2017 (2) TMI 1306 - HC - Income Tax

Receipt of on money in cash - Held that - Considering document i.e. Kaccha receipt Banakhat MOU signed by one Vikas Patel and the assessee and details of the payment mentioned in the said MOU which was signed by the assessee and which was duly executed by the assessee both learned CIT(A) as well as learned Tribunal have held that unaccounted payment of Rs. 1.50 Crore has been made on the land in question. Statement of Shri Vikas Patel recorded under Section 132(4) and statement of Shri Bhagwanbhai Aajra dated 12.12.2011 (one of the purchaser) have also been relied upon. Thus it cannot be said that there is any error committed by the learned CIT(A) and learned Tribunal in holding that Rs. 1.50 crore was received in cash as on money. - Decided against assessee. admitted to consider the following question of law. E. Whether on the facts and in the circumstances of the case as well as in law the Appellate Tribunal could have come to the conclusion that the entire gain on sale of said land was assessable as business income as against short term capital gain assessed by AO ?

Summary

Issues Involved:
- Disputed receipt of cash sum in a land deal
- Justification of assessing cash sum as business income
- Assessment of undisclosed income from the transaction
- Assessment of short term capital gain as business income
- Enhancement of income made by the CIT(A)

Analysis:

1. Disputed Receipt of Cash Sum:
The appellant contested the receipt of a cash sum of Rs. 1.50 crore in a land deal, claiming only Rs. 36 lakh was received. The appellant argued that even if Rs. 1.50 crore was received, it should not be solely assessable in their hands due to shared ownership. However, the CIT(A) and ITAT upheld the receipt of Rs. 1.50 crore based on evidence like Kaccha receipts, Banakhat, and MOU, concluding that the undisclosed payment was indeed made.

2. Assessment of Cash Sum as Business Income:
The appellant challenged the assessment of the cash sum as business income instead of short term capital gains. The appellant's counsel argued that no evidence supported the full amount being received by the appellant alone. Conversely, the revenue contended that all relevant documents were signed by the appellant, indicating the entire sum was received by them. The ITAT upheld the assessment, considering the evidence presented.

3. Assessment of Undisclosed Income:
The CIT(A) treated the undisclosed short term capital gain as business income and calculated the undisclosed income from the transaction. The appellant disputed this treatment, emphasizing the lack of evidence supporting the undisclosed income assessment. However, the ITAT affirmed the CIT(A)'s decision based on the evidence available.

4. Assessment of Short Term Capital Gain as Business Income:
The AO assessed the short term capital gain as business income, leading to a disagreement between the appellant and the tax authorities. The CIT(A) and ITAT upheld this assessment, considering the evidence found during the search and the statements of involved parties, concluding that the gain on the land sale should be categorized as business income.

5. Enhancement of Income by CIT(A):
The CIT(A) enhanced the income from the land deal, further complicating the assessment. The appellant challenged this enhancement, arguing against the treatment of the entire gain as business income. Despite the appellant's contentions, the ITAT supported the CIT(A)'s decision, leading to the dismissal of the appeal on this aspect.

In conclusion, the High Court dismissed the appeal on most issues, upholding the assessments made by the tax authorities based on the evidence and statements provided. The judgment highlighted the importance of considering all relevant documents and statements in determining the tax treatment of transactions, especially in cases involving disputed receipts and undisclosed income.