February 05, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal has dismissed the Revenue’s appeal against Ratna Aggarwal, holding that an immovable property received pursuant to a genuine family settlement cannot be taxed as deemed income under Section 56(2)(vii)(b) of the Income Tax Act.
In Income Tax Officer v. Ratna Aggarwal (ITA No.21/Del/2025), the Tribunal upheld the order of the National Faceless Appeal Centre, which had deleted an addition of ₹3,03,43,440 made by the Assessing Officer for Assessment Year 2018–19.
Ratna Aggarwal had originally filed her return declaring an income of ₹3,40,540. The assessment was later reopened under Section 147 after the department noted that she had received an immovable property through a registered gift deed. The stamp duty value of the property was ₹3,03,43,440.
The Assessing Officer took the view that the donor did not fall within the definition of “relative” under Section 56(2) of the Act and treated the stamp duty value of the property as income from other sources. An addition of ₹3,03,43,440 was accordingly made.
During the reassessment proceedings, however, the assessee revised her computation. She explained that the property had in fact been received as part of a family settlement. The transfer was executed by her brother-in-law, Dr. Ravi Agarwal, son of late A.D. Agarwal. It was submitted that late A.D. Agarwal had intended to allocate a portion of his property to the family of his brother, late Sahdev Prasad Aggarwal, who was the assessee’s father-in-law. The registered gift deed was stated to be only a formal instrument to give effect to this family arrangement. The Assessing Officer rejected the explanation and proceeded with the addition.
On appeal, the Commissioner (Appeals) accepted the assessee’s contention that the transaction arose from a genuine family settlement. It was observed that the Assessing Officer had not recorded any adverse finding on the factual claim of family arrangement.
The appellate authority held that the execution of the gift deed merely formalised the settlement and did not amount to a “transfer” within the meaning of Section 2(47) of the Act.
The matter came up before the Bench comprising Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal.
The Revenue argued that the story of a family settlement was an afterthought devised to avoid the applicability of Section 56(2). However, the Tribunal noted that during assessment proceedings the background of the family settlement had been placed on record, and the Assessing Officer had not examined or disputed it on merits.
The Tribunal also observed that although the assessee had initially offered the value of the property to tax in the return filed in response to notice under Section 148, she later revised her computation during reassessment. The appellate authority had admitted and examined the revised claim, and the Revenue did not challenge that exercise of discretion.
On the substantive issue, the Tribunal referred to the proviso to Section 56(2)(vii)(b), which excludes property received from a “relative.” It noted that in the case of a Hindu Undivided Family, the term “relative” includes any member thereof. On the facts, the Tribunal held that the family settlement was between members constituting a Hindu Undivided Family, and the gift deed was merely a formal step to transfer title pursuant to that settlement.
The Bench concluded that the transaction culminating in the gift did not amount to a transfer under Section 2(47) and that the provisions of Section 56(2) were not attracted, as the document only executed an existing family arrangement. Finding no infirmity in the appellate order, the Tribunal dismissed the Revenue’s appeal.
Case Reference : ITA No. 21/Del/2025, Income Tax Officer v. Ratna Aggarwal, Krishna Nagar, New Delhi; Appellant represented by Sh. Mayank Patawali, Adv. and Sh. Akash Ojha, Adv.; Respondent represented by Sh. Krishna Kumar Ramawat, Sr. DR.
