U/S. 147 OF THE ACT, VIDE NOTICE U/S. 148 WAS ISSUED ON 24.03.2011. THE ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 2 ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER (AO) AND SOUGHT REASONS OF RE- OPENING WHICH WAS SUPPLIED ALONG WITH NOTICED DATED 28.07.2011. THE FOLLOWING REASONS WERE SUPPLIED TO THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE RECEIVED GIFT OF RS. 82 LAKH FROM SH RAKESH N GARIDIA HUF, OF WHICH THE ASS ESSEE IS KARTA. PERUSAL OF DETAILS OF INCOME REVEALED THAT ASSESSEE HAS CLA IMED THIS GIFT RECEIVED OF RS. 82 LAKHS AS ACCEPTED UNDER SECTION 10(42). AS P ER THE PROVISIONS OF SECTION 56(2)(V) OF THE ACT, THE KARTA OR C0-OPARC ENAR OF THE HUF IS NOT PRESCRIBED IN THE DEFINITION OF RELATIVE, HENCE THE AMOUNT OF RS.82 LAKHS RECEIVED BY THE KARTA FROM HUF AND CLAIMED AS GIFT IS NOT A GIFT. THEREFORE, THE UNDERSIGNED HAS REASON TO BELIEVE TH AT THE INCOME TO THAT EXTENT HAS A ESCAPED ASSESSMENT. IN ORDER TO TAX TH E SAID AMOUNT, THE NOTICE UNDER SECTION 148 IS BEEN ISSUED TO REOPEN THE ASSE SSMENT UNDER SECTION 147. THE ASSESSEE VIDE HIS REPLY DATED 04.09.2011 SUBMI TTED THAT THE RETURN FILED EARLIER ON 24.07.2006 BE TREATED AS RETURN AGAINST THE NOTI CE U/S. 148. DURING THE REASSESSMENT PROCEEDING, THE GIFT OF RS. 82 LACS CL AIMED EXEMPTED U/S. 56(2)(V) FROM HUF WAS DISALLOWED HOLDING THAT GIFT RECEIVED BY THE ASSESSEE FROM HUF IS NOT COVERED AS PER EXPLANATION ATTACHED TO SECTION 56(2)(V) OF THE ACT. RESULTANTLY, THE GIFT RECEIVED BY ASSESSEE WAS TREA TED UNDER THE HEAD INCOME FROM OTHER SOURCES, IN THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 147 OF THE ACT. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AP PEAL BEFORE THE CIT(A), WHEREIN THE REASSESSMENT WAS HELD AS BAD-IN-LAW. AG GRIEVED BY THE IMPUGNED ORDER OF CIT (A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND AUTHORIZED REPRESENTATIVE (AR) OF ASSESSEE. THE DR FOR REVENUE ARGUED THAT CIT(A) WRONGLY HELD THAT RE-OPENING WAS BAD-IN-LAW OR THE SAME WAS BASED ON THE CHANGE OF OPINION. DURING THE ORIGINAL ASSESSMENT PROCEEDI NG, THERE WAS NO APPLICATION OF MIND WITH REGARD TO THE GIFT RECEIVED FROM HUF. LD DR FURTHER SUPPORTED THE ORDER OF AO U/S. 143(3) R.W.S.147 OF THE ACT. ON TH E OTHER HAND, AR OF THE ASSESSEE ARGUED THAT DURING THE ORIGINAL ASSESSMENT PROCEEDING, THE AO ISSUED NOTICE U/S. 142(1) DATED 31.10.2008 ALONG WITH THE DETAILED QUESTIONARY AND VIDE QUESTION NO. 12, THE AO REQUIRED THE DETAILS OF GIF T RECEIVED BY ASSESSEE. THE ASSESSEE SUBMITTED THE REPLY ON ALL QUERIES INCLUDI NG GIFT RECEIVED FROM RAKESH GARODIA (HUF) ALONG WITH THE DECLARATION OF GIFT WH ICH WAS DULY ACCEPTED BY THE AO WHILE PASSING THE ASSESSMENT ORDER U/S. 143(3) D ATED 14.11.2008. LD AR OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF IT AT ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 3 HYDERABAD IN ITA NO. 47/HYD/13 TITLED AS ITO VS. DR . M. SHOBHA RAVHUVEERA AND ON THE DECISION OF JURISDICTIONAL HIGH COURT IN GER MAN REMEDIES LTD VS DCIT(2006) 285 ITR 26 (BOM). 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE ORIGINAL ASSESSMENT PROCEEDING, NOTICE U/S. 142(1) WAS ISSUED ALONG WITH THE DETAILED QUERIES. AND PAR TICULARLY WHILE QUERY NO.12, THE AO SEEK THE DETAILS OF GIFT RECEIVED BY THE ASSESSE E. THE ASSESSEE FURNISHED ITS REPLY ALONG WITH THE DOCUMENTARY EVIDENCE IN THE FO RM OF DECLARATION OF GIFT RECEIVED BY ASSESSEE FROM HUF. AFTER SEEKING EXPLA NATION, THE AO PASSED ASSESSMENT ORDER DATED 14.11.2008. THE ASSESSMENT W AS RE-OPENED BY THE AO VIDE NOTICE DATED 24.03.2011 I.E. WITHIN 4 YEARS OF COMP LETION OF ORIGINAL ASSESSMENT. THE ASSESSEE FILED THE REPLY TO THE NOTICE OF RE-OP ENING VIDE REPLY DATED 09.06.2011. ALONG WITH REPLY, THE ASSESSEE SOUGHT F OR THE REASONS RECORDED FOR RE- OPENING. THE REASONS FOR RE-OPENING WAS SUPPLIED TO THE ASSESSEE VIDE LETTER DATED 28.07.2011, THEREAFTER, ASSESSEE SUBMITTED VIDE HIS LETTER DATED 04.09.2011 THAT ORIGINAL RETURN WAS FILED BY ASSESSEE ON 24.07.2006 BE TREATED AS A RETURN FILED IN COMPLIANCE OF NOTICE U/S. 148. AGAIN THE AO ISSUED NOTICE U/S. 143(2). THE ASSESSEE SUBMITTED ITS REPLY AND CONTENDED THAT DUR ING THE ORIGINAL ASSESSMENT PROCEEDING, THE AO SPECIFICALLY ASKED FOR THE DETAI LS OF THE GIFTS RECEIVED DURING THE ACCOUNTING YEAR WHICH WAS FURNISHED BY THE ASSE SSEE. THE ASSESSEE FURTHER CONTENDED THAT THE NOTICE ISSUED U/S. 148 R.W.S. 14 7 IS VOID AB-INITIO AND BE QUASHED. WE HAVE PERUSED THE NOTICE U/S 142(1) DATE D 31/10/2008 AND THE DETAILED QUESTIONARY INCLUDING QUESTION NO 12 DETAILS OF G IFT GIVEN AND RECEIVED. THE ASSESSEE SUBMITTED THE REPLY OF ALL QUESTION AND TH E DETAILS OF GIFT AND SUBMITTED THE DOCUMENT IE DECLARATION OF GIFT DATED 19/09/2 005. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AND AO CONCLUDED AS PER E XPLANATION TO SEC. 56(2)(V) OF THE ACT, THE GIFT RECEIVED FROM THE PERSON MENTI ON THEREIN IS EXEMPT. THE HUF IS NOT MENTIONED IN THE LIST OF RELATIVE, AND TREA TED THE GIFT AS INCOME FROM OTHER SOURCES. HOWEVER, THE CIT(A) WHILE DEALING WITH TH E GROUNDS OF VALIDITY OF RE- OPENING OBSERVED THAT DURING THE ASSESSMENT, THE DE TAILS ALONG WITH GIFT-DEED WERE FURNISHED TO AO. THE PERUSAL OF DOCUMENTS/GIFT-DEED CLEARLY INDICATES THAT ASSESSEE IN HIS CAPACITY AS KARTA OF HUF GIVEN A GIFT OF RS. 82 LACS TO THE INDIVIDUAL. THE GIFT WAS GIVEN BY WAY OF CHEQUE WHI CH WAS DULY ACCEPTED BY THE AO, THUS THE ISSUE OF NOTICE U/S. 148 IS BASED ON R EAPPRAISAL THE SAME MATERIAL WHICH AMOUNTS TO CHANGE OF OPINION AND THUS THE SAM E IS BAD IN LAW. HOWEVER, ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 4 AFTER CONSIDERING THE MERIT OF THE CASE, THE APPEAL OF THE ASSESSEE WAS ALLOWED. IN GERMAN REMEDIES LTD. VS. DCIT REPORTED VIDE (2006) 285 ITR 26 (BOM), THE JURISDICTIONAL HIGH COURT HELD AS UNDER: THOUGH THE POWER CONFERRED UNDER SECTION 147 OF TH E INCOME-TAX ACT, 1961, FOR REOPENING A CONCLUDED ASSESSMENT IS VERY WIDE, IT CANNOT BE EXERCISED MECHANICALLY OR ARBITRARILY. THE EXPRESSION REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ME ANS ENTERTAINING A REASONABLE BELIEF THAT A PARTICULAR INCOME WENT UNN OTICED BY THE ASSESSING OFFICER AND HENCE ESCAPED ASSESSMENT. EVEN AFTER TH E INTRODUCTION OF THE CONCEPT OF DEEMED ESCAPEMENT OF INCOME BY EXPLANATI ON 2 TO SECTION 147 OF THE ACT WITH EFFECT FROM APRIL 1,1989, THE BELIEF T HAT THE INCOME HAS ESCAPED ASSESSMENT ENTERTAINED BY THE ASSESSING OFFICER MUS T BE A PRUDENT BELIEF AND NOT MERE CHANGE OF OPINION. THE ASSESSMENT ORDER PA SSED AFTER DETAILED DISCUSSION CANNOT BE REOPENED WITHIN A PERIOD OF FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT DUE TO SOME INHERENT DEFECT IN THE ASS ESSMENT, INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED OR ASSESSED AT TOO LO W A RATE OR EXCESSIVE RELIEF HAS BEEN GRANTED OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THE ACT HAS BEEN COMPUTED. IN CIT VS. DR. M. SHOBHA RAVHUVEERA (SUPRA) THE CO- ORDINATE BENCH OF HYDERABAD TRIBUNAL WHILE CONSIDERING THE IDENTICAL GROUND AND RELYING ON THE DECISION OF AHMADABAD BENCH IN HARSHABHAI DAHYALAL VAIDHYA (HUF) V/S. ITO (155 TTJ (AHD) 71) HOLD THAT HUF IS NOTHING BUT TH E GROUP OF RELATIVE. MERELY BECAUSE IT HAS GIVEN A LEGAL STATUS AS A HUF, THE I NDIVIDUAL DO NOT LOSE THEIR IDENTITY AS RELATIVE AND SUCH GROUP OF RELATIVE, WH O ARE MEMBER OF HUF CLEARLY FALLS WITHIN THE DEFINITION OF TERM RELATIVE AS P RESCRIBED IN THE EXPLANATION TO CLAUSE-5 OF SUB-SECTION 2 OF SECTION 56. THE CO-ORD INATE BENCH OF HYDERABAD TRIBUNAL REFERRED THE RATIO OF HARSHABHAI DAHYALAL VAIDHYA (HUF) V/S. ITO (SUPRA) AS UNDER: 7.1 FOR THE YEAR UNDER CONSIDERATION, I.E. AY 2005 -06 THE DEFINITION OF 'RELATIVE' WAS IN RESPECT OF THE RELATIONSHIP BY AN INDIVIDUAL DONEE WITH CLOSE- RELATIVES AS DEFINED THEREIN. HOWEVER, IT IS VERY P ERTINENT TO NOTE THAT THE OPERATIVE SECTION I.E. SECTION 56(2)(V) WAS IN RESP ECT OF (I) INDIVIDUAL, AND (II) HINDU UNDIVIDED FAMILY (HUF). MEANING THEREBY THE L EGISLATURE HAS CLEAR INTENTION TO INCLUDE BOTH THE STATUSES I.E. INDIVID UAL AS WELL AS HUF WITHIN ITS SCOPE; AS WELL AS; WITHIN ITS OPERATION. THUS, THE SECTION IS APPLICABLE IN RESPECT OF MONEY EXCEEDING RS.25,000/- RECEIVED WIT HOUT CONSIDERATION EITHER BY AN 'INDIVIDUAL' OR BY A 'HUF'. NOW WE READ THE P ROVISO ANNEXED TO SUB- SECTION (V) THAT THE CHARGING CLAUSE SHALL NOT APPL Y TO ANY SUM OF MONEY RECEIVED FROM ANY RELATIVE. MEANING THEREBY THE PRO VISO IS APPLICABLE TO BOTH OF THEM I.E. 'INDIVIDUAL' AS WELL AS 'HUF'. THE DON ORRELATIVE CAN BE EITHER RELATIVE OF 'INDIVIDUAL' OR 'HUF'; AS THE CASE MAY BE. IN OTHER WORDS, IF AN AMOUNT EXCEEDING RS.25,000/- IS RECEIVED AS A GIFT EITHER BY 'INDIVIDUAL' OR BY 'HUF', THEN SUCH AN AMOUNT IS CHARGEABLE TO INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' BUT AN EXCEPTION IS PROVIDED IN THE FIRST PROVISO THAT THE SAID CLAUSE OF CHARGING THE AMOUNT TO TAX SHOULD NO T APPLY TO AN AMOUNT RECEIVED FROM ANY RELATIVE. WE HEREBY THUS INTERPRE T THAT THE PROVISO PRESCRIBES THAT THE CHARGING OF THE GIFTED AMOUNT S HALL NOT APPLY TO ANY SUM OF ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 5 MONEY RECEIVED AS A GIFT FROM A 'RELATIVE' EITHER B Y AN 'INDIVIDUAL' OR BY 'HUF'. NATURALLY, THE PROVISO ANNEXED TO CLAUSE (V) OF SECTION 56(2) DO NOT RESTRICT TO AN 'INDIVIDUAL' BUT IT GOVERNS 'INDIVID UAL' AS WELL AS A 'HUF'. WITH THIS ITA NO.47/HYD/2013 DR. M.SHOBHA RAVHUVEERA, HY DERABAD 5 UNDERSTANDING/INTERPRETATION OF THE MAIN PROVISIONS , WE HAVE TO EXAMINE THE DEFINITION OF 'RELATIVE' GIVEN IN EXPLANATION ANNEX ED TO THIS SECTION. THE POSITION SHALL BE ABSOLUTELY CLEAR THAT EVEN IN CAS E OF HUF IF A SUM OF MONEY IS RECEIVED FROM ANY RELATIVE AND THAT RELATIVE IS AS DEFINED IN EXPLANATION, THEN ALSO FALL WITHIN THE EXCEPTION AS PRESCRIBED I N THIS SECTION. 7.2. ON OUR STUDY, WE HAVE PONDERED UPON THE COMMEN TARY OF SAMPATH IYENGAR 'LAW OF INCOME TAX' 10TH EDITION PAGE 461 1 AND THE COMMENTS ARE REPRODUCED BELOW:- 'EXPLANATION TO CLAUSE (V) THE E XPLANATION TO CLAUSE (V), WHICH DEFINES A RELATIVE, IS WIDE ENOUGH TO INCLUDE SPOUSE, BROTHER OR SISTER, THEIR SPOUSES, BROTHER OR SISTER OF EITHER PARENTS OF THE INDIVIDUAL AND LINEAL ASCENDANT OR DESCENDANT OF BOTH THE INDIVIDUAL AND HIS/HER SPOUSE AND THE SPOUSE OF ANY OF THE PERSONS MENTIONED HEREIN BEFOR E. HENCE, THE DEFINITION COVERS ONLY RELATIVES OF THE INDIVIDUALS, SO THAT T HE EXPLANATION SEEMS TO HAVE OVERLOOKED THE PROVISION IN THE MAIN SECTION SPARIN G LIABILITY FOR HINDU UNDIVIDED FAMILY (HUF) IN RESPECT OF GIFTS FROM REL ATIVES. EVEN THE OTHER EXEMPTION AS FOR OCCASION ON THE MARRIAGE OF INDIVI DUALS OR INHERITANCE COULD HAVE NOT APPLICATION TO THE HUF. IN THE CASE OF HUF , SINCE THE JOINT FAMILY REFERS TO A GROUP OF PERSONS, IT EITHER MEANS THAT THE EXEMPTION IS AVAILABLE FOR GIFTS RECEIVED BY THE HUF FROM ANY PERSON RELATED T O THE KARTA OR ANY OTHER FAMILY MEMBER OR IT MAY MEAN THAT SINCE HUF CANNOT HAVE RELATIVES, ALL THE GIFTS RECEIVED BY THE HUF WILL BE TAXABLE. THIS INF ERENCE DOES NOT OBVIOUSLY FALL IN LINE WITH THE INTENT, BECAUSE THE PROVISION DOES CONTEMPLATE EXEMPTION OF THE GIFTS RECEIVED BY HUF, BUT HAS NOT INDICATED THE RELATIONSHIP THAT IS NECESSARY FOR THE PURPOSES OF HUF, BECAUSE THE DEFI NITION OF RELATIVE IN THE EXPLANATION REFERS TO THE RELATIVES OF THE INDIVIDU AL AND NOT HUF, WITH THE RESULT THAT THE EXEMPTION OF GIFT FROM RELATIVES IS ALIVE ONLY TO THE EXTENT OF POSSIBLE EXEMPTION FOR GIFTS BY WILL OR IN CONTEMPL ATION OF DEATH.' 7.3. OUR ABOVE VIEW GETS SUPPORT FROM AN ORDER OF R ESPECTED RAJKOT BENCH PRONOUNCED IN THE CASE OF VINEETKUMAR RAGHAVJIBHAI BHALODIA VS. ITO REPORTED AT (2011) 140 TTJ (RAJKOT) 58. IN THAT CIT ED DECISION, AN INDIVIDUAL HAS RECEIVED A GIFT FROM HUF. THE AO WAS OF THE VIE W THAT THE HUF BEING NOT COVERED WITHIN THE DEFINITION OF 'RELATIVE', THEREF ORE THE GIFT RECEIVED BY THE INDIVIDUAL FROM THE HUF WAS TAXABLE. THE RESPECTED BENCH HAS COMMENTED THAT AS PER THE DEFINITION OF 'PERSON' DEFINED IN S ECTION 2(31) INCLUDES 'HUF'. THEREFORE A HUF IS DISTINCTLY ASSESSABLE TO TAX AS A PERSON UNDER THE IT ACT. THE BENCH HAS OBSERVED THAT, QUOTE 'THEREFORE, THE EXPRESSION 'HUF' MUST BE CONSTRUED IN THE SENSE IN WHICH IT IS UNDERSTOOD UNDER THE HINDU LAW AS HAS BEEN IN THE CASE OF SURJIT LAL CHHABDA VS. CIT 1976 CTR (SC) 140: (1975) 101 ITR 776 (SC). ACTUALLY AN 'HUF' CONSTITUTES ALL PERSONS LINEALLY DESCENDED FROM A COMMON ANCESTOR AND INCLUDES THEIR MOTHERS, WIVES OR WIDOWS AND UNMARRIED DAUGHTERS. ALL THESE PERSONS F ALL IN THE DEFINITION OF 'RELATIVE' AS PROVIDED IN EXPLANATION TO CL.(VI) OF S. 56(2) OF THE ACT. THE OBSERVATION OF THE CIT(A) THAT HUF IS AS GOOD AS A BOI AND CANNOT BE TERMED AS 'RELATIVE' IS NOT ACCEPTABLE. RATHER, AN HUF IS A GROUP OF RELATIVES. NOW HAVING FOUND THAT AN HUF IS A GROUP OF RELATIV ES, THE QUESTION NOW ARISES AS TO WHETHER WOULD ONLY THE GIFT GIVEN BY T HE INDIVIDUAL RELATIVE FROM THE HUF BE EXEMPT FROM TAXATION AND WOULD, IF A GIF T COLLECTIVELY GIVEN BY THE ITA NO.47/HYD/2013 DR. M.SHOBHA RAVHUVEERA, HYDERAB AD 6 GROUP OF RELATIVES FROM THE HUF NOT EXEMPT FROM TAXATION.' UNQUOTE. ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 6 7.4. THE RESPECTED CO-ORDINATE BENCH HAS ALSO EXAMI NED THE INTENTION OF THE LEGISLATURE AND THEREUPON MADE AN OBSERVATION THAT, QUOTE '11.2. FURTHER, FROM A PLAIN READING OF S. 56(2)(VI) ALONG WITH THE EXPL ANATION TO THAT SECTION AND ON UNDERSTANDING THE INTENTION OF THE LEGISLATURE F ROM THE SECTION, WE FIND THAT A GIFT RECEIVED FROM 'RELATIVE', IRRESPECTIVE OF WH ETHER IT IS FROM AN INDIVIDUAL RELATIVE OR FROM A GROUP OF RELATIVES IS EXEMPT FRO M TAX UNDER THE PROVISIONS OF S.56(2) (VI) OF THE ACT AS A GROUP OF RELATIVES ALS O FALLS WITHIN THE EXPLANATION TO S.56(2)(VI) OF THE ACT. IT IS NOT EXPRESSLY DEFI NED IN THE EXPLANATION THAT THE WORD 'RELATIVE' REPRESENTS A SINGLE PERSON. AND IT IS NOT ALWAYS NECESSARY THAT SINGULAR REMAINS SINGULAR. SOMETIMES A SINGULAR CAN MEAN MORE THAN ONE, AS IN THE CASE BEFORE US. IN THE CASE BEFORE US THE AS SESSEE RECEIVED GIFT FROM HIS HUF. THE WORD 'HUF', THOUGH SOUNDS SINGULAR UNIT IN ITS FORM AND ASSESSED AS SUCH FOR INCOMETAX PURPOSES, FINALLY AT THE END A 'HUF' IS MADE UP OF 'A GROUP OF RELATIVES'. UNQUOTE. THE ABOVE OBSERVATION HAS BUTTRESSED OUR VIEW, HOWEVER, IN ADDITION TO THE ABOVE OBSERVATION OF A COORDINATE BENCH, WE HAVE ALSO NOTED THAT AT SOME LATER STAGE, THE LEGISLATUR E BECAME CONSCIOUS OF THE PROBLEM, THEREFORE WHILE DRAFTING THE ANALOGOUS PRO VISIONS OF SECTION 56(2)(VII), IT WAS ADDED IN THE DEFINITION OF 'RELA TIVE' (II) IN CASE OF A HINDU UNDIVIDED FAMILY, ANY MEMBER THEREOF. THIS SECTION IS INSERTED BY FINANCE (NO.2) ACT OF 2009 W.E.F. 1/10/2009 WHICH PRESCRIBE S THAT WHERE AN INDIVIDUAL OR HUF RECEIVES IN ANY PREVIOUS YEAR ON OR AFTER 1S T DAY OF OCTOBER- 2009 ANY SUM OF MONEY WITHOUT CONSIDERATION EXCEEDING RS.50, 000/- THE WHOLE OF THE AGGREGATE VALUE OF SUCH SUM SHALL BE CHARGEABLE TO INCOME-TAX. PROVIDED THAT THE CHARGING CLAUSE SHALL NOT TO APPLY TO ANY SUM O F MONEY RECEIVED FROM ANY RELATIVE. AS PER THIS NEWLY INSERTED CLAUSES, (A) ' RELATIVE' MEANS IN CASE OF HUF ANY 'MEMBER THEREOF'. ALTHOUGH THIS SUBSEQUENT CHANGE IN THE ACT DO NOT APPLY FOR THE YEAR UNDER CONSIDERATION BEING IN CORPORATED BY FINANCE ACT, 2009 BUT IT APPEARS THAT BY INSERTION OF THESE WORD S HONBLE LEGISLATURES HAVE VISUALIZED THE DIFFICULTY, HENCE STREAMLINED THE PR OVISIONS BY REMOVING THE DOUBT. WE THEREFORE HOLD THAT SINCE THE ASSESSEE-HU F HAS UNDISPUTEDLY RECEIVED A GIFT OF RS.7 LACS FROM A RELATIVE WHO IS AN UNCLE OF THE KARTA OF THIS HUF, I.E.; AS PER EXPLANATION TO SUB-CLAUSE(IV); 'B ROTHER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUAL', HENCE FALL WITHIN T HE CATEGORY OF THE 'RELATIVE' PRESCRIBED IN THE ACT, THEREFORE NOT CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. THUS THE GROUNDS RAISED ARE HEREBY ALLOWE D. 5. NOW COMING TO THE FACT OF THE PRESENT CASE, IN THE PRESENT CASE THE RE-OPENING WAS MERELY BASED ON CHANGE OF OPINION. DURING THE ORIGI NAL ASSESSMENT PROCEEDING, THE AO SEEK THE CLARIFICATION WITH REGARD TO THE GI FT RECEIVED FROM THE HUF THE SAME WAS FURNISHED BEFORE THE AO, AO PASSED THE ORD ER AFTER CONSIDERING THE MATERIAL AVAILABLE BEFORE HIM, THUS KEEPING IN VIEW THE DECISION OF BOMBAY HIGH COURT IN GERMAN REMEDIES LTD. (SUPRA), THE RE-OPENI NG WAS BASED ON MERE CHANGE OF OPINION AND THUS IN OUR CONSIDERED OPINION, THE SAME IS INVALID. NOW COMING TO THE MERIT OF THE CASE, THE CO-ORDINATE BENCH OF HYD ERABAD TRIBUNAL IN THE CASE OF DR. M. SHOBHA RAVHUVEERA (SUPRA) AND AHMADABAD TRIB UNAL IN HARSHABHAI DAHYALAL VAIDHYA (HUF) (SUPRA) HELD THAT HUF IS NOT HING BUT A GROUP OF RELATIVES. THE STATUS AS HUF, DO NOT LOSE THEIR IDENTITY AS THE RELATIVES AS PROVIDED IN THE EXPLANATION ATTACHED TO CLAUSE-5 OF SUB-SECTION 2 O F SECTION 56 OF INCOME-TAX ACT, ITA NO.4528/M/13 SHRI RAKESH KUMAR GARODIA 7 THUS RESPECTFULLY FOLLOWING THE DECISION OF COORDIN ATE BENCH WE CONFIRM THE FINDINGS OF LD CIT(A). WE ORDER ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20/07 /2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 20/07/2016 SK, PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/