2017 (10) TMI 482 - AT - Income Tax

Addition u/s 68 - explanation about the nature and source of receipt - Held that - A perusal of record would show that the assessee miserably failed to submit any details with respect to ₹ 11 lakhs received from Jayaben Balkrishna Oza. The assessee had developed a story that this amount was taken as an advance for sale of flat at Shefali Apartment, but he failed to demonstrate execution of any sale deed to legal heirs of Jayaben Balkrishna Oza. He failed to demonstrate refund of this amount to L/R of Smt. Jyababen Balkrishna Oza. The ld.CIT(A) has considered all these aspects in the finding extracted supra. After going through well reasoned finding of the ld.CIT(A) we do not see any error in it. Accordingly, this ground of appeal is rejected against assessee. Short term capital gain accrued to the assessee on sale of a land - year of taxability - Held that - We find that this amount of ₹ 62.35 lakhs is taxable in the hands of the assessee. It is also pertinent to observe that it is taxable in the Asstt.Year 2010-11. The assessee has tried to withhold information about taxability of this amount in the Asstt.Year 2010-11 by offering this amount as business profit, which is not appreciable step at the end of the assessee. Considering these details and exercising power contemplated under section 153(6)(i) r.w. Explanation 2(a) of the Income Tax Act, 1961, we direct the AO to assess short term capital gain at ₹ 62,34,953/- in the Asstt.Year 2010-11. With the above directions, we reject this ground of appeal of the assessee.

Summary

Issues:
1. Addition under section 68 of the Income Tax Act, 1961.
2. Assessment of short-term capital gain on the sale of land.

Issue 1: Addition under section 68 of the Income Tax Act, 1961:
The case involved the assessee appealing against the confirmation of an addition of ?11.00 lakhs under section 68 of the Income Tax Act. The assessee failed to prove the genuineness and creditworthiness of a cash loan received. The ld.CIT(A) upheld the addition, stating that the appellant did not establish the creditworthiness of the lender and the genuineness of the transaction. The ITAT, after careful consideration, found no error in the ld.CIT(A)'s decision. The assessee's failure to provide details regarding the cash loan led to the rejection of this ground of appeal.

Issue 2: Assessment of short-term capital gain on the sale of land:
The dispute revolved around the year of taxability of a short-term capital gain amounting to ?62.34 lakhs from the sale of land. The AO assessed this gain in the Asstt.Year 2009-10, while the assessee claimed it should be taxable in the Asstt.Year 2010-11. The ITAT analyzed the facts and contentions presented. It was observed that the assessee had not converted the land into stock-in-trade and offered the gain as business profit in the subsequent year, which was a misleading step. The ITAT directed the AO to assess the short-term capital gain in the Asstt.Year 2010-11, as per the provisions of section 153(6) r.w. Explanation 2(a) of the Income Tax Act, 1961. Consequently, this ground of appeal was dismissed, affirming the taxability of the gain in the specified assessment year.

In conclusion, the ITAT upheld the decisions regarding the addition under section 68 of the Income Tax Act and the assessment of short-term capital gain on the sale of land. The appeal of the assessee was dismissed, and necessary directions were issued for the correct assessment and taxability of the disputed amounts in the respective assessment years.