C/TAXAP/721/2019 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 721 of 2019
THE PRINCIPAL COMMISSIONER OF INCOME TAX
Versus
ARVIND N NOPANY
Appearance:
MRS MAUNA M BHATT(174) for the Appellant(s) No. 1
for the Opponent(s) No. 1
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 13/01/2020
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. This tax appeal under Section 260A of the Income Tax Act, 1961
[for short ‘the Act, 1961’] is at the instance of the revenue and is directed
against the order dated 24th January 2019 passed by the Income Tax
Appellate Tribunal Ahmedabad Bench ‘A’, Ahmedabad in the ITA
No.128/AHD/2016 for the A.Y 200809.
2. The facts giving rise to this appeal may be summarized as under:
2.1 A search under section132 of the Act was carried out in the cases
of Nopany Group, Vadodara on 29th September 2011. It appears that the
assessee is connected with the Nopany Group. A search was conducted
of the premise of the assessee. A notice under Section153A(a) of the Act
was issued to the assessee requiring the assessee to furnish the return of
the income. It appears that in the course of the search undertaken of the
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residential premises of the assessee, few documents were recovered. It
was revealed that the assessee had received an amount of
Rs.16,00,00,000/ [Rupees Sixteen Crore] by way of a gift from one Shri
Narotam Sekhsariya. The donor happens to be the brotherinlaw of the
assessee.
2.2 The question before the Assessing Officer was of with regard to
the genuineness of the transaction of the gift. It appears that the assessee
succeeded before the CIT (Appeals). The CIT (Appeals) took the view
that the donor viz. Shri Narotam Sekhsariya would qualify as “relative”
within the meaning of Section56(2)(vi) of the Act. The CIT (Appeals)
while partly allowing the appeal preferred by the assessee observed as
under:
“The Ld. AR, after taking me through the provisions, submitted that
the brotherinlaw would fall in the category of “relative” when
explanation (ii) and (viii) are read, as required, together. I have
perused the provisions. I firstly find, as submitted by the AR, that there
is no mention of “blood relative” in the whole section. Receipts
exceeding Rs.50,000/ without consideration is taxable u/s.56 unless
saves by proviso. Explanation defines “relatives”, and as per clause (ii)
read with clause (vii), the sister’s husband is also a relative. Thus, I am
in absolute agreement with the Ld. AR that the Ld. AO’s attempt to
somehow read “blood relative” in proviso, when plainly and clearly
only “relative” is mentioned and is defined in proviso to s.56, shows
that the Ld. AO has misread the provisions and applied the same
unreasonably. I am satisfied, in view of my earlier finding after
quoting from Hindu Adoption and Maintenance Act, 1956, in para 12
above that the receipts from Shri Narottam Sekhsaria are clearly
covered clause (a) of proviso to s.56(2) read with explanation (ii) and
(vii). Thus, it is held that the gifts of Rs.5 Crore in both the years
received from Narottam Sekhsaria, being from a “relative”, is, Brother
inlaw of the appellant is not taxable u/s.56. The gifts having been
fully established as genuine and from explained sources, the receipts
are also not taxable u/s.68. Thus, the addition of Rs.5 crore each
made by the AO for both the assessment years under appeal is not
sustainable and therefore, the same is deleted. The appellant gets
equivalent relief. The related grounds succeed.”
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2.3 The revenue being dissatisfied with the order passed by the
CIT(Appeals) preferred an appeal before the Income Tax Appellate
Tribunal.
2.4 The appellate tribunal vide impugned order dismissed the appeal.
While dismissing the appeal, the tribunal has observed as under:
“7. We find that the details of the donor starting from PAN
number, capital gain statement, bank statement and others is annexed
to the paper book, which was duly placed before the authorities below.
It appears that when Shri Narottam Sekhsaria was not brought to the
Learned AO by the assessee no further enquiry was conducted by him,
no record against the assessee was also brought. Apart from that, the
creditworthiness and/or genuineness of the transaction though
doubted by the learned AO, the same has not been proved by any
cogent document in favour of the revenue. Further that we find that
the Learned AO acted beyond his jurisdiction by raising doubts
regarding the relationship of the assessee and the donor ignoring the
statutory provision in this regard as already been highlighted by the
assessee before him in his written reply dated 04.02.2015. Without
rebutting the submission made by the assessee the order of addition
was made by the Learned AO. Further that, whether the gift so
received by the assessee from his brotherinlaw is exempted from tax
under section 56 of the Act has been considered on a wrong notion.
Instead of relative as provided by the statute “blood relative” has been
considered by the Learned AO and as a result whereof addition was
made which is absolutely erroneous as rightly pointed out by the
Learned CIT (A) as it reflects from the order impugned. Thus, in the
absence of any infirmity in the order passed by the Learned CIT (A) we
decline to interfere with the same. Hence, the Revenue’s Appeal is
dismissed.”
2.5 Being dissatisfied with the order passed by the appellate tribunal,
the revenue is here before this Court with the present appeal.
3. The revenue has proposed the following substantial questions of
law:
[A] Whether on the facts and circumstances of the case and in law,
the Appellate Tribunal is right in deleting the addition of
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Rs.5,00,00,000/ for A.Y.200809 on account of so called gift claimed
to have been received from the relative without appreciating that the
donor of the gift does not fall within the definition of relative as
envisaged under explanation to clause (vi) of section 56(2) of the I.T.
Act?
[B] Whether on the facts and circumstances of the case and in law,
the Appellate Tribunal is right in deleting the additions of
Rs.5,00,00,000/ for A.Y.200809 on account of so called gift claimed
to have been received from the relative, when the affidavit filed by the
assessee before the State Land Authority admits that the assessee has
no sister and hence, the existence of relative i.e. brotherinlaw does
not arise?
[C] Whether on the facts and circumstances of the case and in law,
the Appellate Tribunal is right in deleting the addition of
Rs.5,00,00,000/ without appreciating that the so called claim of gift
received was without any reason or occasion?
4. Having heard the learned senior counsel appearing for the
appellant – Revenue and having gone through the materials on record,
we take notice of the fact that the tribunal took into consideration the
details of the donor, more particularly, the PAN number, capital gain
statement, bank statements and the other relevant documents. Upon
perusal of the same, the tribunal concurred with the findings recorded
by the CIT (Appeals) as regards the genuineness of the transaction. The
tribunal, thereafter, looked into the Section 56 of the Act.
5. Section56 of the Act is with regard to the income from other
sources. What is relevant for us is Section56(2)(vi), more particularly,
the explanation (e) which reads thus:
(e) “relative” means,–
(i) in case of an individual–
(A) spouse of the individual;
(B) brother or sister of the individual;
(C) brother or sister of the spouse of the individual;
(D) brother or sister of either of the parents of the individual;
(E) any lineal ascendant or descendant of the individual;
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(F) any lineal ascendant or descendant of the spouse of the
individual;
(G) spouse of the person referred to in items (B) to (F); and
6. The plain reading of the aforesaid provision would indicate that
the assessee would fall within the definition of the term “relative” as
explained under Section56 of the Act.
7. In the overall view of the matter, we are convinced with the
reasons assigned by the appellate tribunal. We are of the view that none
of the questions of law formulated in the memorandum of the tax appeal
could be termed as substantial questions of law.
8. In the result, this appeal fails and is hereby dismissed.
(J. B. PARDIWALA, J)
(BHARGAV D. KARIA, J)
aruna
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