DCIT 2(3), MUMBAI V. PARAS D. GUNDECHA, MUMBAI

ITA 8320/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88205 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Keywords: Capital asset; Gift; Earning of tax free income
• Section: 131

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI . . , ! '# , $ BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.8320/MUM/2010 ASSESSMENT YEAR: 2007-08 DCIT - 2(3), ROOM NO.556, AAYAKAR BHAVAN, MUMBAI-400020 / VS. SHRI PARAS D. GUNDECHA, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON(W), MUMBAI-400062 ( '# / REVENUE) ( ()* /ASSESSEE) P.A. NO.AACPG2599L '# + , + , + , + , / REVENUE BY SMT. PARMINDER, CIT - DR ()* + , + , + , + , / // / ASSESSEE BY): SHRI VIMAL PUNMIYA + *-! / / / / DATE OF HEARING : 20/01/2015 ./0 + *-! / DATE OF PRONOUNCEMENT : 28/01/2015 '1 '1 '1 '1 / / / / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 29/09/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI , ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE AMOUNT OF RS.33 CRORE WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF FA MILY SETTLEMENT, HENCE, NOT LIABLE TO TAX, IGNORING THE FACT THAT THE FAMILY SETTLEMENT/AGREEMENT DATED SHRI PARAS D. GUNDECHA 2 15/12/2006 DID NOT MENTION THE IMPUGNED AMOUNT TO BE GIVEN TO THE ASSESSEE BY SMT. NEETA ASHOK GUNDECHA. 2. AT THE TIME OF HEARING, SMT. PARMINDER, LD. CIT- DR, ADVANCED HER ARGUMENTS WHICH ARE IDENTICAL TO T HE GROUND RAISED BY SUPPORTING THE ADDITION MADE BY TH E LD. ASSESSING OFFICER BY FURTHER SUBMITTING THAT EV EN THE SOURCE OF IMPUGNED RECEIPT WAS NOT EXPLAINED BY THE ASSESSEE AND THIS IS AN INCOME TO THE ASSESSEE WHICH IS LIABLE TO TAX. 2.1. ON THE OTHER HAND, SHRI VIMAL PUNAMIYA, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBMITTING THAT IT IS A FAMILY SETTLEMENT AS THERE WAS A DIVISION OF PROPERTY AMONG THE FAMILY MEMBERS AND THE AMOUNT WAS RECEIVED BY WAY OF FAMILY SETTLEMENT AS THERE W AS DIFFERENT VALUATION OF DIFFERENT PROPERTIES, THUS, THE IMPUGNED AMOUNT IS NOT LIABLE TO TAX AS THERE WAS N O INCOME TO THE ASSESSEE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS IN THE BUSINESS OF BUILDING/DEVELOPING AND ALSO HOTEL BUSINESS. THE ASSESSEE WAS ALSO DIRECTOR OF M/S SE A PRINCESS HOTELS AND PROPERTIES PVT. LTD., DECLARED TOTAL INCOME OF RS.86,994/- IN HIS RETURN FILED ON 31 ST OCTOBER, 2007. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY UNDER CASS, CONSEQUENTLY, NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961(HEREINAFTER THE ACT) WAS ISSUED AND SERVED UP ON THE ASSESSEE. THE SHRI PARAS D. GUNDECHA 3 ASSESSEE ATTENDED ASSESSMENT PROCEEDINGS AND FURNISHED THE DETAILS. THE ASSESSEE, DURING THE YEA R, RECEIVED A SUM OF RS.33 CRORES FROM A CLOSE RELATIVE/FAMILY MEMBER NAMELY MS. NEETA ASHOK GUNDECHA (WIFE OF THE BROTHER OF THE ASSESSEE) AND CLAIMED THE SAME AS EXEMPT. THE DETAILS OF EXEMPT INCOME WERE FILED IN HIS RETURN BY THE ASSESSEE. T HE ASSESSEE WAS ASKED TO FURNISH BANK STATEMENT, LEDGE R EXTRACT AND DETAILS OF EACH INCOME. THE ASSESSEE V IDE LETTER DATED 21/10/2009, SUBMITTED THE LEDGER ACCOU NT ALONGWITH COPY OF GIFT DEEDS. THE ASSESSING OFFICE R ASKED THE DETAILS OF DONOR TO WHICH THE ASSESSEE AL SO FILED THE BALANCE SHEET/CAPITAL ACCOUNT OF THE DONO R (WIFE OF YOUNGER BROTHER OF THE ASSESSEE). FROM TH E RECORD, IT WAS FOUND BY THE ASSESSING OFFICER THAT THERE WAS TOTAL CAPITAL OF RS.34,06,52,123/- OUT OF WHICH A SUM OF RS.33CRORES WAS GIVEN TO THE ASSESSEE. THE ASSESSING OFFICER EXAMINED THE GENUINENESS OF THE TRANSACTIONS AND RECORDED THE STATEMENT OF SMT. NEE TA GUNDECHA U/S 131 OF THE ACT ON 07/12/2009. IN HER STATEMENT, SHE CATEGORICALLY STATED THAT SHE GAVE T HE IMPUGNED AMOUNT TO THE ASSESSEE BECAUSE OF FAMILY SETTLEMENT DEED ARRIVED AT AMONG THE FAMILY MEMBERS . THE ASSESSING OFFICER ALSO NOTED THAT AS ON 31/03/2006, SHE WAS PARTNER IN TEN FIRMS WHEREAS AS ON 31/03/2007, SHE CONTINUED/REMAINED PARTNER IN ONLY ONE FIRM AND AT THE SAME TIME, HER INVESTMENT IN SHARES OF M/S SEA PRINCESS HOTELS & PROPERTIES LTD. INCREASED TO RS.15,89,651/- FROM RS.3 LAKH. ON QUESTIONING BY THE ASSESSING OFFICER, SHE EXPLAINED THAT SHRI PARAS D. GUNDECHA 4 SHE RETIRED FROM PARTNERSHIP OF NINE FIRMS DURING T HE YEAR AND FURTHER ALONGWITH HER HUSBAND SHE RETIRED FROM VARIOUS PARTNERSHIP FIRMS. SHE FURTHER TENDER ED TO SETTLE THE MATTER PEACEFULLY THEY RETIRED FROM THE FIRMS AND THERE WAS RESHUFFLING OF THE COMPANY. THE PART OF THE STATEMENT HAS BEEN REPRODUCED IN PAGE 3 ONWARDS OF THE ASSESSMENT ORDER. SUBSEQUENTLY, VIDE LETTER DT. 14/12/2009, THE ASSESSEE FURNISHED THE DETAILS ON BEHALF OF SMT. NEETA GUNDECHA BY MENTIONING THE FAMILY ARRANGEMENTS WHICH TOOK PLACE AND THE REAL ESTATE BUSINESS WAS TAKEN OVER BY THE FAMILY OF THE ASSESSEE AND THE HOTEL BUSINESS WAS BY SHRI ASHOK GUNDECHA FAMILY (HUSBAND OF DONOR). THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE INTENTION ALLY AND DELIBERATELY UNDERSTATED THE REAL CONSIDERATION BY ADOPTING A COLOURABLE DEVICE, THE GIFT DEEDS ARE NO T PROPERLY STAMPED. THE ASSESSING OFFICER ISSUED A L ETTER DATED 16/12/2009 TO WHICH THE ASSESSEE FILED HIS RE PLY VIDE LETTER DATED 22/12/2009 BY REITERATING THAT IT WAS A FAMILY ARRANGEMENT AND THE AMOUNT WAS RECEIVED AS A GIFT/FAMILY SETTLEMENT, THEREFORE, IT IS EXEMPT U/S 56(2)(V) OF THE ACT. THE LD. ASSESSING OFFICER HEL D THAT IT WAS MERELY A COLOURABLE DEVICE AND FINALLY ADDED TH E IMPUGNED AMOUNT TO THE INCOME OF THE ASSESSEE. 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), THE FACTS WERE EXAMINED, FINALLY IT WAS CONCLUDED THAT THE SOURCE OF THE IMPUGNED RECEIPT H AS BEEN DULY EXPLAINED AND ON THE REASONING CONTAINED IN THE IMPUGNED ORDER DECIDED IN FAVOUR OF THE ASSESSE E. SHRI PARAS D. GUNDECHA 5 THE RELEVANT PORTION FROM THE CONCLUDING PARA IS REPRODUCED HEREUNDER FOR READY REFERENCE:- 5. I HAVE CONSIDERED THE FACTS OF THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. THERE IS NO MERIT IN TH E SUBMISSION OF THE AR THAT THE IMPUGNED GIFT GIVEN B Y MRS.NEETA ASHOK GUNDECHA TO THE APPELLANT WAS A GEN UINE GIFT. A GIFT IS GIVEN OUT OF NATURAL LOVE AND AFFEC TION WITHOUT ANY CONSIDERATION. IN THE PRESENT CASE, THE FAMILY SETTLEMENT HAS TAKEN PLACE WHICH COULD HE TO AVERT EITHER EXISTING OR POTENTIAL ISSUES RELATING TO DISTRIBUTI ON OF PROPERTY/ ASSETS. OBVIOUSLY, IN THESE CIRCUMSTANCES , THERE COULD BE NO NATURAL LOVE AND AFFECTION. BESID ES, IT IS NOTED THAT THE DATE ON WHICH THE IMPUGNED GIFT HAS BEEN PURPORTEDLY GIVEN AND THE DATE ON WHICH FAMILY SETT LEMENT WAS MADE ARE THE SAME. THIS MEANS THAT THIS 'GIFT D EED' WAS MADE/SIGNED SIMULTANEOUSLY WITH THE FAMILY SETTLEME NT DEED. ALSO, THE AO HAS NOTED IN PARA 6.2 OF THE ORD ER THAT THE SHARES OF M/S. SEA PRINCESS HOTELS & PROPERTIES LTD . WERE TRANSFERRED IN THE FAMILY SETTLEMENT AT AN UNDERSTA TED PRICE OF RS. 100 PER SHARE WHICH WAS SIGNIFICANTLY LOWER THA N THEIR BOOK VALUE AND INTRINSIC VALUE. THE AO HAS ALSO NOT ED THAT IT WAS TO OFFSET THIS UNDER STATEMENT IN VALUE OF SHAR ES THAT THE APPELLANT CHOSE TO TAKE THE MONEY FROM HIS BROTHER' S WIFE IN THE GUISE OF A GIFT. HENCE, THE CONTENTION OF THE A PPELLANT THAT THE IMPUGNED GIFT WAS A GENUINE GIFT CANNOT BE ACCE PTED IN THESE FACTS OF THE CASE. HENCE, THE GROUND RELATING TO GENUINENESS OF THE GIFT IS DISMISSED. 5.1 IT IS FURTHER NOTED THAT THE FACT THAT THE APPELLANT RECEIVED THE IMPUGNED AMOUNT FROM MRS. NEETA ASHOK GUNDECHA IS NOT IN QUESTION SINCE THAT FACT ALSO STANDS CONFIRMED BY THE AO IN THE ASSESSMENT O RDER. FURTHER, THE IDENTITY AND CREDITWORTHINESS OF MRS. NEETA, FROM WHOM T1E MONEY HAS FLOWED TO THE APPELLANT IS ALSO NOT IN QUESTION. ONCE IT IS HELD THAT THE SAID PAYM ENT REPRESENTS PART CONSIDERATION FOR THE SHARES OF M/S SEA SHRI PARAS D. GUNDECHA 6 PRINCESS HOTEL WHICH THE AO ADMITTED HAVING BEEN TRANSFERRED AT LOWER THAN THEIR MARKET VALUE, THE N EXT QUESTION TO BE ADDRESSED IS WHETHER SUCH RECEIPT WOULD BE EXIGIBLE TO TAX IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. IT HAS ALREADY BEEN NOTED ABOVE THAT T HE TRANSFER OF SHARES OF THE SAID HOTEL WAS A PART OF THE WIDER TERMS OF FAMILY SETTLEMENT, WHICH ALSO INCLUDED DIVISION/ DISTRIBUTION OF A LARGE NUMBER O F ASSETS INCLUDING THE OWNERSHIP OF VARIOUS FIRMS AND COMPANIES OWNING CONSTRUCTION/ HOTEL BUSINESS. LOOK ING AT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDI NG THE CASE LAWS QUOTED BY THE AR, THERE IS MERIT IN THE P LEA OF THE APPELLANT THAT IF THE SAID RECEIPT IS TREATED A S A PART OF THE FAMILY ARRANGEMENT, THEN THE SAME WOULD NOT BE LIABLE TO TAX IN VIEW OF THE RATIO OF THE VARIOUS P RONOUNCEMENTS OF THE COURTS INCLUDING THE APEX COURT AS BROUGHT O UT BY THE AR. 5.2 THERE IS NO MERIT IN THE SUBMISSIONS OF THE AR THAT AFTER THE OMISSION OF THE ERSTWHILE SECTION 10(3) W ITH EFFECT FROM 01.04.2003, CASUAL INCOME IS NOT CHARGE ABLE TO TAX. IT IS NOTED THAT SUCH INCOME IS STILL CHARGEAB LE TO TAX AND ONLY THE EXEMPTION HAS BEEN WITHDRAWN BY THE OMISSION OF THE SAID SECTION. HOWEVER, THE SOURCE O F THE IMPUGNED RECEIPT HAS BEEN DULY EXPLAINED BY THE APPELLANT. THE SOURCE OF THIS RECEIPT ALSO STANDS A DMITTED DURING EXAMINATION BEFORE THE AO BY THE PERSON WHO MADE THE SAID PAYMENT. THE PRINCIPLES DISCUSSED IN THE V ARIOUS JUDICIAL PRONOUNCEMENTS QUOTED BY THE AO ARE RIOT APPLICABLE TO THE FACTS OF THE CASE ON HAND. ALSO, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD AS LO HOW TH E SAID AMOUNT QUALIFIES TO BE HELD AS 'INCOME' WHICH WAS ACTUALLY STATED TO BE A GIFT BUT HELD T3 BE A PART OF THE FAMILY SETTLEMENT RECEIPT. THUS, EVEN FOLLOWING THE ASSESS ING OFFICERS FINDING THAT THE GIFT WAS A DEVICE TO COM PENSATE THE DONEES FAMILY FOR THE STATED UNDERSTATEMENT OF THE VALUE OF THE SHARES OF SEA PRINCES HOTEL, STILL THERE IS NO TAX AVOIDANCE SINCE THE UNDERSTATED PRICE OF SHARES IN THE FAMILY NO TAX SHRI PARAS D. GUNDECHA 7 AVOIDANCE SINCE THE UNDERSTATED PRICE OF SHARES IN THE FAMILY ARRANGEMENT IS NOT TAXABLE AS HELD IN A NUMBER OF COURT JUDGMENTS QUOTED BY THE AR. HENCE, IT IS H ELD THAT NO ADDITION ON ACCOUNT OF CASUAL INCOME COULD HAVE BEEN MADE BY THE AO IN THE CIRCUMSTANCES OF THE CASE. TH E GROUND QUESTIONING THE TAXATION OF RECEIPT OF THE S AID AMOUNT AS INCOME OF THE APPELLANT IS THEREFORE ALLO WED. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LE ADING TO ADDITION OF THE IMPUGNED AMOUNT, MATERIAL AVAILABLE ON RECORD, REPLY FILED BY THE ASSESSEE, STATEMENT OF DONOR REC ORDED U/S 131 OF THE ACT BY ASSESSING OFFICER, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THERE WAS A FAMILY AGREEMENT/ARRANGEMENT FOR D ISTRIBUTING THE PROPERTY OF THE BIGGER FAMILY/JOINT FAMILY. TH E ASSESSING OFFICER SUSPECTED THE FAMILY SETTLEMENT BY TREATING IT A COLOURABLE DEVICE. EVEN FOR ARGUMENT SAKE, IT IS PRESUMED THA T THERE WAS UNDERSTATEMENT OF VALUE OF THE PROPERTY, AS HAS BEE N ALLEGED BY THE ASSESSING OFFICER, AND ARGUED BY THE LD. CIT-DR , STILL THE AMOUNT RECEIVED BY THE ASSESSEE OUT OF THE FAMILY S ETTLEMENT CANNOT BE SAID TO BE INCOME BECAUSE IT IS OFFSHOOT OF CAPITAL ASSET OF THE JOINT FAMILY. IT IS NOT THE CASE THAT NEW I NCOME WAS GENERATED WHICH ESCAPED TAXATION. THE STATEMENT OF THE DONOR WAS RECORDED U/S 131 OF THE ACT BY THE ASSESSING OF FICER HIMSELF WHEREIN M/S NEETA ASHOK GUNDECHA, SPECIFICALLY TEND ERED THAT THE IMPUGNED AMOUNT WAS OFFSHOOT OF THE FAMILY SETT LEMENT WHILE DIVIDING THE PROPERTY AMONG THE FAMILY MEMBERS, IN REPLY TO QUESTION NO. 14, SHE EXPLAINED, WHILE TENDERING STA TEMENT, THAT AS ON 31/03/2006, SHE WAS PARTNER IN TEN FIRMS AND DUE TO FAMILY SETTLEMENT (DIVISION OF PROPERTY) SHE REMAIN ED PARTNER IN ONLY ONE FIRM AND THE HOTEL BUSINESS WENT TO THEIR SHARE AND THE SHRI PARAS D. GUNDECHA 8 PROPERTY BUSINESS WENT TO THE ASSESSEE. IF THE STA TEMENT TENDERED BY THE DONOR IS ANALYZED, THE IDENTITY OF THE DONOR, GENUINENESS OF THE TRANSACTION AND SOURCE OF THE AM OUNT IS NOT IN DISPUTE. EVEN THE ASSESSING OFFICER IN PARA 6.1 , IN RESPONSE TO LETTER DATED 14/12/2009, HIMSELF ADMITTED THIS FACT . IN PARA 6.2 OF THE ASSESSMENT ORDER, IT HAS BEEN SPECIFICALLY M ENTIONED THAT 53,220 SHARES OF M/S SEA PRINCESS HOTELS & PROPERTY PVT. LTD. WERE TRANSFERRED FROM THE FAMILY MEMBERS OF THE ASS ESSEE AND THEIR OTHER CONCERN TO THE FAMILY OF DONOR OUT OF T HE TOTAL SHARES TO THE TUNE OF 75,000. THE HOTEL/FIVE STAR HOTEL WAS SITUATED AT THE PRIME LOCATION IN MUMBAI, THE VALUE OF WHICH, A S PER THE ASSESSING OFFICER, CANNOT BE LESS THAN 100 CRORES, MEANING THEREBY, THE FACTUM OF FAMILY SETTLEMENT IS NOT DOU BT. NOW QUESTION ARISES WHETHER THE CLAIM OF EXEMPTION U/S 56(2)(V) OF THE ACT, UNDER THE FACTS AVAILABLE ON RECORD, CAN B E DENIED TO THE ASSESSEE. WE NOTE THAT ONE OF THE REASON FOR DENYI NG THE RELIEF TO THE ASSESSEE BY THE ASSESSING OFFICER IS THAT THE W RITTEN AGREEMENT WAS NOT PRODUCED BY THE ASSESSEE, WHEREAS , THE HONBLE APEX COURT IN TAKE BAHADUR BHUJIL VS DEVI S INGH BHUJIL (AIR) 1966 (SC) 292 HELD THAT FAMILY ARRANGEMENT CA N BE ARRIVED AT ORALLY. IDENTICAL RATIO WAS LAID DOWN IN SAHU M ADHO DAS VS MUKUND RAM AIR 1955 (SC) 481 AND KALE VS DY. DIRECT OR OF CONSOLIDATION AIR 1976 (SC) 807 AND ZIAUDDIN AHMAD VS CGT (1976) 102 ITR 253 (GAU.). EVEN OTHERWISE, NO NEW PROPERTY CAME IN TO EXISTENCE OR TO THE ASSESSEE BECAUSE THE ASSESSEE WAS ALREADY HAVING A RIGHT/SHARE IN THE UNDIVIDED PROPE RTY. DUE TO FAMILY SETTLEMENT/ARRANGEMENT, THE INDIVIDUAL PERSO NS BECAME FULL OWNERS OF THE PROPERTY OF THEIR RESPECTIVE SHA RE AND THEY RELINQUISHED THEIR PART OF THE SHARE WHICH WENT TO ANOTHER FAMILY MEMBERS. EVEN CAPITAL GAINS IS ATTRACTED WHEN THER E IS A SHRI PARAS D. GUNDECHA 9 TRANSFER OF PROPERTY. UNDER THE PRESENT FACT, IT I S NOT A TRANSFER OF PROPERTY RATHER IS A FAMILY SETTLEMENT THROUGH WHIC H THEIR INDIVIDUAL SHARES WERE DETERMINED OUT OF THE PROPER TY WHICH THEY WERE ALREADY HAVING. IT IS NOT THE CASE THAT THE P ROPERTY WAS RECEIVED FROM A THIRD PARTY WHERE THE ASSESSEE WAS HAVING NO INTEREST AT ALL. THE FAMILY SETTLEMENT WAS ARRIVED AT TO RESOLVE THE FAMILY DISPUTE BY PEACEFUL EQUITABLE DIVISION OF TH E PROPERTY AMONG THE UNITS/FAMILY MEMBERS OF THE JOINT/UNDIVI DED FAMILY SYSTEM. THE FAMILY SETTLEMENT WAS VOLUNTARY AND WAS NOT BY INDUCEMENT OR FRAUD. SO FAR AS, THE CONTENTION OF T HE REVENUE THAT IT WAS A GIFT IS ALSO NOT SUBSTANTIATED BY THE FACT THAT THE STATEMENT OF MS. NEETA ASHOK GUNDECHA WAS RECORDED U/S 131 OF THE ACT ON 07/12/2009 AND IN RESPONSE TO A SPECI FIC QUERY WHETHER THERE WAS A FAMILY ARRANGEMENT, SHE SPECIFI CALLY TENDERED THAT TO SETTLE THE MATTER PEACEFULLY, HER FAMILY RESHUFFLED THE SHARES HOLDING OF THE COMPANY AND DI VISION OF THE PROPERTY OF VARIOUS CONCERN WAS ARRIVED AT AMONG TH E FAMILY MEMBERS. THIS FACTUAL MATRIX HAS BEEN DULY RECORDE D IN PARA-5 (PAGE-3) OF THE ASSESSMENT ORDER ITSELF. REGARDING DIVISION OF PROPERTY HAS BEEN MENTIONED IN PARA 6.1 ONWARDS OF THE ASSESSMENT ORDER ITSELF. THEREFORE, THE SUSPICION OF THE ASSESSING OFFICER IS NOT BASED ON DOCUMENTARY EVIDE NCE. IN SUCH A SITUATION, IT CAN BE SAID THAT SUSPICION CANNOT T AKE THE SHAPE OF EVIDENCE HOWEVER STRONG IT MAY BE, MORE SPECIFIC ALLY, WHEN BY WAY OF FAMILY SETTLEMENT, THE PROPERTY WAS DIVIDED AMONG THE FAMILY MEMBERS. 2.5. SO FAR AS, SOURCE OF THE IMPUGNED RECEIPT IS C ONCERNED, THERE IS UNCONTROVERTED FINDING IN PARA 5.2 OF THE IMPUGNED ORDER THAT IT WAS DULY EXPLAINED BY THE ASSESSEE. THIS F ACTUM WAS DULY EXPLAINED BEFORE THE ASSESSING OFFICER DURING SHRI PARAS D. GUNDECHA 10 EXAMINATION/RECORDING OF STATEMENT OF THE MS. NEETA GUNDECHA. THE TOTALITY OF FACTS CLEARLY INDICATES THAT THE IM PUGNED AMOUNT CANNOT BE SAID TO BE INCOME IN THE HANDS OF THE ASS ESSEE AS THE SAME WAS OFFSHOOT OF FAMILY SETTLEMENT OF THE PROPE RTY WHICH WAS ALREADY IN EXISTENCE. 2.6. ANOTHER ARGUMENT TAKEN BY THE LD. CIT-DR THAT THERE WAS NO NATURAL LOVE AND AFFECTION BY THE DONOR WHEN THE RE WAS A DIVISION OF PROPERTY. WE ARE UNABLE TO APPRECIATE, THIS TYPE OF CONTENTION BECAUSE WHEN THERE IS A DIVISION OF PROP ERTY, IT WAS NOT A MARRIAGE LIKE CEREMONY AND SECONDLY, IF THE D IVISION OF THE PROPERTY IS BY WAY OF MUTUAL SETTLEMENT, DEFINITELY , THE FAMILY AVOIDED PROLONGED LITIGATION AND COMPLETED THE SETT LEMENT PEACEFULLY, THEREFORE, IT CANNOT BE PRESUMED THAT T HERE WILL BE NATURAL LOVE AND AFFECTION. EVEN OTHERWISE, WHILE DISTRIBUTING THE PROPERTY, THE MARKET VALUE IS DETERMINED ON THE BAS IS OF MARKET VALUATION AND OTHER CONSIDERATIONS AND IT IS ALWAYS NOT POSSIBLE TO DIVIDE THE PROPERTY IN EQUAL PARTS AND IT CAN BE COMPENSATED BY WAY OF MAKING THE PAYMENT OR BY GIVING THE ANOTH ER PROPERTY TO THE OTHER FAMILY MEMBERS. THE PROPERTY CANNOT B E PHYSICALLY WEIGHED ON THE SCALE AND IS TO BE VALUED ONLY FOR S ETTLING THE MATTER. 2.7. ANOTHER CONTENTION RAISED BY THE LD. CIT-DR A ND ALSO MENTIONED IN PARA 6.2 OF THE ASSESSMENT ORDER THAT SHARES OF M/S. SEA PRINCESS HOTEL AND PROPERTIES LTD. WERE TR ANSFERRED LOWER THAN THE BOOK VALUE AND THE IMPUGNED GIFT WAS NOT GENUINE IS ALSO NOT SUBSTANTIATED AND ALSO NOT BORNE OUT OF FACTS, BECAUSE UNLESS AND UNTIL THE FAMILY MEMBERS AGREE BY WAY OF FAMILY SETTLEMENT, IT CANNOT GO THROUGH BECAUSE THERE MAY BE POSSIBILITY OF COMPENSATING THE VALUE IN EITHER TERMS OF MONEY OR BY PROVIDING EQUIVALENT SHARE IN ANOTHER PROPERTY BUT FACT REMAINS SHRI PARAS D. GUNDECHA 11 THAT THE SOURCE OF THE IMPUGNED RECEIPT HAS BEEN DU LY EXPLAINED. THE FAMILY IS CONSISTING OF BUSINESSMEN/BUSINESSWO MEN AND ALL THE MEMBERS ARE AWARE ABOUT THE MARKET VALUE OF THE TOTAL PROPERTY AND HOW TO SAFEGUARD THEIR INTEREST IN A B EST MANNER, THEREFORE, THERE IS NO QUESTION OF UNDERSTATEMENT. EVEN, IF IT IS PRESUMED THAT THE VALUATION WAS UNDERSTATED, IT CAN BE OF THE TOTAL PROPERTY AND NOT OF THE SINGLE PROPERTY. STI LL FACT REMAINS THAT THE ENTIRE PROPERTY WAS IN EXISTENCE AT THE TI ME OF PARTITION IN WHICH CONCERNED FAMILY MEMBERS WERE HAVING THEIR INTEREST/SHARES, THEREFORE, IT WAS CLEARLY A FAMILY SETTLEMENT. THEREFORE, THE FAMILY ARRANGEMENT IS NOT TAXABLE AN D NO ADDITION WAS WARRANTED ON THE INCOME WHICH NEVER AROSE TO TH E ASSESSEE. AS DISCUSSED EARLIER, THE ENTIRE PROPERTY WAS ALREA DY IN EXISTENCE HAVING COMMON SHARES AND BY WAY OF THE MUTUAL SETTL EMENT ONLY THE RESPECTIVE SHARES WERE DETERMINED. THUS, WE FIN D NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 /01/2015. '1 + ./0 2'3 28/01/2015 / + 9 SD/- (N.K.BILLAIYA) SD/- (JOGINDER SINGH) ! '# ! '# ! '# ! '# / ACCOUNTANT MEMBER '# '# '# '# / JUDICIAL MEMBER MUMBAI; 2' DATED : 28/01/201 5 F{X~{T? P.S/. .. '1 + :* ;0* '1 + :* ;0* '1 + :* ;0* '1 + :* ;0*/ COPY OF THE ORDER FORWARDED TO : 1. <= / THE APPELLANT 2. :><= / THE RESPONDENT. 3. ? ( ) / THE CIT, MUMBAI. SHRI PARAS D. GUNDECHA 12 4. ? / CIT(A)- , MUMBAI 5. A9 :* , , / DR, ITAT, MUMBAI 6. 9B( C / GUARD FILE. '1 '1 '1 '1 / BY ORDER, >* :* //TRUE COPY// D DD D/ // /E ' E ' E ' E ' (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI