NAVANITBHAI PATEL,CHHOTAUDEPUR vs. THE INCOME TAX OFFICER, WARD 3(1)(4), VADODARA

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ITA 1158/AHD/2026Status: DisposedITAT Ahmedabad13 August 2026AY 2014-157 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the receipt of Rs. 55 Lakhs was from a family property partition and not 'income'. Relying on judicial precedents, it was established that a family partition is not a transfer and thus not taxable as income.

What were the facts?

The assessee received Rs. 55 Lakhs as his share from a family partition of inherited properties. The Investigation Wing treated this as unexplained income, and the Assessing Officer made an addition under Section 69A. The CIT(A) upheld this addition.

What were the issues?

Whether the amount received by the assessee from a family partition of inherited property constitutes 'income' taxable under the Income Tax Act. Whether the addition made under Section 69A for unexplained cash deposits is sustainable in this context.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 271(1)(c),Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA

For Appellant: Shri Manan Agrawal, A.R, Ms. Sudiksha Rani, Sr.DR
For Respondent: Ms. Sudiksha Rani, Sr.DR
Hearing: 19/05/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD

BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1158/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2014-15) बनाम Navanitbhai Patel The Income Tax Officer / 1, Kherva, Duma Road, Ward 3(1)(4), Vadodara Vs. Alhadpura Gram Panchayat, Chhotaudepur, Gujarat- 391135 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AGAPP9213E (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Manan Agrawal, A.R. ��यथ� क� ओर से/Respondent by : Ms. Sudiksha Rani, Sr.DR

Date of Hearing 19/05/2026 13/08/2026 Date of Pronouncement

(आदेश)/ORDER Per Sanjay Garg, Judicial Member:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 18.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2014-15.

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 2 – 2. The assessee in this appeal has taken following grounds:

“1. The Ld. CIT(A) has erred in law and in fact in upholding the order of the Ld. AO. 2. The Ld. AO has erred in law and in fact in issuing the notice U/s. 148 of the Act. 3. The Ld. AO has erred in law and in fact in making addition of 55,00,000/- U/s. 69A of the Act. 4. The Ld. AO has erred in law and in fact in taxing the income U/s. 115BBE of the Act. 5. The Ld. AO has erred in law and in fact in initiating penalty proceedings U/s. 271(1)(c) of the Act for concealment of income. 6. The Appellant reserves the right to add, alter, amend, modify, delete all or any of the grounds of appeal either partially or completely.”

3.

The brief facts of the case are that certain investigations were carried out by the Investigation Wing of the Department in respect of cash deposit of Rs.50.50 Lakhs in the bank account of Late brother of the assessee, namely, Shri Shirish Patel in the month of September 2013. Said late Shri Shirish Patel explained to the Investigation Wing that, pursuant to the death of his father Shri Raghunath Patel in the year 2011, the family members executed a family partition deed in the year 2013, as a result of which, all immovable properties (having market value of Rs.3.30 Crore) of their Late father Shri Raghunath Patel would devolve / vest in two brothers of the assessee, namely, Shri Indravadan Patel and Shri Girish Patel and in lieu of that, the aforesaid two beneficiary brothers would pay Rs.55.00 Lakhs each to all family members / legal heirs. It was, therefore, explained by the

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 3 – deceased brother of the assessee to the Investigation Wing that the source of amount of Rs.50.50 Lakhs was out of cash amount received by him from his brothers, on account of his share in the family property, received by him on partition. The list of the family members alongwith amount received / paid was detailed as under:

Sr. Name Relation with Amount (₹) Paid / No. Appellant Received 1. Shri Navneet Patel Assessee 55,00,000 Received 2. Smt. Jashoda Patel Mother 55,00,000 Received 3. Smt. Saroj Patel Sister 55,00,000 Received 4. Late Shri Shirish Patel Brother 55,00,000 Received 5. Shri Girish Patel Brother 1,10,00,000.00 Paid 6. Shri Indravadan Patel Brother 1,10,00,000.00 Paid

4.

The Investigation Wing considering the entire details, concluded as under:

“[D] Conclusion: Both Shri Girish R Patel and Shri Indravadan R. Patel are agriculturist and having no other source of income. Both of them are non filers has failed to give satisfactory explanation regarding fact and accepted by payment of Rs.55,00,000/- each to other four family members. It is established them that their agriculture income for F.Y.2013-14 was around Rs.8 lakh each. In this scenario, it is Impossible for them to pay Rs.55,00,000/- each to other four family members. From above it can be inferred that both of them are hiding their sources of income and Rs.2.2 crores paid by them to other family members remained their unexplained income. Thus the unexplained income of Shri Girish R Patel and Shri Indravadan R. Patel is required to be taxed u/s 69A of the Income tax Act. Details of income escaped are as under. F.Y. Name of the Income Taxability person escaped (in Rs.) Taxability Shri Indarvadan R 1,10,00,000/- 69A

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 4 – Patel Taxability Shri Girish R. 1,10,00,000/- 69A Patel Further, as both the above persons has accepted under oath of paying total of Rs.55,00,000/- only to other family members, therefore on protective basis case is required to be reopened of following family members: S.No. Name of the Person A.Y. Amount escaped 1 Shri Shirish R. Patel 2014-15 55,00,000/- 2 Shri Navneet R. Patel 2014-15 55,00,000/- 3 Smt Saroj N. Patel 2014-15 55,00,000/- 4 Smt Jashodaben R. Patel 2014-15 55,00,000/- 5. Therefore, as per the report of the Investigation Wing, the addition of Rs.1,10,00,000/- each in the name of Shri Indravadan R. Patel and Shri Girish R. Patel, brothers of the assessee, who had paid the amount to the assessee and other family members, was proposed to be made u/s 69A of the Act because of their failure to explain the source, from which, the said amount was paid by them to the assessee and other family members. Further, the Investigation Wing recommended the addition of Rs.55 Lakhs each in the case of four family members as noted above on protective basis.

6.

On the basis of the aforesaid report of the Investigation Wing, the Assessing Officer (in short ‘the AO’) reopened the assessment in the case of the assessee u/s 147 of the Act and made the impugned addition of Rs.55 Lakhs into the income of the assessee u/s 69A of the Act treating the same as unexplained cash deposits.

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 5 – 7. The Ld. CIT(A) confirmed the addition, so made by the AO.

8.

We have heard the rival contentions and gone through the record. In this case, a detailed investigation was carried out by the Investigation Wing and, thereafter, a report was given by the Investigation Wing that the two brothers of the assessee, namely, Shri Indravadan R. Patel and Shri Girish R. Patel had retained the immovable properties of their deceased father and in lieu of that, they had contributed Rs.1.10 Crores each, which amount was distributed to the other four family members / legal heirs amounting to Rs.55 Lakhs each. The Investigation Wing also observed that the said two brothers of the assessee, namely, Shri Indravadan R. Patel and Shri Girish R. Patel had failed to explain the source of the said amount paid by them to the other family members including the assessee, therefore, the Investigation Wing recommended for substantive addition of the said amount in the case of the said two brothers of the assessee, however, the addition in the case of recipients was recommended on protective basis. Two brothers / payers of the assessee have duly admitted before the Investigation Wing that they have paid the amount in question to the remaining family members. The partition of the property, inherited from their father, has not been doubted by the Investigation Wing / Income Tax Authorities. Under the circumstances, the source of Rs.55 Lakhs cash deposit in the account of the assessee is duly explained in the report of the Investigation Wing, itself, which is based on the admission of the

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 6 – payers i.e. two brothers, namely, Shri Indravadan R. Patel and Shri Girish R. Patel.

9.

So far as the question as to whether the said receipt of Rs.55 Lakhs would constitute income of the assessee, is concerned, admittedly, the same has been received by the assessee on partition by the family property in lieu of his share in the family property, therefore, the same would not constitute the character of ‘income’. The Ld. Counsel for the assessee, in this respect, has relied upon the decision of the Co-ordinate bench of the Tribunal in the case of “Shri Y. Shanmuga Durai, L//H of Late S. Yogarathinam vs. ACIT” in ITA No.626/CHNY/2024, dated 17.03.2025, wherein, the Co-ordinate Bench of the Tribunal in para 26 onwards of the decision, has observed as under:

“26. The reliance placed by the Id.AR in the case of CIT vs Nagaraja Rao in ITA No.3038 of 2005 dated 19.02.2012 (Hon'ble Karnataka High Court) wherein their Lordship has endorsed that, it is a well settled law that the partition is not transfer. What is recorded in family settlement is nothing but partition. Adjustment of rights in family properties, shares, crystallization of the respective rights in the family properties and therefore it cannot be construed as a transfer in the eyes of law. When there is no transfer there is no capital gain and consequently no tax on capital gain is liable to be paid. 27. In deciding the issue of settlement deed between the brothers in the case on hand, we take note of the decision of the Hon'ble Apex court in the case of SS Pillai vs. KS Pillai AIR 1972 SC 2069 (SC), wherein it was held observed that if in the interest of the family, properties and family peace, the close relatives settle their dispute amicably, this court will be reluctant to disturb the same. 28. The Hon'ble Madras High court in the case of CIT vs. R. Ponnammal 164 ITR 706, gone one step ahead and witnessed that when the parties enter into a family arrangement the validity of the

ITA No.1158/Ahd/2026 [Navanitbhai Patel vs. ITO] A.Y. 2014-15 - 7 – family arrangement is not be judged with reference to whether the parties who raised disputes or rights or claims in certain properties had in law any such right or not. The members of a joint family may, in order to maintain peace and bring about harmony in the family, enter into a family arrangement and if the arrangement is entered into bonafide and the terms thereof are fair, courts will normally give assent to such an arrangement rather than avoid it. Even if a party to the settlement has no title under the arrangement but the other party relinquishes all his claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed, and the family arrangement will be upheld. 29 Therefore, respectfully following the decision of the jurisdictional High court decision, we cannot agree with the ld.CIT(A) for taxing the settlement deeds of the assessee with his brother considering it as 'transfer under section 2(47) of the Act and hence we are inclined to delete capital gains added by the AO.” 10. In view of the above stated legal position, the impugned addition is not sustainable and the same is, accordingly, ordered to be deleted.

11.

In the result, the appeal of the assessee stands allowed.

This Order pronounced on 18/08/2026 under Rule 34(4) of the ITAT Rules, 1963

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/08/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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