SMT. PREMA MUKESH JHALANI ,MUMBAI V. ITO WARD 3(2) , THANE

ITA 4753/MUM/2024

AI Insights

The case involves Smt. Prema Mukesh Jhalani, who appealed against the order of the National Faceless Appeal Centre, Delhi, which upheld the AO's decision to reopen her assessment for the year 2011-12 and make additions under section 56(2)(vii)(c) of the Income Tax Act, 1961. The appellant had received gifts of equity shares from 20 different donors, which the AO treated as income from other sources. The Tribunal examined the legality of the reassessment and the applicability of section 56(2)(vii)(c), concluding that the gifts were not taxable in the hands of the appellant for the assessment year in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652839 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: Charanjiv Lal Aggarwal vs. ITO, Vasudev Ramchandra Shelat vs. Pranlal Jayanand Thakkar, CIT vs. M. Ramaswamy, CIT vs. Gangeshwari Metal P. Ltd, PCIT vs. Jatin Investments P. Ltd, PCIT vs. Laxman Industrial Resources Ltd, CIT vs. ARL Infratech Ltd, CIT vs. Jalan Hardcoke, Dhirajlal Girdharilal vs. CIT, Dhakeshwari Cotton Mills vs. CIT, Lal Chand Bhagat Ambika vs. CIT, Asst. CIT vs. Rajesh Jhaveri Stock Brokers (P.) Ltd, SFIL Stock Broking Ltd. vs. ITO, Mohd. Yousuf Wani vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHETAN M. KACHA
• Assessee Lawyers: NISHIT GANDHI
• Keywords: Question of law; Fair market value; Gift; Search and seizure; Reason to believe; Share purchase agreement; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 56; 131; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE HON‟BLE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER & SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA No. 4753/Mum/2024 (Assessment Year: 2011-12) Smt. Prema Mukesh Jhalani 1 A/34, Drugs Society, Opp. JK Gram, Samatha Nagar Pokhran Road No. 1 Thane (W). Vs. ITO, Ward 3(2) Room No. 4, 6th Floor, B-Wagle Estate, MIDC, Thane (W) PAN/GIR No. AAUPJ0472D (Applicant) (Respondent) Assessee by Shri Nishit Gandhi Revenue by Shri Chetan M. Kacha, (Sr. DR) Date of Hearing 23.04.2025 Date of Pronouncement 16.06.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order 22.08.2024 passed u/s 250 of the Income Tax Act, 1961 („the Act‟), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2011-12. 2. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in upholding the order of AO in reopening the 2 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai assessment and making additions u/s 56 of the Act in violation of law. Therefore we have decided to adjudicate the same through the present consolidated order. 3. Ld. AR reiterated the same arguments as were raised by him before the Revenue Authorities and also relied upon his written submissions, the same is reproduced here in below :- 1. Appellant had received gift of Equity shares of M/s Krishnaping Alloys Pvt Ltd from 20 different persons (hereinafter referred to as \"Donors \"). 2. However, the Ld. A.O. while passing the assessment order has made addition of the gift received from 20 donors u/s 56(2)(vii)(c) of the I. T. Act, 1961 amounting to Rs. 1,03,78,600/- in respect of 1,03,786 shares received by the appellant from 20 donors. 3. The list of such 20 donors who had gifted shares of M/s Krishnaping Alloys Pvt Ltd to appellant are as under :- Sr No. Name of Doner No. of Shares Paper book Page no. 1 Aarti Sachdev 4,235 36-47 2 Dinesh Kumar Soni 4,529 48-59 3 Hemant Kumar Sahu 4,328 60-71 4 Hitesh Patel 2,714 72-83 5 Ishwar Nimje 5,680 84-95 6 Ishwar Ninawe 7,051 96-106 7 Jaganath Chakole 8,496 107- 118 8 Lalit Kumar Chandak 8,692 119- 130 9 Laxmi Devi Nagdev 3,917 131- 133 10 Mahesh Kumar Soni 4,235 134- 145 11 Sangeeta Dadasena 4,407 146 – 157 12 Sanjay Kumar Nagdev 4,382 158-160 13 Sunil Kumar Nagdev 4,328 161-172 14 Mahesh P. Jain (HUF) 5,141 173-175 3 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 15 Pankaj C. Jain 4,015 176-178 16 Rajkumar Jain 7,100 179- 181 17 Ramna Swami 8,100 182-184 18 Ruchi Jain 3,133 185-196 19 Indra Kumar Jain 5,141 197-207 20 Gulabi Devi Kumhar 4,162 208-210 4. A detailed chart outlining the sequence of events pertaining to the shares gifted to the appellant, along with the corresponding actions undertaken by the company for the execution of the share transfer, is provided below: Sr. No. Particulars Date Refer page No. of paper book 1 Letter by M/s Krishnaping Alloys Pvt Ltd. informing the shareholders that, shares were allotted . 31/03/2009 39, 51, 63, 75, 87, 99, 110, 122, 131, 137, 149, 158, 164, 173, 176, 179, 182, 188,200,208 2 Donor had written letter to Krishnaping Alloys Pvt Ltd showing their willingness to gift shares held by them to Mrs. Prema Jhalani (appellant) out of love and affection and to deliver the shares to the assessee at their address. 09/04/2009 40-41, 52-53, 64- 65, 76-77, 88-89, 100-101, 111-112, 123-124, 138-139, 150-151, 165-166, 189-190,201-202 3 Krishnaping Alloys Pvt Ltd. acknowledged the letter dated 09/04/2009 sent by the donor and mentioned in the letter that as soon as necessary formalities are completed shares shall be delivered to appellant, the recipient of the shares so gifted. 17/04/2009 42, 54, 66, 78, 90, 102, 113, 125, 132, 140, 152, 159, 162, 174, 177, 180, 183,191,203,209 4 Krishnaping Alloys Pvt Ltd acknowledged the Gift deed dated 30/04/2009 sent by the donors in favor of the appellant. However, since the gift deed was not on stamp paper, the company requested the donors to provide the gift deed on a stamp paper. 14/06/2010 43, 55, 67, 79, 91, 103, 114, 126, 133, 141, 153, 160, 168, 175, 178, 181, 184, 192,204,210 5 Thereafter in response to company's letter and on the company's request, the donor's had sent a new gift deed dated 18/09/2010 on stamp paper to the company as per the requirement of the company. 25/09/2010 44-47, 56-59, 68- 71,80-83, 92-95, 104-106 A, 115- 118, 127-130, 142- 145, 154-157, 169- 172, 193-196, 205- 208 4 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 5. The aforementioned table delineates the complete sequence of events relating to the transfer of shares, effected as gift in favour of the assessee. 6. Further the shares were gifted by the donor to the appellant on 09/04/2009 itself, as per the letters of the donors as referred above. Now, the provisions of section 56(2)(vii)(c) of the I. T. Act, 1961 were introduced for the first time w.e.f., 01.10.2009 i.e. FY 2009-10 (AY 2010-1 1) and the shares were already gifted in the name of the appellant by the donors prior to that. Thus, the provision of section 56(2)(vii)(c) of the I. T. Act, 1961 is not applicable to the Appellant so far, the above-mentioned gifts are concerned. It is only because the gift deed was executed on stamp paper on 18.09.2010 at the request of the company the Ld. AO has initiated re- assessment for AY 2011-12. However, the Ld. AO has himself stated in his order that the gift deed was made on 30.04.2009 [Ref. pg. 10 of AO]. However, nowhere has the Ld. AO mentioned that the gift deed was not made on 30.04.2009 or that the gift deed was invalid, etc. It is in this background the appellant has challenged the action of the Ld. AO in making an addition u/s 56(2)(vii)(c) in the hands of the Assessee for AY 201 1-12. 7. In this regard, the Assessee submits as under: LEGAL SUBMISSIONS: ON THE VALIDITY OF RE-ASSESSMENT: 1. The reasons provided to appellant are undated and therefore it is not possible to verify whether the reasons were recorded on or before 28/03/2018 i.e., prior to issuance of notice u/s 148 of the I. T. Act, 196L Reliance is placed on the decision of Charanjiv Lal Aggarwal vs. ITO [201 7] 88 taxmann.com 845 (Amritsar - Trib.). 2. The reassessment order is liable to be quashed as it is founded on incorrect facts and reflects a manifest non-application of mind. The reasons cited rely solely on uncorroborated and unconfronted information, without any independent verification or inquiry. Furthermore, the assumption that the entire amount of Rs.100 per share (comprising Rs. 10 face value and Rs. 90 share premium paid by the donors) constitutes taxable income in the hands of the appellant is in gross contravention of Section 56(2)(vii)(c) of the Income Tax Act. Such an interpretation is legally untenable. Accordingly, the reassessment, being based on flawed reasoning and erroneous factual premises, is unsustainable in law and deserves to be quashed. ONMERITS: 3. Admittedly, the shares are transferred by delivery vide gift deed dated 30.04.2009 i.e. in AY 2010-11, that is FY 2009-10. So far as the donor and donee are concerned the transaction of gift is completed and such mode of transfer of shares has also been recognised in law as held by the Hon'ble Supreme Court and various other Courts [Ref. Vasudev 5 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai Ramchandra Shelat v/s Pranlal Jayanand Thakkar - (1975) 45 CC 43 (SC)/1975 AIR 1728 SC, CIT v/s M. Ramaswamy - (1985) 151ITR 122 (Mad), et. al.]. Therefore, so far as the donor and donee are concerned the gift is complete. 4. However, apart from merely raising doubts, the Ld. AO has not conducted independent enquiry to rebut the submission of the appellant and therefore the addition made by the AO deserves to be deleted since the same is based only on surmise and nothing more. 5. Further, the Ld. AO has nowhere stated that the gift deeds are bogus or invalid in law. He has also not denied the fact that the actual transfer of shares took place during AY 2010-11. Therefore, the taxability, if at all arises then the same could have been taxed only in AY 2010-11. Therefore, Ld. A.O. is not correct in simply rejecting the claim of the appellant and thereafter making an addition in her hands for AY 2011-12. Without prejudice to the above if the stand of the Ld. AO is accepted that the shares were transferred in the name of the appellant on 18.09.2010, even then as per the doctrine of relating back the same would be seen as transferred from 30.04.2009 i.e., in AY 2010-11. 6. Despite the request of the appellant before the Ld. A.O., the Ld. A.O. has chosen not to conduct any further enquiry on the correctness or validity of the gifts. Now, the appellant cannot be saddled with tax liability if the Ld. A.O. failed to perform his duty. In the present case, the Ld. A.O. has not at all made any further enquiry as regards the submissions made by the appellant that the transfer took place during AY 2010-11. In such a situation, the submission made by the appellant-should have been accepted [Ref. CIT v/s Gangeshwari Metal P. Ltd - (2014) 361 ITR 10 (Delhi), PCIT v/s Jatin Investments P. Ltd – ITA No.43 of 2016 Delhi High Court, PCIT v/s Laxman Industrial Resources Ltd- ITA 169 of 2017 Delhi High Court, CIT v/s ARL Infratech Ltd - (2017) 394 ITR 383 (Rajasthan), CIT v/s Jalan Hardcoke - (2018) 95 Taxmann.com 330 (Rajasthan). 7. The Ld. A.O. is not empowered to make addition merely on mere presumptions and surmises, without making any independent enquiry. Such an addition based on presumptions or assumptions is unsustainable [Ref: Dhirajlal Girdharilal v/s CIT - (1954) 26 ITR 736 (SC), Dhakeshwari Cotton Mills v/s CIT- (1954) 26 ITR 775 (SC), Lal Chand Bhagat Ambika v/s CIT- (1959) 37ITR 288 (SC)} 8. The appellant further humbly submits that in any case, section 56(2)(vii)(c) envisages taxing the fair market value of the movable property received without consideration. Firstly, natural love and affection is a valid consideration as held in numerous judgements. Secondly, without undertaking the exercise of computing the fair market value, the Ld. A.O. cannot proceed ahead for making addition in the hands of the appellant. Therefore, the invocation of section 56 is invalid and the addition made by him deserves to be deleted. 6 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 9. It is therefore submitted that the Ld. A.O. has erred in initiating the reassessment and making addition in the hands of the appellant u/s 56(2)(vii)(c) of the Act for AY 2011-12.” 4. On the contrary, Ld. DR relied upon the orders passed by the Revenue Authorities. 5. We have heard the counsels for both the parties, perused the material placed on record and the orders passed by the revenue authorities. 6. From the records, we noticed that the case of the assessee was reopened on the reasons that the assessee had received gifts of equity shares of M/s. Krishnaping Alloys Private Limited from 20 different persons i.e donors and the list of such donors is as under : 7 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 8 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 7. However, the AO while passing the assessment order treated the gifts as ‘income from other sources’ and made additions in the hands of Assessee U/S 56(2)(vii)(c) of the Act. 9 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 8. At the very outset, it was argued that the reasons provided to the assessee are undated and therefore it is not possible to verify as to whether the reasons were recorded on or before 28.03.2018 i.e, prior to issuance of notice u/s 148 of the Act and in this regard, reliance is being placed on the decision of the Coordinate Bench of ITAT in ITA No. 598/ASR/2015 titled Chiranjeev Lal Agarwal vs ITAT, wherein it was decided as under: 5. We have heard the rival contentions in the light of the material available on record. Since the dispute is with regard to recording of satisfaction by the Assessing Officer, it is important to reproduce the reasons recorded by the Assessing Officer as under: \"Brief reasons for initiating proceedings under section 147 In the case of: Shri Charanjiv Lal Aggarwal, Prop. M/s. Premier Rubber Mills Verka, Amritsar PAN-AALPA5792L Assessment year 2004-05 As per the information in my possession, the assessee made export of goods to the Iraq Government, under the Oil for Food programme under the supervision of UNO. As per the information, the assessee has made payments to the Iraq Government, under the head ASSF and Inland Transportation fee which was considered as illicit payments made in the shape of kickback. These payments were made directly to the Iraq control banks of the front companies outside Iraq and these payments did not got the escrow account which was maintained for oil transactions under the Government. Accordingly, these payments made under the head ASSF and Inland Transportation fee to the Iraq Government, were termed as illicit payments forming the part of the kickback by the UNO and therefore, these were not as allowable expenditure. 10 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai As per the information, the assessee has made the following payments in USD. ASSF-17276 USD Inland Transportation fee - 1200 USD Since these payments were declared as illicit payments by the UNO under whose program the export of goods were made, therefore, the amount to the extent mentioned above has not been included in the profit declared by the assessee on the export of goods to Iraq as the remittance received against the export made to the Iraq were received less to that extent. Accordingly, the profit returned by the assessee from his export business from Iraq has been under assessed to the tune of Rs. 17276+1200=18476 USD/Rs. 56.15, i.e., Rs. 10,37,427 (in Indian currency) has been under assessed for the assessment year 2004-05 as the final payments were received by the assessee during the period relevant to the assessment year 2004-05. In view of the above, I have, therefore, reasons to believe that on account of the assessee's failure to disclose true and full particulars of his income in the return of income lied, income to the extent of Rs. 10,37,427 chargeable to tax has escaped assessment within the meaning of section 147 of the Income- tax Act, 1961 for the assessment year 2004-05. Issue notice under section 148 of the Income-tax Act, 1961. Notice under section 148 has been issued with the prior approval of the Additional Commissioner of Income-tax, Range- IV, Amritsar. From the above reasons recorded, we find that these reasons are undated, which itself prove that the Assessing Officer has not applied his mind. Secondly, nothing appears in the reasons recorded suggesting that the Assessing Officer had made any positive enquiry before coming to the conclusion that the income chargeable to tax has escaped assessment. The Assessing Officer has reopened the case on the basis of borrowed satisfaction, which is not permissible under the law. 11 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai The Income-tax Appellate Tribunal, Amritsar Bench, in the case of Mohd. Yousuf Wani (supra) under similar facts and circumstances has held the assessment order bad in law. For the sake of convenience, the relevant findings of the aforesaid order of the Tribunal are reproduced below: \"7. We have considered the rival submissions and have also gone through the material available on record. In the instant case, the Assessing Officer initiated the proceedings under section 147/148 of the Act by recording the following reasons: 'Office of the Income-tax Officer, Ward 3, Srinagar. 1 Name of the assessee Shri Md. Yousuf Wani 2 Address of the assessee Shopian, Kashmir 3 Status Individual 4 Assessment year 2004-05 Reasons for initiation of proceeding under section 148 of the Income-tax Act, 1961 In this case information was received from J&K Vigilance Organization during August through the office of the Additional Commissioner of Income-tax, Srinagar Range, Srinagar. The information was titled as under: \"Information in the case of Shri Mohd. Yousuf Wani, Forest Contractor, s/o Shri. Mohd. Ramzan Wani, r/o Shopian presently at Raj Bagh, Srinagar and reflection of the unaccounted assets of Shri Mohd. Yousuf Wani.\" The information supplied by the Vigilance Organisation was constituted of two pages (in letter form) photo of fourteen (14) cash certificates/fixed deposits in the name of Shri Mohd. Yousuf Wani and its other family members. After analysing the entire information it was noticed that the assessee has purchased the following cash certificates/FDRs from J&K Bank, Pulwama on the dates shown each and proceedings under the Income- tax Act as mentioned below were initiated in respect of the relevant assessment year: 12 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai Sl. No Date Type Amount (Rs.) 1. 19.08.2003 Purchase of FDR / CC No. (0870833) 5,00,000 2. 17.11.2003 Interest on FDR / CCR 6832 5,06,832 As per records the assessee has not filed his return of income for the said assessment year and as such I have reason to believe that the income of Rs. 5,06,832 has escaped assessment for the assessment year under reference. Accordingly notice under section 148 of the Income-tax Act, 1961 is being issued in this case. Sd/- Income-tax Officer Ward 3, Srinagar.' 7.1 At the first instance, we may point out that the so-called reasons recorded by the Assessing Officer are mere information received from the J & K Vigilance Organisation during August through the office of the Additional Commissioner of Income-tax, Srinagar Range, Srinagar. We may also point out that the so-called reasons recorded by the Assessing Officer are undated, which means that the Assessing has not applied his mind while recording the reasons. In the so-called reasons recorded, the Assessing Officer has also mentioned that \"as per records the assessee has not filed his return of income for the assessment year and as such I have reason to believe that the income of Rs. 5,06,832 has escaped assessment for the assessment year under reference\". The above observation noted by the Assessing Officer is wrong and contrary to the records. From the assessment order dated December 29, 2006 passed under section 143(3) of the Act, it is clear that the original return in this case was filed by the assessee on November 1, 2004 declaring income of Rs. 1,44,800 and agricultural income of Rs. 1,95,000. Subsequently, the notice under section 148 of the Act was issued to the assessee. In response to that, the assessee submitted that the return already filed on November 1, 2004 be treated as filed in response to notice under section 148 of the Act. In our view, the Assessing Officer has casually recorded the reasons. In fact, he has not cared to see the 13 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai return of income of the assessee, which was filed well within time for the year under consideration. This fact alone shows non-application of mind by the Assessing Officer. We also find that the Assessing Officer even did not examine the assessee under section 131 or 133(6) of the Act to ascertain the truth with regard to the contents of the letter sent by the Vigilance Department. It is also worthwhile to mention here that the perusal of the assessment order will reveal that the Assessing Officer has not made any addition in the reassessment order pertaining to the FDRs mentioned in the so-called reasons recorded but he has travelled to other issues. This fact alone shows that the so-called reasons recorded by the Assessing Officer were made without application of mind by the Assessing Officer. In our considered view, reliance placed by the Assessing Officer on the letter of Vigilance Department was not sufficient to make a belief that the income of the assessee escaped assessment. In the present case, the reasons for formation of belief was only the information received from the Vigilance Organisation. In our opinion, the so-called reasons recorded by the Assessing Officer could not be held the reasons for proceedings under section 147/148 of the Act, since it was only an information and was not at all discernible as to whether the Assessing Officer has applied his mind to the information and independently arrived at a belief, on the basis of material which he had before him, the income of the assessee had escaped assessment. While taking such a view, we are fortified by the ratio laid down in the judgment of the hon'ble Delhi High Court in the case of CIT v. SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Delhi) wherein it has been held as under (page 289): 'After having heard the counsel for the parties, we are inclined to agree with the submissions made by the respondent/assessee. We find that the Supreme Court in Asst. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC) made it absolutely clear that before an Assessing Officer issues a notice under section 148, thereby reopening the assessment under section 147 of the said Act, he must have formed a belief that income had escaped assessment and that there must be some basis for forming such a belief. The 14 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai Supreme Court made it clear that the basis of such belief could be discerned from the material on record which was available with the Assessing Officer. However, the Supreme Court in Rajesh Jhaveri [2007] 291 ITR 500 did not say that it was not necessary for the Assessing Officer to form a \"belief\" and that the mere fact that there was some material on record was sufficient. In the present case, we find that the first sentence of the so- called reasons recorded by the Assessing Officer is mere information received from the Deputy Director of Income-tax (Investigation). The second sentence is a direction given by the very same Deputy Director of Income-tax (Investigation) to issue a notice under section 148 and the third sentence again comprises of a direction given by the Additional Commissioner of Income-tax to initiate proceedings under section 148 in respect of cases pertaining to the relevant ward. These three sentences are followed by the following sentence, which is the concluding portion of the so-called reasons : \"Thus, I have sufficient information in my possession to issue notice under section 148 in the case of M/s. SFIL Stock Broking Ltd. on the basis of reasons recorded as above.\" From the above, it is clear that the Assessing Officer referred to the information and the two directions as \"reasons\" on the basis of which he was proceeding to issue notice under section 148. We are afraid that these cannot be the reasons for proceeding under section 147/ 148 of the said Act. The first part is only an information and the second and third parts of the beginning paragraph of the so-called reasons are mere directions. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Consequently, we find that the Tribunal has arrived at the correct conclusion on the facts. The law is well-settled. There is no substantial question of law which arises for our consideration. The appeal is dismissed.' 15 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai From the above, it is clear that the Hon'ble Delhi High Court has also considered the decision of the Hon'ble Supreme Court rendered in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC) and after considering the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri (supra) the Delhi High Court concluded that the Assessing Officer has not applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment. In the instant case also, it is crystal clear that the Assessing Office has not applied his mind and also not independently arrived at a belief that on the basis of the material he had before him, income has escaped assessment, and therefore, we allow ground Nos. 1 to 4 of the appeal and quash the reassessment order.\" 7. We find that the Tribunal after taking into account the judgment of the Hon'ble Delhi High Court in the case of SFIL Stock Broking Ltd. (supra) has quashed the assessment order. The aforesaid case law as relied on before us were relied upon before the learned Commissioner of Income-tax (Appeals) by the assessee, but the learned Commissioner of Income-tax (Appeals) has distinguished the case law by holding as under : \"(i) CIT v. SFIL Stock Broking Ltd. [2010]325 ITR 285(Delhi) The above said case was distinguished by the learned Commissioner of Income-tax (Appeals) by holding that in the present case the Assessing Officer had verified from the return of income filed by the assessee and had then come to the conclusion that income chargeable to tax had escaped assessment. However, from the reasons recorded, we do not find that the Assessing Officer had carried out any such exercise. Therefore, the learned Commissioner of Income-tax (Appeals) has wrongly distinguished the above case law. (ii) Mohd. Yousuf Wani v. ITO (I.T. A. No. 372/Asr/2009 Income-tax Appellate Tribunal-Amritsar Bench) (supra) The learned Commissioner of Income-tax (Appeals) has distinguished the above case by holding that the Assessing 16 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai Officer did not examine the assessee under section 131 or 133(6) to ascertain the truth with regard to the contents of letter sent by the Vigilance Department. We find that in the present case also, the assessee was not examined under section 131 or 133(6) of the Act. Secondly, the learned Commissioner of Income-tax (Appeals) held that in that case the reasons recorded were undated. We find that in the present case also the reasons recorded are undated. Therefore, it cannot be said that the facts of the case relied upon by the learned counsel are distinguishable from the facts of the present case. The findings of the learned Commissioner of Income-tax (Appeals) to this extent are not correct.\" 8. In view of the above discussions and legal precedents, we quash the assessment order passed by the Assessing Officer, as void ab initio and therefore, ground No. 3 of the appeal is allowed. 9. After having meticulously gone through the orders passed by the Coordinate Bench in the case of Charanjiv Lal Aggarwal (supra), we are of the view that the reassessment order is liable to be quashed as it is noticed that the reasons recorded which are at paper book page No. 213 to 214 are undated which itself proves that the AO has not applied his mind. Secondly the same are founded on incorrect facts and reflects a manifest non-application of mind. It appears that AO had not made any positive enquiries as the reasons cited rely solely on ‘uncorroborated and unconfronted information’, without any independent verification or inquiry. Furthermore, the assumption that the entire amount of ₹100 per share (comprising ₹10 face value and ₹90 share premium paid by the donors) constitutes taxable income in the hands of the 17 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai appellant is in gross contravention of Section 56(2)(vii)(c) of the Income Tax Act and such an interpretation is legally untenable. 10. Now we analyze as to whether the additions could have been made during the year under consideration or not? After evaluating and appreciating the facts, we noticed that the shares were gifted and transferred by the donors to the assessee on 09.04.2009 as per the respective letters of the donors and also as per gift deed dated 30.04.2009, wherein the donor had ‘gifted and transferred’ all the rights of the shares in favour of assessee along with other supporting documents. 11. However, the company who had issued the shares to the respective donors had requested for gift deeds to be on stamp papers, therefore on 18.09.2010 the gift deeds on stamp papers were supplied. Thus by applying the principles of doctrine of relating bank, the same could be effective from 09.04.2009 and 30.04.2009 itself. In this way, the entire transaction of gift stood completed between the donor and the done on 09.04.2009 itself. Even delivery of share certificates to the Donee was not necessary in view of section 122 of the transfer of property act, as has been held by Hon’ble Supreme Court in the case of Vasudev Ramchandra Shelat Vs Pranlal Jayanand Thakkar, [1975] 45 CC 43 (SC). 18 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 12. The AO had merely raised doubts and has not conducted and independent enquiry worth a name to refute the submissions of the assessee and has not even doubted the veracity and genuineness of the gift deeds. Even the provisions of section 56(2)(vii)(c) of the I.T. Act was introduced with effect from 01.10.2009 i.e F.Y 2009-10 (A.Y. 2010-11) and the shares were already gifted in the name of the assessee by the donors prior to that. Thus, the provisions of section 56(2)(vii)(c) of the Act is not applicable to the assessee so far, the above gifts are concern. It is only that the gift deed was stamped on 18.09.2009 at the request of the Company, the AO initiated the reassessment for AY 2011–12, whereas AO himself admitted that gift deed was executed on 30.04.2009 itself. Thus, in this background, no additions were called for in the hands of the assessee for the year under consideration i.e A.Y 2011-12. 13. Therefore keeping in view of our above discussion, we are of the considered view that AO erred in initiating the re-assessment and making additions in the hands of the assessee u/s. 56(2)(vii)(c) for the year under consideration. Therefore while allowing the grounds, we direct the AO to delete the additions. 19 ITA No. 4753/Mum/2024 Smt. Prema Mukesh Jhalani, Mumbai 14. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 16.06.2025. Sd/- Sd/- (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) (ACCOUNTANT MEMBER) JUDICIAL MEMBER Mumbai, Dated 16/06/2025 KRK, PS/PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT 5. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai "