2024 (1) TMI 103 - AT - Income Tax

ITAT restores multiple tax issues to AO for verification including interest income and mutual fund capital gains classification

The ITAT Mumbai restored multiple issues to the AO for verification. Regarding interest income addition, the matter was remanded to verify assessee's ... Addition of interest income appearing in the bank account but not included under the head ‘income from other sources’ - contention of the assessee are that said interest amount was already included by the assessee in the return of income filed for immediately proceedings assessment year i.e. assessment year 2014-15 following the mercantile system of accounting as the said interest was credited by the bank in relevant assessment year and accordingly deducted the TDS and said amount was appearing in the 26AS statement for the assessment year 2014-15 - HELD THAT:- In view of the above submission, we feel it appropriate to restore this matter back to the file for the AO for verification of the claim of the assessee and if same is found to be correct, then no addition is required to be made in the hands of the assessee for the assessment year under consideration. The ground Nos. 1 & 2 of the appeal are accordingly allowed for statistical purpose. Capital gain of redemption of mutual funds - LTCG OR STCG - claim of the assessee that said mutual funds were sold by the assessee between the period of 01.04.2014 to 10.07.2014 and therefore, same should be subjected to long term capital gain being held for more than 12 months as provided u/s 2(42A) - HELD THAT:- In view of the highlighted portion of provision prescribing holding period of 12 months for treating sale of shares/mutual fund for Long Term Capital during the period of 1/04/2014 to 10/07/2014, we feel it appropriate to restore this issue back to the file of the Ld. Assessing Officer for verification of the date of the sale and then decide in accordance with law. The ground of appeal of the assessee is accordingly allowed for statistical purposes. Long-Term Capital Gain without providing the information collected directly by the AO to the assessee, when it is specifically requested by the assessee and instructed by the DRP also that all the information collected by the AO should be provided to the assessee - As addition was not part of the draft assessment order and no direction has been given by the Ld. DRP and therefore, while giving effect to the direction of the Ld. DRP the Assessing Officer is not justified in making addition, which being ultra vires , liable to be deleted. Unexplained investment in Franklin Templeton MF - Before us, the assessee has filed additional evidence in support of investment in Franklin Templeton MF of Rs. 30,00,000/- as well as statement of investment in Aditya Birla Sun Life MF. In view of the additional evidence filed by the assessee, we restore the issue back to the file of the Assessing Officer for deciding afresh after verification of the source of investment in those mutual funds. Insurance premium paid assessee has expressed inability in getting copy the detail of the insurance premium allegedly paid by the assessee to ICICI Prudential Fund. In the facts and circumstances, we direct the Assessing Officer to gather the said details of the insurance premium paid by the assessee from ICICI Prudential Fund invoking authority u/s 133(6) or 131 of the Act and thereafter provide said information to the assessee to explain the source of investment therein. Payment of purchases of property - We note that the assessee has already explained amount of Rs. 28,47,493/- out of Rs. 33,39,100/- but could not explain source of Rs. 4,58,117/-. AO is directed to collect the detail of the payments made by the assessee from builder M/s PAX Homes LLP invoking authority u/s 133(6) or 131 of the Act and provide copy of the said payment details of Rs. 33,39,100/- to the assessee. Accordingly, the Assessing Officer shall provide the details which will be collected from the builders and thereafter may examine the source of investment and decide the issue in accordance with law. The ground No. 5 of the appeal of the assessee is accordingly allowed for statistical purposes. Issues Involved:1. Addition of interest income.2. Addition of short-term capital gain.3. Addition of long-term capital gain.4. Addition of unexplained investments.5. Non-resident tax filing obligations.Summary:1. Addition of Interest Income:The assessee contested the addition of Rs. 98,204/- as interest income, arguing that the amount credited in the bank account pertained to the previous year (A.Y 2014-15). The tribunal directed the Assessing Officer to verify the assessee's claim that the interest was already included in the previous year's return and, if correct, to remove the addition for the year under consideration.2. Addition of Short-Term Capital Gain:The assessee challenged the addition of Rs. 3,35,023/- as short-term capital gain from mutual fund redemptions. The tribunal noted the provision in Section 2(42A) of the Income-tax Act, which considers mutual fund units held for more than 12 months as long-term capital assets if sold between 01.04.2014 and 10.07.2014. The issue was remanded to the Assessing Officer for verification of the sale dates and appropriate classification.3. Addition of Long-Term Capital Gain:The tribunal found that the addition of Rs. 7,54,209/- as long-term capital gain was not part of the draft assessment order and lacked directions from the Dispute Resolution Panel (DRP). Consequently, the tribunal deemed the addition ultra vires and deleted it.4. Addition of Unexplained Investments:The assessee provided additional evidence for the source of Rs. 30,00,000/- invested in Franklin Templeton Mutual Fund and Aditya Birla Sun Life Mutual Fund. The tribunal remanded the issue to the Assessing Officer for verification. For the insurance premium of Rs. 7,20,965/-, the tribunal directed the Assessing Officer to obtain details from ICICI Prudential Fund. Similarly, for the unexplained property payment of Rs. 4,58,117/-, the tribunal instructed the Assessing Officer to gather payment details from the builder and allow the assessee to explain the source of funds.5. Non-Resident Tax Filing Obligations:The tribunal did not adjudicate on the grounds related to non-resident tax filing obligations, as the primary issues were resolved in favor of the assessee for statistical purposes.Conclusion:The tribunal allowed the appeal for statistical purposes and directed the Assessing Officer to verify and reassess the disputed additions in accordance with the law. The appeal was pronounced in the open court on 19/10/2023.