2015 (8) TMI 121 - AT - Income Tax

Gift from HUF - Holding that HUF is not a relative under section 56(2), A.O. treated the amount as income of the assessee - Held that - The issue of HUF being treated as Relative so as to get exemption as per the provisions of section 50(2)(vi) has been considered in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO (2011 (5) TMI 584 - ITAT RAJKOT ) wherein similar issue was considered to hold that HUF can be treated as a relative under the provisions of section 56(2) so as to exclude the amount received from HUF by the assessee-individual. Accordingly, we set aside the order of the Ld. CIT(A) and A.O. on this issue and direct the A.O. to treat the amount of ₹ 2,25,000 received from the HUF as an amount exempted under section 56(2). The addition is accordingly deleted. - Decided in favour of assessee. Amount credited to the loan account which is not reflected the firms accounts - Held that - Prima facie assessee has source for the above amount and this cannot be treated as a gift under the provisions of section 56(2). However, since A.O. did not examine the ledger account nor Ld. CIT(A) consider it in his order, we set aside the same to the A.O. to verify the ledger accounts of the firm and delete the same. With these directions, the issue is restored to the file of A.O. to do accordingly. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Treatment of HUF as a 'relative' under section 56(2) for exemption.
2. Addition of Rs. 90,000 as income due to discrepancies in firm's accounts.

Issue 1: Treatment of HUF as a 'relative' under section 56(2) for exemption:
The appellant received a gift of Rs. 2,50,000 from HUF, which the Assessing Officer (A.O.) considered as the appellant's income since HUF was not deemed a 'relative' under section 56(2). The appellant contended that HUF should be considered a 'relative' based on a previous case ruling. The Coordinate Bench held that HUF constitutes a group of relatives and gifts from HUF should be exempt under section 56(2)(vi). Consequently, the Tribunal held that the amount received from HUF should be exempted, overturning the lower authorities' decision.

Issue 2: Addition of Rs. 90,000 as income due to discrepancies in firm's accounts:
The A.O. added Rs. 90,000 as the appellant's income, considering it a gift from the firm due to discrepancies in the firm's accounts. The appellant argued that the amount was a repayment made by the firm for a housing loan, supported by ledger entries. The Tribunal found that the A.O. and the Ld. CIT(A) erred in not considering the ledger entries that clearly showed the firm's payment on behalf of the appellant. The Tribunal directed the A.O. to reexamine the ledger accounts to verify the source of the amount and instructed to delete the addition. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that HUF can be considered a 'relative' for exemption under section 56(2) and directing the A.O. to delete the addition of Rs. 90,000 based on the firm's ledger entries.