TaxTMI 
TaxTMI 
2024 (6) TMI 1597
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....ee has raised the following grounds of appeal: "1. The Ld. CIT(A) erred in partly allowing the appeal. 2. The Ld. CIT(A) ought to have appreciated that the order passed by the Assessing Officer under section 153A of the Income Tax Act, 1961 by the Assessing Officer is erroneous both on facts and in law, to the extent the order is prejudicial to the interest of appellant. 3.a) The Ld. CIT(A) erred in dismissing the grounds of appeal on unaccounted cash receipts of Rs. 50,00,000/-. b). The Ld. CIT(A) ought to have appreciated that the addition made based on the statement recorded u/s 132(4) has no evidentiary value in absence of any further corroborative evidence. c) The Ld. CIT(A) ought to have appreciated that the Ld. Assessing Officer erred in not making independent enquiries i.e., by taking statement of purchaser or by examining the bank account of the assessee. d) The Ld. CIT(A) erred in not accepting the clarifications given by the assessee in course of assessee's retraction of statement filed through an affidavit before DDIT. e) The Ld. CIT(A) ought to have appreciated that the AO erred in making the addition o....
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....o have appreciated that the taxability of capital gains has already occurred in AY 2016-17 and that taxing capital gains again in the year under consideration would amount to double taxation. d) The Ld. CIT(A) failed to appreciate that there is no transfer of constructed property (built up area) in the year under consideration and hence no Capital gains would arise for the year under consideration. e) The Ld. CIT(A) ought to have appreciated that the assessee has duly pertaining to the impugned property in the AY 2019-20. f) The Ld. CIT(A) erred in directing the AO to tax the sale consideration on sale of built up area of 19,005 sq. ft as long term capital gains instead of splitting the capital gains as long term capital gains for land and short term capital gains for transfer of commercial space. g) The Ld. CIT(A) ought to have deleted the addition made of Rs.3,65,20,662/- towards short term capital gains. 7.a) The Ld. CIT(A) erred in partly allowing ground nos. 5 to 5.6 taken before him with regard to the addition of Rs.3,56,717/- as long term capital gain. b) The Ld. CIT(A) ought to have appreciated that liability to tax has ....
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....ment number 9205/2017 executed on 17.08.2017 by the assessee and others in favour of Shri Vinay Dantapally Kumar for a sale consideration of Rs.33 lakhs was found, however, the SRO guideline value of the said property as per the stamp valuation was at Rs.46,23,500/-. The AO further noted that a sale agreement in respect of the above property was also found and seized during the course of search and as per the said sale agreement, the consideration was agreed at Rs.83 lakhs and out of which Rs.33 lakhs was paid by cheque and the balance amount of Rs.50 lakhs was paid in 4 instalments in cash. A statement on oath was recorded from the assessee and confronted it with agreement to sale. In response to the specific question, the assessee stated that he has received consideration of Rs.50 lakhs in cash and also admitted as undisclosed income. The AO on the basis of sale agreement between the parties coupled with the statement recorded from the assessee during the course of search, made addition of Rs.50 lakhs towards unaccounted cash receipts from the sale of property. 6.1. The learned Counsel for the assessee, Shri P. Murali Mohan Rao, C.A., submitted that the ld. CIT(A) is erred in ....
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....ment specifically states that the balance consideration of Rs.50 lakhs should be paid in four instalments starting from 15.04.2014 to 15.04.2015. The agreement further states that the said consideration should be paid in cash and a proper receipt should be issued by the vendor. The agreement also states that the vendor shall complete building by June, 2015 with a additional 6 months grace period and also ensure that the property should fetch minimum rent of Rs.53/- per sq.ft per month. According to the counsel for the assessee, since there is a failure from assessee to fulfil the terms and conditions of the agreement, the consideration has been reduced to Rs.33 lakh only and no cash has been paid by the purchaser as alleged by the AO. 6.4. We have given our thoughtful consideration to the reasons given by the AO and ld. CIT(A) to make addition towards unexplained cash receipts from sale of property, in light of various averments made by the learned counsel for the assessee and we ourselves do not subscribe to the reasons given by the Assessing Officer for the simple reason that, except agreement to sale, there is no further evidence with the Assessing Officer with regard to the ....
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....ry details, and in response, the assessee submitted that he has sold various properties during the financial year 2017-18 relevant to assessment year 2018-19, however, admitted capital gain in the year 2019-20 because the construction of the property was completed, and the possession was handed over to the buyers during the financial year 2018-19, relevant to assessment year 2019-20. The Assessing Officer on the basis of details submitted by the assessee, including the copies of relevant sale deeds, observed that the assessee has received sale consideration of Rs.5,45,02,449/- on sale of 19,005 sq.ft property during the financial year 2017-18, relevant to assessment year 2018-19. The AO further observed that capital gain on the sale of land is assessable under the head long-term capital gains because the holding period is more than 3 years, whereas the property being sale of the built-up area was assessable under the head short-term capital gain because the holding period of the asset is less than 3 years. Therefore, the AO called upon the assessee to furnish the computation of capital gain, in respect of the sale of land and the sale of built-up area separately. The assessee has f....
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....tal gain was rightfully brought to tax in the year 2010-11 and the same has been accepted by the Revenue. Since the assessee has received built up area in exchange of transfer of land in A.Y. 2010-11 and sold the said property during the current year 2018-19, the holding period of the asset is beyond three years and thus, any profit or gain received from sale of said property is assessable under the head long term capital gain only. Since the holding period of built-up area is more than three years, the Assessing Officer is directed to assess profit or sale of built up area also under the head long term capital gain. 7.4. Aggrieved by the order of ld. CIT(A), the assessee is now in appeal before us. 7.5. The learned counsel for the assessee submitted that the ld. CIT(A) erred in upholding reasons given by the Assessing Officer to assess capital gain for the assessment year 2018-19, in respect of 19,005 sq.ft property sold by the assessee for the F.Y. 2017-18 relevant to A.Y. 2018-19, even though the assessee has already offered capital gain for A.Y. 2019-20 on the basis of the possession handed over to the buyers. The learned counsel for the assessee further submitted that th....
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....lication of Section 45(5A) and uphold the findings of the ld. CIT(A). To somehow, in our considered opinion, there is no error in the reasons given by the ld. CIT(A) to uphold the findings of the Assessing Officer in assessing the capital gain for A.Y. 2018-19 in respect of 19,005 sq.ft property sold by the assessee and thus, we inclined to uphold the addition made by the ld. CIT(A) and reject the grounds taken by the assessee. 8. Ground nos.4 and 5 of assessee is addition towards capital gain by applying provisions of section 50C of the Income Tax Act, 1961. 8.1. The learned counsel for the assessee at the time of hearing submitted that the assessee does not wish to press ground nos.4 and 5 of assessee challenging the additions made by the Assessing Officer. Therefore, the grounds of appeal filed by the assessee challenging the addition made towards capital gain by applying provisions of Section 50C of the Act are dismissed as not pressed. 9. In the result, the appeal filed by the assessee is partly allowed. ITA Nos.638/Hyd/2022 for A.Y. 2019-20 (SARAT GOPAL BOPPANA) 10. The assessee has raised the following grounds of appeal : "1. The Ld. CIT(A) erred in p....
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....nstead of splitting the capital gains as long term capital gains for land and short term capital gains for transfer of commercial space. e) The Ld. CIT(A) ought to have deleted the addition made of Rs.4,50,63,347/- towards short term capital gains. 6.a) The Ld. CIT(A) erred in partly allowing ground nos.8 to 8.4 taken before him with regard to the addition of Rs. 1,49,255/- as long term capital gain. b) The Ld. CIT(A) ought to have appreciated that liability to tax has already occurred in the assessment year, 2010-11 and that taxing the same again in the year under consideration tantamounts to double taxation. c) The Ld. CIT(A) ought to have appreciated that the assessee has duly admitted capital gains arising on the sale of the impugned property in assessment year 2019-20." 11. The first issue that came up for our consideration from ground nos.5 and 6 of assessee's appeal is assessment of short term capital gains, in respect of sale of built up area and long term capital gains in respect of land. We find that similar issue has been considered by us in assessee's own case for A.Y. 2018-19 in ITA No.637/Hyd/2022. As the facts are identi....
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....onted to the assessee and a statement of oath was recorded on 03.12.2019 and in response to specific question, the assessee stated that the documents pertaining to the sale of property in Sarat City Capital Mall, Kondpaur. The assessee further submitted that he along with two others namely, Sri P. Ganeshwar Rao and Sri N.Srimannarayana jointly purchased a land of Ac.3.29 gts in Kondapur Village vide document No.1063/2018 dt.12.02.2008. Later, the co-owners P. Ganeshwar Rao and N.Srimannarayana executed a Release Deed on deed on 15.01.2013 realizing their rights in property in favour of the assessee. As per the terms of Release Deed, the assessee has to pay an amount of Rs.1,02,07,500/- to P. Ganeswara Rao. Thereafter, an Agreement of Sale cum GPA was executed by the assessee in January, 2013 in favour of P. Ganeswara Rao and agreed to transfer of 4,083 sq.ft of commercial place along with undivided share in land in 3rd floor of Sarat City Capital Mall for a consideration of Rs.2,45,00,000/-. The property was ultimately registered in favour of buyer on 13.12.2018 for a consideration of Rs.1,02,07,500/- as per the agreed terms between the assessee and buyers, in terms of registered s....
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....ition towards alleged cash receipts towards sale of property. 15.3. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 15.4. The ld. DR submitted that the ld. CIT(A) has erred in deleting the addition made towards difference amount on agreement of sale coupled with statement of record from the assessee without appreciating the facts that the sale agreement was signed by both the parties and also consideration was clearly specified at Rs.2.45 lakhs. The ld. DR further submitted that the ld. CIT(A) failed to appreciate the fact that the agreement of sale was given effect by both the parties by completing the transfer of property, the manner thereby was that the parties have agreed for consideration of Rs.2.45 lakhs whereas registered the property for a consideration of Rs. 1,02,07,500/-. 15.5. The learned counsel for the assessee supporting the order of ld. CIT(A) submitted that initially parties were agreed for consideration of Rs.2.45 lakhs with certain terms and conditions. As per the agreement, the assessee should deliver physical possession of the property on or before the agreed date as per the terms of sale agreement. Further, the assessee also ....
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.... Assessing Officer with regard to the fact that the assessee has received the cash consideration of Rs.50 lakhs, as stated in the agreement. Although, the agreement of sale clearly specifies that the consideration should be paid in cash, proper receipt should be issued, there is no iota of the evidence that even after search proceedings, the assessee had received cash receipts. Further, the assessee has filed a retraction on 28.12.2019 with a sworn affidavit and explained the reasons for retraction in agreed sale consideration. If we go by the reasons given by the assessee for the retraction of the statement, in our considered opinion, the said statement is in accordance with the terms of agreement between the parties in sale agreement dated 07.08.2014 and has rightly claimed by the assessee, as the initial agreed price was not materialised for various reasons, including non-completion of building on or before the agreed date and also the minimum agreed return of rental income. 15.8 In our considered opinion, the reasons given by the assessee appear to be reasonable going by the date of the agreement of sale and their terms and conditions, and also the date of the sale of the pr....
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....sessing Officer to assess value of jewellery under normal provisions of the Act, as claimed by the assessee on the ground that the source of purchase of jewellery is explained by the assessee out of security deposits received from Shri Syed Mohammed Aslam, Managing Director of M/s. Skill Promoters Pvt. Ltd for joint development of the property. 16.3. Aggrieved by the order of ld.CIT(A), the Revenue is now in appeal before us. 16.4. The ld.DR, on the other hand, referring to the paper book filed by department submitted that the purchase bill of jewellery to the extent of Rs.1,24,60,000/- is in the name of the assessee. Therefore, the assessee cannot claim that jewellery to the extent of Rs.1,24,60,000/- is received from Shri Syed Mohammed Aslam, Managing Director of M/s. Skill Promoters Pvt. Ltd as security deposit. The remailing three bills were although in the name of Syed Mohammed Aslam, the jewellery was found in the possession of assessee. Although, the assessee claims to have received jewellery as security deposit, but the joint development agreement between the parties does not satisfy the payment of security deposit by way of jewellery. Assessing Officer after consider....
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....o reference of payment of security deposit in kind, by way of jewellery, in the joint development agreement, but when the parties have agreed in their statements recorded during the course of search that the jewellery was paid as part of security deposit, in our considered opinion, there cannot be any other view, unless it is supported by further evidences. 16.7. In the present case, the Assessing Officer assessed the value of jewellery as unexplained money u/s 69A of the Act and brought to tax in terms of Section 115BBE of the Act, even though the source of purchase of jewellery has been explained by the assessee. It is well established principle of law by various decisions that provision of Section 69A of the Act cannot be applied once the nature and source of acquisition of any money, bullion, jewellery or any further valuable article is explained to the satisfaction of the Assessing Officer. Since the assessee has explained the possession of jewellery, in our considered opinion, the provisions of Section 45 r.w.s. 115BBE of the Act cannot be applied. The ld.CIT(A) after considering the facts has rightly directed the Assessing Officer to assess the value of jewellery under th....
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.... 28(via) cannot be applied. The assessee further contended that the said provision is applicable from 01.04.2019 relevant to assessment year 2020-21 and thus, the said provision cannot be applied for the impugned assessment year. The ld.CIT(A) after considering the relevant facts and also taken note of provisions of Section 28(via) of the Act, observed that said provisions do not apply to the facts of the present case, because the assessee has held the property, as investment even before the joint development agreement and after the joint development agreement, the property continued to be a capital asset and income derived from the said property has been offered to tax under the head 'income from house property'. The ld.CIT(A) further held that provisions of section 28(via) apply to a case where inventory / stock-in-trade converted to a capital asset. In the present case, since there is no conversion of inventory into capital asset, application of section 28(via) is incorrect and thus, direct the Assessing Officer to delete the addition made towards profits and gains from business u/s 28(via) of the Act. 17.4. Aggrieved by the order of ld.CIT(A), the assessee is in appe....
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....in dispute that the assessee and their family members had offered capital gain for tax in A.Y. 2010-11 on the basis of date of joint development agreement and paid relevant taxes and the same has been accepted by the Assessing Officer, in pursuant to re- assessment proceedings u/s 147 of the Act. The Assessing Officer assessed the value of the property retained by the assessee and let out to various parties as profits and gains of business and profession in terms of Section 28(via) on the ground that the assessee's activity entering into joint development agreement with the developer and subsequent receipt of developed building is in the nature of trade and commerce and further, the built up area received by the assessee and their family members for exchanging the land becomes inventory of the assessee. The Assessing Officer further observed that since the assessee has let out the property, the nature of conversion of inventory into capital asset, in terms of Section 28(via) and thus, the fair market value of the inventory, as on the date on which it was completed into, are treated as capital asset should be assessed as income from business. 17.8. We have given our thoughtfu....
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....resent case, the facts brought on record clearly indicate that the assessee was not into the business and the question of carrying inventory and subsequent application of fixed assets does not arise. It is only the Assessing Officer, who imagined and stated that the assessee carried the inventory of business and subsequently, converted into fixed assets without there being any substance in his observation. These facts clearly show that the assessee is an investor and the property held by the assessee was an investment or capital asset all along and even after receipt of built up area from the developer. Therefore, in our considered opinion, the Assessing Officer has erred in applying the provisions of Section 28(via) of the Act. The ld. CIT(A) after considering the said facts has rightly deleted the addition made by the Assessing Officer. Thus, we inclined to uphold the findings of ld. CIT(A) and reject the grounds taken by the Revenue. 18. In the result, the appeal filed by the Revenue is dismissed. ITA 696/Hyd/2022 for A.Y. 2019-20 (Smt. KAVYA BOPPANA) 19. The Revenue has raised the following grounds of appeal : "1. The Ld. CIT(A) erred both in law and on facts ....
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....d with section 153A of the Act for the assessment year under consideration. d. The Learned CIT(A) ought to have appreciated that in accordance with the provisions of the Act, the issuance of a notice under section 153A of the Act is sine qua non before the completion of the assessment relating to the year in which the search has taken place. e. The Learned CIT(A) ought to have appreciated that since no notice under section 153A of the Act has been issued to the assessee and since no order under section 143(3) read with section 153A of the Act has been passed for the assessment year under consideration, the order passed under section 147 of the Act dated 28.09.2021 is invalid ab initio. f. The Learned CIT(A) ought to have appreciated that the search under section 132 of the Act had taken place in the appellant's case on 22.10.2019, the assessment year 2020-21 is relevant to the previous year in which the search had taken place, and that the Assessing Officer is obliged to issue a notice under section 153A of the Act and pass an assessment order under section 143(3) read with section 153A of the Act as per the amended provisions of section 153A of the A....
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....of income is not satisfactory. 24.2. Aggrieved by the order of Assessing Officer, assessee carried the matter before ld. CIT(A). 24.3. On appeal, the ld.CIT(A) confirmed the addition made by the Assessing Officer. 24.4. The learned counsel for the assessee submitted that the ld.CIT(A) has erred in sustaining addition made at Rs.1,23,92,500/- u/s 69A r.w.s. 115BBE of the Act without appreciating the fact that the assessee has explained the cash payment made for purchase of the property from other sources of income. The learned counsel for the assessee further submitted that the impugned assessment year is the year of search which is evident from the date of search i.e., 22.10.2019 which falls under the F.Y. 2019-20 relevant to A.Y. 2020- 21. The due date for closure books of accounts and filing of return of income was expired when the search took place. Further, the assessee is not engaged in any business activity and is not maintained any books of accounts for any previous year. Therefore, the reasons given by the Assessing Officer to make addition towards income declared under the head income from other sources as unexplained investment u/s 69A r.w.s. 115BBE of the Act is....
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....ing any investment in books of accounts for any assessment does not arise. Further, when the due date for filing of return of income was not offered or due, then it cannot be presumed that the assessee would not have disclosed the said income for the purpose of tax. Since the assessee is not required to maintain any books of accounts for the impugned assessment year and further, the due date of return of income was not expired as on the date of search, in our considered opinion, the explanation offered by the assessee regarding source for cash payment for the purchase of the property needs to be accepted. The assessee declared income to an extent of Rs. 1,23,92,500/-, in respect of cash payment for purchase of property as income from other sources and paid taxes. 24.8. Therefore, in our considered opinion, the Assessing Officer and ld. CIT(A) are erred in treating income declared under the head 'income from other sources' as unexplained investment u/s 69 and brought it to tax under Section 115BBE of the Act. Further, the provisions of Section 69 can be invoked whether in the financial year, immediately preceding the assessment year, the assessee has made investments, whi....
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....xt issue that came up for our consideration from ground no.3 of assessee's appeal is addition towards value of unsold inventory being treated as fixed assets amounting to Rs.6,45,35,000/-. An identical issue has been considered by us in the case of Sarat Gopal Bopanna in ITA No.690/Hyd/2022 for A.Y. 2019-20. In the present case, the facts are similar to the facts considered in the case of Sri Sarat Gopal Boppana for A.Y. 2019-20. Hence, the reasons given by us in Para no.17.7 to 17.10 in ITA No.690/Hyd/2022 for A.Y. 2019-20 shall apply mutatis and mutandis to this appeal as well. Therefore, for similar reasons we inclined to uphold the findings of ld.CIT(A) and reject the grounds taken by the Revenue. 29. In the result, the appeal of Revenue is dismissed. ITA No.646/Hyd/2022 for A.Y. 2020-21 (TARA CHAND BOPPANA) 30. The assessee has raised the following grounds of appeal : "1. The Ld. CIT(A) erred in dismissing the appeal. 2.a The ld. CIT(A) ought to have appreciated that the order passed u/s 143(3) of the Act dt.28.09.201 is invalid abintio. b. The Ld. CIT(A) ought to have annulled the assessment made u/s 143(3) of the Act dated 28.09.2021. ....
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....nvoking provisions of section 115BBE of the Income Tax Act. 32. An identical issue has been considered by us in the case of Smt. Kavya Bopanna for A.Y. 2020-21 in ITA No.642/Hyd/2022. The facts being identical in nature in the present case, the reasons given by us in appeal in ITA No.642/Hyd/2022 for A.Y. 2020-21 in the case of Kavya Bopanna shall apply mutatis and mutandis to this appeal as well. Therefore, for similar reasons, we reverse the findings of ld. CIT(A) and direct the Assessing Officer to assess income declared under the head income from other sources towards cash payment made for purchase of property. 33. In the result, the appeal filed by the assessee is allowed. ITA 694/Hyd/2022 for A.Y. 2019-20 (Smt. JHANSI RANI BOPPANA) 34. The Revenue has raised the following grounds of appeal: "1. The ld. CIT(A) erred both in law and on facts of the case in granting relief to the assessee. 2. The ld. CIT(A) erred on facts and in law by holding that the provisions of section 115BBE are not applicable to the income admitted towards unaccounted jewellery even thought he same was detected during the search operation. 3. The ld. CIT(A) erred on ....