TaxTMI 
TaxTMI 
2019 (9) TMI 679
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....her Bank account represent the cash component of the consideration received for sale of her father's immovable property. It was submitted that the father of the assessee was in judicial custody and the assessee had sold the property which was in the name of the father by taking GPA from her father. It was further submitted that amounts totaling to Rs. 77 lakhs was received in cheque and Rs. 16,80,500/- was received in cash and the entire amount was deposited in Banks. The AO, however, did not accept the explanation put forth by the assessee and treated the cash deposit amounting to Rs. 16,80,500/- as "unexplained investment" in the hands of the assessee and brought the same to tax in the assessee's hands. The assessment was accordingly completed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dated 31.12.2012. 2.2 Aggrieved by the order of assessment dated 31.12.2012 for Assessment Year 2010-11, the assessee carried the matter in appeal to CIT(A), Mysore. Before the CIT(A), the assessee reiterated the submissions put forth before the AO. The assessee also admittedly placed on record a copy of the Return of Income filed by her father on 31.03.2013....
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....urisdiction to subject the Appellant to assessment under Act. 8. The learned AO has erred, in law and in facts, in initiating penalty dings u/s 271(1)(c) of the Act. 3.2 All the grounds raised in this appeal (supra) are in respect of the issue of the addition of Rs. 16,80,500/- made towards "undisclosed investment" in the hands of the assessee. In the course of proceedings, the learned AR of the assessee filed a paper book (pages 1 to 59) containing various documents / judicial pronouncements in support of her case, which are duly considered. 3.3.1 In appeal proceedings, the learned AR of the assessee put forth various submissions, the gist of which is as under:- (i) The assessee in the period under consideration is admittedly a student and therefore has no independent source of income and was therefore incapable of earning any such unexplained income or investment; as alleged. (ii) The father of the assessee Shri. R. Rachaiah was in judicial custody and the assessee had obtained General Power of Attorney (GPA) from her father and sold the property; which fact is borne out from the recitals in the sale deed dated 07.06.2010. As such the sale of the ....
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.... therefore she had no independent source of income. The fact that the sale of the said immovable property was done by the assessee's father and that the assessee is only a GPA holder is borne out from the recitals in the sale deed and is not disputed. In fact, it is seen that the AO has not raised the issue of any income from capital gain, in the assessee's hands, arising out of the sale consideration received in cheque even though the cheques amounting to Rs. 77 lakhs (Rs. 75 lakhs plus Rs. 2 lakhs) have also been deposited in the assessee's bank account. Therefore, the fact that the sale consideration of the property has to be considered in the hands of the father and not in the hands of the assessee has been accepted and not disputed by the AO. It is settled principle that the capital gains arising on sale of property should be considered in the hands of the actual seller and not the GPA holder and the stand of the AO in this regard is correct. 3.5.2 The only dispute in this appeal is with regard to the taxability of the cash deposits amounting to Rs. 16,80,500/- in the assessee's bank account. In this regard, the assessee's contention is that these cash deposits were part of....
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.... cash component of the consideration should be assessed in the hands of the assessee; as has been held by the CIT(A). 3.5.5 Taking into account the factual matrix and the circumstances of the case, as discussed above, the inference of the AO that the cash deposits amounting to Rs. 16,80,000/- in the assessee's bank account in Corporation Bank, Vijaynagar Branch, Mysore, constitutes unexplained investment by the assessee in the case on hand is not tenable. In my considered view, the explanation furnished by the assessee in this regard was proper and plausible and ought to have been accepted, but was rejected without substantial reasons. The finding rendered by the ITAT-Jaipur Bench in the case of Smt. Ramawati (supra) is equally applicable to the facts of the present case and therefore the addition made by the AO being untenable and unsustainable is ordered to be deleted. It is accordingly ordered. 4. In the result, the assessee's appeal for Assessment Year 2010-11 is allowed. Order pronounced in the open court on this 12th day of July, 2019. ============= Document 1 8. It is a fact on record that the assessee is an illiterate lady & has no source of income other t....
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....ribunal as well as the High Court were in error in their interpretation of s. 69 of the Act. It was held by Hon'ble Supreme Court as under:- "We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question Document 2 whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 of the Act to treat the source of investment ....