:1: bgp bgp bgp IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME INCOME INCOME TAX APPEAL NO.1222 OF 2007 TAX APPEAL NO.1222 OF 2007 TAX APPEAL NO.1222 OF 2007 The Commissioner of Income Tax, ..Appellant Vs. Shri.Shirish S.Maniar ..Respondent Mr.P.Vyas a/w. P.S.Sahadevan for the Appellant. Mr.A.K.Jasani for the Respondent. CORAM CORAM CORAM :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA, S.J.KATHAWALLA, S.J.KATHAWALLA, JJ. JJ. JJ. DATE DATE DATE : 18TH JULY, 2008 : 18TH JULY, 2008 : 18TH JULY, 2008 P.C. P.C. P.C. 1. Heard the learned Counsel for the parties. The following two substantial questions are sought to be raised by the Revenue: a. Whether in the facts and circumstances of the case and in law the Tribunal is right in holding that the transfer of the flat by the Assessee is under the family arrangement and therefore the provisions of Section 2(47) of the Act are not attracted and hence the long term capital gains is not attracted? b. Whether in the facts and circumstances of the case and in law the Tribunal is right in deleting the addition made under Section 68 of the Act? 2. We have perused the judgment of the Tribunal dated 15th March,2007. In the said judgment, the Tribunal had, in detail considered as under: . We have heard rival submissions and considered them carefully. We have also perused the relevant materials on which our attention was drawn. Copy of memorandum of recording terms of family arrangement is placed on record. We noted that the family arrangement was entered among various family members i.e. Shri.Shirish Shantilal Maniar, Sh Bhairavi Shirish Maniar, Harsh Shirish Maniar and Jay Shirish Maniar. Therefore, it is not the case that this family arrangement :2: was entered between the Assessee and his son Sh Harsh only as from the deed of the family arrangement, it seen that the family arrangement was not between the two but was among all the family members. We further noted that the only two properties i.e. the flat at Paddar Road and at Kandivali were not involved but many properties were involved which were divided through the family arrangement deed. There were business assets and liabilities which were also divided between the family members. As per the family arrangement deed, the assets and liabilities including the properties were divided among the members. Nothing was brought on record either by the ld AO or by the ld CIT (A) to establish that the family arrangement entered among the members was not acted upon actually. Without bringing any positive evidence or material on record, presuming that the family arrangement was not bonafide and it was a colourable device to save tax or to protect the Paddar Road flat from RBI, in our considered view was not correct and also not justified. . We have also seen the decision of the Apex Court in the case of Ram Charan Das Vs. Girja Nandini Devi, AIR 1966 Supreme Court 323 and found that ratio of this decision goes in favour of the Assessee. The Apex Court has held that "the consideration for such a settlement, if one may put it that way, is the expectation that such settlement will result in establishing or ensuring amity and goodwill amongst persons bearing relationship with one another. That consideration having passed by each of the disputants the settlement consisting of recognition of the right asserted by each other cannot be impeached thereafter." Therefore, in view of the above facts and the circumstances, we hold that the transfer of assets under the family arrangement does not attract the provisions of sec.2(47) in the present case and therefore, Assessee is out of the mischief of Section 45. Accordingly, the ground of the Assessee is allowed on this issue. Since the provisions of Section 45 does not attract in the facts of the present case, therefore, Section 50C is also not applicable. 3. Perusal of the above order, clearly indicates that the Tribunal had fully justified in holding that the transfer was due to a family arrangement. There :3: is nothing erroneous or illegal in the said findings given by the Tribunal. 4. Similarly, with regard to second question of law, the Tribunal had observed, that; Secondly, the addition cannot be made on the reasoning given by the AO because there is no dispute of liability of Rs.3,95,51,512/- towards M/s.Keynote Capitals Ltd. as on 31/03/2003. This is clear from the letter received from M/s.Keynote Capitals Ltd. itself. M/s.Keynote Capitals Ltd. itself has credited the ledger account of the Assessee by Rs.2,28,04,334.64 by debiting the account of M/s.Add Investments. The entry passed by M/s.Keynote Capitals Ltd. was without any instruction or without any concurrence by the Assessee. If a party on instruction of a third party disturbs its account or passes any entry, no action can be taken against the person whose account was credited or debited either in the eyes of law or on the facts. The Assessee has categorically stated through its reply-dated 30th March,2006 that he does not understand that why M/s.Keynote Capitals Ltd. has passed such entry. Neither the Assessee has confirmed the action of M/s.Keynote Capitals Ltd. nor it has given his concurrence, therefore, no action can be taken against the Assessee. Without going further into details and in view of the facts and the circumstances of the case, we delete the addition of Rs.2,28,04,334.64 made and confirmed by the lower authorities. In the result, the appeal of the Assessee is allowed. 5. Under the aforesaid facts and circumstances of the case, no substantial question of law involved in the above. Hence, the Appeal stands dismissed. (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.)