==> , Advs v. Income Tax Officer Ward 35(1) New Delhi

CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MS. JUSTICE SWARANA KANTA SHARMAO R D E R01.10.2024 % 1.Issue notice. 2.The learned counsel appearing for the respondent accepts notice. 3.The petitioner has filed the present petition impugning an order dated31.08.2024 (hereafter the impugned order) issued under Section 148A(d) ofthe Income Tax Act, 1961 (hereafter the Act) as well as the notice dated31.08.2024 (hereafter the impugned notice) issued under Section 148 of theAct, pursuant thereto. 4.The petitioner has filed the return for the assessment year 2018-19disclosing an income of ₹3,98,560/-. The said return was processed under Section 143(1) of the Act. 5.The petitioner received a notice dated 19.08.2024 under Section148A(b) of the Act calling upon the petitioner to show cause why noticeunder Section 148 of the Act not be issued on the basis of information that anamount of ₹97,76,003/- has escaped assessment for the Assessment Year 2018-19. The said information was premised on the basis that an immovableproperty had been purchased for an amount of ₹97,00,000/-. The said property was gifted by one Mr. Harish Kumar to the petitioner who was the brother of the petitioner’s father. According to the assessing officer, a nephew was not arelative within a meaning of explanation (e) to proviso to Section 56(2)(vii) ofthe Act, the said gift would be taxable. 6.The petitioner responded to the impugned notice dated 19.08.2024,inter alia, seeking the copy of the approval by the concerned authority underSection 151 of the Act and further contending that the definition of ‘relative’would also include the donor (Mr. Harish Kumar) as he is the brother of thepetitioner’s father. 7.The assessing officer rejected the said contention in terms of theimpugned order. The Assessing Officer noted the definition of expression‘relatives’ under explanation (e) to proviso to Section 56(2)(vii) of the Actand held that since the word ‘nephew’ is not mentioned in the definition of a‘relative’, the gift received by nephew from his uncle would be taxable in thehand of donee. Paragraph 4 of the impugned order which also refers to thedefinition of the term ‘relative’ is reproduced below: “4.In response, the assessee filed reply on 21.08.2024 statingthat under definition of ‘relatives’ given in clause (e) ofsec.56(2)(vii), brother of either parents of individual are coveredfor purpose of gift.The gift has been received from the uncle(brother of my father) and consequently the proceedings arestarted wrongly. The reply of the assessee has duly beenconsidered, however, it is not found tenable. As per Income TaxAct u/s 56(2)(vii)(e) relative means: (i) in case of an individual — (A) Spouse of the individual (B) brother or sister of the individual (C) brother or sister of the spouse of the individual (D) brother or sister of either of the parents of the individual (E) any lineal ascendant or descendant of the individual (F) any lineal ascendant or descendant of the spouse of theindividual (G) spouse of the person referred to in the items (B) to (F) (i) in case of an individual — (A) Spouse of the individual (B) brother or sister of the individual (C) brother or sister of the spouse of the individual (D) brother or sister of either of the parents of the individual (E) any lineal ascendant or descendant of the individual (F) any lineal ascendant or descendant of the spouse of theindividual (G) spouse of the person referred to in the items (B) to (F) The word “nephew” is nowhere mentioned in the definition ofrelative as per clause (e) of section 56(2)(vii). Therefore the giftreceived by the nephew from uncle is taxable in the hand ofdonee. Considering that the assessee has not given any suitableexplanation, such transactions represent the undisclosed income ofthe assessee for the year under consideration. Moreover, this pieceof information falls in the category as explained in Explanation1(i) to Section 148 of the Act and suggests that income ofRs.97,00,000/- chargeable to tax has escaped assessment. It is alsoevident from information available with Assessing Officer that theincome chargeable to tax for the relevant year, which has escapedassessment is more than Rs. 50 lakhs and same is represented inform of an “asset as immovable property acquired through gift".Thus, the assessee’s case is covered under provisions of section149(1)(b) of the Act, accordingly, it is concluded to be fit case forissuing notice u/s 148 of the Act for the A.Y. 2018-19.” 8.It is clear from the plain language of explanation (e) to proviso toSection 56(2)(vii) of the Act that a relative would also include a brother orsister of either of the parents of the individual. In this case, the donor is thebrother of the petitioner’s father and therefore, is covered under the saidclause. The fact that the word ‘nephew’ has not been mentioned cannot be areason for proceeding on the basis that uncle or nephew are not relativeswithin the meaning of explanation (e) to proviso to Section 56(2)(vii) of theAct. 9.In view of the above, the impugned order as well as the notice is setaside. The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J OCTOBER 01, 2024‘gsr’ SWARANA KANTA SHARMA, JClick here to check corrigendum, if any