2022 (2) TMI 644 - AT - Income Tax

ITAT Chandigarh: Appeals Allowed, LTCG Additions Deleted

The ITAT Chandigarh allowed the appeals, deleting the additions of LTCG and related expenses. The income had been disclosed and taxed in the hands of ... Addition u/s 68 - bogus LTCG - Addition on account of Long Term Capital Gain (LTCG) and expenditure in connection with the LTCG - HELD THAT:- As relying on ANJULA GOEL VERSUS THE D.C.I.T., CIRCLE-II, CHANDIGARH. [2021 (4) TMI 291 - ITAT CHANDIGARH] impugned income having been categorically taxed as undisclosed income of the assessee firm, we fail to understand why it should be taxed in the hands of the assessee also, which would only result in taxing the same income twice. The observation of the Hon’ ble Settlement Commission on which the Revenue has relied for dismissing assessee's claim, that they refrain from making any comment in respect of claim of utilization of additional income of M/s Rohit Traders in the hands of partners, in our view, only serves the limited purpose of the Commission refraining from commenting on assessee's which were not there before them. This observation, we find, does not negate the admitted and undisputed fact of surrender of the impugned capital gains of the assessee in the hands of M/s Rohit Traders. We direct the deletion of addition made on account of Long Term Capital Gains and expenditure incurred on account of the same in the hands of the assessee - Decided in favour of assessee. Issues:- Sustenance of addition of Long Term Capital Gain (LTCG) and related expenses- Validity of revised return filed after search- Utilization of surrendered income by group concernsAnalysis:Sustenance of addition of LTCG and related expenses:The appeals by the assessee challenged the order of the Ld. CIT(A) upholding the addition of Rs. 21,93,371/- as LTCG and Rs. 1,71,235/- as expenses related to LTCG. The search and seizure operation under section 132(1) led to proceedings under section 153A, resulting in the assessment of income at Rs. 37,10,866/-, including the disputed LTCG and related expenses. The Ld. CIT(A) sustained the action of the Assessing Officer (A.O.), prompting the appeals. The assessee contended that similar issues were adjudicated by ITAT Chandigarh in a related case, emphasizing that the LTCG was already disclosed and taxed in the hands of another entity, M/s Rohit Traders. The ITAT, referring to the previous case, ruled in favor of the assessee, deleting the additions made by the A.O. and upheld by the Ld. CIT(A).Validity of revised return filed after search:The Ld. CIT(A) upheld the impugned additions, citing the submission of a revised return by the appellant post the search. The Ld. CIT DR argued against the assessee's claim, emphasizing that no application was filed under section 245D(1) before the Settlement Commission, implying that the disclosed amount by M/s Rohit Traders was not utilized for the appellant's investments. However, the ITAT found merit in the assessee's contention, noting that the LTCG had already been surrendered by M/s Rohit Traders before the Settlement Commission, and there was no basis for taxing the same income twice.Utilization of surrendered income by group concerns:The contention revolved around the utilization of surrendered income by group concerns, with the Ld. CIT DR opposing the assessee's claim due to the absence of an application under section 245D(1) before the Settlement Commission. However, the ITAT, relying on the findings of a previous case involving similar facts, ruled in favor of the assessee, directing the deletion of the additions made by the A.O. and upheld by the Ld. CIT(A).In conclusion, the ITAT Chandigarh allowed the appeals of the assessee, deleting the additions of LTCG and related expenses, as the income had already been disclosed and taxed in the hands of another entity, M/s Rohit Traders. The judgment highlighted the importance of considering previous rulings and the utilization of surrendered income in related cases to prevent double taxation.