TaxTMI 
TaxTMI 
2024 (4) TMI 585
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....nt in the absence of any incriminating material. 4. That the various findings of the learned lower authorities are opposed to the facts hence the same may kindly be quashed. 5. That on the facts and circumstances of the case The learned assessing officer erred in making and The Learned CIT Appeals -3, Bhopal in confirming the addition of Rs. 3,67,00,000/- u/s 56(2)(vii)(b)(i) of The Act, on account of undisclosed income from other sources." 2. The assessee is an individual and filed her return of income for assessment year under consideration on 13.03.2018 declaring total income of Rs. 36,59,090/-. There was a search and seizure operation u/s 132 of the Act at the premises of Asnani Group at E- 2/132 Arera Colony, Bhopal on 16.05.2018. The assessee is a member of Asnani Group which subjected to search and seizure operation and therefore, covered under the said search and seizure action. The assesse is a partner and shareholder in various firms and companies of Asnani Group and primarily derives income from business activities. Pursuant to the search operation a notice u/s 153A of the Act was issued by AO on 11.09.2019. In response to which the assesse has filed....
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....ss entity by NCLT. Ld. Sr. counsel has submitted that all these events took place prior to the search and seizure action and therefore, these documents were found at the time of search and seizure operation and seized by the search party. He has referred to the order of NCLT dated 03.10.2018 whereby the demerger scheme was approved by the NCLT as agreed by the parties vide MOU dated 27.09.2017. 3.1 Ld. Sr. counsel has referred to the family chart of late Shri Mulchand Mangharam Kriplani and submitted that Shri OP Kriplani & Vishan Das Asnani despite being close relatives are also business partners and share business partnerships. The AO erred by disproportionately relying on a single document i.e. gift deed from the seized material and neglecting all other seized material reflecting the true nature of the transaction being family settlement/arrangement. Ld. Sr. counsel has submitted that search operation yielded a substantial volume of information, documents, and records, all of which collectively contribute to the understanding of pretext on the basis of which the said gift deed was executed. The AO committed a significant oversight by classifying the gift deed merely as a conv....
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.... and is a corroborative evidence to establish that land in question is part of the family settlement/arrangement to be equally distributed between the parties. The parties of transfer were to alien and equalized the land holding within a specific geographical area therefore, in order to give effect to the family arrangement a gift deed was executed by Mrs. Aditi Bhatia. He further submitted that the property forming the subject matter of the instant appeal, transferred through the aforementioned deed in favour of the appellant, was originally purchased by the appellant's brother, Mr. OP Kriplani, and his wife, Mrs. Jaya Kriplani, in the year 2008. Importantly, the entire consideration for this property was funded and paid by Mr. OP Kriplani and Jaya Kriplani, and not by their daughter Aditi Prashant Bhatia as at the time of purchase, Aditi Prashant Bhatia did not possess independent funds nor had any financial means to independently finance the acquisition of the property. Consequently, it is asserted that the property, though funded by the Kriplani's, was merely registered in the name of their daughter, Aditi Prashant Bhatia. 3.2 Ld. Sr. counsel has submitted that in furthe....
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....etation but rather reads it in the context of the entire set of documents. The aforementioned facts and circumstances unequivocally establish that the transfer through the said gift deed arises from a "family settlement/arrangement" and the same is not a mere gift. The material on record, seized during the search, vividly illustrates a family arrangement executed between the involved parties to equalize property shares, align their respective interests and to reduce the chance of potential disputes. The Learned AO committed a significant error by overlooking the material seized during the search operation, thus disregarding the fundamental principle of substance over form. It has contended that the AO's narrow interpretation, solely based on the deed's nomenclature, neglects the broader context and intent reflected in the seized material. He has submitted that a family settlement is distinct from a transfer mechanism and doesn't fall under the category of commercial contracts. A family settlement is an arrangement among family members designed to be generally and reasonably beneficial for the family. Its primary purpose is to avert litigation and maintain the family'....
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....ion of documents. In support of this contention he has relied upon the following decisions: (i) Bhopal Sugar Industries versus Sales Tax Officer (1977) 3 SCC 147 (ii) M/s Super Poly Fabriks versus Commissioner of Central Excise (2008) 11 SCC 398 (iii) V. Lakshmanan v. B.R. Mangalagiri and Ors. [1995 Supp.(2) SCC 33] (iv) Assam Small Scale Ind. Dev. Corp. Ltd. and Ors. v. J.D. Pharmaceuticals and Anr. (2005) 13 SCC 19, 3.6 Thus the Ld. Sr. counsel has submitted that when the transactions in question is part of the family settlement and only an exchange of assets being equitably distributed between the parties then the same cannot be taxed as per section 56(2)(vii)(b) of the Act. 4. On the other hand, ld. DR has submitted that the gift deed demonstrates that the transfer was made by donor without consideration and therefore, it attracts the provisions of section 56(2)(vii)(b) of the Act. Ld. DR has further submitted that it is not gift between the relative as per the provisions of section 56(2)(vii)(b) and therefore, the fair market value would be deemed as income of the assessee. The land in question was registered in the name of Aditi bhati....
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....riplani the brother of the assessee. These seized documents contain the details of the assets to be distributed between the parties. For ready reference the details of the assets as per LPS-4 are reproduced as under: 5.2 It is manifest from these details of the family settlement/arrangements dated 14.02.2015 that apart from the other assets the land in question bearing Khasra Numbers 291/1,294/2/2, 295/1 and 295/2 measuring about 1 hectare was also part of the assets to be distributed under the said family settlement/arrangement. The nature of transaction is specifically stated as exchange. Further in order to execute the said family settlement dated 14.02.2015 Shri O.P. Kriplani (brother of the assessee) and Shri Vishan Das Asnani (Husband of the assesse) entered into a MOU which was executed and registered on 27.09.2017 and marked as LPS-6 placed at page no.36 of the paper book. This memorandum of understanding set out the modalities and manners in which the assets under their business entities were to be distributed between the parties through demerger process. The parties also entered into supplementary MOU on the same date i.e. 27.09.2017 whereby they agreed to give effect ....
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....transactions was exchange of the assets between the parties instead of an isolated transaction of gift. 5.3 Thus, it is clear that under the family settlement the land owned by the companies of these two families were to be first demerged so that the land could be equitably distributed between the parties. The assets being land as part of the settlement were to be distributed and to make up deficiency of land of 1 hectare the land which is registered in the name of Aditi Prashant Bhatia was also to be transferred as an exchange. Since the title of the property was required to be transferred therefore, the gift deed was executed in this respect on 04.02.2017. Further even as per map placed at page no.679 & 680 of the paper book all the lands which were part of the settlement including land in question were separately marked and shown to be distributed/divided between the parties. It is evident from the seized material itself that the land in question was very much part of the assets to be distributed and consequently part of the family settlement/arrangements. The execution of the gift deed in question is only to give effect to the settlement and distribution of the assets betwee....
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....escribe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. Thus the mere formal description of a person as an agent or buyer is not conclusive, unless the context shows that the parties clearly intended 'to treat a buyer as a buyer and not as an agent. Learned counsel for the appellant relied on several circumstances to show that on a proper construction of the agreement it could not but be held to 'be a contract of sale." 5.5 Thus, it is settled proposition of law that to understand the terms of a document one has to look to the substance rather than the form of it if mere formal description is not conclusive, unless the context shows the intention of the parties. In the case in hand as evident from the relevant record the gift deed in question was executed in the process of family settlement arrangement and distribution of the assets between the parties and therefore, the nature of transactions has to be determined on the basis of the substance and the real and intent of the parties behind the transactions. Accordingly in the facts and circumstances of ....
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