2015 (12) TMI 1226 - AT - Income Tax

Unexplained capital gain ans sale proceeds - Held that - Once Smt. Shardaben R. Patel has recognised the sale consideration by computing capital gain on transfer of the two flats and the return was filed before the search, then it has been demonstrated that source of the funds in purchasing two fixed deposits is the transfer of the two flats by Smt. Shardaben R. Patel. The assessee has discharged the onus before us also, and therefore, no addition can be made in purchase of fixed deposits. We allow this ground of appeal. Addition of ₹ 9,80,000 which is 50 per cent. of the sale proceeds along with interest considered in the hands of the assessee is deleted.

Summary

Issues Involved:
1. Non-compliance with Tribunal directions by the Assessing Officer.
2. Entitlement to telescopic benefit of shares of profit received from firms.
3. Additions made without supporting documents found during the search.
4. Unexplained deposits in the bank account.

Detailed Analysis:

1. Non-compliance with Tribunal directions by the Assessing Officer:
The assessee contended that the Assessing Officer failed to adhere to the Tribunal's directions when setting aside the initial assessment order. The Tribunal had directed the Assessing Officer to make a fresh assessment after providing the assessee with an opportunity to be heard and considering the material, submissions, and contentions of the assessee. However, the assessee argued that the Assessing Officer repeated the additions without any supporting documents found during the search.

2. Entitlement to telescopic benefit of shares of profit received from firms:
The assessee, a partner in multiple firms, claimed a telescopic benefit for the shares of profit received from these firms, which had already suffered tax. The Tribunal noted that the assessee had a 33.33% profit share in eight firms and a 100% profit share in one firm, resulting in a total undisclosed income share of Rs. 63,57,387. The Tribunal agreed that the assessee should be given telescopic benefit for this amount against various additions made by the Assessing Officer. The matter was remitted back to the Assessing Officer to ascertain the share of profit and provide the telescopic benefit accordingly.

3. Additions made without supporting documents found during the search:
The assessee argued that the additions made by the Assessing Officer were not supported by any documents found during the search. The Tribunal observed that the Assessing Officer had agreed to provide a set-off for the disclosed income of the firms but restricted it to Rs. 13 lakhs, which was the amount disclosed by the assessee. The Tribunal directed the Assessing Officer to give telescopic benefit for the total amount of Rs. 63,57,387, as the source of the expenditure was from the firms that had already suffered tax.

4. Unexplained deposits in the bank account:
The assessee contended that the unexplained deposits in the bank account belonged to his sister, who had sold two flats and deposited the proceeds in fixed deposits. The Tribunal considered the evidence, including the sister's affidavit and the acknowledgment of her income tax return filed before the search. The Tribunal found that the source of funds for the fixed deposits was the sale of the flats by the sister, and the assessee had discharged the onus of proof. Consequently, the Tribunal deleted the addition of Rs. 9,80,000 made by the Assessing Officer in the hands of the assessee.

Conclusion:
The appeal of the assessee was partly allowed for statistical purposes. The Tribunal directed the Assessing Officer to provide the telescopic benefit for the total amount of Rs. 63,57,387 and deleted the addition of Rs. 9,80,000 related to the unexplained deposits in the bank account. The order was pronounced in the open court on October 15, 2015.