R. Sudhakar, J. - This Tax Case (Appeal) is filed at the instance of the assessee as against the order of the Income Tax Appellate Tribunal raising the following substantial questions of law:
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Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the cash gifts received in cheque in the name of individual from his close relatives and thereafter blended with the account of HUF would attract section 56 of the Act and not section 64(2) of the Act? |
(2.) |
Whether on the facts and circumstances of the case, the Appellate Tribunal is right in law in presuming that the cash gifts were directly received by the appellant-HUF even though the said cash gifts through cheques were received in the individual name only and thereafter blended with the HUF account, ignoring the affidavits filed by the donors before the assessing officer itself? |
(3.) |
Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that Section 56(2)(vi) clause (vii) is not applicable to the present assessment year even though the amendment is merely clarificatory in nature? |
(4.) |
Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in not even citing the coordinate bench of the Tribunal in the case of Vineetkumar Raghavijibhai Bhalodia which had held that a gift received from relatives is not taxable under Section 56(2) of the Act after taking into account the amendment made to the Act?" |
2. The assessment in this case relates to the assessment year 2008-09. The appellant/assessee, during the birthday celebration on attaining the age of 60, received gifts from his son, wife, mother and daughter amounting to Rs.13,17,300/-. All the amounts were received through cheques in the name of the individual and the same had been subsequently deposited in the HUF account. The cheques, which were drawn in the name of the individual became blended with the property of HUF by way of journal entry.
3. The Assessing Officer doubted the genuineness of the transaction, however, stated that the gifts received by the individual were duly accounted in HUF account and therefore added in the amount in the name of the HUF. The Assessing Officer invoked Explanation to Proviso to Section 56(2)(vi) of the Income Tax Act and held that the HUF would not come within the definition of relative. Aggrieved by the said order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) specifically raising grounds, viz., 2 to 5 and contending that the transaction in this case will be covered by Section 64(2) and not Section 56 of the Income Tax Act. The Commissioner of Income Tax (Appeals), however, did not consider the plea of the assessee and dismissed the appeal, which forced the appellant to prefer further appeal before the Tribunal.
4. Before the Tribunal, the assessee raised a specific ground stating that Section 64(2) of the Income Tax Act alone will apply to the transaction, as he has received the amount as an individual and transferred it to the HUF. This argument was not considered by the Tribunal as well. The Tribunal upheld the order of the Assessing Officer who placed reliance on 56(2)(vi) by reading into the amendment to Section 56(2) by virtue of clause (vii), which came into effect from 01.10.2009. Accordingly, the Tribunal dismissed the appeal. Aggrieved by the same, the assessee is before this Court.
5. Heard Mr. R. Sivaraman, learned counsel appearing for the assessee and Mr. M. Swaminathan, learned Standing Counsel appearing for the Revenue and perused the materials placed before this Court.
6. The primary plea of the appellant/assessee consistently before the Commissioner of Income Tax (Appeals) and before the Tribunal that Section 64 (2) of the Income Tax Act alone would get attracted to the facts of the present case and not Section 56(2) of the Income Tax Act was not considered by the Tribunal and therefore the legal plea raised by the assessee has been totally ignored by the Commissioner of Income Tax (Appeals) as well as by the Tribunal which gives rise to the filing of the present appeal.
7. For better clarity, Section 56(2) and Section 64(2) of the Income Tax Act is set out hereunder:
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"56 Income from other sources.—(1)** |
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(2) In particular, and without prejudice to the generality of the provisions of sub-section (10, the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :-
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(i) to (v) & (ia) to (id)** |
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(vi) Where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April, 2006 but before the 1st day of October, 2009, the whole of the aggregate value of such sum:
Provided that this clause shall not apply to any sum of money received_
| (a) |
from any relative; or |
(b) |
on the occasion of the marriage of the individual; or |
(c) |
under a will or by way of inheritance; or |
(d) |
in contemplation of death of the payer; or |
(e) |
from any local authority as defined in the Explanation to clause (2) of section 10; or |
(f) |
from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of Section 10; or |
(g) |
from any trust or institution registered under section 12AA. |
Explanation - For the purpose of this clause "relative" means
| (i) |
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spouse of the individual; |
(ii) |
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brother or sister of the individual; |
(iii) |
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brother or sister of the spouse of the individual; |
(iv) |
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brother or sister of either of the parents of the individual; |
(v) |
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any lineal ascendant or descendant of the individual; |
(vi) |
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any lineal ascendant or descendant of the spouse of the individual; |
(vii) |
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spouse of the person referred to in clause (ii to (vi); |
(vii) |
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where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 — |
(b) any immovable property without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (emphasis supplied)
(clause vii) Inserted by the Finance (No.2) Act, 2009 w.e.f.1.10.2009.
Income of individual to include income of spouse, minor child etc.
64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly —
(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property)], then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971 -
(a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly;
(b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family;
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(c)** |
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**" (Emphasis supplied) |
8. The consistent plea of the appellant before the Tribunal as well as before the Commissioner of Income Tax (Appeals) is that the transaction in question would get attracted in terms of Section 64(2) of the Income Tax Act. That argument was not considered at all. On the contrary, the Authorities proceeded on the basis that the reliance placed by the Original Authority on Section 56(2) would be correct for the transaction in question.
9. We find that the appellant has invoked Section 64(2) of the Act, which has been totally ignored by the Commissioner of Income Tax (Appeals) and the Tribunal. This clearly goes to show that the Tribunal has not considered the legal plea so raised and therefore prejudice is caused to the appellant in not considering this legal plea. Further, the issue as to the applicability of Section 64(2) of the Income Tax Act, as contended, should have been considered by the Tribunal in the manner in which the assessee justifies the transaction in question. Hence, to that effect we find the order of the Tribunal requires to be interfered.
10. Since the issue raised by the appellant requires an in-depth analysis of both the provisions, viz., Section 56(2)(vii) and Section 64(2) of the Income Tax Act, as rightly pointed out by the learned Standing Counsel appearing for the Revenue, the matter requires to be considered by the Assessing Officer by way of de novo proceedings.
11. In the light of the above, the order of the Tribunal stands set aside and the matter is remanded back to the Assessing Officer for de novo consideration of the entire issue. This Tax Case (Appeal) stands allowed by way of remand. No costs. Consequently, M.P.Nos.1 and 2 of 2014 are closed.