Case Law Details
Sachi Desai Vs ACIT (ITAT Surat)
The Income Tax Appellate Tribunal (ITAT) Surat has remanded the case of Sachi Desai vs. ACIT back to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh consideration regarding the taxability of a gift received from a Hindu Undivided Family (HUF). The appeal arose from an order passed by the National Faceless Appeal Centre (NFAC), which had upheld the Assessing Officer’s (AO) classification of the gift as “income from other sources” under Section 56(2)(vii) of the Income Tax Act, 1961. The tribunal found that the CIT(A) had decided the matter ex parte, without considering later judicial rulings favoring the assessee.
During the proceedings, the assessee’s counsel argued that the AO incorrectly relied on the ITAT Ahmedabad decision in Gyanchand M. Bardiya vs. ITO (2018) while ignoring subsequent decisions supporting the taxpayer’s claim. Notably, the Chandigarh Tribunal in Pankil Garg vs. PCIT (2019) and Rajkot Tribunal in Vineet Kumar Raghavjibhai Bhalodia vs. ITO (2011) had ruled that gifts from an HUF to its member should not be taxed under Section 56(2)(vii), as they fall within the scope of Section 10(2), which exempts such receipts. However, due to procedural lapses and the assessee’s unfamiliarity with electronic filing, these precedents were not presented before CIT(A).
The Revenue opposed the appeal, stating that the assessee had been given sufficient opportunities to respond to notices but failed to do so. The department maintained that the CIT(A)’s ex parte decision was justified based on the available records. However, the tribunal acknowledged that the assessee had not received a fair opportunity to present her case effectively.
Considering the legal precedents and procedural fairness, ITAT Surat ruled that the case should be re-examined by CIT(A), ensuring that the assessee is given an opportunity to present all relevant evidence and legal arguments. The tribunal emphasized that the CIT(A) must review the applicability of Section 10(2) and past tribunal decisions before making a fresh determination. With this directive, the appeal was allowed for statistical purposes, and the case will now return to CIT(A) for reconsideration.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 09.08.2024 for assessment year (AY) 2015-16, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 29.11.2019.
2. Rival submissions of both parties heard and record perused. The Ld. Authorized Representative (Ld.AR) of the assessee submits that Assessing Officer treated the gift received from HUF, as income from “other sources” by taking view that assessee is not included in the definition of “relative”. The assessee has received such gift from HUF, wherein the assessee is one of the member. The Assessing Officer relied upon the decision of ITAT Ahmedabad Benches in the case of Gyanchand M. Bardiya vs. ITO (2018) 93 taxmann.com 144 (Ahd-Tribunal). On appeal before Ld.CIT(A) the action of Assessing Officer was upheld in ex parte proceedings. The Ld. AR of the assessee submits that there is other decision subsequent to decision of Ahmedabad Tribunal, including the decision of Chandigarh Tribunal in case of Pankil Garg Vs. PCIT (2019) taxmann.com 108 taxmann.com 337 (Chand-Trib) and earlier decision of Rajkot Tribunal in Vineet Kumar Raghavjibhai Bhalodia Vs ITO (2011) taxmann.com 384 (Rajkot). The decisions of Chandigarh Tribunal also considered section 10(2) of the Act. However, such fact is not considered by Ld. CIT(A) as could not be brought to his notice. The Ld.AR of the assessee prayed that matter may be restored back to the file of Ld.CIT(A) for adjudication of issue afresh in accordance with law. The Ld. AR of the assessee submits that assessee could not make proper compliance before Ld.CIT(A) as assessee has given her mobile number and e-mail address while filing appeal before Ld. CIT(A) in Form-35 and she was not well verse with electronic mode. The Ld. AR of assessee submits that one more opportunity may be given to assessee to contest her case on merit before Ld.CIT(A).
3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. Ld.Sr-DR for the Revenue submits that assessee was given ample opportunities by Ld.CIT(A) as recorded in para-3 of the impugned order, however, assessee failed to respond such notices. The Ld. Sr-DR submits that assessee does not deserve any further opportunity.
4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We find that there is no dispute about the fact that assessee has received gift from HUF wherein she is a member of such HUF. The Assessing Office treated the gift as “income from other sources” by taking view that assessee does not fall in the category of “relative” define in clause-(ii) of Section 56(2)(vii). We find that Ld.CIT(A) confirmed the action of Assessing Officer in ex parte proceedings. Before us, Ld. AR of the assessee vehemently argued that there is subsequent decision of Chandigarh Tribunal in favour of assess and assessee maybe given one more opportunity to contest the case before Ld.CIT(A). Considering the fact that Ld. CIT(A) has passed ex parte order by taking view that assessee has not made compliance despite service of notices on the e-mail provided in form-35 while filing appeal. Considering the overall facts and circumstances of the present case, we deem it proper to allow one more opportunity to assessee to contest her case before Ld.CIT(A) again. Thus, the order of Ld. CIT(A) is set aside and is restored to the file of Ld.CIT(A) to pass order afresh in accordance with law after consideration decision of Chandigarh Tribunal in Pankil Garg Vs PCIT (2019) taxmann.com 108 taxmann.com 337 (Chand-Trib). Needless to direct the Ld.CIT(A) shall grant opportunity of being heard to assessee. The assessee is also directed to provide all evidences and information again to the Ld.CIT(A) as and when required. In the result, grounds of appeal raised by assessee are treated allowed for statistical purposes.
5. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 10/01/2025.
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