The Tribunal decided this very issue against my client in an earlier assessment year. Same facts, next year. Am I bound by it?
Not necessarily. The Ahmedabad Bench, on the same assessee and the same issue, declined to follow the Tribunal's order for AY 2012-13 and deleted the addition, holding — following the Chandigarh Bench in Pankil Garg — that a member has a pre-existing right in the property of the HUF, so an amount given to him from that property is not a sum received without consideration or a gift at all, and section 56(2)(vii) is not attracted. The earlier order was distinguished on the footing that it had proceeded on the premise that the payment was a gift, a premise held incorrect in law.
Decided by the ITAT (Ms Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member) on 2022-03-25, reported as ITA No. 2244/Ahd/2017 (ITAT Ahmedabad 'B' Bench, conducted through virtual court). It bears on section 56(2)(vii), section 10(2), section 250(6) of the Income Tax Act 1961, in Gifts, Shares & Angel Tax, How Tax Law Is Read and Appeals matters.
Two distinct uses. Substantively, this is the strongest formulation of the HUF-to-member argument, because it does not require the reader to accept that an HUF is a 'relative' — it says the charge is never triggered, since nothing is received without consideration. That defeats the department's best point, which is that the Explanation's HUF limb speaks only of an HUF as recipient. Procedurally, it shows how a Bench may depart from an order in the assessee's own earlier year: not by refusing to follow it, but by identifying a legal premise in it that a later decision has shown to be wrong. The order is also an honest map of the split: the Bench records at paras 10 to 12 that the Tribunal has consistently held such payments outside the section, that the only decision the other way is the assessee's own for AY 2012-13, that the Departmental Representative pointed to no other, and that Pankil Garg approached the question from a different perspective altogether.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For AY 2014-15 the assessee, a coparcener, received Rs 50 lakh from his HUF. The Assessing Officer treated it as taxable under section 56(2)(vii) and the CIT(A) confirmed, noting that an identical issue had arisen in the assessee's own case for AY 2012-13 where the addition had been confirmed. The appeal had earlier been dismissed ex parte on 25 July 2019 on the footing that the issue was covered by the Tribunal's order in the assessee's own case for the preceding year; that ex parte order was recalled in M.A. No. 364/Ahd/2019 on 5 March 2021. Before the Bench, the assessee accepted that identical gifts in AY 2012-13 had been taxed and upheld by the Tribunal, but relied on a body of coordinate-bench decisions the other way. The Departmental Representative relied on the orders below and on the assessee's own earlier order.
The appeal was allowed and the addition deleted (paras 13 and 14). Following the Chandigarh Bench in Pankil Garg, the amount of Rs 50 lakh received by the assessee from his HUF is not in the nature of any sum received without consideration or gift, and is therefore not exigible to tax under section 56(2)(vii); the CIT(A)'s order was set aside.
The Bench first recorded the state of the authorities: the Tribunal has consistently held sums given by an HUF to its members or coparceners not exigible under section 56(2)(vii), the only decision the other way being that in the assessee's own case for AY 2012-13, and the Departmental Representative pointed to no other (paras 9.2 and 10). It observed that in most of those decisions the route was that a gift from an HUF falls within the contours of a gift from a specified relative, but that Pankil Garg dealt with the issue from a different perspective — that under Hindu law every member has a pre-existing right in the property of the HUF, so that any amount given to a member from HUF property amounts only to giving him what already belonged to him, and there is no question of an amount given for no consideration or of a gift within the scope of section 56(2)(vii) (paras 11 and 11.1). Because Pankil Garg was decided after the assessee's own order of 21 February 2018, and because it held the payment not to be a gift at all, the earlier order — which had proceeded on the premise that it was a gift — stood clearly distinguished (para 12.1).
we hold that the amount received by the assessee from its HUF of Rs. 50 lakhs is not in the nature of any sum received without consideration/gift and therefore not exigible to tax as per provisions of Section 56(2)(vii) of the Act.
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Handle my notice → Ask a CA on WhatsAppNot necessarily. The Ahmedabad Bench, on the same assessee and the same issue, declined to follow the Tribunal's order for AY 2012-13 and deleted the addition, holding — following the Chandigarh Bench in Pankil Garg — that a member has a pre-existing right in the property of the HUF, so an amount given to him from that property is not a sum received without consideration or a gift at all, and section 56(2)(vii) is not attracted. The earlier order was distinguished on the footing that it had proceeded on the premise that the payment was a gift, a premise held incorrect in law. This was decided by the ITAT (Ms Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member) and bears on section 56(2)(vii), section 10(2), section 250(6) of the Income Tax Act 1961. It is reported as ITA No. 2244/Ahd/2017 (ITAT Ahmedabad 'B' Bench, conducted through virtual court). Two distinct uses. Substantively, this is the strongest formulation of the HUF-to-member argument, because it does not require the reader to accept that an HUF is a 'relative' — it says the charge is never triggered, since nothing is received without consideration. That defeats the department's best point, which is that the Explanation's HUF limb speaks only of an HUF as recipient. Procedurally, it shows how a Bench may depart from an order in the assessee's own earlier year: not by refusing to follow it, but by identifying a legal premise in it that a later decision has shown to be wrong. The order is also an honest map of the split: the Bench records at paras 10 to 12 that the Tribunal has consistently held such payments outside the section, that the only decision the other way is the assessee's own for AY 2012-13, that the Departmental Representative pointed to no other, and that Pankil Garg approached the question from a different perspective altogether. If it applies to you, the first step is this: Where an earlier order in the assessee's own case is against you, do not argue consistency — identify the premise the earlier Bench proceeded on and show that a later decision holds that premise wrong in law. That is what carried this appeal.
For AY 2014-15 the assessee, a coparcener, received Rs 50 lakh from his HUF. The Assessing Officer treated it as taxable under section 56(2)(vii) and the CIT(A) confirmed, noting that an identical issue had arisen in the assessee's own case for AY 2012-13 where the addition had been confirmed. The appeal had earlier been dismissed ex parte on 25 July 2019 on the footing that the issue was covered by the Tribunal's order in the assessee's own case for the preceding year; that ex parte order was recalled in M.A. No. 364/Ahd/2019 on 5 March 2021. Before the Bench, the assessee accepted that identical gifts in AY 2012-13 had been taxed and upheld by the Tribunal, but relied on a body of coordinate-bench decisions the other way. The Departmental Representative relied on the orders below and on the assessee's own earlier order. The matter was decided on 2022-03-25 by the ITAT (Ms Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed and the addition deleted (paras 13 and 14). Following the Chandigarh Bench in Pankil Garg, the amount of Rs 50 lakh received by the assessee from his HUF is not in the nature of any sum received without consideration or gift, and is therefore not exigible to tax under section 56(2)(vii); the CIT(A)'s order was set aside.
The Bench first recorded the state of the authorities: the Tribunal has consistently held sums given by an HUF to its members or coparceners not exigible under section 56(2)(vii), the only decision the other way being that in the assessee's own case for AY 2012-13, and the Departmental Representative pointed to no other (paras 9.2 and 10). It observed that in most of those decisions the route was that a gift from an HUF falls within the contours of a gift from a specified relative, but that Pankil Garg dealt with the issue from a different perspective — that under Hindu law every member has a pre-existing right in the property of the HUF, so that any amount given to a member from HUF property amounts only to giving him what already belonged to him, and there is no question of an amount given for no consideration or of a gift within the scope of section 56(2)(vii) (paras 11 and 11.1). Because Pankil Garg was decided after the assessee's own order of 21 February 2018, and because it held the payment not to be a gift at all, the earlier order — which had proceeded on the premise that it was a gift — stood clearly distinguished (para 12.1). In the words reproduced by the source cited on this page: "we hold that the amount received by the assessee from its HUF of Rs. 50 lakhs is not in the nature of any sum received without consideration/gift and therefore not exigible to tax as per provisions of Section 56(2)(vii) of the Act." The decision followed or applied Pankil Garg v. Pr. CIT (ITAT Chandigarh) — followed.
It was decided by the ITAT on 2022-03-25 and is reported as ITA No. 2244/Ahd/2017 (ITAT Ahmedabad 'B' Bench, conducted through virtual court). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 56(2)(vii), section 10(2), section 250(6), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the addition deleted (paras 13 and 14). Following the Chandigarh Bench in Pankil Garg, the amount of Rs 50 lakh received by the assessee from his HUF is not in the nature of any sum received without consideration or gift, and is therefore not exigible to tax under section 56(2)(vii); the CIT(A)'s order was set aside. It arises in Gifts, Shares & Angel Tax, How Tax Law Is Read and Appeals matters, on section 56(2)(vii), section 10(2), section 250(6) of the Income Tax Act 1961, and was decided by Ms Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Plead the Pankil Garg route (no receipt without consideration, because of the pre-existing right) as the primary ground, and the 'group of relatives' construction in Bhalodia as the alternative. Where the HUF payment is out of family property rather than out of the year's income, note that the section 10(2) route in Bhalodia is not available on those facts and the Pankil Garg route is the only one left. Expect the Revenue to say the issue is covered by the earlier order in the assessee's own case; be ready with the dates, because the sequence — the earlier order of 21 February 2018 and Pankil Garg after it — is what made the distinction available.
Validity check could not be completed. Validity check could not be completed, and the label understates a genuine conflict. The Bench itself records that the Tribunal decided the identical issue against this same assessee for AY 2012-13. That is a conflict between coordinate Tribunal benches, not between High Courts, so 'high courts differ' would be the wrong label. Pankil Garg, the decision followed, is already in this library. No High Court decision on the point was located and I did not search for one systematically, nor for any appeal against this order. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read with caution as to structure. The transcription of this order jumps from paragraph 5 to paragraph 7 — no paragraph 6 was returned on the pass that transcribed the order — so the numbering is not continuous as read, and nothing is cited here from a paragraph 6. Paragraphs 4, 7 and part of 11.1 came back as bracketed editorial summaries rather than transcribed text, and nothing in them is quoted or relied on; the substance stated here is taken from paragraphs 9 to 14, which were returned as continuous text. Paragraph 12.1 gives the date of the Chandigarh Bench's order in Pankil Garg as 17 March 2019 while the retrieval index lists that decision as 17 July 2019; the sequence the Bench relies on — Pankil Garg after the assessee's own order of 21 February 2018 — holds either way. The order lists seven coordinate-bench decisions at para 9.2 which were returned only as a bracketed count, so they are not named here. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the addition deleted (paras 13 and 14). Following the Chandigarh Bench in Pankil Garg, the amount of Rs 50 lakh received by the assessee from his HUF is not in the nature of any sum received without consideration or gift, and is therefore not exigible to tax under section 56(2)(vii); the CIT(A)'s order was set aside.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
I received money from my HUF. Is it taxable because an HUF is not my 'relative'?
My step-sister gifted me a flat. Can the department tax it because we are not blood relations?
My mother gifted shares to my HUF. Is she a 'relative' of the HUF?
The AO says my gift is taxable because there is no registered gift deed. Is a deed required?