2019 (10) TMI 259 - HC - Income Tax

Bogus LTCG - Addition u/s 68 - HELD THAT - Assessee was under a duty to discharge the primary onus that lay upon him that the amounts, reflected a genuine transaction and were borrowed from existing parties which was creditworthy. The materials on record show that of these three ingredients that atleast in regard to two ingredients assessee could not produce sufficient materials to convince the revenue authorities. No question of law therefore arises. As regards the plea advanced by the assessee regarding the HUF owned property, it is noticeable that the family settlement was in respect to the property owned by the assessee s father which was allegedly ancestral. Upon entering into the family settlement and the division of the property, a share which fell to the assessee became his individual one having regard to the judgment in Commissioner of Wealth Tax Vs. Chander Sen 1986 (7) TMI 7 - SUPREME COURT . Therefore, the inference drawn by the lower appellate authorities cannot be said to be per se illegal. No interference is called for.

Summary

Issues:
1. Long term capital gain tax on property transactions
2. Addition under Section 68 of the Income Tax Act

Analysis:
1. The appeal involved two key issues. Firstly, the appellant contested the long term capital gain tax imposed on them, amounting to ?5,33,720. Secondly, an addition of ?16,56,000 was made under Section 68 of the Income Tax Act. The appellant argued that the findings regarding these amounts being brought to tax in their hands were erroneous.

2. The appellant's income for the assessment year 2008-09 was re-assessed under Section 148/149 of the Act. The assessing officer had made additions to various taxes after considering the return. While the CIT(A) and ITAT provided some relief, the additions related to two plots were sent back for verification. The appellant contended under Section 260A that the findings on property transactions were incorrect.

3. The appellant argued that the properties in question were HUF properties and did not require reporting for income tax purposes at the relevant time. It was highlighted that in 2008, there was no legal obligation to obtain a PAN registration. The property in question had come to the appellant through a family settlement in 2001, held on behalf of the HUF. Regarding the addition under Section 68, the appellant submitted that relevant documents were produced before the assessing officer, who did not accept them. Additional evidence was presented at the appellate stage under Rule 46A.

4. The findings on both issues were concurrent. The addition under Section 68 was related to cash received by the appellant but not reported in the returns. The court noted that the appellant failed to discharge the onus of proving the genuineness of the transactions and the creditworthiness of the parties involved. Insufficient evidence was provided to convince the revenue authorities, leading to the dismissal of the appeal.

5. Concerning the HUF property, it was clarified that the family settlement pertained to the property owned by the appellant's father, which was considered ancestral. After the division of the property through the settlement, the share that came to the appellant became his individual property as per legal precedents. The court found that the lower appellate authorities' inferences were not inherently illegal.

6. Ultimately, no interference was deemed necessary, and the appeal was dismissed.