Back
2025 Supreme(Online)(ITAT) 6807
INCOME TAX APPELLATE TRIBUNAL (RAJKOT BENCH)
DR. ARJUN LAL SAINI, ACM, SHRI DINESH MOHAN SINHA, J
Kunal Rajendra Mashru – Appellant
Versus
Assistant Commissioner of Income-tax – Respondent
Income Tax Appeal No. ITA No.387/RJT/2025
For the Appellant: Shri Abhishek Choksy, AR
For the Respondent: Shri Abhimanyu Singh Yadav, Sr.DR
Gifts from HUF to members are taxable as HUF is not considered a 'relative' under the Income Tax Act.
Headnote:(A) Income Tax Act, 1961 - Sections 56(2)(vii) and 10(2) - Regarding taxability of gift received by an individual from a Hindu Undivided Family (HUF) - It was established that HUF is not considered a 'relative' under the strict interpretation of the Income Tax Act; therefore, gifts from HUF are taxable under section 56(2)(vii) - Appellant argued that since HUF members are relatives, the received gift should be exempt from tax; however, binding contrary precedents and Supreme Court judgments were noted - Provisions denying taxation on family gifts are pragmatically upheld unless explicitly detailed. (Paras 1-14)
| Table of Content |
|---|
| 1. establishment of the appeal's context and basis. (Para 1) |
| 2. discussion on grounds for appeal and initial assessment. (Para 2 , 3 , 4) |
| 3. addressing of tax implications for gifts from huf. (Para 5 , 6) |
| 4. judicial interpretation of definitions for taxation exemptions. (Para 7 , 8 , 9 , 10 , 11) |
| 5. final ruling and outcome of the appeal. (Para 12 , 13) |
ORDER
Per Dinesh Mohan Sinha, Judicial Member:
Captioned appeal filed by assessee pertaining to Assessment Year 2017-18, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the LD. Commissioner of Income-tax (Appeal), ADDL/JCIT(A)-3, Chennai (in short ‘CIT(A)’), dated 29.05.2025, which in turn arises out of assessment order passed by Assessing Officer u/s. 143(3) of the Act on 07.11.2019.
2. The grounds of appeal raised by the assessee are as under:
“1. The Ld. CIT(A) erred in law and in fact in passing the appellate order u/s. 250 of the Act in violation of principles of natural justice:
(a) by not giving opportunity to be heard before dismissing the appeal (b)by not following the supreme verdict that where two opinions are possible.
One in favour of the assesse shall be taken into consideration.
2. The Ld. CIT(A) erred in law and in facts in confirming addition of 10,00,000/- u/s. 56 of the Act on account of receipt by the appellant from the HUF [Mr. Rajendra H. Mashru (HUF).) of which the appellant was the member.
2.1. The Ld. CIT(A) has erred in law in facts in relying on the decision of Gyanchand M. Baradla v. ITO (1072/Ahd/2016) without appreciating following several judicial pronouncements which are well analysed. well established and well accepted and in favour of the appellants
2.1.1. Vineet kumar Bhalodia v. ITO (2011) (Rajkot) (11 taxmann.com
2.1.2 Pankil Garg v. Pr. CIT (2019) (Chandigarh) (108 taxmann.com 337)
2.1.3. DCIT v. Ateev V. Gala (Mumbai) ( ITA No. 1906/Mum/2014)
2.1.4. Biravelll Bhaskar Karimnagar v. ITO (Hyderabad) ( ITA No. 38/Hyd/2015)
2.1.5. Harshadbhal Dahyalal Valdhya (HUF) v. ITO (Ahmedabad) (144 ITD 605)
2.1.6. Hemal D. Shah v. Dy. CIT (Mumbai) ( ITA No. 1906/Mum/2014)
2.2 The Ld. CIT(A) has erred in law in facts in not appreciating that HUF is nothing but a group of relatives and any gift received from a relative /
group of relatives is excluded from the purview of section 56(2)(vii) of the Act.
2.3 The Ld. CIT(A) has erred in law and in fact in not appreciating the alternative contention of the appellant that the receipt is capital receipt and is exempt under section 10(2) of the Act.
3. The appellant craves leave to add to, alter, amend and/or delete in all the foregoing grounds of appeal.”
3. The brief facts of the case are that the assessee is an individual and has e-filed his Return of Income vide acknowledgment no. 475065760210318 for the F.Y. 2016-17 relevant to A.Y. 2017-18 on 21.03.2018, declaring his total income at Rs. 1,28,88,680/- under regular provisions of IT Act, 1961. The same was processed u/s. 143(1) of the Income-tax Act, 1961 by CPC Bangalore. Thereafter, the case was selected for Limited Scrutiny under CASS and E- notice u/s. 143(2) of the Act was issued on 09.08.2018 and was duly served on the assessee. E-notice u/s. 142(1) of the Act, along with questionnaire, was issued on 15.05.2019 which was duly served upon the assessee. Another E-notice u/s. 142(1) of the Act was issued on 11.09.2019, which was duly served upon the assessee. E- Show Cause Notice was issued on 25.09.2019 which was duly served upon the assessee. In response to the said notices, assessee filed e- submission from time to time. The details furnished are perused and verified. During the year under consideration, the assessee had derived salary income and income from other sources.
4. During the course of assessment proceedings, the AO noted from the assessee's capital account that the assesse has shown receipt of gift from M/s. Rajendra H. Mashru (HUF) of Rs. 10,00,000/- during the F.Y. r
