2013 (8) TMI 939 - HC - Income Tax

Addition u/s 68 - Held that - The amount of ₹ 10,10,000/- was given by Shri Jigar A. Patel staying at U.K. Vide cheque no. 481971 drawn on ICICI Bank dated 27/03/2008 and the said amount was from NRI Account No.008501014581 of ICICI Bank at Vallabh Vidyanagar and considering the fact that even the aforesaid was confirmed by Shri Jigar A. Patel, both the CIT(A) as well as ITAT have rightly held that the same cannot be said to be unexplained cash deposit and have rightly deleted the addition - Decided in favour of assessee

Summary

Issues involved:
1. Deletion of additions under Section 68 without establishing identity, creditworthiness, and genuineness of the transaction.
2. Deletion of additions under Section 40A(3) for cash payment in regular business transactions.
3. Treatment of amount as income from long term capital gain instead of business income.

Issue 1:
The first issue revolves around the deletion of additions under Section 68 without establishing the identity, creditworthiness, and genuineness of the transaction. The ITAT upheld the CIT(A)'s decision to delete additions of specific amounts in the cases of two individuals. The court noted that the amount in question was received through a cheque from an NRI account, which was confirmed by the depositor. Both the CIT(A) and ITAT found that the deposit was not unexplained cash and thus deleted the addition under Section 68 of the Income-tax Act. The court, based on these findings, dismissed the Tax Appeal concerning question no. 1.

Issue 2:
The second issue concerns the deletion of additions under Section 40A(3) for cash payments in regular business transactions. The AO had made additions under this section, citing the regular engagement of the assessee in the business of sale/purchase of properties. The ITAT upheld the CIT(A)'s decision to delete the additions, supported by a Supreme Court decision. The court found that cash payment for land purchase attracted Section 40A(3) provisions. The Tax Appeal was admitted for further consideration regarding questions 2 and 3.

Issue 3:
The final issue pertains to the treatment of an amount as income from long term capital gain instead of business income. The ITAT upheld the CIT(A)'s decision to treat a specific amount as income from long term capital gain despite the assessee's regular engagement in property business. The court is yet to provide a final decision on this issue as the Tax Appeal is admitted for further review.

In summary, the judgment addressed the issues of deletion of additions under Section 68 and 40A(3), along with the treatment of income from long term capital gain. The court dismissed the appeal for question 1, while questions 2 and 3 are admitted for further consideration.