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Issues involved: Assessment of undisclosed income, applicability of section 56(2)(v) of the Income Tax Act, 1961.
Assessment of undisclosed income: The appellant, the Revenue, challenged the deletion of an addition made by the Assessing Officer (A.O.) in the assessment of an individual's income for the Assessment Year (A.Y.) 2004-05. The A.O. reopened the assessment after finding undisclosed income from a transaction involving a property known as "Avasia House." The individual, the assessee, had received a sum of money which was not offered for taxation. The A.O. treated this amount as taxable income under the head "income from other sources" and completed the assessment accordingly. On appeal, the Commissioner of Income Tax (Appeals) deleted the addition based on a Tribunal order in a previous case. The Revenue challenged this deletion, but the Tribunal upheld the decision of the Commissioner, citing that the sum received by the assessee had a legal consideration and thus was not taxable under section 56(2)(v) of the Act. Applicability of section 56(2)(v) of the Income Tax Act: The Tribunal, in its order, explained that the sum received by the assessee was in consideration of giving up rights to contest a will, which constituted legal consideration as per the Indian Contract Act, 1872. The Tribunal held that this consideration prevented the application of section 56(2)(v) of the Act, as the sum received was not without any consideration. Therefore, the additions made by the A.O. were directed to be deleted. The Tribunal declined to interfere with the decision of the Commissioner in deleting the addition, as no distinguishing features were presented by the Revenue. Consequently, the appeal filed by the Revenue was dismissed, upholding the deletion of the addition made by the A.O. *Order pronounced on 17-10-2012.*
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