" \n \nIN THE INCOME TAX APPELLATE TRIBUNAL, ‘I’ BENCH MUMBAI \n \n BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER \n & \n SHRI AMARJIT SINGH, ACCOUNTANT MEMBER \n \nITA No.5884/Mum/2024 \n(Assessment Year :2016-17) \n \nRabin Arup Mukerjea \n46, Radford House \n1, Pembridge Gardens \nLondon \nUnited Kingdom \nVs. ITO, \nIntl. \nTax \nWard \n3(2)(1), Mumbai \nPAN/GIR No.FDMPM7366B \n(Appellant) \n.. \n(Respondent) \n \n \nAssessee by \nShri Ashok Rao /Shri \nManoj Raghani \nRevenue by \n \n \nShri Krishna Kumar, Sr. \nDR \nDate of Hearing \n 31/12/2024 \nDate of Pronouncement \n 21/03/2025 \n \nआदेश / O R D E R \n \nPER AMIT SHUKLA (J.M): \n \n \nThe aforesaid appeal has been filed by the assessee against \norder dated 21/10/2024 passed by ld. CIT (A)-57, Mumbai for \nthe quantum of assessment passed u/s.147 r.w.s. 144C for the \nA.Y. 2016-17. \n2. \nIn the grounds of appeal the assessee has challenged the \nreopening of the assessment u/s.148; and on merits has \nchallenged the addition of Rs.7,50,81,605/- on the ground that \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n2 \ndonor and donee were not relatives and therefore, the receipt of \nthe property gifted without consideration was chargeable to tax \nu/s.56(2)(vii)(b) of the Act. \n3. \nThe brief facts are that assessee is an individual and non-\nresident Indian, since assessee did not have any income or \nsource from India, therefore, he was not filing any return of \nincome in India. The assessee had made an application u/s.197 \nin the month of January 2021 for lower deduction of tax on \naccount of sale of property (Flat No. 80, Marlow, 62B, Sir \nPochkhanawala road, Worli, Mumbai – 400 025). This property \nwas received by the assessee as a gift from Ms. Vidhie Mukerjea \non 21/01/2016 by way of registered gift deed with Joint \nRegistrar, Mumbai City-III, Mumbai, wherein Ms. Vidhie \nMukerjea has been referred to as „donor‟ and Mr. Rabin Arup \nMukerjea has been referred as „donee‟. According to the ld. AO \nthe donor and donee were not relatives as per the meaning \ncontained in Section 56(2) of the Act and therefore, ld. AO has \nreason to belief that receipt of the property without consideration \nare chargeable to tax and accordingly, reasons were recorded \nand notice u/s.148 was issued on 23/02/2021. The reasons \nrecorded by the ld. AO for reopening the assessment reads as \nunder:- \n\"Reasons for reopening of the assessment in case of Mr. Rabin \nArup Mukerjea for A.Y-2016-17 u/s 147 of the Act. \n \n1. Brief details of the assessee. The assessee is an individual and \nNRI, has not filed return of income for the A.Y. 2016-17 \n \n1. Brief details of Information collected/received. \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n3 \n \nRegistered Gift Deed with Joint Sub Registrar, Mumbai-City-III, \nMumbai dated 22-1-2016 between Vidhie Mukerjea referred as \n\"Donor and PIME Arup Mukerja referred as \"Donee\" \n \n1. Analysis of Information collected/received. On perusal of the \nGift Deed it is observed that Donor has gifted 100% of her rights, \ntitle and interest vested in the Flat No. 402. \"Marlow\", Plot No. 62-\n8, Pochkhandawala Road, Worli, Mumbai-400 025 to the donee. \nThe transfer of title in the immovable property is made without \nconsideration stating that since the Donor/donee are sister and \nbrother respectively \n \n1. Enquiries made by the AO as sequel to information \ncollected/received: \n \nPursuant to the above fact, and assessee s pending application \nu/s. 197 of the Income Tax Act, 1961 enquiries were conducted to \nfind the whereabouts of the Donor and the Donee. The Enquiry \nrevealed that the Donor's mother is Mrs. Indrani Mukerjea Mrs. \nIndrani Mukerjea had married third time with Peter(Pratim) \nMukerjea. Peter(Pratim) Mukerjea had divorced his first wife \nShabnam Singh and had married Indrani Mukerjea. Even the \nwedlock between Mrs. Indrani Mukerjea and Peter(Pratim) \nMeukerjea ended in divorce in the year 2019. The judicial decree \npronounced (placed on record) by the Hon'ble Principal Judge, \nFamily Court, Mumbai on 26-12-2019 in the divorce petition No. F-\n2427 of 2018, at para 2 of this order reveals the fact as under. \n\"That there is no childbom out of the wedlock of Indrani Mukerjea \nand Peter(Pratim) Mukerjea. Indrani Mukerjea has a daughter \nnamed Vidhie from the previous marnage with Mr. Sanjeev \nKhanna. Shri Peter(Pratim) Mukerjea has two sons named Rahul \nMukerjea and Rabin Mukerjen from the previous marriage with \nShabnam Singh \n \n1. Findings of the AO: \n \nThe assessee has received the property under consideration as \ngift from Vidhie Mukerjes on 21-1-2016 and in the said gift deed \nthe donor and the donee are termed as sister and brother \nHowever on the basis of the Hon'ble Family Court finding both are \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n4 \nnot the biological sister and brother. Vidhie Mukerjea and Rahul \nMukerjen are bom out of different wedlocks. The definition of \n\"relative\" contained in section 55 contain only brother and sister. \nNowhere in the section refers step brother and step sister to form \npart of relative \n \n1. Basis of forming reason to believe and details of escapement of \nincome: As per the provisions of Section 56 of the Income Tax Act, \nthe donor and donee do not fall under the purview of \"Relative\" \nand therefore the provisions of section 56(1)(vii)(b) is invoked. \nHence. 1 have reason to believe that as the assessee has not filed \nROI and has not disclosed these material facts necessary for the \nassessment income chargeable to tax has escaped \n \nIN 1. Escapement of income chargeable to tax in relation to any \nassets (including financial Interest in any entity): In this case the \nvalue of the property mentioned in the Registered Pavli No. 620 \ndated 22.01.2016 by the Joint Sub-Registrar, Mumbai City-VII. \nMumbai is 7,50,68,525/ The value of this property is chargeable \nto tax in the hands of the assessee has escaped assessment. \nMorever the stamp duty and Registration fees paid of 38,30, 820/- \nis incidental cost for the gift received by the assessee and is ought \nto have been paid by the assessee and therefore the source of \nthese payments need to be verified. Therefore the aggregate \namount of 7,88,99,345/-has escaped assessment. \n \n1. Applicability of the provisions of section 147/151 to the facts of \nthe case: As discussed above, I have reason to believe that the \nreceipt of the immovable property without consideration amounting \nto 7,50,68,525/- and the expenditure related to receipt of the \nimmovable \nproperty \nof \n38,30,820/- \nboth \naggregating \nto \n7,88,99,345 has escaped assessment within the meaning of \nExplanation 2 of Sec. 147 of the Income Tax Act Therefore, it is a \nfit case for issue of notice u/s 148 r.w.s 147 of the IT Act for the \nA.Y-2016-17 Accordingly, approval of u/s 151(2) of the I.T. Act, \n1961 is required in the case, for issuing notice under section 148 \nof the I.T. Act. 1961.\" \n \n4. In response to the notice assessee filed return of income and \nafter getting the reasons recorded, has filed his detailed \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n5 \nobjections which has been incorporated in the impugned order \nfrom pages 4-7. In sum and substance, assessee‟s objection \nbased on various propositions of law was that, the step brother \nand step sister are related which are covered within the ambit of \ndefinition of “relative” provided in Section 56(2)(vii) r.w. Clause E \nof Explanation, i.e., “brother and sister of the individual”. The \nld. AO in his order for disposing objection has referred to various \nActs to define various relatives and held that step brother and \nstep sister cannot be treated as relative. The ld. AO has drawn a \npictorial family tree of the members in the family to narrate the \nco-relation between the family members which for the sake of \nready reference is drawn herein below:- \nIndrani Mukerjea\nPeter (Pratim)\nMukerjea (2nd husband)\nSidharth Das \n(1st Partner)\nSanjeev Khanna\n(1st husband)\nPeter (Pratim) \nMukerjea (2nd\nhusband)\nShabnam Singh\n(1st Wife)\nIndrani Mukerjea\n(2nd Wife)\nSheena Bora\n(daughter)\nMikhail Bora\n(son)\nVidhie Mukerjea\n(daughter)\nNo children\nRabin Mukerjea\n(1st son)\nNo children\nRahul Mukerjea\n(2nd son)\n \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n6 \n5. Accordingly based on his own interpretation, ld. AO rejected \nthe claim of the assessee holding that gift given by Ms. Vidhie \nMukerjea to the assessee who are step sister and step brother do \nnot fall in the category of „relatives‟ and therefore, gifted property \nof Rs.7,50,68,525/- is taxable as income from other sources. \n6. The ld. CIT(A) has confirmed the action of the ld. AO in his \ndetailed order and held that the definition stated in Section 56(2) \nis to be interpreted keeping the blood relationship, lineal \nascendant and lineal descendant and hence, no further meaning \ncould be ascribed to this term. Therefore, relationship between \nMs. Vidhie Mukerjea and the assessee is not covered by these \nterminologies. He upheld the stand of the ld. AO that the term \n„step‟ cannot be automatically incorporated and interpreted such \nrelationship unless explicitly specified in the relevant provision of \nthe Act. He also rejected the assessee‟s reliance placed on \ndictionary meaning and commonsense of the term „brother and \nsister‟ to impute step brother and step sister where both the \nparties are different. He held that even though Mr. Peter \nMukerjea (husband) and Ms. Indrani Mukerjea (wife) and Ms. \nVidhie Mukerjea are connected by affinity, however, it cannot \nbe held that assessee and Ms. Vidhie Mukerjea are related by \naffinity, because brother has the name with the same parent and \nit is essential that relationship of brother and sister to share the \nsame parent or at least one of the parent should be common. His \nfurther conclusion in this regard reads as under:- \n \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n7 \n“6.8.2 The remand report of the AO as well as the rejoinder filed \nby the appellant and other submissions filed in this regard have \nbeen perused. It is noted that the natural father of Ms. Vidhie \nMukerjea is Mr. Sanjeev Khanna, who was the erstwhile husband \nof Ms. Indrani Mukerjea Subsequently since Ms. Indrani Mukerjea \nwho is natural mother of Ms. Vidhi Mukerjea divorced Mr. Sanjeev \nKhanna and later married Mr. Peter Mukerjea, Mr. Peter Mukerjea \nmay be termed as \"step-father\" of Ms. Vidhie Mukerjea. However, \nthe relationship of Ms. Vidhie Mukerjea being natural daughter of \nMr. Sanjeev Khanna does not change as a result of divorce of Mr. \nSanjeev Khanna and Ms. Indrani Mukerjea and still continues. \nTherefore, while the natural father of Ms. Vidhie Mukerjea is Mr \nSanjeev Khanna, who continues to be one of her parent also, the \nstepfather is Mr. Peter Mukerjea. Therefore, the presence or \nabsence of father's name as Mr. Peter Mukerjea in the document \npresented as additional evidences by the appellant does not \nchange the above factual position, which is undisputed Further, in \nthe instant case, no documentary evidences etc have been \nsubmitted by the appellant nor it has been argued that Mr. Peter \nMukerjea has legally adopted Ms. Vidhie Mukerjea as his \ndaughter. It is further noted that the additional evidence filed by \nthe appellant includes the Bachelor's Degree dated 16/04/2020 \nwhereas Ms. Indrani Mukherjea and Mr Peter Mukherjea were \nalready divorced on 26/12/2019 Based on the above discussion, \nit is seen that the additional evidences filed by the appellant does \nnot help the arguments and stand of the appellant as stated in the \ngrounds of appeal in any manner.” \n \n7. We have heard both the parties at length, perused the \nrelevant finding given in the impugned order. Here, moot \nquestion is, whether the gift given by step sister to a step brother \nfalls within the definition of „relative‟ as given by Section 56 (2) of \nthe Act. \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n8 \n8. The brief background of the relationship between the \nassessee and Ms. Vidhie Mukerjea is that, Ms. Vidhie is the \ndaughter of Ms. Indrani Mukerjea from her husband, Mr. \nSanjeev Khanna, whereas, Mr. Rabin Mukerjea is the first son of \nMr. Peter Mukerjea with his first wife Mrs. Shabnam Singh. After \nthe marriage of Ms. Indrani Mukerjea with Mr. Peter Mukerjea, \nMs. Vidhie Mukerjea and Mr. Rabin Mukerjea became step sister \nand step brother due to alliance of marriage between their \nrespective parents. We have already incorporated the family tree \nto show the relationship between various members of the family \nfrom the first and second marriage of Ms. Indrani Mukerjea and \nMr. Peter Mukerjea. Mr. Peter Mukerjea after marring Ms. \nIndrani Mukerjea had gifted half share of his property, i.e., the \nimpugned flat at Worli, vide gift deed dated 28/08/2003. \nThereafter, both Mr. Peter Mukerjea and Ms. Indrani Mukerjea \nfurther gifted their half share each to Ms. Vidhie Mukerjea by \ndeed of gift dated 07/01/2011, i.e., to the daughter of Ms. \nIndrani Mukerjea (through her ex-husband Mr. Sanjeev Khanna). \nAccordingly, Ms. Vidhie Mukerjea became full owner of the \nproperty. Later on Ms. Vidhie Mukerjea gifted the entire flat to \nMr. Rabin Arup Mukerjea, i.e., assessee vide deed of gift dated \n21/01/2016. In the gift deed, it was stated that the donor and \ndonee are sister and brother respectively. The copy of gift deed \nhas been placed before us in the paper book from pages 57-61. \n9. Later on, assessee decided to sell the property and submitted \nan application u/s.197 of the Act for a certificate of low rate of \nTDS. It is from this information, ld. AO came to the conclusion \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n9 \nthat Ms. Vidhie Mukerjea was not the „sister‟ and therefore, not a \nrelative of the assessee and accordingly, based on his \ninterpretation that step brother and step sister are not relative \nwho do not fall within the definition of „brother and sister‟, the \ncase was reopened u/s.147 and notice u/s 148 was issued for \nthe A.Y. 2016-17. In response to the notice, assessee has filed \nthe return of income disclosing the exempt income of \nRs.7,50,68,525/- i.e. the stamp value of the property gifted by \nMs. Vidhie Mukerjea to the assessee. \n10. Clause (e) to Explanation below Section 56(2)(vii) states that \n„relative‟ means:- \n\"relative\" means,— \n(i) in case of an individual— \n(A)---------------------------------; \n(B) brother or sister of the individual; \n(C) ---------------------------------; \n(D) ---------------------------------; \n(E) ---------------------------------; \n(F) ---------------------------------; \n(G) ---------------------------------. \n11. Ergo, the Act uses the word „brother and sister of an \nindividual‟. In common parlance, there are 5 kinds of brother \nand sister relations- \n Firstly, Uterine brothers and sisters - where the mother is the \nsame; \n \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n10 \n Secondly, Consanguine brothers and sisters - where the father \nis the same; \n Thirdly, Germane (also, biological) brothers and sisters - where \nboth the parents are the same; \n Fourthly, Step, that is, step brothers and step-sisters - where \nboth the parents are different; and \n Lastly, Adopted children- who would become brother/sister \nthrough law. \nThough, often there are other terms to define brother and sister \nsuch as “whole blood” and “half blood”, which fall in first three \ncategories. \n12. Before us, various provisions have been cited of different \nActs to canvass that „step‟ child has been recognised under the \nvarious Acts, for example Section 2(15B) of the Income Tax \nAct, 1961 defines the word “child”. It states that “any relation \nto an individual, includes a step child and an adopted child \nof that individual”; thus, a step child has been treated as a \nchild for the purpose of the Income Tax Act and if this analogy is \ntaken into consideration, then step brother and step sister \nshould also be reckoned as brother and sister. Further, Section \n45S of the Reserve Bank of India Act, 1934 provides the list of \nrelatives which includes “step brother and step sister”. Similarly, \nSection 2(77) of the Companies Act, 2013 includes step \nbrother and step sister within the meaning of term “relative”. \nAlthough under the Income Tax Act, step brother or step sister \nhas not been defined, but here if we are interpreting the word \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n11 \n„relative‟ to understand the relation between step brother and \nstep sister, whether they can be treated as relative for the \npurpose of Income Tax Act, then some inference can be drawn \nfrom the aforesaid provision from different Acts. \n13. In Black’s Law Dictionary “relative\" means: \"a kinsman, a \nperson connected with another by blood or affinity. When used \ngenerically, includes persons connected by ties of affinity as well \nas consanguinity, and, when used with a restrictive meaning, \nrefers to those only who are connected by blood. Individual \nrelated by affinity of consanguinity within the third degree \nas determined by common law, or individual in a step or \nadoptive relationship within such third degree. A person or \nthing having relation or connection with some other person or \nthing; as, relative, rights, relative powers.\" Thus, according to \nthe Black‟s Law Dictionary, „relative‟ includes persons connected \nby ties of affinity as well as consanguinity and when used with a \nrestrictive meaning, refers to those only who are connected by \nblood. Individual related by affinity also include individual in a \nstep or adoptive relationship. Thus, the term „relative‟ would also \ninclude „step brother and step sister‟. \n14. Although the Indian Succession Act, 1925, step brothers \nand step sisters unless duly adopted are not considered legal \nheirs and do not have the right to inherit the property of the step \nparents; and step children do not have any claim of the property \nof the step parent whether movable or immovable property. If the \nperson dies intestate, the property is distributed according to the \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n12 \nRules outlined in the Indian Succession Act and the property is \nto be given to legal heirs like children, spouse and parents, etc., \nThe person related by whole blood are preferred over those \nrelated by half blood if the nature of relationship is the same in \nevery other aspect. Although Indian Succession Act is applicable \nfor the right of inheritance where step child has no legal right to \ninherit the property of his or his step parent, but it does not lead \nto inference, i.e., step brother and step sister who are related by \naffinity because of marriage of the respective parents cannot be \nreckoned as brother and sister within the term „relative‟. Here \nwhat is to be seen whether the step brother and step sister can \nbe said to be relative by way of affinity. \n15. The term affinity has been elaborated in different \ndictionaries in the following manner:- \nIn the Sixth Edition of Black's Law Dictionary (Page 59) as \nunder: \n \n\"Affinity\" A close agreement, relation, spiritual relation or \nattraction held to exist between certain persons. State ex inf. \nNorman v. Ellis, 325 Mo, 154, 28 S.W.2d 363, 367. Relation which \none spouse because of marriage has to blood relatives of the other. \nState v. Hooper, 140 Kan. 481, 37 P.2d 52. \nThe connection existing, in consequence of marriage, between each \nof the married persons and the kindred of the other Kest v. Lewis, \n169 Ohio St. 317, 159 N.E.2d 449, 450. \nDegree of relationship by affinity are computed as are degrees of \nrelationship by consanguinity. The doctrine of affinity grew out of \nthe canonical maxim that marriage makes husband and wife one. \nThe husband has the same relation, by affinity, to his wife's blood \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n13 \nrelatives as she has to them by consanguinity and vice versa. \nState v. Hooper, 140 Kan. 481, 37 P.2d 52. \n \nAffinity is distinguished into three kinds: (1) Direct, or that \nsubsisting between the husband and his wife's relations by blood, \nor between the wife and the husband's relations by blood; (2) \nsecondary, or that which subsists between the husband and his \nwife's relations by marriage; (3) collateral, or that which subsists \nbetween the husband and the relations of his wife's relations. \n \nIn a larger sense, consanguinity or kindred. \n \nQuasi affinity. In the civil law, the affinity which exists between \ntwo persons, one of whom has been betrothed to a kinsman of the \nother, but who have never been married. \n \n(ii) In P. Ramanatha Aiver's \"The Law Lexicon\" (Reprint 2001) \n(Page 73) as under: \n \n\"Affinity\" - Relationship by marriage as distinguished from \nconsanguinity, or relationship by blood. (Wharton, Burrill; \nWebster); The tie which arises from the marriage between the \nhusband and the blood relations of the wife, and between the wife \nand the blood relations of the husband. (2 Steph Com. 259). \n \nAn artificial relationship between persons of different blood, \nregarded as analogous to consanguinity; the relation between \nfamilies or individuals created by intermarriage. \n \nAFFINITY is the tie arising from marriage betwixt the husband and \nthe blood relations of the wife, and betwixt the wife and the blood \nrelations of the husband. Thus the relations of the husband stand \nin the same degree of affinity to the wife in which they are related \nto the husband by consanguinity, but there is no affinity betwixt \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n14 \nthe kinsmen themselves; thus the husband's brother and the \nwife's sister have no affinity. (See Tomlin's L.D.). \n \nAffinity is thus of three kinds:- \n(1) Direct, that subsists between the husband and his wife's \nrelations by blood or between the wife and her husband's \nrelations by blood; \n(2) Secondary, that subsists between the husband and his wife's \nrelations by marriage; and \n(3) Collateral, that subsists between the husband and the \nrelations of his wife's relations. \nAccordingly, step sister and step brother are part of the family by \naffinity and in common sense they are related to each other as \nbrother and sister. \n16. Thus, as per the Dictionary meaning of the term „relative‟, it \nincludes a person related by affinity, which means the \nconnection existing in consequence of marriage between each of \nthe married persons and the kindred of the other. If the aforesaid \nDictionary meaning is to be referred and relied upon, then the \nterm „relative‟ would include step brother and step sister by \naffinity. If the term „brother and sister of the individual‟ has not \nbeen defined under the Income Tax Act, then, the meaning \ndefined in common law has to be adopted and in absence of any \nother negative covenant under the Act, in our view, brother and \nsister should also include step brother and step sister who by \nvirtue of marriage of their parents have become brother and \nsister. Accordingly, we hold that gift given by step sister, i.e., Ms. \n\n \nITA No.5884/Mum/2024 \nRabin Arup Mukherjea \n \n15 \nVidhie Mukerjea to a step brother, i.e., Mr. Rabin Arup Mukerjea \nfalls within the definition of „relative‟, that is, they are to treated \nas brother and sister as per Section 56(2)(vii) and consequently, \nproperty received by brother from sister cannot be taxed \nu/s.56(2). Accordingly, the claim of the assessee that gift \nreceived by his step sister Ms. Vidhie Mukerjea is exempt from \nbeing taxed as income from other sources is accepted and \naccordingly, the addition made by the ld. AO is deleted. \n17. Since, we have deleted the addition on merits, the various \nobjections raised on validity of reopening u/s.148 is treated as \nacademic. \n18. In the result, appeal of the assessee is allowed on \nmerits. \nOrder pronounced on 21st March, 2025. \n \n \nSd/- \n (AMARJIT SINGH) \nSd/- \n (AMIT SHUKLA) \nACCOUNTANT MEMBER \nJUDICIAL MEMBER \nMumbai; Dated 21/03/2025 \nKARUNA, sr.ps \nCopy of the Order forwarded to : \n \n \n \n \n \n \n \n BY ORDER, \n \n \n \n(Asstt. Registrar) \nITAT, Mumba \n1. The Appellant \n2. The Respondent. \n3. CIT \n4. DR, ITAT, Mumbai \n5. Guard file. \n \n//True Copy// \n \n"