Tribunal rules against assessee in long-term capital gain dispute, emphasizing burden of proof

The Tribunal allowed the Revenue's appeal, setting aside the Commissioner's order that deleted the addition of Rs. 15 lakhs to the assessee's long term capital gain. The Tribunal found the mutual agreement letter insufficient evidence to support the deduction, shifting the burden of proof to the assessee due to lack of mention in the conveyance deed and questions regarding sole liability. The Tribunal concluded that the letter lacked expenditure quantification details, casting doubt on the sole responsibility of the assessee for the deduction, ultimately ruling in favor of the Revenue.

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Issues:
Challenge to impugned order dated 3rd July 2012 for assessment year 2005-06 under Income Tax Act, 1961 regarding addition of Rs. 15,00,000 made by Assessing Officer on account of payment made to purchases after execution of sale deed.

Analysis:
The assessee filed its return of income at Rs. 59,250 which was re-opened under section 147 due to non-disclosure of tax on capital gains. The Assessing Officer disallowed Rs. 15 lakhs claimed against long term capital gain due to lack of mention in the sale deed regarding adjustment of this amount from total consideration. The assessee contended that a mutual agreement with the purchaser required Rs. 15 lakhs for encroachment clearance and access, supported by a letter signed by both parties. The Commissioner (Appeals) accepted the contention, emphasizing the absence of evidence proving related parties or cash return to the assessee, thus deleting the addition.

The Departmental Representative argued no evidence supported the Rs. 15 lakhs expenditure claim, pointing out the conveyance deed's clear clauses on the purchaser's responsibilities. The Counsel for the assessee reiterated the agreement's terms and the Commissioner's findings. The Tribunal noted the absence of long term capital gain disclosure initially, with the claim that only Rs. 31 lakhs, not Rs. 46 lakhs, was received, supported by a mutual agreement letter. However, the Tribunal found the letter insufficient evidence, shifting the burden of proof to the assessee, as the conveyance deed did not mention the Rs. 15 lakhs deduction, and the joint ownership raised questions on sole liability. The Tribunal concluded the letter lacked details on expenditure quantification, casting doubt on the sole responsibility of the assessee for the Rs. 15 lakhs deduction, ultimately allowing the Revenue's appeal and setting aside the Commissioner's order.

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