THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. ARVIND N NOPANY

TAXAP/721/2019HC GujaratGJHC24065564201913 January 2020Author: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA5 pages
AI SummaryDismissed

What were the facts?

A search under Section 132 of the Income Tax Act, 1961, was conducted on the Nopany Group, including the assessee, on September 29, 2011. During the search, documents revealed that the assessee received Rs. 16,00,00,000 from Shri Narotam Sekhsariya, who is the assessee's brother-in-law. The Assessing Officer (AO) questioned the genuineness of this gift. The CIT(Appeals) ruled that the donor qualified as a "relative" under Section 56(2)(vi) of the Act, and thus the gift was not taxable. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal, upholding the CIT(Appeals)'s order. The revenue has now filed this tax appeal before the High Court.

What did the High Court hold?

The High Court held that none of the questions of law formulated in the memorandum of appeal could be termed as substantial questions of law. The Tribunal had taken into consideration the details of the donor, including PAN number, capital gain statement, and bank statements, and concurred with the CIT(Appeals) regarding the genuineness of the transaction. The Court noted that Section 56(2)(vi) of the Act, specifically Explanation (e), defines 'relative' to include various relationships, and a plain reading indicated that the brother-in-law would fall within this definition. The Court was convinced with the reasons assigned by the Tribunal and found no infirmity in its order. Therefore, the appeal was dismissed.

What were the issues?

1. Whether, on the facts and in law, the Appellate Tribunal was right in deleting the addition of Rs. 5,00,00,000 for AY 2008-09 on account of a gift claimed to be received from a relative, without appreciating that the donor does not fall within the definition of 'relative' as envisaged under Explanation to clause (vi) of Section 56(2) of the Income Tax Act? (Question of law) 2. Whether, on the facts and in law, the Appellate Tribunal was right in deleting the addition of Rs. 5,00,00,000 for AY 2008-09 on account of a gift claimed to be received from a relative, when an affidavit filed by the assessee before the State Land Authority admits that the assessee has no sister, and hence, the existence of the relative (brother-in-law) does not arise? (Question of mixed law and fact) 3. Whether, on the facts and in law, the Appellate Tribunal was right in deleting the addition of Rs. 5,00,00,000 without appreciating that the claimed gift was received without any reason or occasion? (Question of mixed law and fact) Assessee's contentions (as per CIT(A) and ITAT findings): The brother-in-law falls within the definition of "relative" under Section 56(2)(vi) read with Explanation clauses (ii) and (vii). The term "blood relative" was incorrectly applied by the AO. The gifts were genuine and from explained sources. The AO acted beyond jurisdiction by doubting the relationship and ignoring statutory provisions. The ITAT noted that the donor's details (PAN, capital gain statement, bank statement) were provided, and the revenue failed to prove the transaction's genuineness or creditworthiness with cogent documents. Revenue's contentions (as per proposed questions): The donor does not fall within the definition of 'relative'. An affidavit filed by the assessee suggests the absence of a sister, thus questioning the existence of a brother-in-law. The gift was received without any reason or occasion.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 153A,Section 56(2)(vi),Section 68

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/721/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 721 of 2019 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX Versus ARVIND N NOPANY ========================================================== Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA   Date : 13/01/2020

ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1.

This tax appeal under Section 260A of the Income Tax Act, 1961 [for short 'the Act, 1961'] is at the instance of the revenue and is directed against the order dated 24th  January 2019 passed by the Income Tax Appellate   Tribunal   Ahmedabad   Bench   'A',   Ahmedabad   in   the   ITA No.128/AHD/2016 for the A.Y 2008­09. 2. The facts giving rise to this appeal may be summarized as under:­

2.

1 A search under section­132 of the Act was carried out in the cases of Nopany Group, Vadodara on 29th Septem

The order continues below.

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