Tribunal Confirms Deletion of Rs. 12.50 Crores Addition; Validates Property Sale as Genuine, Dismissing Revenue Appeal.

The Appellate Tribunal upheld the CIT(A)'s decision to delete the Rs. 12.50 crores addition made by the AO under section 69A of the Income Tax Act. The Tribunal agreed that the unregistered gift deed did not invalidate the transaction, as the assessee was in possession of the property and the sale proceeds were legitimate. The Tribunal confirmed that the amount credited to the assessee's account resulted from a genuine property sale, not unexplained money, and dismissed the revenue's appeal. Judgment was pronounced on 3.11.2023.

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Issues involved:
The judgment pertains to the deletion of an addition of Rs. 12.50 crores made by the Assessing Officer (AO) to the income of the assessee on account of unexplained money under section 69A of the Income Tax Act.

Facts of the case:
During scrutiny assessment proceedings, the AO observed that the assessee had shown long-term capital gain on the sale of a property at Rani Jhansi Chowk, Delhi, and claimed exemption under section 54 of the Act. The property was initially purchased by the husband of the assessee and later gifted a 1/3rd share to the assessee, which was subsequently sold by her, resulting in long-term capital gains.

AO's findings and addition:
The AO dismissed the gift transaction as the gift deed was not registered and noted that the property deed was executed by a third party after the alleged gift date. Consequently, the AO treated the amount of Rs. 12.50 crores credited to the assessee's bank account as her income under section 69A of the Act and made the addition.

CIT(A)'s decision:
The CIT(A) considered the provisions of section 2(47)(vi) related to the transfer of immovable property and opined that the assessee, being in possession of the property, had the right to sell it. The CIT(A) further highlighted that the amount from the sale was reinvested in another property, justifying the claim of exemption under section 54.

Appellate Tribunal's ruling:
The Appellate Tribunal upheld the CIT(A)'s decision, emphasizing that the unregistered gift deed did not invalidate the transaction, especially since the assessee was in possession of the property and the sale proceeds were genuine. The Tribunal rejected the application of section 69A, as the credited amount stemmed from the legitimate sale of property, not unaccounted funds.

Conclusion:
After careful consideration, the Tribunal found no grounds to interfere with the CIT(A)'s findings and dismissed the revenue's appeal. The judgment was pronounced on 3.11.2023.

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