2014 (5) TMI 5 - AT - Income Tax

ITAT remits Rs. 35,00,000 deletion issue to AO for fresh assessment, grants assessee right to be heard.

ITO, Ward 42(4), New Delhi Versus Smt. Nandita Gupta

The ITAT remitted the issue of the deletion of Rs. 35,00,000/- back to the AO for fresh assessment, granting the assessee the right to be heard. The ... Deletion of addition on sale of residential property – Withdrawal of exemption u/s 54 of the Act - Held that:- CIT(A) was of the view that Assessee had paid the cheques to the company where his father is director, for purchase of the new property and that the reason for disallowance of the transaction – the entire transaction is a family affair and is not genuine by the AO - the assessee got married and staying separately in that house - Since the house is acquired in 1991 and investment is made in 2009, the long term capital gain arises in the case of exemption u/s 54 is allowed – though the CIT(A) has considered the various aspects of the submissions and claim of the assessee which were not before the AO - CIT(A) has not asked for any remand report from the AO in this regard – the matter is required to be remitted back to the AO for fresh consideration – Decided in favour of Revenue. Deletion of undisclosed STCG – Sale of shares - Held that:- CIT(A) was of the view that on a/c of Short Term Gain on sale of shares the AO had ignored the second letter issued by M/s ISF Securities dated 25.11.2011 regarding the transaction with the appellant – revenue contended that the assessee has not submitted cogent reply before the AO - Assessee has submitted the second letter issued by M/s IFS Securities and confirmation of the statement of account of the brokers and copy of DMAT account etc. before the CIT(A) – thus, the issue also needs to be remitted back to the AO for fresh consideration – Decided in favour of Revenue. Issues:1. Deletion of addition of Rs. 35,00,000/- by withdrawing exemption u/s. 54 of the I.T. Act.2. Deletion of addition of Rs. 1,44,529/- made on account of undisclosed Short Term Capital Gain.Deletion of addition of Rs. 35,00,000/-:The appeal by the Revenue contested the Ld. CIT(A)'s order concerning the deletion of the addition of Rs. 35,00,000/- by withdrawing exemption under section 54 of the Income Tax Act. The case involved the sale of a residential property and claiming deduction under section 54. The AO raised concerns about the authenticity of the transaction, including the registration of the sale deed, payment verification, and the nature of the property transfer. The Ld. CIT(A) reviewed the facts and submissions, emphasizing the family's tax planning history and the genuine nature of the transaction. The Ld. CIT(A) concluded that the addition of Rs. 35,00,000/- was unjustified and deleted it. The Revenue appealed this decision, arguing that the Ld. CIT(A) considered new submissions without a remand report from the AO. The ITAT decided to remit the issue back to the AO for a fresh assessment, ensuring the assessee's right to be heard.Deletion of addition of Rs. 1,44,529/-:Regarding the deletion of the addition of Rs. 1,44,529/- made on account of undisclosed Short Term Capital Gain, the AO noted discrepancies in the profit earned from shares. The Ld. CIT(A) overturned this addition based on additional evidence submitted by the assessee, including a second letter from the securities company and account statements. The Revenue challenged this decision, claiming that the Ld. CIT(A) accepted the submissions without verifying with the AO. The ITAT decided to remit this issue back to the AO for a fresh assessment, considering the submissions made before the Ld. CIT(A). Ultimately, the appeal by the Revenue was allowed for statistical purposes.This detailed analysis covers the issues of deletion of additions under the Income Tax Act, providing a comprehensive overview of the judgment's key points and the decisions made by the authorities involved.