Kunal Rajendra Mashru Vs ACIT (ITAT Rajkot)
The appeal pertains to Assessment Year 2017-18, challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Chennai, which upheld an addition of Rs. 10,00,000 under section 56(2)(vii) of the Income Tax Act, 1961 (“the Act”). The addition arose from a gift received by the assessee from Rajendra H. Mashru (HUF), of which the assessee was a member. The assessee argued that the addition was unjustified, as a Hindu Undivided Family (HUF) comprises a group of relatives and gifts received from such a group should fall under the definition of “relative,” exempt under the Act. The assessee also contended that the sum constituted a capital receipt and was exempt under section 10(2).
The assessment was initiated after the assessee filed his income tax return for FY 2016-17, declaring total income of Rs. 1,28,88,680. The case was selected for limited scrutiny, and notices under sections 142(1), 143(2), and a show-cause notice were duly issued. The assessee submitted details including the gift deed, the capital account of the HUF, and computations of income. Despite this, the Assessing Officer (AO) treated the Rs. 10,00,000 as taxable income from other sources, citing that HUFs are not considered “relatives” under section 56(2)(vii).
