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TMI Blog2025 (3) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... n the month of January 2021 for lower deduction of tax on account of sale of property (Flat No. 80, Marlow, 62B, Sir Pochkhanawala road, Worli, Mumbai - 400 025). This property was received by the assessee as a gift from Ms. Vidhie Mukerjea on 21/01/2016 by way of registered gift deed with Joint Registrar, Mumbai City-III, Mumbai, wherein Ms. Vidhie Mukerjea has been referred to as "donor" and Mr. Rabin Arup Mukerjea has been referred as "donee". According to the ld. AO the donor and donee were not relatives as per the meaning contained in Section 56(2) of the Act and therefore, ld. AO has reason to belief that receipt of the property without consideration are chargeable to tax and accordingly, reasons were recorded and notice u/s. 148 was issued on 23/02/2021. The reasons recorded by the ld. AO for reopening the assessment reads as under:- "Reasons for reopening of the assessment in case of Mr. Rabin Arup Mukerjea for A.Y-2016-17 u/s 147 of the Act. 1. Brief details of the assessee. The assessee is an individual and NRI, has not filed return of income for the A.Y. 2016-17 1. Brief details of Information collected/received. Registered Gift Deed with Joint Sub Registrar, Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall under the purview of "Relative" and therefore the provisions of section 56(1)(vii)(b) is invoked. Hence. 1 have reason to believe that as the assessee has not filed ROI and has not disclosed these material facts necessary for the assessment income chargeable to tax has escaped IN 1. Escapement of income chargeable to tax in relation to any assets (including financial Interest in any entity): In this case the value of the property mentioned in the Registered Pavli No. 620 dated 22.01.2016 by the Joint Sub-Registrar, Mumbai City-VII. Mumbai is 7,50,68,525/ The value of this property is chargeable to tax in the hands of the assessee has escaped assessment. Morever the stamp duty and Registration fees paid of 38,30, 820/- is incidental cost for the gift received by the assessee and is ought to have been paid by the assessee and therefore the source of these payments need to be verified. Therefore the aggregate amount of 7,88,99,345/-has escaped assessment. 1. Applicability of the provisions of section 147/151 to the facts of the case: As discussed above, I have reason to believe that the receipt of the immovable property without consideration amounting to 7,50,68,525/- and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties are different. He held that even though Mr. Peter Mukerjea (husband) and Ms. Indrani Mukerjea (wife) and Ms. Vidhie Mukerjea are connected by affinity, however, it cannot be held that assessee and Ms. Vidhie Mukerjea are related by affinity, because brother has the name with the same parent and it is essential that relationship of brother and sister to share the same parent or at least one of the parent should be common. His further conclusion in this regard reads as under:- "6.8.2 The remand report of the AO as well as the rejoinder filed by the appellant and other submissions filed in this regard have been perused. It is noted that the natural father of Ms. Vidhie Mukerjea is Mr. Sanjeev Khanna, who was the erstwhile husband of Ms. Indrani Mukerjea Subsequently since Ms. Indrani Mukerjea who is natural mother of Ms. Vidhi Mukerjea divorced Mr. Sanjeev Khanna and later married Mr. Peter Mukerjea, Mr. Peter Mukerjea may be termed as "step-father" of Ms. Vidhie Mukerjea. However, the relationship of Ms. Vidhie Mukerjea being natural daughter of Mr. Sanjeev Khanna does not change as a result of divorce of Mr. Sanjeev Khanna and Ms. Indrani Mukerjea and still continues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the property. Later on Ms. Vidhie Mukerjea gifted the entire flat to Mr. Rabin Arup Mukerjea, i.e., assessee vide deed of gift dated 21/01/2016. In the gift deed, it was stated that the donor and donee are sister and brother respectively. The copy of gift deed has been placed before us in the paper book from pages 57-61. 9. Later on, assessee decided to sell the property and submitted an application u/s. 197 of the Act for a certificate of low rate of TDS. It is from this information, ld. AO came to the conclusion that Ms. Vidhie Mukerjea was not the "sister" and therefore, not a relative of the assessee and accordingly, based on his interpretation that step brother and step sister are not relative who do not fall within the definition of "brother and sister", the case was reopened u/s. 147 and notice u/s 148 was issued for the A.Y. 2016-17. In response to the notice, assessee has filed the return of income disclosing the exempt income of Rs. 7,50,68,525/- i.e. the stamp value of the property gifted by Ms. Vidhie Mukerjea to the assessee. 10. Clause (e) to Explanation below Section 56(2)(vii) states that "relative" means:- "relative" means,- (i) in case of an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, when used with a restrictive meaning, refers to those only who are connected by blood. Individual related by affinity of consanguinity within the third degree as determined by common law, or individual in a step or adoptive relationship within such third degree. A person or thing having relation or connection with some other person or thing; as, relative, rights, relative powers." Thus, according to the Black"s Law Dictionary, "relative" includes persons connected by ties of affinity as well as consanguinity and when used with a restrictive meaning, refers to those only who are connected by blood. Individual related by affinity also include individual in a step or adoptive relationship. Thus, the term "relative" would also include "step brother and step sister". 14. Although the Indian Succession Act, 1925, step brothers and step sisters unless duly adopted are not considered legal heirs and do not have the right to inherit the property of the step parents; and step children do not have any claim of the property of the step parent whether movable or immovable property. If the person dies intestate, the property is distributed according to the Rules outlined in the Indian Succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iver's "The Law Lexicon" (Reprint 2001) (Page 73) as under: "Affinity" - Relationship by marriage as distinguished from consanguinity, or relationship by blood. (Wharton, Burrill; Webster); The tie which arises from the marriage between the husband and the blood relations of the wife, and between the wife and the blood relations of the husband. (2 Steph Com. 259). An artificial relationship between persons of different blood, regarded as analogous to consanguinity; the relation between families or individuals created by intermarriage. AFFINITY is the tie arising from marriage betwixt the husband and the blood relations of the wife, and betwixt the wife and the blood relations of the husband. Thus the relations of the husband stand in the same degree of affinity to the wife in which they are related to the husband by consanguinity, but there is no affinity betwixt the kinsmen themselves; thus the husband's brother and the wife's sister have no affinity. (See Tomlin's L.D.). Affinity is thus of three kinds:- (1) Direct, that subsists between the husband and his wife's relations by blood or between the wife and her husband's relations by blood; (2) Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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