ACIT 14(3), MUMBAI v. LUCKY PAMNANI, NAVI MUMBAI

ITA 4333/MUM/2009 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 433319914 RSA 2009
Bench Mumbai
Appeal Number ITA 4333/MUM/2009
Duration Of Justice 10 month(s) 13 day(s)
Appellant ACIT 14(3), MUMBAI
Respondent LUCKY PAMNANI, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Assessment Year 2005-2006
Appeal Filed On 17-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D.MANMOHAN HONBLE VICE PRESIDENT AND SHRI J.SUDHAKAR REDDY ACCOUNTANT MEMBER ITA. NO. 4333/MUM/2009 ASSESSMENT YEAR 2005-2006 ACIT-14 (3) MUMBAI 400 021. VS. SHRI LUCKY PAMNANI MUMBAI 400 705. PAN AABPP-5009-R (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI PEEYUSH JAIN(DR) FOR RESPONDENT : -NONE- ORDER PER D.MANMOHAN V.P. 1. ONLY GROUND OF THE REVENUE READS AS UNDER : THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 10 LAKHS BEING GIFT RECEIVED BY HIS TWO MINOR SONS WHI CH DOES NOT FALL UNDER THE DEFINITION OF RELATIVES AS PER S ECTION 56(2)(V) OF THE I.T. ACT ON THE GROUND THAT ASSESSING OFFICE R HAS NOT CONSIDERED EXPLANATION (IV) BELOW CLAUSE (V) OF SUB SECTION (2) OF SECTION 56 WHICH INCLUDES THE RELATIVE AS BROTHE R AND SISTER OF THE PARENTS OF THE INDIVIDUAL. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAV E HEARD THE LEARNED DR AND CAREFULLY PERUSED THE RECORD. 3. FACTS IN SHORT ARE THAT MINOR CHILDREN OF THE A SSESSEE RECEIVED GIFTS OF RS. 10 LAKHS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. A SUM OF RS. 5 LAKHS EACH WAS RECEIVED BY MINOR SONS VIZ. MASTER DEVESH PAMNANI AND MASTER 2 AYUSH PAMNANI FROM SHRI RAJESH SAWLANI WHO IS THE B LOOD BROTHER OF THE ASSESSEES MOTHER SMT. MEENA PAMNANI. 4. ACCORDING TO THE ASSESSING OFFICER GIFTS WERE N OT RECEIVED FROM RELATIVES WITHIN THE MEANING OF SECTION 56(2 )(V) OF THE I.T. ACT AND HENCE GIFT AMOUNT OF RS. 10 LAKHS WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON AN APPEAL FILED BY THE ASSESSEE LEARNED CIT (A) SET ASIDE THE ADDITION BY OBSERVING AS UNDER : I HAVE CONSIDERED THE RIVAL SUBMISSION ON THE ISSU E AND HAS ALSO CAREFULLY CONSIDERED THE FINDING OF TH E ASSESSING OFFICER. I FIND THAT ASSESSING OFFICER HA S NOT APPRECIATED FULL FACTS OF THE CASE. IN FACT EXPLAN ATION (IV) BELOW CLAUSE (V) OF SUB SECTION (2) OF SECTION 56 INCLUDES THE RELATIVE AS BROTHER OR SISTER OF EITH ER OF THE PARENTS OF THE INDIVIDUAL WHICH MEANS BROTHER OR S ISTER OF THE APPELLANT IS A RELATIVE. IN THIS CASE THE DO NOR SHRI RAJESH SAWLANI IS THE MATERNAL UNCLE OF THE APPELLA NT WHO IS THE BLOOD BROTHER OF HIS MOTHER SMT. MEENA PAMNANI. THEREFORE THIS FACT PROVES THAT IT HAS BE EN TAKEN FROM THE RELATIVES. IN ADDITION TO THIS LEGAL AND FACTUAL POSITION IT IS ALSO SEEN FROM THE BANK STAT EMENT THAT GIFTS HAS BEEN PROPERLY DEPICTED/ENTERED IN TH E BANK STATEMENT. NOT ONLY THAT APPELLANT HAS ALSO SUBMITTED THE COPY OF GIFT DECLARATION/GIFT DEED DA TED 9- 12-2006 WHICH HAS BEEN MADE BY MR. RAJESH SAWLANI. FURTHER MORE APPELLANT HAS ALSO SUBMITTED THE ZEROX COPY OF THE PASSPORT AND VISA OF MR.RAJESH SAWLANI. ALL THESE FACT PROVES THE GENUINENESS OF CLAIM OF GIFT HENCE ADDITION MADE OF RS. 10 LAKH ON ACCOUNT OF GIFT IS 3 HEREBY DELETED AND ASSESSING OFFICER IS DIRECTED TO REDUCE THE ASSESSMENT. 6. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. WE H AVE HEARD THE LEARNED DR WHO STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON A CAREFUL PERUSAL OF RECORD WE NOTICE THAT THE LEARNED CIT(A) SET ASIDE THE ADDITION ON A WRONG PREMISE TH AT THE ASSESSEE HAS RECEIVED THE GIFT OVERLOOKING THE FACT THAT THE RE CIPIENTS OF THE GIFT ARE HIS TWO SONS VIZ. MASTER DEVESH PAMNANI AND MASTER AYUSH PAMNANI. SECTION 2 (31) DEFINES THE EXPRESSION PER SON WHICH INCLUDES INDIVIDUAL. ANY HUMAN BEING IS AN INDIVI DUAL WHETHER A MALE FEMALE ADULT OR MINOR. INCOME EARNED BY A MI NOR CAN BE ASSESSED TO TAX IN THE HANDS OF THE MINOR CHILD PRO VIDED A MINOR EARNS INCOME BY VIRTUE OF MANUAL WORK DONE BY HIM O R BY CARRYING ON ANY ACTIVITY INVOLVING APPLICATION OF SKILL TALENT OR SPECIALIZED KNOWLEDGE AND EXPERIENCE (SEE SECTION 64). THIS PRO VES BEYOND DOUBT THAT MINOR IS ALSO CONSIDERED AS AN INDIVIDUAL UN DER THE INCOME TAX ACT. IN THIS BACK DROP THE LANGUAGE OF SECTION 56 H AS TO BE LOOKED INTO. SECTION 56 (2)(V) STATES THAT ANY SUM OF MONEY EXC EEDING RS.25000/- RECEIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL I S ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. PROVISO READ WITH EXPLANATIONS CARVES OUT CERTAIN EXCEPTIONS WHICH SA YS THAT IF IT IS RECEIVED FROM A RELATIVE SPECIFIED THEREIN IT S HALL NOT AUTOMATICALLY BE TAXED UNDER SECTION 56 OF THE ACT. BY VIRTUE OF SUB-CLAUSE (IV) OF EXPLANATION BELOW SECTION 56 (2) (V) GIFT RECEIVE D FROM BROTHER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUALS FALLS OUTSIDE THE AMBIT OF SUB-CLAUSE (V) OF SUB-SECTION (2) TO SECTION 56 OF THE ACT. 7. IN THE INSTANT CASE WITH REFERENCE TO THE DON EE THE RELATIONSHIP OF THE DONOR CANNOT FALL IN THE CATEGO RY OF GRANDFATHER ; DONEE IS NOT EVEN A LINEAL DESCENDANT OF THE DONOR WHICH IS HIGHLIGHTED WITH THE HELP OF THE FOLLOWING CHART. 4 MOTHER MEENA PAMNANI SHRI RAJESH SAWLANI (DONOR) (MAIDEN NAME MS. MEENA SAWLANI)-- BROTHER OF MS. MEENA SAWLANI/PAMNANI )( )( ______________________________________________ MASTER DEVESH PAMNANI MASTER AYUSH PAMNANI (DONEES) 8. IN THE INSTANT CASE MINORS HAVING RECEIVED GIF T RELATIONSHIP OF THE DONOR SHOULD BE WITH REFERENCE TO THE MINOR WHO IS TO BE TREATED AS THE INDIVIDUAL. WITH REFERENCE T O THE MINOR THE DONOR IS NOT A BROTHER OR SISTER OF EITHER OF THE PARENTS AND HE CANNOT EVEN BE CONSIDERED AS A LINEAL DESCENDANT. LEARNED CIT(A ) THEREFORE ERRED IN LAW IN ASSUMING THAT INCOME OF THE MINORS BEING ASSESSABLE TO TAX IN THE HANDS OF THE FATHER BY APPLYING DEEMING PRO VISION UNDER SECTION 64 OF THE ACT HE SHOULD BE CONSIDERED AS A N INDIVIDUAL FOR THE PURPOSE OF CONNECTING THE RELATIONSHIP WITH THE DONOR OVERLOOKING THE FACT THAT SECTION SPEAKS OF THE RELATIONSHIP BETWEEN THE DONO R AND THE DONEE AND NOT A DEEMED ASSESSEE. LEARNED CIT(A) HAS GONE A STEP FURTHER IN ENTHUSIASTICALLY ADDING AS U NDER : 2.1. ..IN ADDITION TO THE LEGAL CLAIM LD. AR HAS ALSO SUBMITTED THE XEROX COPY OF THE BANK PASS BOOK REVEALING THE RECEIPT OF GIFTS AND HAS ALSO SUBMITT ED THE XEROX COPY OF THE DD OF GIFT ISSUED BY THE DONOR FR OM ABROAD FROM THE BANK ACCOUNT OF ASIA EXCHANGE CENTR E DUBAI UAE OF ICICI BANK. FATHER SHRI LUCKY PAMNANI (GIFT AMOUNT ASSESSED U/S. 64 OF THE ACT MOTHER MRS. LUCKY 5 9. WHEN SECTION 56 OF THE ACT DEEMS A PARTICULAR R ECEIPT AS INCOME FROM OTHER SOURCES IRRESPECTIVE OF THE GENU INENESS OF THE GIFT IT IS DIFFICULT TO APPRECIATE AS TO WHY THE LEARNED CIT(A) HAD GIVEN PROMINENCE TO THE AVAILABILITY OF COPY OF PASSBOOK AND THE MODE OF RECEIPT OF THE GIFT ETC. THOUGH IT WAS NEITHER THE CASE OF THE ASSESSEE NOR THE CASE OF THE ASSESSING OFFICER AT THE ASSESS MENT STAGE (SINCE REFERENCE TO THE BONAFIDES OF GIFT IS UNNECESSARY F OR CONSIDERATION WHILE APPLYING SEC.56 OF THE ACT). SUFFICE TO SAY T HAT THE AMOUNT OF GIFT RECEIVED IS HIT BY THE PROVISIONS OF SECTION 56 OF THE ACT AND HENCE THE ASSESSING OFFICER WAS JUSTIFIED IN BRINGING TO TAX THE IMPUGNED SUM IN THE HANDS OF THE ASSESSEE BY INVOKING THE PROVISION S OF SECTION 56 READ WITH SECTION 64 OF THE I.T. ACT. WE THEREFORE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND UPHELD THE ORDER OF THE ASSE SSING OFFICER. ORDER PRONOUNCED IN THE OPEN COURT ON 31-05-2010 SD/- SD/- (J.SUDHAKAR REDDY) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 31 ST MAY 2010. VBP/- COPY TO 1. ACIT 14 (3) 6 TH FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI - 400 021. 2. SHRI LUCKY PAMNANI 603 J.K. CHAMBERS SECTOR-1 7 VASHI NAVI MUMBAI 400 705. PAN AABPP-5009-R 3. CIT (A)-XV MUMBAI. 4. CIT CITY-XIV MUMBAI. 5. D.R. A BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI 6 SNO DATE INITIALS 1 DRAFT DICTATED ON 20-05-2010 SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR 21-05-2010 SR.P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 21-05-2010 V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 21-05 -2010 A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS 21-05-2010 SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON 31-05-2010 SR.P.S. 7. FILE SENT TO THE BENCH CLERK 31-05-2010 SR.P.S. 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER