2018 (5) TMI 1257 - AT - Income Tax

Tribunal decision on capital gains and cash book inclusion upheld

Dr. G. Gopala Krishna (Deceased) Legal Heir : Dr. G. Venkata Krishna, C/o Vimalamma Hospital Versus ITO, Ward-2 (2), Rajahmundry

The Tribunal upheld the Assessing Officer's decision to determine capital gains based on the SRO's value as of the final sale date rather than the ... Calculation of capital gain - determination of value - SRO’s value has to be adopted as per the registered sale agreement or finally sold the property as on 07/02/2008 -Held that:- We find that there is no merit in the arguments advanced by the ld. counsel for the assessee for the reason that the date of registration is only valid for one month and the property was sold altogether to a new vendee i.e. M/s. Sri Ramdas Paper Boards (Pvt.) Ltd., near about two years. Therefore, in the eye of law, the agreement is not in force on the date of sale. Therefore, the Assessing Officer has rightly adopted the SRO’s value as on the date of sale of ₹ 57,47,000/-, which was confirmed by the ld.CIT(A). We find no infirmity in the order passed by the ld.CIT(A). - Decided against assessee. Negative balance in the cash book - unexplained expenditure - Held that:- We find that ld. CIT(A) gave a categorical finding that the assessee has not filed any evidence to show that the impugned expenditure was incurred from the cash available of the assessee’s son & daughter-in-law and no entry is made in their books of account. Therefore, we find no reason to interfere with the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Issues Involved:1. Determination of capital gains based on SRO's value as per registered sale agreement date or the date of final sale.2. Treatment of negative balance in the cash book.Analysis:Issue 1: Determination of Capital GainsThe case revolved around the assessment of capital gains by the Assessing Officer based on the sale of a property. The Assessing Officer considered the SRO's value as on the date of final sale to be &8377; 57,47,000, resulting in a long-term capital gain of &8377; 9,91,116. The assessee argued that the SRO's value on the property as of the registered sale agreement date (10/04/2006) should be considered for capital gain calculation, which was &8377; 26.00 lakhs. However, the Tribunal found that the agreement with the initial vendees was not materialized, and the property was eventually sold to a new party on 07/02/2008 for &8377; 26.00 lakhs. The Tribunal held that the agreement was not in force on the date of sale to the new party, and thus, the SRO's value as on the final sale date was correctly adopted by the Assessing Officer. The Tribunal dismissed the appeal, citing that the case laws referred to by the assessee were not applicable to the present case.Issue 2: Treatment of Negative Balance in Cash BookRegarding the negative balance in the cash book during a specific period, the Assessing Officer observed a peak negative balance of &8377; 2,61,926. The assessee explained that the expenditure was met from the cash balance of the assessee's son and daughter, who were staying with the assessee. However, the Assessing Officer found this explanation unacceptable, as no evidence was provided to support the claim that the impugned expenditure was covered by the cash balance of the son and daughter. Consequently, the amount was added to the total income of the assessee. The CIT(A) upheld this decision, noting the lack of evidence in the cash books of the son and daughter to substantiate the claim. The Tribunal, after considering the arguments, concurred with the CIT(A)'s findings, stating that no evidence was presented to show that the expenditure was covered by the cash available to the son and daughter. Therefore, the Tribunal dismissed the appeal on this ground as well.In conclusion, the Tribunal upheld the orders of the lower authorities regarding both the determination of capital gains and the treatment of the negative balance in the cash book, resulting in the dismissal of the appeal filed by the assessee.